The Accountant Becomes Louis XVI to Save His Neck

The declaration of war came with a display of patriotic fervor in Paris streets. In town for a few days, flags were waving, processions of military officers were held, and crowds cheered and yelled. But in King's study, more appropriately a war room today since maps were the only things that covered the surfaces, the grim reality of the situation was starting to dawn. Cheerleading wasn't going to purchase cannonballs. Patriotism wasn't going to build ships.

Louis confronted a massive chart Necker had prepared, a macabre monument to their dilemma. Figures were frightening. To be expended in the first year of war alone to prepare the army, to re-equip the navy, for guns, for uniforms, and for supplies, would be a staggering 500 million livres. It was greater than the Crown's entire annual revenues.

Jacques Necker looked like a condemned man. He indicated the figures with a trembling hand. "It's impossible, Your Majesty," he breathed, his voice a soft desperate whisper. "Just impossible. We've no reserves. Our credit's strained to the breaking-point. Wartime financing in the old way's not possible for us."

"Explain the old ways," Louis said, his gaze fixed upon the destructive figures. He recognized the answer, but he wanted Necker to tell him about the trap they were in.

"Traditionally, a warring king has two choices," said Necker in lecturing automatic mode. "First, he can issue a tax hike. But the nobility and clergy are exempted, of course. The entire tax burden would be placed upon the Third Estate—the merchants, the peasants, the workers. They are taxed to the maximum already. Another war tax would not only be unpopular; it would evoke riots, rebellion. It would be suicidal."

He paused to regain his breath. "The second financing path is with forced loans. The Crown takes donations from the great noble families and the corporate offices of the church. But after the recent... unpleasant ordeal of the trial, the nobility are in no mood to pay for your war. They will oppose, delay, and undermine. We cannot rely upon them." He fell into a chair, the very picture of defeat. "We are ruined before a ball is ever shot."

Louis listened, his head going up and down slowly. Necker was right. Old styles were a dead end. But the mind of Louis did not work in the eighteenth century. He was thinking in terms of the big wars of the twentieth, of nations mobilizing not just their armies, but their people en masse. He was thinking in terms of some other kind of financial weapon.

"We're approaching this all wrong, Minister," said Louis, stepping back from the chart. "You see the people solely as a source of tax revenues to be wrung out of them. Suppose we considered the people to be a source of investment capital to be borrowed?"

Necker looked up in confusion. "Borrow? From the common people? Your Majesty, the peasantry does not have any capital to invest. Shopmen and merchants, they keep the gold hidden in their safes. They will not lend to the state. That is the domain of the great banking companies in Geneva and Amsterdam, not of the baker on the street."

"Because we've never done it before," Louis snapped back, a twinkle of fervor in his eyes. He began to pace, the idea coming to full bloom in his thoughts. "We don't tax citizens into compliance, Necker. We are going to present people with a partnership. We are going to make this war a national, patriotic investment. We will create something new, something for all of us. We will sell 'Liberty Bonds.'"

The idea was so foreign that Necker just stared, unable to understand.

Louis described, in great detail, a system that would not become popular for more than a century. "We will sell government bonds, but not in the huge big issues sold to the bankers exclusively. We will sell them in packages with minimum purchases of fifty livres. Each citizen, from a wealthy bourgeois in Lyon to a poor shopkeeper in Paris, will be able to buy into France's victory. It will be their opportunity to loan money directly to their King, to their country."

"But. why would they?" Necker continued to struggle with the idea. "What's their reason?"

"First, patriotism," Louis explained. "We will make it their patriotic duty. But second, and more to the point, self-interest. We will offer a fair, predictable rate of interest. Five percent, for instance. Not so high that it would be ruinous to us, but far better than they would receive hiding their money under a floorboard. We will make it a planned repayment, with the full faith and credit of the Crown to secure it. We will market it as a secure, respectable, and profitable investment."

He sensed a flash of understanding, of grudging respect for the financial mechanics, in Necker's eyes. But the minister did not trust him. "The idea has a certain... grace, Your Majesty. But to convince the people of this radically new instrument... the publicity, the flattery that would be required would be enormous."

"Just so," replied Louis with a tight smile. "And to that end, we need a different kind of minister."

He summoned Beaumarchais. The playwright listened to Louis's plan, his eyes widening with each describing detail. What Necker thought to be a risky financial plot, Beaumarchais understood to be a great piece of national theatre, a story to be recounted.

"A Liberty Bond!" exclaimed Beaumarchais, practically relishing his words. "It's perfect! It uses the words finance and liberty in one sentence!"

He was given a new, unofficial title right away by Louis. "Monsieur, in addition to your... trading company... you are my Minister of Public Persuasion from this moment on. It will be your new mission to convince the people of France to purchase this war, to purchase these bonds. I want you to make full use of all instruments available."

Beaumarchais's mind was already afire with possibilities. "Oh, the potential, Your Majesty! This will be my greatest production! We will need a campaign, a national spectacle!"

He began to sketch out his designs, his energy enlivening the room. "Posters! We need them in every town. Good-looking, idealistic images. A stout French seaman looking out to sea, a defiant fighting man standing at attention. And a clear, pointed inscription below. Something like this: 'Your Livres, Their Swords! Buy a Liberty Bond!' "

"And pamphlets as well!" he continued, waving his hands in the air. "Not impersonal figures of accounts, but touching stories! A wife's letter in which her husband is at sea and telling how she has invested the savings of their household in a bond to bring him home in triumph. Two merchants, one of whom squeezes his gold and the other invests his in the country and secures his family's prosperity."

"And we must take the message to the people ourselves! We'll hold 'Liberty Bond Rallies' in grand public spaces. We'll have military bands and marching men, and patriotic speeches made by disabled veterans. We'll get popular lovelies selling the first bonds to wildly enthusiastic crowds! We'll make buying a bond the greatest way, the greatest act of patriotism possible to a citizen!"

He paused, catching his breath, his eyes twinkling. "We will make the pitch for each class. To the rich bourgeoisie, we will sell it as a safe, shrewd investment in the future prosperity of a victorious France. To the shopkeepers and artisans, we will sell it as a means of buying their portion of the victory, of loaning their king the money to finally defeat the prideful English who have harassed our commerce for a century. We will sell to them not just a scrap of paper money, Your Majesty. We will sell to them hope. We will sell to them revenge. We will sell to them glory."

The campaign was launched a week later. It was something France had not seen before. Posters appeared overnight, patches of color and heroics in the gray city walls. Pamphlets circulated through the coffee houses. Rallies drew huge, enthusiastic crowds.

It was a colossal, historically unparalleled gamble. The entire future finances of the war effort, and indeed of the kingdom with it, now hung in the balance of a single, unresolved question: Would the citizenry of France, long accustomed to viewing the state as, at worst, a tax taker and at best a tax collector, now voluntarily open their own treasuries and become its financier? Everything hung in the balance with the response.