The Accountant Becomes Louis XVI to Save His Neck

The suppression of the venal offices was an epic victory. It was the first, decisive blow struck by the National Audit, an emphatic message that the days of privileged immunity were over. The people were delirious, hailing Louis as a new Hercules cleaning up the Augean stables of the state. But Louis and Necker knew better: it was a symbolic victory, not an economic one. While it certainly would save them money down the line, it absolutely didn't begin to look at the immediate, crushing issue of the national debt. The kingdom was still bankrupt, still careening toward an inevitable default that would render all of their political victories impotent.

The Assembly's tone, now the euphoria had passed, turned grim. The Committee of Public Accounts published its last report, and the daunting, terrifying magnitude of the deficit was made public for all eyes to see. The figures could never again be mere secret treasure known only to the King's study; they were now part of the public record. France owed an amount so colossal that repayment appeared an impossibility. The state was like a drowning man, and cutting down one or two thousand parasitic offices was like giving him a handkerchief as opposed to a lifeline.

Hopelessness insinuated itself into the debates. What could be done? A taxing of nobility and church would help, but this was a long-term process and one yet resisted, tooth and nail, in provincial courts. Currency printing was now acknowledged, thanks to Louis's gentle expostulations, as a dead-end venture. The radicals once again raised the slogan of pure and simple repudiation of debts, something which made the merchants and lawyers of the Third Estate, the nation's primary creditors, shudder. The revolution, after doing so much and doing it all so quickly, now threatened economic ruin and began to lose heart.

It was into this atmosphere of panic and uncertainty that Louis chose to concoct his pièce de résistance. He and Necker had privately worked on this plan for months, polishing it with anxious late-night arguments. Necker thought the plan magnificent in its mechanics but appallingly extreme in politics. Louis knew it was both. He waited until the Assembly was at its lowest point, where they most needed some audacious solution.

He rose to address the Assembly, not as a monarch, but as an audit committee chairman presenting his final recommendation. He began by laying out the two essential, intertwined problems in harsh simplicity.

"Gentlemen," he said, his voice low but carrying to the remotest corners of the hall. "We've weeks confirming what we already knew: the state has precisely no money. That's the first issue. The second and more daunting problem is the state has no credit. We cannot borrow our way up from this crisis, because there's no one willing to lend to the broke. We are trapped."

He looked out at the anxious faces. "Some have suggested we just print fresh money to pay our debts. But I must tell you now, a piece of paper isn't valuable unless it stands for something valuable. To print money backed by nothing tangible is to print worthless paper. A short-term trick that will lead to rising prices, the collapse of trade, and the ruin of us all. Money must be backed by something tangible."

He paused, letting the gravity of the problem descend upon them. "But what glorious, untapped resource does this state possess? What treasurehouse of immense fortune has our audit identified as yielding virtually nothing to the general good?"

There was a stir through the room as they knew where he was heading. The clerical delegates, the bishops and cardinals, moved uncomfortably in their seats.

"Our most powerful, most precious, and most neglected asset," Louis declared, his voice thundering with an new harsh note, "is the soil. More specifically," he finished, dropping the bombshell that would shake France to its foundations, "the huge, productive, untaxed, and often idle properties of the Gallican Church."

The hall erupted. Bishops rose to their feet, shouting "Sacrilege!" and "Theft!" The radical deputies from the Third Estate began cheering.

Louis held up his hand for silence. "This isn't a proposition for a tax," he clarified, his voice drowning out the hubbub. "A tax would be too gradual. We are at an immediate crisis. I propose an enduring solution."

He then unveiled his plan, an amazingly ambitious idea that consolidated all sorts of modern finance concepts into one, revolutionary system. He called it the Assignat.

First, he explained, the National Assembly, as the final representative of the nation, would vote to nationalize all properties and lands of the Church. He argued this wasn't stealing. "The Church," he said, "is merely the caretaker of this vast wealth. The people of France at various points over centuries gave this wealth to the Church for the benefit of the kingdom. The kingdom now faces danger. The nation is only taking back something and indeed always has belonged to her."

Second, the state would create an entirely new paper money, the Assignat. But he stressed this was anything but the useless paper money he'd warned against. Each Assignat would be something truly remarkable, a revolutionary innovation: currency, bond. "It will be made legal tender," he clarified, "for all payments and for payment of all taxes. But beyond all this, each and every Assignat will contain an actual physical ownership share of the real value of the nationalized properties of the Church. It is not a note promising to pay; it is a title of ownership."

Third, he outlined the final, clever part of the scheme. "This whole new national territory," he outlined, "will be sold at public auction. And it will be purchasable in one and only one currency: the Assignat. Any citizen, from the largest banker to the smallest farmer with some little sum saved, can take advantage of these notes and acquire part of the nation."

He then explained the brilliance of the system as an anti-inflationary one. "As the lands are sold, those Assignats used to purchase them will be returned to the Treasury. And they will not be respent. They will be ceremonially, openly burned. The money will be removed from circulation at the exact same rate as the asset being secured by it is being sold. The system self-regulates. The money supply will be reduced as the land becomes privatized and cannot be used to finance the destructive inflation all of us fear."

He concluded his address, articulating the ideal, complementary benefits of his proposal. It was a response to one problem, but all the problems, simultaneously.

It would provide the state with an immediate, palpable resource to finance the introduction of a new currency, restoring its credit and its ability to pay its existing bills. It would involve requesting no new, damaging taxes from an overtaxed people. It would, in one blow of legislation, break the gigantic political and economic power of the Church, his most powerful and obstinate institutional enemy, irreparably.

And most importantly, it would create an altogether new, gigantic class of small property-holders. The peasants and bourgeoisie who would buy, from the proceeds of their lifetime's savings, a small plot of erstwhile Church property would now individually, personally be interested in the continued success of the revolution. They would be the base upon which the new order would be constructed, an immense new constituent base that would go to the death to guarantee there could be no return of the Ancien Régime, for the return would imply the invalidation of their deeds to property, the deprivation of all they possess.

The proposal was met with one stunned, deep moment of silence as the delegates absorbed the bald, magnificent enormity of what the King was proposing. The hall exploded into furious, passionate argument. The churchmen were yelling this was the Antichrist at work. The ultra-radical Jacobins were delirious, treating it as the blow against feudalism to end all blows against feudalism. The moderate lawyers and merchants were curious but fearful, minds reeling at the innovativeness of the money idea.

The future of France, the fate of the revolution, now hinged on this one, ultimate ballot. Louis had brought his modern finance skills to develop an agenda of not just repaying the debt, but of completely and irrevocably overhauling the social, economic, and political establishment of the state as a whole.

The HUD, as always, framed the stakes in harsh, naked terms.

PROPOSAL: The Assignat Decree.

VOTE IMMINENT.

IF IT PASSES: Financial Crisis: SOLVED (Short-Term). Power of the First Estate: BROKEN. Revolution: SECURED. New landowning class created.

IF IT FAILS: Financial Crisis: CATASTROPHIC DEFAULT IMMINENT. Revolution: FAILED. CIVIL WAR PROBABILITY: 100%.

The president of the Assembly, pallid as he was and as grim as the hour, asked for the vote. The very future of the nation, and of Louis himself, depended upon it.