Chapter 464: The Three Major Rating Agencies
When Mirabeau saw the different types of industrial data from the past year displayed on a single chart, clearly showing the trends, his eyes lit up.
"Your Highness, how did you come up with this method? It's truly amazing!" He flipped through the various statistical charts, practically unable to put them down. "The Lord truly favors you! Look at these charts; they allow us to understand the industrial situation from last year in just a few minutes."
Just moments ago, he had spent nearly an hour explaining the same information.
The efficiency improvement these charts brought to their work was astonishing.
He immediately thought of more applications for this method and said excitedly, "Perhaps we could promote this way of data presentation in factory production and administrative management."
Bailli, standing nearby, added, "And in scientific research. It could make papers clearer and easier to read."
"Indeed, it's a great innovation!" Mirabeau looked at Joseph with admiration. "Your Highness, I dare say, if government departments and factory managers all used these charts to process documents and data, it could greatly improve the efficiency of the entire country. I suggest we promote this nationwide as soon as possible, perhaps even make it mandatory for government documents."
Joseph was a bit taken aback by their enthusiasm. He had merely intended to make Mirabeau's reports more concise and efficient, not realizing the far-reaching impact this could have.
He rubbed his forehead. Having grown up with statistical charts, he had taken them for granted, not recognizing how revolutionary they could be in the 18th century. Mirabeau was right; these small techniques could significantly enhance management efficiency, almost like an 18th-century version of Excel.
Joseph nodded and said to Mirabeau, "Very well, please organize some scholars to help me compile these charting methods into a manual and print it in large quantities. As for how to teach it to managers..."
Mirabeau immediately responded, "Your Highness, we could incorporate this statistical method into the standardization of production, with Mr. Jean-Saulnier's management consulting firm responsible for teaching it."
Joseph nodded in agreement. These things might seem simple in modern times, but in the 18th century, they really needed a professional company to promote them—just like how people in the early 21st century had to attend training sessions to learn how to make Excel spreadsheets.
Speaking of standardizing production, Joseph was reminded of another issue: companies that adopt standardized production methods should be rewarded, as they contribute to the overall productivity of the nation.
His first thought was to reduce taxes, but he quickly shook his head. Tax rates had already been lowered significantly through initiatives like industrial development zones and the promotion of automatic looms. France, after all, was still burdened with over 20 billion in debt.
Perhaps establishing a rating agency should be put on the agenda.
With a rating agency, companies that meet standardized production criteria could be given higher ratings. Although the rating itself might not generate profits, it would be a reflection of the company's strength. Both investors and consumers would likely favor companies with higher ratings. Additionally, when applying for bank loans, companies with higher ratings would find it easier to get approved.
Joseph could also use the rating standards to guide the direction of a company's development. And once the rating agency gained enough influence, it could even engage in "sovereign credit rating" as seen in modern Western practices.
A sovereign credit rating assesses the credit quality of a country or region, considering aspects such as governance, economic performance, policy quality, social structure, and fiscal strength.
In the future, the three major rating agencies would wield enormous power. A mere downgrade of a country's credit rating could scare off foreign investors, potentially triggering an economic crisis in severe cases.
Establishing a rating agency would give France an additional economic weapon. If any country dared to go to war with France, it could first be hit with a series of credit rating downgrades. Even if that didn't collapse their national debt, it would at least raise their financing costs, increasing the pressure on their military budget.
Now, who would be the right person to set up this rating agency?
Joseph pondered. First of all, the agency couldn't have any direct ties to the French government, as that would undermine its perceived objectivity and independence.
Jean-Saulnier's consulting company seemed like a good choice. To promote production standardization, its workforce had already grown to over a thousand employees, so it could easily spin off a group to establish a rating agency.
Next, the French Chamber of Commerce could take the lead in forming a rating agency in collaboration with major banks.
Additionally, another agency could be established in one of France's allied countries. After all, when it came to sovereign credit ratings for other nations, if all the rating agencies were French, some countries might suspect bias.
Regardless of who initiated the establishment of these agencies, or where they were located, the control behind these rating agencies must remain firmly in Joseph's hands.
As for Jean-Saulnier's company, it was originally created to promote production standardization, with funding coming from Joseph himself. Therefore, Joseph would naturally hold a controlling stake in any rating agency it spawned.
The Chamber of Commerce, which couldn't ignore the royal family's opinion, was also funded by the French National Bank, so gaining control there wouldn't be difficult.
As for the foreign rating agency, it would need careful consideration. It would be best to find a local institution to act as a proxy, with France holding a controlling stake through financial investment.
Spain, being a Bourbon relative, might be a suitable location.
With a general plan for the rating agencies in mind, Joseph returned to discussing industrial development with Mirabeau. As he glanced at the line graph he had drawn earlier, something seemed off.
He picked up the chart for a closer look. Previously, the dense data made it hard to notice, but now he saw it clearly—while the first nine months of last year showed steady growth, starting in October, growth in most industries began to slow, with the exception of paper and brewing.
Pointing to the lines on the chart, he turned to the Minister of Industry, "Count Mirabeau, it seems there's been an issue with industrial growth since October."
"Indeed, Your Highness," Mirabeau nodded. "This is actually one of the main points I wanted to discuss with you today.
"Industrial growth has indeed shown signs of slowing down, and there are two main reasons for this.
"First, there's been a lack of investment. After investing in the Luxembourg iron mines, the Industrial Development Fund doesn't have much money left. Most of the investors interested in industry made their investments in the first half of the year. Some additional funds went into the Southern Netherlands coal mines, but new investors have been scarce since then."
The Minister of Industry paused before continuing, "Secondly, the return on industrial investment has been relatively low, which has caused potential new investors to hesitate, and factories are also reluctant to increase production significantly."
(End of Chapter)
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