Chapter 821: The New Backyard
Joseph smiled and said, "In fact, when we have great influence over northern Italy, military occupation is the least efficient means."
Back when Napoleon was still fighting in Alexandria, Joseph had already studied 21st-century Europe and America's tactics. Now, facing the eager yet hesitant looks of Talleyrand and Ségur, he explained patiently:
"We will start from two aspects—economics and propaganda.
"Let's begin with economics.
"For example, if we want to strengthen control over Milan, we can first offer them a large loan..."
The two chief finance officials twitched at the corners of their eyes.
Conquerors had always plundered occupied territories, but this was the first time they heard of loaning money back to them.
Ségur cautiously asked, "Your Highness, do you mean forcing them to accept loans with extremely high interest rates?"
If interest exceeded 35%, with goods as collateral, it might be considered a good deal.
Joseph shook his head. "No, no. Too high an interest rate would provoke resistance. About 3% interest is just right."
"Three percent? How is that acceptable?!" Ségur exclaimed. French savings banks offered deposit interests above 3%. Lending money at so low a rate would mean losing principal.
Joseph smiled, "Actually, I planned for interest-free loans, but that would arouse suspicion. So we set it at 3%."
"But…"
Joseph signaled him to calm down and explained, "We use low interest to attract northern Italian states to actively seek loans, which will be seen as a 'special favor' from France, making them more willing to side with us.
"All loans will be provided in banknotes and won't heavily burden our treasury.
"Loan recipients can only use the money to buy goods from France or the Caribbean. This will in effect make them dumping grounds for French products."
Joseph paused, then emphasized:
"Furthermore, these loans come with conditions.
"First, recipients must accept the circulation of French franc banknotes domestically—at least allowing free exchange at banks.
"Second, loans must be invested only in designated industries that must include a certain proportion of French ownership.
"Finally, loan usage must be supervised by France."
Talleyrand and Ségur, being sharp, soon caught on, their suspicion gradually turning into admiration.
These loans would almost immediately secure a vast market under French supervision.
At such low interest, northern Italian states would scramble to borrow. France could even add political conditions that few would refuse.
Apart from using French banknotes, the other conditions were common loan requirements of the time.
However, this approach only works within France's military influence zone—elsewhere the debtor might default.
Joseph continued:
"Apart from loans, we will help the northern Italian states develop industries."
This time, Talleyrand and Ségur seemed a bit numb, exchanging looks and waiting quietly.
"For instance, Milan has silk and steel forging industries. We can provide textile and smelting technology, even sell steam engines," Joseph added quickly, "albeit limited to coarse silk and primary metallurgy.
"These semi-processed goods will be sent to France for refinement—like fashion and iron goods—then sold back to them.
"To get our industrial technology support, they must first accept our patent laws. Also, they must accept our rating agencies' assessments of their industries and credit."
In reality, after France achieved financial control through loans over these small states, patent laws mattered little.
If problems arose, France could apply domestic law directly—criticize dissenters with financial pressure, and if that failed, French troops stood ready nearby.
These weaker states, guilty as they were, would face no opposition for France's punishments and might even join in the denunciation.
Talleyrand and Ségur understood but felt they hadn't grasped fully. They nodded continually.
Joseph couldn't explain in more detail anyway; that would take months of lessons.
This was the "vertical division of labor system" of future generations.
Using finance, patents, and credit ratings to lock vassal states into low-end industry chains.
But this was far better than leaving them as raw material suppliers—since low-end industries still generated some profit.
With that profit, these states could boost purchasing power, serving as better French markets.
Meanwhile, their industries would integrate with France; leaving the French upstream would cause rapid collapse.
Thus, these states would be firmly tied to France.
On the other hand, through deliberate arrangement, the industrial development of these Italian states would heavily focus on certain fields while abandoning others.
That was why Joseph's loan terms specified investments only in designated industries.
Such industrial "specialization" meant the entire country couldn't drastically improve its national strength.
Like a future "Great Universe" country that seemed strong in a few sectors but whose national economy was fragile and forever dependent on a distant power.
Moreover, French ownership from the start ensured France's influence.
Ultimately, this area would become France's "backyard."
Having finished recording, Joseph and Ségur continued:
"Economic means keep the Italian states' 'interests aligned' with ours, but for their wholehearted support, propaganda is key.
"If propaganda works well enough, even if you don't force them to serve France, their people will demand it."
Talleyrand felt overwhelmed, instinctively asking, "Your Highness, how can propaganda have such an effect?"
Joseph signaled Aimon for fresh tea, then answered, "The foundation is that the Italian states must abolish strict press censorship.
"Or at least ease controls for our news."
Talleyrand worried, "Your Highness, it may be easy for Genoa and Lucca, but Parma and Sardinia will likely resist strongly."
(END CHAPTER)
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