Life of Being a Crown Prince in France

“Low return on investment?”

Joseph frowned slightly. Did that mean it was not profitable? It was the end of the 18th century, they were engaged in industry, and they had his various advanced ideas to boot, and yet they were not making money?!

Mirabeau replied helplessly, “Indeed, Your Highness.”

With his help, Joseph found the data on the return on investment for various industries in the report. A quick glance revealed that indeed, most industries had returns ranging between 6% and 10%.

Such figures would be very impressive in the 21st century, but right now, they were frustratingly low.

One must know that the current base interest rate for bank deposits was at 6.5%, and this was after a decrease following some alleviation of last year’s financial crisis; before that, it had even been above 7%.

And if one were to lend money out, a 10% interest rate could easily be obtained.

In such a scenario, who would be willing to invest in industry?

When Joseph saw that the profit margin of the steel industry was only 7.9%, his expression immediately turned grim, and he looked at Mirabeau, saying, “Our iron-smelting industry has already implemented hot blast technology extensively. The profits should absolutely exceed 20%. What exactly is the problem?”

He had been preoccupied with the Silesian conflict in the past few months and had indeed neglected domestic development somewhat. He had assumed that with various new technologies and standardized production models, the factories ought to be raking in profits. It turned out their earnings were barely outperforming bank deposits.

Mirabeau rubbed his hands somewhat awkwardly and said, “Your Highness, profits can indeed reach 20% if sold near the factories’ locations, but if transported to places like Paris or Bordeaux for sale, profits drop to less than 7%.”

Bailly added, “Yet, after the signing of the Rhine-Saone Treaty, iron products sold to the German regions did yield close to a 10% profit.”

Joseph instinctively responded, “Why is that…”

Before either could answer, he realized himself, “Is it because of the local tariffs in each province?”

“Yes, Your Highness,” Mirabeau nodded with a wry smile, “And the tolls along the way consume a large portion of the goods’ profits as well.”

Bailly continued, “In some provinces, they even see goods coming from other regions as an opportunity to make money.

“Just take what I witnessed last month in Toulouse. The tax collectors charged a sales tax on a cartload of cloth based on the value of the goods. Then at the next checkpoint, they stopped the cart again and, based on the size of the vehicle, levied another sales tax on them. Yes, just by adding a word, they made it two different taxes, ratified by the High Court of Toulouse.”

When it came to unreasonable taxes and such, Mirabeau, as a representative of the capitalist nobles, couldn’t help but ramble and complain.

Joseph quickly began to frown tightly.

As French industry began to flourish, local tax farmers and municipal authorities sought to wring every last drop out of the factories.

For example, in Lyon, the center of France’s textile industry, the local government had actually decreed that all textiles leaving the factory must meet certain lengths and widths in order to be transported and sold; otherwise, they would face fines, or even be publicly burned.

Tax farmers’ collection teams surrounded the factories daily, holding tax laws in their hands and desperately hunting for taxables, making factory life miserable.

In reality, Joseph knew there was more they hadn’t mentioned, namely the corruption of the officials. Many of France’s current officials had bought their positions, and to recoup their “costs,” they became extremely corrupt.

Although the Bureau of Fair Investigation had a certain deterrent effect on officials since its establishment, Bohr’s energy was limited, and it was difficult to uncover the subtle means officials used to trouble factories and covertly demand benefits.

Joseph couldn’t help but massage his temples, fatigued. He had previously focused all his energy on promoting technological and managerial advancements to boost factory competitiveness but had neglected the business environment.

Britain had become the world’s leading industrial nation not solely because of the vast raw material sources and markets from its colonies but also because it had the best factory operating environment in Europe, another core factor.

Britain had abolished internal local tariffs decades ago, and its tax system had seen several reforms, making it transparent and reasonable.

As for the integrity of government officials, while British officials were also corrupt — unavoidable in the 18th century — they were relatively one of the better cases compared to other countries.

All this greatly promoted Britain’s industrial development. In contrast, France was still trying to manage a country on the verge of the industrial age with feudal officials and tax systems.

If left unchecked, even with advanced technologies and ideas supporting French industry, it might still be crippled by its own tax farmers and officials…

Joseph let out a sigh, “It seems we must proceed with tax reforms as soon as possible.”

He silently added in his mind: and administrative reforms too.

Mirabeau and Bailly exchanged a glance before cautiously saying, “Your Highness, pardon my frankness, but even if some laws are passed to standardize taxes, the tax farmers will always find ways to circumvent them…”

“You’re absolutely right,” Joseph nodded gravely, “That’s why we’ll target the Tax Farmers Association!”

The Tax Farmers Association was the autonomous organization of all tax farmers in France.

France’s current tax system worked like this: at the beginning of each year, representatives from the Tax Farmers Association would negotiate with the Finance Minister to set a fixed tax amount for the year or multiple years and then sign an agreement.

Afterward, tax farmers from various regions would pay a lump sum of the fixed tax directly to the French Government based on the agreement, and then they would have the right to collect taxes in a certain area, keeping all the taxes they collected.

In other words, the French Government only issued tax laws but did not participate in actual tax collection.

The tax farmers maintained tax collection teams, who were adept at extortion and repeated taxation, causing widespread resentment among the populace. Despite collecting a significant amount of taxes, the government could only obtain a fixed amount, leaving the treasury strapped for cash. Enjoy exclusive content from My Virtual Library Empire

At these words, Mirabeau’s eyes flashed with excitement, but he immediately became cautious again, “Your Highness, our financial situation… may not withstand the impact this could bring.”

His words were the objective reality.

A significant portion of France’s current revenue came from the fixed tax paid by the tax farmers at the beginning of each year, sometimes covering two or three years at a time.

If the tax farmer system were changed, then at the beginning of the year, the French Treasury would face an empty coffers situation.

Although the government could then collect taxes later on, that would be months away, and the question was, what about the financial expenditures in the meantime?