Rouble Nationalization – the Way to Russia’s Freedom. Nikolay Starikov

heir to the throne. But we do not have that information at our disposal…

      What would you do if you were an old king whose heirs are dying one by one? Would you become more cooperative during negotiations? The question is difficult and everyone decides for themselves. The Sun King agreed to negotiations. The Treaty of Utrecht was signed in 1713 which consigned the eleven years that France spent fighting to waste.[80] After that, the heirs to the French throne stopped dying. The five-year-old infant, the Sun King's great grandchild and the future Louis XV, became the heir. An infant Dauphin by a 74-year-old king, who can die of old age any moment. Should the King die, who will protect and help the child? France would have found itself in a very tough situation if it had not been for the handsome 28-year-old Duke of Berry, the second grandson of Louis XIV and the heir's uncle. It was him that the elderly king entrusted with looking after the country and the young king. And… yes, your guess is right, the Duke of Berry died very soon, too. He was injured while hunting and hit the saddlebow very hard.[81] It is usually said that he fell off his horse and died. Allegedly, he broke his neck or spine. But this is not true. The poor duke died on 4^th May 1714 after a four-day-long illness. Now it is more common to say that he died of internal injuries caused by the fall.[82] Could this have happened? Yes, it could have unless another participant of turbulent politics of the time had not died in a similar way having fallen off his horse…

      After the accident that happened to his grandson Louis XIV lost interest in life. Fearing further accidents, he went as far as to change the law. Previously, only children born by the queen could be the heirs to the throne. Louis XIV had several illegitimate children. The King legitimated them and put them at the top of the royal hierarchy straight after the princes of the blood. A couple of months later, Louis XIV especially stipulated the following: should the legitimate kin be extinct the new princes would be able to inherit the throne. He knew who was trying to destroy his family and realised that the series of deaths was not incidental and more deaths could follow.

      In 1715 the Sun King passed away. End of story, it would seem. However, it was just the beginning. Less than a year after the old King's death, the shareholders of the Bank of England proved to be right in their suspicions. Someone tried to steal their know-how, their invention, in a most impertinent way. To copy it, just as sly Chinese manufacturers copy the looks of famous car brands. It turned out to be impossible to keep the secret of the 'printing machine'. Its advantages and amazing simplicity were obvious. Instead of the complicated procedure of extracting gold and silver there came the simple process of printing money. France, which lost in the war due to 'credit deficiency', decided to create its own 'printing machine'. In 1716 a Scotsman called John Law received a patent for opening a private bank with the right to issue bank notes that could be exchanged for metal.[83]

      The French king, Louis XV was a still a child and obviously was not very interested in financial issues. His Regent, Philippe II, Duke of Orleans, on the other hand, seized on this brilliant idea. He ordered that bank notes were to be accepted as payments as well as coins. In 1718 Law's bank was renamed into Banque Royale.[84] Although, essentially, it was the same 'joint stock company' where shares were divided between cunning bankers and the Royals. From now on the military and diplomatic rivalry between England and France also takes a secret financial turn. Two groups of bankers who received two different governmental protections were fighting each other for the right to uncontrollably print unsecured money. And through that to rule the whole world.

      But we have been distracted. Let us go back to the French attempt to clone the 'English idea of paper money. The story of rapid development of England during the reign of William started repeating itself in France. It is not surprising – your personal economy will immediately flourish as well if your find a briefcase full of money in the street. The Central Bank of France was very successful. In one fell swoop, John Law solves all the financial problems of the royal house: he lends 100 million livres to the Government at a 3% annual interest rate. For reference: when the Sun King died there was as little as 700 thousand livres in the treasury.[85] At the end of 1716, on the other hand, when John Law turned his printing machine on, the budget deficit had reached 140 million livres[86] and France could now proceed with its global expansion as it had the money for it.

      The French copied the system established by the English not only in its essence but also in details. The authorities leased to John Law the exploitation of gold deposits in Louisiana as well as all trade overseas. It would all be dealt with by the India Company which was a full copy of the British East India Company. Shares of the new company were at first sold to anyone and later on, only to those who paid with bank notes which could be received in exchange for gold coins. 'It turned into a competition – who could get rid of their gold first'.[87] But the success did not last long, in fact it was surprisingly short. The credit and monetary basis of the French expansion was destroyed within literally a few months.

      This is the chronology of prosperity and immediate death of the Bank of England's clone in France. In January 1720 banker John Law rises on the surge of phenomenal success of his creation and is put in charge of controlling all financial affairs of France, since the Bank which he was the head of had just lent France 100 million livres. And at this point something terrible happened. 'Immediately and very rapidly disturbing news spread around Paris and the whole city found itself in the state of atrocious panic', recalls the French writer Guy Breton in his book 'Love Stories throughout the History of France'.[88] And already in early 1720 those who wanted to exchange their paper money back to gold started applying great pressure on the bank. At first, the exchange had to be slowed down and later on frozen altogether.[89] When did it happen? In February-March, 1720.

      Since it all happened such a long time ago, it is hard to track how the panic among shareholders was organised, but in my opinion those technologies were not very different from the ones used today. I would like to draw your attention to the fact that it happened three years after the Bank started operating, which means that at the beginning it was doing pretty well. And then, all of a sudden, things got worse – after the record-breaking loan of 100 million livres received by the government. Was this a coincidence? Judge for yourself – the blow was quick and merciless. The Bank that issued 3 billion worth of paper money under the warranty of 700 million in coins was unable to pay back. But the French Government did not give up without fighting. And it managed to find a very 'original' way out. As the population would not want to use paper bills and preferred coins… using coins should be prohibited. 'The decree of 11^th March 1720 banned using coins from 1st May onwards; if found on someone, coins were to be confiscated'.[90]

      You can imagine the reaction this decision caused in France. Of course, universal jubilation and enthusiasm of the public. After this decree, the popularity of paper money went down to the very bottom, as well as the popularity of the royal power. Everyone started hunting the forbidden coins and avoiding the allowed banknotes. And this quickly ended in a catastrophe. The next decree published on 22^th May 1720 announced a reduction of the nominal rate of banknotes by half.[91] Therefore, those who obeyed the previous decree and had started using paper money immediately lost half of their savings. Then, on 10^th October 1720 a third decree was published which announced that banknotes would no longer be used after 1st November 1720. Small banknotes were to be exchanged for state bonds with another half-reduction of the nominal rate.[92]

      As a result, obedient citizens were quickly robbed twice. Obviously, the royal government which did all these tricks (very similar to Russian reforms) became very unpopular. It was then that the hatred for the French monarchy was planted which would lead to a revolution in 1789 and would completely destroy the royal authority. In November 1720 the Central Bank went bankrupt and its founder had

80

The English achieved all their goals: they weakened France and stopped Austria from strengthening. And having agreed with the French candidate for the Spanish throne Philip V, they managed to get a formal prohibition for him to become the next French king. It meant that Spain and France could not merge into one superpower. By the way, this is when England obtained an important part of the Spanish territory – Gibraltar. And apart from that, the Isle of Menorca and the French territories in North America (the land around Hudson Bay and Newfoundland). But the most important English acquisition was the Asiento. This was the exclusive permission to sell slaves from Africa to Spanish territories. England became the only country entitled to do slave trade. And it did a good job and brought slavery overseas. Wherever the British came, it is slaves who started working. Another story, which we will leave beyond this book, is white slaves of the English. They were mostly Irish. English laws did not provide for any punishment for a murder of an Irishman committed by an Englishman. Because an Irishman living in Ireland occupied by the English was a second class person even being free. Because the Irish were Catholics, whereas England was Protestant, and even more than that – it had its own Anglican church.

The English did not forget Russia either: English money and diplomatic support helped Sweden, making it pursue wars with Russia until 1721. And Charles XII who strived to achieve peace, died very promptly after returning to Sweden in 1718. He was killed by a stray bullet in a trench during an operation in Norway. Do you recognise the style? His sister, Ulrika Eleonora, stopped peace negotiations and continued the war for three more years.

81

http://www.louisxiv.ru/finale.html.

82

http://wiki-linki.ru/Citates/49719/3.

83

Do pay attention that the idea came from a Scottish banker again.

84

http://www.icpress.ru/information/articles/?ID=4310.

85

World History // The English Revolution. Moscow: AST, 2000. P. 284-286.

86

http://www.erlib.com/Ги_Бретон/От_великого_Конде_до_Короля-солнце/16.

87

Ibid.

88

http://www.erlib.com/Ги_Бретон/От_великого_Конде_до_Короля-солнце/16.

89

http://www.icpress.ru/information/articles/?ID=4310.

90

http://www.icpress.ru/information/articles/?ID=4310.

91

Ibid.

92

Was it the governmental reforms of young Louis XV that were used as a template by the reformers of the 90s for their strategy? They are just so similar! People's saving accounts were frozen and then devaluated by means of hyperinflation. As a result, the cost of a flat became equal to the cost of a chocolate bar. In France it was decided to clear the rest of the state debt for bank notes through 2% and 4% life annuities.