George luo's personal site

In the complex strategic environment of a text-based grand strategy game —a simulation where players enact the roles of state governments—I was tasked with engineering a financial rescue plan for a manufactured economic crisis in 1902 France. The crisis was precipitated by a diplomatic rupture: the Russian faction signed the ‘US-Russia Trade Agreement,’ diverting critical Qing Dynasty indemnities and trade exclusivity to the United States. Viewing this as a betrayal of allied interests, the French faction retaliated with a punitive, massive sell-off of Russian bonds. However, this maneuver backfired, triggering a severe domestic liquidity crunch and leaving French middle-class investors with toxic assets. Invited to mitigate this self-inflicted fallout, I designed a comprehensive stabilization policy that neutralized the bad debt through a sovereign debt swap program and restored market confidence by negotiating a strategic central bank mutual-aid pact with the United Kingdom. This project demonstrates my ability to apply historical financial mechanisms—such as the Baring Crisis precedents—to resolve dynamic, emergent challenges within a complex geopolitical simulation.

Preliminary Response Plan for the French Economic Crisis of 1902

Background Investigation

According to the book Emprunts russes et investissements français en Russie, 1887-1914, in 1900, the nominal capital investment by the French in Russian government bonds and public funds (Emprunts d’État et Fonds publics) amounted to 11.343 billion francs, but the actual investment was only 6.16 billion francs (because the issue price and face value differed). Private corporate investment (Investissements privés) was approximately 921.6 million francs. The sum of both is about 7 billion francs, but currently, almost all of these assets have become bad debts.

But how does this operate?

Commercial banks, led by Banque de Paris et des Pays-Bas (Paribas), are primarily responsible for partnering with French enterprises to carry out industrial investment within Russia, or forming underwriting syndicates with several banks to negotiate directly with the Russian government to create Russian state bonds. Then, using deposit banks led by Crédit Lyonnais—which has branches in every French province—they distribute these Russian state bonds and government-guaranteed bonds (such as railway bonds, land bank bonds) to millions of French middle-class citizens.

Private banks, led by Hottinguer & Cie, function similarly to the commercial banks mentioned above, mainly participating in Russian bond negotiations and direct industrial investment. The main difference is that these private banks are firmly controlled by hereditary grand bourgeois families, whereas commercial or deposit banks are held by multiple shareholders.

Solutions

According to Le marché financier français au XIXe siècle Tome 1, around 1902, the French government’s nominal long-term public debt (Rentes) was 26.029 billion francs, and floating debt (Dette flottante) was around 1 billion francs (essentially the treasury, but since the funds are deposited by various entities including local governments, interest must be paid, hence it is termed debt). Between 1895 and 1899, the state paid an average annual interest (Intérêts versés) of about 1.237 billion francs. In 1900, French government revenue was 3.8 billion francs. The book describes the fiscal situation of this period as “les années excédentaires sont assez fréquentes et les déficits ont une ampleur bien moins importante que dans les périodes précédentes” (Surplus years are quite frequent, and deficits are of a much smaller magnitude than in previous periods).

Furthermore, during the Franco-Prussian War, to pay the war indemnity of up to 5 billion francs to Prussia, the French government, relying on its excellent financial reputation, issued “Liberation Bonds” (Emprunts de libération)—perpetual bonds with a 5% interest rate and no repayment deadline.

Therefore, I judge that the financial difficulties France currently faces do not require a full closure of stock exchanges and a complete banking holiday similar to the US Great Depression, but rather targeted economic support and confidence restoration. We can utilize France’s historical experience; if the French government has a precedent of assuming large debts and successfully repaying them, it can happen a second time.

First, the French Cabinet needs to immediately convene a meeting of major bankers, inviting the Bank of France (France’s private central bank) and major banks from the three categories I mentioned earlier (Deposit, Commercial, and Private, i.e., Paribas, Crédit Lyonnais, Hottinguer, etc.) to discuss preliminary mutual aid and market rescue plans. To ensure timeliness, the Cabinet will directly use short-term treasury bills to help banks facing liquidity difficulties due to public runs (the most affected would likely be deposit banks like Crédit Lyonnais), so that everyone can withstand the runs of the first few days. The Cabinet will also require the Bank of France and banks with relatively ample funds (such as Rothschild, Société Générale, Comptoir National d’Escompte de Paris) to jointly provide loan support to cash-strapped banks, stating that as long as the French financial industry supports one another, we can survive this crisis caused by the detestable Russians; otherwise, if any single bank collapses, the resulting financial tsunami could engulf everyone (and we have the precedent of cooperation during the 1889 CNEP copper crisis).

However, this only guarantees the short-term survival of banks; the French government still needs to address the Russian bad debts currently held by millions of middle-class citizens. Therefore, the French Cabinet needs to immediately begin drafting a Debt Swap Bill. According to Emprunts russes et investissements français en Russie, 1887-1914, Russian bond interest rates in the 1890s were mainly around 3% to 3.5%. According to For Peace and Money: French and British Finance in the Service of Tsars and Commissars, in 1901, due to the 1899 financial crisis faced by Russia, the Russian government obtained another loan from France at a 4% rate, with a repayment term of 81 years. The new bill will swap all 6.16 billion francs of bad debt (the actual amount will be lower since some have already been sold off) for French 3% perpetual public bonds. Although this will increase the French government’s annual fiscal expenditure by 184.8 million francs and increase the scale of long-term public debt by approximately 23.7%, it will allow the French public to completely abandon Russian finance in one fell swoop, safeguarding the interests of the French middle class and the stability of the financial system. Furthermore, the French government can take state ownership of these un-sold Russian bonds for future actions against Russia.

Finally, the Cabinet needs to convene an emergency meeting in Parliament overnight and invoke emergency procedures. The French Parliament needs to pass the Debt Swap Bill as quickly as possible, pressuring MPs with rhetoric such as “if the bill is not passed, the bankrupt middle class will flatten Paris.” Once the bill passes, middle-class anger should be quelled (because French national debt is, in a sense, a higher-quality asset than Russian debt), and consequently, bank runs will vanish.

Medium-Term Response Plan for the French Economic Crisis of 1902

After the Debt Swap Bill is passed, although we can end the mass run on gold by the middle class, this might affect the credit of the Franc (because the currency now underpins more debt, increasing the risk of gold depletion), potentially leading international grand bourgeoisie to sell off Francs, causing gold outflows.

The traditional method is for the Central Bank to raise the discount rate to increase the profit of deposits in France, thereby encouraging the grand bourgeoisie not to withdraw gold, but this hurts industrial capital by raising loan rates. Or, due to France’s unique bimetallism, it could forcibly payout in silver coins to prevent gold withdrawals, but this would still damage the government’s financial reputation.

This is why I believe a better solution is to ally with the United Kingdom, for which historical precedents exist. According to American economist Charles P. Kindleberger’s A Financial History of Western Europe, during the Baring Crisis of 1890, the Bank of France lent the Bank of England gold worth 3 million pounds (approx. 75 million francs). Furthermore, according to Gold Reserves of Principal Banks of Issue, 1900-1919, in 1900, the Bank of England’s gold reserves were about 29.7 million pounds (at $4.8665=£1), while the Bank of France’s reserves were about 2.33 billion francs (at 1 Franc = $0.193, approx. 92.4 million pounds). Therefore, the Bank of France’s gold reserves are actually three times those of the Bank of England! This is why we don’t actually need the Bank of England to lend France a large amount of money; rather, we need them to make a statement announcing that the British financial sector stands with France to jointly resist the Russian securities disaster, thereby further boosting market confidence.

The specific operation can replicate the Baring Crisis approach initially—secretly contacting the Bank of England via the Rothschild family for negotiations. However, this time, instead of a loan, we can innovate financially: the two central banks can open a credit line account for each other worth 3 million pounds. Funds are interest-free when not in use. If, for example, the Bank of England needs to handle a financial crisis, it can withdraw from the special account at the Bank of France and pay interest at the official discount rate, and vice versa. Through this method, we establish a permanent Anglo-French central bank mutual aid system, so we don’t need to negotiate new loan agreements every time an economic crisis arises.

Once negotiations are complete, the agreement can be made public. Since this is a limited mutual aid with historical precedent, equal in amount, and aimed at the Russian securities crisis, it shouldn’t trigger nationalism. Instead, it will boost market confidence, making the grand bourgeoisie realize that the British and French central banks are now cross-guaranteeing each other, which should significantly reduce speculation against the Franc.

Of course, to further ensure Anglo-French nationalist antagonism isn’t incited, the French Cabinet can secretly contact Havas News Agency and major newspapers. Funds can be provided to require them to start reporting bad news about Russia—for example, the Russo-American treaty betraying Britain and France, barbaric acts like the execution of the Tsar’s entire family, and economic negatives like the collapse of the Russian financial market, agricultural stagnation, and industrial halts due to foreign capital withdrawal. The goal is to construct an image where the French government, after being betrayed by Tsarist Russia, joins Britain to administer just sanctions (and since the debt swap is complete and the government has taken responsibility, the middle class has indeed suffered no loss).

法国1902年经济危机初步应对方案

背景调查

根据Emprunts russes et investissements français en Russie, 1887-1914一书，在1900年，法国人对俄国国债和公共基金（Emprunts d’État et Fonds publics）的名义资金投入有113.43亿法郎，但实际投入其实只有61.6亿法郎（因为发行价和面值是不一样的）。而私人企业投资 (Investissements privés)则是约9.216亿法郎。两者之和大约为70亿法郎，但现在这些资产几乎都成为了坏账。

但这是如何运作的呢？

以法国巴黎银行（Banque de Paris et des Pays-Bas）为首的商业银行主要负责与法国企业合作在俄国本土开展工业投资，或者通过数个银行团结在一起，组建承销辛迪加与俄国政府进行直接谈判来创建俄国国债债券，然后通过以里昂信贷银行 (Crédit Lyonnais)为首的，在法国各省都有分行的存款银行来将这些俄国国债与政府担保债券（如铁路债券、土地银行债券）分销给数百万法国中产阶级。

以霍廷格银行（Hottinguer & Cie）为首的私人银行的主要功能与前者的商业银行是类似的，也是主要负责参与俄国国债谈判与直接工业投资，主要区别就是这些私人银行是被世袭大资产阶级家族牢固控制，而商业银行或者存款银行则是多人持股的。

解决方案

根据Le marche financier francais au XIXe siecle Tome 1一书，1902年左右法国政府的名义长期公债（Rentes）为260.29亿法郎，浮动债务（Dette flottante）则是10亿法郎左右（但其实就是国库，只不过这些资金是包括地方政府在内的各种人存进来的，所以需要交付利息，才被称之为债务）。在1895年至1899年期间，国家平均每年支付的利息（Intérêts versés）约为 12.37亿法郎 。而在1900年，法国政府的财政收入则是38亿法郎，书中对这段时期的财政状况描述为“les années excédentaires sont assez fréquentes et les déficits ont une ampleur bien moins importante que dans les périodes précédentes.”，谷歌翻译“盈余年份相当频繁，赤字年份远不如以往时期那么严重。“。

此外，在普法战争期间，为了支付高达50亿法郎的对普鲁士的战争赔款，法国政府凭藉其优良的金融信誉发行了解放公债（Emprunts de libération），利率5%的没有偿还期限的永久公债。

因此，我判断当前法国面临的金融困难其实并不需要类似于美国大萧条式的证券交易所全面休市还有银行全部停业休整，而是针对性的经济支持与信心恢复。我们可以利用法国的历史经验，如果法国政府曾经有着政府承担大量债务并且成功偿还的先例，那么就可以有第二次。

首先，法国内阁需要立刻召开大银行家会议，邀请法兰西银行（法国的私有央行）和我之前提到的三种银行（存款，商业与私人）当中的主要银行（也就是法国巴黎银行，里昂信贷银行，霍廷格银行等），来开始商讨初步的互助与救市方案。为了确保时效性，法国内阁会直接动用短期国库券来帮助因为民众挤兑导致资金困难的银行（受影响最大的应该是例如里昂信贷银行的存款银行），这样前几天的挤兑大家应该就都可以硬扛下来。并且内阁也会要求法兰西银行与资金相对更加充裕的相关银行（例如罗斯柴尔德，法国法兴银行，巴黎国民贴现银行）联合对资金紧张的银行提供贷款支持，并表示只要法国金融业相互支持，我们就可以扛过这次由可恶的俄国人导致的危机，否则如果有任何一个银行倒闭，最后席卷的金融海啸可能会吞噬每一个人（而且我们也有1889年巴黎国民贴现银行铜矿危机的合作先例）。

但是这只能保证银行的短期存续，法国政府还需要面对数百万中产阶级正在承担的俄国坏账。因此，法国内阁还需要立刻开始制定一个债务置换法案，根据Emprunts russes et investissements français en Russie, 1887-1914一书，1890年代的俄国国债利率主要在3%到3.5%左右，而根据For Peace and Money: French and British Finance in the Service of Tsars and Commissars一书，在1901年，由于俄国面临的1899年金融危机，所以俄国政府以4%利率又一次的从法国获取了贷款，并且这些俄国国债的偿还期限通常是81年。那么，新法案将把这61.6亿法郎的坏账（而且实际数额会更低，因为已经抛售掉一些了）全部交换为法国的3%利率永久公债，虽然这会导致法国政府每年的财政支出增加1.848亿法郎，并且让法国长期公债规模增加大约23.7%，但是，这可以一举让法国民间彻底放弃俄国金融的同时，保障法国中产阶级的利益与法国金融系统的稳定，而且法国政府可以将这些尚未被抛售的俄国国债全部收为国有，以便未来的对俄行动。

最后，内阁需要连夜在议会召开紧急会议并动用紧急程序，法国议会需要以最快的速度通过债务置换法案，可以以如果法案不被通过，破产的中产阶级将会踏平巴黎之类的措辞来压力议员。只要议案通过，中产阶级的愤怒应该就会被平息（因为法国国债在某种意义上是比俄国国债更加优质的资产），进而银行挤兑也会消失。

法国1902年经济危机中期应对方案

在债务置换法案通过之后，虽然我们可以结束广大中产阶级对黄金的挤兑了，但是这可能会影响法郎的信用（因为法郎这个货币无论如何都承担了更多的债务，进而提高了黄金被兑换完的风险），所以也许会导致国际大资产阶级开始抛售法郎，导致黄金外流。

传统的方法是央行提高贴现率从而提高存款在法国的利润，进而鼓励大资产阶级不从法国取出黄金，但是这会伤害工业资本，因为会提高贷款利率。或者法国因为自己特色的金银复本位也可以通过强制给予银币来让大资产阶级取不出来黄金，但是这依然会伤害法国政府的金融信誉。

这就是为什么，我觉得更好的解决方案应该就是联合英国，并且也存在历史先例。根据美国经济学家查尔斯·P·金德尔伯格所著的《西欧金融史》，在1890年巴林危机当中，法兰西银行借给了英格兰银行价值300万英镑（约等于7500万法郎）的黄金。并且根据Gold Reserves of Principal Banks of Issue, 1900-1919一文，1900年英格兰银行的黄金储备大约为2970万英镑（按汇率 $4.8665 = £1 折算），法兰西银行的黄金储备大约为23.3亿法郎（按汇率 1 Franc = $0.193 折算，也约等于9240万英镑），所以说，其实法兰西银行的黄金储备是英格兰银行的三倍！这就是为什么，我们其实并不需要英格兰银行真的给法国大量借款，而是需要他们进行表态，宣布英国金融业将和法国站在一起，共同抵御俄国证券灾难，从而进一步增强市场信心。

具体的操作方式可以先复刻巴林危机，也就是通过罗斯柴尔德家族秘密联系英格兰银行展开谈判，但这一次不是给予贷款，我们可以搞点金融创新，两国央行可以各自给对方开一个额度价值为300万英镑的可取用账户，资金在未动用的时候是无利息的，而比如说如果英国央行需要应对金融危机，就可以从法国央行开的特殊账户里进行取款，并正常按照官方贴现率支付利息，反之亦然。通过这种方法，我们就建立了永久性的英法央行互助，在未来面临经济危机的时候，就不需要一次次谈判新的贷款协议了。

在谈判完成后，协议就可以公开了，因为这个是有历史先例的有限互助，而且在金额上是双方平等的，并且是为了应对俄国证券危机，所以应该不会引爆民族主义，而且会增强市场信心，让大资产阶级意识到现在英法两国央行是相互担保的，对法郎的投机应该就会大大减少了。

当然，为了进一步确保英法民族对立不会被煽动，法国内阁可以与哈瓦斯通讯社还有各大报社进行秘密联络，可以提供资金要求他们开始报道关于俄国的各种坏消息，比如说俄美条约背叛英法和沙皇全家被处以死刑的各种野蛮行径，还有沙俄金融市场崩溃，农产品滞销和外资撤离导致工业停滞之类的各种经济负面新闻，力求构造一个法国政府被沙俄背叛后联合英国正义制裁的形象（而且现在国债确实置换好了，政府负责了，中产阶级的确没有损失）。