His father Stefan was a priest in the small town of Čurug, and his mother was related to Miloš Cvetić, a well-known drama writer and actor.

There he also met Svetozar Marković, Vasa Pelagić and the future leadership of the Radical Party: Nikola Pašić, Pero Todorović and Petar Velimirović.

After the successful rehabilitation of this important state institution, Paču became the head of the Belgrade Cooperative Society with the aim to stabilize the national currency—the dinar.

With harsh monetary measures, financial discipline, and above all, well-conducted negotiations, he managed to balance the budget first and then restore the confidence of European countries.

Because of a policy of paying back any debt (even to enemies), Serbia was able to take out loans to cover the costs of increased military spending in World War I.

In addition to new measures in customs and taxation policy, at the very beginning of the ministry, Paču launched a new nickel-plated five dinar with the image of Black George or Karadjordje and King Peter and a new metal coins.

Serbia during the wars of 1876-78 settled its modest budget from only two types of tax - personal and property so that the rapid increase in government liabilities required an urgent reform of the entire financial system, and above all fiscal policy.

In addition, Serbia inherited the obligations of High Port to the Austro-Hungarian Empire and the Railway Company in the European part of Turkey - i.e. to build new ones and to complete and link the started routes within the boundaries over which it gained sovereignty.

[11] The year 1881 not only marked the change in the conduct of Serbia's financial policy but also the beginning of its full economic (and political) attachment to Austro-Hungarian, through Lazar Paču.

Namely, for the sake of dynastic interests and obtaining the royal title, the "Secret Convention" was signed on June 28, which established as Austro-Hungarian protectorate over Serbia.

However, by the circumstance, the first Serbian foreign loan was concluded in March 1881 with a consortium of French banks through the Société Générale from Paris for the construction of the Belgrade-Vranje railway line in the amount of 100 million dinars, with a repayment period of 50 years and an annual interest rate of 5%.

Immediately after that Serbia signed with the same creditor so-called a "lottery loan" in the amount of 33 million golden dinars, with a 3% interest rate and a repayment period until 1938.

The loan was intended for the payment of debts to Russia in the amount of 30 million dinars, which she claimed from Serbia to finance its wars against Turkey in the period 1876-78.

Since, due to indebtedness, virtually nothing could be given as a security for obtaining new loans, foreign creditors made the conversion of state debts so-called "Carlsbad Protocol", and thus saved Serbia from total bankruptcy.

Due to the almost absolute reference to the dominant Austro-Hungarian market, capitalism in Serbia at the beginning of the 20th century remained at the level of the "agrarian pendant".

The priority task of the new regime which was introduced by Lazar Pachu was to "heal the sick finances" by fostering national savings, devising credit policies, reforming state accounting, parliamentary oversight of budget items, and general directions for the development of the overall economic activity.

The presence of French and English capital was becoming increasingly felt in the financing of railroad construction, mining, trade, and the establishment of mixed banking institutions.

In 1904, taxpayers of Serbia paid 75% of the permanent state surplus, 25% for schools, 7% for railway, 5% for military buildings, 5% for overhaul, 5% for personnel and 4% for gendarmerie.

On 23 July, Ministry of Foreign Affairs Baron Gizl presented the Austro-Hungarian ultimatum to the Serbian authorities, including Pachu, with a 48-hour deadline.

[16][17] The instruction from Foreign Minister Count von Berchtold was to leave the country immediately and the Serbian government should not accept all the points of the ultimatum.

As the Serbian government did not accept all the points, Gizl declared that diplomatic relations were broken off and left on a train half an hour later.