Holy Roman Empire - Chapter 142

Chapter 142: Chapter 29, Despicable Tricks

Translator: 549690339

As the railway plan was initiated, Franz did not forget the other two core industries, though the government’s direct involvement in these industries was much less.

In a way, the manufacturing industry can be seen as a whole. The food processing industry could be separately peeled off, with no other factor but the simple ability to make money.

At present, the main source of foreign exchange for the Austrian Empire is agricultural exports, which include refined agricultural products and exports of raw ecological agricultural products.

Undoubtedly, the profits from exporting processed grain are much higher, which can drive large numbers of employment and bring substantial tax revenue to the country.

From the perspective of economic development, this is a point of GDP growth. Franz even hoped that the profits from agricultural exports would offset the trade deficit.

In international trade, the Austrian Empire was in a deficit most of the time, which was also the main cause of the continued depreciation of the Austrian shield.

In those days, currency wasn’t like the credit systems of later generations; it was real gold and silver, and gold and silver were used for international trade settlements.

International currency? The British Pound could barely qualify, but it did not have the status it achieved in the late 19th century, and most countries and regions did not recognize it.

Against this backdrop, a continued trade deficit would lead to an outflow of wealth, affecting the development of the domestic economy.

After Franz took charge, stabilizing the value of the Austrian shield became key to the normal development of the domestic economy.

Addressing the trade deficit as quickly as possible became an urgent matter for the government.

In the short term, the only way for the Austrian Government to balance trade was through the export of refined agricultural products to earn added value.

In August 1849, the Austrian Government issued a decree: to reduce by two points the tax rate for agricultural product processing enterprises, and also announced that after 1850, the export tariffs on raw ecological agricultural products would be increased by one point.

In order to encourage more investment in the industry, the Austrian Government also stipulated that newly established agricultural processing enterprises would enjoy a tax exemption in the first year, and a half-tax benefit for the following three years.

Influenced by this policy, Austria saw an increase of 221 agricultural processing enterprises in the last few months of 1849, including Franz’s own involvement.

Austria was already a major exporter of agricultural products and naturally had an advantage in developing the agricultural processing industry; a simple policy encouragement was all that was needed.

The manufacturing industry, however, was more troublesome; its scope was too broad, and while Austria had advantages in some areas, it was already starting to fall behind in most industries.

But this backwardness was only relative to the United Kingdom, which had already completed industrialization; in the Southeast Europe region, Austria’s industry still had an advantage.

In Franz’s view, promoting the development of manufacturing was essentially accelerating industrialization; mechanized production had far too much advantage over manual labor.

This was not something that could be done in a short time, but the government still supported heavy industry, such as the steel and machinery manufacturing industries.

This support was not just a matter of lowering tax rates; local governments also helped solve basic infrastructure problems, such as industrial water supply and transportation issues.

To develop manufacturing, the most important thing was to be able to endure loneliness. Not to mention one year, even three to five years might not see evident results, but after ten to twenty years of persistence, success was certain.

Innovation?

It is too early to discuss this issue now. Before completing industrialization, Austria’s manufacturing industry followed the path of copying the British, and of course, an occasional unexpected gain was also pleasing.

Overall, from the second half of 1848 to the end of 1849, the economic reforms carried out by the Austrian Government were all aimed at clearing the obstacles to domestic economic development.

As a unique country with a mix of planned and market economies, Austria achieved notable economic success in 1849.

The most tangible feeling for the citizens of Vienna was the decrease in grain prices, which had fallen by fifteen percent compared to 1847.

This figure might seem insignificant, but in fact, it was very important industrially. The decrease in grain prices meant that the cost of feeding the workers was reduced.

The reduction in the cost of living also improved the lives of the lower-class citizens. Many people had a trivial amount of savings, and with this money, some chose to save, while others chose to spend.

Individual insignificance might seem neglibigle, but when the numbers add up, they become significant, and the prosperity of the market increased.

These seemingly insignificant consumptions ultimately fed back into industrial production. With a market, production naturally follows, driving an increase in industrial capacity.

If such an impact was negligible, then the removal of internal tariffs and the opening up of the Hungarian Region’s market had a much greater effect.

No matter how backward the economy was, there were still more than ten million people. After the emancipation of the serfs and the redemption of lands, these people became property owners.

Having assets naturally leads to purchasing power. Although this market had not yet fully grown, the increase in total consumption was an indisputable fact.

Without tariffs, Austria’s industrial and commercial products greatly increased their competitiveness in the Hungarian Region. Coupled with the market expansion there, it naturally stimulated the development of domestic industry and commerce, resulting in a minor boom.

According to statistics from the Ministry of Industry, Austria’s industrial capacity increased by 15% in 1849 compared with 1847, a result that was both unexpected and reasonable for Austria.

Industrial capacity could not skyrocket overnight, and expanding production also took time; in this era, unlike later times, one could not immediately get equipment after placing an order.

The following years would be the explosive period for Austrian industrial capacity.

Beyond the expansion of the domestic market, the establishment of the Holy Roman Economic Alliance provided the domestic industry and commerce with a much broader market, naturally stimulating industrial production.

While Franz was envisaging a bright future, bad news came.

“Your Majesty, we’ve received news from St. Petersburg; the Russians are out of patience.

A week ago, after the Prussian Government announced national mobilization, Tsar Nicholas I made a decisive counter-decision, and the Russian Empire’s troops are now gathering on the Prusso-Russian border.

Yesterday morning, the Russian Ministry of Foreign Affairs issued a 72-hour ultimatum to the Prussian ambassador in Russia.

Without any surprises, the Prussian Government will soon yield to the Russians; they dare not go to war with Russia now,” Metternich said with a frown.

The Prusso-Russian standoff over the Danish War was in Austria’s interest; while it drained the Prussian Government’s strength, it also worsened Prusso-Russian relations, highlighting the importance of the Russian-Austrian Alliance to the Russians.

But since the Russians have run out of patience, the Prussian Government can no longer hold on.

At first, the Prussian Government was confident in annexing the duchies of Schleswig-Holstein, but as they witnessed the Russians’ firm attitude, their confidence gradually waned.

By this point, the factor that prevented them from giving up was no longer the annexation of the duchies of Schleswig-Holstein, but rather public sentiment in the Germany Region that wouldn’t allow them to back down.

Russians are formidable, and their neighbors feel this most keenly, but the German Confederation states separated by Prussia-Austria can hardly sense it.

To curry favor with domestic public opinion, the Saxon-Gotha Duchy Government brazenly declared, “For the territorial integrity of the German Federation, we are ready to fight a decisive battle against the Russians!”

The Kingdom of Hanover also made a strong statement, “As long as the Russians dare to invade Schleswig-Holstein, we will fight them to the death!”

Even Franz had to admit, “If it’s necessary to deploy troops to defend Schleswig-Holstein, Austria won’t be left behind.”

While these kingdoms and duchies only remained tough in their rhetoric, places like the Free Cities that are ruled by public opinion had already taken practical action.

The Hamburg German National Expeditionary Force, the Lübeck German National Self-Defense Force, the Bremen Hanseatic German National Volunteer Army…

There was no need to take them too seriously; these impressively named forces were actually composed of just a few hundred nationalists—the political significance outweighed their actual significance.

With everyone acting this way, naturally, the Prussian Government was embarrassed to back down.

Frederick William IV felt he needed to save face. If he backed down without a convincing reason, could he even continue mixing in the Germany Region?

But standing firm was not an option either. If Prussia truly started fighting the Russians, wouldn’t these same people, who shouted slogans that shook the heavens, switch sides in an instant?

In the eyes of politicians, what does integrity amount to? There are thousands of excuses; would they worry about failing to find one?

If worst came to worst, they could just organize a group of volunteers to go as reinforcements, cramming any unwelcome enemies into the fray as cannon fodder; it wasn’t like this couldn’t be done.

Just look at the approach of the Austrian Government—you wanted to participate in the frontlines, just sign up, and right after the war erupted, they’d send you there.

In the end, there were no more protest marches, and the Austrian Government neither suppressed them nor expelled the protesters, but simply sent a few Scribe Officers to record the names of those participating in the demonstrations.

Those listed were all activists with a passion for the German Federation, ready to go to the frontline. War had broken out, and the Federation needed you to defend it. Shouting slogans wouldn’t cut it; patriotism had to be proven through actions.

The loudmouths hesitated. They were fine with shouting slogans but leaving the actual fighting on the front lines to others.

The student troops, which should have been the main force, were still hitting the books in school. They were concerned about the events unfolding outside, but couldn’t leave, could they?

With the government’s seemingly active stance, there was nothing more for them to do, and no need to break school rules, right?

The general populace all had jobs. Supporting the recapture of the two duchies of Schleswig-Holstein was one thing; taking to the streets was quite another. Could protests reclaim the territory?

Everyone was rational, and it was sufficient to cheer on the Kingdom of Prussia. It wasn’t necessary to create chaos for the country, especially since demonstrating could also impede economic growth.

“If the Prussian Government is going to compromise, there’s nothing we can do. After dragging this out for so long, the Kingdom of Prussia must brace for a tough year ahead.

Frederick William probably regrets it by now; after spending so much, in the end to come away empty-handed,” Franz said with a wry smile.

He truly wasn’t rejoicing in another’s misfortune, had the Prussians not provoked the Russians into a national mobilization, Nicholas I wouldn’t have been set off so easily, and then dragging the Prussia-Denmark war into next year wouldn’t have been an issue.

By then, a portion of the funds that Franz had invested out, combined with the savings the Royal Bank attracted from the public, would fill the gap left by his misappropriation of donations.

It’s obvious that the Prussians can no longer hold on, which is why they are deliberately provoking the Russians to borrow Russia’s military threat and persuade the nationalists within to compromise.

Otherwise, why would Frederick William IV, full and bloated, order a national mobilization?

When it comes to fighting the Kingdom of Denmark, Prussia’s current military strength is enough. If they were to fight the Russians, not even a national mobilization would suffice, right?

It’s possible to persuade the nationalists within Prussia, as everyone would feel uneasy about fighting the Russians, and this time the Prussian Government has incorporated them into the army with the national mobilization.

Shouting slogans, nobody backs down. But once they’re in the barracks, many begin to rethink. They can’t just risk their lives for the two duchies of Schleswig-Holstein, can they?

If Prussia were to go to war with Russia, even if the entire German Confederation supported them, it would still be Prussia who would suffer the most. If they lose, not only could they not recuperate the two duchies, they might even have to cede more territory.

With such a low chance of military victory, everyone’s enthusiasm naturally wanes. By convincing the domestic front, the Prussian Government would have overcome its difficulty.

As for the public opinion in the Germany Region, Frederick William IV has clearly given up. How could they possibly reverse such an obvious problem easily when the German Confederation teamed up to trip them?

Being criticized is just fine, as it’s not as if they’ll lose a piece of flesh.

They may have the ambition to unify the Germany Region, but they lack the corresponding strength. Even if they won public support, what good would it be if they can’t win on the battlefield?

The Prussian Government made the right choice by stopping its losses in a timely manner. Compared to real benefits, reputation can be sacrificed as well.

Without prestige in the Germany Region and with worsened Prusso-Russian relations, the prospects for the Kingdom of Prussia to unify Germany were virtually gone.

In terms of strategy, the Austrian Empire had won. However, Franz was not pleased; money, money, money, without which, nothing could be done.

Biting his lip, Franz decided to employ a delaying tactic. Once the Prussian Government conceded and gave up the two duchies of Schleswig-Holstein, he would have the Royal Bank demand the return of donations from the Prussian Government.

You must know that by now the Royal Bank has already paid over four million shields in donations to the Prussian Government for the war, and it was clear they couldn’t possibly refund it, having spent the money on the war.

By using the return of donations as an excuse to delay, he created time for the repayment. Although this move was somewhat despicable and even thoroughly offended the Prussian Government, Franz had no other choice.

Without doing this, how would he refund the public’s donations?

If he had to stick to previous promises and pay out based on the remaining funds, Franz’s financial shortfall would quickly be exposed.

By insisting that the Prussian Government deceived them into giving donations, representing all citizens who had donated to demand their money back, he could divert everyone’s attention and secure enough time to raise funds.

“Contact the governments of each German nation, the moment the Prussian Government gives up the two duchies of Schleswig-Holstein, let us all strike together and incite the public to reclaim the money swindled by the Prussian scoundrels,” Franz thoughtfully said.

“Yes, Your Majesty,” Metternich responded.