Holy Roman Empire-Chapter 1001 - 15, Loss-making Deal

Chapter 1001: Chapter 15, Loss-making Deal

Europe had been struck by a disaster, and naturally, America could not escape its reach. With the booming development of international trade, the economic connections between nations had become increasingly tight.

After the outbreak of the economic crisis, it wasn’t just the downstream manufacturing and retail sectors that suffered heavy losses; middlemen wholesalers and upstream raw material suppliers were likewise unable to escape the impact.

Then, the sales of Argentine beef and soybeans slumped, Chilean copper mines and saltpeter experienced stagnant sales, and the cotton of the United States rotted in the fields—the United States, being the most advanced in industrialization, naturally suffered the heaviest losses.

There was no way around it. Once the economic crisis erupted, mass dumping began. In this respect, the interests of the Anglo-Austrian two countries were aligned, and this could be considered the common will of the European countries. The American people, fragmented as they were, had no strength to refuse.

Not only was the market hit hard, but the most tragic aspect was that British capital, in a critical moment to deal with the domestic crisis, withdrew its investments in the United States.

Strikes, unemployment, and the surge of populism spread like wildfire. Especially the “Free Silver” movement of 1892, which further exacerbated the crisis.

The price of silver had been falling for quite some time, and the “Free Silver” policy was undoubtedly leading the US Dollar down a path of devaluation and inflation.

It wasn’t that American people were unaware of the consequences of the “Free Silver” policy; they were essentially forced into it. Faced with competition from European industrial products, American domestic businesses had almost no power to fight back.

To protect the country’s industry, the United States government had no choice but to adopt stimulative policies. As for the side effects that followed, the common people had to pay the price, and the agricultural sector undoubtedly suffered the most.

However, America had already split once, and the powerful agricultural states had mostly followed along with the Alliance; the remaining states, dominated by capital, naturally cared little for these minor issues.

When inflation met an economic crisis, the situation became entirely different. The purchasing power of the ordinary people declined, directly leading to a further contraction of the market, and a vicious economic cycle began.

The withdrawal of British capital further intensified the crisis, creating an eerie situation. On one hand, there was severe inflation; on the other, there was a shortage of currency in circulation.

The United States of America, with its severe gold reserve shortage, was caught in an economic crisis and, at the same time, a currency crisis.

To cope with the crisis, Democratic President Cleveland, seeking to escape the Great Depression, took decisive measures: issuing government bonds to buy gold.

This opportunity to make a fortune was something bankers would not pass up. On one side, they provided gold for these high-interest bonds; on the other, they exchanged paper money for gold reserves.

With gold moving in and out, the gold remained the same; the reserves hardly increased, and the interest margin had already allowed the bankers to make a killing.

Looking at the intelligence in his hands, Franz seriously doubted whether Cleveland had been bought by the bankers, to bring out such a brainless monetary policy.

Doubts aside, this didn’t affect his involvement in getting a piece of the action. The only regret was that the current United States wasn’t very profitable—the plate was too small, too many people were sharing the cake, and as a newcomer, he got even less.

The profit margin of 680,000 US Dollars was the result of a month’s operation by the American branch. To the ordinary person, it was a huge sum, but to Franz, it was just a token amount.

Following this, Franz no longer concerned himself. Any brainless policy lacked sustainability, and such money-giving policies were no exception. If Cleveland continued playing this way, perhaps the United States government would be crushed by debt even before his term was over.

Regardless of how ridiculous the gold bond policy was, it did not affect Cleveland’s reputation as a “good president.” Merely on the grounds that he abolished the so-called “mother of trusts,” the McKinley Tariff Act, he must be considered a “good president.”

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According to the financial world, if everyone is tied to risk, then it doesn’t count as a risk. The same logic applies here; if all the world’s economies slide together, it can be considered as if there were no slide at all, at least in terms of relative national power.

Franz had achieved his goal, but he couldn’t be happy about it. After all, one must find a way to weather the economic crisis.

All countries had been dragged into the mess, leaving no opportunity for competitors to rise opportunely. Strategically, it was a success, but restoring the economy became even more difficult.

He glanced at the world map and said helplessly, “The foreign ministry should prepare to mediate the Japanese and Spanish war; the Spaniards are almost at their limit, and the Japanese aren’t much better off.

If the war continues, it might turn into a war of attrition between us and the British. With the intensity of the Philippine campaign, it could take another three to five years to determine a winner.

A gamble without a foreseeable outcome is not worth continuing to waste money on. Now is the best opportunity for a settlement, and I estimate the British aren’t keen to throw their money away either.”

A war between two paupers, if allowed to drag on, will ultimately leave the sponsors in trouble. Although the world had not yet reached the point where “the debtor is the lord,” when faced with a broke patron, everyone is powerless.

Spain was somewhat better off, with a few wealthy colonies worth some money; Japan was truly impoverished. If they managed to take the Philippine Islands, there might come a day to repay the debt; if not, British investment would be lost.

The oil yield from soy is twenty percent, from rapeseed thirty-six percent, from sesame forty-five percent, but can you extract oil from chaff?

Putting himself in the shoes of the British Government, Franz also had to consider whether continued investment in Japan was worthwhile.

Using capital to exhaust the enemy—if the opponent was Russia, it might have been feasible, but unfortunately, the adversary this time was the Shinra Empire. Without pouring in billions of British Pounds, not even a ripple could be made.

Even though the British had more substantial capital, the endurance of Shinra was much stronger! A war of attrition tested not only capital but endurance as well.

Foreign Minister Weisenberg frowned and said, “Your Majesty, the key to mediating the Japanese and Spanish war lies with the ownership of the Philippine Islands. With the war having progressed to this point, neither Japanese nor Spaniards are likely to concede easily.

If we opt for a compromise and let both countries co-manage the Philippine Islands, the war can end now, but in a few years, they will fight again.

We don’t have that much time to be entangled in this. From the Empire’s perspective, the best course of action is to make Japan back down.

To make the Japanese Government yield, merely our and Spain’s influence will be insufficient, even with the entire Continental Alliance supporting us, it wouldn’t guarantee success unless the British also support us.

However…”

Franz interrupted, “There is no ‘however.’ The protagonists of the Philippine war are Japan and Spain, don’t you think we are getting too involved?”

At this point, it’s about time for the Spaniards to put some effort into it themselves. No matter how incapable they may seem, as a European country, they couldn’t possibly lose to the Japanese in the competition for influence in Europe’s public opinion, could they?

Let them mobilize their own influence, create momentum for themselves in Europe, and by the way, portray the Japanese as somewhat more barbaric. That should suffice.

Now, we’re in the midst of an economic crisis, and the British Parliament isn’t just twiddling its thumbs. There are so many eyes watching, where could the London Government get so much funding to support the Japanese?

With the end of the Japanese-Spanish War, the gold-eating beast is gone, and the government’s finances can finally catch a breath. This is very beneficial for the upcoming economic construction.

War costs money. The Philippine campaign has reached this point, and both the Japanese and Spanish sides need “large amounts of money” and “massive supplies.” Mere verbal support has lost all meaning.

Once public opinion gets hyped up, and the British Government again funds Japan, the grumbling British public will definitely not let them get away with it.

In the matter of catching the government’s faults, the opposition party is a natural ally of the Spanish Government. Once an issue erupts, they will definitely make trouble in Parliament.

Even if the British Government could suggest consortia to lend money to the Japanese, who would lend to the Japanese Government, recognizing at a glance its inability to repay debts, without security guarantees for the loan?

The Japanese Government, without money, would find it hard not to compromise. If they don’t take advantage of the negotiating capital they have now, they’ll be left with nothing to bargain with later.

The only regret is that the Japanese-Spanish War has ended this way, preventing the Holy Roman Empire from maximizing its interests. Purely in terms of investment return, the Vienna Government has virtually made a loss-making deal this time.

However, Franz couldn’t care less about making losses now, with the aim to quickly emerge from the economic crisis. The monthly consumption of over 10 million Divine Shields could create tens of thousands of jobs if used for economic recovery.

After all, the Vienna Government is truly broke now. Not only does the domestic economy need recovery, but they also need to find money to support several subordinates.

The government must exist despite bankruptcy. The debt issue can be set aside for now, but the social order in different countries cannot collapse.

Times have changed, and as the “big brother” of the Continental Europe, the Holy Roman Empire has become the maintainer of order. The “wonderful” era of enjoying turmoil without concern has gone for good.

Prime Minister Carl: “Your Majesty, considering the current special circumstances, the Cabinet prepares to increase infrastructure investment and to kickstart the Asia-Africa-Europe Circular Railway ahead of schedule, to drive domestic economic recovery through infrastructure industry.

In light of the massive investments required for this project, the Cabinet plans to split it into several subprojects, and to finance the construction of the segments with higher returns on investment, to reduce cost input.

For the remaining segments with more difficult construction and no visible return on investment, the government will undertake the investment. The main funding will be through bank loans and the issuance of government bonds.

The current situation is very favorable to us. Recently, several European countries, including Russia, Spain, Belgium, Switzerland, and others, have borrowed a significant amount of money from us.

The Divine Shield settlement system is firmly established on the European Continent. We happen to be in an economic crisis, and the British are too busy to attend to us.

As long as we can step out of the economic crisis first, Divine Shield will take an absolute upper hand in the battle for currency hegemony.

Once Europe is stable, it will be easy to expand globally. It’s just a matter of buying, buying, buying. Regardless of what national governments think, capitalists are very welcoming of Divine Shield.”

Strategically important but loss-making railways are doomed to be funded only by the government. There’s no way around it, as the trick of cheating capitalists can only be pulled off once. More than thirty years ago, during the domestic railway boom, capitalists were cheated once; now everyone has wised up.

No matter how good a story you tell, if the return on investment isn’t visible, no one will pay attention.

The “Asia-Africa-Europe Circular Railway” sounds mighty, but in reality, it’s just so-so. It’s merely linking the existing railways and filling in the missing links.

To expect this railway to “make money” might be possible if the Holy Roman Empire’s population grows four or five times, giving a glimmer of hope.

And this is merely nominally “making money,” where operational income exceeds the operational costs. To recoup the investment cost and earn a substantial return, the population would have to grow seven or eight times.

Whether this can be achieved in the future is unknown; certainly not within Franz’s lifetime. Losing money isn’t the concern; it’s the value of the loss that matters.

In theory, as long as the Shinra Navy can control the Mediterranean, this strategically significant railway loses all practical value. After all, sea transportation is cheaper; by the time goods have gone around the railway, the merchant ships would have made several round trips.

Looking at the current international situation, the Shinra Navy’s supremacy in the Mediterranean has been completely established, even the British can’t shake it.

If the British ever muster the courage to send the Royal Navy’s main force into the Mediterranean, Franz would laugh in his dreams. The bathtub isn’t a joke, and nobody has decreed naval battles must be fought solely by navies.

As the world’s leading air power, Franz can boldly declare that coastal areas are no-go zones for military ships from all nations.

Whether taking off from the Asia-Africa-Europe Continent or from the Italian Peninsula, the Shinra Air Force can ensure they don’t get away with it.

Low hit rates are fine; as long as the quantity is high, there will always be gains. If all else fails, Japan’s “Divine Wind” squad isn’t bad either.

Apart from airplanes in the sky, there are also submarines underwater. Originally, Shinra’s progress in submarine technology was unspectacular. However, this situation improved following the end of the anti-France war.

Having inherited French submarine technology, the Shinra Navy now has its submarine fleets, though it’s a pity the technology hasn’t broken through to allow for open sea operations.

With so many advantages, the Vienna Government’s demand for the “Asia-Africa-Europe Circular Railway” naturally isn’t high. If it hadn’t been for the economic crisis, it’s likely the railway wouldn’t have even been approved.

There are no ifs in reality. Since it coincided with the crisis, then the circular railway is to be born. It may be wasteful, but considering the positive implications of launching the railway, it’s hardly worth mentioning.

After all, recovering the economy is the most pressing task for the Vienna Government at the moment. To emerge from the economic crisis one day earlier, Divine Shield can gain a slight advantage in the struggle for currency hegemony.