Holy Roman Empire-Chapter 998 - 12, The Astute Wilhelm II

Chapter 998: Chapter 12, The Astute Wilhelm II

The bubble was pricked, and as the economic leader, Shinra suffered the greatest loss; as the second-largest industrial nation in the capitalist world economic system, Britannia’s loss was naturally the second-largest.

Regardless of whether the two nations were politically opposed, economically they were already tied together. The economic bubble in the Shinra Empire was severe, and Britannia’s economic bubble was not much less.

In fact, the crisis should have erupted after the end of the European wars, but it was suppressed by the combined forces of various parties.

The Vienna Government took measures, and the London Government was not idle. During the Gladstone Cabinet’s tenure, Britannia’s foreign strategy nearly collapsed entirely, and if economic prosperity also vanished, it was estimated that the British public would tear them apart.

The Cabinet wanted to safely finish their last term, and the consortiums needed time to retreat. Both sides came to an agreement, artificially creating the second half of the economic boom.

The economic crisis that should have erupted in 1893 was dragged on until now. If it were not for the crash of the Vienna Stock Market, the crisis would probably have been delayed even further.

Against this backdrop, the newly appointed Prime Minister Robert Cecil was in trouble. Before he could even get comfortable, the stock market disaster struck, and the economic crisis was on the verge of exploding.

At that time, Britain practiced free economy, and the government was not to interfere with the market. Of course, that’s easier said than done, as taking it seriously meant defeat.

Not being able to intervene directly in the market did not mean that there would be no intervention at all. In fact, government economic policies and legislation were important factors affecting economic development, with the only difference being the extent of the intervention.

Including adjusting tax rates, social relief, uniting consortiums to save the market, and launching foreign wars to divert crises etc., all these were part of government market intervention.

“How is it going, has the consortium agreed to intervene in the market?”

Prime Minister Robert Cecil couldn’t help but be anxious. Since the economic bubble burst, the London Stock Market followed in the footsteps of the Vienna Stock Market, beginning an unending downward trend.

Unlike the conservative countries of Shinra, where a large number of family businesses tightly held on to their shares and did not go public, Britannia was the most developed country in the financial industry, with almost all enterprises of scale being publicly listed companies.

Public companies could obtain financing more easily, which was conducive to accelerating business development; the drawback was that the companies were affected by stock price fluctuations.

The management style of professional managers appeared very scientific, but the company’s money was not their own. To obtain higher returns in the short term, the company management usually adopted more aggressive strategies.

This was fine under normal circumstances, but once the stock price fell significantly and it became difficult for the company to finance, the aggressive development strategy often led to a break in the company’s capital chain.

In contrast, unlisted and conservative family businesses preferred to make steady progress. Although the development was slower, the enterprises themselves rarely had large debts, and they maintained adequate cash flow most of the time, without the risk of a financial chain breaking.

Most importantly, large enterprises that did not go public typically were profitable and had strong market competitiveness, with inherently strong risk resistance.

Specifically, one could look at Franz’s Royal Consortium, which only listed high-risk tech enterprises, or those with insufficient profitability, unclear development prospects, or enterprises that had reached the industry’s peak potential.

The truly profitable enterprises or those in a fast development phase were all quietly making a fortune below, and only when they reached the industry’s ceiling would it be time to go public and cash in.

All this talk of growing together and sharing together was just deceptive nonsense. Why share when you can hold onto a no-loss, high-return business in your own hands?

Perhaps some enterprises have achieved it, but such enterprises are rare; out of thousands of listed companies, there are only about a hundred or so. The majority of enterprises, after going public, perform modestly.

Enterprises that can consistently operate steadily, outpace inflation, keep up with the national economic growth rate, and avoid sudden defaults, are conscientious enterprises.

If all these high-quality enterprises were to go public, even if the market valuation is low, with the economic scale of the Holy Roman Empire, the financial centers of Vienna and Frankfurt could not possibly be smaller than London.

Against this backdrop, the Holy Roman Empire, which suffered the worst stock market decline, was actually less impacted economically than Britannia.

Economic Minister Aquina shook his head, “Regrettably, they have rejected our proposal. The consortium believes that there is still a bubble in the current stock market, and that it is very risky to step in to boost stock prices now; they need to wait.

If the government really wants them to contribute to saving the market, the consortium has even set conditions, and that is to act jointly with Vienna. They are worried about others profiting from their move.”

Prime Minister Robert Cecil frowned and said with irritation, “Wait even longer? If we wait any further, businesses will go bankrupt, and there’ll be nothing left to save. To think they want to jointly intervene with Vienna.

It’s clear what the situation is now. After the wars in Europe, the Holy Roman Empire’s economy has encountered major issues; they are currently in a period of economic adjustment. Even without this stock market crash, they would still have had an economic crisis.

We are different; we are just the unlucky ones dragged into this. If we can’t stabilize the stock market, we’ll have to experience the economic crisis together with them.

Don’t expect the Vienna Government to save the market without dragging everyone down with them. Right now, they would love nothing more than to drag everyone down to share the losses.”

Complaining is of no use, after all, the London Stock Market isn’t dominated only by British capital but also has contributions from the European Continent.

If a consensus cannot be reached, and the UK consortium steps in to save the market while others seize the opportunity to sell off, then they will become the scapegoats.

Although since the beginning of the year, capital from Europe has started to return, it is only a small portion of their huge volume.

After the outbreak of the Vienna stock market crash, the UK consortium has capitalized on the sit-tight advantage, acting first to strike international capital a heavy blow.

Now, considering the matter of saving the market, they naturally worry about others following suit. If they spend a great deal to drive up stock prices, only for others to take the chance to escape, then they’d be in trouble.

After all, the consortium is not omnipotent. In the treacherous capital market, everyone must be cautious, or else they will eventually be eliminated by the market.

Furthermore, although a large number of corporate bankruptcies are very detrimental to the nation, for the consortium, it is an opportunity for a capital feast. They can completely take advantage of the restructuring during corporate bankruptcies to acquire high-quality enterprises at bargain prices.

…

The British Government is not the only one with headaches. In the face of an Empire eager to drag everyone down with it, all capitalist industrial nations are deeply troubled.

In the past, countries used to criticize the Vienna Government for interfering with economic freedom; no need for that now, the outcome is even more difficult to accept.

The Vienna Government finally followed the natural law of the market economy for once, and as a result, everyone has been dragged into an economic crisis.

In fact, Franz is also in a difficult position. If possible, he too would not want an economic crisis to occur at this time. But there is no way around it, the economy of the Holy Roman Empire has unknowingly gone off track.

Especially in the Northern States, the uneven development of industries was compounded by a significant surplus in production capacity. Take, for example, the railway and construction industries, which were two of the hardest hit.

After the war in Europe ended, it was unclear whose idea it was, but several Northern States began engaging in grand infrastructure projects. There was nothing inherently wrong with infrastructure projects; the problem was that they built a whole lot of unnecessary ones.

Railway lines were redundantly constructed, with branch lines even reaching into villages, and there was a proliferation of real estate projects and water conservancy projects that were utterly impractical.

If it weren’t for the economic crisis that erupted and the announcement of bankruptcy by the Kingdom of Prussia, Franz would have had no idea that people could play so high.

In fact, even if he had known in advance, he would have had no way to intervene. The autonomy of the Sub-States was not a joke; how to develop their economies was their own business, with no need to report to the Emperor.

The only silver lining was that the grain harvest in the Northern Germany Region was short last year. Yes, a grain shortfall at this time was also a silver lining, at least for now.

If there had been a bumper harvest of grain, Franz would have had to consider the problem of agricultural product surplus. After all, following the economic outbreak, the populace would have to tighten their belts, and even for an essential product like grain, sales would decline.

Last year’s grain shortfall in the north at least ensured the stability of the Empire’s agriculture. As for the subsequent impact of the grain shortfall, those were minor issues.

Apart from the impoverished Kingdom of Prussia due to the Prusso-Russian War, the other Northern States had very good economic conditions; otherwise, they wouldn’t have had the money for such extravagance.

Since the outbreak of the economic crisis, besides Wilhelm II personally running to Vienna for help, the other Sub-States had only sent a few telegrams to complain about difficulties, while also crying poor and asking for money.

It could be seen that they were still holding on for the time being and didn’t want the Central Government to meddle in their internal economic issues.

Franz liked these kinds of Sub-States that didn’t cause trouble for the Central Government. Who would want to interfere in the affairs of a Sub-State if they weren’t overflowing with boredom and looking for something to do?

No matter if they were courting death, purely in terms of economic development results, these Sub-State governments were performing better than the vast majority of directly governed provinces.

The main problem for the Kingdom of Prussia was the serious historical legacy issues, and the colossal reparations from the war had impacted domestic economic development.

But all in all, the economic recovery was not bad, and although they were a bit behind their neighbors, the per capita income was still above that of Spain and Russia, and they were about to catch up with pre-war France.

The economic crisis had a significant impact, but it was just beginning and had not yet reached the most difficult time. With the reserves of the Kingdom of Prussia, even if they couldn’t hold on, they wouldn’t be the first to collapse.

Especially since the Kingdom of Prussia had announced its bankruptcy suddenly, without any warning whatsoever. Normally, before declaring bankruptcy, they should have sought help from the Central Government first.

Even if for the sake of the Empire’s reputation, the Vienna Government would have extended a helping hand as long as the funding shortfall wasn’t too large.

Yet the reality was the exact opposite. Before the government announced its bankruptcy, there had been no plea for help made to Vienna, as if they were intent on going bankrupt.

After the Berlin Government announced its financial bankruptcy, Wilhelm II only then emerged, running to Vienna with a sob story of poverty, which was obviously not normal.

Times had changed. As a member of the Holy Roman Empire, Prussia now had the ability to bargain with the British.

Franz had every reason to believe that the Prussian Government had deliberately bankrupted itself, and the economic crisis merely provided them with an “excuse for bankruptcy.”

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Even without this economic crisis, they would have found some other excuse to go bankrupt sooner or later, such as the government’s funding chain breaking, no longer able to pay for construction projects…

After all, there were many benefits now that the Prussian Government had declared bankruptcy! For domestic economical issues, they could seek help from the Central Government – the Vienna Government could not ignore that; the debt owed to the British that might not even be repaid in the next century could also be reasonably restructured.

In this regard, the Kingdom of Prussia had a history. A year ago, when the “German Federal Government” declared bankruptcy, the Berlin Government had followed suit.

Unfortunately, they made a wrong move at the last minute, and the British only accepted the transfer of debt from the German Federation. After all, the German Federal Government at the time was a government that would dissolve if the contract wasn’t signed today; to avoid not finding the debtor, the British had to bite the bullet and accept.

It was different for the Kingdom of Prussia. Even if the government dissolved, the King remained, and Wilhelm II couldn’t possibly give up his throne over debt. As long as the nation existed, a new government could be reformed if the current one disappeared, but the debt incurred would not vanish.

Additionally, at that time, the Holy Roman Empire was still in the process of being formed, and without a Central Government to shelter them from the storm, the Berlin Government could not withstand the pressure imposed by the British and caved after securing a few months of debt deferral.

Now, it was different. As long as the Berlin Government had thick enough skin, the British could do nothing to them.

The “collateral” for the debt?

No problem, feel free to come and collect it, we guarantee full cooperation.

Tariffs, now collected by the Central Government, should the British think they could take it from the Vienna Government, there would be no issue whatsoever.

The port wharves might be in the hands of the Kingdom of Prussia, but involving territorial sovereignty, that was the business of the Central Government. Negotiations would have to go through the Ministry of Foreign Affairs, and it was all negotiable so long as the Vienna Government was willing.

The right to mint currency, that too was now with the Central Government. If you want it, negotiate with the Ministry of Foreign Affairs, as the Prussian Government has no jurisdiction over it anymore.

…

In short, after the breach of debt agreements, the series of collateral contracts that the Prussian Government had once signed with the British could now not be implemented.

Although these treaties still held legal effect since before the establishment of the Holy Roman Empire, actualizing the terms stipulated in these treaties could only be done through negotiations with the Empire’s Ministry of Foreign Affairs.

“Willfully defaulting” and “no money to repay debt” are two entirely different concepts. The former is despised by the international community, while the latter is resolved by simply handing over the collateral.

Now, all Wilhelm II had to do was be willing to lose face, put on a show of willingness to surrender collateral, and then push the problem onto the Vienna Government, and the matter would be done.

Ultimately whether the British concede, or the Vienna Government assumes their debt, those problems no longer need to trouble him.

Knowing it was troublesome, Franz had no choice but to brace himself to take on the situation. Whatever the cause, he as the Imperial Emperor could not allow the nation’s sovereignty to slip away.

At this thought, Franz felt an urge to thrash those keyboard warriors. Who called Wilhelm II stupid? The man’s political maneuvers were sharply on point.