Holy Roman Empire

Chapter 486: The Essence of the Industrial Revolution: Cost

Chapter 486: The Essence of the Industrial Revolution: Cost

After Christmas, both Britain and Austria recognized the Greater French Empire, tacitly accepting France’s annexation of Italy.

As a result, in 1871, European countries began to recognize the legitimacy of Greater France and resumed diplomatic relations with France. Napoleon III finally escaped his predicament of diplomatic isolation.

The international tension caused by France’s annexation of Italy thus came to an end. However, its impact was profound.

Undercurrents began to stir, and ambitious individuals became active. Expansion became the prevailing theme of the era, and many small European countries lost their sense of security.

The era of imperialism had fully arrived. The actions of the French once again pushed the boundaries for the great powers. From now on, strong nations no longer needed any justification to annex a sovereign country.

A facade was no longer needed. The law of the jungle had never been so blatant, and the unwritten rules of the game had become even more unfavorable for weak nations.

Someone spread rumors of an alliance between Britain, France, and Austria, causing the recently eased international situation to become tense again. At that moment, the remaining European countries were unsettled, and the foreign ministries of Britain, France, and Austria became busy.

Even Alexander II, who was focused on internal reforms, personally sent a telegram to inquire. Secrecy was out of the question, as both Britain and France had openly acknowledged the ongoing alliance negotiations.

Since the purpose was to use this alliance to increase Austria’s influence in the world, Franz naturally did not see any point in denying it.

As for what Alexander II might think, it was no longer important. Never mind the current half-dead Russian Empire, even at its peak, the Russian Empire would have avoided confronting a tripartite alliance of Britain, France, and Austria.

The formal alliance treaty between the three countries had not yet been signed, but discussions on shaping a new international order had already begun.

In the face of benefits, everyone was tempted. Formulating a set of rules that favored oneself was indeed the greatest benefit.

Even Franz, who had little interest in the tripartite alliance, was very interested in establishing a new international order.

Austria had experience in this area, having led two Vienna Systems. A set of rules favorable to them could bring benefits no less than those from any colony.

Now, everyone needed a stable Europe: the British needed continental balance, the French wanted to consolidate their gains, and Austria needed time to continue developing.

Other countries were no exception. The Kingdom of Prussia needed to digest its gains, the Russians were busy with reforms, and the smaller countries, needless to say, all wanted a stable Europe.

With this common desire, a new international order was about to emerge. This time it was even more ruthless: the three great powers would set the rules, and the other countries would follow.

The secondary powers, like Prussia, Russia, and the Nordic Federation, still had some say, but the many small countries had completely become mere yes-men.

As one of the beneficiaries, Franz had no intention of speaking up for them.

He was currently busy with economic reforms. The second industrial revolution brought changes compared to the first industrial revolution, rendering some of the old economic policies obsolete.

The renowned “Austrian School of Economics” of later generations had begun to emerge, albeit still in its infancy. Perhaps due to the butterfly effect and the influence of the environment, some changes occurred.

Franz couldn’t say exactly what those changes were. He wasn’t an economist and wasn’t very familiar with these issues.

In an era where free-market economics prevailed, Austria’s economic policies were already considered proactive, though this proactiveness was quite limited.

The market was primarily allowed to develop freely, with the government only providing improved infrastructure and enacting some helpful policies when necessary.

As long as you had the money, you could enter any industry. Whether you could survive was up to you.

As a pragmatist, Franz always adhered to the principle that “the most suitable is the best.” Within the larger framework, the economic measures in different parts of Austria were not entirely the same.

Different regions had different development directions and required different policies. If the central government had to worry about everything, it would be overwhelmed.

In the Vienna Palace, a meeting on the economic report deciding Austria’s future for the next ten years was taking place. This economic reform was merely a fine-tuning.

Overall, the previous economic policies would continue to be used, with changes needed only in certain sectors, and the scope of these changes was not extensive.

Minister of Economy Andrew analyzed, “Over the past two years, the domestic economy has generally been in a good state, with the economic growth rate maintained at 7.8%.

Of particular note is the new energy industry, mainly the power industry, which has seen especially remarkable growth. From an industry scale of less than 10 million guilders in 1868, it has rapidly climbed to the current 200 million guilders.

The entire industrial chain involves multiple fields, driving upstream industries such as copper smelting, rubber, and power equipment manufacturing, as well as downstream industries such as hardware, electrical machinery, and transportation.

A total of 638,000 new jobs have been created, making a significant contribution to overcoming the economic crisis. The most typical examples are the copper smelting industries in the Saxony and Balkan regions, which have made significant breakthroughs in production capacity.

The Ministry of Economy believes that in the future, electric power will become the largest point of economic growth.

Currently, only Vienna has fully implemented electric lighting. Although cities like Frankfurt, Munich, Venice, and Milan have started projects, they still need some time to complete.

In Africa, we have discovered several copper mines, all of which are rich deposits with high-quality ore, with reserves exceeding the total amount of copper mines currently being mined in Europe.

Our domestic shipyards have no technical issues in building large ore carriers of 20,000-30,000 tons. Transportation costs can also be reduced, and the copper constraint on the spread of electric power can be resolved soon.

Once the raw material issue is addressed, copper prices in the market will quickly fall, and the cost of promoting electric lighting will be significantly reduced.

Additionally, electric machinery has great potential, and it may even replace the current steam engine in the future. Currently, electric machinery is already being used in some fields.

Besides this, another point of economic growth is the consistently high number of newborns, with sales of baby products continuously increasing.

This area involves so many products that compiling statistics is too cumbersome. We can only provide a rough estimate. There is currently a market of about 35 million guilders annually, but it is growing rapidly, and it is expected to grow by 12% this year.

In contrast, traditional economic fields are already showing signs of decline. The last economic crisis has proven that many areas of the domestic economy are saturated.

Currently, the fastest-growing traditional economic fields are steel, mining, shipbuilding, and construction, with growth rates of 13.2%, 9.6%, 10.1%, and 8.9%, respectively. Previously fast-growing industries like textiles only had a 3.1% growth rate last year.

Our most advantageous food processing industry is now encountering a bottleneck. Although it still maintains a growth rate of 5.8%, the downward trend is very evident.

From these data, it is clear that developing emerging industries has become the pillar of future economic development. The Ministry of Economy plans to promote electric lighting nationwide and encourage innovations in electric technology.”

This aligns well with the intentions of the Austrian government. The widespread adoption of electricity cannot happen without government policies. Without government support, it’s unlikely that any electric company would altruistically provide an entire power grid.

In contrast, baby products are different. They don’t require government intervention and capitalists will do an excellent job on their own. The government’s role is just to regulate and standardize the market.

Prime Minister Felix, ever the prudent statesman, took up the topic, “Promoting electric technology is not an issue. Everyone has personally experienced the benefits this technology brings, like the electric lights above our heads.

However, when promoting it, we must consider the initial cost. Building a city power grid is not a small expense.

Not every city can afford it, and the government does not recommend promotion in cities with lower financial revenue. If someone turns this beneficial policy into a harmful one, we will have to hold them accountable.”

Is electric technology good? The answer is: very good. Unfortunately, it’s still too early, and the costs have not yet come down.

For major cities with higher financial revenues, following Vienna’s example of popularizing electric lighting is fine if they can afford it.

But for some cities that are dirt poor, it would be a heavy burden. For example, in Vienna, the city government spends 1.2 million guilders annually on electricity and lighting system maintenance.

For a bustling city like Vienna, this cost can be directly passed on to the city’s merchants, who are the biggest beneficiaries of the city that never sleeps. The revenue generated from the night market is enough to cover this expense.

However, even maintaining government operations is difficult in some small cities with little commerce and annual financial revenues of only hundreds of thousands of guilders.

If cities blindly follow suit, the costs will ultimately fall on the ordinary people. For residents already struggling with low incomes, this would be a disaster.

The lower the population density in a city, the higher the per capita cost of electricity. The Austrian government had already calculated this.

To avoid the worst-case scenario, Prime Minister Felix preemptively poured cold water on the idea, preventing some bureaucrats from blindly following the trend for the sake of political achievements.

Hearing Felix’s warning, many local officials attending the meeting broke out in a cold sweat, realizing their previous plans were flawed.

Sure enough, quick political gains are not easily achieved. If conditions are not met and they blindly follow the trend, their careers will likely end once the report is submitted.

Except for a few states with greater autonomy, most cities need the Austrian government’s approval for such large-scale projects.

So far, only economically developed major cities or those located in coal-rich areas with incredibly low power generation costs have been approved.

For the vast majority of cities, it’s best to wait for technological innovations to further reduce power supply costs before considering this issue.

In the original timeline, Europe’s electricity revolution started in Germany, mainly because Germany had the highest copper production in Europe at the time, and coal production was also the highest in Europe. The cost of promoting electric technology was also lower than in Britain and France.

The U.S. had an even greater advantage, with an abundance of resources. They had ample supplies of copper and coal, enabling them to stay ahead of Europe in technological innovation from the Second Industrial Revolution onwards.

It’s not that European countries lacked technology, but they lacked raw materials. Transporting these materials from overseas increased costs, making widespread adoption impractical. Without mature industrial technology, even Britain and France couldn’t bear the high costs.

Franz’s high-profile push for the electric technology revolution was not kept secret because Austria’s raw material costs were lower than those of Britain and France.

Apart from Russia, Austria’s copper reserves exceeded those of all other European countries combined, with production accounting for half of the world’s total.

In rubber production, Austria also held a significant share. The colonies in Southeast Asia weren’t acquired for nothing as nearly every island could grow rubber. Coupled with the rubber plantations in Africa, Austria was now the world’s largest supplier of rubber products.

For Britain and France to promote electric technology, they first had to import copper and then rubber. France had it even worse, as they also had to import coal.

These cost factors meant that Britain and France were at a disadvantage in this industrial revolution.