Holy Roman Empire

Chapter 519: Good News

Chapter 519: Good News

The sharp plunge in international grain prices also had an impact on Austria’s domestic grain market, causing grain prices to fall as well.

Grain prices in Austria had always been lower than in the international market, but now, they have finally caught up with global prices.

Not only did grain prices drop further, but the prices of other agricultural products followed suit. Although capitalists were trying to prop up the market, their efforts were futile in the face of such massive supply.

As the international grain market became more turbulent, a large amount of raw grain was dumped onto the market, which also affected processed grain exports.

Take flour exports as an example: prices not only fell by 9% compared to the same period last year, but the total export volume also shrank by 4%.

This was a consequence of the Austrian government’s dumping of old grain onto the British market. British capitalists, armed with cheap raw materials, ramped up production and took over existing markets.

There was no other option. Flour couldn’t be stored long-term, so the only way to disrupt the Anglo-Russian grain trade was through raw grain.

With prices dropping and exports shrinking, companies involved in agricultural exports were struggling, especially those in low-tech processing industries.

In Austria, the agricultural processing industry had formed a massive industrial chain, employing more than three million workers. The flour processing sector alone employed over 800,000 people.

This issue also affected millions of farmers. The grain processing industry’s downturn would inevitably impact the purchase of new grain.

At the Vienna Palace, Franz set down the documents in his hand, lifted his teacup, and watched as faint smoke rose, filling the air with a fragrant aroma.

“We must quickly stabilize the domestic market. With raw grain prices crashing on the international market, it won’t be long before the price of processed grain also collapses.

The capitalists won’t be able to hold out for long. In the face of profit, few can remain rational, and the processed grain market won’t stay stable for long.

We can’t control the international market. We should keep whatever market share we can, without worrying too much about short-term gains and losses. But we must stabilize our domestic and colonial markets.

Domestic grain consumption is growing at almost 2% per year. If we can hold out for 2-3 years, when the wave of bankruptcies among European farmers hits, we’ll be able to weather the crisis.

However, the government must take more proactive measures and not wait for the market to adjust on its own. We don’t have that much time to waste. Otherwise, the advantages we’ve built up will be wasted.”

The primary reason for the increase in consumption is population growth, followed by economic development and rising incomes, which naturally lead to increased consumption.

Franz’s earlier proposal to absorb immigrants from various European countries was, in fact, a strategy to boost grain consumption.

Of course, the main goal of absorbing immigrants was to increase the labor force. Austria’s colonies already covered a vast area, and developing these regions would require a large population.

Even in the most prioritized area, the African continent, after years of immigration efforts, the population of Austrian Africa had barely reached 10 million.

This number was still far from enough. Other colonies were even worse off. Due to the lack of population, they couldn’t even begin basic development.

The Minister of Agriculture, Holz, stood up, took a report from his folder, walked up and handed it to Franz.

“Your Majesty, the Ministry of Agriculture recommends raising tariffs on agricultural imports to prevent foreign agricultural products from impacting the domestic market. We also suggest implementing a minimum purchase price guarantee for grain and issuing price guidance for domestic processed grain.

For processed grain export companies that have suffered losses, the Ministry of Agriculture proposes offering tax rebates on exports to offset some of their losses.

Here are the detailed measures and corresponding plans. Once implemented, domestic agricultural product prices will stabilize in the shortest time possible.”

Raising tariffs on agricultural imports was aimed at Russia. In recent years, grain exports from the Russian Empire had decreased, but they hadn’t completely disappeared.

However, these grains didn’t directly enter the international raw grain market. Instead, they were sold to Austrian grain processing companies, which processed the grains and then sold the products on the international market, including selling them back to the Russian Empire.

Austria had managed to capture up to 70% of the international agricultural export market, thanks in no small part to the Russians.

Now, with Russia’s agricultural production booming, Austria could no longer absorb it all. Combined with the fact that many countries have been boosting their grain production in recent years, leading to an oversupply in the international market, the Ministry of Agriculture naturally prioritized protecting the interests of domestic nobles and farmers.

The minimum purchase price guarantee was another measure to protect farmers’ interests. The price guidance for domestic processed grain was also part of this protection strategy.

In simple terms, the government would set a retail price range for processed grain, and companies would have to price their products within that range.

Before this, the Austrian government had already imposed a price ceiling on agricultural products, and now they added a price floor as well.

“Free market economy”—unfortunately, while Austria had a market economy, it did not have a free market economy. The government’s intervention in the market was nothing new.

Of course, if the industry was unrelated to international livelihood, the Austrian government never interfered. Sectors like crafts and luxury goods, for example, were entirely free from any interference.

After a quick review of the report, Franz nodded but also shook his head.

“The rest of the plan is good, but raising agricultural import tariffs can’t be implemented for now. If we raise tariffs, the Russians will certainly retaliate by increasing tariffs on Austrian industrial and commercial products.

It’s enough for this crisis to be limited to agriculture. If it spreads to other industries, the consequences will be even harder to control.

***If you are able, you can support the translation at /dragonlegion***

We can impose restrictions when implementing the minimum purchase price for grain, applying it only to domestic, newly harvested grain from this year. The tax rebate subsidies for companies should also be limited to products processed from local grains.

To prevent companies from fraudulently claiming subsidies, any company that applies for tax rebate subsidies should be prohibited from purchasing foreign agricultural products for six months.”

Franz recalled that one of the main reasons for the German-Russian rift in the original timeline was the issue of agricultural tariffs. Of course, the current situation was different, and the Russians lacked the leverage to fall out with Austria.

Escalating tensions would bring no benefits. Although the Russian Empire’s market wasn’t flourishing due to its poor economic development, it was still an important sales market for Austrian industrial and commercial products.

Moreover, the Austro-Russian alliance hadn’t completely collapsed, and the trade agreements between the two countries were still in effect. Unless the agreement was violated, raising tariffs would be a joke.

The agreement explicitly stated that tariff increases could not exceed 5% of the original rate, and the same product could only be adjusted once every three years.

The agricultural trade tariff between Russia and Austria stood at 4%. Raising it by 5% would bring it to 4.2%, a negligible increase that Franz didn’t consider worthwhile.

The fact that Austrian goods still fill the shelves of Russian stores, despite the Russian government’s multiple increases in tariffs on Austrian industrial and commercial products, is enough to illustrate the point.

Under the terms of the agreement, no single product’s tariff rate could exceed 10%, and most were only a few percentage.

If they wanted to bypass the agreement, it was simple—they could just break it. But this treaty was something Franz had worked hard to get the Russians to sign, so how could he willingly break it?

In this sense, the Minister of Agriculture still had room to improve his broader perspective. But Franz, ever magnanimous, was willing to overlook such minor issues—after all, one can’t demand too much from technical bureaucrats.

While Holz’s abilities in other areas were average, he excelled in his professional field. Under his leadership of the Ministry of Agriculture, Austria’s agriculture had seen significant improvements.

Optimizing the agricultural structure, promoting new agricultural technologies, and improving the agricultural supply chain were all achievements completed under his leadership.

Now that Austria’s agricultural production capacity was in surplus, Holz could claim some credit for that too. Of course, it wasn’t his fault. Changing farmers’ planting habits was incredibly difficult when they were still making money.

In the original timeline, this agricultural crisis lasted more than 20 years, forcing one farmer after another into bankruptcy before a new balance was reached. The difficulty of that can be easily imagined.

Growing cash crops isn’t a matter of just a few words—it must also ensure profitability. Unfortunately, due to the lack of transparent market information, no one could provide such a guarantee.

Austria wasn’t a planned economy, and farmers could plant whatever they wanted. What might be scarce this year could rot in the fields next year because no one wanted it.

In comparison, grain was still a relatively stable product. The return might be lower, but at least it wouldn’t result in total loss.

After pausing for a moment to digest Franz’s words, Colonial Minister Stephen took out a document and handed it to him.

“Your Majesty, gold mines have been frequently discovered in the South African region recently. Both the quality and quantity of these newly found gold mines are astonishing.

This is a report submitted by Viscount Falkner, the Governor of South Africa. Preliminary assessments suggest that this could be a gold mine cluster even larger than those in West Africa, with reserves potentially exceeding those in the United States.”

This was good news. Austria’s defeat in the race for monetary dominance was partly due to its lack of gold reserves under the gold standard.

Franz was naturally well aware of how rich South Africa’s gold reserves were. Knowing was one thing, but explaining how he knew would be difficult.

Austria already had a strong religious atmosphere, and Franz had no desire to give the Church more ammunition to throw at him. He had managed not to reveal any flaws in all these years since his rebirth by being cautious.

In any case, the gold was buried underground and wasn’t going anywhere. Since South Africa was already under Austrian control, those gold mines would eventually be discovered, and in the end, the gold would still flow into Austria.

In reality, Austria had been quite lucky with gold as almost every colony had some. This wasn’t something Franz had specifically planned—Austria’s direction of expansion was dictated by circumstances.

When Franz first began to expand into Africa, he never imagined that it would lead to such a vast empire. If the European powers hadn’t neglected the African continent, there’s no way Austria could have gotten such a bargain.

The expansion into Southeast Asia was completely accidental but unexpectedly successful. The presence of colonies in Central America was initially meant only to intervene in the American Civil War, but the scale of their growth far exceeded Franz’s expectations.

Before taking action, Franz had no idea how weak those small Central American nations were.

Initially, he just wanted a foothold there but unexpectedly managed to lure a group of German immigrants from the United States, directly becoming the dominant force.

Of course, those in power in those small nations probably wouldn’t agree with this statement. With only a few tens of thousands of white people in the whole country and armies never larger than a regiment, how could they have resisted Austria?

As for Alaska, it could be said the Russians practically forced it upon Austria. Ignoring the behind-the-scenes lobbying Franz had orchestrated, that’s basically what happened.

Austria’s development to its current state was not only due to effort but also heavily reliant on luck. Franz could only marvel at how reality had unfolded so dramatically.

He picked up the document and skimmed through it. Nothing unexpected. The historical mission of the two republics, the Transvaal Republic and the Orange Free State, was now over and they could finally return to Austria’s embrace.

There was nothing wrong with this—most of the local population had become supporters of Austria. The Republicans had likely met their end, though the report didn’t specify, and Franz didn’t need to know the details.

“If everything is ready, then let’s stage a little farce to dissolve these two republics! If we’re going to develop the South African region, we can’t let them remain in the way.”

Franz, being a man of dignity, would never directly annex a sovereign state. However, if the Transvaal Republic and the Orange Free State dissolved on their own and the locals willingly returned to Austria, then no issue would arise.

Franz believed Viscount Falkner could handle this issue well. After such a long time, the local power players, if they hadn’t gone to meet God already, must surely be on their side by now.

Even if there was trouble, it wouldn’t be a big deal. At this point, African colonies were known to be chaotic, so any unexpected events would be seen as normal occurrences.