Holy Roman Empire

Chapter 636 - 209: Ostensible Scheme

After half a year of negotiations, the United Kingdom and Austria finally reached an agreement. On November 12, 1877, representatives from both countries signed the "British-Austrian Free Trade Agreement" in Paris, officially incorporating Austria into the free trade system.

One must say the Paris Conference was a comedy, initially intended to reconcile the contradictions between nations and eliminate international conflicts, but it failed to achieve its original purpose. Instead, it gave birth to several unrelated treaties.

Thinking about it, it makes sense; after all, it was a meeting of high-level officials from various countries. How could they return empty-handed without achieving any results?

Going off-topic was inevitable, as everything was for the sake of political achievements. Up until now, the Paris Conference has produced a total of eight treaties, involving most countries in Europe.

This is only what is apparent. As for how many secret agreements were made behind the scenes, no one can know, but in any case, the Paris Conference was not held in vain.

...

At the Palace of Versailles, Napoleon IV slammed down his glass and cursed, "Damn the British, damn the Austrian fools, they must have done this on purpose!"

Napoleon IV’s guess was not wrong; the Anglo-Austrian free trade negotiations actually took place in Vienna, but they went to Paris to sign the treaty, which was strongly demanded by the British.

The reason is self-evident—how could the London Government not react to the French maligning Queen Victoria?

Diplomatic protests are ineffective at silencing the French; their newspapers dare to publish even the Emperor’s scandalous news, let alone that of the British queen.

From the initial "curses" to now, the reportage has evolved to include gossip and even erotic novels with content that is too shameful to look at.

The channel cannot stop the spread of entertainment gossip. By distributing these newspapers and novels, they have long crossed the ocean into Britannia and have been secretly circulated.

Whether the content is exciting or not is one thing, but this is too much of an affront to the nation’s dignity, leaving the British public very dissatisfied. People demanded that the London Government put a stop to the French’s deplorable conduct.

Of course, the British Royal Family should have played a major role in this. Under pressure from all sides, the London Government naturally had to take action.

Since it is impossible to silence the French, it’s better to create a major news story to divert attention and simultaneously reprimand the French.

The "British-Austrian Free Trade Agreement" undoubtedly serves as the perfect weapon, striking directly at the French’s Achilles’ heel. If not handled well, France, which is already falling behind, will truly be on the path to decline.

Finance Minister Allen, "Your Majesty, now is not the time to quibble with them. The urgent matter is to minimize the impact.

The United Kingdom and Austria have reached an agreement, and it won’t be long before the two countries take action to persuade more countries to join the free trade system.

The only great European nations currently outside the free trade system are us and Spain. At all costs, we must stabilize the Spaniards; otherwise, we are in big trouble."

One must admit that British diplomatic tactics are formidable; over the past decades, they have successively brought the Netherlands, Belgium, Portugal, Prussia, Russia, and the Nordic Federation, among others, into the fold.

Now with Austria joining the free trade system, the remaining Switzerland, the German Federation Empire, Greece, Montenegro will naturally also join it.

France is isolated again, with only Spain remaining, who must be firmly secured at all costs. Fortunately, the Spanish royal family was established by Napoleon III, staunchly pro-French.

Foreign Minister Montero, "It is not that simple. The Spaniards may not stand with us this time.

The United Kingdom and Austria have too many bargaining chips at their disposal; they can offer a price much higher than ours.

Our main advantage is the pro-French Spanish Government. However, it’s hard to say how effective this advantage can be when faced with interests.

The current situation is very clear, and it is our turn to make a decision. The semi-free trade model we’ve had until now was workable before, but it has now become the worst choice."

The "semi-free trade system" was an economic policy formulated by Napoleon III based on the actual circumstances of France, taking into account economic policies from across Europe.

In simple terms, it entails implementing either tax exemptions or low tariffs on industrial raw materials France needs, while enacting trade protection policies for goods that can be produced domestically.

To some extent, before this, the economic policies of France and Austria were somewhat similar, both protecting their domestic industries and commerce.

Regrettably, Austria seized the opportunity of the Second Industrial Revolution, was the first to complete industrial transformation, and had agriculture as a support. Now, it already has the capacity to compete on the international stage.

The situation in France is different; not only is it lacking in natural resources, but its capitalists also dislike investing in manufacturing.

Even though Napoleon III encouraged the development of manufacturing, he couldn’t change the nature of French capital’s preference for usury.

The insufficient funds flowing into manufacturing meant industrial development inevitably lagged behind. The core factor causing all this was essentially the lack of industrial raw materials in France itself.

Although France was also a colonial empire, it was at the same time a desert empire. The vast majority of its extensive colonies were desert, resulting in relatively insufficient colonial output.

Coupled with the annexation of the resource-poor Italian Area, this made France’s resource crisis even more severe, forcing reliance on imports.

Now, over seventy percent of the world’s industrial raw material exports were monopolized by the Anglo-Austrian two countries. To strike against competitors, Anglo-Austria, holding the pricing power, artificially inflated the market prices of raw materials.

Relying on imports for industrial raw materials meant naturally higher costs. In international competition, French industrial and commercial products conspicuously lacked competitiveness.

Finance Minister Allen, "Your Grace, joining the free trade system sounds easy, but if we really implement it, we first have to consider whether our domestic industry and commerce can withstand the impact.

According to data from the Paris Daily, the overall cost of industrial and commercial products manufactured domestically is 2.9% higher than that of the British, and 2.7% higher than Austria’s.

But the fact that our domestic industrial production costs are high is a reality, and if we remove market protection and face international competition, we will be at a disadvantage."

High industrial production costs present an unsolvable problem. Unless the cost of raw materials is driven down, there is no solution.

Napoleon IV, "If the cost of industrial production differs by just a couple of percentage points, it seems not to be insurmountable.

Capitalists from Britain and Austria also need to make money; they can’t possibly sell at cost price, so domestic enterprises simply earn less.

The government can also reduce taxes to narrow this gap. As long as we survive the initial shock, I believe our domestic enterprises will be able to stand their ground in the competition.

At the very least, we can rely on proximity and advantages to protect our local market, preventing the situation from worsening."

After hearing Napoleon IV’s words, Finance Minister Allen was startled and hastened to dissuade, "Your Majesty, it’s not that simple. This gap is the overall difference across all industries.

If we look at a specific industry, the cost gap could possibly widen to twenty to thirty percent, which is beyond what tax adjustments can offset."

Just kidding, newspaper published data, goodness knows how much of it is inflated, whether it’s through data analysis or outright speculation, nobody knows.

The French government doesn’t have a dedicated statistics agency; when data is required, it’s the responsibility of economic experts to estimate, and then the government artfully manipulates it as needed.

Allen has no intention of changing this; as Finance Minister he knows too many truths, and unfortunately, the French public cannot accept the fact that they do not measure up to the Anglo-Austrian two countries.

Not to mention now; even after the Franco-Prussian War in the original timeline, the French public didn’t admit they were inferior to Germany.

The First World War was said to be caused by Franco-German tensions, but in reality, it was also due to French pride. It was after World War I, when French arrogance was crushed, that led to the World War II debacle.

It’s better not to compile real statistics and admit to them than to not collect them at all, and just collectively feign ignorance.

The free trade system, it’s fine to chant slogans during normal times, but if taken seriously, it could be the death of a country.

Apart from the financial industry which has an advantage, most of France’s industries would be impacted. The emergence of a Usury Empire is not without reason.

Napoleon IV frowned deeply, there was no doubt he felt embarrassed again. This feeling was extremely unpleasant, making him seem like an unknowing emperor.

"So how do we resolve the current issue? Britain and Austria are working together on the free trade system, and most European countries have joined. The remaining countries will not last long either.

Soon, not just Europe, but the entire world will be covered by the free trade system. Can France really stay self-sufficient?"

Napoleon IV wasn’t oblivious; rather, he saw things all too clearly. The British-engineered free trade system is a plot in broad daylight, unstoppable even when known.

Currently, French industry has not exploded, and can temporarily remain aloof. But once domestic industry and commerce develops further, faced with reality, France will still have to join.

Of course, there’s also the option to challenge the world. In the original timeline, Germany did so because it lacked raw materials and markets, and having no say within the free trade system, initiated war out of desperation.

France’s situation is naturally much better than that of the German Empire, but a crisis still exists. Unless manufacturing development is foregone, the crisis will inevitably detonate.