Holy Roman Empire

Chapter 665 - 238: A War Without Gunsmoke

1879 was a pivotal year for the entire world, both politically and economically, greatly influenced by the Prusso-Russian War.

Due to the tense European situation, France and Austria both kept a tight watch on the European Continent, refraining from causing any disturbances. The British merely made a foray into South America, focusing their main energies on the European Continent as well.

With the three major bullies refraining from stirring trouble, there was even less need to mention other countries.

At this time, the political sensitivity of colonial empires was extremely high. With the tense situation on the European Continent, there wasn’t a focused concentration on the homelands—what to do if the situation spiraled out of control?

With the colonial empires not causing disturbances, it was undoubtedly good news for those precarious independent nations, who could finally enjoy some days of comfort.

The outbreak of the Prusso-Russian War even subdued the conflicts between England, France, and Austria. For mutual benefits, the three great powers had stood together early on.

Of course, this alliance of interests was unreliable, and the moment there was a significant shift in international circumstances or an imbalance in the powers of the three nations, the alliance could crumble at any time.

If the impact of the Prusso-Russian War on the international situation was more about the post-war period, then its impact on the world economy was immediate.

Many industries were affected, spanning nearly every domain, with agriculture, manufacturing, finance, and service industries reaping the largest dividends.

In the capitalist economic world, a new round of prosperity had begun. The most classic example was the disappearance of the agricultural crisis and the elimination of overcapacity in manufacturing, with the booming economy directly driving the development of finance and service industries.

Though the war had just started, its greatest dividends had not yet fully emerged, but capitalists were filled with confidence.

A massive influx of hot money had already poured into the market, suddenly improving the economic environment. Help Wanted signs could be seen everywhere in the streets, with slight wage increases for workers in war-related fields.

According to statistical data, just in November, Austria’s new investments totaled to 160 million Divine Shield, a sharp increase of 76.4% compared to the same period last year.

Most of this capital flowed into manufacturing, with factories springing up everywhere, a clear sign that investors were very optimistic about this opportunity.

Not just Austria, but the entire European Continent was like this. Capital poured into various industries like madness, wanting to get a slice of the Prusso-Russian War.

Looking at the statistical data, Franz furrowed his brows, "The market is too hot right now. Although the war’s consumption is significant, Prussia and Russia’s wallets are somewhat...

Neither England and France nor us will provide them with unlimited funds. Before long, a new round of overcapacity will erupt, and post-war Europe’s economy will likely wail."

Economy Minister Reinhardt Halden explained, "Your Majesty, this is an inevitable law of economic development. In the previous wars, many people made a fortune. They have been blinded by interests, ignoring the existence of risks.

Not only domestically, but the entire European world is like this. According to economic experts, in the past two months alone, Europe’s new investments have increased by at least 50% compared to the same period last year.

Post-war overcapacity will become a common problem for European countries. It’s a huge trouble but also a tremendous opportunity.

As long as we seize this opportunity, we can take advantage of the situation to crush the French manufacturing industry and weaken our biggest competitor."

In those days, there were no anti-dumping laws; free trade was the trend of the times. The French still couldn’t withstand the pressure and joined the free trade system six months ago.

The core of "free trade" is for governments to remove restrictions and hindrances on import and export trade, abolish privileges and preferential treatments for domestic import and export goods, allowing goods to be exported and imported freely, and to compete freely in domestic and international markets.

On the surface, it seems beneficial to everyone, providing access to the global market and clearing obstacles to the flow of goods.

However, there are disparities between enterprises and between countries, with these gaps directly affecting market competitiveness.

Without a doubt, resource-scarce France was at a disadvantage in this round of competition. Importing raw materials directly drove up production costs.

To cut costs, capitalists naturally sought to lower workers’ wages, and the influx of cheap Italian labor created favorable conditions for reducing wages.

In the past decade, Europeans’ average wages had increased by 23.8%, while in Great France, the average wage had increased by a mere 5.4%.

Against this backdrop, conflicts between the French and Italian people were frequent, and even with the Paris Government’s strong suppression, it was of little effect.

Regrettably, even after driving down wage costs, most French industrial and commercial products still lacked international competitiveness.

There was no choice, as cheap labor costs were the norm during that era. Aside from labor-intensive industries, labor costs accounted for less than one-fifth of the total cost of most industrial and commercial products, and often even less.

Industrial raw materials dominated production costs, and without addressing root issues, how could market competitiveness be improved?

The market is a whole, and lowering labor costs also weakened purchasing power.

Although Great France had a population of sixty million, its market consumption power could not catch up with John Bull’s, which only had over thirty million people.

With market consumption power lagging, it fed back into industrial production, forcing enterprises to produce cheaper goods, creating a negative economic cycle.

Take coal as an example: the cost of industrial coal in France is 1.3 times that of Austria, and in some inland areas, it even exceeds twice that amount.

This is just the beginning, as high coal prices lead to increased costs of electricity generation, which in turn cause a rise in electricity prices. The expensive electricity is undoubtedly the biggest obstacle to the spread of electrical power.

One slow step results in being slow at every step; if electricity does not proliferate, then naturally there can be no talk of machinery powered by electricity.

As a result, upstream electrical machinery manufacturers are constrained in their development and lack the investment to research and develop more advanced equipment, gradually falling behind in international competition.

Downstream equipment users, because they do not adopt the most advanced productivity in time, are surpassed by competitors in market competition, or even eliminated.

In this era of the survival of the fittest, lagging behind means getting beaten up. The French have strong military power and no one attacks them for no reason, but economically it’s different—everyone is a competitor, and underhanded tactics are inevitable.

As long as it’s possible to take down a competitor, paying a price is naturally worthwhile. Under a free trade system, massive overcapacity appears, and then it becomes a contest of industrial strength among nations.

In this regard, the Vienna Government has confidence, as does Franz. This is because Austria’s infrastructure construction is the unrivaled king of its time.

Not only is the transportation developed, but it is also among the earliest in Europe to have widespread electricity and a birthplace of the Second Industrial Revolution, with emerging industries at the forefront of the world.

In this aspect, Anglo-Austria are two extremes—one focusing on emerging fields and the other concentrating on traditional industries—both dominating their sectors. This creates favorable conditions for cooperation between the two countries.

Franz, "In that case, let the crisis come more violently! It would be best if it destroyed the manufacturing industries of both Europe and America, as if clearing the stage before the curtain rises.

This time we can cooperate with British capitalists, letting private enterprises take the lead, without directly dragging the government into it. As soon as the Prusso-Russian war ends, we’ll launch together and kick off this grand capital war."

A war without gunsmoke can sometimes be even more brutal. The destruction it brings is in no way inferior to that of an actual war.

One can imagine that before long, unemployment and bankruptcy will once again become hot topics throughout society.

After pondering for a moment, Economy Minister Reinhardt Halden, "As long as they have joined the free trade system, they are easy to deal with.

The United States of America is somewhat difficult; they still stubbornly implement trade protectionist policies, and it’s incredibly challenging to pry open their doors."

Fool me once, shame on you; fool me twice, shame on me. American capitalists have been harmed by the British several times and are now frightened, choosing to shut the door and play by themselves.

After all, they are rich in resources and can directly copy European technology. Except for a slightly smaller domestic market, they are still living comfortably.

Franz, "Leave this problem to the Foreign Ministry. When it comes to promoting free trade, the British are eager leaders.

We can join forces to put pressure on the Union, becoming half-ally if they join. If they remain willfully stubborn, then there’s no need to be polite.

Since they want to play the protectionism card, just let them play enough of it. International embargo is an excellent choice."

To be honest, at this point in time, the industrial and commercial products of the Union do not possess much competitiveness; many of their products are even inferior to those of the Russians.

If they do not protect their trade and open their doors to competition, they will undoubtedly suffer a terrible fate.

Franz does not expect the Union to completely open its markets. Just cracking open a door would suffice, and if that really isn’t feasible, smuggling would be acceptable too.

When it comes to striking at competitors, Franz never misses an opportunity.

Prime Minister Felix, "Your Majesty, if we push further, the postwar economic crisis could be very severe.

If the crisis lasts too long, the situation on the European Continent might be broken again, and we are not yet ready."

Man-made disasters are the most terrifying, especially ones that can be initiated but cannot have their outcomes controlled, with destructive powers even greater than a war.

With the advent of the industrial age, the influence of the economy on political situations grows ever larger. There are countless cases of economic deterioration leading to political instability, causing the outbreak of wars.

Franz shook his head, "We do not have that much time to prepare. We can never be fully prepared; by the time we are ready, the opportunity will also have slipped by.

Besides, our inaction does not mean the British will not act. Rather than reacting passively, it’s better to take the initiative."

With age comes conservatism, but it’s not to say conservatism is bad; in fact, for a great nation, conservatism often means longevity of national fortune, while radicalism is a disaster for a country.

However, the opportunity is too rare; once missed, to take action again would require paying a much greater cost.

Put bluntly, Franz is not one to settle for peace either. Aside from avoiding risks in the military, he does not mind trying his luck in the economic field.

If successful, that would be the best outcome; if it fails, it’s the speculators who are unlucky. The Vienna Government is very experienced in dealing with economic crises, and such setbacks will not reach the nation’s core.