Is there any other way to have enough troops than to expand the army? Expanding the army requires money, of course. Since its establishment, the finances of the Hungarian Republic had been teetering on the edge of bankruptcy. The newly formed government had no idea how to manage money. The tax revenues they managed to collect disappeared before they even warmed in their hands. On this issue, Kossuth bore direct responsibility. It could be said the newly formed Hungarian Republican government had exceeded Austria in corruption and embezzlement. This issue can be compared to the Republican government after the Xinhai Revolution, where in the absence of a stable new order following the collapse of the old order, officials in positions of power became even more unrestrained. “Mr. Kossuth, the government has already imposed two war taxes this year!” reminded Marquis Thallóczy. Hungarian taxation has always been independent and operated in the shadows. During periods when the government was controlled by corrupt nobility, there were often chaotic tax policies that made life difficult for the people. Originally, it was thought that once independence was achieved, everyone would be able to lead a better life. However, the reality was quite the opposite. Without the “exploitation of the Austrians,” life became even more difficult for them. The newly established republican government granted greater autonomy to local authorities, and in their view, any elected government seemed to be composed of virtuous and upright individuals. However, reality often differs from the ideal. The current Hungary has taken a cue from the United States, allowing not only the central government but also local authorities to levy taxes. In essence, the number of tax-collecting agencies has increased without any restrictions. Officials have seized the opportunity to amass wealth, and even some local governments have created a plethora of confusing tax categories. Of course, the nobility and capitalists are exempt from these confusing taxes. The real burden falls on the shoulders of ordinary citizens. However, there is an exception in the form of war taxes, to which both the nobility and the capitalists must contribute. While contributing is one thing, the problem arises when they do so frequently, making it difficult for everyone to accept. How long has the Republic of Hungary been in existence? Even if we include the preparations before the establishment, it’s barely three months, right? In this short time, they’ve already imposed two war taxes, and now they’re about to impose a third war tax. The enemy hasn’t even arrived yet, but life is becoming unbearable. Unlike capitalists, who can find ways to evade taxes, nobles deal primarily in land, which is all out in the open and hard to hide. Trying to evade taxes is not an easy task. “Yes, Lord Marquis.” “But the situation is beyond our control. According to the intelligence we’ve gathered, Austria can deploy up to 400,000 troops against us in a war, while our National Guard is less than 300,000 strong. Moreover, their forces are well-trained regular troops, while ours consist mainly of recently laid-off workers and peasants who have just put down their tools and are relying solely on passion. The disparity between the two sides is simply too great. Without an equal number of troops, we simply don’t have a chance to win this war!” Kosut argued. Well, the situation of the Hungarian National Guard is even worse than he described, because even the ordinary soldiers are far from being passionate. Even the number of soldiers doesn’t come close to 300,000. The National Guard is nothing more than an improvised organization with lax control over its subordinates. After deductions at every level, there simply isn’t enough money to maintain such a large force. But that’s not a problem. There are always solutions to every situation, and capitalists are the most experienced in this regard. Under the influence of the upper class, military officers with bourgeois backgrounds quickly came up with a deceptive strategy. Aside from recruiting some people for the show, the rest could be on paper only. When inspections came from above, they could temporarily recruit people to make up the numbers. Everyone involved received benefits, and no one dared to expose the fraud. Among all the military forces in Hungary, the student army is the only one with real fighting ability. They are the real revolutionaries fighting for national independence. The rest, including Kossuth, are no longer pure revolutionaries. “Mr. Kossuth, I believe the government must disclose its financial expenditures. The Republican government has only recently been established, and you have already spent the equivalent of what the Hungarian government normally spends in a year! If government spending continues at this rate, we may not have to wait for the Austrians to act. You will have destroyed the new government yourselves!” Duke Leopold warned sternly. This is an embarrassing situation, and Kossuth’s expression is ominously grim. Everyone is aware of the exorbitant financial expenditures of the new government, and in the past, Kossuth had always used the war as an excuse. However, the current spending is already substantial with the war yet to even begin. How will they cope if a real conflict breaks out? International loans? That’s wishful thinking. No financial consortium would dare lend them money, as it would likely result in default, and Austria, as a great power, wouldn’t recognize any treaties signed by these insurgent factions. Other than that, the only option left is to impose taxes. But that’s not a good solution. It can’t solve internal problems, and no matter how much money is collected, it won’t fill this bottomless pit. “Fine, the government can disclose its financial expenditures for everyone’s scrutiny. However, given the current financial difficulties, we need a sum of money to overcome the crisis. This time, the government won’t take it for free. We’re going to use a bond issuance model where everyone can subscribe. The annual interest rate will be set at 7%, and we plan to issue 200 million guilders. (Each equivalent to 11.69 grams of silver). If the bonds don’t sell well, then we’ll have no choice but to impose another war tax.” Kossuth chose to compromise, recognizing that he still needed the support of these people. Without the cooperation of the nobility, taxation would be impractical, and making some concessions was a viable option. Seeing the strong stance of the aristocratic representatives present, Kossuth even temporarily converted the war tax into war bonds, accepting the burden of high-interest rates. He was unwilling to unnecessarily inflame the emotions of all concerned. The Republic of Hungary, from its inception, represented the interests of the emerging bourgeoisie. Immediately upon independence, it enacted a series of laws favorable to the economic development of the bourgeoisie, including the abolition of various cumbersome and miscellaneous taxes hindering economic progress. These reform measures won the support of the capitalists, but also significantly increased the financial pressure on the government. After all, the development of the capitalist economy takes time. The Kossuth government, lacking experience in governing, was faced with proposals to issue Hungary’s own currency. After tasting the sweetness of issuing currency, the cash-strapped republican government began printing banknotes in an attempt to escape the financial crisis. Reality taught Kossuth a harsh lesson; lacking sufficient reserves and relying solely on the government’s credibility to issue currency, these banknotes became nothing more than beautiful scraps of paper. After the failure of the currency issue, a financial crisis broke out in the Republic of Hungary, which set the country on an irreversible path of imposing taxes.
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