The ever-changing international situation no longer drew much of Franz’s attention. Right now, his eyes were fixed on the first-quarter price change report. By common logic, the prices of essentials like grain should rise during wartime, especially with the primary exporter of grain in Europe now embroiled in conflict. Due to the war, Russia’s total grain exports had significantly decreased since last year. The amount flowing into Austria alone had dropped by a quarter. Undoubtedly, this shortfall was offset by increased domestic grain production in Austria. Although potash fertilizer had only just begun to be promoted last year and had not seen widespread civilian use, Austria had state-owned farms to rely on. In fact, the number of government-run farms had been steadily declining due to high administrative costs. Many small and medium-sized farms had been leased to individuals. Even so, the land occupied by state-owned farms remained considerable. In Europe alone, they accounted for less than five percent of arable land, but the situation was different when including other territories. Take the Anatolian Peninsula, for example. Except for noble estates and land grants awarded for military merit, most arable land there belonged to state-owned farms. This was not because Franz preferred running so many state farms, but because it was a practical necessity. Without government intervention, farmlands left behind by the Ottomans would be abandoned. Selling them to civilians was out of the question, as it would weaken the appeal of land grants for military service and undermine the very foundation of Austria’s system. Aside from early land redemption and brief colonial openings, the only reliable way for ordinary people to obtain land was through military merit. As for the reason, anyone who knew a major continental war was coming would have made preparations. Why would soldiers risk their lives without sufficient rewards? And if there was not enough land stockpiled, what would there be to grant them afterward? The European continent was densely populated, with no unclaimed territory left. War spoils could not be relied upon. Given this context, even knowing the high operating costs of state farms, Franz had to grit his teeth and carry on. If the losses became too much, the farms could be leased out. As long as the land remained state-owned, it would not affect future rewards granted to individuals. In fact, France’s national agricultural development plan was inspired by Austria. Seeing Austria manage a network of farms, the French followed suit. What they didn’t know was that Austria’s farms were barely holding up. On the surface, thanks to support from affiliated processing companies, Austrian farms appeared to be running well and generating profits for the government each year. In reality, it was those affiliated enterprises that were profitable. Most of the farms themselves were only breaking even. Very few generated direct profit. These were not public companies, and state-owned enterprise financials were confidential. Public disclosures only showed total profits. External observers had no idea about internal structures or asset allocations. To Napoleon IV, these figures appeared promising. Since someone suggested emulating Austria, why not? There was no reason Austria could succeed in something France could not. As for internal realities, bureaucrats below rarely reported the full truth. How could an emperor, shut inside the inner palace, possibly know? Especially after his visit to Algeria, Napoleon IV had attributed every issue to bureaucratic corruption and negligence. Despite owning a vast amount of farmland, state farms did not devote most of it to grain cultivation. Their real value lay in setting examples and driving trends. There was never a shortage of clever people in the world. With the government promoting potash fertilizer and state farms using it at scale, some private individuals dared to take the risk and try it themselves. Government officials were among the first to use potash fertilizer on their own land. The final outcome was a significant increase in Austria’s grain production last year. The total production growth was not the 3% estimated by the Agriculture Ministry, but 6.7%. Of course, this figure included newly cultivated land, which also contributed to increased grain output. Do not underestimate the 3.7% discrepancy. With Austria’s agricultural base, that amounted to enough food to feed millions of people for a year. Britain and France also launched agricultural initiatives, boosting output in their colonies and reducing grain imports. The end result was that even with reduced Russian grain exports, prices on the international grain market dropped instead of rising. A decline in grain prices might be understandable, but prices of textiles, steel, and other goods falling as well left Franz puzzled. This was wartime, with Britain and France locked in a major struggle. How could the prices of strategic materials fall? Holding the report in his hand, Franz asked in disbelief, “Are you sure this price list isn’t the wrong one?” Minister of Economy Reinhardt replied, “Your Majesty, we’ve confirmed it multiple times. These figures accurately reflect average prices in the first quarter. Not only have domestic prices not risen, but the same trend is seen across Europe. Apart from a brief surge at the beginning of the war last year, prices this quarter have returned to rational levels. The Anglo-Russian War’s impact on Europe’s economy is far less than we had expected. In particular, demand for materials is far below what we projected. As for the British, they can rely on domestic production. The low import volume from Russia, according to our analysis, stems from two main reasons. First, the Russian government prepared for war in advance and stockpiled supplies. Our export records from last year prove this. Second, material consumption on the Afghan front is far below our earlier estimates. I consulted the General Staff. The reduced usage is partly due to Afghanistan’s terrain, which hampers heavy equipment deployment. Another factor is the British military’s poor performance, which has prevented any major, evenly matched battles.” This answer left Franz with nothing more to say. If the fighting wasn’t intense, of course material consumption would be limited. Grain, which normally had the highest consumption, was not in short supply for Russia and did not require imports. The British could source from India and had no need to ship from Europe. After war broke out between Britain and Russia, capitalists across Europe ramped up production, hoping to make a fortune. But while production capacity increased, the two warring nations’ actual demand for materials fell short of expectations. This led to an unfortunate situation. In the era of free trade, any time supply outpaces demand, prices inevitably fall. Were it not for the ongoing war and the market’s lingering confidence, the situation could have been even worse. With a sigh, Franz remarked, “At this rate, a new economic crisis is almost upon us. Capitalists all thought the Anglo-Russian War would be even larger than theRusso-Prussian War and rushed in hoping to profit from war. But the situation is clear now. No matter how much the conflict escalates, we won’t see millions of troops clashing in prolonged battles. If this continues, the Anglo-Russian War might become the trigger for a new wave of overcapacity in European industries.” Every round of overcapacity stems from capitalists misjudging market trends. The smart ones still had time to cut their losses. But if they held on until the war ended, total collapse would be inevitable. Franz understood this well, but chose not to intervene. It was a thankless job that would only bring resentment and blame, without any real benefit. Foreign Minister Wessenberg said, “Overcapacity is a minor issue. At worst, it just reshuffles the industry. The real trouble is the recent flurry of petty actions from Britain, France, and Russia. Especially the British, who have been constantly stoking tensions between us and the French. Once or twice is tolerable, but repeated provocations strain our relationship with France. It cannot endure much more. Just recently, the British government even subtly hinted that if we ceased supporting the Russians, they would back our unification of the German states. If nothing else, they have likely offered the French a similar deal, perhaps an even more generous one.” Not just Austro-French relations, no bilateral relationship could withstand prolonged sabotage. Even knowing it was a British scheme, the underlying issues between Austria and France remained deeply rooted and unsolvable. No matter how much both governments tried to suppress tensions, the resentment would build up over time and eventually explode. Chancellor Karl shook his head and said, “The real issue lies with the French. If they give in to temptation and accept Britain’s offer, a continental war will become inevitable.” Under the original plan, if they followed it step by step, Austria’s unification of Germany was only a matter of time. The Austrian government had no reason to take unnecessary risks. But France is different. Its Central European strategy has become crucial for advancing its status. If it fails to expand into Central Europe, this moment may become the peak of French power. After that, decline is the only path. In truth, France’s decline has already begun. Looking at the world stage, France’s height in international prestige and comparative strength peaked between 1870 and 1881. That ended with the gunfire of the Paris Revolution, which severely weakened France. It is only now beginning to recover. Compared to Britain and Austria, France wasted eight years. If it fails to resolve its energy issues, things will only get worse. Under these circumstances, if the French government refused to accept decline and chose to take a gamble, it was only a matter of time. Franz furrowed his brow and said slowly, “We have to account for that possibility. We must accelerate our military preparations to avoid being caught off guard. Strengthen surveillance of the French government. If there is any sign of them preparing for war, it must be reported immediately.” Austria’s preparations had already begun. But for the sake of secrecy, they had proceeded in a very low-key manner. After all, this was not the ideal moment for a decisive battle. Austria had not yet reached its peak strength and its national power was still growing rapidly.
*** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)
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The french honestly get a bit to much credit in this story, it was already over for them after the ruinous Napoleonic Wars.
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