What worried the British government was not only the international situation, but also the economic problems that came with it. If nothing unexpected happened, the markets abandoned by the French would mostly be taken over by Austrian industrial and commercial goods, leaving Britain only scraps to pick up. The law of the strong becoming ever stronger applied here as well. Austria was already the industrial hegemon, and now, having seized the French markets, its industry and commerce would only develop further. Anyone with a bit of common sense knew that the more industrial and commercial goods were produced, the lower the costs would become, and the stronger the competitiveness in the market. The market was only so large. With Austria’s industry and commerce advancing further, competition with Britain was inevitable. If nothing else, Britain’s share of the European market was bound to be squeezed. As the market shrank, corporate profits would decline in turn. With less profit came reduced investment in product research, development, and promotion. This was a vicious cycle. Of course, these were long-term problems. Britain had the wealthiest colonies in the world and could hold on for the time being. At worst, the economy could be gradually restructured, abandoning the low-margin manufacturing industry and expanding vigorously into finance and services. That was what happened in the original course of history, and it could be done again now. Long-term problems were matters for the next administration, or the one after that. Gladstone had no need to worry about them. However, the immediate troubles alone were enough to give him headaches. As the world’s foremost financial empire, Britain could hardly avoid moneylending. Everyone knew that those who played with finance were bold to the point of recklessness, with shattered moral compasses scattered beneath their feet. As long as the profit was large enough, no matter how great the risk, there would always be someone willing to do it. Britain, which prided itself on the principle of a free economy, never interfered in private lending. And in the midst of the Continental War, it was only natural that speculators would swarm in. Where some made a fortune, others suffered ruin. With the war now over, the financial groups who had wagered on the French government found themselves hopelessly trapped. Had it been the capital of powerful consortia at stake, Gladstone would have opened a bottle of champagne in celebration, caring nothing for the fate of these bloodsuckers. Unfortunately, the bloodsuckers were shrewd. They had plotted everything in advance. The profits were their own, while the losses had been shifted onto funds raised from the public. From the end of the Continental War until now, more than three hundred financial institutions in Britain had declared bankruptcy, dumping the mess squarely into the government’s hands. There was no hope of collecting debts. From the looks of things, even if the French government had the money, the Anti-French Coalition had already stripped it bare. It was likely that for decades to come, the debt could never be honored. Before the French arrears could even be addressed, another blow fell upon the British government: the German Federation announced a default on its debts. This time, it was not just private lending at risk. A number of the loans had carried the explicit guarantee of the British government itself. There was no escaping it. The German Federation had declared bankruptcy. In order to cut expenses, it had even closed its embassy in London, entrusting its business to the Austrian legation instead. It was not a matter of deliberate evasion. The Federation quite literally had no money. The member states had ceased remitting taxes, the central territories had been ravaged by war, and the government was left without a single source of revenue. Austria was already footing the salaries of its civil servants. To expect repayment under such conditions was impossible. As the year-end settlement drew near, the government found itself unable to produce the funds to meet its obligations, and bankruptcy became the only option. In truth, the German Federation was not the only one to go bankrupt. Belgium, whose homeland had been reduced to a wasteland by war, also declared bankruptcy at this time. No money meant they could no longer pay. There was no pretense of poverty, and their default was not directed solely at Britain, but at all creditors alike. It was simply that Britain had lent the most and thus became the greatest victim. “Have the Belgian and German governments given any explanation?” Gladstone of the British government dismissed the French altogether, for he did not believe there was any hope of extracting funds from under the watchful eyes of the anti-French alliance. That Belgium and the Federation were bankrupt was a fact known to all, and Gladstone did not expect them to produce money immediately. Yet the lack of funds was not necessarily a fatal problem. Britain possessed professional financiers. As long as there were sufficient securities to pledge, another loan could always be arranged. The real question lay in their attitude toward the crisis. Was this truly a case of being forced to “suspend payments” for lack of funds, or was it an attempt to “repudiate the debt” entirely? “The Belgian government has proposed to postpone payment for five years, with French war reparations offered as collateral. Five years from now, once France begins paying its indemnities, those payments will first be directed to us. The German Federation’s proposal is a transfer of debt. They suggest deducting the corresponding amount directly from the reparations owed by France, leaving the French to bear the burden in their place. In theory, both proposals are feasible. The only question is whether the French have the means to pay at all.” It was not that George was soft-hearted, but the circumstances were unusual. Belgium was nothing but a pauper now, its treasury so empty that the doors of the state could practically be left open, for there was not a drop of oil left to squeeze. The German Federation looked slightly better on the surface, yet its government was far too weak, liable to collapse at any moment. If the debt issue was not settled quickly, once Austria declared the restoration of the Holy Roman Empire and dissolved the German Federation as an illegal body, even the creditors themselves would vanish into thin air. No nation would ever recognize the debts of an unlawful government founded by rebels, unless Britain somehow compelled Austria to acknowledge the German Federation as legitimate. But that was clearly impossible. To recognize its legitimacy was to admit the Empire’s division. The Austrian government had withstood such pressure thirty years ago, and even more so now would it refuse. “What a headache!” “From the look of things, the anti-French coalition will surely exact a heavy toll from the French, and war reparations will not be less than a billion pounds. Belgium made great sacrifices in this war, and both sentiment and reason demanded that Austria appease her. The share of reparations Belgium receives will not be small. With five years as a buffer, France should have regained some strength. Even if she could not pay the indemnity in full, the share allotted to Belgium each year would be enough to cover our debts. If there was still a shortfall, Belgium could make up the rest. But the German Federation’s proposal is troublesome. The transfer of claims may appear harmless, yet the risks we would shoulder are enormous. Not only must we worry about France’s ability to pay, we must also consider the political dangers. If Russia and Austria conspired to meddle, making France deliberately delay, or push those transferred debts to the back of the line, we might not see a single penny before the end of the century.” Gladstone could not help but feel uneasy. Britain had once played the same trick, but now the tables had turned and it was their turn to be placed in a passive position. To accept the transfer of the German Federation’s debt meant taking on enormous risks; to refuse it meant losing even the chance to shoulder those risks. The current German Federation was like a limited liability company burdened with immense debt and on the verge of bankruptcy, and one with the lowest possible registered capital at that. Since everyone was liable only within the limit of that registered capital, both the corporation and its shareholders could choose to cut their losses in time, with no intention of saving the company. For Britain as a creditor, this was a disaster. They could either chase after the bad debts owed abroad, or wait for bankruptcy liquidation. Foreign Secretary George added, “We are not the only ones. The other creditors of the German Federation are receiving the same treatment. Even the Austrian Royal Bank is no exception. George I has already shut his doors to visitors and left everything to the German Federation. The Kingdom of Hanover and the Federation have already completed their separation. In an attempt to cut losses, the Foreign Office proposed settling the debt with colonies, but they refused outright. They even declared that if anyone dared touch their colonies, they would go to war with us.” None of them were easy to deal with. Even Britain’s so-called favored son had now turned against them. No matter how close relations had once been, the debt was something they refused to bear. Even knowing that this would offend Britain beyond repair, they showed no fear. With the revived Holy Roman Empire standing as the continental hegemon, the British could cause trouble if they wished, but the central government would take the brunt of it. There was simply no reason for them to bow their heads. … The British government was not the only one troubled. Far away in Tokyo, the Japanese government was also ill at ease. Even though the Japanese army had already occupied the Philippine Islands, this brought no comfort to Emperor Meiji. There was nothing to be done. Plans could never keep pace with change. The Japanese government had originally prepared to take advantage of the situation once it became clearer, but due to poor communication, their information was delayed by several days. In those few days, the French had already surrendered, and the declaration of war that Japan had prepared could not even be delivered. They could not even manufacture a pretext. French Indochina had already been seized by the British, and the scattered islands the French held in Southeast Asia had fallen into Austrian hands. None of which Japan dared to provoke. Their gamble had failed, leaving Japan in a deeply awkward position, with international circumstances turning against them, especially with the upcoming Vienna Congress. Spain was a European power, a member of the anti-French alliance, and it was obvious whom the conference would support. Without recognition from the other nations, Japan’s occupation of the Philippines was nothing but a rootless duckweed, liable to be snatched away at any time. In the days to come, they not only had to guard against a Spanish counterattack but also remain vigilant against Britain and Austria making moves at them in secret. Previously, Spain had managed to hold the Philippines not solely because of its strength. Judged purely on strength, Spain, the Netherlands, and Portugal had no real right to retain their colonies. Much of it had rested on political factors. But now, with the upheaval of Europe’s balance of power and the Philippines falling into Japanese hands, those political factors no longer held sway. Japan had missed its chance to seize an advantage. If the government wished to hold the Philippine islands, it could only rely on strength. “Prime Minister, where do the European powers stand?” Itō Hirobumi’s expression tightened. With some difficulty, he said, “The outlook is grim. I personally visited the envoys of each nation, yet even when our Empire offered concessions, not a single country gave us its clear support. Among the great powers, the British remain vague, as though indifferent to our occupation of the Philippines. The Russians lean toward Spain, and even after our concessions, they gave no guarantees. Austria’s position is the most unfavorable for us. Ambassador Antonio stated plainly that they wish us to abandon the Philippines and our expansion into the South Pacific. The only good news is that Austria’s stance is not unyielding. They have no intent to interfere militarily. Their opposition to our occupation of the Philippines is likely only because Spain is their ally. According to reports from Europe, the Spaniards have already begun assembling an expeditionary fleet. At present, they have three newly built battleships and ten ironclads, all of them supplied from the French navy.” Navy Minister Saigō Tsugumichi asked in puzzlement, “Weren’t all of France’s warships to be put up for auction? How is it that they ended up in Spanish hands?” Itō Hirobumi explained helplessly, “Those ships were spoils taken from France by the anti-French alliance. Since Spain is a member of that alliance, borrowing them before the auction was hardly an issue. Even when the auction does take place, it will merely be for show. These vessels were destined for Spain regardless. What outsiders might purchase are only the ships the alliance members cast aside.” Pulling strings was nothing unusual. As a member of the anti-French alliance, not having special privileges would have been the real problem. Saigō Tsugumichi fell silent. A century-old navy was no joke. Spain might have declined severely, but its naval tradition was still intact. As long as there was money and warships, a fleet could quickly be mustered. Japan’s navy, on the other hand, had limited resources. Its most advanced vessels were only a handful of ironclads, or at best cruisers. Modern battleships did not exist at all. Warships were not ordinary weapons that could be purchased with money alone. Those available on the international market were all second or third-rate, sometimes even simplified versions. In this regard, the British were the most cunning players. When a pre-dreadnought of more than ten thousand tons faced a cruiser of just a few thousand, calling it a battle was generous. It was closer to slaughter. Naval warfare was not about hot-blooded bravery. No slogan could bridge such a gap in technology. No matter how confident he was, Saigō Tsugumichi could not bring himself to believe that Japan’s few worn-out ships could stand against the finest vessels of the French navy. Seeing the navy falter, Army General Ōyama Iwao hurried to speak up, “Do not worry, Your Majesty. The Imperial Japanese Army fears no enemy. As long as we are here, we will defend the Philippine Islands without fail.” Unlike the anxious navy, the army was full of confidence. In the earlier battles for the Philippines, the Japanese army had completely overwhelmed the Spaniards.
*** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)
[Previous | Table of Contents | Next]
Comments
Post a Comment