At the Vienna Grand Hotel, a touching scene unfolded as the two unlucky men poured out their troubles to each other, a moment that could bring sorrow to those who saw it and tears to those who heard it. And then, nothing followed. No matter how much Maximilian wished to help, it had no real significance. Over the years, in his quest for restoration, Maximilian had exhausted not only his personal connections but had also accumulated a heavy burden of obligations. By now, his influence on the Austrian government had dwindled to almost nothing. Aside from appearances, Maximilian, the exiled Emperor of Mexico, was little more than an empty figurehead. His only real value lay in his high status, which allowed him to speak at critical moments. Whether that carried any real weight was uncertain. Even so, Leopold II was unwilling to give up this small advantage. After all, having someone to speak on his behalf was still better than having no one at all. No matter how little influence Maximilian carried in politics, he was still in a position to speak directly to Franz. The annual restoration funds of several hundred thousand were proof enough of that. Yet people grow with time. Although deeply moved and quite willing to help Belgium, Maximilian was no longer the naive young man he once was. “Leopold, I advise you not to set your hopes too high. From what I know, the Austrian government is again running a deficit this year. If you truly wish to secure funds from Austria, it would be wiser to seek financing through private channels. Although the interest rates will be higher, the political cost will be much smaller.” This was Maximilian’s sincere advice. Expecting aid or interest-free loans was asking too much. The days of the European War were over, and Belgium’s importance to the Holy Roman Empire had greatly diminished. The Austrian government was no longer a bottomless purse. If the amount were small, Belgium’s pleading and appeals might still work. But with the current massive financial gap, the stakes involved were far too great. Leopold II, of course, was aware of this. The problem was that he had no other options. Ordinary international financing not only came with high interest rates but also carried a host of political conditions. The most crucial issue was that the Belgian government had already mortgaged everything it could in previous loans. Now, with nothing left to offer as collateral, it was relying purely on the government’s credit, which the financial consortiums refused to accept. It was not only in Vienna; the Belgian government had sought loans in all the major financial markets across Europe. By now, almost every large bank and financial company in Europe was a creditor of the Belgian government. In order to raise enough funds, the Belgian authorities had engaged in repeated mortgages and even deceitful practices. Unfortunately, financial institutions were far too shrewd. They had no faith in the Belgian government’s repayment ability, always demanding large amounts of collateral while releasing only meager sums in return. With postwar reconstruction expenses far exceeding the budget and normal commercial channels blocked, Leopold II undertook this journey to Austria. “Maximilian, do you not already know what those vampires are like? With Belgium’s current condition, do you really think it is possible to obtain a proper commercial loan?” Seeing Leopold II’s helpless expression, Maximilian nodded sympathetically. Having once been an emperor himself, he knew well enough what bankers were. “Lending umbrellas on sunny days, only to take them back when it rains.” This was not just a saying. Back when he held the throne of Mexico, Maximilian had endured the same troubles. Loans that appeared generous on the surface were only designed to deceive the public. The real interest rates were always shockingly high. Maximilian still vividly remembered the first time he secured a loan. He mortgaged Mexico’s silver mines and obtained what seemed to be a favorable deal. The nominal annual rate was only 2.5%, but there were endless hidden fees. Worse, the loan was disbursed in installments while interest was charged on the full amount. Once calculated, the actual rate soared to 14.62%. And that was considered a generous offer, arranged only because Napoleon III had personally intervened with the French financiers on his behalf. Without government mediation, left to the bankers’ free hand, it was outright usury. No one knew exactly how high the rates could go, but Maximilian himself had once taken out a loan at half the principal with a rate of 46.9%, loaded with countless additional conditions. Even so, Maximilian had not truly suffered a loss. Though the interest was steep and the conditions harsh, it was a high-risk loan. With the fall of the Mexican Empire, those debts turned into bad debts. The aftereffect was that when Maximilian later sought to raise funds for restoration, not a single bank was willing to lend to the exiled government. Even when he tried to borrow under his own name, no bank would provide credit. Government debt was not the same as imperial debt, and there was no joint liability. In theory, as a direct member of the House of Habsburg, Maximilian should still have been considered a first-rate client in the eyes of bankers. Perhaps he could not borrow enormous sums, but securing a million or two should have been entirely possible. Unfortunately, Franz had long ago sent word to the financial world that any bank daring to lend to Maximilian personally would be opposing the Habsburg dynasty itself. Capital is always profit-seeking and timid. No bank was reckless enough to risk confrontation with the Habsburgs for the sake of a little interest. Unaware of this, Maximilian suffered rejection after rejection, believing instead that he had become a fallen phoenix, abandoned by the vampires who once circled him. After some hesitation, Maximilian said slowly, “Leopold, on this matter, I can only help convey that your country is facing difficulties. The final decision still rests with the Austrian government. You should not place too much hope in it. My elder brother rarely involves himself in such affairs.” Politics was always this pragmatic. Any decision likely to offend was handled by the cabinet, while Emperor Franz himself usually appeared only when all parties were satisfied. From Maximilian’s understanding of his brother, unless the Belgian government could present sufficient benefits in exchange, such a thankless task would almost certainly be rejected. “Thank you.” “If the Austrian government can provide us with the assistance we need, then in the future all of Belgium’s international trade settlements will be conducted in guilder.” Leopold II said through gritted teeth. In a certain sense, this was equivalent to selling off part of national sovereignty, but Belgium no longer had a better choice. With insufficient funds for postwar reconstruction and French reparations still out of reach, Belgium had already mortgaged everything it could. Now, this was the only bargaining chip left in hand. If Leopold II had not discovered that the Austrian government was preparing to turn the Guilder into an international settlement currency, he would not even have realized that a settlement currency itself could be offered as part of a negotiation. After all, until then, most international trade settlements had been conducted in gold, with silver occasionally used as well. The use of the Guilder in settlement only occurred when countries traded directly with the Holy Roman Empire. Switching entirely to the Guilder for trade settlement did not only mean abandoning gold and silver; it also meant that Belgium’s currency would be pegged to the Guilder, changing the system from a purely gold standard to a mixed Guilder-gold standard. Since the Guilder could be freely exchanged for gold and its value remained relatively stable, the difference between this mixed standard and a pure gold standard was minimal. Minimal for now, however, did not mean minimal forever. Once the Guilder was unlinked from gold, the situation would be completely different. Without question, no one at the time had grasped this possibility. Ordinary people could not even imagine the Guilder losing its gold backing. No one foresaw such rapid economic development that global gold production would be insufficient to meet real demand. Had Leopold II known this, he would never have so casually placed such a concession on the table. At this stage, the conditions he offered could only be taken as a gesture of goodwill, while the true price to be paid in final negotiations would certainly be much greater. Maximilian nodded, breathing a small sigh of relief. The struggle for monetary supremacy between the Guilder and the Pound was no longer new, and even a political exile like him had heard of it. Belgium’s current stance was not only about economic benefit but also about choosing sides politically. Years earlier, Britain and Austria had each tried to establish their own settlement systems and sought to win over European states. At that time, however, conditions had not been mature enough, and while some nations showed leanings, none dared to announce that they would conduct all settlements in a single foreign currency. If Belgium were to step forward now, it would become the first country in the world to openly declare that all of its trade settlements would be conducted in Guilders. For this reason alone, it would earn considerable goodwill from the Austrian government. At this point, only Belgium, poor and lacking in resources, dared to make such a move. Adopting the Guilder in full settlement not only offended the British government politically but also effectively shut Belgian goods out of the British market. Whether for pride or for profit, the British government could never accept the Guilder as the settlement currency for Anglo-Belgian trade. For the moment, trade between Britain and Austria was still largely settled in gold. Even the Austrian government, though eager to elevate the Guilder to the status of an international settlement currency, was not so radical. For now, the plan was limited to making the Guilder the settlement currency within the European Alliance. Leopold II understood the risks perfectly well, yet he acted anyway. The reason was simple and harsh: only Britain and Austria had the strength to provide Belgium with the funds it so desperately needed. Although the Austrian government seemed to be under financial strain, that was only relative. With some adjustment, money could always be found. Moreover, the government’s lack of immediate cash did not mean it was unable to provide funds at all. After more than a year of recovery, the financial markets of the Holy Roman Empire, however tight, could still produce several tens of millions when needed. Reconstruction funds were not meant to be spent in a single day. As long as Belgium could secure eight or nine million at once to cover immediate needs, the rest could be disbursed in the following months. The European situation was now clear, and Belgium no longer had the luxury of wavering. To go begging Britain for loans at such a moment would have been suicidal. Since Belgium had to take the role of a subordinate anyway, Leopold II decided to gamble on becoming the foremost one. Though the foremost subordinate would be expected to charge at the front and face greater dangers, the rewards were correspondingly rich. The Belgian leadership had studied the matter thoroughly beforehand. With the momentum the Holy Roman Empire had gathered, as long as the Austrian government did not act recklessly, its dominance on the Continent was assured, and the likelihood of replacing Britain as the ruler of the seas was very high. Given Belgium’s limited size, if it did not align itself immediately, its value would vanish once another country seized the opportunity first.
*** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)
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