Good news kept rolling in, but trouble followed close behind. More allies made the road easier to walk, yet the more allies there were, the more disputes inevitably arose. The Continental Alliance already suffered from serious internal frictions. After expanding its membership, those problems only grew worse. If not for the Holy Roman government stepping in to mediate, the chaos raging across Europe might well have been replayed on the American continent. Foreign Minister Leo reported, “Your Majesty, news has arrived from our embassy in the Far East. The Japanese government has sent representatives with a formal letter, requesting ceasefire negotiations.” It had to be said that the Japanese of this era truly knew when to bend and when to stand tall. With no neutral country daring to step forward and mediate, they simply came knocking themselves. Doing so meant giving up any initiative at the negotiating table. But under the current international situation, Japan had no initiative to begin with, so there was really nothing to lose. What they truly had to give up was nothing more than some vague notion of “face,” and a kind of “dignity” that held no real value for the weak. The Continental Alliance had many member states, but very few carried real weight. As for anyone willing to speak on Japan’s behalf, there was none at all. After all, Japan had managed to offend three major bosses. Who would dare help them now, not knowing whether it would bring disaster upon themselves? The only path left to the Japanese government was to find a new patron and seek protection before the British collapsed completely. Looking across the entire world, there was no second power capable of doing so aside from the Holy Roman Empire. Politics had no room for sentiment. Even with existing frictions between Japan and the Holy Roman Empire, the Japanese government could only grit its teeth and approach anyway. This outcome was entirely expected. Still, when it truly happened, Franz could not help but want to laugh. To preserve his imperial image, Franz forcibly suppressed his amusement and said with a stern expression, “A ceasefire whenever they please? Do the Japanese think this is a child’s game? Tell them this. If they want a ceasefire, they must show genuine sincerity. Otherwise, they can lay down their arms and surrender unconditionally.” “Sincerity” was probably one of the hardest words in the world to define. What exactly counted as sincerity? No one could really give a clear answer. And that was precisely what Franz wanted to see. Only a deliberately vague response allowed him to avoid responsibility while leaving himself ample room to maneuver. Otherwise, if word ever got out that he had “instructed Japan to wipe out the Russian forces in the Far East,” where would Emperor Franz put his face? Scheming against allies was one thing. Allies, after all, were often used that way. But doing it openly and shamelessly crossed a clear red line. As the one who set the rules, Franz would never commit such an overstep. In contrast, letting the Japanese draw their own conclusions was far safer. No matter what happened afterward, it would have nothing to do with Franz. Ultimately, everything depended on the outcome of the Russian civil war. If Russia were torn apart by sheer luck, then it would mean the Japanese had failed to show sufficient sincerity and would have to be punished severely. If the Russians managed to weather the crisis, then for the sake of balancing Russian power, keeping Japan as a chess piece would not be a bad choice either. Of course, there was a prerequisite. Japan had to eliminate the Russian forces in the Far East and prove that it possessed the capability to restrain Russia. Fortunately, Franz’s plan was known only to himself. If the Japanese government ever learned the truth, it would likely suffer an immediate mental collapse. What made it even more tragic was that no matter how badly they broke down psychologically, they would still have to follow the script laid out for them. Betting on whether the Russians could survive at least carried a certain chance of success. But rejecting the script outright meant one hundred percent destruction. Chancellor Chandler said, “The Japanese are only a minor nuisance. A militaristic agricultural country like that is not worth spending too much of our attention on. As for the conflicts of interest among our allies in the Americas, those are not serious matters either. Give it some time and they can be resolved. The real problems are the Americans and the Russians. Although the United States has already gone through one split, the scale of the Union is still far too large. No one knows how much they managed to scoop up from the British this time. Once they digest those gains, they are bound to become a major headache in the future. The allied nations must also remain vigilant. While they have leaned toward our side in this war, the promised declaration of war against the Union has been delayed again and again, and they still have not truly acted. It is obvious they want to use the power of the alliance to expand their own influence. If this is not checked, it will become another scalding camellia sooner or later. As for the Russians, there is no need to say much. For the past few centuries, they have always been a threat to the European continent. They only behaved themselves for a few years after the Empire rose. The Russian government’s greed for land is endless. If their strength is not weakened, Europe will never truly know peace in the future. Now is the best opportunity. If we miss this chance and allow them to join forces with a resentful Britain and France, that will be an enormous problem.” It was clear that Chancellor Chandler no longer regarded the British as a serious concern. The world war had not yet ended, yet Britain had already been pushed two places down on the Holy Roman Empire’s threat list. By comparison, dealing with the United States was relatively straightforward. Since they were enemies anyway, as long as their last-minute defection was not accepted, the Empire could openly suppress them together with its allies. The most troublesome issue was how to handle the Russians. As Austria’s traditional ally and a key member of the Continental Alliance, the Holy Roman government could not possibly strike at them directly. Not only could it not act against them, but on the surface, they still had to provide assistance to Russia as an ally. Even cutting off the supply of strategic materials required an excuse, framed as “prioritizing supplies for Russian frontline forces,” otherwise it would not have been justifiable. This was already the limit of what the Holy Roman government could do. Supporting nationalist independence movements or aiding revolutionary parties was completely out of the question. “As for the American issue, we will set it aside for now and deal with it after the war against Britain is concluded. Regarding the Russians, it is inconvenient for us to intervene directly. Let the Prussian government handle it as they see fit.” Fortunately, the Holy Roman Empire still had Prussia, a steadfastly anti-Russian state. Otherwise, if someone needed to do the dirty work behind the scenes, Franz would not even know whom to put forward. These little maneuvers could not fool anyone who was paying close attention. Still, as long as the Holy Roman government firmly refused to acknowledge them, it was as if nothing had happened. As for Prussia’s anti-Russian actions, those could always be blamed on historical grudges. They had nothing whatsoever to do with the central government. … While the Holy Roman government was preparing for the aftermath, the British government was also thinking about its way out. With the war having reached this stage, Britain had effectively already lost. As more and more allies switched sides, the supply situation on the British Isles grew increasingly dire. Now Britain not only had to guard against enemy submarine attacks, but also had to watch its back against betrayal from so-called allies. Once an ally changed camps, all British assets in that country would instantly go up in smoke. In a sense, Britain’s massive overseas investments were one of the main reasons other countries dared to jump ship. By confiscating British assets, they not only offered a pledge of loyalty to the Continental Alliance, but also recovered a large part of the costs they had paid. Some countries even turned a profit. The war was not officially lost yet, but Britain was already feeling the aftershocks of defeat ahead of time. The loss of vast overseas assets dealt a heavy blow to British capital circles, and the financial markets in particular were a scene of utter devastation. The stock market was cut in half, then cut in half again. This was different from when the Continental Alliance had previously seized assets. Back then, people still believed that once the war ended, they could reclaim everything with interest. Now the situation was painfully clear. Anyone with even a little insight could see that the British Empire had already lost any real chance of winning the war. At best, the most optimistic assessment was that Britain might manage to withdraw intact after paying a certain price. The stock market trades on expectations. Now that expectations for the future were gone, it naturally became the biggest negative factor hanging over the market. Compared to ordinary investors, the well-informed financial conglomerates reacted far more violently. They began dumping assets at any cost, cutting their losses without hesitation. But selling at a loss was only the first step. Once they had cash in hand, the capitalists immediately looked for ways to convert it into gold. Even with a premium to pay, it did nothing to dampen their enthusiasm. Gold was still gold. Under the gold standard, when exchanging pounds for gold required a premium, the economic meaning was simple. Either gold had gone up in price, or the pound had depreciated. Since gold, as a reserve asset, had not changed in intrinsic value, the only possible conclusion was that the pound was losing value. And as that “premium” continued to rise, the pound’s depreciation quietly accelerated. Driven by the market’s shared expectation that the pound would keep falling, it was as if overnight the pound dropped from a world currency to something everyone wanted to get rid of. Under this broader environment, prices across the British Isles once again stepped on the accelerator and surged upward at breakneck speed. Forget about hoping for a miraculous comeback. At this point, people no longer even believed Britain could withdraw safely after paying a price. The stock market crash was only a secondary problem. What truly gave Prime Minister Campbell a headache was the financial crisis triggered by that crash. War is, at its core, a contest of money. The British Empire’s fiscal revenue was not particularly high, especially when compared with the Holy Roman Empire. The two were not even on the same level. Britain’s ability to mobilize enough funds for the war had always relied on one key factor: a highly developed financial system and a strong capacity for government financing. Yet now, with a financial crisis erupting, London’s financial markets have taken a severe hit. In the short term, raising funds from the market had become almost impossible. War was a bottomless pit that swallowed gold. With only the limited reserves in government hands, and no follow-up funding, Britain simply could not hold out for long. The situation was already dangerous. Now both material supplies and the government’s purse were in trouble at the same time. It would have been strange if Campbell was not panicking. But panic alone solved nothing. Britain’s biggest problem now was “confidence”. The public, interest groups, and even government officials all doubted whether the war could still be won. Unless the British army could score a major victory on the battlefield and shock everyone back to their senses, there was almost no chance of reversing this mindset. Chancellor of the Exchequer Asquith said, “Inflation has been severe recently. The lower classes are suffering badly, and the market is rapidly losing confidence in the pound. More and more people are choosing to exchange their currency for gold. Our gold reserves have fallen to their lowest level in fifty years, forcing us to temporarily suspend free convertibility. However, this only treats the symptoms, not the root cause. It can slow the outflow of gold for a time, but it cannot fundamentally solve the problem. If we want to avoid this situation altogether, the best solution is to sever the pound’s link to gold and implement a fiat currency system.” … Solutions are often forced out under pressure. If not for the wave of bank runs, Asquith would never have pushed for a fiat currency system. It was not that he did not understand its advantages. The real issue was the immense risk involved. One wrong step, and the pound’s value could collapse completely.
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