Holy Roman Empire

Chapter 243: Chapter 130: Economic Development
Colonizing overseas has never been an easy matter, especially for an emerging colonial empire like Austria, which had much to learn.

The African continent in this era was far from a hospitable place; the most formidable enemy was not the native tribes, but rather the harsh natural environment.

Poisonous insects, fierce beasts, and rampant diseases were the core factors that constrained the colonization of Africa by various nations. Otherwise, the nearby African continent would have long been completely carved up by everybody.

Frankly speaking, if the production technology of quinine had not made a breakthrough and the major problem of malaria had not been preliminarily solved, Franz would not have dared to recklessly set foot on the African continent.

For safety’s sake, all Austrian soldiers were receiving education in hygiene practices, including personal and camp sanitation, all of which had to be rigorously according to standards.

Even to avoid infection with local diseases, Franz distributed face masks, and soldiers were warned not to come into contact with natives at whim, and were strictly forbidden from sexual relations with locals, not to mention intermarriage was out of the question.

Franz had to take these issues seriously, as people with exotic tastes have always existed, regardless of the era, and were especially common in military camps. Fortunately, this batch of immigrants was expected to have a considerable number of young women, which should help resolve this issue.

After more than three months of preparations, on April 28, 1854, the first Austrian colonial vanguard departed from the port of Trieste.

With two second-class battleships as the core, accompanied by five cruisers and over a dozen auxiliary vessels, they took the first step in colonization with the strength of an infantry regiment, setting their sights on Guinea.

This time the adversary was native tribes; the navy was just equivalent to a training exercise, possibly even having to fight enemies akin to canoes, the main force would still be the army.

Originally, Franz had planned to establish a marine corps but was met with collective opposition from both the army and the navy. The army did not wish to diminish their say in colonial affairs, and the navy simply couldn’t afford it.

This was no joke; Austria’s navy truly wasn’t sufficient. To secure increased funds, prove your value first.

Politics is often that pragmatic; you get as much budget as your value dictates.

If the overseas colonies could bring substantial profits to the empire, then the navy could transform from a stepchild to a favored son.

Franz had no objections; this was the most rational approach. Without enough interests at stake, rashly expanding the navy would have been simply a waste of resources.

Rather than doing that, it was better to invest the precious funds into domestic economic construction. Even though the domestic economic boom hadn’t subsided, with several main railway lines opening, their stock prices were soaring sky-high.

Were it not for Franz’s insistence on prohibiting redundant railway construction, Austria would have already been emulating Anglo-American policies by now.

Of course, because a single railway line was authorized to only one company, it garnered capital enthusiasm. In this age, what was the most profitable? Clearly, it was monopolistic operations.

Under these favorable circumstances, the government managed to add several less popular routes to the valuable ones, making everyone more accepting.

To attract foreign investment, even the charges for railway transportation were determined by the market itself. Franz wasn’t worried about prices skyrocketing.

In a market economy environment, it’s the market that ultimately decides. Overall price levels in society are determined by supply and demand relationships, and the height of railway freight rates would certainly be based on the maximization of profits.

Capitalists naturally understood how to balance priorities. Now that railways were newly competing with traditional modes of transportation, without a price advantage, how would they attract customers?

To be able to save costs and time compared to traditional transportation meant progress. Qualms about high shipping fees potentially affecting the flow of goods would have to wait until the railway construction was completed!

Currently, all Austrian railway companies were in a state of pure investment; even the few main lines that were operational and profitable were still a drop in the bucket.

These profits were reinvested by the railway companies into the construction of new lines. Franz was well aware that ever since their inception, the Austrian railway companies had never once declared a dividend.

If they had never reaped any profits, could they be expected to lower their prices? If they did, the hotly pursued railways would suddenly become deserted.

At this time, the Vienna Government certainly wouldn’t hold them back. The promise of ten years of tax exemption had already been fulfilled; the government collecting no fees was an encouragement for everyone to keep building the railways.

“Time is life, time is money.”

This slogan had become the motto of all high-level executives in the Austrian railway companies. Starting operations and opening one day earlier meant reaping benefits one day sooner.

Up to this point, all the routes that Austria had opened had not let everyone down. Under the vast backdrop of free pricing, there were no loss-making routes, which vastly stimulated the nerves of certain individuals.

It’s unknown how many English and French capitalists wished to control the Austrian railway network to engage in monopolistic operations. They then fell into the delightful illusion woven by Franz and shattered it themselves in ecstasy.

Profits indeed lead to delusion; everyone was frenziedly building railway lines. To many, the time was ripe for claiming territory; owning one more railway line meant securing a stable future income.

There was no such thing as a railway bubble at the moment, not to mention monopoly operations. Nobody believed there would be losses.

Against this backdrop, Franz, who monopolized the supply of sand and stone raw materials, naturally made a fortune. It was projected that by the end of that year, Austria’s total railway mileage would surpass ten thousand kilometers.

At the beginning of Franz’s reign, the entire country of Austria didn’t even have three thousand kilometers of railway. On average, over fourteen hundred kilometers were completed each year.

In this era, only the Americans across the ocean could compare. Just like Austria, the United States also experienced a railway investment boom, only a little less frenzied due to Austria divesting a portion of the capital.

The total railway mileage for the entire New Holy Roman Empire exceeded twelve thousand kilometers. Indeed, even the railway mileage of those few small Teutonic sub-states surpassed two thousand kilometers.

It wouldn’t be right to call it madness, as the most active period of railway construction in history was in the Germany Region. By 1850, the total railway mileage in the Germany Region reached 5,856 kilometers, more than twice that of Austria.

If Franz hadn’t promoted Austrian Railway construction, the Germany Region would now be the fastest in European railway construction, and only the French could match them.

Of course, this refers to France during the era of Napoleon III. In 1854, the Germany Region had over three thousand more kilometers of railway than France.

Starting in 1854, French railways began to grow rapidly; by the time of the Prussia and France war, the total railway mileage of the two countries differed by only a few hundred kilometers.

Among the major European powers, the Russians were the slowest in railway construction; due to the Near East war, their railway construction projects had almost come to a halt until they reached 1,626 kilometers in 1860.

It was a disgrace amongst the powers; even Belgium and Spain had more. The same period saw England and France surpass the ten thousand mark, which was not even comparable in scale.

As the national territory expanded, the plans for the railway network naturally grew as well. There was no need for government promotion—private railway companies had already taken the initiative to stake their claims.

The tendering process for Austrian Railway lines was very interesting, as the faster the start and the earlier the completion, the more likely they were to win contracts.

Since the railway lines were authorized for free, the railway companies had to start and complete construction within the promised deadlines. Exceeding these deadlines would incur fines, and in severe cases, the government had the right to take back the construction rights. There were also rewards for early completion.

It all tested everyone’s capital chains. Franz didn’t engage in any underhanded tricks; as long as the railway company’s operations were good and they could complete on schedule, there would be no problem.

But if the capital chain broke, that would be a disaster. If construction hadn’t started yet, that was still fine—they could just pay a fine and return the unbuilt railway line.

If construction had already started, or even if the project was more than halfway complete but there was no financial support for the remaining construction, then the losses would be substantial.

All the investment would be wasted, with the government taking over unfinished projects for completion. Whether the railway company went bankrupt and restructured or just died off was not within Franz’s consideration anymore.

After all, it was a transparent strategy, laid out plainly for everyone to see. The government wasn’t deliberately setting traps—the tender notifications spelled everything out very clearly.

All these risks, under the temptation of monopoly, still led everyone to dive in headfirst. English and French capital came in, and so did Austrian domestic capital. Speculators vied with each other to get a piece of the action.

Because the government provided free labor, the cost of Austrian Railway construction in this era was artificially lowered, making the financial statements of various railway companies look attractive.

It can be said that Franz had taken great pains for the construction of Austria’s railways. Not speeding up was not an option, because a new economic crisis was not far off.

If Austria couldn’t take advantage of the economic boom to push domestic railway construction with foreign capital, then, when the economic crisis erupted and the railway bubble burst, the Austrian Government would be left to deal with all the unfinished projects.

How severe was the economic bubble in Austria? No one had an answer for Franz. However, one thing that could be observed was the rate of economic growth.

If goods worth One Hundred Shields were speculated to One Thousand Shields, wealth would have invisibly increased by Nine Hundred Shields. As long as the market could bear it, that was fine, but once the market could not, and prices fell back to the original One Hundred Shields, the Nine Hundred Shields added during the bubble would evaporate.

This is why so much wealth could disappear overnight during an economic crisis—the bubble had been burst, forcing the market back to rationality. But because of supply and demand, the price of goods often falls below their actual value.

Austria’s economic growth rate was very rapid at the moment. Even if all industries in Austria came to a standstill, just relying on the stock market bubble, the economy would have to grow by at least one percentage point every year.

This era was different from later times when government administrative measures intervened in the market economy to avoid major economic crises.

The economy was now left to develop naturally, with minor economic crises every seven to eight years and major crises every few decades.

Each time a crisis broke out, industrial output often fell by twenty to thirty percentage points, and sometimes even by as much as forty to fifty percent.

In any case, the larger the bubble, the steeper the subsequent fall, and the more vigorous the initial economic growth, somewhat like a roller coaster.

In 1854, the total railway mileage under construction in the New Holy Roman Empire reached 23,000 kilometers, and the blind investment in railways had become extremely severe.

However, Franz had no intention of stopping it. On the contrary, he was preparing to give it another push to heat up the market even more.

The explosive economic development model was always irresistible. Every industry in Austria was growing explosively. Since the outbreak of the Near East war, the average annual growth rate of industry exceeded fifteen percent, and the economic growth rate also surpassed ten percent.

If it weren’t for the western expansion strategy midway, these figures might have been one or two points higher. Rationality was long gone, the market had gone mad, and it was nearly at the point where any investment would pay off.

The Russians’ contribution was immense. Since the outbreak of the Near East war, Austria had entered an era of trade surplus. Before this, Austria was almost always in a long-term trade deficit.

Clearly, the factor that created the illusion in the capital market that “whatever you invest in earns money” was this sudden Near East war.

Because of the war, a large amount of cash flowed into Austria from Russia, stimulating the economic market. Many capitalists were blindly expanding production, hoping to make a big profit before the war ended.

The early colonization of overseas territories was also a means to divert domestic economic crises. However, African colonies were just in their beginnings and played a negligible role in the imminent economic crisis.