Holy Roman Empire

Chapter 251: Chapter 138, Economic Transition
After the Vienna Congress, the European Continent once again returned to tranquility.

The signing of “The Four-Nation Convention” brought joy to some and sorrow to others; for most nations, it was naturally a good thing because the international order was reestablished and everyone could rest easy.

Order implies stability, and since the European Continent had stabilized, it meant that the paths for expansion for the Kingdom of Prussia and the Kingdom of Sardinia on the continent were cut off.

To disrupt the international situation would certainly incur the backlash of the international order, a cost they could not afford.

In Turin, looking at “The Four-Nation Convention” in his hands, Prime Minister Cavour was of two minds. A stable international situation was conducive to their economic recovery, but it also made the unification of the Italian Area even more difficult.

After the Ausa war, the unification route of the Kingdom of Sardinia had changed; most people believed that it was too difficult to take Lombardy and Veneto back from the Austrians, and it was better to start with Tuscany, the Papal State, and the Kingdom of Naples.

Cavour was a supporter of this route; the unification from the easy to the difficult was in line with the actual situation of the Kingdom of Sardinia.

Do not look at the heavy losses the Kingdom of Sardinia suffered after the Ausa war; they had not yet recovered. However, among the several sub-states in the Italian Area, their power was still among the top.

Now with “The Four-Nation Convention” coming out, their plans had collapsed, and even the British, who supported them, would not allow them to disrupt the situation in the European Continent at this time.

Since England and France had lost in the Near East war, as one of the investors, the Kingdom of Sardinia naturally had to share in the loss. Thousands of lives were lost in vain without any benefit to show for it.

Without the strength to secure their interests, they did not dare to take them. The French could carve out a piece of the Balkans for themselves because it was based on formidable strength.

In the Near East war, the combat effectiveness of the French Army was widely recognized among the countries. Keeping a third of the Balkan Peninsula was not an issue at all, neither Russia nor Austria would hassle with the French over such slight gains.

The high cost of modern warfare has told everyone it is best not to engage in war with major power unless absolutely necessary.

“Prime Minister, are you saying we should make peace with the Austrians?” asked Victor Emmanuel II in disbelief.

You should know that to bolster everyone’s courage, the Sardinian Government had not spared using the hatred between the two countries as a rallying point. Now, suddenly changing the policy was a severe shock to Victor Emmanuel II’s fragile nerves.

Cavour explained, “Your Majesty, the international situation has changed. After the rebuilding of the Vienna System, there will not be any wars between the major powers for a long time to come.

“Our strength alone is hardly enough to defeat Austria. Continuing to be hostile to Austria only makes them more vigilant, without any substantial benefits.

“Because of the political opposition between the two countries, we have also suffered huge losses due to the economic blockades imposed by our enemies.”

As a qualified statesman, Cavour could calmly weigh the pros and cons and would not be blinded by hatred.

The Kingdom of Sardinia is now in great need of recovery; it has only been five years since the Ausa war, and they have not yet emerged from the shadows of the conflict. If they want to recover the economy quickly, continuing the confrontation with Austria is clearly not a wise move.

In history, the unification of the Italian Area was filled with coincidences. Now, the Kingdom of Sardinia’s desire to unify the Italian Area is just wishful thinking; no one is truly confident about this internally.

The unity war launched by the Germany Region, which ultimately ended in failure, further undermined the confidence of the Italians.

Aside from the British, which great power would like to see the Italian Area unified? The answer is: none of them.

Even the British support was merely verbal. Hoping that the British would make an effort for the unification war of the Italian Area would be a fool’s dream.

After hesitating for a moment, Victor Emmanuel II asked, “How do we explain this to our people? As you know, to stir up everyone’s fighting spirit, we have fanned the flames of hatred toward Austria, and it has taken deep root in people’s hearts.”

During the conversation, a trace of worry was evident in Victor Emmanuel II’s brows; clearly, he was not optimistic about Prime Minister Cavour’s proposal.

Cavour calmly replied, “Your Majesty, there is no need to do anything, just handle it quietly. The anti-Austrian faction within our country will explain for us since we need to remain patient now when the enemy is strong and we are weak.”

He dared to propose easing relations between the two countries because there were many within the Kingdom of Sardinia who were fearful of Austria, people who had lost their nerve and feared that war might break out between the two countries again.

Do not look at the rallying cry for the unification of Italy; in reality, not many people among the public are interested in this. Most do not believe that the Kingdom of Sardinia can unify the Italian Area.

Especially after experiencing a war, most Sardinian People were of the Peace Party; after going through such grief and sorrow once, nobody wanted to experience it a second time.

Grow stronger through setbacks? Not at all!

Because of the war, the finances of the Kingdom of Sardinia were bankrupt, and to repay debts, even their military force existed in name only. What did they have left to seek revenge with?

 

The shift in the foreign policy of the Kingdom of Sardinia was something Franz knew nothing about; these matters were not his focus.

The Near East War had ended, and with it, the opportunity for Austria to hugely profit from the conflict. The arms industry had just made a fortune, garnering substantial earnings during the war, and thus, there was no so-called crisis.

In this war, Austria had exported to the Russians a total of 1.2 million rifles, more than 2,000 cannons, and over a hundred thousand tons of various weapons and ammunition, not to mention an assortment of other military equipment.

The total transaction price for the weapons and ammunition soared to 250 million Rubles, setting the highest record in human history for arms trade, surpassing the international market’s total arms transactions over the past hundred years.

These figures might seem inconsequential in the future, but at present, they represented a huge sum, sufficient for the Austrian arms industry to undergo comprehensive technological upgrades.

The arms sector did not require worry; it was an industry of windfall profits—no need to open for three years, but when it did, it reaped three years of profits.

Other industries, however, were different—since the war had ended, the relationship between supply and demand for products had changed, necessitating production line adjustments.

Post-war reconstruction was supposed to be lucrative, but unfortunately, the Tsarist Government was too impoverished to afford it.

Without funds from the client, Franz was helpless. Given the current international political situation, it was still extremely difficult for the Tsarist Government to seek foreign loans.

It was foreseeable that in the coming year of 1855, the Austrian economy would inevitably face challenges, though market feedback would take time, and the crisis would not erupt immediately.

Even though the war had ended, Austria had seized many markets that could still sustain domestic industries and commerce.

Vienna Palace

Franz spoke earnestly, “The Near East War has concluded, and it’s imperative that we adjust our domestic economy. Private enterprises can decide for themselves by capitalists, and they don’t need our intervention. Nevertheless, state-owned enterprises must prepare for industrial transformation.

Many materials massively consumed during the war are no longer needed by the market; therefore, these production lines must be altered, cutting what’s unnecessary and closing what’s superfluous.

We must shift production towards what the market demands. If an industry cannot pivot or offers too low a profit, we can auction it off.

The government only needs to control industries vital to national and public livelihood; for ordinary sectors, maintaining a certain influence will suffice.”

If it’s not profitable, then let it go. Franz did not cling to the notion that state-owned enterprises are immutable. The mainstream economy of this era was private capital.

The Austrian Government owning so many industries was due to special circumstances, and it wasn’t the government’s initial plan to operate this many industries. Now, selling some of them imposed no pressure on Franz.

Prime Minister Felix replied, “Your Majesty, selling these industries now might not be opportune. Everyone knows the war has ended and that, without foreign trade orders, these enterprises simply cannot fetch a good price.

Moreover, the redeployment of state enterprise personnel is quite troublesome. Perhaps it would be better to wait for the market to complete its self-regulation before we deal with this issue.”

Franz shook his head and said, “No, by the time the market has adjusted, new enterprises will have already sprung up. To whom will we sell these low-value enterprises in our hands?

The same enterprise, in government hands versus in capitalists’ hands, is not the same concept at all. Based on past experience, many enterprises directly mismanaged by the government, once sold to capitalists, quickly turned around.

We can’t solely consider the price issue; we must think globally to ensure rapid economic development within the country.

Why worry about personnel arrangements? We can just reassign them. There’s a shortage of administrative officials in the Balkans, so we could send some people there.

If an enterprise has come to the point of being auctioned off under their management, do they still have the audacity to claim they are meritorious officials?”

While others may be oblivious to the impending economic crisis, Franz sensed something unusual in the capital market. Gathering as much capital as possible before the crisis exploded was the key strategy.

Franz wasn’t worried about arranging for employees. No matter who the boss was, it would be all the same to the ordinary workers on the bottom rung.

The Austrian state-owned enterprises hadn’t been around long enough to form interest groups capable of setting terms with the government.

If the enterprises were sold off, the leaders in charge would be fortunate to not be held accountable. They could only dream of being treated as meritorious officials!

Austrian state enterprises had substantial autonomy. In an environment where the broader economy was flourishing, any enterprise that fell into hardship or a dead end demonstrated their incompetence.

Franz naturally would not show favor to such incompetents. Not driving these people home was already merciful.

Of course, the severe lack of grassroots civil servants in the Austro-Balkans was also a significant factor. These individuals might have average abilities, but their use was safe, and there was no fear that they might conspire with the remaining Ottoman remnants.