Holy Roman Empire

Chapter 251: Economic Transition

After the Vienna Peace Conference, peace returned to the European continent.

The signing of the “Four-Power Treaty” brought mixed feelings to different nations. For most countries, of course, it was a good thing, as restoring international order meant that they could now rest easy.

Order meant stability, and for the Kingdom of Prussia and the Kingdom of Sardinia, the stability of the European continent meant that they were now cut off from expanding on the continent.

They could not afford the cost of breaking the international status quo, which would inevitably lead to a backlash from the international order.

In Turin, Prime Minister Cavour, holding the “Four-Power Treaty” in his hands, was torn between joy and worry. A stable international situation was good for economic recovery, but it made the unification of Italy even more difficult.

After the Austro-Sardinian War, the path to Italian unification had changed for the Kingdom of Sardinia. Most people believed that it would be too difficult to regain Lombardy and Venice from Austria and that it would be easier to start with Tuscany, the Papal States, and the Kingdom of Naples.

Cavour also supported this approach. The strategy of unification, to tackle the easier goals first and the more difficult ones later, corresponded to the real situation of the Kingdom of Sardinia.

Despite the heavy losses it suffered in the Austro-Sardinian War and its continuing struggle to recover, the Kingdom of Sardinia remained one of the most powerful of the various Italian states.

However, with the emergence of the "Four-Power Treaty", their plans were essentially thwarted. Even the British, who supported them, would not allow them to disrupt the situation on the European continent at this time.

Since Great Britain and France lost in the Near East War, the Kingdom of Sardinia, as one of the parties involved, naturally had to bear the losses. They sacrificed thousands of lives without gaining any benefits.

Lacking the power to secure advantages for themselves, they dared not seize them. France was able to carve out a part of the Balkans because of its formidable strength.

The effectiveness of the French army in the Near East War was widely recognized by other nations. Gaining a third of the Balkan Peninsula was no problem for them. Neither Russia nor Austria would likely engage in a bitter struggle with France over such a small gain.

The high cost of modern warfare had been a lesson to everyone that it was best to avoid war with great powers unless absolutely necessary.

“Prime Minister, are you suggesting that we reconcile with the Austrians?” Victor Emmanuel II asked in disbelief.

It was known that the Sardinian government had often emphasized the hostility between the two nations to bolster morale. Now, a sudden change of policy was a great shock to the delicate nerves of Victor Emmanuel II.

Cavour explained: “Your Majesty, the international situation has changed. After the restoration of the Vienna System, there will probably be no wars between the great powers for a long time.

Relying on our strength alone, it is very difficult to defeat Austria. Continuing to be hostile to the Austrians will only make them more vigilant.

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

As a qualified politician, Cavour was able to calmly weigh the pros and cons, not allowing hatred to cloud his judgment.

Currently, the Kingdom of Sardinia is in a state of rebuilding. It’s only been five years since the Austro-Sardinian War, and they have yet to emerge from the shadow of that conflict. To recover economically as quickly as possible, it’s not wise to continue to confront Austria.

Historically, the unification of Italy was filled with coincidences. Now, while the Kingdom of Sardinia desires to unify the Italian region, this remains merely a wishful thought, with everyone still lacking confidence.

Especially after the failure of the unification war in Germany, the confidence of the Italian people was further shaken.

Apart from the British, which other great power wishes to see a unified Italy? The answer is none.

Even the support of the British is only verbal. To expect the British to take an active part in the war for the unification of the Italian region is a fanciful dream.

After hesitating momentarily, Victor Emmanuel II asked, “How do we explain this to the people? We have already deeply ingrained the hatred for Austria to inspire everyone’s fighting spirit.”

As he spoke, Victor Emmanuel II’s expression showed traces of worry, clearly indicating his skepticism towards Prime Minister Cavour’s proposal.

Cavour calmly replied, “Your Majesty, there’s no need to do anything specific, just downplay the situation. The anti-Austrian faction in our country will explain it to us. After all, we are currently in a position of weakness and must exercise restraint.”

He dared to propose an easing of relations with Austria, based on the presence of a significant anti-Austrian faction within the Kingdom of Sardinia. These people have lost their courage, fearing the outbreak of another war between the two nations.

Despite the loud calls for Italian unification, in reality, there aren’t many among the general populace interested in this. Most people do not believe that the Kingdom of Sardinia is capable of unifying the Italian region.

Especially after experiencing one war, the majority of the Sardinian populace favors peace. The experience of mourning and crying, which every family went through once, is not something anyone wants to repeat.

The idea of growing stronger through adversity? That doesn’t exist here!

Due to the war, the Kingdom of Sardinia is financially bankrupt. To pay off debts, even the army exists only in name now. With what resources could they seek revenge?

……

Franz was completely unaware of the shift in the Kingdom of Sardinia’s foreign policy; these were not his concerns.

With the end of the Near East War, Austria’s opportunity to profit massively from the conflict also came to an end. The arms industry had just made a fortune, reaping substantial profits during the war, so there was no so-called economic crisis for them.

In this war, Austria exported a total of 1.2 million rifles and over 2,000 cannons to Russia, along with various types of weapons and ammunition totaling more than 100,000 tons, as well as a range of other military equipment.

The total transaction value of these weapons and ammunition reached an astonishing 250 million rubles, setting a record for the highest value in a single arms deal in human history, surpassing the total value of international arms transactions over the past hundred years.

This figure might seem insignificant in the future, but at that time, it represented a huge sum, sufficient for Austrian arms manufacturers to undergo a comprehensive technological upgrade.

The arms industry didn’t need to worry; it’s a sector known for making enormous profits every few years that sustain it for long periods.

Other industries, however, faced challenges because the end of the war led to changes in the supply and demand of products, necessitating adjustments in production lines.

Post-war reconstruction could have been a lucrative business, but unfortunately, the Russian government was too impoverished to afford it.

With the client lacking funds, Franz was powerless. Given the current international political situation, it remained extremely difficult for the Russian government to seek foreign loans.

It’s foreseeable that in the upcoming year of 1855, the Austrian economy would inevitably face challenges. Of course, market feedback takes time, so an economic crisis wouldn’t erupt immediately.

Although the war was over, Austria had captured a considerable share of various markets that could still sustain the nation’s industry and commerce.

Vienna Palace

Franz spoke seriously: “With the end of the Near East War, our domestic economy will inevitably have to adjust. Private enterprises will make their own capitalist decisions; they don’t need our interference. However, state-owned enterprises must be prepared for industrial transition.

Many materials that were consumed in large quantities during the war are no longer needed in the market, so those production lines must be adjusted accordingly. What needs to be cut should be cut, and what needs to be closed should be closed.

We should redirect production towards what the market needs. Industries that cannot adjust or those with too low profits can be auctioned off.

The government only needs to control industries vital to national welfare and maintain a certain influence in general industries.”

Franz did not adhere to the notion that state-owned enterprises were untouchable, as private capital dominated the economy at the time.

The Austrian government’s ownership of so many industries was due to special circumstances, not because it originally intended to manage so many. Franz was under no pressure to sell some of these enterprises.

Prime Minister Felix replied, “Your Majesty, now is not a good time to deal with these industries. Everyone knows the war is over, and without foreign trade orders, these businesses simply won’t sell for a good price.

In addition, the placement of personnel from state-owned enterprises is very troublesome. It would be better to wait and let the market adjust before addressing this issue.”

Franz shook his head and said, “No, by the time the market has adjusted, new enterprises will have already sprung up. Who will buy these low-value enterprises from us then?

The same enterprise, in the hands of the government and the hands of capitalists, is not the same concept. Based on past experience, many enterprises that failed under government management flourished after being sold to capitalists.

We can’t just look at the price issue, we have to look at the bigger picture and ensure the country’s rapid economic development.

Why worry about personnel arrangements? Just reassign them. The Balkan Peninsula requires administrative officials; some can be sent there.

If an enterprise has come to the point of auction under their management, can they still claim to be meritorious officials with a clear conscience?”

Others may not be aware of the impending economic crisis, but Franz senses something unusual in the capital market. Before the crisis erupts, gathering as much capital as possible is essential.

Franz is not worried about employee arrangements at all. Regardless of who the boss is, it’s all the same for the ordinary workers at the bottom.

The state-owned enterprises in Austria have not been around long enough to form interest groups, and they simply don’t have the power to negotiate with the government.

If the enterprises are sold, the leaders in charge should consider themselves lucky not to be held accountable. They can only dream of being treated as distinguished contributors!

Austrian state enterprises have a high degree of autonomy. The fact that they have fallen into difficulties or dead ends in the favorable environment of economic development demonstrates their incompetence.

Franz naturally won’t show any favor to these incompetent people. Not sending them all back home is already a form of mercy.

Of course, the severe shortage of entry-level civil servants in the Austrian-ruled portions of the Balkans is also a significant factor. These individuals may be of average ability, but they are safe to use. There’s no need to worry about them colluding with the remnants of the Ottomans who escaped capture.

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