Holy Roman Empire

In 1879, the year marked a turning point for the entire world, with both politics and economics deeply affected by the Russo-Prussian War.

Due to the tense situation in Europe, France and Austria focused heavily on the European continent, refraining from stirring trouble elsewhere. Even Britain, though briefly intervening in South America, kept its primary focus on Europe.

With the three big bullies preoccupied and restrained, other nations naturally followed suit.

At this time, colonial empires displayed sharp political sensitivity. If they diverted their attention away from their homelands amidst the tense European situation, what if things spiraled out of control?

For fragile independent nations, this global pause in imperial ambitions came as welcome news, offering a rare period of peace and stability.

The Russo-Prussian War even suppressed conflicts among Britain, France, and Austria. For their common interests, the three great powers aligned early on.

Of course, this alliance was fragile. If the international situation shifted drastically or if power imbalances emerged among the three nations, this alliance could collapse at any moment.

While the impact of the Russo-Prussian War on international politics would be more apparent in the post-war period, its impact on the global economy was immediate and significant.

Numerous industries were affected, touching almost every sector. However, agriculture, manufacturing, finance, and services benefited the most.

In the capitalist economic system, a new wave of prosperity began. The agricultural crisis faded away, manufacturing overcapacity disappeared, and booming economic growth directly fueled the development of the financial and service sectors.

Although the war had only just begun and the greatest economic benefits brought by it had not yet fully materialized, capitalists were brimming with confidence.

A flood of speculative capital surged into the market, and the economic environment suddenly improved dramatically. Job advertisements appeared on every street corner, and in war-related industries, workers’ wages saw slight increases.

According to statistical data, Austria alone saw new investments totaling 160 million guilders in November, a 76.4% increase compared to the same period last year.

The majority of these funds flowed into manufacturing, with factories rising one after another. Clearly, investors were highly optimistic about this opportunity.

This wasn’t limited to Austria. The entire European continent was experiencing a similar boom. Capital moved like a frenzy, pouring into various industries in a rush to capitalize on the Russo-Prussian War.

Looking at the statistics, Franz furrowed his brow and said, “The market is overheating. While war consumes significant resources, the wallets of Prussia and Russia are not bottomless.

Neither Britain, France, nor us will provide them with unlimited funding. It won’t be long before another wave of overproduction hits, and post-war Europe will likely suffer economic devastation.”

Minister of Economy Reinhardt Haldergen explained, “Your Majesty, this is an inevitable law of economic development. In previous wars, many people made enormous fortunes, and they’ve been blinded by profit, ignoring the risks involved.

This isn’t just happening domestically, the same scenario is playing out across Europe. According to economic experts, in the past two months alone, European investment has increased by at least 50% compared to the same period last year.

Post-war overproduction will become a common challenge for all European nations. This will indeed be a massive problem, but it also presents a tremendous opportunity.

If we seize this opportunity, we can strike a decisive blow against French manufacturing and weaken our greatest competitor.”

In this era, there was no concept of anti-dumping and free trade was the dominant trend of the times. The French, unable to withstand the pressure, joined the free trade system six months ago.

The core principle of “free trade” was to eliminate government restrictions and barriers on imports and exports, remove special privileges and benefits for domestic goods, and allow goods to flow freely in and out of markets, competing openly both domestically and internationally.

On the surface, this seemed beneficial for everyone, offering access to global markets while removing trade obstacles.

In reality, however, there were significant disparities between enterprises and between nations, and these differences directly translated into varying levels of market competitiveness.

Without a doubt, resource-scarce France found itself at a disadvantage in this round of competition. The need to import raw materials significantly increased their production costs.

To cut costs, capitalists naturally sought to suppress workers’ wages. The influx of cheap Italian labor further facilitated wage suppression.

In the past decade, average wages across Europe grew by 23.8%, while France’s average wage grew by only 5.4%.

Against this backdrop, conflicts between French and Italian workers became increasingly common. Despite the French government’s efforts to suppress these tensions, their efforts had little effect.

Unfortunately, even with lowered labor wages, the international competitiveness of most French industrial and commercial goods remained weak.

This was simply because, in this era, labor costs were already relatively low. Except for labor-intensive industries, labor costs accounted for less than one-fifth of total production costs, sometimes even less.

The main contributor to production costs was industrial raw materials. Without addressing the root issue, how could market competitiveness be improved?

The market operates as an integrated system. While lowering labor costs, purchasing power was also weakened.

Despite having a population of 60 million, France’s market consumption couldn’t compare to John Bull’s which only has 30 million people.

This weak consumption power fed back into industrial production, forcing companies to produce cheaper goods, creating a vicious economic cycle.

Take coal as an example. The industrial coal cost in France was 1.3 times higher than in Austria, and in some inland regions, it was more than twice as high.

This was just the beginning. High coal prices led to increased power generation costs, which in turn raised electricity prices. High electricity prices undoubtedly became the biggest obstacle to widespread adoption of electricity.

Falling behind in one step meant falling behind in every step. Without widespread electricity, the adoption of electrically powered machinery was impossible.

As a result, upstream manufacturers of electrical machinery struggled to grow, lacking the capacity to invest in and develop advanced equipment, gradually falling behind in international competition.

Downstream equipment users, unable to adopt the latest production technologies, were outperformed and even eliminated by their competitors.

In this ruthless era of survival of the fittest, falling behind meant being overtaken. While France’s military strength was sufficient to deter unprovoked attacks, economic competition was a different story. Every nation was a rival, and underhanded tactics were inevitable.

As long as crushing competitors was possible, paying a price was naturally worth it. Under the free trade system, when large-scale overproduction emerged, nations would have to compete based on industrial strength.

In this regard, the Austrian government was confident, and Franz was equally confident. Austria’s infrastructure development was unmatched in this era.

Not only did it have an advanced transportation network, but it was also one of the first European countries to popularize electricity. As the birthplace of the Second Industrial Revolution, Austria was at the forefront of emerging industries worldwide.

In this regard, Britain and Austria represented two extremes: one focused on emerging sectors, while the other emphasized traditional industries. Both had become leaders in their respective fields, creating favorable conditions for cooperation between the two nations.

Franz said, “In that case, let the crisis become even more intense! Ideally, let it crush the manufacturing industries of Europe and America together. It’ll be a cleanup act before the grand curtain rises.

This time, we can cooperate with British capitalists. Let private enterprises take the lead, and keep the government out of direct involvement. Once the Russo-Prussian War ends, we’ll jointly launch this campaign and ignite a capital war.”

Wars without gun smoke can sometimes be even more brutal. The destruction they cause is no less severe than that of military conflict.

It’s easy to imagine a future where unemployment and bankruptcy would once again become hot societal topics.

After a moment of contemplation, Minister of Economy Reinhardt Haldergen said, “Any nation that has joined the free trade system will be easy to deal with. Meanwhile, the United States poses a challenge, as they stubbornly adhere to protectionist trade policies. Prying open their market doors will be extremely difficult.”

Once bitten, twice shy. The American capitalists had been burned by British capital several times and were now thoroughly intimidated. They simply shut their doors and played their own game.

With their abundant natural resources, they could copy European technologies directly. Aside from their relatively small domestic market, they were doing quite well on their own.

Franz said, “Leave this issue to the Ministry of Foreign Affairs. When it comes to promoting free trade, the British have always been at the forefront.

We can join forces with others to pressure the United States. If they join, they’ll become half an ally. If they remain stubbornly resistant, then there’s no need to be polite.

Since they want to play trade protectionism, let them play to their heart’s content. An international embargo might be an excellent choice.”

To be honest, U.S. industrial and commercial products of this era weren’t very competitive. Many of their goods couldn’t even match Russian standards.

Without trade protectionism and with their doors wide open to competition, they would suffer catastrophic losses.

Franz didn’t expect the U.S. to fully open its markets. Even cracking the door slightly would be enough. If that proved impossible, smuggling would also be acceptable.

When it came to undermining competitors, Franz never missed an opportunity.

Prime Minister Felix stated, “Your Majesty, if we push any further, the post-war economic crisis could become extraordinarily severe. If the crisis drags on for too long, it might destabilize the European continent again, and we are not fully prepared for that.”

Man-made disasters are the most terrifying, especially those where only the beginning can be controlled, but not the outcome. Their destructive power far exceeds natural calamities.

With the arrival of the industrial era, the economy’s influence on political stability has become increasingly significant. There have been countless instances of economic deterioration causing political unrest and even leading to war.

Franz shook his head and said, “We’ll never have enough time to fully prepare. If we wait until we’re ready, the opportunity will have already passed us by. Moreover, if we don’t take action, it doesn’t mean the British won’t. Instead of reacting passively, we should take the initiative.”

Age brings conservatism, not because conservatism is inherently bad. In fact, for a great power, conservatism often means long-term stability, while recklessness is a path to disaster.

But this opportunity is too rare. If missed, acting later will come at an exponentially higher cost.

Simply put, Franz wasn’t one to sit still. While he wouldn’t risk military adventures, in the economic arena, he was more than willing to experiment.

If successful, it would be excellent. If it failed, the ones to suffer would be the speculators. The Austrian government had already amassed significant experience in managing economic crises, and the nation’s foundations wouldn’t be shaken.

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