Holy Roman Empire - Chapter 496

Chapter 496: 69th Chapter: Striving to Not Become a Non-Emperor
 

The South African War had ended, and the Vienna Government, as the victor, found no joy in its conclusion. Reality had once again proven that in modern warfare, relying on reparations was no longer sufficient to compensate for losses.

Through the ceasefire treaty, the Vienna Government obtained 3 million in land redemption fees, plus ransom for prisoners of war, totalling 6.1268 million British Pounds, equivalent to 12.2536 million Divine Shield.

On the surface, this seemed like a colossal sum, but when compared to wartime expenditures, it was merely a drop in the bucket, not even recovering a quarter of the costs.

And this was under the circumstances where the French had lent their support from behind the scenes. Otherwise, the costs would have been even higher.

What they had won as spoils of war was a savage land. Because of the war, the land acquired from British-South Africa was so barren that not even a few native tribes could be found, let alone settlers.

If it weren’t for the strategic gain of securing an exit to the sea in South Africa, compressing the British influence to a corner, and ensuring the safety of Transvaal and the Orange Free State, it would have been a complete loss.

Despite the losses, the war was won, and rewarding the meritorious was inevitable.

However, since they had fought under the guise of the Boer Republic, the post-war reckoning of merits would have to be detoured until Austria annexed these territories for settlement.

The original elite within the Boer Republic, save for the few wise ones who had made the right choice, had all vanished in this reshuffling.

This was a gap in magnitude; in the former Boer Republic, those with hundreds of workers were leading capitalists, whereas in Austria, they’d be considered the scale of township enterprises.

With the British invasion, their bargaining capital had also vanished. They had dug their own pit by neglecting military preparations, and when the British invaded, they had to seek help from Austria.

They originally thought Austria would need to rely on these local bigwigs, but although they guessed the beginning right, they missed the ending.

The British were not as strong as they had imagined, which decreased Austria’s dependence on them. The wise ones promptly adjusted their attitude and pledged their loyalty; naturally, they faced no loss.

Those who reacted a step slower suffered tragedy. There was the economic loss, which goes without saying, but their political influence had also been diminished. Their previously held relations within the Boer Republic Government were now shattered.

That’s the harsh reality; without a reshuffling of power, how to promote those loyal to Austria?

These nobles, who had brought their own rations to fight, also had their interests to claim, and would certainly be part of the restructured rights.

Even if their roots were not here and they would not stay to develop, it was feasible to arrange for a scion of their family to come and develop. The established nobility knew well how to maintain their standing.

These new interest groups would form the foundation of Austria’s future rule over South Africa. As for the original interest groups, they could only be apologized to for their misjudgment.

With the signing of the Cape Town Treaty, the biggest obstacle to the formation of the alliance between England, France, and Austria was gone. On July 1, 1871, representatives of England, France, and Austria signed the alliance treaty at the Palace of Versailles, ushering in the era of great power hegemony.

For various reasons, this alliance treaty was only scheduled to last for five years. It was apparent that the confidence of the three nations in this alliance was lacking; it was merely an experiment.

Whether or not to renew the treaty after five years would depend on whether the nations could reap more benefits in that timeframe. The relationships between nations were just that realistic; only interests could sustain this alliance.

Even so, the European world was still in an uproar, and this alliance, fraught with contradictions, alarmed many.

For small countries that had relied on the contradictions between the great powers to survive, life became increasingly difficult, and breaking up this alliance became a common goal among numerous European nations.

In the Vienna Palace, Franz was holding a Cabinet meeting to discuss the African railway network plan.

Prime Minister Felix proposed, “Your Majesty, considering operational cost issues, the African Railway Network plan should be postponed. For now, we only need to complete the east-west and southwest strategic railways.

Blindly going ahead with railway network construction will bring a heavy burden to the treasury. Taking our domestic railway network as an example, despite the government’s preferential policies, many railway companies have gone bankrupt as a result.

Affected by this, the capital markets are no longer enthusiastic about railway investment. To date, there are few profitable railway companies in the country.

If we start the African railway network plan, financing from the capital market is nearly impossible, and all the burden would fall on the government.

This massive railway project has exceeded our financial limits; it might not break even for a hundred years.”

The bankruptcy of the railway companies was Franz’s fault. To quickly popularize the railway network across Austria, he had used development methods from a future era.

Introducing a concept, sketching a grand vision, attracting capital to the market. Railways naturally operated as monopolies, and once past the initial investment phase, making a profit truly wasn’t difficult.

This grand vision was much more tangible than the virtual concepts of later ages, and achieving it wasn’t impossible. It just required large initial investments and would take a long time to turn a profit.

With the help of capital, Austria completed its railway network in the shortest time. As for railway companies that had collapsed midway, they all shared one trait—a break in the capital chain.

This was all due to poor management on their own part, certainly not orchestrated by Franz for the government to take over.

Investment carries risks; enter the market with caution. In a capitalist market economy, it’s one’s own responsibility not to consider economic crises.

Let’s not speak of this explanation. Franz never stepped forward to promote railway investment; it was the experts who advocated, and capitalists who drove railway companies into bankruptcy. This has nothing to do with the Emperor.

The surviving railway companies prove that with a prudent selection of quality railway lines—even if bundling branch lines—one can still be profitable, as long as one doesn’t act foolishly.

Of course, the prerequisite is that you have enough money to weather the prolonged investment period; the return on investment later on is still relatively significant.

Don’t compare profits and stock prices; that stuff is all just a bubble. Not one company’s profits could keep up with the rise in its stock price.

At its peak, the total market value of Austrian railway companies once broke through the myth of twenty billion Divine Shields. Is Austria’s railway network worth twenty billion Divine Shields?

Without a doubt, this is impossible. Twenty billion Divine Shields in this era is an astronomical figure, more than all the gold that has been mined in the entire world combined.

If there were that much money, one wouldn’t just build a domestic railway network—there would be enough to lay tracks in every inhabited area of the world.

Keep in mind that, when taken together, the annual profits of Austria’s railway network are less than one hundred million Divine Shields, to be precise, less than five million Divine Shields in net profit.

Of course, there is great potential for growth. Now, the profits of railway companies that have stabilized and ceased continuous construction are basically maintaining a growth rate of more than thirty percent.

This isn’t because their profit growth rate is high, it’s because their base is too low. A natural rapid increase is expected when freight volumes rise by one percent, causing railway company profits to potentially increase by four or five percent.

It’s not an issue of high or low freight rates; it’s entirely due to insufficient business, leading many railway lines to lose money. Increase the volume of business and many branch lines will go from loss to profit. With the overall profit being inadequate, it seems quite substantial.

Take the Draco Railway Company as an example. In 1869, the profit was 12,000 Divine Shields; in 1870, the total profit was 1.386 million Divine Shields. On the surface, it looks like it increased by more than a hundredfold, but in reality, the annual business volume only grew by 5 percent.

This seemingly explosive growth is still insignificant. Keep in mind that the Draco Railway Company’s net assets are 130 million Divine Shields, with a market value of up to 530 million Divine Shields. At the peak, the market value even reached 1.68 billion Divine Shields.

Otherwise, if the growth rate is fast, this market profitability is not worth considering. To expect profits to recover investment costs, it’s impossible without ten or twenty years.

The same tactic can only be played once; capitalists aren’t fools. Trying to trick people with the African railway network also requires believers, right?

Hoping on retail investors, sadly, these minnows haven’t grown enough to be significantly harvested. Unless financial management regulations are relaxed to allow small-scale capital into the market.

Obviously, this is not feasible. If such an action were taken and a stock disaster occurred, the impact would be much wider.

Life is hard in this era. Ordinary people struggle daily just to survive; these people have no capacity to withstand risks. If they were really conned into it, wouldn’t it just be handing cannon fodder to the Revolutionary Party?

Digging one’s own grave is something that absolutely must not be done. As for the African railway network construction, it’s fine to delay it a bit.

Why rush colonial development when it suffices to provide industrial raw materials and markets? Even if massive development is desired, it would have to wait until after domestication.

Franz nodded and said, “The construction of the African railway network is indeed too costly. These two railways need to be replanned.

We already have some railways in Africa; these can’t be wasted. The southwest railway could be considered for direct connection in the Congo Region, and the east-west railway could also connect mid-way through the southwest railway.

This way, the strategic goal can still be achieved. Perhaps from a long-term perspective, this planning is a bit distant, but in the short term, it can minimize investment.”

This was not Franz showing shortsightedness. On the contrary, there was profound meaning in this move. Through this railway, Africa’s inland resources could be transported out and shipped back from the nearest port.

Once the strategic goal was achieved, the fact that the railways were not the shortest routes, increasing the integration costs of resources across Africa, was itself a means of balancing the colonies.

Have you not seen the British construct a bunch of chaotic railways in India, which even in the 21st century Indians have not managed to straighten out? It’s a tactic to check the colonies.

Franz’s approach was already quite restrained; at the very least, he did not unify the track gauge standards. No, it’s not entirely unified. Some railways specifically for mining might even be narrow gauge.

After reaching the port, they would load directly onto ships without needing to connect to the railway mainline. At least for mines not far from coastal areas, this kind of railway would be built.

Otherwise, by leveraging local resource advantages, there might be a complete industrial system in Austro-Africa in ten or twenty years. If domestication isn’t completed in time, that will be a big problem.

Franz definitely does not wish to move the capital to the African Continent to become a non-emperor during his lifetime. Even if shifting the strategic focus could unite the African Continent, creating the world’s largest empire would not do.