Holy Roman Empire - Chapter 519

Chapter 519: Chapter 92: Good News
 

International grain prices suddenly plummeted, and the domestic grain prices in Austria were also impacted, with prices experiencing a steep decline.

Domestic grain prices in Austria had always been lower than international market levels, but this time they had finally converged with the international standard.

It wasn’t just grain prices that continued to fall, but other agricultural product prices were similarly in decline. Capitalists were trying to hold the market, but it was futile against the vast supply.

As the international grain markets tumbled, a massive amount of raw grain was dumped onto the market, which also affected the export of processed grains.

Take flour exports as an example, not only has the price fallen by nine percent compared to the same period last year, but the total export volume has also shrunk by four percent.

This was an aftereffect of the Vienna Government dumping old grain onto the United Kingdom, where British capitalists, receiving cheap raw materials, tirelessly produced and encroached upon existing markets.

There was no helping it, as flour cannot be stored for long periods. To disrupt England and Russia’s grain trade, they could only impact it with raw grain.

With falling prices and shrinking exports, businesses dealing in agricultural product exports were having a hard time, especially those in the processing industry with low technological content.

Within the Austrian agricultural processing industry, a vast industrial chain had formed. It boasted over three million industrial workers, and just the businesses involved in flour processing numbered over eight hundred thousand people.

Behind them were tens of millions of farmers; the shock to the grain processing industry would inevitably affect the purchase of new grain.

In the Vienna Palace, Franz put down the document in his hand and picked up his teacup. The faint smoke rose gently, diffusing a delicate aroma.

“We must stabilize the domestic market as soon as possible. With the crash in international raw grain trading prices, it won’t be long before the prices of processed grains plummet as well.

The capitalists can’t hold out for much longer. In the face of interest, not many can remain rational, and the processed grain market won’t stay stable for long.

The international market is uncontrollable. We’ll hold onto as much market share as we can, without fussing over temporary gains and losses, but we must secure our domestic and colonial markets.

The domestic rate of grain consumption is growing nearly two percent. If we can hold out for two or three years, until the wave of farmer bankruptcies erupts in various European countries, we will be able to weather this crisis.

However, the government still needs to adopt more proactive policies and can’t wait for the market to adjust itself. We don’t have that much time to waste, otherwise, the advantages we’ve accumulated earlier will be squandered.”

The main reason for the increase in consumption is population growth, followed by economic development and the rise in people’s income, which in turn increases consumption.

The previous suggestion by Franz to absorb immigrants from various European countries was, in fact, a means to increase food consumption.

Of course, the main purpose of absorbing immigrants was for labor. Austria’s colonies had already grown quite large, and to develop these places required a significant population.

Even after many years of efforts to migrate to the African Continent, the total population in Austro-Africa had barely exceeded ten million.

This number was still far from sufficient. Other colonies fared even worse; due to their meager populations, they couldn’t even begin basic development.

Minister of Agriculture Hols stood up, took out a report from his folder, and walked over to hand it to Franz.

“Your Majesty, the Ministry of Agriculture suggests raising import tariffs on agricultural products to prevent foreign agricultural products from impacting the domestic market; at the same time, implement a minimum grain purchase price to protect domestic processed grain prices by suggesting a guidance price.

For processed grain export enterprises whose interests have been harmed, the Ministry of Agriculture suggests giving them a tax rebate subsidy on the export portion to compensate for some of their losses.

These are specific measures, along with corresponding supporting plans. Once implemented, domestic agricultural product sales prices will stabilize in the shortest time.”

Raising import tariffs on agricultural products is aimed at the Russians. In recent years, the Russian Empire’s grain exports have decreased but have not completely vanished.

However, this portion of grain did not directly enter the international raw grain market but was sold to Austrian grain processing businesses, which after processing, were sold on the international market, including being resold back into the Russian Empire.

Austria was able to hold up to seventy percent of the share in the international agricultural product export market, and the contribution of the Russians was significant.

Now, with a surge in Russian production capacity, Austria could no longer absorb it, and with the crazy increase in grain production in various countries in recent years, the international market had more supply than demand. Naturally, the Ministry of Agriculture’s priority was to protect the interests of the native nobility and farmers.

Setting a minimum grain purchase price was also one of the measures to protect farmers’ interests. This includes the guidance price for domestic processed grain sales that followed.

To put it simply, the government established a retail price range for processed grains, and businesses could only price their products within this range.

Before this, the Vienna Government already had a maximum selling price for agricultural products, and now they added a minimum price.

“Free market economy,” unfortunately, Austria had a market economy but no free market economy. Government intervention in the market was not a new occurrence.

Of course, if the industry was unrelated to international livelihood, like the trade in handicrafts and luxury goods, the Vienna Government never interfered; that was very free.

After a brief review, Franz nodded and then shook his head.

“The subsequent plans are all good, but we can’t implement the increase in import tariffs on agricultural products for now. If we raise tariffs, the Russians will definitely retaliate by raising tariffs on Austrian industrial and commercial products.

If this turmoil was confined to agriculture that would be enough, but if it spreads to other industries, the consequences would be even more difficult to control.

We can impose restrictions when executing the minimum grain purchase price, focusing only on the domestic, current year’s new grain; as for the tax rebate subsidy for enterprises, it will also be limited to products processed from domestic grain.

To prevent enterprises from cheating for subsidies, once they apply for the tax rebate, they are prohibited from purchasing foreign agricultural products for half a year.”

Franz still remembered that one of the key reasons for the falling out between Teuton and Russia in the original timeline was the agricultural produce tariff disputes. Of course, the situation was different now, as the Russians lacked the confidence to confront Austria.

But there was no benefit in merely exacerbating the conflict. Despite the poor economic development which made the Russian market less attractive, it remained an important market for Austrian industrial and commercial goods.

Moreover, the Russian-Austrian Alliance had not yet crumbled, and the trade agreements signed between the two nations were still in effect. Unless one was to breach the treaty, raising tariffs would be a joke.

The agreement explicitly stated that any tariff increase could not exceed five percent of the original rate, and the same commodity’s tariff could only be adjusted once every three years.

With an agricultural product tariff of four percent between Russia and Austria, an increase of five percent would result in a 4.2% rate. For such a minor increase, Franz might as well not bother adjusting it at all.

The Tsarist Government had repeatedly raised taxes on Austrian industrial and commercial products without changing the fact that Austrian goods filled the shelves of Russian stores, which spoke volumes.

Within the scope of the treaty between the two, no commodity’s tariff rate could exceed ten percent, and most were just a few points.

To override it was simple: break the treaty. Such an agreement was not easily secured by Franz, having finessed the Russians into signing it—how could he possibly initiate a breach?

From this perspective, the vision of the Minister of Agriculture left much to be desired. However, Franz generously overlooked this minor issue; technical bureaucrats couldn’t be held to too high a standard.

While Hols’ capabilities seemed average in other areas, he was formidable within his field of expertise. Under his leadership, Austrian agriculture had improved substantially over the years.

Optimizing agricultural industrial structures, promoting new agricultural technologies, and enhancing agricultural supply chains were all accomplished under his watch.

The current surplus in Austria’s agricultural production capacity was partly thanks to Hols’ contributions. Of course, he couldn’t be blamed for this. Changing the planting habits of farmers was too difficult while profits could still be made.

The agricultural crisis of the original timeline lasted over twenty years, driving numerous farmers into bankruptcy before balance was restored—the difficulties can only be imagined.

Transitioning to cash crops was not an overnight decision; it also had to ensure revenue. Unfortunately, due to opaque market information, no one could make such a guarantee.

Austria was not a planned economy; farmers grew whatever they pleased. If there was a shortage in the market this year, the same crops could rot in the fields unwanted the next year.

Compared to this, grains were relatively stable products. Perhaps the returns were a bit lower, but not to the point of complete loss.

After a brief pause to digest Franz’s words, Colonial Minister Stephen produced a document and handed it to Franz.

“Your Majesty, in recent times, gold mines have been discovered frequently in the South African region. The quality and reserves of these newly found gold mines are quite astonishing.

This is a report submitted by Viscount Feckney, the Governor-General of South Africa. Preliminary assessments suggest that this could be a gold deposit cluster even larger than that of West Africa, with potential reserves surpassing those of the United States.”

This was good news; Austria’s deficiency in gold reserves contributed to its loss in the battle for currency hegemony.

Franz was well aware of the abundant gold reserves in South Africa. Knowing was one thing, but speaking of it openly would make things difficult to explain.

With a strong religious atmosphere already prevalent in Austria, Franz had no intention of giving the Church further momentum. Having been reborn for so many years without a slip, he owed his success to his prudence.

After all, the gold buried underground wasn’t going anywhere. South Africa was occupied; these gold mines would inevitably be discovered sooner or later, with the gold ultimately flowing into Austria.

In fact, Austria’s luck with gold was also remarkable; nearly every colony had gold deposits. It wasn’t that Franz had specifically chosen these, but that reality had guided Austrian expansion in that direction.

When first expanding into the African Colony, Franz had not anticipated building such a foundation as he saw today. If Europe hadn’t undervalued the African Continent, Austria wouldn’t have had such an opportunity.

The expansion into Southeast Asia was entirely accidental and unexpectedly successful; the Central American Colony existed merely to interfere in the Civil War. Its current extent exceeded Franz’s original plans as well.

Before taking action, Franz had no idea that the small nations of Central America would prove to be so inept.

He had only planned to borrow a place to land, but accidentally facilitated the migration of Teutonic settlers from the United States, effectively taking over.

Of course, the rulers of those small nations would likely dispute this version of events. With a mere few tens of thousands of white citizens and armed forces never exceeding a battalion, what could they do to resist Austria?

Alaska was not even worth mentioning, as it was practically forced upon Austria by the Russians. If Franz’s lobbying efforts behind the scenes were ignored, it was indeed so.

Austria’s development to its current state was due not only to sheer effort, but fortune played a crucial role as well. Franz could only marvel at the legendary nature of reality.

Picking up the document and skimming through it, Franz found no surprises. The historical roles of the Transvaal and the Orange Free State republics had ended; they could now return to Austria’s embrace.

This was unproblematic, as the local populace had become supporters of Austria. The remaining republicans had probably already gone to meet God. The specifics were not detailed in the report, and Franz was also unaware.

“If the preparations are ready, let’s stage a farce to dissolve these two republics! If we’re to develop the South African region, we cannot allow them to continue being an eyesore.”

Franz cared about appearance and wouldn’t engage in the outright annexation of sovereign nations. If the Transvaal and the Orange Free State dissolved and the local populace returned to Austria’s embrace, then there would be no issues.

Franz trusted that Viscount Feckney could handle this situation well. After such a long time, if the local power players had not met their maker, they would certainly be on their side.

Even if there were disturbances, it wouldn’t be a problem. At that time, African Colonies were quite tumultuous, and any accidents were considered normal.

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