Holy Roman Empire

Chapter 521: Going Through the Motions

The Prussian government, largely composed of military leaders, has always been known for its swift and decisive actions. Once they decided to undermine Poland, they were determined not to hold back.

Due to the issue of the Polish throne, tensions between Prussia and Poland had been simmering. The newly independent Poles were unwilling to be swallowed up by Prussia.

With the intervention of international forces constantly exacerbating the Prussian-Polish contradictions, if it weren’t for the existence of Russia as a common enemy, the two countries would have parted ways long ago.

Even so, the radical faction within the Polish government was eager to see Prussia’s influence diminished and sought to push Prussia aside and go at it alone.

The Prussian government was acutely aware of these issues and was concerned. Dealing with these radical elements was tricky. One wrong move could lead to a severe backlash.

The Prussian government had long considered killing with a borrowed knife, but the hidden dangers of this were significant. Mishandling the situation could result in disaster.

To confront the Russian Empire, the Kingdom of Prussia needed Polish forces as cannon fodder, so they couldn’t afford to weaken Poland too much.

If it weren’t for the recent rift in the Russo-Austrian alliance, Moltke wouldn’t have dared to propose such a plan. Otherwise, the Russians could have taken the opportunity to involve Austria, and Prussia and Poland together wouldn’t have stood a chance against Russia and Austria.

Now that the Russo-Austrian alliance had some problems, Austria also needed to use Prussia and Poland to weaken Russia. In this context, the Austrian government might discipline Poland, but they wouldn’t cripple them.

How much Poland would have to pay for this was of no concern to the Prussian government. Although they viewed Poland as theirs for the taking, they had to acknowledge the harsh reality.

For the Kingdom of Prussia, Poland was too large a bite to swallow in one go. If they tried, the most likely result would be choking to death.

In the First Russo-Prussian War, Poland suffered heavy losses, in part due to Prussian machinations. However, these actions were kept hidden from the public.

Inciting the young radicals was simple—just stirring up public opinion was enough. Newspapers were the most effective weapon. Overnight, the historical partition of Poland by Prussia, Russia, and Austria was dug up.

Of course, the role of the Kingdom of Prussia was conveniently omitted. The newspapers instead highlighted the partition by Russia and Austria, exaggerating Austria’s involvement.

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In St. Petersburg, ever since Austria began its dumping operation, causing a catastrophic drop in international grain prices, Alexander II has been in a bad mood.

After years of hard work to resolve the land issues of the Russian Empire, the victory was within reach, only to be met with a devastating blow.

Austria’s retaliation has been brutal. If Russia cannot navigate this agricultural crisis, the empire will soon face a dire situation.

The main issue is financial. Russia is not an industrialized nation. Agricultural taxes are still the government’s primary source of revenue, accounting for more than half of the total annual income.

The collapse in grain prices means that the Russian government’s finances are in jeopardy. The loans secured from the British were intended for railroad construction and industrial development, not for maintaining the government’s day-to-day operations.

And this is assuming that the British honor their agreement. If John Bull decides to renege on their agreement, the Russian government could very well face bankruptcy again, despite having gone through one just a few years ago.

It’s important to note that the loan agreement between the two countries doesn’t mean the funds are disbursed all at once. The British would release the funds in installments, and so far, the Russian government has only received 5 million pounds.

For an individual, this was a huge sum, but for the Russian Empire, it was just a matter of a few hundred kilometers of railways.

It’s not that the cost was too high. The complex terrain, harsh climate, and the need to import rails from Britain meant that if the final cost wasn’t high, it would be surprising.

John Bull’s loans weren’t easy to secure and came with strings attached. Half of it must be spent on British goods, and for railroad construction, it’s mandatory to purchase rails from Britain.

Foreign Minister Chris Basham handed a document to Alexander II.

“Your Majesty, the Austrians have once again sent out a ‘Grain Production Reduction Proposal’ to the world’s major grain-exporting countries. They propose that each country reduce its grain production by 8% in 1873 to address the agricultural crisis.”

A reduction of 8% in grain production refers not to the international trade market but to each country’s total grain output, which translates into a global decrease of several million tons of grain.

If this could be achieved, the agricultural crisis would be largely mitigated. The 21% overcapacity figure published by Austria is a theoretical number calculated using a formula.

It only estimates the demand for food consumption, brewing, industrial use, and animal feed production.

In real life, some grain will inevitably be wasted—for example, losses during transportation, spoilage due to weather, and wastage in daily life.

If several grain-exporting countries simultaneously cut their production by 8%, the amount of grain entering the international market would basically return to the 1870 level.

Since the population is continually growing, within 2-3 years, the surplus grain currently on the market would be consumed, and grain prices would stabilize.

On the surface, Austria’s proposal seems reasonable. All major grain-exporting countries reduce production proportionally to maintain market price stability, effectively accepting the Russian Empire as one of them, with Austria even relinquishing a significant portion of the market.

However, this is extremely problematic for the Russian government. Reducing production is easier said than done. If the Russian Empire were to increase grain production by 8% next year, it would be simple—just expand the cultivated area.

Russian citizens are highly motivated to grow grain, and production is steadily increasing. As long as transportation issues are resolved, replacing Austria as the world’s top grain exporter would be no problem.

But reducing production is much more difficult. The government can’t just ban people from growing grain, can it? Russia has tens of millions of farmers, and if they choose to expand grain production, no one can stop them.

Even if they were to imitate Austria’s fallow land law, it would be useless—Russia has plenty of land. As for Austria’s land reclamation laws, the Russian government wouldn’t dare to copy them as it would only cause trouble.

After pondering for a moment, Alexander II turned his gaze toward the others.

“What do you all think? Is Austria’s proposal feasible?”

A middle-aged man with a heavy build stood up, visibly agitated, and said indignantly, “Your Majesty, this is Austria’s conspiracy. Reducing grain production by 8% in one year—how is that even possible?

Even with the current low international grain prices, it would take a long time for farmers to adjust their planting habits on their own.

The government can’t directly dictate what farmers should plant. Agricultural overproduction is similar to industrial overproduction—after a crisis, the market will naturally adjust through survival of the fittest.

If we forcibly reduce production, it would only cause chaos without any real benefit. The Austrians are trying to intimidate us. They want to use low grain prices to force us into compromising with them.”

Manilov wasn’t foolish. As the Minister of Agriculture, he was well aware of how eager Russian farmers were to grow grain. Asking them to reduce production at this time would be a thankless task.

Russia and Austria were entirely different. The two countries’ national conditions were vastly dissimilar. After the Austrian government enacted laws, they successfully curbed the increase in land used for grain cultivation.

In Austria, if the high-ranking nobles led the way by converting their land to grow cash crops, many would follow suit. But in Russia, it’s a different story. While converting to cash crops might seem easy, the problem is—who would they sell them to?

This highlights the difference between an agricultural country and an industrial one. Austria has a well-established industry, with developed transportation and communication networks, and relatively transparent information.

The upper-class nobility in Austria could easily understand market trends and know what crops would sell.

But in the Russian Empire, domestic industry was just beginning to take off, and the poor state of transportation isolated communication. Forget about telephones. Even telegraphs hadn’t yet reached every city.

Even if someone wanted to switch to growing cash crops, they wouldn’t know what to plant. And even if they did manage to grow something, they wouldn’t know where to sell it.

Lacking effective sales channels, people naturally stick to conservative farming. Regardless of the grain price, at least grain is easy to sell and merchants come to buy it.

If someone wants to grow cash crops, they need to think carefully. If there are nearby factories, that’s fine. They can plant with confidence.

But if there are no factories, then production needs to be on a large scale. If the output is too low, it might not even cover the transportation costs.

Foreign Minister Chris Basham interjected, “Marquis Manilov, please calm down. Don’t forget that Austria is the largest agricultural exporter, and they have the most to lose if this continues.

After the raw grain prices crashed, the prices of processed grain products have also been steadily declining. If this continues, even these processing companies will eventually suffer.

To protect their domestic companies, the Austrian government has already reduced taxes for them, but Austria’s share in the international market is still shrinking.

After acquiring cheap raw materials, grain processing companies in various countries that were previously suppressed by Austria are now beginning to flourish.

If the situation of oversupply doesn’t change and raw grain prices remain low, the grain processing companies across Europe will soon rise.

From a financial perspective, Austria’s proposal is more about protecting its domestic manufacturing industry.

No matter how you look at it, Austria is still our most important agricultural export market, even if we’ve reopened the British market. This fact remains unchanged.

If Austria refuses to accept our agricultural products, that would be the beginning of a disaster. No other European country has such a large-scale agricultural processing industry chain.”

Alexander II rubbed his forehead in frustration. Even a bountiful grain harvest could be troublesome. The international grain market was oversupplied, and it was already certain that this year’s grain would not sell well.

If they lost Austria, their largest buyer, the mountains of grain piling up within Russia would be impossible to deal with. Preliminary estimates suggested that the Russian Empire had an excess of tens of millions of tons of grain this year.

Aside from the uncertain contract with Britain, they had no major orders at the moment. At the same price point, no one wanted their grain.

Everyone had stable suppliers, and no one would switch suppliers without reason, especially not to someone they disliked.

It couldn’t be helped. In recent years, the Russians had been heavily vilified in Europe. Currently, 70% of Europeans don’t even recognize Russia as a European country, meaning that Russians themselves aren’t considered Europeans.

Of the remaining 30% who did see Russia as part of Europe, 74 million were Russians. Given that the total population of continental Europe at that time was less than 300 million, this proportion was rather disheartening.

Luckily, at least half of this excess grain would be impossible to export. Otherwise, competition in the international grain market would be even fiercer.

This outcome was completely contrary to Alexander II’s original plan. He had hoped to use grain as leverage to shake the continental power balance. But before he could even begin, his plan had already backfired.

There was nothing wrong with the plan itself. It was just that circumstances had changed unexpectedly. The main grain-exporting countries in Europe were Austria, Russia, Poland, and Prussia with the rest not even worth mentioning.

Overseas competitors hadn’t yet become a significant threat. The countries of the Americas only exported about a million tons of agricultural products to Europe each year, so their market share was low.

This was dictated by economic interests. The Confederate States of America were still heavily focused on cotton production, and they remained the undisputed leaders in that market.

At the same price, they competed on quality. At the same quality, they competed on price. In this era, no other region’s cotton could compete with theirs.

The British attempt to grow cotton in Egypt had long since failed. After the French took over Egypt, they tried to develop a cotton industry, but under the pressure of American cotton, the French eventually gave up.

The British experiment with Indian cotton was also outmatched by the Americans in terms of cost. When it came to profit, there was no room for compromise, and Indian cotton couldn’t become the mainstream.

Austria’s cotton-growing base in West Africa wasn’t much better. Over the years, its output had barely increased, and domestic capitalists remained loyal fans of American cotton.

There was no way around it. The natural conditions in the Confederacy were simply unbeatable. If companies didn’t use Confederate cotton, their products would lack market competitiveness.

The government wasn’t omnipotent and simply couldn’t nurture every industry. Spreading themselves too thin often led to accomplishing nothing. Since Austria had no advantage in the cotton market, the Austrian government naturally didn’t invest in it.

If it weren’t for the loss of this powerful competitor, everyone’s days would be even harder.

Currently, the main grain-exporting countries in the Americas are Brazil and Argentina, but these countries have small populations, limited land for grain cultivation, and not very high production capacity.

After pacing back and forth for a few steps, Alexander II had a sudden inspiration and made a decision.

“Reply to the Austrians and tell them that the Russian Empire is also a responsible great power. We agree to reduce grain production capacity. We’ll follow Austria’s example in our specific measures but with some adjustments.

The fallow land law is fine, we’ll adopt it as is. But we’ll change the land reclamation law. From now on, newly reclaimed land will not be allowed to grow grain for five years.”

Alexander II had seen the consequences of overproduction firsthand. Since there was no longer any profit to be made from international grain exports, he no longer wished to increase grain production capacity.

Given this, he decided to give the Austrian government some face. The Russian Empire would temporarily stop increasing grain production capacity, but as for reducing it—well, that was a challenge the Russian government couldn’t quite manage.