Holy Roman Empire

Chapter 522: The Era of Mass Consolidations

The impact of the agricultural crisis was not limited to the European continent. The Americas couldn’t escape it either. As grain prices plummeted in Europe, capitalists naturally began shipping grain abroad to sell, which in turn drove down grain prices in the Americas as well.

Advancements in shipping technology reduced the cost of sea transport, and more and more ten-thousand-ton ocean-going vessels appeared. Riding this wave, the grain Austria was dumping even reached the Japanese market.

Of course, this was just incidental. Shipping grain specifically to Japan for sale was still not profitable enough, and no one had the leisure for that.

Due to the influence of the Meiji Restoration, Japan had significantly increased its imports of machinery from Europe in recent years, making trade between the two regions more prosperous.

The advent of ten-thousand-ton transport ships, first developed in Austria, lowered freight costs but also came with an awkward issue—cargo often couldn’t fully fill the ships.

This problem didn’t stump the capitalists. They filled the remaining space with local specialties, figuring that even a small profit was better than nothing.

The Austrian government’s call for action did have some effect. The major grain-exporting countries all announced production cuts, though the effectiveness of these measures was uncertain.

From Franz’s perspective, the measures taken by various countries were full of loopholes, and whether production capacity could actually be reduced depended entirely on the farmers’ willingness to comply.

After the autumn harvest, a large influx of new grain hit the market, causing international grain prices to continue falling. The capitalists thus recognized the severity of the situation. If prices kept dropping, everyone would suffer.

To stabilize grain prices, capitalists joined forces with large landowners to pressure governments. By the end of 1872, most European countries had raised tariffs on agricultural imports.

But these measures were still not enough. To stabilize market prices, capitalists were forced to painfully destroy some of their agricultural products.

Meanwhile, grain-importing countries fared relatively well. By raising tariffs and destroying some of the surplus agricultural products, the market quickly stabilized.

However, simply maintaining “stability” was not enough to restore grain prices to normal levels—it was not something that could be achieved overnight.

Grain-exporting countries, on the other hand, were in dire straits, facing one sale failure after another. The trade disputes that erupted across Europe this year alone outnumbered those of the past five years combined.

The hardest hit were the four countries of Russia, Austria, Prussia, and Poland. To alleviate the crisis, in October 1872, the Austrian government announced the purchase of 2.7 million tons of wheat, 4.8 million tons of rye, 3.8 million tons of corn, and 1.9 million tons of soybeans for strategic reserves.

Of course, there were conditions attached: this purchase was limited to newly harvested domestic crops and would be bought at the government-mandated minimum grain protection price.

First, they cleared the inventory, and now they were beginning to replenish it—there was no fault in that. Stimulated by this positive news, grain prices in the Austrian domestic market finally stabilized.

However, the international grain market showed no signs of improvement. The issue now was not just the price but that the market was already saturated, with many grain-importing countries halting their imports altogether.

Seeing the Austrian government buying up grain for strategic reserves, the Junker nobility couldn’t sit still. They began to offer advice, urging the Prussian government to increase its strategic grain reserves.

At the Berlin Palace, a meeting on this issue was already underway. William I had no objections to increasing strategic grain reserves. The only problem was that the Prussian government lacked the funds.

Austria was using the money earned from dumping surplus grain previously to finance its grain purchases. A rough calculation showed that, in this process, the Austrian government lost over a million tons of grain.

It was difficult to calculate the exact loss, considering the price difference between new and old grain, as well as the cost at which the Austrian government had previously acquired its reserve grain.

“Prime Minister, what do you think?”

Moltke was under increasing pressure, caught between the government’s empty coffers and the interests of the Junker nobility, leaving him in a difficult position. After a brief hesitation, reality forced him to make a decision.

“Your Majesty, no one knows when the Russo-Prussian War will break out or how long it will last, so it is indeed necessary to increase our strategic grain reserves.

However, the government currently has no money. To increase our strategic reserves, we would need at least hundreds of millions of marks, which is far beyond our financial capacity.

If the farmers are willing to accept credit, we could purchase some of the grain, but the government cannot guarantee when we will be able to pay for it.”

This answer left little room for rebuttal. It wasn’t that the government didn’t want to increase its strategic reserves—the problem was simply that it had no money to buy them.

The government could buy the grain, but only by issuing IOUs, promising to pay when funds became available. If the government never had the money, the debt would just continue to accumulate.

From a class-interest perspective, Moltke’s response left many dissatisfied, but there was no way to refute what he said. No matter how eloquent the opposition, the fact remained that the government was out of funds.

“Prime Minister, this approach might not work. Growing grain has its costs. The government needs to at least cover those costs. Otherwise, many farmers might go bankrupt,” Minister of Agriculture Melanie Griffith urgently advised, worried about facing the Junker nobility if the government resorted to IOUs.

TN: 梅拉尼-格里菲思 is the raw for the Minister of Agriculture. The author seems to be naming the Ministers after famous people like the one with Chris Basham lol.

Moltke shrugged, spreading his hands in a gesture of helplessness.

“Where would the money come from? Our finances have always been tight. Even though grain prices are very low right now, with rye costing less than 100 marks per ton, buying a million tons would still amount to 100 million marks.

If your Ministry of Agriculture can solve the funding problem, there will be no issue with how much grain we purchase. I can guarantee that no one in the government would oppose it.”

The Kingdom of Prussia was already deeply in debt, and the domestic financial sector lacked the capacity to provide loans to the government. Borrowing from external sources would require selling off national interests. But anyone who dared to suggest this would have to consider whether they might be shot by a patriotic youth as soon as they left the building.

These days, Prussia was full of young hotheads, whose fervor ensured the strength of the Prussian army but also made them a potential ticking time bomb for the kingdom.

Melanie Griffith, the Minister of Agriculture, wasn’t ready to risk her life by becoming a target for these patriotic youth, so she had no intention of making such a reckless proposal.

“Sorry, Prime Minister. This isn’t within my purview. You should ask the Ministry of Finance. If the government can’t stabilize grain prices, then at least it can develop more proactive agricultural policies, right?”

Moltke replied, “Of course! As long as it doesn’t involve money, we’ll do our best to address any other issues.”

“That’s great,” Melanie Griffith responded.

Having come prepared, Melanie Griffith pulled out a document and walked over to present it to William I.

“Your Majesty, this is the Ministry of Agriculture’s plan to reduce grain production. We’ve studied the experiences of Austria and are ready to implement a ‘Land Fallow Law’.”

This proposal shocked everyone, as the Prussian government had previously discussed this issue. However, the strong opposition from the Junker nobility, who controlled the Ministry of Agriculture, led to the idea being shelved.

After briefly scanning the document, William I’s expression darkened. Although the proposed land fallow law seemed harmless on the surface, a closer examination revealed that many issues were glossed over ambiguously. With some analysis, it became clear that the plan primarily served the interests of the Junker nobility.

The nobles had vast amounts of land, so even with the implementation of a strict land fallow law, they had enough land to rotate and continue farming. The real losers would be the smallholder farmers who didn’t have sufficient land.

According to the regulations in this proposal, the introduction of crop rotation techniques would reduce the time land needed to lay fallow. This would spell disaster for the ordinary farmers who had just started to see some improvement in their fortunes.

If this law were enacted, it would trigger a new wave of land consolidation in Prussia, leading to the bankruptcy of many smallholder farmers.

“Melanie Griffith, are you sure that the contents of this proposal are realistic? Has the Ministry of Agriculture not considered the consequences of such actions?” William I questioned.

In response to the king’s inquiry, Melanie Griffith remained calm and confidently replied, “Your Majesty, following the agricultural crisis, the market is bound to undergo a round of survival of the fittest.

Whether or not we implement the ‘Land Fallow Law,’ a wave of bankruptcies will occur. By taking proactive measures, we can overcome the crisis sooner and prevent more widespread damage.”

Though this reasoning was flawed, it was also grounded in reality. The failure of smallholder farmers to compete with large landowners was inevitable. Given the current situation, with grain prices having collapsed, smallholder farmers could hold out for a few years at most before going bankrupt under the weight of their debts.

This outcome couldn’t be changed by human intervention. It was simply a matter of time. The Junker nobility had changed their stance and agreed to reduce production, not only to protect grain prices but also to seize the opportunity to consolidate land and expand their estates.

While ordinary people might think that falling grain prices made land less valuable, the Junker nobility, who held power, saw things differently.

The population was constantly growing, while land couldn’t continue to grow. From this perspective, grain prices were bound to rise eventually.

Even if international grain prices didn’t recover, the Junkers could manipulate the rules to artificially raise domestic agricultural prices.

In the Second German Empire of the original timeline, where the country’s grain production was insufficient, the Junker nobles dared to impose restrictions to block foreign agricultural products from entering the domestic market. How much more likely would they be to do so now?

The bankruptcy of small farmers was exactly what the capitalist Junkers wanted, as it would provide them with a larger pool of cheap labor. Analyzing the interests at stake, it was clear that this plan was unstoppable in the Kingdom of Prussia.

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After the Kingdom of Prussia introduced the “Land Fallow Law,” which was essentially a move towards land consolidation, other European countries quickly followed suit.

This land grab was orchestrated seamlessly by large landowners and capitalists working together. The landowners acquired more land, while the capitalists secured cheap labor.

Austria was not immune to this trend, but it faced a significant obstacle: the “Anti-Land Consolidation Law.” This law was signed by Franz after the Vienna Revolution of 1848.

The law explicitly stated: “Small parcels of land cannot be privately sold and must be sold at market value to the local government.” (This specifically applied to plots smaller than 200 hectares.)

The agricultural land acquired by the local government could only be sold to farmers with less than 50 hectares of land, retired soldiers with less than 100 hectares, or noble families with military merit who owned less than 200 hectares.

(Author’s Note: Once a buyer reaches these limits, they cannot purchase more land.)

Furthermore, any land purchased under these conditions could only be resold to the government, not directly to other individuals.

In simpler terms, small landowners could buy land, but large landowners who wanted to expand could only purchase farms larger than 200 hectares.

From the perspective of productivity development, the small-scale farming economy was inevitably going to be overwhelmed, with large farms becoming the dominant mode of agricultural production in the future.

This type of land consolidation would help enhance agricultural competitiveness, and Franz had no intention of stopping it. However, he didn’t want to see domestic agriculture monopolized, so he enacted this law to limit the unchecked expansion of the great nobles.

According to this law, over 80% of Austria’s arable land was locked in, meaning it could only be transferred among ordinary citizens.

If nobles wanted more land, they should go to the colonies. In the homeland, once their holdings exceeded 200 hectares, any further expansion would have to come from purchasing large farms.