Holy Roman Empire

Chapter 523: Grain = Labor

In London, due to the domestic drop in grain prices, the capitalists who had previously signed contracts with the Russians were no longer willing to fulfill their agreements.

Blatantly breaching the contract was out of the question, as it would not only violate British law but also create diplomatic issues.

Moreover, the payments for the grain were intended to repay the Russians’ debts to domestic banks. Since the loans had already been disbursed, if the capitalists defaulted, the Russians could legally refuse to repay their debts, which the bankers would certainly not accept.

Take rye as an example: the current price of rye on the British market was about 6 to 7.5 pounds per ton, while the original contract with the Russians stipulated a price as high as 9.1 pounds per ton. This meant that the deal would not only be unprofitable but would actually result in a loss.

Of course, even at 9.1 pounds per ton, the capitalists wouldn’t actually lose money. The added value from processing the product would still cover the difference in price.

However, no qualified capitalist would willingly take such a loss, as this would mean earning 1.5 to 3 pounds less per ton of rye.

While this might seem like a small amount, when scaled up to tens of thousands of tons or hundreds of thousands of tons, it quickly turns into a staggering figure.

Unable to default directly, the capitalists were not at a loss for options. This is where Members of Parliament came in, to guide public opinion, among other things. In short, a reasonable and legal pretext for defaulting needed to be found.

With anti-Russian sentiment on the rise, this was not good news for the newly formed Gladstone Cabinet. The “Pound-Gold System” that established Britain’s monetary dominance could be undermined if the Russians were pushed out, potentially reverting the system to its previous state.

The previous government had nearly won the election based on this policy achievement. If they hadn’t stirred up old grievances and incited the families of soldiers who died in the Anglo-Boer War to protest, Gladstone might never have made it to Downing Street.

Casually tossing the newspaper aside, Prime Minister Gladstone grumbled incessantly, “Damn them! They’re already gone, but they still can’t let us rest, leaving us with this bomb to deal with!”

Such situations were common during a change of government. Being members of the Conservative Party and the Liberal Party, respectively, their political identities naturally put them at odds with each other.

If they didn’t throw a wrench into Gladstone’s plans, how could their party hope to win in the next election? If the roles were reversed, Gladstone would probably make the same choice.

After all, it was all within the rules of the game of politics. The mess left by the Benjamin Cabinet was entirely legal. Apart from privately venting his frustration, Gladstone was powerless and couldn’t even use this issue to criticize his predecessor.

“Prime Minister, the biggest problem right now isn’t those people outside, nor the members of Parliament, but the fact that the capitalists don’t want to honor their contracts.

Given the current grain prices, under the terms of the agreement with the Russians, they might lose millions of pounds each year. Even if that loss is spread out, it’s still no small amount.

What’s more critical is that this isn’t just for one year, but for five consecutive years. If something goes wrong during that time, they could be replaced by others.”

As he spoke, Chancellor of the Exchequer, Largo Lloyd, picked up the newspaper from the floor, folded it a couple of times, and then tore it up before tossing it into the trash.

Clearly, he wasn’t as relaxed as he appeared. When it comes to matters of profit, asking capitalists to back down is incredibly difficult.

Even if the government wanted to take action, they wouldn’t have a good excuse. From start to finish, these people had stayed in the shadows, while the ones on the front lines were the farmers they had incited.

The plummeting grain prices were blamed on the Anglo-Russian grain loan agreement, with people claiming it was government interference in the market that caused this fallout.

What was once the previous administration’s achievement now needed to be cleaned up by them—a task where, if done well, they’d receive no credit, but if done poorly, they’d be criticized.

After calming down, Prime Minister Gladstone sat back in his chair and asked, “What do they want? Breaching the contract is impossible. We still need the Russians.”

The British pound’s dominance had just been established, and Russia’s gold standard reform had only just begun. Before fully binding the Russians to their system, they couldn’t afford to fall out with them.

This would take at least five or six years, which is why the Anglo-Russian loan agreement was set to last for five years. The British government used this loan to bind the Russians. It wasn’t really a loan, but more accurately described as a grain trade contract.

Compared to the enormous profits brought by currency dominance, the losses of these grain capitalists were negligible. Even though the previous administration took most of the credit, Gladstone had to continue with this policy.

Otherwise, the bankers in the country would send him to meet his maker. Don’t think that only America has a history of assassinating presidents. British capitalists are equally capable.

However, since the British aristocracy still had some power, the capitalists hadn’t completely taken control of the government. Otherwise, these grain capitalists wouldn’t even bother with roundabout methods.

The era of monopolies was approaching, and the time for capitalists to fully assert themselves wasn’t far off. Once various financial groups were established, the country would fully enter an era of oligarchy.

In comparison, British prime ministers of this era were relatively fortunate. In the age of oligarchy, politics would become a mere game of capital, and that would be the real tragedy.

“They want the government to purchase this batch of grain, following Austria’s example of establishing a strategic grain reserve. In theory, there’s no problem with that. After all, Britain is just an island nation with limited grain production, so building up a reserve makes sense.”

At this time, Britain was at the peak of its power, and “wealthy and powerful” were the most fitting words to describe it.

Even though the war had left the British government deeply in debt, they weren’t worried at all. The immense wealth from the colonies was more than enough to help them manage the situation easily, and they even had enough resources left to establish a strategic reserve system.

Gladstone didn’t oppose the idea. Although he didn’t believe that Britain needed to establish a strategic grain reserve, he also wasn’t going to stand in the way of others making money.

Britain’s most glorious era was also its most corrupt. Once a large project like this gets underway, it brings with it a flood of wealth.

Gladstone smiled faintly, placed his hands palm-up on the table, and said, “If they can convince Parliament to allocate the funds, I have no objections.”

Clearly, that was unlikely. If they had the confidence to persuade Parliament to allocate the funds, the capitalists would have done it already, without all this maneuvering.

In truth, the grain capitalists had limited influence in the British capital market. They didn’t even represent the grain processing industry as a whole.

While they had allies in Parliament, it was still very difficult to sway parliamentary decisions. For one thing, their competitors wouldn’t let them succeed easily.

The current momentum was only possible because of the prevailing social conditions. If not for the domestic grain price collapse, they wouldn’t have been able to organize so many farmers to participate in protests.

Chancellor of the Exchequer Largo Lloyd shook his head and said, “If they could persuade Parliament, they wouldn’t have come to us. They’ve made a promise: if this plan passes in Parliament, they’ll sponsor us with 200,000 pounds in campaign funds. Besides that, there are other benefits. The specific details can’t be discussed openly. They’ll need to be negotiated privately.”

Politics requires financial support, and every election is backed by numerous behind-the-scenes deals. If there was only investment without return, who would fund these campaigns?

Without revenue, how would a political party survive? Without money to support the campaign team or to boost public approval, how could they win elections?

In reality, politicians often compromise their principles. Prime Minister Gladstone was no exception. Political parties need monetary support, and from the very beginning, the two sides have been intertwined.

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Under the promotion of the Liberal Party, on October 21, 1872, the British Parliament passed the proposal of “Establishing a Strategic Grain Reserve” by a narrow margin.

On October 24, the British government halted the Anglo-Russian grain loan agreement, citing the need to stabilize the domestic grain market.

After some token negotiations, a week later, the British government reluctantly purchased the grain within the scope of the agreement at prices higher than the market rate.

There was no doubt that this was all for show, aimed at appeasing the public. The real reason was to clean up the mess for the grain capitalists, with the government taking on their losses.

The Anglo-Russian transaction still proceeded smoothly, and Franz was not disappointed. The benefits of monetary hegemony were greater, and the British government naturally knew how to make trade-offs.

The only unexpected development was that he hadn’t anticipated the British would establish a strategic grain reserve. After all, the Royal Navy dominated the seas, and there was no nation in the world capable of challenging Britain. There simply wasn’t an enemy that could blockade the British Isles.

These changes were minor issues as the ultimate goal was still achieved. Although they hadn’t managed to disrupt the Anglo-Russian trade, the collapse of the international grain market had still severely weakened European agriculture.

In this era, the concept of agricultural subsidies didn’t exist, and taxes couldn’t be avoided. If a government reduced agricultural taxes, it was considered highly attentive to public welfare.

For large landowners, an agricultural crisis was an excellent opportunity for land consolidation. Why would they want to reduce agricultural taxes? Without these taxes, how could farmers go bankrupt quickly? And without bankrupt farmers, how could they acquire more land?

Tax cuts were inevitable, but they would come only after the land consolidation was complete. Otherwise, it would cut off their financial prospects.

The large-scale bankruptcy of European farmers was something Franz was eager to see, as Austria’s colonies were in dire need of people.

He wasn’t interested in British or French immigrants, nor did he expect much from Portuguese, Spanish, or Dutch immigrants. But there were other countries he could consider.

Times had changed, and now Austria’s control over its colonies was stable enough to absorb some foreign immigrants.

Unlike in the early days when Franz only accepted domestic and German immigrants in large numbers since he was wary of accepting a lot of immigrants from other countries.

He was concerned that they might overwhelm the local population and take control. In matters of national assimilation, it is usually the larger group that assimilates the smaller one, and the reverse is not easy.

In essence, it was like trading grain for people, with Austria selling off a batch of grain in exchange for a new batch of labor.