Holy Roman Empire

Chapter 477: Industrial Tuition Fee

There are many types of mineral resources, but coal, iron, and oil are the most important.

Russia, Brazil, China, Australia, India, Canada, and the United States are the seven countries with the highest iron ore reserves;

China, the United States, and Russia have the largest coal reserves, with Asia, Europe, and North America having the best quality coal;

Oil is highly concentrated in specific regions, namely the Middle East, Russia, the United States, China, Mexico, and Britain.

…

Franz remembered this passage from his geography class in his past life clearly. In summary, Europe lacks minerals.

On one hand, early development had exhausted many resources by the 21st century. On the other hand, the actual reserves were quite limited.

Russia is the only exception, as all other European countries are poor in minerals, and their mineral resources are quite limited. A typical example is Germany, which, apart from coal and iron ore, lacks almost everything.

Even so, many countries envy Germany for having these two essential elements of the industrial age, while their neighbor France lacks coal.

In comparison, Austria was relatively fortunate, perhaps due to its larger territory, as it possessed almost all kinds of mineral resources. However, the reserves were not very impressive.

Of course, this is relative. Compared to other European countries, excluding Russia, Austria’s mineral resources were advantageous.

These resources laid the foundation for Austria’s industrial development. By 1870, Austria’s steel production surpassed that of Britain for the first time, reaching 6.48 million tons of annual output and becoming the world’s leading steel producer.

However, the advantage was not significant, only surpassing Britain by 20,000 tons. The main factor driving the rapid growth in Austria’s steel production was the increase in domestic market demand.

A domestic market of 30 million people compared to one of 70 million people—both having completed industrialization—clearly results in a greater demand for steel in the latter.

In fact, this production still cannot meet market demand. Besides the domestic market, the African colonies are also major consumers of steel.

According to data provided by the Ministry of Industry, Austria’s steel demand will double over the next decade, with steel demand reaching 1.5 million tons.

Upon seeing this data, Franz had a headache. The steel production in Bohemia had already hit a bottleneck, with the growth rate slowing down. Rapidly expanding production capacity would require another technological revolution.

However, this was unrealistic. The steel industry had just undergone a revolution not long ago, and achieving another breakthrough in the short term with the current industrial technology was almost impossible.

The second steel production base in Bosnia, although developing rapidly, still had a long way to go before filling this gap. It wouldn’t be able to meet the demand within ten years.

Currently, Austria’s main steel enterprises are concentrated in Bohemia (modern-day Czech Republic), accounting for 63% of the country’s steel production.

In addition to this, there are also steel plants in other regions like Bosnia, Linz, Bavaria, Württemberg, Saxony, Galicia, and Silesia.

Several factors caused this situation. In Bavaria, Württemberg, and Saxony, the steel plants were historical legacies, limited by resources and unable to develop further.

Bosnia had started industrializing too late, and the government was still busy building roads. Although steel enterprises had settled there, their production capacity was limited by transportation in the short term.

In Galicia, the government did not place enough importance on steel production, making it unable to compete with Bohemia. In Silesia, the Prussians had left a mess when they fled, which the Austrian government had just cleaned up.

Human factors can be overcome, but the most troublesome issue is resource distribution. Austria has plenty of coal and iron ore, but they are not concentrated.

For the development of steel enterprises, it is essential to move closer to raw material sources, resulting in a scattered pattern of development.

In Franz’s view, the capitalists’ choices were correct. Since the main purpose of investment is to make money, if the enterprises are far from the raw material sources, the competitiveness of their products cannot be guaranteed.

By now, the concentration of heavy industry is no longer suitable for Austria. Each region’s resource supply is limited. If you can only provide raw materials for one million tons of steel, you cannot produce two million tons.

To meet the growing domestic demand, the establishment of multiple industrial bases has become inevitable. Except for Germany, where resources are concentrated, almost every industrialized nation has multiple industrial bases.

After carefully reviewing the data, Franz made a decision, “We don’t need to choose. Considering the current development situation in the country, the demand for steel will only increase.

Instead of adding one heavy industrial base today and another tomorrow, we might as well develop them simultaneously.

Regions like Serbia, Silesia, and Galicia all have the potential to become heavy industrial bases, so let’s list them all this time!

Other regions that simultaneously have coal and iron mines, with relatively convenient transportation, can also be developed.

The government should formulate appropriate policies, find ways to solve transportation issues, and leave the final development to enterprises and the market.”

In this era, most governments took a laissez-faire approach to industrial development, with the market economy primarily determining the industrial landscape.

Austria’s approach of solving infrastructure issues through government intervention is already a form of administrative interference in the market economy, albeit subtly.

One only needs to look at neighboring Russia, which, despite being the most resource-rich country in Europe, has a steel production capacity less than one-twentieth of Austria’s.

This isn’t because Russian capitalists didn’t see the business opportunities; the main issue was the poor transportation. If the Russian government doesn’t solve the transportation problem and expects them to build the roads themselves, who will dare to take on such a business?

It was only after the Russian government began to focus on transportation that Russian industry truly started to develop. Unfortunately, the Russian Empire was too vast, and building roads was incredibly difficult.

In the original timeline, before World War I, the Russians had only built over seventy thousand kilometers of roads, which was already the result of the efforts of successive tsars.

Before crossing over, Franz often criticized the transportation in Russia. However, after coming to this world, his perspective changed.

Building roads in the Russian Empire is indeed challenging. Constructing railways in a land of ice and snow requires much higher technical difficulty and construction costs than in other European countries, and the Russian government was perpetually short of funds.

The saying “If you want to be rich, build roads first” holds true. However, when you don’t even have money to build roads, it’s a tragedy.

What’s even more tragic is that the construction costs for Russian railways were not only high, but the maintenance costs were also far higher than those in other European countries. Even if the railways were built, it couldn’t be guaranteed that trains could run year-round.

To ensure the railways remained open, railway companies had to invest a lot of labor in winter maintenance. Many sections could be covered in snow in just a few hours.

This increased the operational costs of the railways, leading to higher freight charges. Originally cheap industrial raw materials became less affordable after being transported over long distances.

Starting late and facing such harsh conditions, coupled with the corruption of the Russian government, it’s no wonder Russian industry did not develop.

Alexander II probably didn’t have time to consider these problems yet. He was still busy leading the Russian people in large-scale land reclamation.

No, the land reclamation had already been going on for nearly two years now. Now, he should be worrying about how to handle the increased grain production.

To sell the grain, it first has to be transported. The grain from Ukraine doesn’t need mentioning as most of the Russian Empire’s grain exports come from here.

Grain from Moscow can also be managed, as it can be transported via rivers. As for the grain from the Caucasus, first, they need to build roads. Without railways, it’s really a headache.

The most tragic situation is in the Siberian plains. The Russian people opening up new lands there are in for a tough time. The harsh climate is one thing, but since the Tsar gave them plenty of land, they can still endure it.

The transportation problem is what’s truly troubling. Rivers do exist, but the prerequisite is that your land must be along the riverside, and the river must be navigable.

Fortunately, Alexander II exempted newly reclaimed land from taxes, otherwise, tax officials would be at their wits’ end. The people have no money; if they pay taxes with grain, should the tax officials accept it or not?

Perhaps for the Russian people, this is a fortunate problem. They no longer need to worry about starvation. In a few years, everyone’s warehouses will be full of grain.

It’s still early, so the effects of large-scale land reclamation aren’t fully visible yet. However, looking at the data, Franz knew that Alexander II’s reform was already half-successful.

More grain means lower prices. Besides filling the farmers’ stomachs, it also means feeding a large number of workers at the lowest cost.

When everyone is well-fed, the country remains stable. At least for several decades, most Russian citizens will feel content.

The only issue is whether they can withstand the backlash from the conservatives. With so much new land reclaimed, how could the Russian nobles not be tempted?

Once the reclamation is complete, someone will come forward to reap the benefits. If land consolidation isn’t curbed, the Russian Empire will fall into crisis once again.

Land consolidation is a problem for the future. The immediate concern is the sale of grain. If this much grain can’t be sold on the international market, there will be big trouble.

This situation won’t take long. By next year or the year after, the Russian Empire will face an oversupply of grain.

Up until now, the Russians have reclaimed at least 200 million mu (approximately 13.3 million hectares) of farmland, which is nearly half of Austria’s domestic arable land area.

Fortunately, the newly developed Russian land is relatively poor, with low grain yields. In many places, only one season of potatoes can be grown.

If the yield was according to Austrian standards, this amount of grain could flood the international grain market.

To cope with the impact of Russian grain on the international market, Austria has already started destocking, and many smart farmers are preparing to switch to cash crops.

As for the grain processing industry, it remains dominated by Austria. Utilizing the advantage of self-production and sales, Austria has defeated many competitors over the years and controls the end pricing of the grain market.

Even if the Russians export grain, most of it is first exported to Austria, where it undergoes further processing before being sold to other European countries.

The advantage of proximity and established infrastructure will not change in the short term. Unless the Russians complete industrialization and develop their own processing industry, this will remain the case.

This brings us to the issue of industry. Such changes are not achieved overnight. Take the flour processing industry, for example. Russian enterprises produce flour that is not only expensive but also of poor quality.

Currently, much of the flour sold in Russian cities is still produced in Austria, highlighting the weak competitiveness of Russian products.

The machinery of this era is not as user-friendly as modern milling machines, which are easy to operate and can be managed by almost anyone.

The current machinery is considered high-tech, and without professional technicians, it is challenging to operate. And this talent gap cannot be easily bridged.

Training technical workers is not easy. In this era, countries exporting machinery often embed numerous pitfalls.

For example, the instruction manuals for Austrian-exported machinery are all in German. At critical points, they might even include some local dialects.

Even professional translators might not fully understand the instructions. So, what can be done? Naturally, you have to hire experts, providing another revenue stream for the exporting companies through post-sale services.

Some unscrupulous companies even plant traps in certain areas, deliberately causing the buyer to make operational errors due to ignorance, leading to additional maintenance fees.

This is why even after importing the most advanced European equipment, buyers often have to go through repeated troubles before they can smoothly commence production. Manufacturers make sure to earn enough money first from post-sale services.

Some dishonest sellers sell machinery at a low price initially to entice buyers, then tamper with the equipment, relying on subsequent maintenance to earn exorbitant profits.

Without these invisible barriers, in an era without technical limitations, the industrial production levels of countries around the world could be brought to a similar standard.

In the industry, this is no secret. Many buyers are aware of the potential pitfalls in transactions.

However, they have no choice. This is the tuition fee for latecomers. If not paid now, the cost will be even higher in the future.

Hoping to directly acquire the industrial technology of the great powers and quickly reach world-leading standards is unrealistic.

The great powers are not doing charity. To ensure their technological lead, planting traps is a routine practice.

Otherwise, catching up with industrial powers would simply require replicating their technology to quickly close the gap.

How could such a good thing be possible? If it were that easy, France and Austria wouldn’t have been chasing after Britain for so many years.

If not for the Second Industrial Revolution, the British advantage might have been maintained for a much longer time.