Holy Roman Empire

Chapter 502: The Temptation of Benefits

Since the Anglo-Boer War, the Benjamin Cabinet had been caught in a political vortex. Not to mention considering re-election, they needed to work hard just to complete the current term.

The Colonial Office took responsibility, with Colonial Secretary Louis and Cape Town Governor Delf resigning in disgrace. Yet the opposition was relentless, seizing on the issue and refusing to let go.

If not for the distraction provided by the “Tripartite Alliance,” which diverted public attention, Downing Street might already have a new occupant.

But this was far from enough. To cover up this blemish, the cabinet needed to achieve greater success in politics and diplomacy.

Improving relations with Russia was part of this effort, as capitalists needed to open the doors to the Russian market to earn more profits.

In this context, Alexandrovich’s visit to London was naturally welcomed by the British government.

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“Your Imperial Highness, in principle, we agree to your country’s request for a loan. As long as you can persuade the bankers, the amount won’t be an issue,” said Foreign Secretary Maclean with elegance. This was his genuine opinion. As long as the Russians could convince the bankers, the British government wouldn’t interfere no matter how much they borrowed.

Alexandrovich frowned. If he could persuade the bankers, he wouldn’t need to deal with the British Foreign Office.

“Respected Minister, we are currently facing difficulties and need the help of your government,” Alexandrovich said. As he spoke, he felt a deep sense of humiliation. To secure a loan, he, the crown prince, had to humble himself and plead.

There was no choice. When under another’s roof, one must bow one’s head. If he didn’t step in personally, Alexandrovich was certain that the bureaucrats at the Ministry of Foreign Affairs wouldn’t achieve any results.

It wasn’t that they were incompetent. The main reason was that the British wanted to stage a political show to boost the government’s reputation among the public.

Compared to dealing with officials from the Ministry of Foreign Affairs, negotiating with the crown prince added more sensationalism. Alexandrovich also needed this credit to enhance his prestige at home. Both sides had their needs.

Foreign Secretary Maclean smiled slightly and calmly said, “We are always happy to help our friends. However, there is a slight issue at the moment.

Your government’s tariff barriers severely affect the normal operation of our bilateral relations. If your country could join the free trade system, then none of this would be a problem.

This is a win-win choice. Once you join the free trade system, your country’s agricultural exports will not face any restrictions. This would be very helpful in addressing your financial issues.”

The free trade system was proposed by the British to open up the markets of European countries. Along with expanding the market for British goods, it also involved the pound-gold system, or in other words, the implementation of monetary hegemony.

Currently, the Russians are still promoting a bimetallic system of gold and silver. Once they join this system, they must undergo a reform to adopt the gold standard.

The monetary system reform of the Russian government had begun a long time ago, but it was carried out with the help of Austria. As relations between the two countries cooled, the Russians’ monetary reform also stalled.

This presented an opportunity for the British, who wanted to seize the chance to take over. They aimed to pull the Russians from the half-step they had taken into the guilder-gold system into the pound-gold system, thereby widening the gap with their competitors.

Currently, there are three major systems in the international monetary market: the pound-gold system, the guilder-gold system, and the franc-gold-silver system.

Without a doubt, the British, possessing two major gold-producing areas, Canada and Australia, along with the accumulation of colonial plunder, naturally have the upper hand in the pound-gold system.

Following closely is the guilder-gold system. Austria’s domestic gold production is not low, and with the supplement of gold from the African continent, it also holds an important position in the international monetary market.

However, there is still a long way to go to catch up with the British. To bridge this gap, the Austrian government has been trying to persuade the Russians to join.

However, Alexander II was unwilling to play second fiddle, and this issue has never been settled. After the outbreak of the Russian government’s financial crisis, the two sides resumed negotiations, but the gap in their bottom lines was too large, and it ended without results.

In contrast, the French bimetallic system is more tragic. France’s gold production is too low to meet demand, forcing them to adopt the bimetallic system.

Although most countries during this era were on a mixed currency standard, the frequent fluctuations in the value of gold and silver caused significant difficulties in settlements.

The French have gone to great lengths to maintain the stability of the franc. However, this has not prevented the devaluation of silver.

Using the gold standard results in insufficient production capacity, while using the silver standard leads to overcapacity. During this era, the production of silver started to surge, with growth rates far exceeding that of social wealth.

Alexandrovich remained silent. Joining the British-led free trade system involves too many things and is not something he can decide on his own.

Despite Maclean’s assurance that loans are not a problem, which sounds promising, the reality is that the issues involved are significant.

Without considering other factors, once tariff protection is lost, can Russia’s fragile industry and commerce survive?

Why hadn’t any industrially strong countries joined the British free trade system? It was because they were worried about the impact on their domestic industry and commerce. In this era, British manufacturing was a guarantee of quality.

Economic impacts would also lead to political repercussions. Joining the British-led free trade system would also require consideration of Austria’s reaction.

Although the relationship between the two countries is cooling, that is only in the political realm. Commercial exchanges between the two countries remain very close.

The second Russo-Prussian War is already on the horizon, with both sides preparing for conflict. At this time, Austria’s importance has become irreplaceable.

Even if Russia were to join the British-led free trade system, the British government would not support the Russian Empire in the Russo-Prussian War, as Prussia and Poland were their loyal followers.

Of course, if the Russian government was willing to let go of its hatred and not seek revenge against Prussia and Poland, the British might mediate the conflict between the parties.

This thought quickly flashed through Alexandrovich’s mind. While he is indeed a pacifist, he is not so naive as to lose sight of his own position.

After thinking for a while, Alexandrovich asked, “Minister, I understand the benefits of free trade. Your country has the world’s strongest industrial power. Without tariff barriers, our nascent national industry will likely be crushed in no time.

Currently, the industrial workforce in the Russian Empire exceeds six million. If issues arise, it will lead to a wave of unemployment and could seriously threaten national security. How would these problems be resolved?”

Marquis Maclean calmly explained, “Your Highness, you are overthinking this. While many industries might be impacted, your country also has many advantages.

For example, agriculture. Your country’s agriculture is the most promising in Europe, and once integrated into the free trade system, surpassing Austria is only a matter of time.

No one understands the scale of Austria’s agricultural processing industry better than you. If your country leverages its domestic grain production to develop a complementary processing industry, it will have nothing to fear from competition.

With agricultural exports alone, your country could generate over a hundred million pounds in exports. Wouldn’t the profits from this be enough to compensate for losses in other industries?

In addition to agriculture, your country’s rich resources are another innate advantage. Once integrated, there will be no fear of competition.”

Alexandrovich did not show it on his face, but deep down, he was already very annoyed. Apart from sowing discord between Russia and Austria, the rest of what was said was nothing but empty talk.

The international grain market is already saturated, and if the Russian Empire joins in now, it would only get a small share at best. To achieve what Maclean described, they would first have to surpass Austria!

No one knows the situation better than those involved. There is a significant gap in agricultural production technology between Russia and Austria, which cannot be bridged overnight.

Poor natural conditions also limit Russia’s agricultural exports. Not to mention, the high transportation costs alone increase expenses.

In addition to these issues, there is also a problem with agricultural processing technology. First, the machinery and equipment must be imported, as locally produced machinery is of poor quality.

Second, the lack of skilled workers results in a high rate of defective products. This is a common issue in Russian industry and commerce, where even with the same machinery, their defect rate is higher than that of other European countries.

With all these problems combined, costs had already increased significantly. How could they compete with opponents in agricultural product exports?

While the Russian Empire is rich in resources, it should also be noted that transportation is underdeveloped. No matter how abundant the resources are, if they can’t be transported out, what’s the point?

Joining the free trade system is possible, but the British need to offer tangible benefits. Alexandrovich is looking for real advantages, not an illusory promise.

“Minister, what you mentioned is only a direction for future development. In the short term, the Russian Empire would not gain any benefits from joining the free trade system.

But the price we have to pay is very high, not only affecting domestic industry and commerce but potentially leading to the breakdown of the Russian-Austrian alliance. This is not a fair trade, and it is not right to be so insincere with friends.”

Alexandrovich deliberately emphasized his tone to express his dissatisfaction with Maclean.

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The first round of negotiations ended with both sides failing to probe each other’s intentions, and the talks were temporarily put on hold.

However, Alexandrovich was indeed tempted. Whether or not the British were making empty promises, the prospect of dominating the agricultural export market was indeed very enticing.

But just thinking about the competition made him feel hopeless. During this era, the Russian Empire only exported grain and not other agricultural products, mainly due to transportation issues.

Products like fruits and vegetables would be mostly rotten by the time they were transported from the Russian Empire to various European countries for sale.

Wheat, potatoes, beans, and corn are the flagship products of the Russian Empire. The area of cultivated cash crops is too small, and their export share is very limited.

Take cotton, for example. Due to factors such as production technology, geographical conditions, and transportation, Russian cotton has lost its competitiveness.

These problems couldn’t be solved overnight. It was extremely difficult to make up for inherent deficiencies.