Holy Roman Empire

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With the outbreak of the second industrial revolution, the total industrial output of countries grew exponentially, and the demand for markets and industrial raw materials increased day by day.

The Vienna Government was eager to promote free trade, not only for domestic economic development but also for undisclosed strategic purposes.

Once the era of free trade began, Austria, which held an advantage in emerging industries, was bound to amplify this advantage and set higher barriers for newcomers.

If progress went smoothly, in the near future, the following scenario would emerge: the United Kingdom dominating the traditional industries of textiles and shipbuilding, while Austria took the lead in the emerging industries of electricity, communications, and internal combustion engines.

It could almost be said to be a replication of the economic rise of the Second German Empire, except that Austria was somewhat more solidly founded, being Europe’s leading agricultural exporter and supported by vast colonies.

The Anglo-Austrian two countries divided the industrial main body of the world, what about the remaining countries?

Especially France, which was next after the two countries, whether competing with the British in traditional industries or with Austria in emerging industries, they had no advantage.

It wasn’t that they couldn’t keep up technologically, but rather, the supply of industrial raw materials could not be resolved. Unlike later times, transportation was not as developed in this era. Once distances became too great, costs would rise.

Militarily defeating France posed too great a risk, as it had become a populous nation of nearly sixty million. Even if the Italians contributed nothing militarily, they could still offer logistical support.

When snipes and clams grapple, it’s the fisherman who benefits.

Unless the war could be ended quickly and the opponent completely crushed, the victor would be the fisherman.

A glance at the map and a modicum of military knowledge made it clear that France and Austria could not determine a winner in the short term, a result dictated by their geographical locations.

By comparison, economically defeating France was much less risky and had a higher rate of success.

In the economy, England, France, and Austria were all competitors; even though the London Government liked to play with European balance, that could only be a military balance, not an economic one.

The economies of France and Austria had long been unbalanced, and the British had no intention of helping France, which would mean aiding the enemy.

Forget strategy; capitalists have no such lofty integrity. Making money is always the first priority. Why refuse the chance to eliminate a competitor and make more profit?

The threat from Austria might be great, but that was a problem for the future; capitalists would not give up making money because of a potential danger.

The most typical example was the rise of the Soviet Union in the original timeline. In terms of sheer threat, this was much more terrifying than present-day Austria, yet for profit, capitalists would still cooperate with the Soviets.

In the age of free trade, the economy was determined by the market, and the government’s interference was relatively limited. Taking the London Government of that era as an example, they hardly interfered with the market.

Without a doubt, once Austria joined the free trade system, those with vested interests would also push for both governments to unite and pull all remaining countries into the free trade system.

Undoubtedly, most European countries lacked the resolve to refuse. Once everyone joined the free trade system, the French would be in trouble.

Joining the trade circle, they lacked competitiveness. Not joining, they would find themselves in the awkward position of being isolated.

France had already been ostracized on the European continent, and it had taken twenty years of effort by Napoleon III just to be reluctantly accepted. Playing solo now, they had reverted to their former state.

Perhaps one day the British would give up the free trade system, but they definitely would not do so in support of France. As long as the benefits outweighed the drawbacks, free trade would remain the British hallmark.

Looking at the current situation, as long as they didn’t sabotage themselves, British industry and commerce could maintain their competitiveness for decades to come, thanks to their heritage as an established industrial powerhouse.

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Franz: "What’s the domestic public opinion?"

Prime Minister Felix: "The voices of support and opposition are nearly equal, and both sides are quarreling fiercely. It’s feared that a victor will not be determined in a short time."

Those supporting free trade were not only from emerging industries but also from the agricultural processing industry; they were Austria’s advantaged industries, confident in joining international competition.

Joining the free trade system and reducing import and export tariffs, these industries would all benefit.

Naturally, whenever someone profits, others stand to lose. For example, the cotton textile industry was the staunchest opponent; once they abandoned tariff barriers, the British would inevitably snatch a portion of their market.

Of course, if these enterprises were competitive enough, they also had the chance to snatch the British market. After all, these industries were low-tech, with little technological gap between competitors.

If it weren’t for the higher labor costs in Austro-African colonies, it’s likely the domestic cotton textile industry would have relocated. Once the era of free trade began, cost control became an essential part of business.

Franz: "Then provide them a platform, let supporters and opponents debate, and let the... public be the judges."

Franz had originally wanted to say "spectators," but as the words reached his lips, he felt it inappropriate and timely changed it to "public."

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"Your Majesty, this might cause even greater disturbances. Many people have already applied to the police to demonstrate and protest," Prime Minister Felix advised.

Franz shook his head, "It’s precisely because the situation has escalated that it’s necessary to let them debate. Without an outlet for venting, would these aggrieved parties be content?"

Having capitalists argue with each other is better than the government stepping in personally. Regardless of the outcome of the debate, reform is necessary.

It just adds a buffer that shifts the targets of resentment for those who have suffered losses.

This is only right, as beneficiaries of the reforms, they can’t just reap the benefits without taking on responsibilities. Attracting animosity is one of their duties.

...

Finance Minister Karl: "Your Majesty, our negotiations with the British have hit a snag. Overall, we have reached a consensus, but the British are demanding that we open up our financial industry.

Given the strength of our domestic financial sector, once we open up the financial market, it will be difficult for us to hold an advantage."

Not to mention holding an advantage, Austria’s financial sector is even weaker than that of France, let alone compared to the British. If restrictions were lifted, we would essentially be destined to be thrashed.

After hesitating for a moment, Franz said, "Relaxing financial restrictions is impossible. Domestic capital is already restricted; how could foreign capital not be? Continue the negotiations with the British. We can allow British capital into the securities market, but they must abide by relevant laws.

If the British persist in fixating on financial issues, we’ll just sign an agreement stating that neither country’s capital will enter the other’s financial market. That would be fair."

Austria has never prohibited foreign capital from entering its financial market, it’s just that there are many restrictions. If you want to roam free in financial freedom, just wait to be confiscated by the regulatory authorities!

Unlike the London Financial Market, where rule makers intentionally leave loopholes, the Vienna financial market is constantly being patched.

Finding a loophole in the rules doesn’t mean you can make money; you also need to be quick enough to complete your operation before the regulatory authorities catch on.

After years of patching up, there are now few loopholes left in Austria’s financial market. Trying to shear the sheep without restraint has become much more difficult.

"Not entering each other’s financial markets" is a complete joke.

For Austria, it doesn’t matter. The domestic financial industry is still in the stage of capital accumulation, and even if we wanted to reach out to the London Financial Market, we lack the strength.

From the perspective of the British, it’s a different story. The London Financial Market is the financial center of the world, attracting capital from all over the globe for speculation.

Aside from a few lucky ones who manage to make money, the vast majority are harvested by the UK consortium.

For the British financial consortium, incoming foreign capital is like sheep delivered to their door. Why reject these opportunities?

The British were the earliest to complete the Industrial Revolution, and they accumulated a vast amount of capital early on thanks to their advantage as the world’s factory, leading to capital surpluses starting twenty years ago.

The rise of the United States in the original timeline was due to the British seeking to vent their excess capital; otherwise, the Chosen Country wouldn’t have developed so easily.

Austria’s rise was also aided by British capital in the early years. However, Franz took advantage of the economic crisis and the rule makers’ edge to betray the British capital midway through.

Now, the British want Austria to open up its financial market, essentially because they have been spooked by the traps.

Triggering an economic crisis prematurely is one thing; it can be seen as a lack of skill, and next time one just has to be more careful.

But restrictions due to rules, that’s utterly disheartening. Many seemingly insignificant rules ordinarily have little impact, but when an economic crisis hits, they can often deliver a lethal blow.

And these rules are pre-established and public, part of the game rules. If they are missed, it’s one’s own fault, and they have no grounds for complaint.

The British employ similar tactics. The London Financial Market also has similar rules, specifically designed to trap uninformed foreigners.

But people are fond of double standards: exploiting rules to one’s benefit indicates clever tactics; being outmaneuvered by someone else’s rules is intolerable.

One learns from mistakes. After such experiences, British capitalists want to eliminate these rule restrictions.

Franz also found it difficult; he’d like to tell the British that this was completely unnecessary.

The same ploys can’t go on forever, and as the market continues to regulate, there simply aren’t that many traps to set anymore.

Regrettably, no one would believe it if he said so. From the very beginning with the Vienna Government’s creation of the water supply and railway monopoly projects to the premature detonation of the economic crisis not long ago, British capital suffered heavy losses.

From Austria’s standpoint, these moves are normal play, completely within the rules of the game; but from the perspective of British capital, they are enormous pitfalls.