Chapter 285: Diverting the Crisis
After the economic crisis struck, the landmines Franz had buried exploded one after another, with unfinished projects popping up everywhere and the Austrian government scrambling to clean up the mess.
There was no choice; the destructive power of the economic crisis was too great. As the first global economic crisis, it was much more severe than previous ones.
In 1857 alone, bankruptcies in the United States exceeded 5,000, the stock market was halved, and in some industries with severe overcapacity, stock prices fell by as much as 90%.
European countries didnt fare much better, although the economic crisis hit them a little later, giving their governments some time to react.
Unfortunately, government economic intervention was unheard of in that era. Everyone waited for the eruption, guaranteeing inevitable losses.
Affected by the economic crisis, many capitalists saw their capital chains broken. With their pockets empty, they had to sell off their assets reluctantly, even if they did not want to.
The initial investments were regarded as acts of charity, as performance guarantees went down the drain.
The unfinished government projects were a minor problem. After all, these projects were not urgent, and delays of several years would not cost lives.
Moreover, the more capable capitalists persisted. The more they invested, the less willing they were to give up. In essence, these projects were still high-quality ventures.
This perseverance was crucial for Austrias fragile economy. It allowed many companies along the supply chain to survive and prevented the economy from deteriorating further.
Prime Minister Felix solemnly said, Your Majesty, to date there have been 1,800 domestic bankruptcies, with another 2,000 companies on the verge of bankruptcy, including the five major railway companies.
The overall stock market has plummeted 42%, with railway stocks experiencing the steepest decline. Due to the effects of the American railway bubble, many investors lost confidence in the railways, resulting in a 72% drop in market value.
The textile, manufacturing, financial, and steel industries have all suffered heavy losses. Even agricultural exports have shrunk by a quarter due to the economic crisis.
Industrial production has fallen by almost 30% compared to the same period last year and is currently in a continuous downward trend.
The unemployed has reached over 980,000 and will soon exceed one million. If the economic situation does not improve, this situation will only get worse.
The impact of the economic crisis on various industries and the large-scale bankruptcies of companies do not concern Franz; all this was expected.
A laissez-faire model of economic development is bound to have consequences. If it werent for the Near East War, which allowed Austria to seize the market in the Russian Empire from Britain and France, the economic crisis would have occurred much sooner.
The Austrian crisis began during the postwar economic transition.
If it werent for measures such as the opening of overseas colonies, the reform of the gold standard system, the influx of gold from colonial territories, and government investment in infrastructure, this economic crisis would not have started in the United States, but in Austria.
Other problems can be dealt with gradually, but the problem of unemployment is immediate and must be dealt with immediately or it will lead to very serious social problems.
Franz thought for a moment and said: According to the original plan, the government will take over the unfinished construction projects and let the workers resume work first.
At the same time, the government will negotiate with the railway companies that have suspended operations. They must either find solutions to their financial problems and resume construction immediately, or accept government investment for equity. In either case, construction must resume as soon as possible.
The Colonial Ministry must also act quickly. The economic crisis offers the best opportunity to organize migration, not only for Austria but for the entire German region.
Encourage bankrupt individuals to emigrate to the colonies. At this time, the Americans are also facing an economic crisis, so there is no competition for migrants.
Instruct the colonial government to accelerate the pace of expansion into Nigeria and the Congo. I authorize the mobilization of civilian militias to participate in the fighting to rapidly expand the areas under our control.
Once these projects resume normal construction, the related upstream and downstream enterprises will also survive, solving most of the domestic unemployment problem.
Industrial diversity remains low at present, with related industries from these projects already covering most of the country.
Franz took over the unfinished infrastructure projects because there were no buyers and only the government could take over and continue construction.
The decision not to acquire the railway companies directly was made not only because of their high market value and significant acquisition costs but also because the railway companies were unprofitable ventures.
After the Austrian government licensed all the lines as a package to the railway companies, their financial prospects dimmed.
The shrewd financial conglomerates retreated from the scene at the first sign of the U.S. economic crisis, leaving behind only those speculators who reacted too slowly and got trapped.
Of course, Franz couldnt help them out of their predicament, knowing full well that the railway companies wouldnt make a profit for the next decade. With no one willing to back such long-term projects, relying solely on the Austrian governments investment would create enormous financial pressures.
If possible, hed rather have private capital complete all of the railroads in the New Holy Roman Empire than settle for the compromise of public-private partnerships.
Thanks to a series of capital operations, Austria added more than 14,800 kilometers of railways in less than a decade, bringing the total railway mileage in the New Holy Roman Empire to more than 20,000 kilometers.
If it were up to government investment alone, Austria would probably struggle to complete even half of these projects. This is the power of money; the impoverished Austrian government cannot afford such large-scale projects.
Even now, the Austrian government is not in a position to make such enormous investments. Ongoing infrastructure construction is done through debt financing.
This has made Austria the fourth largest debtor nation in the world, following in the footsteps of Great Britain, France, and the United States. For the next several decades, the Austrian government will have to work hard to repay this debt.
War might be the best way to divert the crisis, but unfortunately, Africa is a little too far away. Otherwise, Franz wouldnt mind conquering a few native kingdoms to get through this economic crisis.
However, expansion into the region is still necessary. Not to mention the plundering of wealth, at least the land to resettle the immigrants must be seized first.
Germany has been facing overpopulation for some time. Austria is relatively better off after theyve already sent hundreds of thousands of immigrants to the Balkans and persuaded tens of thousands to move to the colonies, relieving some of the pressure.
Its different in other parts of Germany. Whenever theres an economic crisis, theres always a wave of emigration.
This time, with the United States also experiencing an economic crisis, people will probably want to emigrate, but they wont be welcome there.
Josip Jelai replied: Your Majesty, the Colonial Ministry has already formulated an immigration plan. To attract immigrants from Germany, we propose two immigration options:
First, by accepting government employment, immigrants will go to the colonies to develop farms, with specific locations arranged by the government. All immigration expenses will be paid by the government, and they will not have to worry about employment issues.
Of course, this requires signing a five-year work contract, with wages 20% higher than on the mainland, and the government provides one free family visit during this period.
Second, free migration: Anyone who chooses to settle in one of our colonial outposts will receive a government subsidy that will cover half the cost of the ship ticket.
Franz nodded. These are the best conditions the Austrian government can offer. The main purpose of developing these farms and plantations is to reward meritorious individuals.
After all, land in the homeland is limited. Even when someone is ennobled, it is usually a nominal title. Much of the land already has owners and cannot be given away as rewards.
So the use of colonial land as an estate is inevitable. Not everyone has a noble lineage. Simply giving them land does not give them the ability to develop it.
Commoners, or heroes of fallen noble descent, have limited wealth. They lack the ability to develop land estates as they did in the past. Therefore, using developed farms or plantations as estates is also a good choice.
By developing it themselves, they can gain hundreds or even thousands of square kilometers of land, while inheriting existing farms may give them only tens or hundreds of hectares of land.
Theres no concept of being taken advantage of or getting unfair benefits here; developing new land necessitated investment. Franz wouldnt force anyone in this matter.
The plantations first established in the colony of Guinea are now beginning to pay off. Crops such as cereals, cotton, and peanuts have a quick cycle, after all.
With the profits in hand, the Austrian government heavily publicized them, claiming to open up a second home for the New Holy Roman Empire and emphasizing the fertility of the African land.
Many peoples perceptions of the African colonies have changed, and the concept of the Dark Continent has faded, replaced by notions of abundance.
Thats not a lie; Africa really has a lot of fertile land. The colonies opened by Austria were relatively prosperous, with climatic conditions suitable for human habitation.
Mobilizing people to immigrate not only allows the development of overseas colonies and solves domestic unemployment problems, but also helps to divert the economic crisis. Its truly a win-win situation.
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