Holy Roman Empire

Chapter 378: The Integration Process

The negotiations between the North and the South have not concluded yet, but the American Civil War has effectively ended. Neither the European powers nor the American public want this war to continue.

This was not something that could be reversed by individual will; all that remained was to negotiate terms.

To demonstrate sincerity, both sides have ceased military actions, including ongoing military mobilizations.

Strategically, the goal of weakening the United States has essentially been achieved. All that remains is the final treaty to formalize the division of the United States.

However, this is not just a positive development; it also brings along a series of issues. For example, Austrias cotton and cotton textile industry will be impacted.

Taking advantage of the reduced cotton production during the American Civil War, the Austrian cotton textile industry, which had sufficient cotton supply, rose unexpectedly, seizing market share from the British in Europe.

In Eastern, Southern, and Central Europe, British cotton textile products were gradually squeezed out of the market.

Previously, due to insufficient cotton supply, cotton textile products were in high demand, and the British were powerless when Austria seized market share.

Now, things are different. With the end of the Civil War, cotton production in the United States will quickly recover. With sufficient raw material supply, British capitalists will naturally seek to regain the market.

The market is the lifeblood of every industrialized nation. As the first country to undergo the Industrial Revolution, the British have accumulated enough advantages, with industrial strength once surpassing more than half of the global total.

As France and Austria completed their industrialization, the proportion of British industry in the global industrial output decreased, but it still remains the worlds number one.

However, an embarrassing fact is that the British Empire, the worlds factory, has long been in a trade deficit.

In 1864, Britains total exports were worth 215 million pounds, while imports totaled 275 million pounds, resulting in a trade deficit of 60 million pounds.

During the same period, Frances total exports amounted to 2.963 billion francs, while its total imports from abroad were 2.523 billion francs, resulting in a trade surplus of 440 million francs (approximately 17.6 million pounds).

Meanwhile, Austrias total exports amounted to 285 million guilders, with total imports totaling 226 million guilders, resulting in a trade surplus of 59 million guilders (approximately 29.5 million pounds).

Not only were France and Austria in a state of trade surplus, but Russia also found itself in a similar position. In 1864, Russias total exports amounted to 187 million rubles, with imports totaling 175 million rubles, resulting in a trade surplus of 12 million rubles.

During this era of relatively small international trade volumes, Russias agricultural exports alone exceeded half of its total exports, allowing it to achieve a trade surplus through this advantage.

Austrias significant trade surplus can also be attributed to its agricultural exports, as food is a basic need, and Britain is one of Europes major grain-importing countries.

To address the issue of trade deficits, successive British governments were deeply concerned. However, the inherent shortage of domestic resources meant that Britain would remain in a state of trade deficit.

Fortunately, John Bull had many colonies, allowing it to plunder colonial wealth to fill this gap. Otherwise, an ordinary country would have crumbled long ago.

Historically, the Opium Wars were started by the British precisely to offset their trade deficits.

Now that the Austrian capitalists had seized market share, the British would certainly not accept this lying down. Overturning the table was still too extreme this level of conflict did not require the two countries to completely break off relations.

Of course, turning hostile would be futile; this was fair competition in business. It was the Britishs insufficient supply of cotton textile products at the time that allowed Austria to take advantage of the situation. John Bull couldnt make the market wait.

Now that the American Civil War had ended, cotton production in the South might return to normal next year. Thanks to the benefits of labor exports, production might even increase further.

The Confederate States of America enjoyed uniquely advantageous geographical conditions, and their cotton yield per acre was usually higher than in other regions.

Of course, the insufficient yield per acre could be compensated by expanding the planting area, but it would inevitably lead to an increase in corresponding labor input.

Historically, the North emerged victorious, causing the Southern plantation owners, as the defeated party, to lose access to cheap labor. This severely impacted cotton production, compounded by competition from Indian and Egyptian cotton in the market.

However, the primary reason was the Northern capitalists need for cheap industrial raw materials. They utilized methods such as raising tariffs and railway freight rates to render American cotton less competitive in the market.

Currently, Indian cotton production has not yet increased significantly. In efforts to compete for labor in the excavation of the Suez Canal, British attempts to promote cotton cultivation in Egypt faced obstruction from France and Austria.

At present, the only competitor of the Confederate States of America in the cotton market is West Africa.

As the global cotton supply had not yet exceeded demand, such competition was unwise in the short term, as Austria itself could absorb most of West Africas cotton production capacity.

However, with the entry of Indian and Egyptian cotton in the future, this competition will intensify.

Facing competition with the British in the cotton textile industry and competing in the cotton market with the United States, Egypt, and India, Franz had to consider these economic issues in advance.

Schnbrunn Palace

Todays agenda consists of only two items. Firstly, how to maintain our market share for cotton textile products on the European continent; secondly, how to safeguard the interests of cotton farmers?

During this period, industrial and commercial products were relatively scarce, with the textile industry dominating the economy. Although the cotton textile industry was not one of Austrias core industries, due to the impact of the American Civil War, it experienced a sudden rise and thus could not be abandoned.

Currently, regions like Bavaria, Wrttemberg, Lombardy, and Venetia have a combined workforce of up to 1.2 million in the cotton textile industry, with over 2.5 million employees across the industry chain.

With so many people dependent on the textile industry for their livelihoods, it directly dictates that the Austrian government must protect this industry, making the ongoing Anglo-Austrian trade dispute inevitable.

Ensuring the interests of cotton farmers goes without saying. Currently, the majority of plantation owners in the colonies are nobles.

This is determined by Austrias national situation. Ordinary people are limited by their economic strength and cannot expand plantation areas significantly, even if they want to. Meanwhile. capitalists lack interest in farming.

Due to land redemption within the country, many nobles have lost their land but gained redemption money, which obviously cannot sit idle.

After the establishment of the colonies, many conservative nobles turned their investment targets to plantations. Perhaps in later years, farming profitability might not be high, but in this era, the return on investment in plantations is not much lower than in other industries.

Cotton plantations are no exception, attracting a large number of nobles. As the spokesperson for the nobility interest group, Franz naturally had to consider their interests.

This also related to peoples enthusiasm for opening up colonies. Under profitable conditions, the ruling class would certainly strive to maintain the colonial system; otherwise, the opposite would be true.

Minister of Economy Andrew replied, Your Majesty, our Ministry of Economy has prepared contingency plans. When necessary, we can use political means to maintain the domestic and Russian markets without much trouble.

Southern Italy is in the midst of a civil war, and the already limited market there is further shrinking, so it will not be the focus of British counterattacks.

The remaining battleground is in Central Europe, including the German Federal Empire, Prussia, Switzerland, the Netherlands, and other regions, which are the main theaters of this trade war.

French capital may also join in. The French economy has developed quite well in recent years, and with raw material supply guaranteed, their cotton textile products are also competitive in the market.

To enhance the market competitiveness of cotton textile products, the Ministry of Economy believes that it may be necessary to provide tax rebates and subsidies to these frontline production enterprises when necessary.

Simple and crude, yet highly effective. The production technologies of everyone are almost the same, and there is no discernible difference in product quality. With no significant advantage in production costs, to gain an edge in market competition, one can only resort to policies.

Historically, it was through the subsidies of various countries that the British cotton textile industry was eventually crushed. In manufacturing, the competition comes down to cost and quality. Once the technological advantage is lost, the competition becomes brutal.

In this regard, Franz was also powerless. They could only seize a portion of the British market by taking a lead, but now the real competition had arrived, and everyone could only rely on their strength.

The only advantage was that the British cotton textile industry was larger in scale. If financial subsidies were used, for every 1 million spent by Austria, the British would have to pay 3 million.

This kind of mutually damaging approach was not something that would normally be played out. After all, a country has so many industries, and it was impossible to concentrate resources on just one industry.

Minister of Agriculture Christian said, Cotton and the cotton textile industry are closely related. As long as the domestic cotton textile industry does not collapse, the cotton plantation economy in West Africa will not collapse.

To enhance the competitiveness of West African cotton, we can consider tax measures, such as reducing or even abolishing trade tariffs between colonies and the homeland.

Throughout Europe, Austria is definitely the country that places the highest emphasis on the development of colonial economies. However, no matter how much emphasis is placed, it still cannot surpass that of the homeland.

To avoid the impact of cheap agricultural products from colonies on the domestic agricultural market, trade tariffs have existed between the homeland and colonies from the beginning, albeit slightly lower than foreign tariffs.

There has always been a call for economic integration within the Austrian government. The nobles who invest in plantations have always wanted to integrate the colonies into the homeland for their own interests.

Currently, the governance model in West Africa, Congo, and Nigeria is beginning to converge with that of the homeland, and some colonial cities are adopting laws similar to those of the homeland.

As the first generation of colonizers, people still have very strong feelings toward the homeland. Many are pushing for the process of integration, and Franz himself is one of the supporters.

However, due to the involvement of various factors, the Austrian government still dares not hastily announce the integration of colonies into the homeland. Nonetheless, the best-developed colonies have already begun to implement the provincial system.

Compared to the homeland, these colonial provinces have greater rights and even have some military authority. Lowering trade tariffs between colonies and the homeland undoubtedly advances the process of integration further.

After a moment of contemplation, Franz raised a question, In theory, there are no issues. However, lowering tariffs between the homeland and the colonies also involves the integration process between the second homeland of Germany and the mainland.

Lets first leak this issue to gauge the reactions of various sectors domestically. At the same time, organize economists to conduct comprehensive analyses. We must understand the extent of the impact this will have on the homeland.

This issue has been brought to the surface. Prior to this, the legal basis for promoting the integration process between the colonies and the homeland was Franzs proposal to recreate the second homeland of Germany.

Since the African colonies were the second homeland of Germany from the beginning, merging them with the first homeland should not be a problem.

However, these were all speculations from the public, as the official stance had not been expressed. The main force behind the integration process was also in the civilian sector, with groups and individuals involved in colonial interests driving the plan forward.

The push was substantial, while opposition from various groups was more robust. Primarily consisting of small and medium-sized nobility and farmers from the homeland, they feared that cheap colonial agricultural products would flood the homeland, damaging their interests.

However, the current situation was somewhat unexpected. Agricultural products from Austrian colonies were not inexpensive, at least not competitive compared to those from the homeland.

On one hand, the lack of labor in the colonies has led to high labor costs; on the other hand, the main reason is that these are newly developed lands with initially low yields.

Most crucially, Austrias two major grain-producing regions currently have very fertile land, and infrastructure such as water conservancy and transportation is already well-established, which the colonies cannot match.

As for the future? Franz can say with certainty that once chemical fertilizers emerge, the profit from farming will further decline.

Regardless of whether there was competition from colonial agricultural products, domestic agriculture would be affected. Many grain-importing countries would be able to increase their grain production using these fertilizers, leading to a short-term sharp contraction in the international grain market.

From this perspective, Austria cannot develop chemical fertilizers, or even if it is developed, they cannot put them into production.

The longer it is delayed, the more beneficial it is for Austria. Making changes rashly before the industry has developed to a certain level can easily lead to disaster.

More grain production is not necessarily better; the market capacity is limited. Once the threshold is exceeded, one can only lament over surplus grain.

This point can be illustrated by the fact that the inventor of chemical fertilizers was German. Would it not be self-inflicted misery for the major grain exporters like the United States, Austria-Hungary, and Russia to invent chemical fertilizers?

Of course, the Germans could never have dreamed that their invention of chemical fertilizers would benefit the French the most, directly allowing the French to escape the grain dilemma and become one of the main grain exporters in Europe.