Holy Roman Empire

The eternal theme of this world: interests. The conflict of interests between Britain and France is severe, and without sufficient external pressure, they cannot truly unite.

In the original timeline, the German Empire exerted significant pressure on the French, to the extent that the French government preferred to spend considerable resources to court the Russians rather than align with the British immediately, which illustrates the situation well.

After the Franco-Prussian War, both Germans and British became France’s biggest enemies, and in the following decades, Britain and France nearly went to war several times.

The conflict between Germany and France could surpass that between Britain and France largely due to Kaiser Wilhelm II’s reckless provocations, which repeatedly stirred up French nationalism and were exploited by the British.

After realizing that the Germans posed a threat to their own interests, the British took the initiative to extend goodwill to the French.

Even so, the French government hesitated for a long time before lowering its pride to become a subordinate. Otherwise, it would not have been so easy for both sides to compromise.

Now it goes without saying that a resurgent France does not feel threatened. Why would it want to play second fiddle to the British?

With this thought in mind, Franz felt reassured. The intertwining conflicts among Britain, France, and Austria create a more stable arrangement.

In a situation where there are significant conflicts of interest among them, the fact that Britain, France, and Austria can sit down together is truly a testament to how delicate diplomacy is.

With external issues resolved, it was time to address internal matters. In recent years, Austria’s economy seems to have taken flight, thriving on the tailwinds of the Second Industrial Revolution.

Not only Austria, but the entire European continent is experiencing robust economic growth. Taking the railway industry as an example, from 1870, the total railway mileage in Europe increased by 58%.

Among them, the Prussian-Polish Federation and the Russian Empire saw the fastest growth, followed closely by Greater France and the Nordic Federation. Britain and Austria, having developed their railways earlier, are now experiencing a slowdown in growth.

Of course, this growth rate is relative to the existing infrastructure. Austria’s slower growth does not mean it has built fewer railway miles than other countries.

Russia’s growth was the most astounding. Other countries grew by percentages, but Russia’s growth is measured in multiples.

This rapid growth is not due to the Russian government’s prowess in railway construction but rather because Russia’s railway industry has developed slowly. After the Russo-Prussian War, the total railway mileage in the Russian Empire was less than 3,000 kilometers, so doubling that figure is not particularly difficult.

In contrast, Austria had already surpassed 60,000 kilometers of operational railway mileage by 1870. Given this substantial base, its growth rate naturally slowed down.

Franz’s initial proposal for a major railway plan has now progressed beyond mere plans. After more than twenty years of effort by the Austrian government, it is nearing completion.

Perhaps twenty years ago, a total of 100,000 kilometers of railway seemed like a distant dream. However, today, Austria’s operational and under-construction railways have already exceeded 100,000 kilometers.

By the end of 1875, Austria’s operational railway mileage reached as high as 76,000 kilometers. Within five years, it is expected to surpass 100,000 kilometers.

Of course, this significant increase in data can be attributed not only to rapid domestic economic development but also to the “African Integration Strategy.”

As of now, a total of 23 cities and regions have been approved by the imperial parliament to be incorporated into the homeland, bringing the area of this territory close to one million square kilometers.

With the increase in land area, the demand for railways naturally grows. The operational railway mileage in this territory approaches 10,000 kilometers, with an additional 8,000 kilometers under construction.

This data is kept strictly confidential and once disclosed, it would undoubtedly shock the world.

Of course, “confidential” is relative to ordinary people and for politicians, it is not a secret. Railways cannot be hidden. If one wants to know, it is relatively easy to investigate.

In this era, railway mileage does not necessarily equate to national strength. Austria has the highest operational railway mileage in the world, followed closely not by Britain or France but by the United States.

If it weren’t for the division of America, they would certainly have the most extensive railway mileage today, as the third-ranking in total railway mileage is held by the Confederate States of America.

This is somewhat frustrating. European countries have limited land areas. While regional railway density might be higher than that of Americans, they cannot compete in total mileage.

Currently, the country with the highest railway density is Britain. The British Isles are surrounded by water and have an astonishing 23,000 kilometers of operational railways. This density is something Austria cannot hope to match. Not only now but even if Franz’s grand railway plan were fully realized, it would still fall short of the British.

Franz understood this but had no intention of emulating them. The high railway density in Britain is largely due to significant redundancy in construction.

The distribution of railways in Britain is extremely uneven, as capitalists tend to invest only in economically developed areas, leaving economically backward regions neglected.

In the British Isles, surrounded by water, there is no need for so many railways in just the economically developed areas. With proper planning and allocation, Britain’s transportation could reach new heights.

Clearly, this is impossible. Capital follows profit. Lucrative ventures attract competition, while unprofitable ones are ignored.

If it weren’t for Franz initially using monopoly as bait to entice capitalists into the fold—tying together the railways of developed and underdeveloped areas—Austria’s railway construction might have followed in Britain’s footsteps.

Austria’s railway bundling plan encountered an economic crisis on the eve of its dawn. Capitalists who originally thought they would make huge profits ended up facing severe losses due to a lack of funding.

Such a tactic can only be played once. Before this, Austria had not completed its industrialization and lacked the qualifications to even enjoy an economic crisis, so people’s vigilance was naturally low.

Capitalists overlooked the risks of long-term investments and were lured by the term “monopoly,” which led them to get caught up in it.

It’s not just that local capitalists lack experience. Even international capitalists from countries like Britain and France fell prey to the allure of “monopoly,” with hundreds of millions tied up in railway construction.

Those with substantial financial resources managed to hold on, while those with less strength were forced to sell off their investments, allowing the Austrian government to pick up the pieces at bargain prices and continue its unfinished railway plans.

Now, railway investment remains highly sought after, but it is no longer frenzied. The main factor is policy. The Austrian government has already intervened in railway freight pricing.

There is a maximum price limit set in various regions, and the government has also stipulated that railways are public infrastructure with a certain public welfare nature. Railway companies are not allowed to exceed a 30% annual profit margin.

To be frank, this figure is still quite tempting. Aside from the financial sector, very few industries can achieve a 30% profit.

However, this is entirely different from the exorbitant profits that capitalists pursue. After all, railways are major investment projects, and profits are calculated based on revenue, not total investment.

If total investment were taken into account, no railway in Austria would have an annual return rate exceeding 30%, and it would be impossible to achieve this anywhere in the world.

The only advantage is likely the stability of returns. The revenue from Austria’s railways has been steadily increasing, with annual growth rates generally not falling below 3%.

Due to economic development, some sections have even experienced revenue surges of several dozen percent in a single year.

In addition to freight charges, railway companies have other profit models. For instance, real estate projects around stations are often part of the railway companies’ assets or involve their investment.

Stations are not particularly grand structures so many places can accommodate them. Railway companies are not foolish. If there were no benefits, why would they build stations there?

Shifting a station slightly forward or backward does not affect the normal operation of the railway. In an era without competition from airplanes or cars, even if a station is a few kilometers away, people still have no choice.

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After briefly reviewing the reports, Franz displayed a satisfied smile. In 1875, Austria’s economic growth rate once again exceeded 8%. The benefits brought by the Second Industrial Revolution had begun to take effect.

The electricity industry has performed exceptionally well, with an astonishing annual growth rate of 23.6%, clearly outpacing all others.

In contrast, the growth rate of traditional industries appears much weaker. For example, the textile industry, which rose to prominence during the early Industrial Revolution, now has a meager growth rate of only 1.8%.

However, behind these figures, Austria’s textile industry has seen a capacity increase of 5.6%. This indicates that the growth rate of production capacity far exceeds the industry’s revenue growth, suggesting that profits in the sector are declining.

Of course, technological advancements have also led to lower production costs, which could potentially increase profits for specific companies.

Nevertheless, the slowdown in industrial growth is an undeniable fact. As competition intensifies in traditional industries, declining profits are becoming inevitable.

This is not something that can be changed by human effort. As science and technology advance, the added value of products increases. Primary industries with low technological content will see their profits shrink, ultimately leading to competition based solely on cost.

There are exceptions, such as the steel industry, which has a history spanning thousands of years and is firmly established as a traditional sector. Yet, the steel industry continues to grow rapidly.

In 1875, Austria’s steel production surpassed 8 million tons, leaving the British behind and securing its position as the world’s leader.

The steel production figures for major countries during this period are as follows:

Austria: 8.23 million tons; steel output: 960,000 tons

Britain: 7.42 million tons; steel output: 760,000 tons

France: 2.74 million tons; steel output: 235,000 tons

German Federal Empire: 1.556 million tons; steel output: 315,000 tons (including the Rhineland region)

United States: 1.54 million tons; steel output: 146,000 tons

Russian Empire: 1.042 million tons; steel output: 24,000 tons

Prussian-Polish Federation: 968,000 tons; steel output: 126,000 tons

Confederate States of America: 346,000 tons; steel output: 38,000 tons…

The remaining countries can be ignored. Big data indicates that the French have fallen behind, and this gap continues to widen.

This is not because the French government is incapable of developing the economy. It is entirely due to the harsh realities they face. France’s coal mines are located quite deep, with shallow seams and accompanied by gas.

The extraction costs are inherently high, and the quality is poor. While it can be used for iron smelting, steel production is another matter and importing is the only viable option.

Under these circumstances, the French have turned to “black technology,” specifically charcoal iron smelting. As Franz knows, French steel companies are also researching charcoal steelmaking.

This is no joke. A significant portion of France’s steel production comes from charcoal. Many French metallurgical experts confidently assert in newspapers that iron produced from charcoal is of the highest quality.

There is no need to be surprised. Charcoal iron smelting is a traditional process with a history of over a thousand years.

Now, the French are still researching charcoal steelmaking technology and have achieved some preliminary results. In laboratory settings, they have successfully produced steel of good quality using charcoal.

Unfortunately, mass production remains unattainable. During industrial trials, the quality of steel produced with this technology cannot be guaranteed, and the costs are exorbitant.

These practical issues have not dampened the enthusiasm of French capitalists. They continue to pursue this dead-end path with determination.

Capitalists have their reasons for doing so. France’s coal production is insufficient and of poor quality, but the country has abundant forest resources. If they can have a breakthrough in charcoal steelmaking technology, they could instantly escape their predicament.

If France were to follow the examples of Britain and Austria, relying solely on imported coke would already render its steel industry uncompetitive due to the associated costs.

In a country like France, where the financial sector is well-developed, most steel companies are publicly traded. Regardless of whether they succeed, they must present a narrative that convinces investors of the viability of charcoal steelmaking.

Driven by profit, capitalists must firmly believe this is the right path. Otherwise, how could they drive up stock prices?

Compared to the same period in history, France’s steel industry is still performing relatively well, with the most significant impact felt by the United States following its division.

The United States inherited most of America’s industrial capacity, but its development has been quite challenging. Without the Southern market and needing to recover from the wounds of war, the economy of the United States has struggled.

The Union, which inherited two-thirds of America, has a comprehensive national strength that is less than half of what it was historically. The shrinking market and labor shortages are major factors hindering economic development.

Due to the butterfly effect, in the past twenty years, the number of immigrants from Europe to America has been less than one-third of what it was historically.

Without people and markets, industries will inevitably shrink. This is beyond human control.

Additionally, political factors have played a role. The federal government’s prestige has plummeted due to its defeat in war, leading many federal states to disregard the central government.

Each federal state has its own leadership team, and the policies they formulate are centered around their respective states. The so-called sense of the larger picture is nonexistent.

It is common to see certain federal states erecting trade barriers to protect their local industries, while others open their doors wide to allow products from around the world to enter.

These policies are all driven by self-interest. If local industries can produce certain products, the government will set up trade barriers to protect them.

For industrial products that cannot be produced locally and must be purchased from outside, the decision is naturally based on which supplier offers the best price and quality.

As a result of this series of factors, in the post-war period, the labor-short United States had no choice but to import a large number of people of color.

Cheap contract laborers were highly sought after by capitalists. The workers provided by these labor-exporting companies, while having nominal personal freedom, were essentially no different from slaves.

The current scale of the U.S. steel industry owes much to these inexpensive foreign laborers.

However, the side effects are quite serious. This exploitative approach has exacerbated racial tensions within the United States.

Addressing these issues is not something that can be accomplished overnight. At the very least, there needs to be a strong government to integrate the various federal states.