Holy Roman Empire - Chapter 522

Chapter 522: Chapter 95: The Era of Great Mergers

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The agricultural crisis affected not just the European Continent, America also could not avoid the calamity.

As grain prices plummeted in Europe, naturally, capital owners transported and sold their grain elsewhere, bringing down grain prices in America as well.

Advancements in shipping technology reduced maritime transportation costs, leading to an increase in ocean-going vessels capable of carrying tens of thousands of tons. With this tailwind, the grain dumped by Austria even crossed the oceans to enter the Japanese market.

Of course, this was just incidental, as shipping grain specifically to Japan to sell it was still too low in profit, and no one had that much spare time to bother.

Influenced by the Meiji Restoration, Japan had recently increased its imports of machinery and equipment from Europe, making trade more prosperous.

The first ten-thousand-ton transport ships born in Austria managed to reduce freight costs, but they faced an embarrassing problem—the cargo often couldn’t fill the hold.

This didn’t stump the capitalists; filling the warehouses with some local specialties was better than nothing—after all, even the tiniest mosquito is still made of flesh, and couldn’t be wasted.

The call to action by the Vienna Government had some effect; major grain-exporting countries all announced production cuts, though how effective these were remained to be seen.

In Franz’s view, the measures taken by the various countries were full of loopholes. Whether production capacity could actually be reduced was all up to the farmers’ sense of responsibility.

With the autumn harvest over and a new wave of grain on the market, international grain prices continued to drop. Capitalists realized the gravity of the situation, as a continued decline would doom everyone.

In order to stabilize grain prices, the capitalists collaborated with large farm owners to pressure governments. By the end of 1872, most European nations had raised import tariffs on agricultural products.

These measures were still far from sufficient. To stabilize market prices, the capitalists had to bear the pain of destroying a portion of the agricultural products.

For grain-importing countries, things were better off; tariffs were raised and some of the excess agricultural products were destroyed, stabilizing the market rather quickly.

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Maintaining “stability” was one thing, but restoring grain prices to normal levels was not something that could be achieved overnight.

Grain-exporting countries, however, suffered greatly, facing continued sluggish sales. The trade disputes that broke out on the European Continent this year surpassed the sum of the previous five years.

Among them, the losses of Russia, Austria, Poland, Belarus were particularly severe. To alleviate the crisis, in October 1872, the Vienna Government announced the purchase of 2.7 million tons of wheat, 4.8 million tons of rye, 3.8 million tons of corn, and 1.9 million tons of soybeans for strategic reserves.

Of course, this came with conditions; this procurement was limited to domestically produced new grain, purchased at the government-regulated minimum grain price protection level.

First was de-inventorying, and now it was restocking—no issues at all. Stimulated by this good news, the grain prices in the Austrian domestic market finally stabilized.

The international grain market still showed no signs of improvement. It was not a matter of price now, but rather that the market was saturated. Many grain-importing countries had temporarily stopped importing grain.

Seeing the Vienna Government’s purchase of grain for strategic reserves, the Junker nobles grew restless. They all stepped forward with suggestions, urging the Prussian Government to increase its strategic grain reserves.

Inside the Berlin Palace, meetings on this issue had already begun. Wilhelm I had no objections to adding to the strategic grain reserves; the only problem was that the Prussian Government had no money.

The money Austria used to purchase grain was from previously offloaded stock. A rough calculation showed that the Vienna Government had lost millions of tons of grain in this venture.

Calculating the exact losses was difficult; it had to take into account the price difference between the new and old grain, and the cost to the Vienna Government for the purchases for reserves beforehand.

“Prime Minister, what is your view?”

Maoqi felt immense pressure—from one side, the government’s depleted coffers, and from the other, the interests of the Junker nobility. After some hesitation, reality helped him make a decision.

“Your Majesty, no one knows when the Prusso-Russian war might erupt, nor can anyone guarantee how long this war will last. It is of utmost necessity to increase the strategic grain reserves.

The problem is, the government currently has no funds. To increase the strategic reserves, we need at least a billion Marks, which is way beyond our capacity.

If the farmers are willing to accept deferred payment, we can procure some of the grain. However, when the government can pay this amount, we cannot guarantee.”

This response left no room for rebuttal—not that the government was unwilling to increase reserves, but simply that it had no money to pay for them.

The government could collect the grain, but that would be issuing IOUs, repaying when funds were available and owing indefinitely if they weren’t.

From the standpoint of class interests, Maoqi’s words left many dissatisfied. Yet with no reasons to argue, no matter the eloquence, the government simply had no money.

“Prime Minister, this probably won’t work. Growing grain also involves costs, and the government at least needs to pay for these costs, or else many farmers might go bankrupt.”

Minister of Agriculture, Merani Griffiths, urgently advised, having no way to face the Junker nobles if the government were to indeed issue IOUs.

Maoqi shrugged, conveying a sense of helplessness with his palms spread wide.

“Where is the money supposed to come from? Our finances are always tight. Even now, when the price of grain is very cheap and rye can be bought for less than 100 Marks a ton, a million tons would still amount to a hundred million Marks.

If the Department of Agriculture can solve the issue of funding, there’s no problem with the amount of grain we can acquire. I guarantee no one in the government will oppose.”

The Kingdom of Prussia had long been in debt, and the domestic financial sector lacked the capacity to provide loans to the government. To continue borrowing from external parties, national interests had to be compromised.

Whoever dares to propose such a suggestion must first consider whether they will be shot by patriotic youths the moment they step outside.

In these years, the Kingdom of Prussia was also filled with ‘Chuunibyou’ adolescents, who were the guarantee of the Prussian Army’s fighting capability, but also an unpredictable ticking time bomb within the Kingdom of Prussia.

Merani Griffiths had not lived enough and did not wish to become a target of these patriotic youths; engaging in such suicidal acts was out of the question for him.

“Sorry, Prime Minister. This is not within my job scope; you should ask the Ministry of Finance. If the government cannot stabilize grain prices, then at least we can implement more aggressive agricultural policies, right?”

Maoqi: “Of course! As long as it does not involve money, we can do our best to solve any other issue.”

Merani Griffiths: “That would be for the best.”

Well-prepared, Merani Griffiths took out a document and advanced to present it to Wilhelm I.

“Your Majesty, this is the Ministry of Agriculture’s plan to reduce grain production capacity. We have learned from the Austrians’ experience and plan to implement the ‘Fallow Law’.”

This proposal caught everyone by surprise; the Berlin Government had discussed this issue before, but it was eventually shelved due to strong opposition from the Ministry of Agriculture, which was controlled by the Junker nobility.

After quickly scanning the document, Wilhelm I’s expression darkened. The Prussian version of the Fallow Law was far more blatant than expected.

At first glance, it didn’t seem to be a major issue, but a closer examination revealed many ambiguities that were glossed over, and a further analysis uncovered that it only considered the interests of the Junker nobility.

The nobles had vast lands, and even with strict Fallow Laws enacted, they had enough land to rotate crops; it was the peasants with insufficient land whose interests would truly be harmed.

Under the regulations set forth in the document, due to the emergence of crop rotation techniques that reduced fallow time, ordinary farmers, who had just begun to enjoy better days, would soon face misfortune again.

If implemented, a new wave of land monopolization would commence in Prussia, leading to the bankruptcy of many smallholders.

“Merani Griffiths, are you sure that the content of this document reflects reality and that the Ministry of Agriculture hasn’t considered the consequences of these actions?”

Faced with the questioning by Wilhelm I, Merani Griffiths maintained his composure and calmly replied, “Your Majesty, after the outbreak of the agricultural crisis, the market will inevitably endure a round of survival of the fittest.

Whether we implement the ‘Fallow Law’ or not, a wave of bankruptcies will break out. By taking proactive measures, we can overcome the crisis sooner and avoid involving more people.”

This was a fallacious argument, yet it was also a fact. The smallholders would inevitably be outcompeted by the large farm owners. Given the current situation, with grain prices collapsed, they could hold on for a few years at most before succumbing to insurmountable debt.

This was not something within human power to change; it was merely a matter of when the outbreak would occur. The Junker nobility had changed their minds and agreed to cut production capacity, but more than preserving grain prices, they sought to monopolize land and expand their estates.

Common people might think that with grain prices plummeting, land would become worthless, but the power-holding Junker nobility thought otherwise.

The population was continuously growing, whereas the amount of land could not expand indefinitely. From this perspective, the price of grain was bound to rise eventually.

Even if international grain prices failed to recover, they could artificially raise domestic agricultural prices by changing the rules.

In the original time-space German Empire, despite insufficient domestic grain production, the Junker nobility dared to set restrictions to prevent foreign agricultural products from entering the domestic market, so why not now?

The bankruptcy of farmers was also something the capitalist Junkers wanted to see, affording them more cheap labor. An analysis of interests would show that this plan was unstoppable in the Kingdom of Prussia.

…

After the Kingdom of Prussia introduced the highly monopolistic ‘Fallow Law,’ other European countries quickly began to follow suit.

Large farm owners and capitalists together drove this feast of division, with the farm owners securing more land and the capitalists obtaining cheap labor, in perfect harmony.

Austria was not spared either, but they still faced the “Prohibition of Land Monopoly Law” that had been enacted following the 1848 Vienna Revolution, which Franz had signed into law.

It explicitly stated: Private sale of small plots of land is forbidden; they can only be sold to local governments at market value. (Specifically, this refers to land under 200 hectares.)

These recovered agricultural lands can only be sold by local governments to farmers with less than 50 hectares of arable land, or to retired soldiers with less than 100 hectares of arable land, or to military nobility with less than 200 hectares of arable land.

(Note: After reaching this purchase limit, further acquisition is not allowed.)

These purchased lands, if to be resold, could only be sold back to the government, not directly to individuals.

In short, small farm owners could buy, but large farm owners looking to expand could only acquire farms larger than 200 hectares.

From the perspective of productive forces development, the small farm economy was inevitably doomed, and the future mainstream of agricultural production would be large farms.

This type of land consolidation helped increase agricultural competitiveness, and naturally, Franz had no intention of stopping it, but he didn’t want to see domestic agriculture monopolized, hence he had introduced this law to limit the large nobility’s unchecked expansion.

Based on this law, over 80% of Austria’s arable land was locked in, only circulating among the general populace.

If the nobility wanted more land, they had better look to the colonies; on their own land, once their arable land exceeded 200 hectares, any further desire for expansion meant purchasing from large farm owners.