Holy Roman Empire

Chapter 178: War Loans (BONUS)

The Greeks were pulled in, but Franz didn’t take them seriously at all. In this Near Eastern War, the main characters were the Russians, and Austria was just playing a minor role, at most causing a few problems for the beleaguered Ottoman Empire.

Even though the two countries had declared war, there was still ample room for maneuver. Austria merely occupied their two vassal states then stopped, keeping conflict within controllable bounds.

The decrepit Ottoman government was actually quite tolerant, but it had previously overestimated its own strength, and Austria needed this war to happen for various reasons.

Whether the Ottoman Empire should be destroyed or not was a matter of indifference to Franz. With the support of Britain and France, at the very least, the Ottoman Empire could hold onto the Anatolian Peninsula.

As for the Greeks, to be honest, Franz didn’t have any expectations of them.

Their geographical location made clinging to the British the best choice, while their lack of strength meant that the Ottomans could easily suppress them with one hand.

If they openly joined the alliance and declared war on the Ottoman Empire, then for political reasons, responsible figures like Franz and Nicholas I would undoubtedly lend them a hand.

Even if they were defeated on the battlefield, post-war negotiations wouldn't leave them at a disadvantage.

Sneaking into the conflict couldn’t be considered allying with any of the major powers. If they won, Franz was a man of his word, and the Austrian government would certainly support their demands, and the Russians would likely uphold their promises.

If they lost, then they were on their own. It was the civilian militias at play, and it had nothing to do with the Greek government, nor with Austria or Russia. Franz remembered that in history, the Greeks had lost and were brutally defeated by the Ottoman Empire.

Compared to the Greeks, another Balkan small country, Montenegro, or as it was known then, Crna Gora (the Black Mountain), had a much firmer stance.

Originally, Bishop Danilo had aimed for neutrality. Montenegro, a small country with a population of less than 200,000, had launched three wars against the Ottoman Empire in 1821, 1829, and 1835, all ending in failure, in an attempt to gain access to the southern sea.

Bishop Danilo was a pacifist. He was pessimistic about this war. With Montenegro completely surrounded by the Ottoman Empire, he feared being overrun before Russian reinforcements arrived.

Unfortunately, the pro-Russian Montenegrin people did not agree with him. A belligerent spirit was a characteristic of all Balkan nations, and Montenegro was one of the most prominent examples.

The Ottoman Empire had ruled over the Balkan Peninsula for hundreds of years but still had not been able to conquer the Principality of Montenegro. The Ottoman government had grown weary of this.

Thus, they made a proposal to the Montenegrin government: if they were willing to cease hostilities with the Ottoman Empire, acknowledge the Ottoman Empire’s suzerainty, they would grant Montenegro the city of Scutari, an outlet to the Adriatic Sea, and a portion of Herzegovina.

The tough Montenegrins firmly rejected this enticement. They would rather conquer these lands with their own hands than submit to the Ottoman Empire.

Hatred had seeped into the bones of every Montenegrin. With the opportunity at hand and both the Russians and Austrians declaring war on the Ottoman Empire, how could they possibly abstain from this conflict?

It should be known that in the Crimean War, pro-Russian Montenegrins had all wanted to participate.

However, Bishop Danilo understood the situation clearly. He believed that the Russians were too far away, and if a war broke out, Montenegro would be isolated without support. So, he chose neutrality.

For this, Bishop Danilo nearly got overthrown.

Now, there was no need to worry about isolation. They were not far from the Austrian province of Dalmatia, and this left Bishop Danilo with no choice but to compromise.

To be able to marry, Bishop Danilo made a compromise. He agreed to support the war, but in exchange passed the bishopric to someone else and crowned himself “Prince of Montenegro and the Brdas”.

As a traditional Russian ally, the Principality of Montenegro received considerable care. Russia communicated with Austria to have them provide assistance to Montenegro.

Franz naturally would not reject this little request from Russia. It was just weapons, equipment, and strategic supplies. As long as they were willing to pay, everything could be discussed.

At times like this, the advantages of state enterprises became apparent. With just an administrative order from the government, enterprises began early production of strategic materials.

Considering Montenegro’s limited financial resources, Franz also considerately offered a loan service to address the urgent needs of their customer.

Providing such loan services was unavoidable, and it wasn’t just Montenegro; even the Russians had limited financial capabilities.

Currently, they haven’t completed internal reforms yet. The wealth that a feudal dynasty can amass simply cannot compare to capitalist countries.

The Russian government didn’t anticipate British and French intervention, and now, with no access to sea routes, the strategic supplies stockpiled along the Ukrainian coast can only be transported by land. This clearly can’t ensure the needs of the front-line military, so they have to procure goods from Austria, which is closer.

The costs of launching an expedition to the Balkan Peninsula are much higher than those in history during the Crimean War. Due to the Russian government’s corruption, even without Austria driving up prices, they still rose.

Franz certainly can’t prevent Russian bureaucrats from getting rich, right?

In the end, it’s a win-win situation, and the only entity that is harmed is the Russian central treasury. After all, they have a big operation to support, and if they run out of money, they can always take out a loan.

The Austrian government is very eager to take on this business. These loans are earmarked, which means they can only purchase Austrian goods, and they don’t even have to provide real money. In any case, giving loans to the Russians for payment is better than letting the Russians default on the payment.

Political loans were never simple, carrying additional trade conditions. Even if Russia’s government defaulted, Austria’s government would not lose out.

Austria’s central bank is the only entity with the capacity to handle this deal. Otherwise, loans in the hundreds of millions wouldn’t be feasible, not even if you combined several major commercial banks domestically.

With Franz’s command, the Austrian central bank started up the printing press and gathered the first tranche of funds in the shortest time.

The Russians borrowed 100 million guilders, the Principality of Montenegro borrowed 5 million guilders, while the loan request from the Greeks was vetoed by Franz.

The reason is that Austria is unable to provide them with material assistance. They don’t share a land border, and relying on sea routes for deliveries is quite challenging when the British are involved, isn’t it?

Pay in hard currency? That was obviously impossible. The Austrian government was not an open purse, how could they expect Greece’s finances to repay loans?

It should be known that since the Kingdom of Greece’s establishment, their finances relied on borrowing from powerful backers. When had they ever cleared their debts?

After loans to Russia and Montenegro were completed, this money flowed into the Austrian market, stimulating economic growth.

Anyway, it’s wartime now, so rising prices are normal. As long as they don’t overdo it, there shouldn’t be any major issues.

After unifying Southern Germany, with a larger currency pool in the market, inflation issues would be readily solved.

As long as funds did not flow out, increasing money issuance along with greater wealth creation in society was normal operation, and would not lead to serious inflation.

As for the economic pains from the market returning to normal after the war ended, there were still Russian repayments. As long as hard currency flowed in, any crisis could be readily solved.

This opportunity could be used to link the Austrian and Russian economies more closely, using interests to consolidate their alliance.

The French could influence the Russian government by controlling Russian finances. Austria lacked the power to control Russian finances, but influencing a bit should still be achievable, right?

Franz was very conscientious, with loans to allies only 0.2% monthly interest, absolutely no unequal additional conditions whatsoever.

It just promoted some economic exchange between allies. With Britain and France as enemies, Austria seizing their markets was not excessive, right?

At this point, Britain and France won’t even have the opportunity to protest; they became enemies of the Russian government the moment they blockaded the ports.

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