Holy Roman Empire

Chapter 136: Core Industries

What are the core industries of Austria’s development?

Franz still doesn’t have an answer in his mind. The Austrian Empire was initially blessed with abundant resources, and during the early stages of industrialization, shortages were a rare occurrence.

Historically, there was no external colonial expansion from the times of the Austrian Empire to the Austro-Hungarian Empire, a decision closely tied to the wealth of domestic resources at their disposal.

However, this prosperity was somewhat short-lived. As Austria progressed, it began to confront limitations due to the dwindling availability of domestic resources.

Take the steel industry, for example. While many nations were churning out steel in quantities ranging from tens of thousands to even millions of tons annually, Austria initially faced no resource shortages. But as time advanced, with production reaching tens of millions, and eventually hundreds of millions or even billions of tons, sustaining such levels of production became an increasingly formidable challenge.

This issue posed a long-term concern, but Franz took comfort in the fact that it wouldn’t demand his immediate attention for the next few decades.

Theoretically, the core industries that could work for Austria were broad, including areas such as agriculture and food processing, metallurgy, machinery, defense, railways, shipbuilding and textiles.

The strength of Austria’s solid foundation became evident. Before the loss of Lombardy and Venice, Austria's industrial capacity was nearly on par with that of the French.

This observation wasn’t surprising at all. During this era, Austria represented a unique blend of Austria itself and half of Italy. Just the territories of Lombardy and Venice alone could rival with the other half of Italy.

Franz was under no illusions about achieving equal progress in every industry. In a world marked by fierce competition, he understood the importance of the government’s role in supporting specific sectors. Without such strategic guidance, could anyone ensure their supremacy over their rivals?

And it wasn’t just Austria; even the British, as the world’s primary industrial power, didn’t evenly nurture every sector. They focused their efforts on finance, shipbuilding, and textiles.

Making such a commitment was a significant decision; once chosen, it would become a long-term national policy capable of shaping the nation’s economic landscape for generations to come.

Numerous factors come into play when determining a nation’s core industries: resources, markets, industry expertise, interest groups, the direction of national development, and the constantly shifting international stage...

Free-market economy? Market economy?

These are just words, and it’s best not to take them too seriously, or you might end up feeling disheartened.

In any prosperous nation, core industries receive support through policies such as tax incentives or the implementation of measures aimed at fostering their growth...

Sch?nbrunn Palace.

Franz and Felix took a leisurely stroll together in the square, their conversation centered on the future course of Austria’s development.

“Prime Minister, in your opinion, what should be Austria’s strategic focus in the years ahead?” Franz inquired.

This was an era marked by the principle of survival of the fittest, where expansion was the prevailing theme. Ever since the Vienna System fell apart, European nations had entered a new era of rivalry and competition...

For smaller nations, sticking to the status quo was often their only option, while larger nations, driven by the pursuit of progress, had to swim against the current, recognizing that stagnation meant regression.

The Austrian Empire found itself at a crucial crossroads, and its alignment with Russia marked Austria’s initial venture into strategic decision-making, albeit this time focusing on the selection of an ally.

Historically, what drove the Austro-Hungarian Empire to become entangled in Balkan affairs, a choice criticized by numerous experts and scholars as a strategic mistake?

Franz had once shared this viewpoint, but his firsthand experiences led him to reevaluate the situation...

Austria had plenty of opportunities for external expansion, yet they deliberately refrained from pursuing them. Involving themselves in Balkan affairs wasn’t a decision made enthusiastically by the ruling authorities.

One only needed to consider the global landscape of that era to understand that it was a decision born out of necessity, as Franz fully comprehended.

Amid the chaos of the Great World War, major powers were aggressively expanding their spheres of influence. Austria and Spain, however, were notable exceptions, finding themselves stagnating and struggling to keep up with the rest.

This situation often depicted them as two sheep among a pack of wolves. To avoid becoming prey, they needed, at the very least, to project the image of wolves...

Austria had asserted its claim over the territories of Bosnia and Herzegovina, presenting itself as a formidable wolf, a move that brought them a few years of relative tranquility. In contrast, Spain remained passive, catching the eye of the American eagle, and subsequently becoming embroiled in the Spanish-American War.

Prime Minister Felix responded promptly, “The German region!”

“Why?” Franz inquired.

Prime Minister Felix took a moment to think before replying, “By annexing the Southern German States, we’ll share a direct border with France. Despite our current friendly relations, the French have long had ambitions of continental dominance. Therefore, we must consider the need for defense along the western front.

Furthermore, we must stay watchful regarding the Kingdom of Prussia. As we consolidate the Southern German States, Prussia is likely to seek the annexation of the Northern German States, potentially creating a divided Germany.

If they succeed in unifying the Northern German States, the Kingdom of Prussia’s power will substantially increase, making them a more formidable threat than they are currently. Most importantly, they have ambitions to unify the entire German region.”

“What if we were to redirect their ambitions westward?” Franz mused.

Austria, a formidable force, projected a commanding presence. Its annexation of the Southern German States would only further bolster its power.

In contrast, Belgium, Luxembourg, and the Netherlands seemed like comparatively more accessible targets, akin to ripe and tempting fruits.

Belgium boasted a thriving industrial sector, the Netherlands excelled in navigation, and possessed extensive colonies. Even tiny Luxembourg had garnered a reputation as a producer of steel.

“Your Majesty, I fear that the Prussians may harbor the intention but lack the capability to expand westward. They would face insurmountable odds challenging the French, and the British are unlikely to grant their approval,” Felix responded, his thoughts weighed carefully.

To most observers, it seemed that the Prussians lacked the courage required to confront the French head-on...

As for the British, their stance was quite clear: if Prussia managed to defeat the French, effectively neutralizing them, the British would find themselves in a precarious position without their hired forces. In the worst-case scenario, they might have to endure a few years of maritime blockades.

Though the French were formidable, when facing the formidable alliance of Austria and Russia, they appeared somewhat more manageable.

“That depends on Prussia’s ambitions and the French interest in the Rhineland region. Either of these factors could ignite this war,” Franz declared with unwavering confidence.

The undeniable truth was that in some countries, the state controlled the army, but in Prussia, it was the army that held sway over the nation. Nationalism was on the rise, and it wouldn’t take much to incite them into action.

If Prussia lacked the audacity to initiate the conflict, aligning with Austria remained a viable option. If necessary, they could forge an alliance with Austria, and Franz was convinced that Prussia would find it difficult to resist such temptations.

Once the die was cast, a future confrontation with the French became inevitable. In the process, the possibility of an Anglo-Prussian alliance would crumble, making way for the reestablishment of the Three Emperors' League, thus shaping the political landscape of the European continent...

The question of whether to proceed with this plan or not left Franz in deep thought. In the larger scheme of things, it appeared that the one who stood to benefit the most was none other than the Russians.

In this scenario, Austria would primarily secure a stable rear and, at best, claim a few morsels of French colonial territory. Meanwhile, the Russians would have a clear and unobstructed path to the open seas.

With a subtle smile, Felix replied, “Your Majesty, I believe the Prussians would find this proposal highly intriguing. However, one must wonder if they have the strength to devour this tempting bait all at once.

Belgium, the Netherlands, and Luxembourg, despite sharing a Germanic heritage, don’t readily acknowledge their ties, and they would undoubtedly put up strong resistance.

Even if, with our support, Prussia were to overcome the French, the shadow of British support looms large.

But if they stumble in their efforts to digest it all, a second opportunity may never present itself. If, in the future, Prussia’s relations with the English and French sour, rest assured, our support for them would diminish accordingly.”

The words snapped him out of his thoughts. The Kingdom of Prussia was not the future German Empire; the vast difference in their sizes made it highly unlikely for them to manifest the same strength.

The Dutch population, roughly 3.06 million, the Belgians at approximately 4.4 million, and the Luxembourgers, a modest 200,000 in number, were predominantly Catholic. In contrast, the Kingdom of Prussia had a population of roughly 13 million. Could they really be absorbed?

In terms of overall economic power, the combined forces of these three nations barely matched the Kingdom of Prussia.

Of course, this was the present state of affairs, and change was inevitable in the future. However, no matter the nature of the shifts that lay ahead, swallowing a nation marked by growing nationalism would never be a straightforward task.

Franz even believed that Prussia’s annexation of these three countries seemed more like a fantasy than Austria's absorption of the Balkan Peninsula.

Well, in reality, it’s all just food for thought.

Without external influence, gradual encroachment might be feasible. But if you attempt to swallow it all at once, you’re either diving into a river of blood or choking yourself to death.

Given this, Franz knew what he had to do. Austria couldn’t compete with the British on its own, at least not in their three core industries. That was an unattainable goal.

But that was alright; Austria didn’t need to replicate the British path to development. They could, however, follow the Prussians’ example, prioritizing the growth of the military-industrial complex, railways, and manufacturing. Combine that with Austria’s strengths in the agricultural and food processing industries...

Building railways required both government investment and encouragement of private investment, with commercial competition primarily being an internal matter. Similarly, the military-industrial complex relied heavily on government funding, with the international market playing a minor role during this era. The neighboring bear, for instance, showed promise as a valuable client.

Manufacturing, on the other hand, had to rely on the international market. However, Franz wasn’t overly concerned. With the Holy Roman Economic Alliance as a vast market and the Russian Bear as a valuable ally, they held a far stronger position than Prussia did in historical terms.

As for food processing, there was little competition to speak of. Austria’s main competitors in the European grain market were Russia and the Ottoman Empire, both of which were grain exporters.

Historically, the Russians exported wheat while simultaneously importing flour from abroad. This wasn't an internet meme; it was a real phenomenon of that era.

There’s nothing particularly unusual about it. Ships would depart with their holds brimming with grains and return with empty hulls that required heavy stones as ballast to stabilize their voyage. Among these mariners, shrewd traders spotted a lucrative opportunity: the Russian market had a strong demand for flour, and the potential profits were substantial.

This meant that in this particular domain, Austria’s competition was primarily with the food processing companies in grain-importing countries. Right from the start, a significant cost difference set them apart.

Industries where advantages didn’t require massive investments naturally became key areas for development. In historical records, during the era of the Austro-Hungarian Empire, Hungary was recognized as Europe’s primary supplier of flour.

As for the steel industry, a sector often held in high regard by many time-travelers, and often seen as a symbol of a nation’s strength, why wasn’t it the primary focus of development?

The answer becomes clear when you consider the demand for steel during that period.

The Austrian Empire produced a mere twenty to thirty thousand tons of raw steel annually, the Russians a few thousand tons, and even the British, despite their industrial prowess, couldn’t boast an annual output exceeding one hundred thousand tons of raw steel.

Unfortunately, the market had a modest appetite for steel. Even when you factored in pig iron, demand didn’t soar. No one had yet crossed the threshold of producing over a million tons.

Had steel been chosen as a core industry, the Austrian market would have been flooded with excess steel within a few months.

To address the issue of surplus steel, the government would have had to invest significant funds in other industries, only to discover with astonishment that the steel industry hadn’t taken off, leading to an industrial crisis arriving prematurely.

Given this, it made more sense to develop the railways and the military-industrial complex to drive steel consumption. Market demand propels production; that’s the fundamental law of the market.

Focusing on the development of the steel industry was already forward-thinking, not to mention high-tech industries. Except for the military-industrial complex, a country’s economic model is mostly shaped by market forces dictating industry prospects.

During this era, it was a high-tech desert, and many groundbreaking products, even if developed in laboratories, couldn’t be effectively marketed.

In such advanced fields, it wasn’t suitable for a nation’s core industry. Nevertheless, as secondary development goals, achieving early technology readiness was still feasible.