Holy Roman Empire

Chapter 144: Budget

After Christmas, the Austrian government’s annual budget meeting for the next year began once again.

In reality, the budget battles within various departments had already concluded by this point, and this was the final round of approvals.

If they were to bring up the budget for discussion during the meeting, it would likely take several days, and there wouldn’t even be enough time to review the project documents that everyone had prepared.

Prime Minister Felix handed a report to Franz and said, “Your Majesty, this is the annual budget plan for the year 1850. The main expenses include military expenditures, government administration, educational expenses, land redemption payments, infrastructure development, and cultural unification, these six major categories.

Among them, military spending has decreased by 27% compared to 1849, while educational expenses have increased by 31%, cultural unification spending has increased by 32%, government administrative expenses have increased by 9%, and infrastructure development expenses have increased by 44.5%.”

In summary, except for the decrease in military spending, all other expenses have increased significantly. Land redemption payments are an exception as they didn’t exist previously.

While expenses were increasing, government revenue also increased; otherwise, this budget would never have passed.

Franz took the budget report and briefly scanned the summary table.

Military expenses amounted to 61,568,400 guilders, with the navy accounting for 10,652,300 guilders and the army for 50,916,100 guilders.

The war had already ended, and demobilization was completed in 1849. Therefore, a significant reduction in military spending in 1850 was expected.

However, the decrease in military spending only applied to the army, as naval expenses increased by 1.5 million guilders compared to the previous year. It seemed that the colonial faction within the government was gaining influence.

Educational expenses amounted to 68,509,400 guilders, including 40,164,100 guilders for compulsory education, 20,563,200 guilders for university education (including funding for university laboratories and research), and 7,782,100 guilders for secondary education.

The educational expenses turned out to be much lower than Franz’s estimate. One reason was that compulsory education was still being expanded and not yet completed. Another reason was that families with means chose to send their children to private schools to provide them with a better future.

On the surface, it may appear that the Ministry of Education allocates the same educational budget for all compulsory education level students. However, in reality, compulsory education schools also provide students with free meals, uniforms, and accommodation.

While the expenses for a single child might not be significant, the costs can add up substantially when there are many students. Preliminary estimates suggest that this could result in a reduction of around 10 million guilders in the total budget.

Infrastructure construction expenditure amounts to 48,203,800 guilders, including allocations for railway construction (20,152,000 guilders), post-war reconstruction costs (15,416,000 guilders), urban infrastructure renovation costs (10,263,200 guilders), and other expenses.

It’s unavoidable. Some railways have no commercial value but are of vital military importance, so they must be constructed.

In later years, some would criticize the Austrian Empire’s railways for prioritizing military use at the expense of commercial interests.

To prevent such situations, the Austrian government had to fund the construction of these railways, as relying on private investment would likely delay construction indefinitely.

Fortunately, these railways are relatively short, typically ranging from about 100 to 180 kilometers in length. Even the longest ones don’t exceed 400 kilometers. When you add up the total mileage, it’s only around two to three thousand kilometers.

Once these railways are completed and integrated into Austria’s railway network, they will enable the rapid deployment of national troops to the front lines.

The government administrative expenses include 53,282,100 guilders in total. This consists of 11,261,000 guilders for corporate management administrative expenses and 42,021,100 guilders for government agency administrative expenses.

Upon seeing this, Franz furrowed his brow. It appears necessary to let state-owned enterprises operate independently. Merging them in the short term is fine, but in the long run, relying on government management for these enterprises may lead them off track from the market.

The cultural unification budget is 23,160,800 guilders, which is dedicated to efforts in unifying language and script.

Due to the influence of the Austrian government’s policies, it’s well-known that learning the common language is beneficial for finding employment. Promoting this in urban areas has been relatively successful, but it’s more challenging in rural regions.

Franz doesn’t have a perfect solution for this issue. Coercion isn’t a viable option and would likely make things worse. It seems that achieving language and script unification in this generation is impossible; it will have to be accomplished by the next generation.

All schools in the country are now required to offer Austrian language courses, and teacher training is underway. The goal is to eliminate regional dialects as soon as possible.

Exactly, in Austrian official documents, there’s no longer any mention of ethnic languages. At this point, there’s only one language in the country, Austrian, while the rest are regional dialects.

If everything goes as planned, starting from 1850, all elementary and secondary school teachers must participate in an Austrian language examination. Those who pass will receive an increased salary and benefits level, while those who fail must prepare for a makeup exam.

If they fail the assessment for three consecutive years, they will likely have to find another profession. To promote the Austrian language as quickly as possible, both the Ministry of Culture and the Ministry of Education are putting in considerable effort.

Regarding land redemption funds, there’s no need to explain further. The government annually allocates 105 million guilders, which serve as compensation to the nobility for their land. The burden falls on the farmers who acquire the land; the government merely facilitates the process.

Just these six expenditures alone total a whopping 359,724,500 guilders. Beyond that, there are numerous smaller budget items. In total, Austria’s fiscal expenditure for the year 1850 amounts to 423 million guilders.

If officials in Austria had seen this budget figure two years ago, they would likely have been shocked. It’s almost three times the government’s fiscal revenue. However, given the circumstances now, it doesn’t seem to have generated much reaction.

(Author’s Note: Two years ago, the finances of Hungary and Austria were separate.)

The annual land redemption payments from farmers amount to approximately 158 million guilders. After the government pays 105 million guilders to redeem noble lands, there is still an income of 53 million guilders.

However, this income is not very stable and is subject to fluctuations due to natural disasters. In the event of a major calamity, the government might have to cover a portion of the expenses.

Additionally, there is the tithe paid to the Church, which fluctuates annually, totaling around 93.5 million guilders. This is also influenced by fluctuations in agricultural product prices. Furthermore, a portion of this tax, amounting to twenty percent, is deducted to be paid to the Church.

Making the clergy members collect taxes comes with its own costs, and they often labor diligently while also taking the blame for any unpopular tax policies. It’s not possible to expect them to work for free.

Once the government deducts the expenses related to land redemption payments and portion of the tithe paid to the Church, it is left with approximately 74.8 million guilders.

At the moment, there may seem to be some surplus funds available for educational expenditures. However, it’s important to note that once compulsory education is fully implemented, these funds may fall short, and the government might need to allocate additional money.

Taking these two expenses into account, the Austrian government’s budget appears to be more manageable and less daunting.

Furthermore, the salaries of enterprise management personnel can also be offset by the profits contributed by state-owned enterprises, even though they have been consolidated.

The Ministry of Finance has provided an estimated fiscal revenue of 230 million guilders for 1850, with a total government revenue projection of 480 million guilders. This total includes land redemption payments, tithe, state-owned enterprise profits, real estate leasing and sales, and various other sources of income.

After subtracting the 423 million guilders budget, it might appear that there is a fiscal surplus.

However, in reality, this is not possible. The Austrian government also has debts to repay, including bank loans, various bonds, and debts from enterprises and individuals, totaling 542 million guilders.

All of this money needs to be repaid on schedule. In theory, if no unexpected events occur, the Austrian government would achieve fiscal balance.

These are all ideal conditions, and whether there will be a surplus or deficit will only become clear by this time next year.

In 1848, the Austrian government achieved a fiscal surplus by confiscating assets from households. However, in 1849, the Austrian government experienced a fiscal deficit of 7,256,800 guilders.

While this number may not seem significant, continuous deficits over time can become a problem, especially during a critical period like the outbreak of the Crimean War. Accumulating debts, especially to countries like Britain and France, can have diplomatic implications.

In history, Austria leaned towards Britain and France partly due to these factors. France, in particular, relied on loans to sway Russia away from the Three Emperors’ League.

Unless Austria follows the strategy of Prussia, which involves accumulating debt for development, launching a war when it’s economically strong, and winning the war to pay off debts. If they lose, then that would be the end of them.

Austria has a solid financial foundation, and Franz isn’t inclined to take such risky gambles. This is a strategy more fitting for the rise of smaller nations and not applicable to major powers.

After some consideration, Franz said, “Let’s proceed with the fiscal budget as outlined. Leave a reserve budget of twenty million guilders for dealing with unexpected situations.”

Cutting the budget?

The contents of this budget report have already been reviewed by various departments and submitted to him. Unless there are significant budget overruns, Franz wouldn’t disrupt the process.

“Yes, Your Majesty,” Prime Minister Felix responded.

In the presence of a strong-willed monarch, the ministers naturally couldn’t assert their authority. The unequal status between monarch and ministers gave the monarch an inherent advantage.

At the beginning of his regency, Franz needed to use his Foreign Minister, Metternich, to balance the power of the influential Prime Minister, Felix. However, after more than a year of adjustment, this situation had undergone a significant change.

……

Without waiting for a negotiating delegation from the German Federal Council, under the strong pressure of Russian Foreign Minister Karl Nesselrode, on January 6, 1850, the Prussian army completely withdrew from Danish territory, including relinquishing the recently acquired Duchies of Schleswig and Holstein.

Everyone knew that the next day was the Russian Christmas, and after suppressing his emotions for so long, Tsar Nicholas I naturally needed to let off some steam.

As one of his trusted confidants, Karl Nesselrode wanted to present a special gift on this occasion, and unfortunately for the Prussian government, they became the backdrop for this.

At first, Franz thought the same way, but when he saw the brilliant smile on Metternich’s face, he knew that things weren’t so simple, and the Austrian Foreign Ministry may have played a less than honorable role in this situation.

Franz naturally was completely unaware of anything. The rivalry between Austria and Prussia, the two major states in the German region, was quite normal. They had both cooperation and conflicts over the years.

In recent decades, it seemed like everyone was friends. However, starting from the Frankfurt Assembly, Prussian-Austrian relations began to rapidly deteriorate.

It was more of an alienation than an escalation, and there hadn’t been any direct conflicts between the two sides. Prussia’s attempt to establish the “Three Emperors’ League” was thwarted by the Austrian Foreign Ministry right after it began its operations.

The Austrian government also took advantage of Prussia’s involvement in the Prussian-Danish War to establish the Holy Roman Economic Alliance, isolating Prussia in the German region.

All of this underscores the idea that there’s no room for two tigers in one mountain, and Prussia, unfortunately, ran into Franz. The Austrian government had effectively resolved internal conflicts in advance and had the energy to trip them up.

“Should we issue a diplomatic note to the Kingdom of Prussia in the name of the German Federal Council and force them into submission?” Franz asked hesitantly.

Metternich pondered for a moment before replying, “Your Majesty, if we do that, it’s highly likely that the Prussian government will comply, and then won’t the Russians hold it against us?”

Indeed, at this point, with the German Confederation becoming involved, there was a real possibility that the Prussian government would drag everyone into the conflict.

Everyone knew that the Russians didn’t really want to resort to force. Once the Prussian government showed determination by relinquishing its independent foreign policy and letting the German Federal Council take over, things could get complicated.

If they back down, they’ll all be scolded alongside the Prussian government, and no one will have it easy; if they resist stubbornly, the Russians might truly come to hate Austria.

The Russian government holds grudges, and Franz knew that well. The overall situation has already settled; there’s no need to invite trouble.

Franz shook his head and said, “Let’s forget about it. After the Prussian government withdraws its troops, we can mobilize the people to hold them accountable.

At the same time, we should expose the sinister intentions of the Prussian government in using the war to divert domestic attention, causing the German people to despise them.”

“Yes, Your Majesty!” Metternich replied.

Although he didn’t think this small trouble would have a significant impact on the Kingdom of Prussia, it was still satisfying to give them a hard time.

At the very least, not whitewashing this bad reputation would make it more difficult for the Kingdom of Prussia to annex Northern Germany.

Using military force to annex territory was actually the least desirable option. Without the approval of the people, it would be challenging to convert the added land and population into national strength.