Holy Roman Empire-Chapter 1020 - 34: Thick Fog
Chapter 1020: Chapter 34: Thick Fog
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Pretending to be confused is acceptable, being genuinely confused is not. Ruenior was reluctant to delve deeper, mainly fearing that the results might reveal exactly who they least wanted to face as an enemy.
By not lifting the lid, everyone could continue to feign ignorance. They could keep playing this political game together, but once something was discovered, it would be impossible to go back to the current state.
Marquis Tabyada nodded thoughtfully, his expression a bit somber. The once-great Empire on Which the Sun Never Sets, had actually fallen to the point where it had to act as if nothing had happened.
However, pretending to be deaf and mute was possible, but the problem still had to be solved.
Having a hidden enemy meant that the Spanish Government had to divert more resources to prevent unforeseen incidents.
For the already beleaguered Spanish Government, this was undoubtedly torture.
...
Seeing the atmosphere in the room becoming heavy, Antonio decisively chose to change the subject, “Alright, regarding the colonies, everyone just needs to stay alert. Let’s first discuss the matters of the loans!
Unlike last time, there is no residual goodwill left from the wars against France, getting an interest-free loan would be tough now.”
As a longstanding empire, Spain had declined, but Antonio was still keenly aware of the rules of political games among major powers.
Frankly speaking, the fact that he had managed to secure a large interest-free loan from the Vienna Government had already surprised Antonio greatly.
Normally, the Vienna Government should have taken advantage of the situation during the Philippine War. Surprisingly, they had given up just because of a prior commitment.
Having a credible leader was indeed good, but leaders also needed their share. The Holy Roman Empire had not achieved its vast territory because the Vienna Government was harmless as it appeared.
The last time they helped, it might have been due to creditworthiness or perhaps because the Holy Roman Empire, as the dominant power in Europe, needed a political show.
Such an occurrence was definitely not going to happen twice. Even if the Vienna Government was willing to help without compensation, Spain could not afford it.
Based on past political experience, Antonio knew very well that “the more one wants to gain, the greater the cost one has to pay.”
Cheap favors from a hegemon were not easy to obtain. Once involved, when it comes time to repay, it might cost Spain dearly.
For example, in the event of escalating conflicts between Anglo-Austria, Spain, having accepted favors, would have to play the role of the sacrificial pawn.
Don’t expect to default on debts; Spain simply didn’t have the funds. Merely France alone couldn’t shield Spain from Shinra’s retaliation.
Not wanting to become cannon fodder in the Anglo-Austria hegemonic conflict, while allying with Shinra, Spain also had to maintain sufficient autonomy.
This was how all European governments operated. Despite the presence of the Continental Alliance, the Vienna Government had no coercive power over the states; anything done still needed a trade of interests.
Finance Minister Siegfried said, “Don’t even think about an interest-free loan; the Austrians are not running a charity.
Unless we can offer enough benefits in exchange, this loan will just be a typical commercial one.
The finance department has already consulted with domestic banking consortiums; they require the government to use salt tax as collateral and can only provide a loan of up to 50 million Belgas.
The loan fee is 8%, with an annual interest rate of 8.9%, payable over 30 years, with a monthly principal and interest payment of 397,800 Belgas.
I’ve calculated it: borrowing 50 million actually brings us 46 million in hand, and we need to repay a total of 143.532 million in principal and interest.
This is already the most favorable commercial loan we can obtain. Ordinary private commercial loans would have double the interest.
Such high interest rates are unbearable even for the government, let alone ordinary people. All the money is drained by these vampires; no wonder our economy can’t flourish.
We need to fund two wars simultaneously, 46 million Belgas could only cover two months’ salaries for the soldiers. Using it for warfare, sustaining even a month would be a miracle.
Based on the most optimistic estimates, if we can quell the Philippine rebellion within six months and suppress the Cuban uprising within a year, the government still has a funding shortfall of 880 million.
Converted into Divine Shield, that’s about 70 million. With an interest rate of 8.9%, just the interest payments alone nearly equal a quarter of our fiscal revenue.
The actual situation could be even more severe; given our current financial health, no commercial bank would dare lend us so much money.
Even if some greedy vampire dares to take on this business, the interest would be terrifyingly high. Merely an 8.9% return is not enough to tempt them to risk a total loss.”
(1 Belgian approximately equals 0.29 grams of gold)
Since the Philippine War broke out, the Spanish Government has been living off borrowed money; as of today, Spain’s total debt has reached an astonishing 330 million Divine Shield.
The debt has caught up to one-fifth of Shinra’s total debt, but Spain’s fiscal revenue is far less than a fifth of Shinra’s, not even one-twentieth.
There’s no way around it; this is the difference between a semi-industrial country and an industrial country. Spain, with one-seventh of Shinra’s population, doesn’t even earn one-twentieth of Shinra’s fiscal revenue.
As of today, over half of the Spanish Government’s annual revenue is used to repay domestic and foreign debts.
In this context, Spain’s fiscal health cannot be good. From his first day as Finance Minister, Siegfried had been robbing Peter to pay Paul.
This is still under the backdrop of numerous interest-free loans; otherwise, just the capital interest could crush the Kingdom of Spain.
At this point, the biggest problem facing the Spanish Government is not the high or low interest rates of the loans but their own debt repayment capability.
The richer one is, the easier it is to borrow money. The same applies to countries. Spain, having lost its debt repayment capability, naturally wouldn’t have an easy time securing loans.
Unable to secure loans, issuing bonds was even more out of the question. The capital market is always realistic; no one wants to lend money to a pauper.
Antonio rubbed his forehead and said, “Let’s discuss the high domestic financing costs later. Right now, we need to figure out a way to raise funds to get through the current difficulties.
What will it cost us to secure this loan from Shinra?”
Obviously, these issues were not new. In fact, the high financing costs were a common phenomenon in this era, not unique to Spain.
Interest rates of fifteen or twenty percent on commercial loans seemed high, but they were actually not unusual for that time.
Behind these high interest rates lay high delinquency and high risk. Defaulting and fleeing were common occurrences, and once the debtor left their homeland, the banks simply couldn’t catch up.
Even if there were assets to pledge as collateral, it was common to encounter multiple and repeated pledges for loans. Limited by poor communication, banking institutions were bound to step on mines despite being cautious.
“High risk” did not scare bankers; they merely raised the loan rates to spread the default losses among other debtors.
This was also why the cost of government borrowing was much lower than commercial loan rates, as lending to governments carried a smaller risk of default.
Of course, the Spanish Government was clearly not a premium client. Therefore, they had to provide collateral, and they couldn’t expect lower interest rates.
Siegfried shrugged his shoulders and jokingly said, “It depends on what the Vienna Government wants. Perhaps they are in a good mood and decide to lend us money out of kindness.”
Siegfried himself didn’t believe what he said, and neither did anyone else.
Seventy million Divine Shield was not a trivial sum like seven thousand; unless the top echelons of the Vienna Government collectively lost their minds, such charity was definitely off the table.
…
Being unfairly blamed, Franz felt just as the British did. Explaining was impossible; the more one tried, the murkier it became.
From a pure profit perspective, Vienna Government had ample motive to undermine Spain.
Spain, described as ‘a child holding a gold brick in a busy market,’ was an object of envy for all. Those with power had the motivation.
Though frustrated, Franz was powerless to act. The Spaniards merely harbored suspicions and didn’t investigate further; what could be done?
Having suffered in silence, Franz started to harbor resentment towards the mastermind behind the scenes.
The method was all too familiar—the same formula, the same approach—and Franz never expected it to be used against him one day.
It must be said that there were manipulative people in the world who, while instigating the Cuban independence movement, not only concealed themselves but also diverted blame onto several scapegoats.
Unless it was a deliberate scheme, Franz couldn’t believe that with the British being the scapegoat, the Spaniards would uncover the involvement of other international forces.
…
Franz asked, “Did you find the mastermind behind the scenes?”
The Spanish Government, fearing they would unravel unwanted truths they couldn’t handle, was reluctant to investigate further, but that didn’t mean the Vienna Government wouldn’t.
Although they wouldn’t make a big fuss over such a small matter, identifying and guarding against the mastermind was still inevitable.
Prime Minister Carl shook his head, “No! This mastermind is too well-hidden. After instigating the Cuban independence, they quickly concealed themselves.
The clues they left were messy, some pointing to us, and others to the British, the United States, and the Confederate States; it’s impossible to discern the truth from falsehood.
However, directing the Spanish Government’s suspicion towards us is mostly the British’s doing. Desperate to break up the Continental Alliance, the London Government is almost frantic.
But the British didn’t realize how timid the Spanish Government is; it’s not investigating further, rendering their arrangements futile.”
Not being able to find out meant that the Vienna Government was set to take the blame. Such matters didn’t need evidence; mere suspicion was enough.
Just as Prime Minister Carl believed the British were framing Shinra, based solely on conjecture, Franz took it as the truth.
“If we can’t find out, let it be. However, we need to elevate our level of vigilance regarding the United States and Confederate States.
Especially since the British might be involved.
The current international situation is very unfavorable to Britain. Unable to dissolve the Continental Alliance, it’s inevitable that the British would panic and seek to ally with the Americans.
The best way to prevent an Anglo-American merger is to stir up discord between the United States and Confederate States. As long as their relations remain strained, the British will have to choose between them.”
Honestly, Franz wasn’t too worried about the United States and Confederate States improving their relations. It’s easy to talk about letting go of hatred, but much harder to actually do it.
In the original timeline, the Southern states’ resentment towards the North persisted into the 21st century without being fully resolved.
Now more than ever, after the bloodshed between the North and South, and their eventual separation,
regarding each other as enemies had become politically correct.
Unless external pressure became too great, threatening their survival, there was no chance of reconciliation between the United States and Confederate States in this generation.
Undoubtedly, such pressure simply did not exist. Neither Britain nor the Holy Roman Empire had the power to annihilate the United States and Confederate States.
The vast oceans served as their best line of defense, limiting the European powers’ force projection.
