Holy Roman Empire - Chapter 144

Chapter 144: Chapter 31: Budget

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After Christmas, the Austrian Government’s annual budget meeting resumed once more.

In actuality, by this time, the budget struggle among various departments had already concluded. Now it was time for the final confirmation.

If the budget issues were brought to the meeting for discussion, it was estimated that even reviewing the prepared documentation for everyone’s projects would not be feasible within these last few days.

Prime Minister Felix handed a report to Franz and said, “Your Majesty, this is the budget plan for 1850. The main expenditures include: military spending, government administration, education funds, land redemption payments, infrastructure construction, and cultural unification—these six major categories.

Of these, military expenditure has decreased by 27% compared to 1849, while education spending has increased by 31%, cultural promotion expenditure by 32%, government administrative expenses by 9%, and infrastructure construction spending by 44.5%.”

Overall, with the exception of military spending which decreased, all other expenses had significantly increased. The land redemption payment was an exception; it hadn’t existed before.

While expenditures increased, the government’s fiscal revenue also rose; otherwise, this budget would never have passed.

Franz received the budget report and merely glanced at the summary table of the budget.

Military expenditures amounted to 61.5684 million shields, including 10.6523 million for the navy and 50.9161 million for the army.

The war had ended, and the military was already reduced in 1849. A significant fall in military expenses for 1850 was normal.

However, the reduction was only in the army’s budget. Naval spending had actually grown by 1.5 million shields compared to the previous year, indicating that the colonial faction within the government had grown stronger.

The education budget was 68.5094 million shields, including 40.1641 million for compulsory education, 20.5632 million for university education (including expenses for university labs and scientific research), and 7.7821 million for secondary education expenses;

The budget for educational expenses was much lower than Franz had estimated. On one hand, compulsory education was still being popularized and was not yet universal; on the other hand, families that could afford it chose fee-paying schools with better educational conditions for a better future for their students.

On the surface, it appeared that the Ministry of Education allocated the same funds for all students at the compulsory education stage. In reality, the schools provided free meals, school uniforms, and lodging for students.

The expenses for a single child were not high, but they added up to a considerable sum with the large numbers, preliminarily estimated to reduce expenditures by ten million shields.

Infrastructure construction funds amounted to 48.2038 million shields, including 20.152 million for railway construction, 15.416 million for post-war reconstruction, 10.2632 million for urban infrastructure renovation, among others

This was unavoidable; some railways had no commercial value but held significant military importance and had to be built regardless.

In later times, there would be criticisms of the Austro-Hungarian Empire’s railways for prioritizing military needs over commercial viability.

To prevent this, such railways could only be funded by the Austrian Government. Relying on private investment probably wouldn’t see work start even in the next century.

Luckily, these railways were not long, generally only a hundred and eighty kilometers at most, and the longest did not exceed four hundred kilometers. The total distance added up was merely two to three thousand kilometers.

Upon completion, these railways could be connected to Austria’s railway network, enabling domestic troops to be rapidly deployed to the frontlines in the shortest time.

Government administrative expenses were at 53.2821 million shields, with 11.261 million for enterprise management administration and 42.0211 million for government office administration;

Franz frowned upon seeing this. It seemed necessary to allow state enterprises to operate independently. It was fine to merge them in the short term, but in the long term, state management of enterprises would inevitably become detached from the market.

The budget for cultural promotion was 23.1608 million shields, aimed at the effort to unify the language and script.

As influenced by Austrian Government policy, everyone knew that learning the common language was beneficial for job-seeking. The promotion was relatively smooth in cities, but problematic in rural areas.

Franz did not have a better solution; coercion was impossible. That would only make things worse. It seemed that unifying the language and script in this generation was unlikely, and the task would have to be completed by the next.

All schools in the country were compelled to offer courses in Austrian. Now the focus was on training teachers, striving to abolish local dialects at the earliest.

Indeed, in Austria’s official documents at this time, there was no longer any mention of ethnic languages—there was only one language, Austrian, with the rest being regional dialects.

Unless something unexpected occurred, starting from 1850, all elementary and secondary school teachers would have to take the Austrian language exam. Those who passed would receive a pay raise, while those who did not had to prepare for a retake.

Those failing the assessment for three consecutive years could prepare to go home. In order to promote the Austrian language as quickly as possible, both the Ministry of Culture and the Ministry of Education had put in great effort.

There’s no need to elaborate on the land redemption payment; a fixed annual expenditure of 105 million shields compensated the nobility for the purchase of their land, with farmers footing the bill as the government just handled the transaction.

These six areas of expenditure alone added up to 359.7245 million shields. With a plethora of smaller budget items, Austria’s fiscal spending for 1850 reached a total of 423 million shields.

If one had seen these budget figures two years earlier, it is estimated that Austrian Government officials might have fainted; it was nearly three times the fiscal revenue of the government. Now, however, no one seemed overly concerned.

(Note: The finances of Hungary were separate two years ago.)

The farmers’ land redemption payments were roughly at 158 million shields. After the government paid 105 million in redemption to the nobility, there was still an income of 53 million shields.

This revenue was not entirely stable, being subject to the effects of natural disasters and consequently fluctuating. If a severe natural disaster occurred, the government might even have to contribute a share.

There was also church tithe, fluctuating around 93.5 million shields annually, influenced by agricultural product prices. The church’s twenty percent share had to be deducted from this revenue.

Collecting taxes for clergy costs money; the work was hard and they helped to take the blame. It would be unreasonable to expect them to work for nothing.

What remained for the government was only 74.8 million shields. It seemed as though there was a surplus in education funding for now, but once compulsory education was fully popularized, this amount would be insufficient. The government would have to contribute additional funds at that point.

Deducting these two sums first, the actual Austrian Government budget wasn’t so daunting.

423 – 0.748 – 158 = 243.2 million shields

As for the salaries of corporate executives, in reality, they can also be deducted from the profits contributed by state-owned enterprises; it’s just that they were merged into the costs.

The Ministry of Finance estimated the fiscal revenue for 1850 to be 230 million shields, and the total government revenue was projected at 480 million shields, including land redemption funds, tithe, profits from state-owned enterprises, real estate property rents and sales, and so on.

Subtracting the budget of 423 million, it seems there was a fiscal surplus?

In fact, this was impossible. The Austrian Government still had debts to pay, all of which were to be repaid. Up until now, the Austrian Government owed bank loans, various bonds, as well as corporate and personal debts, totaling 542 million shields.

All this money needed to be repaid on time, theoretically, if no unexpected events occurred, the Austrian Government would have achieved a balanced budget.

These are all ideal states, whether there will be a surplus or deficit, we would know by this time next year.

In 1848, the Austrian Government achieved a fiscal surplus by confiscating property, but in 1849, the Austrian Government faced a fiscal deficit of 7.2568 million shields.

This number might not seem large, but if it continued over time, it would become a problem.

Especially during the critical moment when the Crimean War was about to break out, owing debts to England and France, diplomacy could not but be influenced.

This point has been exemplified in history, the Austrian Government tilted towards England and France, partly because of this factor. The French even pulled Russia away from the Triple Alliance by means of loans.

Unless you follow the Kingdom of Prussia: first borrow to develop, and once development is nearly complete, start a war. If you win, you naturally have the money to repay the debt; if you lose, it’s naturally game over.

Austria had a substantial patrimony, and Franz was not prepared to be a gambler. This strategy of small countries rising does not apply to a large country.

Franz thought for a moment and said, “Let’s execute the financial budget as is! Set aside twenty million shields for the budget, to deal with emergencies.”

Cut the budget?

The content of this budget report had already been submitted for review by various departments, and unless there was a significant overage, Franz would not stir things up.

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

Facing a strong monarch, ministers naturally could not assert themselves. With the unequal status of sovereign and subjects, the monarch held a natural advantage.

When Franz first began regency, he had to use Foreign Minister Metternich to counterbalance the strong Prime Minister Felix, but after more than a year of alignment, this situation had completely changed.

Not waiting for the German Federal Parliament’s delegation to start negotiations, under the strong pressure of Russian foreign minister Carl-Wassell, on January 6, 1850, the Prussian Army completely withdrew from Denmark’s territory, which also included giving up the already obtained Schleswig-Holstein Duchies.

Everyone knew that the next day was the Russians’ Christmas, and Tsar Nicholas I, having restrained himself for so long, naturally needed to vent.

As a confidant, Carl-Wassell naturally had to present a significant gift on this special day, and the Prussian Government unfortunately became the backdrop.

Initially, Franz thought so as well, but after seeing Metternich’s radiant smile, he knew it was not that simple; the Austria’s Foreign Ministry might have played a disgraceful role.

Of course, Franz was to know nothing about it. It’s not unusual for the larger power to suppress the second-in-command. As the two major sub-states of the Germany Region, Prussia and Austria had both cooperation and conflicts.

For the past few decades, it seemed they were all friends. But starting with the Frankfurt conference, the relationship between Prussia-Austria began to rapidly distance.

Yes, it was a distancing, not a deterioration, and there had been no direct conflicts. The “Triangular Alliance” that the Prussian Government attempted to establish had just started moving when it was sabotaged by Austria’s Foreign Ministry.

Moreover, the Austrian Government took advantage of the Kingdom of Prussia engulfed in the Prussia-Denmark war to form The Holy Roman Alliance, isolating Prussia in the Germany Region.

All this had proven that two tigers cannot share one mountain, and the Kingdom of Prussia was unlucky to encounter Franz. The Austrian Government had settled domestic conflicts in advance and had the energy to trip them up.

“Should we send a note in the name of the German Federal Parliament to the Kingdom of Prussia, urging them to hold out?” Franz hesitated to ask.

After some thought, Metternich answered, “Your Majesty, if we did that, the Prussian Government would most likely comply, but then wouldn’t the Russians hate us to death?”

Indeed, at this time, if The Federation got involved, the Prussian Government might indeed pull everyone into the quagmire.

Everyone knew that the Russians did not truly wish to engage in conflict, and should the Prussian Government take a dramatic step, abandoning its independent foreign policy and handing over control to the Federal Assembly, it would be a huge complication.

If they showed weakness, everyone would be blamed alongside the Prussian Government; no one would get off easily. If they resisted strongly, the Russians would probably indeed despise Austria.

Franz knew too well how vengeful the Tsarist Government could be. With the situation already decided, there was no need for further complications.

Franz shook his head and said, “Let’s not do that. After the Prussian Government has withdrawn its troops, we’ll instigate the public to demand compensation from them.

At the same time, we must also expose the Prussian Government’s malicious intent of using the war to divert domestic attention and make the German People despise them.”

“Yes, Your Majesty!” Metternich replied.

Although he did not believe this little trouble could strike a blow to the Kingdom of Prussia, it would still be a nuisance.

At the very least, without clearing this bad reputation, it would be even more difficult for the Kingdom of Prussia to annex North Germany.

Forceful annexation is actually the least desirable. If you cannot win the people’s approval, it becomes difficult to convert the added territory and population into national strength.