Chapter 198: Russian-Austrian Trade
Chapter 195 – Russian-Australian Trade
Vienna in the middle of summer was still cool.
Mei Quan Palace
Metternich said, “Your Majesty, the Russians have asked us to purchase a line of weapons, almost everything from pistols to artillery.”
Franz knew that Austria had robbed the Russian arms group, and these people would definitely make a move, but he didn’t expect that their method would actually be to buy weapons production lines.
Thinking about it is also right, in this era the strongest mechanical equipment technology is the British, Austria and France followed closely, Belgium and Prussia industrial system is not perfect again.
Russians produced their own machinery and equipment, high maintenance costs, not to mention the poor performance of the equipment, can only be said to be barely functional, production efficiency is no way to compare with peers, the purchase of foreign production lines is also forced out.
Britain and France are at war with the Russians, even if they can buy production lines from Britain and France, they do not dare to use. Weapons production equipment is still very sensitive, not civilian goods, smuggling is also smuggled.
If you buy from Prussia and Belgium, it is not impossible. Just so, the front line of those expeditionary forces equipped with Austrian weapons, the future maintenance they can not do.
With the financial strength of the tsarist government, do not expect them to be able to throw away tens of millions of rubles worth of weapons and equipment, the annual maintenance of these devices is also a business of millions of rubles.
Capitalists will not cross with money, in order to maximize the interests of the purchase of Austrian weapons production lines is also very normal.
Franz said indifferently, “Sell them well. Even if it’s the same equipment, the quality of the weaponry produced in the hands of the Russians goes down a notch.”
It wasn’t that he despised the Russians, but it was the truth. Because of the government’s corruption, in order to gain greater profits capitalists would certainly cut corners.
As far as Franz knew, the Russians procured rags-to-riches weaponry locally at a higher price than on the international market. It’s better to build than to buy, that’s how it comes about.
The domestic budget for weaponry imported from Austria was 20 to 50 percent higher than the actual import price. This specific percentage depends on the modesty and ability of the officials who handle it.
Metternich reminded, “Your Majesty, isn’t it necessary to limit it? If the Russians get their hands on the full production line, it will be a problem for us in the future.”
Even though there was no such thing as a technology blockade in this era, but in the field of military industry, it was not like any weaponry could be bought, let alone a weapon production line.
Franz shook his head and said, “It doesn’t matter, technological changes are changing rapidly now. These equipments are not bad within ten years, but if a decade or so passes, I’m afraid they will be obsolete again.
Since the Russians are willing to buy them, let’s make it happen. It’s best to turn them into long-term customers and use the profits gained from the arms trade to advance the technological upgrading of our military industry.”
It was true that Russia was to be feared, but there was really no need to care too much about Russia’s industrial technology, under the rule of the corrupt Tsarist government, it was impossible for their industry to even think about great development.
Metternich continued, “Your Majesty, the Russians have also made an application for a loan.
According to commercial trade, our trade with the Russians nearly tripled in the second and third quarters of 1852.
The total trade between the two sides amounted to 292 million guilders, of which our imports totaled 88 million guilders and our exports 204 million guilders, resulting in a trade surplus of 116 million guilders.
Part of this trade surplus was mainly in arms and strategic goods exports, which alone amounted to 83 million rupiahs.
The rest is the trade in civilian goods. Because of the war, British and French goods have substantially withdrawn from the Russian market, creating an opportunity for us.
The loans we offered to the Russians, they have already used almost all of them. The strategic materials purchased in the previous period were basically consumed after this meeting.
If we can’t achieve a major victory, I’m afraid the Tsarist government’s military expenses for next year will continue to grow.”
Franz calculated, this era everyone likes to do business with the Russians, because they do not use paper money, direct payment with gold and silver. (Paper rubles were abandoned and international trade was settled only in gold and silver rubles)
The direct consequence of the trade between Russia and Austria was that a large amount of gold and silver flowed into the Austrian treasury, which then turned into paper money and flowed into the market.
From a monetary point of view, this inflow of gold and silver, Franz let the central bank to print more paper money risk, has been digested by the market. (Paper money and gold and silver were not issued 1:1, leverage was set according to the economy)
Franz thought for a moment and said, “Talk slowly with the Russians do not rush, tell them that we are not financially rich either, and do not have the ability to provide them with huge loans.
Try to suppress the amount of the loan, delay the loan time, let the Russians take out more gold and silver to pay, do not make too many demands on the interest of the loan, additional conditions can also be abandoned.
We can also help them issue a portion of their debt rolls, they must be government bonds, preferably with collateral, war bonds are not expected to sell, let the Russians set this interest rate themselves, and just be able to sell them.”
If the two countries were on an equal footing before the outbreak of the Near East War, but with the outbreak of the war, Austria’s initiative grew.
Now because of the war, a large amount of gold and silver inflow, resulting in a monstrous prosperity of the Austrian domestic economy, there is also a great hidden danger behind this prosperity.
If Austria now provided too many loans to Russia, either it would draw money from the domestic market or continue to issue more money.
The former is detrimental to the Austrian economy and the latter is prone to inflation. This is caused by the volume of the economy, with Austria’s total economic volume is so large, printing part of the currency market can be digested, once the amount of excessive, then it can not be digested.
The best way is to let Russia’s gold and silver inflow, the treasury’s reserves increased, the market expanded, and then printing money on the non-existence of inflation.
Metternich reminded, “Your Majesty, perhaps we can ask the Russians to take out a portion of their gold and silver when they pay for their goods, and we can reduce our risk.”
Franz shook his head and said, “It is not necessary for now, our risk is still within control. Don’t be in a hurry to remind the Russians that the rate at which their gold and silver are flowing into our country right now is very fast.
Our domestic economy is growing at a high rate, and it’s not just this war that we’re relying on.
Mr. Metternich, you may not have noticed the frantic influx of British and French capital into Austria in the last six months, and the total amount of investment has more than doubled compared with the same period last year. In fact, there is no longer a shortage of gold and silver on the Austrian market.
According to past practice, the Russo-Turkish war will last for a long time, these capitalists are counting on this war to get rich, and have invested in Austria to build factories.
Because of the relationship between the information is not smooth, they are not aware of the recent increase in the number of counterparts, not to mention the Russian material to material demand, is not unlimited.
The market has gone crazy, Karl that guy is about to be scared, afraid of economic crisis outbreak, has developed several sets of contingency plans.
From the law of capitalist market economy, once the war is over, the Austrian economy will immediately face the problem of difficult transition.
The capitalists who came in at the front were fine, they gained profits that could support their transition. The capitalists who came in at a later stage were miserable, they hadn’t made any money yet, they had to face the transition, and a wave of bankruptcy was inevitable.
At this time, it’s a good choice to help the Russians digest a portion of the bonds and cool down the hot market.”
Knowing the economic crisis, why hasn’t the Austrian government put a stop to it? The answer is very realistic, in order to increase revenues and to speed up domestic development.
If this economic boom continues, it will only take two or three years to pass before Austria’s total economic output surpasses that of France. Even if the bubble bursts, the capital will also leave a large amount of money for Austria.
It is easy to put money in, but it is difficult to pull it out. Once turned into plants, machinery and equipment and other real estate, it is not easy to realize.
These capitalists who are trapped, either continue to contribute to the development of Austria, or cut off the meat and walk away, the history of the United States is so developed.
As long as enough benefits were gained from this war to increase market capacity, the impact of the economic crisis could be minimized. When the time comes Franz doesn’t mind having the government interfere in the market and force the economy to land.
How many capitalists would be screwed over by doing so would have nothing to do with Franz, he’s not a saintly mother.
Investment involves risks, so be careful when entering the market.
……
While the war in the Near East was attracting the attention of the outside world, Russia and Austria quietly reached a huge deal without stirring up any waves.
The arms trade is very profitable, especially the sale of weapons production lines, and transfer of production technology, but also to add value to the product, it is even more profitable.
Huge profits, so that the Austrian government up and down are very satisfied.
This is not a one-time business, if the relationship between the two countries continue to be friendly, with the capitalists’ integrity, they are likely to package the subsequent upgrading business together to Austria.
The root cause of the “make is better than buy” is that the cost of research and development, manufacturing is too high. Why are so many companies eager to import in later years, do not they know the benefits of independent research and development?
The most critical point is that the R & D investment, harvest and pay are often disproportionate, not only to consume a lot of time, money, but also full of uncertainty.
For capitalists who are keen to make money, huge investment in this area can not really maximize the benefits. If you are unlucky, you will fall on the eve of harvest.
This is especially true of weapons development, which also requires a supporting industrial system. With the Russians lagging behind in these areas, it’s even more risky for companies to develop on their own.
If a particular military industrialization company does R&D, they don’t wait for them to get results, others have imported production lines in production.
What would the Tsarist government choose? Equip the military with technologically mature advanced equipment, or wait for them to develop equipment with uncertain performance and no idea what will come to fruition?
Austria liberalized all the arms export restrictions, let the Russians free to choose the production line, the tsarist government is naturally very happy, this opportunity can not be rare.
To know the European countries in order to limit the Russians, in the field of military industry exports to finished products, for the production line exports are very cautious.
If you just buy finished products, once the war is blocked, the consequences will be serious, the tsarist government to support the domestic military industrial enterprises.
Purchase of production lines there is no such worry, these days most of the equipment of the Russian military-industrial enterprises are imports, they do not mind continuing to import, as long as they can guarantee the supply of arms on the line.
The future of things, we can not think so far. Theoretically, as long as the overall industrial technology goes up, the military technology will naturally go up, the two are complementary.
Historically, the great development of Russia’s military technology was based on the deterioration of relations with the Western world, the more confrontation between the two sides, the faster their technological progress.
Now that it’s a time of war, even less people think about it that much, and even if some people see a possible crisis, they can’t oppose it.
From the perspective of development, with Austria’s ready-made equipment to dismantle and learn from, their technological progress would be even faster, and then again, they could also copycat it.
……
Thanks to Tang Yu Thistle and Loli Magic Young Boy for the rewards.
Please forgive me~~, I have to be careful lately. Changed and changed and cut a lot of it out
(End of chapter)