Holy Roman Empire-Chapter 1145 - 159: Great Inflation

Chapter 1145 -159: Great Inflation

Good news kept coming, and with it, no shortage of trouble. The more allies one had, the easier the path, but more disputes arose as well.

The internal contradictions within the Continental Alliance were already substantial, and had only become more severe with the addition of new member states.

Had the Vienna Government not mediated, the chaos that erupted in Europe might well have been mirrored in America.

Foreign Minister Leo, “Your Majesty, our embassy in the Far East has sent word. The Japanese Government has dispatched representatives to deliver a state letter, requesting ceasefire negotiations.”

One had to admit that the Japanese, in this day and age, were truly capable of adapting. With no neutral country daring to intervene, they had simply taken the initiative themselves.

Although this meant losing the advantage in negotiations, given the current international situation, the Japanese Government had no such advantage to lose in the first place.

What really required additional sacrifice was nothing more than the intangible ‘face’, and for the weak, the worthless ‘dignity’.

Though the Continental Alliance had many members, few carried significant weight, and even fewer were willing to speak on Japan’s behalf.

Regardless, with Japan having managed to offend three major bosses, who would risk trouble by coming to their aid at this juncture?

The only option left for the Japanese Government was to find a new protectorate before the British were finished.

Looking around the world, aside from the Holy Roman Empire, no other power had the capability to take on such a role.

Politics has no room for sentiment, and even with existing friction with Holy Rome, the Japanese Government had no choice but to brazenly approach.

This was an anticipated event, yet when it actually happened, Franz could hardly suppress a laugh.

To maintain the image of a monarch, Franz suppressed his amusement and said sternly, “They think a ceasefire is child’s play, like a game of house. Tell the Japanese that if they want a ceasefire, they must show sincerity; otherwise, they must lay down their arms and surrender unconditionally.”

‘Sincerity’ was perhaps the most difficult concept to grasp in the entire world. No one could really define what action constituted sincerity.

But this was precisely what Franz wanted to see. Only with an ambiguous response could he avoid commitment and secure ample room to maneuver.

Otherwise, what would become of Emperor Franz’s reputation if the news of “manipulating the Japanese to eliminate the Russian Army in the Far Eastern region” leaked?

Betraying an ally posed no issue, as they were meant to be exploited. However, blatant betrayal crossed the line.

As a rule maker, Franz would not engage in such transgressions.

By contrast, leaving the Japanese to interpret things on their own meant that whatever transpired, Franz was not implicated.

The main thing now was to see the outcome of the Russian Empire’s internal strife; if Russia were fortuitously to break apart, then that would indicate Japan’s failure to show sincerity, and they had to be punished without mercy.

If the Russians weathered the crisis, and it became necessary to contain them, then keeping Japan as a pawn was no trouble.

Of course, the precondition was that Japan had eliminated the Russian Army in the Far Eastern region, proving their ability to restrain the Russians.

Fortunately, only Franz knew his plan. If the Japanese Government were aware of the truth, they would likely suffer an immediate breakdown.

Even more tragically, no matter how much this destroyed their morale, they had to stick to the script.

Betting on whether the Russians could hold out offered some chance of success; rejecting the script’s content meant certain doom.

Prime Minister Chandler, “The Japanese are but a minor nuisance, a poor, militarily aggressive agricultural nation that does not warrant too much of our attention.

The disputes among American allies, too, are no big deal and can be resolved with a little time.

The real trouble lies with the Americans and the Russians. Despite having split once, the United States’ size is still too significant.

No one knows how much they have benefited from the British. Once they have digested their gains, they will definitely become a future problem.

The Alliance must also be vigilant. Though they leaned toward us in this war, they have yet to make a genuine move, despite agreement to go to war with the United States.

It is clear they intend to use the power of the Alliance to expand their own influence. If not checked, it will become another painful lesson, like the camellia burns.

And there’s no need to mention the Russians, who have been a threat on the European Continent for the last few centuries, only becoming manageable after the Empire’s rise.

The Tsarist Government’s greed for land is endless. Without weakening their strength, Europe’s peace is uncertain.

Now is our best opportunity; should we miss this chance, they might scheme with the unwilling England and France, which would be a tremendous issue.”

It was apparent that Prime Minister Chandler did not regard the British highly. The world war was still ongoing, yet Britain had already moved down two places on the list of threats to Holy Rome.

Relatively speaking, dealing with the United States was simple. Being enemies now, we could act openly and suppress them, providing we did not accept their defection in the heat of battle.

The most challenging situation was handling the Russians. As Austria’s traditional ally and a significant member of the Continental Alliance, the Vienna Government could not directly attack them.

Not only could they not take action, as allies, the Vienna Government was obligated to assist the Russians overtly.

Even ceasing the supply of strategic materials was done under the pretext of “prioritizing the frontline Russian Army,” otherwise, it would’ve been untenable.

This was the limit of what the Vienna Government could do. Supporting independence movements and aiding the Revolutionary Party was entirely out of the question.

“The Americans’ issue, let’s shelve that for the moment,” he said. “We’ll deal with it after the war with the UK is over.

“The Russians’ issue, we’re not conveniently placed to intervene directly, let the Berlin Government handle it on their own.”

Luckily the Holy Roman Empire still had an unwavering anti-Russia in Prussia, or else Franz didn’t know who to make the move.

Even though these little maneuvers can’t escape the discerning eye; as long as the Vienna Government resolutely denies it, it’s as if nothing happened.

As for the Kingdom of Prussia’s anti-Russian actions, that’s a historical leftover issue, having nothing whatsoever to do with the Central Government.

…

While the Vienna Government was preparing for post-war matters, the London Government was also pondering an exit strategy. The war had reached a stage where Britannia had, in essence, already lost.

With allies switching sides continuously, the supply of materials to the British Isles had become increasingly difficult.

Now, not only must they be wary of enemy submarine attacks, but they also have to worry about backstabbing from their allies.

Once an ally switches sides, all of Britannia’s assets in that country would go down the drain.

In a sense, Britannia’s massive overseas investments are one of the reasons countries dare to switch allegiances.

Seizing British assets not only signals loyalty to the Continental Alliance, it also compensates for some of the costs incurred, with some countries even turning a profit.

The war hasn’t been lost yet, but the British have already begun to experience the aftermath of a defeat.

A massive loss of overseas assets left the British capital markets reeling, especially the financial markets, which were left desolate as stock market indexes were slashed in half and then halved again.

Unlike previous asset seizures by the Continental Alliance, where everyone still harbored hopes of recovering their investments with interest after the war,

The reality now is crystal clear, anyone with a bit of insight knows that the Great Britain Empire has lost the potential to win the war.

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The most optimistic current view is merely that Britannia might be able to withdraw intact after paying a certain price.

Stocks are all about speculation, and now that the future’s expectations have disappeared, they have become the biggest bearish factor in the market.

Compared to ordinary investors, well-informed consortia reacted more dramatically, now selling off their shares at any cost.

And the sell-off isn’t the end; after getting cash, capitalists are trying every means to convert it to gold. Even at a premium, the enthusiasm for gold remains strong.

In the gold standard era, British Pounds needing a premium to exchange for gold is economically equivalent to a rise in gold prices, or a devaluation of the pound.

As gold is a reserve currency, its inherent value hasn’t changed, which can only mean the pound has devalued.

Moreover, as the “premium” continues to rise, the pound’s “devaluation” invisibly carries on.

Based on the market’s widespread belief in the pound’s devaluation, seemingly overnight, the pound turned from a world currency into one that everyone despised.

Affected by this macro environment, prices in the British Isles once again hit the highway speed and began soaring.

Forget about turning defeat into victory; no one even holds hope for the scenario of exiting unscathed after paying a price.

The stock market crash is secondary; what gives Prime Minister Campbell the biggest headache is the financial crisis sparked by the crash.

Wars are fought with money, and the financial revenues of the Great Britain Empire aren’t that high, at least not on the same level when compared to the Holy Roman Empire.

The key reason for mobilizing sufficient funds for war was Britain’s advanced financial system and the government’s strong financing capabilities.

But now, with the financial crisis erupting and the London Financial Market taking a hit, it’s nearly impossible to finance from the market in the short term.

War is a gold consumer, and without continuous financial replenishment, the little savings the government has will not last long.

With the already precarious situation, now with problems in both material supplies and the government’s funds, it would be difficult for Campbell not to worry.

But worry is of no use, Britannia’s biggest issue lies in “confidence.” The public, interest groups, and even government officials are skeptical about winning this war.

Unless the British Army achieves a significant victory on the battlefield, stimulating everyone’s nerves, reversing everyone’s mindset is nearly impossible.

Chancellor of the Exchequer Asquith said, “Recently, domestic inflation has been severe, the lower classes are suffering tremendously, and the market is losing confidence in the British pound.

“More and more people are choosing to exchange pounds for gold, and our reserves have fallen to the lowest point in fifty years, forcing us to temporarily suspend free conversion.

“However, this is only a symptomatic solution and can only temporarily halt the outflow of gold. It cannot solve the problem at its root.

“The best way to avoid this would be to decouple the pound from gold and implement a credit standard system.

…”

Solutions are often born out of necessity; had there not been a run on banks, Asquith would never have considered a “credit standard system.”

It’s not that he’s unaware of the benefits of a “credit standard system,” but rather, the risks involved are too great. With the slightest misstep, the pound’s value could completely vanish.