Holy Roman Empire-Chapter 990 - 4: The Ruthless Leopold II

Chapter 990 -4: The Ruthless Leopold II

Vienna Grand Hotel, a heartfelt scene unfolded as two unfortunate souls shared their troubles, a sight so poignant that it brought listeners to tears.

Then there was no follow-up, regardless of how much Maximilian wanted to help, it was all in vain.

Over the years, in his efforts to restore his reign, Maximilian had not only exhausted his personal connections but also incurred a mountain of favors owed. Nowadays, his influence on the Vienna Government had waned to almost nothing.

Aside from keeping up appearances, Maximilian, the Exiled Emperor of Mexico, was merely a figurehead. The only use he might have was his high status, which could help in crucial moments by speaking up, though whether it would be effective was uncertain.

Such was the limited assistance that Leopold II was still unwilling to give up. After all, having someone to speak on your behalf was better than no one.

Although Maximilian’s political influence was minimal, he was still able to exert some influence on Franz. The fact that he received hundreds of thousands annually for restoration funds was proof enough.

However, people grow, and although deeply moved and more than willing to assist Belgium, Maximilian was no longer the naïve youth he once was.

“Leopold, I personally suggest that you don’t harbor too much hope. As far as I know, the Vienna Government is facing a deficit again this year.

If you really want to secure funding from Vienna, it would be better to go through private channels for financing. Although the interest rates are a bit higher, politically, the cost would not be as severe.”

This was Maximilian’s sincere advice. Assistance, interest-free loans, these were too much to ask for. Now was no longer the era of continental wars, and Belgium’s importance to the Shinra Empire had significantly decreased, and the Vienna Government was not foolish.

If the amount was small, perhaps Belgium could play on its pitiable state to some effect. But now, the funding gap faced by Belgium was enormous, involving significantly greater stakes.

Leopold II was naturally aware of these complications, but he was out of options. Traditional international financing not only had high interest rates but also came with numerous political strings attached.

Most crucially, the Belgian government had already mortgaged all it could in previous loans and now lacked sufficient collateral. Purely relying on government credibility, financial consortia simply weren’t buying it.

Not just in Vienna, but across all major financial markets in Europe, the Belgian government had borrowed money. Now, any large bank or financial firm in Europe was a creditor of the Belgian government.

In a bid to gather sufficient funds, repeated mortgaging and deceitful tactics had been rampant in the actions of the Belgian government.

Unfortunately, financial institutions were too shrewd, distrusting the Belgian government’s repayment capabilities; every loan involved a heap of collateral, while the money lent was minimal.

Post-war reconstruction costs had significantly exceeded the budgeted amounts, and normal commercial channels were unworkable, prompting this trip to Vienna by Leopold II.

“Maximilian, aren’t you aware of what those vampires are like? Given Belgium’s current situation, do you think it’s possible to obtain a normal commercial loan?”

Seeing Leopold II’s helpless expression, Maximilian nodded sympathetically. Being a former emperor, he knew all too well the nature of banks.

“Lending an umbrella on a sunny day, and taking it back when it rains.” This wasn’t just talk; back when he was the Emperor of Mexico, Maximilian faced many difficulties.

What appeared to be very conscientious loans were only meant to deceive the common people, as the real interest rates were always terrifyingly high.

To this day, Maximilian vividly remembered the first time he obtained a loan. He mortgaged silver mines in Mexico and secured a seemingly generous loan.

Publicly, the annual rate was only 2.5%, but in reality, numerous processing fees piled up. Worse still, the loan was disbursed in installments, yet interest was calculated on the total amount, effectively bringing the real interest rate to a staggering 14.62% per year.

Even this was a fair loan facilitated by Napoleon III, who had personally communicated with the French finance group out of support for him.

If the government hadn’t intervened and banks were left to their own devices, the interest rates would be truly usurious. How high it could go was unknown, but Maximilian had once taken a loan where the principal was halved, and the interest rate was an exorbitant 46.9%, with countless additional conditions.

Of course, Maximilian didn’t entirely suffer from this arrangement. Though the interest rates were high and the conditions numerous, this was a high-risk loan. As the Mexican Empire fell, these debts turned into bad loans.

The legacy effect was that when Maximilian wanted to finance his restoration, there was no longer any bank willing to lend money to the exiled government. Even personal loans under his name were out of the question.

Government debt didn’t equate to emperor’s debt, and there was no joint liability between them. In theory, as a direct descendant of the Habsburg Family, Maximilian remained a prime client in the eyes of banks, and borrowing a hundred and eighty thousand should not be an issue.

Unfortunately, Franz had made his stance clear to the financial world early on, warning that anyone who lent money to Maximilian personally was picking a fight with the Habsburg dynasty.

Capital, being both profit-seeking and fainthearted, meant that no bank would dare to clash with the Habsburg dynasty over slight gains in interest revenue.

Thus, the unsuspecting Maximilian kept facing rejections, mistaking himself as a fallen phoenix, trampled by the vampires in his time of vulnerability.

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After hesitating for a moment, Maximilian slowly said, “Leopold, on this matter, all I can do is convey the difficulties your country faces.

Ultimately, the decision still lies with the Vienna Government, so you had better not harbor too much hope. My elder brother seldom interferes in such matters.”

Politics is just that realistic; whenever there’s a matter that offends people, it is always the Cabinet that takes the blame, while Emperor Franz generally only appears when everyone is happy.

Based on Maximilian’s understanding of his brother, unless the Belgian government can offer enough benefits in exchange, this act of helping without any clear benefit will most likely not go through.

“Thank you!”

“If the Vienna Government can provide us with the assistance we need, then all international trade settlements of Belgium will henceforth use the Divine Shield,” said Leopold II, gritting his teeth.

In a sense, this was also a sell-out of national sovereignty, but Belgium no longer had better options.

With insufficient funds for post-war reconstruction and unable to receive reparations from the French, Belgium had mortgaged everything possible and now had only these few bargaining chips left.

Had it not been for the discovery that the Vienna Government was planning to make the Divine Shield an international settlement currency, Leopold II would not have known that settlement currency could also be traded.

After all, international trade settlements prior to this were mostly completed using gold, and sometimes silver was used. Using the Divine Shield for settlements was something that happened when countries engaged in trade with the Holy Roman Empire.

Using the Divine Shield for all trade settlements not only meant that Belgium was forsaking gold and silver as settlement options, but it also meant linking its currency directly to the Divine Shield, transitioning from a purely gold-based system to a mix of Divine Shield and gold.

However, since the Divine Shield and gold could freely be exchanged, and their values were relatively stable, the difference between this mixed standard and a pure gold standard was not significant.

Just because the difference is not significant now does not mean it will stay that way in the future. If the Divine Shield were to ever decouple from gold, the situation would take a drastically different turn.

No doubt, these are issues that no one has realized yet. It’s beyond normal consideration to imagine a decoupling of the Divine Shield and gold, and no one knows just how fast the economy will grow such that the production of gold cannot meet the real demand.

Had Leopold II known about these factors, he definitely would not have nonchalantly put it forward as a negotiation condition. After all, negotiations had not officially started, and the conditions put forward now could only be considered a show of good faith; the eventual cost would certainly be even greater.

Maximilian nodded, feeling relieved. The currency hegemony struggle between the Divine Shield and the pound sterling had been ongoing for more than a day or two; even he, an exiled emperor far removed from politics, had heard of it.

The current stance of Belgium was not just about economic benefits but more importantly, about a political alliance.

Years ago, the Anglo-Austrian two countries had devised their own settlement systems and had tried to rally European countries. However, the conditions were not yet ripe at that time, and even if there was a leaning towards it, no country dared to declare the use of one country’s currency for all settlements.

If Belgium now stands out, it will be the first country in the world to publicly declare the use of the Divine Shield for all settlements. Just based on this fact alone, it could gain a lot of favor from the Vienna Government.

This is something that, currently, only an impoverished Belgium would dare to pursue. To fully adopt the Divine Shield for settlements is not only politically offensive to the British Government, but it also excludes Belgian goods from the British market.

Whether for face or profit, the London Government cannot possibly accept the Divine Shield as the currency for English-Belgian trade settlements. It’s known that Anglo-Austrian trade is currently primarily settled in gold.

Even though the Vienna Government wanted the Divine Shield to become the international settlement currency, it was not so aggressive; currently, the plan was just to make the Divine Shield the internal settlement currency of the Continental Alliance.

Knowing the severe consequences, Leopold II still went ahead with it. The reason was harsh; currently, only Anglo-Austria had the financial power to provide funds to Belgium.

Even though the Vienna Government seemed financially stretched, it was all relative; squeezing out some funds was still possible.

Moreover, just because the government had no money did not mean it could not produce any funds. After more than a year of buffering, no matter how tense the financial market of the Holy Roman Empire was, it was unlikely that tens of millions of funds could not be produced.

The funds for post-war reconstruction were not to be spent in one day; with eight or nine million for emergency relief, the remaining funds could completely wait until next month’s allocation.

The situation in Europe had cleared up, Belgium could no longer afford to be indecisive. If they ran to the British for a loan at this point, that would absolutely be a sign of being fed up with life.

Since he had to be a lackey anyway, Leopold II decided to gamble on seizing the top lackey position. Although being the top lackey was a bit more dangerous due to needing to charge into battle, the benefits were substantial!

Before this, the upper echelons of the Belgian government had also carefully studied the situation.

With the current momentum gathered by the Holy Roman Empire, as long as the Vienna Government did not act rashly, its status as the continental overlord was already secure, and the chances of replacing the British as the maritime overlord were also very high.

Given Belgium’s limited influence, if it did not immediately align itself, once other countries took the lead, their value would be lost.