NOVPUBWhile the Rhineland region was in the midst of a major migration, the London Conference had reached a critical juncture. Between Belgium and the German Federation, the British chose the German Federation, while Belgium opted to align with France.
Strategically speaking, Belgium leaning towards France was an inevitable outcome. The only force on the European Continent that could counterbalance France was Austria, and although the British wielded significant influence, their clout significantly diminished on land.
Given that Belgium was too far from Austria and too close to France, even though they were aware of the French’s ambitions to annex them, the Belgian government had no choice but to maintain good diplomatic relations with the French for their own security.
Small nations have their own ways of survival. While drawing closer to France, the Belgian government also kept up good relations with the Anglo-Austrian countries, as a means to use their power to check the ambitions of the French.
No matter how correct the strategy was, it was of no use. With France supporting Belgium, Austria had to back the German Federation in order to contain the French.
The three great powers split into two camps, and with a two-to-one situation, the Rhineland region naturally fell into the hands of the German Federation Empire.
The Anglo-Austrian countries were deeply concerned about how the German Federation would govern the Rhineland region. To contain the French expansion, the two countries eventually had to compromise.
The compromise was for the Rhineland region to come under the direct jurisdiction of the Central Government, but not under the Emperor, but rather the Imperial Parliament.
In some respects, this also accelerated the process of integration within the German Federation Empire. The Imperial Parliament, originally meant to check the Emperor’s power, now wielded real authority and was no longer just a mouthpiece.
However, this was a much better situation than an enlarged Hanover. Resolving internal issues through negotiations was not an overnight matter; it wouldn’t be surprising even if it dragged into the next century. n𝚘𝚟𝚙u𝚋.co𝚖
As vested interest parties, the Sub-State governments were unlikely to easily relinquish the powers they held. The Imperial Parliament was always controlled by the Sub-State governments, and the idea of turning the tables was difficult!
Consensus between the Anglo-Austrian countries didn’t mean the matter was concluded. Having agreed on the auction of the Rhineland region, an auction had to be held.
On November 11, 1874, under the witness of various European nations, the highest-profile large-scale land auction on the European Continent began.
Prussian Foreign Minister Geoffrey Friedman personally took on the role of auctioneer, with representatives from England, France, and Austria acting as notaries, and envoys from various countries as the audience.
To avoid disorderly bidding, Belgium and the German Federation each submitted a security deposit of five million pounds. If anyone bid carelessly and failed to come up with the money, the deposit would be confiscated.
Undoubtedly, if Belgium and the German Federation were to pay for themselves, they wouldn’t even be able to come up with the starting bid.
The real money came from behind-the-scenes supporters, with the Anglo-Austrian countries lending to the German Federation Empire and the French lending to Belgium.
This was not just a political contest, but also a capital one; financial resources were part of strength as well.
Of course, both sides had their limits. They couldn’t compete endlessly, allowing the Prussians to pick up a bargain.
Geoffrey Friedman put on a deathly expression and walked up to the auction stage displeased, "The Rhineland auction begins now.
The starting bid is 120 million pounds, with each bid increase being no less than one million pounds. If any bidder exceeds their economic capacity and cannot pay, the deposit will be directly confiscated. The auction begins, please place your bids."
Clearly, Geoffrey Friedman was in a foul mood. Despite a high starting price, the Berlin Government actually could not lay hands on such an amount.
From the auction proceeds, the nations would first deduct a portion of the debts, and only the remaining part would go to the Berlin Government’s income.
The Prusso-Russian war not only depleted Russia’s finances but also the Kingdom of Prussia’s, even to a more severe degree.
Even though the European nations had provided substantial support and England and France offered numerous low-interest loans, the Berlin Government still found itself unable to pay the interest post-war.
However, instead of declaring bankruptcy and defaulting, the Berlin Government negotiated with the creditors. With the Tsarist Government as an example, to make the Prussians dutifully repay their debts, the creditors had to be more agreeable, and many debts were allowed deferment.
Owing money and repaying debts is a natural principle. After the Rhineland auction, the Berlin Government’s purse swelled, and it was natural to repay this portion of the debt first.
It wasn’t just the Anglo-Austrian countries that pressured the Kingdom of Prussia to relinquish the Rhineland. There were also many behind-the-scenes creditors.
Anyone who understood the finances of Prussia knew that the Kingdom of Prussia was a subpar client, whose debts could turn into bad debts at any time. It could be said that the creditors were more concerned about the Kingdom of Prussia’s finances than Wilhelm I himself.
The London Government was able to proactively compel Prussia to sell the Rhineland region, and the British finance group contributed significantly. The Paris Government didn’t interfere with the transaction, and the French finance groups also played a commendable role.
Hundreds of millions in loans could not be taken lightly. If they were to turn sour, it was unpredictable how many financial institutions in England and France would be implicated and go bankrupt.
The Belgian representative Klaus Jansen was the first to raise a sign, which read +500, and everyone knew this meant an increase of five million pounds.
With so many national representatives watching, thinking of playing word games or exploiting loopholes? The deposit was in the custody of the England, France, and Austria countries. If anyone was wealthy enough not to care about five million pounds, they were more than welcome to try.
The voice of the host Geoffrey Friedman rang out, "125 million pounds."
Soon the representative of the German Federation Empire, not to be outdone, also raised a sign that read +500.
Geoffrey Friedman, "130 million pounds."
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"One hundred and forty million pounds."
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"One hundred and forty-two million pounds."
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"One hundred and forty-three million and five hundred thousand pounds."
...
Initially, the increments were in steps of five million pounds, but after surpassing one hundred and forty million pounds, both sides tacitly slowed down their bidding increments. This wasn’t some petty game of one-upmanship, it was a competition that concerned the fate of both nations, where every bid had to be carefully considered before being made.
The value of the pound during this era was extraordinarily high, not like later pounds. Although the economies of Belgium and the German Federation were both doing quite well, they were, after all, small countries with very limited financial capacities.
Geoffrey Friedman’s voice rose again, "The German Federation Empire bids one hundred and fifty-two million pounds, twice!"
There was a pause of about two minutes; still, no representative from Belgium raised a placard. Geoffrey Friedman, feeling helpless, could only announce, "The German Federation Empire’s bid of one hundred and fifty-two million pounds, for the third time... sold!"
There was no choice; this figure had already surpassed Belgium’s limit of endurance. The French had only promised a loan of one hundred million pounds, and the bottom line for the Belgian government was one hundred and fifty million pounds.
Any further increase would be self-defeating. If they drove the price up and the German Federation Empire then withdrew their bid, settling on them while they were unable to produce the money would result in a huge loss.
In terms of value, the Kingdom of Prussia had underpriced its assets this time. The industrial value of the Rhineland region alone exceeded one hundred and fifty-two million pounds, not to mention its rich mineral resources.
Yet the reality left no choice. During this era, land transaction prices were not high, and one hundred and fifty-two million pounds had already set a world record. If the pound didn’t devalue, this record would stand unbroken for the next hundred years.
Geoffrey Friedman, with a grim expression, didn’t even bother with a perfunctory congratulations. This price was clearly below the anticipated amount, and the buyer wasn’t even Belgium, whom they had hoped for.
Without powerful buyers joining the auction, Geoffrey Friedman believed had England and France participated, the final price could have exceeded two hundred million, and three hundred million would not have been out of reach.
Obviously, that was impossible. France and Austria were both well aware of each other’s limits. Breaking this tacit agreement would have benefitted no one.
As Prussia and Germany were signing their treaty, the German Federation Empire also signed loan agreements with England and France, using the mining resources and factories of the Rhineland region as collateral.
To England and France, whether these assets had owners was irrelevant, as long as they had treaties in hand.
The property rights established by the Prussians, if changed under the rule of another nation, would be recognized by the German Federation Empire solely at the discretion of its ruler; at least some people would suffer misfortune.
If the existing beneficiaries remained the same with no change, then what exactly would the German Federation Empire gain from purchasing the Rhineland region – merely an insignificant amount of taxes?
Private property is sacrosanct and cannot be violated, and the government wouldn’t directly confiscate private assets, but it’s still possible that through various means they could suppress these industries to change hands.
Capitalist competition during this era was extremely cutthroat, and without a sufficient network of connections, one simply couldn’t survive.
Otherwise, the capitalists of the Rhineland region wouldn’t have strongly opposed this land transaction. For the capitalists, changing countries never brought mental pressure.
If the Berlin government were paying attention, they would notice that many powerful capitalists had already found new partners, with the rest on the lookout for partnerships.
Of course, the Berlin government probably didn’t have the leisure to concern itself with this matter. If the one hundred and fifty-two million pounds were converted into gold, it would amount to over a thousand tons, more than three times the total gold reserves of the Kingdom of Prussia.
Certainly, this was impossible. The price of one hundred and fifty-two million pounds was only nominal; the Kingdom of Prussia was still significantly in debt.
This sum of money had to first set off debts that had matured, and only the leftovers could make it to the hands of the Berlin Government. This was limited to debts that had come due, not all debts.
To pay off all debts, this money wouldn’t be enough. Reality once again proved that war was a gold-devouring beast. After the end of the Prusso-Russian war, the Berlin Government had already paid off debts amounting to over thirty-eight million pounds, and was still saddled with over two hundred million pounds of foreign debt.
Almost as if to say, a single Prusso-Russian war had cost the equivalent of two Rhinelands. After negotiations, the funds from this land auction paid off one hundred and ten million pounds of debt, leaving only forty-two million pounds for the Berlin Government.
After setting aside funds for resettlement of immigrants, what remained would truly be the Berlin Government’s profits. While the financial crisis had been averted, funding for the next Prusso-Russian war was still unsettled.
The only consolation for the Prussians was that the neighboring Tsarist Government was equally impoverished and, in fact, poorer than they were. Perhaps once one of them gathered enough funds for war, that would be the time for the next Prusso-Russian conflict to erupt.
Soon, Wilhelm I found no more reasons for joy, as the recently improved Prussian finances were burdened again with the troublesome state of the Kingdom of Poland.
If possible, Wilhelm I wouldn’t mind declaring Poland bankrupt. Unfortunately, that was merely wishful thinking. England and France could tolerate Prussia’s annexation of Poland because it also meant taking over Poland’s debts.
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