NOVPUBAfter Christmas, Franz was busy once again. There’s always a lot to do at the end of the year: the government’s annual summary, plans for the coming year, the budget...
Specific tasks were handled by subordinates, but Franz still needed to control the overall direction. As a qualified Emperor, he must ensure his control over the government.
Finance Minister Karl: "Your Majesty, this is the financial revenue and expenditure report for this year.
The New Holy Roman Empire’s total financial revenue in 1875 was 865.2 billion Divine Shields, with total expenditures of 876.4 billion Divine Shields, resulting in a fiscal deficit of 11.2 million Divine Shields.
Austria’s total financial revenue in the year 1875 was 157.41 million Divine Shields, with total expenditures of 155.04 million Divine Shields, resulting in a fiscal surplus of 2.37 million Divine Shields.
Bavaria’s total financial revenue in 1875 was 11.32 million Divine Shields, with expenditures roughly equal to revenue, achieving a balanced budget.
The Jerusalem Kingdom’s financial revenue in 1875 was 2.2 million Divine Shields, with expenditures of 31.4 million Divine Shields, resulting in a deficit of 29.2 million Divine Shields."
Although the Austrian Government is the Central Government of the New Holy Roman Empire, their finances still have to be distinguished.
If the finances were not separated, the Central Government could not simply reach out to the state governments for money when running a deficit.
This segregation is not only in finances, as the functions of the two are also different.
The Austrian Government is mainly responsible for the governance of Austria, such as: collecting taxes, maintaining social order, developing the economy, education, infrastructure construction... these are confined within the Austrian region.
The Central Government, on the other hand, is different. These specific administrative duties are the responsibilities of the state governments and do not require their intervention.
However, the Central Government is responsible for the entire New Holy Roman Empire, with primary functions including: mediating relations between states, legislating, judicial institutions, conducting diplomacy, training and managing the military, issuing currency, collecting tariffs, and managing colonies...
The financial income of the Central Government is not as high as that of the states, which is quite normal. Apart from colonial revenue, the Central Government only has the Coinage Tax and tariffs.
Having a large colonial area does not equate to high financial revenue. At present, it is good enough to achieve a basic balance of revenue and expenditure, and there are even slight surpluses.
However, this surplus only exists on paper; once it passes through the hands of the Central Government, it is consumed by local construction projects.
In earlier years, the Central Government was heavily in deficit and had to share the deficit with the state governments. It is always difficult to take money from someone else’s pocket.
Back then, the end of the year was the most painful time for the Vienna Government. They had to patiently work on the state governments to get them to willingly contribute money.
With the development of the colonial economy, not needing the Central Government to subsidize this situation has changed.
This change is not something the state governments wish to see; not having to contribute money anymore also means their status within the Empire has declined.
Politics is this pragmatic. With the Central Government achieving a balanced budget, merging the Austrian Government with the Central Government has been put on the schedule.
Whether people like it or not, this is an inevitable result. Otherwise, how would you govern after the colonies are localized?
The Central Government directly managing the colonies is not an issue, but if it were to directly manage localized provinces, then the political status of these provinces would be on par with the state governments.
Undoubtedly, the African Continent is so vast, its potential for future development is certainly going to exceed that of the homeland.
If integration doesn’t happen now and the system isn’t established, once these provinces develop, they will undoubtedly seek political rights.
Should we shift to an era of democracy and freedom, where decisions are made by popular vote, then it’s only a matter of time before the European Emperor becomes the non-emperor.
The primary reason for placing the colonies under the empire’s flag, rather than Austria’s, was to have all the states contribute financially, and secondly to facilitate legitimate justification for attracting immigrants in the Germany Region.
Now that these tasks have been completed, it is time to dispose of what’s no longer needed. Politics is just that realistic. Franz has decided to merge the administrative powers of Austria, Bavaria, and Jerusalem.
1875 will be the last year that finances are settled separately, and thereafter they will be completely merged. The government will no longer have the trouble of preparing two budgets.
Franz took the documents and began to read carefully. The soon-to-pass 1875 was a good year, the first time the Austrian Government had a fiscal surplus since his ascension.
Although it was a paltry two million Divine Shields, it was still a great victory.
In the years before his accession, Franz had no shortage of financial headaches until the outbreak of the First Near Eastern War, which allowed him to escape the plight by profiting from the war.
After that, with accelerated colonial expansion, government finances were in deficit for years, at best achieving a balance of revenue and expenditure.
We are living in the age of the gold standard, not the credit currency era; to print money, the government must first consider its gold reserves.
If you want to stimulate the economy with fiscal deficits, you must first check how much money you have in your pocket. It’s not possible to make up for deficits by issuing more currency; persistent deficits will increase government debt.
The government’s ability to bear debt is limited, once it exceeds a certain threshold, finances will be crushed.
In this respect, Greece is a cautionary example, where previous governments issued welfare recklessly without consideration for the consequences of fiscal deficits, resulting in later defaults.
Without a doubt, the Austrian Government also owed a significant amount of debt; the so-called fiscal surpluses exist only on paper and are nothing but a ripple in the face of massive debt.
After a moment, Franz closed the documents, "Fiscal surpluses should be used to reduce debt! Our debt burden is still quite hefty, and if we encounter unexpected situations, we will be very passive."
At the beginning of the establishment of the New Holy Roman Empire, the Sub-States were worried the Central Government would use the Empire’s finances to subsidize Austria, at their own expense.
To reassure everyone, Franz set the rule: the Central Government could not borrow externally, and any fiscal deficits would be apportioned among the Sub-State governments.
The effect was very clear; the Central Government itself did not have enough money to spend and had to ask the Sub-States for funds each year, every expenditure subjected to strict scrutiny by all, naturally preventing any misappropriation.
As a result, the Central Government’s fiscal deficits fell on the Sub-State governments. Austria, being the largest in size, had to contribute the most money along with its own infrastructure investments, hence debt continued to grow.
Today, Austria’s total debt has reached 5 Billion Divine Shields, nearly 3.2 times its fiscal income, more than even the Tsarist Government’s foreign debt.
Of course, this calculation isn’t completely accurate; there are some revenues that haven’t been included in the fiscal income but can still be used to service the debt.
Nonetheless, this number is still somewhat dangerous. During a period of high economic growth, it’s not a problem, but once the economy enters a stable period, or even a recession, the problems will arise.
Franz didn’t even mention the fiscal deficit of the Jerusalem Kingdom, as it was an inevitable outcome.
All the fields are lying fallow, and the city is undergoing redevelopment, which all require funds. If Jerusalem weren’t a Holy Land, it probably wouldn’t even have that income of 220,000 Divine Shields, and it would be a pure investment.
Finance Minister Karl: "Yes, Your Majesty."
After a pause, Karl added, "Your Majesty, our fiscal consolidation plan has met opposition from the Sub-State governments, and there may be trouble in the Imperial Parliament."
The merger of the Central Government and Austria is an inevitable trend, everyone is prepared, and Franz has already discussed it with the Kings of the Sub-States, and generally, they are not opposed.
Administrative mergers are not a problem since, from the beginning, the Austrian Government was already doing double duty as the Central Government. In essence, the two have long been one entity.
Regarding this established fact, Sub-State governments are aware that opposition is futile. As long as their interests aren’t harmed, they generally accept it tacitly.
But finance is different, as Sub-State governments have always been contributing money to subsidize the Central Government. Finally achieving a balanced budget and then having it picked apart is uncomfortable for anyone.
There is no room for compromise on this issue; if the finances can’t be merged, how can the integration be completed?
After hesitating for a moment, Franz made a decision, "If it’s not possible to persuade the Sub-State governments to agree, then we’ll shelve the fiscal merger for now.
Let Jerusalem announce the reconstruction plans while we prepare the documents. At the Imperial Parliament at the beginning of next year, we will apply to join the New Holy Roman Empire."
The Kingdom of Jerusalem has never been part of the Shinra Empire, but no one can object to Jerusalem wanting to join the Shinra Empire.
No Catholic country could refuse the Holy Land’s entry. Otherwise, the public’s spitting backlash could overthrow the government.
With Jerusalem included in the Empire, it’s not just an increase in the weight of a Sub-State’s voice, but also an increase in a big problem.
The Kingdom of Jerusalem is poor and just starting to rebuild, which requires a huge amount of funds. Unquestionably, the Kingdom of Jerusalem itself has no money.
Reconstructing the Holy Land is religiously correct; after joining the Shinra Empire, the expense will fall on the Central Government. Traditionally, this cost would eventually fall on the governments of the Sub-States.
Franz has made a plan, prepared to rely on The Vatican to raise donations from all around the world to support the reconstruction of Jerusalem, for which he has even promised the governance of the city of Jerusalem to the Roman Curia.
However, this is still in secret negotiations. If the Roman Curia wants to gain control over Jerusalem, they must cooperate with Austria to stabilize the entire Middle East Region.
That doesn’t stop him from using the enormous pit of Jerusalem’s reconstruction to exert pressure on the governments of the Sub-States.
