Empire Rising: Spain

Chapter 136: Chapter 121: The Austria Alliance

While Carlo was enjoying sightseeing, the Spanish Government was not idle either. Considering that Spain’s reform urgently needed the support of countries with certain industrial and economic foundation, the Spanish Government engaged in long-term consultations with the Austro-Hungarian Empire Government and signed a new Austria-Hungary-Spain Alliance Treaty.

However, this alliance was not a true military alliance in essence, but rather a cooperative alliance in economic and diplomatic aspects.

This alliance treaty greatly strengthened economic exchanges between Spain and Austria-Hungary. Spain’s abundance of mineral resources and other materials could be conveniently transported to Austria-Hungary via maritime routes, while Austria-Hungary’s food and other industrial products could also reach Spain through sea transport.

Besides enhancing cooperation in economic aspects, the two sides also engaged in consultations on tariff issues, agreeing to jointly lower tariffs and strengthen economic exchanges between the two countries.

Spain was naturally interested in Austria-Hungary’s relatively advanced industry and technological capabilities.

Most of the equipment for Spain’s industrial development was imported from Austria-Hungary and Italy, with a small portion imported from the German Empire, which was also the reason for Spain’s relative rapid industrial growth.

After signing the alliance treaty with Austria-Hungary, the Spanish Government also signed a similar alliance treaty with the Italian Government.

Although Italy’s overall strength is not as great as Austria-Hungary, it still has a certain scale in industry and economy, enough to provide some help to Spain.

With the assistance of Italy and Austria-Hungary, Spain’s industrial development speed was still relatively fast. All around the country, railway and highway constructions were underway, with various factories, led by steel mills and chemical plants, continuously being built, portraying a thriving nation.

However, amidst the rapid development, Spain’s overall construction speed was restricted to a relatively reasonable range.

There was no choice, as the name of the 1873 economic crisis was too prominent, influencing the global economy just second to the Great Depression that started in 1929.

Carlo had an impression of the economic crisis about to occur next year and naturally wanted to ensure Spain’s development remained within controllable limits, rather than developing recklessly without any restrictions.

Speaking of the upcoming economic crisis, the real cause was the countries’ frantic railway construction, continuously stimulating domestic industrial and economic growth.

As is well known, when industrial production scale far exceeds consumption demand, an economic crisis is then bound to erupt afterwards.

This period witnessed extremely exaggerated development across various countries. Since the end of the Civil War, the United States entered a new wave of industrial development.

From 1865 to 1872 over seven years, the total mileage of railways commenced construction in the United States exceeded 31,092 miles, which is to say more than 50,000 kilometers of railway.

This already approached ten times the current railway scale in Spain, and Americans built such a vast railway mileage in only seven years, showing how exaggerated American industrial development was during this period.

Precisely under this railway construction wave, the United States’ pig iron production grew from 755,000 tons in 1865 to over 2 million tons, while coal production increased from 22,159 million tons in 1865 to nearly 50 million tons.

Spain’s current industrial scale still doesn’t catch up to the crumbs of the United States, while American industries continue to expand at an extremely exaggerated pace, and this is precisely the reason why the economic crisis erupted.

So then the question arises, why does the American economic crisis affect the whole world?

Firstly, accompanied by colonial and technological development, the economic ties between the world’s countries are becoming increasingly close.

Secondly, over half of the funds for America’s railway construction come from investments by England, France, and other European Countries, which is precisely why the American railway crisis impacts the entire world.

Moreover, overproduction not only appeared in the United States, but similar phenomena occurred in other European Countries as well.

Since Germany’s victory in the Franco-Prussian War, it entered a period of rapid industrial economic development. After acquiring France’s extremely important industrial mining areas of Alsace and Lorraine, German industry had already acquired quite a solid foundation.

Adding to that, the French sent almost gratuitously to Germany a fund of 5 billion francs, giving German industry enough angel seed funding for development.

Under such circumstances, it would be strange if German industry did not develop at an explosive pace.

Furthermore, the British were not at all lacking either. As the most powerful country globally, the United Kingdom’s industrial development speed was relatively fast. At this point in time, the United Kingdom still reigned as the world’s strongest industrial nation, while America and Germany still needed a longer time to catch up to the United Kingdom.

Aside from France, which after losing the Franco-Prussian War, incurred losses in industry and mining districts and needed to pay large compensation, other European Countries were mostly rapidly developing.

This also led to Europe’s economy entering a prosperity phase from the end of 1871, and it was exceptionally flourishing by 1872.

This economic crisis might possibly affect Spain, which Carlo also remained highly vigilant about.

Spain also has a stock exchange. The Madrid Stock Exchange was established in 1831, and has now been in operation for over 40 years.

However, compared to the stock exchanges in Vienna and London, the Madrid Stock Exchange’s scale and influence are not large, which counts as good news indeed.

After all, the larger the stock exchange’s scale, the greater the effects experienced during economic crises. While London and Vienna’s stock exchanges see large amounts of capital flow in and out daily, once the economic crisis erupts, the number of bankrupt companies might reach thousands.

The economic crisis that erupted in 1873 is considered the mark where capitalism transitioned from free development to monopolistic operation. After this economic crisis, numerous small to medium-sized private enterprises faced bankruptcy, eventually being acquired by larger enterprises.

A series of monopoly giants emerged during this economic crisis, while the capital within various countries transitioned from many small to medium-sized capitals into large capitals, beginning to exert deeper influences on various government regimes.

For Carlo, thinking about how to gain enough benefits during this economic crisis is indeed necessary.

The good news is, considering Spain’s relatively small industrial and economic scale, the impact of this economic crisis will ultimately be limited.

The main explosion point of the economic crisis was in the United States, with affected countries primarily including economically and industrially strong countries like the United Kingdom and Austria-Hungary.

Spain doesn’t need to worry too much about the impact of the economic crisis; rather, it can seize the opportunistic moment brought by the economic crisis, acquiring some vital foreign companies and enterprises.

Though these companies went bankrupt, the technology and staff these companies possess are indeed tangible.

As long as Spain could acquire these factories and enterprises that went bankrupt during the economic crisis and seize the opportunity to recruit some unemployed personnel to Spain, it would indeed be a great supplement for Spain’s technology-oriented talents.

Simultaneously, the production materials and some equipment from these companies and enterprises could also accelerate Spain’s industrial development.

For the Royal Family, acquiring these bankrupt enterprises at low costs and restructuring them could result in forming giants in various industries.