Empire Rising: Spain

Chapter 207: Chapter 152: Cook Bank

With the development of industrialization in various countries, the economic connections between nations are becoming increasingly close.

This, however, has led to a rather serious issue, whereby the outbreak of an economic crisis does not merely affect a single country but extends its impact to the entire world.

Although the economic crisis did not have too severe a direct impact on Spain, it still affected Spain’s import and export trade.

On May 14, 1873, Prime Minister Prim convened a special cabinet meeting to address the potential impacts of the economic crisis on Spain.

Carlo was also quite concerned about this economic crisis and listened to the entire meeting, during which he provided several suggestions to mitigate the crisis’s effects.

During the meeting, Minister of Finance Ewald Bartel frowned deeply and lamented, “Your Majesty, Mr. Prime Minister. After the outbreak of the economic crisis in Vienna, it caused considerable harm to our import and export trade.

As the economic crisis gradually impacts other European countries, it might severely strike our trade.

Since the crisis began, the scale of our daily goods import and export has been declining continuously. If the crisis persists, the total trade volume this year is expected to decrease by at least 30%.”

Why does the economic crisis affect Spain’s import and export trade?

The real reason is that the crisis impacted the economic environments of European countries, leading numerous factories and enterprises to verge on bankruptcy or even go bankrupt directly.

People lost their jobs, and naturally, they lack purchasing power.

In the chaos of other countries’ economies, even if Spain’s industrial production remains largely unaffected, products still won’t sell.

Similarly, if chaos prevails in other countries’ economies, with many factories and enterprises going bankrupt, even if Spain wants to import large quantities, it depends on whether other countries can produce them.

The contraction in import and export during an economic crisis is inevitable unless other countries’ economic conditions improve gradually, otherwise, we can only quietly endure the impact of such a reduction on the economy.

“Doesn’t that mean our economy could face negative growth this year?” Carlo asked aloud.

Since Spain’s reforms, the economy has been growing positively every year, and rapidly at that. This reassured the Spanish Government in utilizing substantial fiscal budgets annually for various infrastructure developments.

As long as the economy maintains a good growth rate, the government’s investment not only won’t suffer losses but will instead translate into more tax returns to the government.

If the economic crisis leads to negative growth, government taxes will decrease. Projects already underway are not easily stopped, indicating a significant fiscal gap the government may face this year.

“Yes, Your Majesty.” Ewald Bartel nodded and replied, “Given the impact on import and export trade, it’s hard for our economy to maintain positive growth.”

Carlo nodded without any change in expression, but felt relieved inside.

The negative growth caused by reduced import and export can be remedied. The remedy is simple: increase the intensity of infrastructure construction, thereby expanding the demand for domestic products.

Simultaneously, substantial infrastructure works can provide more job opportunities and thus positively propel Spain’s economy.

The only downside to this is the government will need to mobilize a substantial amount of funds, but currently, the Spanish government is not lacking in funds.

Although that treasure is worth over 900 million pesetas, the value of gold isn’t calculated this way. If the gold is used to issue currency, it can lead to the issuance of several times its value in currency.

In other words, the Spanish Government can use these over 80 tons of gold to issue currency equivalent to the value of several hundred tons of gold.

At this point, Prime Minister Prim also took the opportunity to stand up and introduced to Carlo the plan the Cabinet Government had long prepared: “Your Majesty, to navigate this economic crisis, the government plans to increase public infrastructure investments once again over the next two years, to create more jobs and stimulate Spain’s economic uplift.

In the infrastructure, our investments will mainly focus on improving road traffic, small-scale water conservancy projects in towns, and slum redevelopment projects.

To protect some affected enterprises, the government will introduce short-term tax exemption policies for certain businesses, encouraging Spaniards to purchase domestic products significantly, expanding our domestic demand and mitigating the impact of reduced exports.”

Previously, slum redevelopment was also limited by finances, keeping its scale small and concentrated in Madrid.

Now that the government no longer lacks money, and there is enough time amid the economic crisis to pursue infrastructure construction, slum redevelopment should naturally be accelerated.

Converting those dilapidated slum houses into tall buildings not only effectively improves Spain’s urban landscape but also provides a better living environment for the poor.

In fact, this economic crisis isn’t entirely disadvantageous for Spain; the benefits are evident as well.

For example, during the crisis, the scale of industrial and agricultural production in various countries is continuously decreasing, with the prices of various industrial goods falling repeatedly.