Chapter 22: Chapter 22 – January Revolution

The unexpected economic crisis also surprised the Vienna government. It was very different from the small-scale economic crises they had confronted in the past, so they had no experience on how to deal with it.

Since this economic crisis was caused by the British industrial crisis, it was very different from a traditional economic crisis. Naturally, their traditional coping strategies would prove ineffective in solving it.

Government-funded bailouts to businesses?

The crux of the matter was that British products, which had flooded the market, boasted a significantly higher quality and lower price than domestically-produced products. Until the problem of Austrian products being unable to compete with British products was solved, no amount of government bailouts could resolve this issue. Not to mention, Chancellor Metternich would never spend government funds to bail out the capitalists who had caused him so much trouble.

Thanks to the government reducing tariffs, prices in the market which had been rising had fallen drastically. Currently, the price of daily necessity products in the retail market in Vienna was around 65% of what it had been in the latter half of 1847, and only 30% of its peak during December.

However, the government still had to take measures to improve the domestic economy. Due to the mass unemployment, there had been a huge decline in the people’s purchasing power; even at such low prices, people did not have the money to buy them. This was truly a tragedy.

Under normal circumstances, the market would be booming with buyers in case prices fell by 30%. Even though the seller would lose money if the prices were 30% lower than usual, depending on the higher volume of sales, he could make up for most of the losses. However, the problem was that there was no market: there were piles of goods, but no buyers.

Wealthier capitalists could perhaps still hold on, but the smaller ones had no choice but to declare bankruptcy due to broken capital chains, owing a lot of debt to the banks.

As a result, Austria’s financial institutions had been hit hard. The businesses were unable to repay their loans which led to the banks no longer having enough cash flow to provide new loans to businesses to allow them to save themselves from bankruptcy. Since the economic crisis broke out, this vicious cycle had persisted.

The depression had arrived not just in Austria but in all of Europe, except Russia where the practice of serfdom was still widespread.

There was no doubt that the Labor Protection Act introduced by the government had to be suspended: since there were no jobs left, there was no point behind ensuring that the workers received fair treatment.

Even though the capitalists had achieved their goal of forcing the government to make concessions and suspend the Labor Protection Act, they were not very satisfied with the outcome.

The sudden economic crisis had harmed the capitalists greatly. Even the gains they made from the suspension of the Labor Protection Act couldn’t be utilized until the economic crisis subsided and the market returned to normalcy. In addition, as market competition became more and more brutal, internal conflicts among capitalists were intensifying.

Chancellor Metternich became the biggest winner as well as the biggest loser. Even though he had managed to successfully thwart the conspiracy of the capitalists, he had to clean up the mess they left behind.

As an onlooker, Franz was at a loss for words. He had never expected that this political struggle would evolve in such a manner: the capitalists, the nobles, and the government all lost more than they gained.

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If there were any pure victors, it had to be Emperor Ferdinand I, who never took part in the political struggle, however, he was unaware of the political struggle ensuing in his empire.

When it came to the working class, they could be regarded as half winners-half losers: the current economic crisis was more serious than any in history and it had become tough for them to survive; the only gain was the Labor Protection Act, which couldn’t be realized yet. In short, the present was cruel, but the future would be better.

 

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“Your Imperial Highness, a revolution broke out in Sicily last night!”

Bernd Schneider, head of the Agency, rushed into Franz’s quarters in Hofburg Palace and informed him of this shocking news.

Hearing Bernd Schneider’s report, Franz was taken aback.

‘Didn’t the revolution this year start in France in February? I don’t recall there being a revolution in Sicily before that...?’ he pondered as a frown formed between his brows.

Well, Franz had to admit that his knowledge of Sicily was limited to historical accounts of the land being fertile, suitable for food production, and strategically located in the heart of the Mediterranean. Also, it had fallen to and his . Beyond that, he knew nothing else about Sicily.

After thinking carefully for a few minutes, Franz recalled that revolutions spearheaded by intellectuals and regional nobles had indeed broken out in Italian states. This “” had been the prelude to the revolutions across Europe in 1848.

Italy was still just the name of a region, much like Germany. At the moment, Sicily was still the independent but weak . To ensure that the Italian states continued to remain independent, Franz had sent spies to watch the movements of the Kingdom of Sardinia, which, historically, would unify the Italian states into the Kingdom of Italy within the next two decades.