Chapter 75: Chapter 74 – War Tax (Part 2)

President Kossuth frowned and replied, "I understand your concerns, Lord Margrave, but we have no other choice besides levying more taxes. According to the information from our spies, Austria can now deploy up to 400,000 troops against us, while our National Guard has less than 300,000 troops.

What's more, the Austrian army is composed of well-trained veteran soldiers, while our army is just a rag-tag group of workers who have just put down their hammers and farming serfs who have lost their hoes. Even our army's morale is very low. It's simply too easy for an army composed entirely of recruits to collapse from a single clash against a veteran army. Without having at least equal numbers, we have no chance of winning this war!"

In fact, the situation of the Hungarian National Guard was far worse than what Kossuth said. After all, it was formed almost entirely of serf conscripts, except for the nobles who were the middle and upper officers. The serfs who had grown accustomed to centuries of oppression by their masters entirely lacked the courage to fight on the battlefield. It was likely that they would desert as soon as they faced the daunting Austrian army.

Moreover, the number of recruits was nowhere close to 300,000. The National Guard had only recently been established and was extremely underfunded. The small amount of funds which finally reached the  National Guard after every department took their cut wasn't nearly enough to house, feed and train 300,000 recruits.

Therefore, the officials in-charge of the National Guard came up with another method to "recruit" 300,000 people. They simply recruited and trained a few thousand people to support the facade of the National Guard being hard at work. Meanwhile, the remaining tens of thousands of people would be called over at a moment's notice. The starving Hungarians would rush over in droves for a single piece of bread.

Within the entire Hungarian National Guard, the only force which had a certain combat effectiveness was actually the battalion formed by the university students who began the revolution. They were the true revolutionaries who were willing to fight for national independence. The rest, including Kossuth, were simply opportunists disguised as revolutionaries.

"Mr. Kossuth, I think it is necessary for your government to disclose its fiscal expenditures. How has your government, which has been around for less than a year, already spent so much money?!

If the expenditures of your government remain this high, maybe we don't have to worry about the Austrians since your government will be one that shatters our Republic!" warned Count Lukács solemnly.

Embarrassed, Kossuth's face turned beet red as his gloomy eyes glared at Count Lukács. In the past, he used the war as a justification behind the huge expenses. However, the war had not even begun, yet the expenses were already so high. In that case, what would they do after the war truly began?

International loans? Impossible. No financial consortium dared to lend them money if they wanted to continue doing business within Austria, which was still one of Europe's four greatest powers. Naturally, they would impose sanctions upon anyone who dared to provide aid to the "Hungarian rebels." Therefore, the Hungarian Republic could only impose another war tax. Unfortunately, no amount of money would be able to fill this bottomless pit.

"The government will make the fiscal expenditures open for everyone to monitor, but we still need a sum of money to survive our current crisis. This time the government won't tax the people for nothing.

We tentatively plan to issue government bonds worth 200 million Conventionsthaler gulden (each valued at 11.693 grams of silver) for the taxpayers with an annual interest rate of seven percent. However, if the bonds fail to sell, we will have no choice but to charge another war tax."

Ultimately, Kossuth chose to compromise since he needed the support of the aristocrats. Without their cooperation, the government simply wasn't capable of collecting the tax, so he had to make concessions. Since the representatives of the Hungarian nobles refused to budge, he had no other choice but to change the war tax into a war debt. He would rather bear the high interest than stand against them.

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