Holy Roman Empire - Chapter 452

Chapter 452: Chapter 25, Impulse Mode
 

No matter how rough the means, those without strength cannot play the game. Not to mention the initial capital investment, just figuring out how to hook up with the Russian Aristocracy is a challenge.

As you know, the Russian Aristocracy is one of the most conservative entities in Europe. If a capitalist wants to make a sales pitch, they probably won’t even see the person before being driven out.

Even if the sales pitch is successful, if they encounter a greedy noble, there’s also a chance that someone will just default on the bonds, and in the end, not a penny can be recovered.

Though Franz wasn’t worried about competitors, he still kept his work secret. Otherwise, if the Tsarist Government patched things up beforehand, all he could do was wait for Alexander III to repay the money.

On the surface, this era seems like the time of the gold and silver standard, where currency seemingly did not devalue.

In fact, although societal wealth was increasing, this increase was hardly able to keep up with the speed of currency printing, and inflation was simply unavoidable.

Price stability is also relative; a decade or so is sufficient to change many things. On the cusp of the second industrial revolution, as long as one invested correctly, reaping several times the profit was a piece of cake.

The industrial revolution involved too many projects, and Franz couldn’t possibly monopolize them all. At this time, venture capital companies could come into existence.

Although the concept of “venture capital” had not been formally presented, it always existed. A widely known example is Lü Buwei, whose speculative storage was a successful venture investment.

Europe had Spain supporting Columbus in discovering the New World, thereby opening the Age of Exploration and establishing the first Empire on Which the Sun Never Sets.

These are just successful cases; there are even more examples of failure. History books have told people that venture capital belongs to high-risk investments.

Franz could bear a high risk, as the cost of investing in emerging industries during this era was very low. It was basically about funding technological research, then investing in factories once results were achieved.

Even if an investment failed, as long as there were relevant patents acquired, the business wouldn’t be too much of a loss.

Unfortunately, finding projects was not easy. This was only the second industrial revolution; there were not as many projects as in later generations. Moreover, due to the inconvenience of communication, effective supervision was also very difficult to achieve.

After much hesitation, Franz gave up on establishing a venture capital firm. The world never lacked smart people, and venture capital existed during this era as well, just on a smaller scale.

To expect a venture capital firm like those in later times, investing in hundreds of projects, was completely impossible. Just the operational costs of the enterprise could crush the company.

After all, the real economy is not the internet; one cannot become rich overnight. Before profits are visible, thinking of going public to raise funds is difficult.

…

The actions of Wealth Securities soon drew the attention of those with an interest. Initially, everyone thought Wealth Securities was deliberately releasing good news, or that there was a breakthrough in Russian-Austrian negotiations.

However, by September the negotiations between the two countries were settled. The Russians would continue to fulfill their debts, but the timeline was postponed by five years. The previously promised collateral was now merely nominal.

For example: Regarding the pledged customs duties, now a portion of Russia’s customs revenue would be used to repay the debt. The specific amount was rather touching; each month, approximately two hundred thousand Divine Shield.

The total income from various collaterals added up to no more than five hundred thousand Divine Shield, which was less than one-sixth of the actual amount of funds needed for repayment.

Of course, there were no penalties for default; the Tsarist Government had no money, so being able to repay the principal and some interest was considered giving face.

There was nothing that could be done; the debtor was the real master. The Vienna Government could only take what it could and wait for the Tsarist Government’s finances to normalize before slowly repaying the rest.

With only so much money available, priority naturally had to be given to paying off government-guaranteed policy loans. As for private loans, unfortunately, they could only be considered in the future.

There is even less to say about bonds; the issue of repayment could be discussed when they matured. Early redemption was out of the question; the Tsarist Government was not easy to negotiate with.

If one dared to bank on the high interest they provided, they had to be prepared to lose the principal. Financial experts had issued warnings when the Prusso-Russian War erupted.

Although the Russians did not say they wouldn’t repay, everyone was very clear that these bonds would probably be very difficult to redeem normally.

The financial improvement of the Tsarist Government was a fallacy. As long as the Russian bureaucratic system was not purified and the problems with the officials were not resolved, the finances would never truly improve.

Purifying the officialdom was a hundred times harder than systemic reform. No matter the regulations, they needed people to carry them out, and therein lay the loophole.

Executing a person to establish authority was a good method, but unfortunately, Europe did not have a tradition of executing nobles, and Alexander II did not have the courage to forge a new precedent.

Franz came up with the civil service examination system, which likewise did not solve the corruption issue. Even bureaucrats of commoner origin were more ruthless in their corruption.

However, this condition created an opportunity for Franz to kill the chicken to scare the monkey. The anti-corruption bureau had work to do, catching a few idiots from time to time to set an example and deter the bureaucratic groups.

After establishing such comparisons, dealing with noble bureaucrats no longer seemed so ruthless by the Emperor.

To see that others who committed crimes were beheaded while noble criminals were only stripped of their titles or imprisoned seemed, to some extent, considerate.

Moreover, the stripping of titles generally meant the end for lifetime nobility, while hereditary noble titles could still be inherited by the second in line.

The reason was not the crime but the insult to the nobility’s honor. Yes, European nobility had its own requirements, and they were high standards indeed.

What was done in secret didn’t matter; whoever publicly breached the code of noble conduct would also face widespread criticism.

Many noble bureaucrats who got caught and could not withstand public pressure chose to end their own lives. With the person dead, debts disappeared, and the incident naturally passed.

Perhaps in later times, this would seem ridiculous. After all, they wouldn’t die from it; after serving a few years in prison and the dust had settled, they could come out and continue living a privileged life. So why commit suicide?

But in this age where honor trumps life itself, an individual’s life ironically becomes secondary to uphold family honor.

Under external pressures, though corruption could not be eradicated, it at least made them restrain themselves. Acts like the Tsarist Government’s blatant embezzlement of public funds and open bribery rarely occurred among Austrian officials.

This practice, however, was something the Russians could not learn. On one hand, the power of the nobility was too great, including Alexander II’s reforms, which were also a survival movement initiated from within the nobility.

On the other hand, it was a matter of literacy rates. Compared to other European countries, the literacy rate among Russians was generally low, and there were hardly any commoners among those who took the civil service exams.

Without sufficient numbers, how could they possibly exert pressure on the noble bureaucrats? If there were only a handful of individuals, they would probably be suppressed as soon as they entered the officialdom.

After so many years of compulsory education, even if only one percent entered university, Austria would still obtain twenty to thirty thousand university students each year, a figure which could be multiplied tenfold at the high school level.

A vast reserve of talent was Austria’s greatest advantage.

Quantitative change led to qualitative change, and many who had been obscure in the original timeline now became leaders of the era; conversely, those who had been famous were now verging on being indistinguishable from the ordinary people.

The fact proved that the environment really could change a person. Franz no longer believed in the so-called celebrity effect; he believed that the butterfly effect had a significant impact.

Before they could show results, in his view, celebrities from the original timeline were not much different from ordinary people.

After all, scientific research is full of coincidences. Maybe changing the date or the laboratory could alter the outcome.

Even an Austrian scientist born slightly later might just be erased by the butterfly. Such occurrences were all too common, whether due to accidents befalling the original parents or a change in the timing of conception, resulting in different sperm and eggs being united.

Even if they bear the same name, in reality, they are another person altogether. To achieve this, just one instance of overtime or a holiday would suffice.

A celebrity cultivation plan was a fallacy from the start. Rather than focusing on these uncertainties, it was better to focus on increasing the quantity.

With more talent, naturally, the number of geniuses also increased. Indeed, in this era, those who could attend university were the elites of the elite.

If one lacked the ability but wished to attend university, the only option was to pay for auditing classes, and should they somehow make a late breakthrough and pass the graduation assessment, they could still obtain a diploma.

As far as Franz was aware, all of the universities in Austria had a bunch of auditors. These people were not there for a diploma but simply to improve their capabilities.

After all, those who could afford the tuition were assuredly wealthy elites, to whom possessing that piece of paper was irrelevant.

Not everyone can afford the tens of thousands of Divine Shields in tuition fees, which is the price of a villa in Vienna. If converted to the 21st century, that’s equivalent to billions.

The Ministry of Education even intended to increase the number of universities, specifically to provide a platform for the education of these rich families’ offspring. After all, these were patrons who could be charged high tuition fees, allowing the institutions to make a substantial profit each year.

Franz was keenly aware that the emergence of such universities was just a matter of time. For wealthy individuals, receiving higher education was never an issue.

If not domestically, could they not go abroad to study? The trend of studying abroad was not popular in Austria simply because domestic education itself was already world-class and had a vast network of social connections.

For many capitalists, sending their children to study was to build network relationships and lay the foundation for their future development.

If there were no such benefits, why would they stick with domestic universities when the cost of studying abroad could be largely saved?

Take Vienna University as an example, the tuition fees for a few years of official study amount to just over a thousand Divine Shields, and one could apply for student loans.

But the fee for auditing students was directly inflated to eighty thousand Divine Shields. Don’t complain about the price—there are only thirty spots, and it’s a seller’s market. Without connections, you can’t even get in.

This price was not only for the knowledge but also for the added value brought by the network of relationships. As Austria’s premier institution, it was worth the price.

Austria had over forty large and small universities, and each admitted only five to six hundred students annually, a thousand at most.

Without expansion of university spots, these places naturally became highly coveted. Unless your connections reached the heavens, no matter how rich you were, you could at best secure a spot as an auditor.

According to Franz, the number of aristocratic offspring who took the backdoor into universities each year was in single digits, and most of the time, there were none.

If a scion of high nobility, after passing through family education, still couldn’t get into university, there were only two possibilities: either they were not suited for academics; or they were just profligates.

Consider this: if the teacher who’s giving you lessons every day still can’t get you into university, then what more is there to say? Even if it’s not the same exact questions, at least you’ve encountered every question type. With such a significant advantage and still not making the grade, there’s really nothing to be done.

Since they are useless, for the sake of saving face, no one would send these offspring to university to embarrass themselves.

Adding a new university is easy, but will people really buy into it? Attending university not only builds social networks but also reflects the hopes of parents for their children to succeed.

If the entire school is made up of such individuals, then its stature is inevitably diminished. Apart from getting a diploma, Franz was very skeptical about how much knowledge could truly be acquired.

Auditors might not enjoy the best reputation, but each year, some of them manage to turn the tables and graduate successfully.

These success stories also contribute to the ongoing stream of auditors year after year.

Building a network means to connect with those stronger than oneself. If everyone around is the same or inferior, such connections are not of much use.

If the status is diminished, the costs can’t be reduced. Otherwise, the Ministry of Education would ultimately have to subsidize the schools’ operation. Franz would rather use that money to establish another university and train talents beneficial to society.