Chapter 397: Chapter 84: No Money, Can Only Slaughter the Pig
 

St. Petersburg, after the battle in East Prussia, the Tsarist Government in the vortex’s center had seen better days.

Despite the frontline generals taking the blame, Alexander II understood that the real reason behind the Russian Army’s major defeat was not an issue of command by the generals.

Had it not been for that order to seek a quick and decisive victory, the battle in East Prussia might still be ongoing. According to the initial strategy, the Russian Army only needed to persevere against the Prussians, relying on naval superiority to achieve victory.

Attack and defense are not the same concept. If the Russian Army had adopted a defensive strategy, they definitely would not have been defeated so quickly. Even with the Prussians’ sudden increase in troops, at most they would have lost a few defensive lines.

“Money” became the chief culprit of the defeat in this battle, followed by the poor transportation system of the Russian Empire, and then the corrupt bureaucratic system of the Tsarist Government, with the “Decisive Battle Order” coming last.

Minister of the Army Hellemed reported, “Your Majesty, we have already mobilized, and the frontline troop losses can be replenished within the next two months.

The lost weapons and equipment are being urgently manufactured by domestic arms factories around the clock, and we have placed orders with Austria for any shortfall, ensuring that they will be equipped to the troops before next spring.”

Hellemed wisely ignored the issue of seeking accountability. Although the main frontline officers had been scapegoated, they were not dismissed or held accountable, instead being ordered to redeem themselves through service.

Overall, their performance was still satisfactory. These officers were Russia’s greatest gain in the Near East War and were the elite of the Russian Army.

They still needed to fight, and the astute Alexander II naturally would not do anything as self-destructive as tearing down their own defenses.

“It’s still a problem with money, isn’t it?”

Alexander II asked helplessly, and from his tone, one could tell that the issue with “money” had arisen more than once.

Minister of the Army Hellemed confirmed, “Yes! We have already defaulted on many payments, and many of the cooperating enterprises have fallen into financial difficulty because of this. Now they demand payment of the arrears before they will organize production.”

It was commonplace for the Tsarist Government to owe money to enterprises, but such a severe situation as this time was rare.

Capitalists are not fools; knowing that the Tsarist Government was in financial trouble, they naturally would not continue to give credit.

In this respect, the Russian officials were allies with them. If businesses don’t make money, what would they have to kickback to them?

Not only arms manufacturers but all enterprises cooperating with the Tsarist Government have accumulated a large amount of debt.

Without resolving these issues, the Russian Empire might as well concede defeat next year with heads bowed.

Alexander II asked with anticipation, “Does the Finance Ministry have any plans to solve the current crisis?”

Finance Minister Kristanval replied with a haggard expression, “There are two solutions: one is to levy another war tax; the other is to borrow foreign loans.”

Without bond issuance or domestic borrowing, it is undoubtedly clear: the credibility of the Tsarist Government has collapsed and domestic finance is also problematic.

In fact, when the Russian Army had just occupied the East Prussia region, many outsiders were optimistic about them, and the Finance Ministry took this opportunity to sell a batch of bonds.

Then there was no follow-up, as their bonds were once again unpopular. Even the Finance Minister himself was not sure whether these bonds could be redeemed.

War is a glutton for gold, and Russia, a feudal empire transitioning to capitalism, had very limited funds it could gather.

Of course, this does not mean they were out of money, but the shrewd financiers at this time feigned poverty and showed no intention of pulling the Tsarist Government out of its predicament.

Alexander II scoffed, “Can’t the domestic finance sector think of a solution? As far as I know, they still hold a considerable amount of foreign debt in European countries!”

True enough, the Tsarist Government borrowing from foreign banks and Russian banks lending abroad was all normal financial activity.

The only abnormality was that these banks were unwilling to lend to the Tsarist Government.

Of course, it was not entirely the banks’ fault. Even more, it was because too many Tsars had played too recklessly with borrowing without repaying, resulting in people’s reluctance to be deceived further.

This topic came to a standstill, and with the government’s finances collapsing, it was understandable that domestic banks were afraid to lend.

Seeing no one reply, Alexander II did not continue this topic. He knew that for bureaucrats: some things can be done but cannot be said, or it would be easy to give political enemies something to exploit.

“How much funding can be raised?”

Finance Minister Kristanval thought for a moment and said, “Preliminary estimates indicate that we can levy a war tax of 86 million rubles. As for seeking loans from foreign banks, the exact amount cannot be determined.

This depends on how much collateral we can offer and political factors must also be taken into consideration.”

“86 million rubles” may appear to be an astronomical figure, but it’s still not enough to repay corporate debts, and in the context of war, it is merely a drop in the bucket.

It’s not that the ruble is worthless, the crux of the matter is that war is too expensive, with hundreds of tons of shells being expended every day, and that’s just for starters.

In fact, it’s already quite frugal, with five to six hundred thousand troops on the front lines; even if each soldier uses only five bullets a day, that’s still over three million bullets.

With so many troops, no matter how much we economize on average daily expenditure, at least several thousand shells need to be fired.

Just for basic ammunition consumption, several hundred thousand rubles are gone every day. Add to that other logistical material expenses, and daily costs of several million rubles are inescapable.

After all, the cost of materials on the battlefield is by no means the cost price. Many strategic materials have already quadrupled in price by the time they are transported from the rear to the hands of the Russian Army at the front.

Alexander II frowned and asked, “Tell me, what do you plan to use as collateral, and how much money can you borrow?”

Alexander II was very annoyed with this feeling of losing control, yet reality gave him no choice, he certainly couldn’t just hand over the hegemony of Europe, could he?

Not even able to handle the small Kingdom of Prussia, Russia’s international standing would probably fall from the very top to behind England, France, and Austria, and possibly even behind Prussians.

Most of the political gains made during the Near East War would be washed away in this defeat.

Finance Minister Kristan refused to hesitate in passing the buck: “It depends on the outcome of negotiations. It’s not about what we are willing to give but about what the other party wants.

We can make contact with several countries and choose the conditions that are most favorable to us. In this regard, the Foreign Ministry is the expert.”

Foreign Minister Clarence Ivanov glared at Kristan with resentment. This was plainly setting someone up.

International loans have never been easy to borrow. Loans without strings attached might exist, but the Tsarist Government can’t obtain them.

If an additional treaty is signed that damages national interests, the Ministry of Foreign Affairs will be the scapegoat, and Clarence’s mood instantly worsened.

“Your Majesty, the current funding gap is too large. There are only a few in the world with the capacity to provide this loan, so we virtually have no choice.

If we depend on international loans to solve the financial crisis, we will likely have to pay a great price to be able to borrow the money.

It would be better to think of a solution domestically. The vast Russian Empire surely can raise a few hundred million rubles.”

Clarence’s stance was very clear; it was best not to borrow money. The current funding gap was too enormous. Even if the loan was obtained, repayment in the future would be impossible.

Now, there were not many chips they could put up as collateral except for the vast territory; Clarence did not believe anything else could secure a loan for such a large sum.

Defaulting on debts might be easy, but secured loans are different. None of the financiers with the strength to lend them money were pushovers. When it came time to take away the collateral, surely they couldn’t respond with war, right?

That was obviously not an option. If they had the money for war, they would have repaid their debts long ago. War, in fact, is the most luxurious toy, not suited for the poor.

Rather than face difficulty later, it would be better to flip the table now. If the government has no money, find it from those who do. It’s not the first time this has been done; there are precedents set by ancestors.

Pull off a big job, not only could it resolve the debt crisis in one fell swoop, but they might also be able to stuff their pockets. The pig has been fattened; now it can be slaughtered.

Alexander II nodded. While this might not be the best choice, it was the choice that best suited the Tsarist Government.

Under the implicit agreement of the Tsarist Government’s higher echelons, the Jews began to have troubles. The upper echelons only targeted Jewish financial capitalists, but the lower and middle-class Jews suffered as well.

The Nobility certainly wouldn’t miss this opportunity to get rich. Both the Reformists and the Conservatives were unusually united in their stance on this issue.