Chapter 596

On March 22, 1872, the United Kingdom and Russia signed the "Anglo-Russian Bilateral Trade Agreement", "Anglo-Russian Grain Mortgage Agreement", "Anglo-Russian Financial Trust Agreement" …

In addition to the lack of an alliance, the Tsarist government's economic proximity to the British had become a reality.

According to the treaty, the Russians were already a member of the pound – gold system, and the pound's status as an international currency was officially established.

In exchange, the British had to provide the Tsarist government with an interest-free loan of 150 million pounds over the next five years, and the Russians would use agricultural products to repay the debt.

Anyone with a discerning eye knew that the so-called loan was just an excuse. The annual loan was equivalent to the agricultural products exported by the Russians. In essence, it was a huge order contract.

The only difference was that the price of agricultural products from Russia was lower, and the Government of London had exempted the import tariff. Through the low price, they seized the market of other countries that exported agricultural products to the United Kingdom.

The first to bear the brunt was Austria. As the world's largest agricultural exporter, Austria's loss was undoubtedly the greatest. Sixty-five percent of the total agricultural products imported by the British each year came from Austria. Now, this market could almost be declared non-existent.

"Free trade", it was fine to just listen to it. If they took it seriously, it would be over. The British's slogan was earth-shattering, but when it came to specific interests, it was decisively thrown aside.

If Austria wanted to maintain its market in the UK, the prices of its agricultural products would have to be cut in half in order to survive the competition.

Affected by the Anglo-Russian treaty, the international agricultural market began to plummet in April. Capitalists began to stock up, sell, and accumulate cash flow, for fear that the agricultural products would freeze to death in the coming winter.

As the protagonist of the vortex, Franz was not so nervous. Although he did not expect the British to suddenly make a move, the impact on the international agricultural market was still expected by the Government of Vienna.

At the last annual work conference, the Government of Vienna formulated a food reduction plan, mainly focusing on wheat, corn, and beans, which were agricultural products that the Russians had a large production capacity.

At the Vienna Palace, at the agricultural economic conference, Franz picked up the baton and drew a curve on the world map.

"The Russians are aggressive, and the British are adding fuel to the fire. The agricultural winter has arrived. This is a challenge for Austria, and we must do our best to take various measures. Holls, talk about the plan of the Ministry of Agriculture. "

The Minister of Agriculture, Halls, stood up from his seat, tidied up his clothes, and put on a serious and nervous expression. Obviously, this topic was very serious.

"Since two years ago, the Ministry of Agriculture has been preparing for Russia's agricultural products to return to the international market.

For this reason, we have taken a variety of measures, including adjusting the industrial structure of agricultural products, and reducing the production of staple crops.

These measures can only reduce our losses, but cannot solve the problem from the source. The international market for agricultural products is only so big. We can't get through the crisis by cutting production.

The agricultural winter has broken out, and the agriculture of all the countries are suffering. There is no need for us to pay the bill.

The collapse of agricultural prices this time was mainly caused by the Russians. Since this is the case, we should push the boat with the current and make the crisis even more intense.

The Ministry of Agriculture planned to reduce the international food prices by half in the next three years, and the agricultural production in Europe would collapse.

Although Russia's agricultural production capacity is large, they lack the ability to withstand risks. The Tsarist government had limited financial resources, so it was impossible for them to provide protection for the peasants.

Once the price of food collapsed, it would inevitably lead to a wave of farmers going bankrupt. If we are lucky, we can also inflict a heavy blow to the Russian agricultural production system.

In order to make up for the loss of farmers, the Ministry of Agriculture proposed to suspend agricultural taxes, grain transaction taxes, agricultural export tariffs, and prohibit the Church from collecting tithes. At the same time, set a minimum guaranteed price for grain to ensure that farmers do not lose money. "

Destroying the agricultural production system of Europe, in addition to the fear of being taken advantage of, was more so because the Government of Vienna did not want to incur hatred.

Austria had already obtained the largest share of the international grain export market. Since they had already taken the largest share of the profits, why did they have to go to the extreme?

Now it was easy. Russia was the one who jumped out. With a bit of publicity, they could blame the Tsarist government and the British. Since their reputation was already bad, they did not care about instigating more hatred.

The Anglo-Russian Agreement was the best evidence. They directly discounted the export price of grain by 30% and exempted tariffs. The two governments directly participated in the trade and destroyed the free trade system. This was the root cause of the loss of food production in Europe.

No one would be able to clear their name by selling at a low price. If someone took the lead in lowering the price, the others following behind would be inconspicuous. If a price war broke out, the price would be even lower. This could not be helped.

Britain and Russia joined forces to attack Austria's grain exports. Rather than letting domestic grain sales stagnate, it was better to lower the price to the lowest point.

Once the international grain price was cut in half, no one knew if the British grain merchants would still honor the contract. No one liked this kind of loss-making business. If the British broke the contract, there would be a good show to watch.

It seemed like it was only attacking the food production system of various countries, but in fact, it was also destroying the alliance between Britain and Russia. Nothing could break an alliance more than a conflict of interest.

Moreover, Britain and Russia were not allies. They were only working together for the sake of benefits. Once the conflict of interest exceeded the benefits of the partnership, it would be hard not to part ways.

Everyone fell into deep thought and began to digest what Holls had just said.

"If grain prices fall by half, how much impact will it have on the country? Will it cause a large number of farmers to go bankrupt? Will it affect the entire agricultural production system? How much money do we need to invest? "

The one who asked the question was Prime Minister Felix. Agriculture had always been Austria's pillar industry, and the Government of Vienna had to pay attention to it. If it went wrong, the repercussions would be very serious.

"Prime Minister, please rest assured. Our Ministry of Agriculture has conducted a special evaluation. After the suspension of agricultural tax, tithe, grain transaction tax, and grain export tariff, the international grain price has been cut in half. The impact on the country has been minimized.

It will be reflected in the grain purchase market, and the purchase price will drop by about 20%. The Ministry of Agriculture will supervise, and if the market turbulence exceeds this range, we will directly intervene in the purchase.

Due to the different production costs of food in different places, it cannot be generalized. In Wallachia, where the natural conditions were better, there was even a small profit. As for some provinces with poor natural conditions, they might have to pay a loss.

Farmers going bankrupt would definitely happen. With the development of the times, the small-scale farming economy would inevitably be destroyed. This primitive production model had too high cost, and it could not compete with mechanized farms.

The per capita land area of farmers in the country is higher. Usually, when everyone grows a variety of crops, they have a certain degree of risk resistance. Large-scale farmer bankruptcies will not break out in Austria.

To complete this plan, the investment required is still relatively large, at least 120 million SD. At the same time, the finance will be reduced by about 21 million SD every year, and the government will need to fill the hole of 15 million SD in education. "

In the end, the problem was still money. Once this plan was implemented, the era of relying on agriculture to make up for industry and education would end.

In fact, Austria's agricultural taxes had always been very low, only 5%. It was the lowest among the major agricultural production countries in Europe.

The grain export tariff was as high as 15%, but the export tariff of the finely processed grain was only 3% to 5%. It was adjusted according to the actual situation, and the lowest was 1%.

Due to this policy, Austria basically exported the finely processed grain, and there were very few direct exports.

Other related taxes were also very low. The grain transaction tax was 5%, the vehicle and ship transportation tax was directly exempted, and there were almost no additional taxes.

Even so, these taxes still occupied an important position in Austria's fiscal revenue. Although it had decreased in recent years, it was still a significant figure.

Franz fell into deep thought. Investing 120 million SD was easy. It would be a one-time investment, and if it didn't work, he could get a bank loan or issue bonds. This amount of money was no longer a problem for Austria.

The problem was that the fiscal revenue would decrease, and the education expenditure would increase. This 36 million SD was not a one-time investment, but a permanent one.

"Temporary exemption" was, in fact, permanent. After the agricultural dividend period ended, it would be the industry's turn to subsidize agriculture.

This meant that Austria's fiscal revenue would shrink by 8.3%, and its expenditure would increase by 6.1%.

After listening to the Ministry of Agriculture's plan, Minister of Finance Carr frowned. After a moment of silence, he put down the cup in his hand.

"That's too radical. There's no need to go to such extremes to destroy the agricultural production system in Europe. It's enough as long as the international grain price reaches a point where the farmers can't make a profit. There's no need to do it in one go.

In the agricultural production field, we have the advantage. The cost of grain production is the lowest in Europe. We also have a complete industrial support system, and we can get more profits.

The farmers in Europe are starting to lose money. In fact, the farmers in China still have a certain amount of profit. As long as we drag on, they will not be able to hold on.

From an economic point of view, the Russians are likely to be the first to collapse. Unless the Tsarist government subsidizes agriculture, the high cost will cause Russia's agricultural products to lose competitiveness in the market.

As long as we grasp this, we don't need to pay too much of a price. Now, we just need to lower the grain export tariff and exempt the agricultural tax to withstand the first wave of impact.

The Russians haven't exported their grain to the UK yet. Now, we will release our grain reserves and hit the international market. We will push the price to the Anglo-Russian transaction price and see if the UK will honor the agreement.

If they don't honor the agreement, the Russians will be in big trouble. I don't know if the Tsarist government's wallet can bear it. The consequences will be very serious if we can't sell the mountains of grain. "

It had to be said that the professionals were really ruthless. This was not a blow to the grain price, but the Tsarist government's finances. Once there was a large scale of grain sales, Alexander Ii Of Russia would be out of luck.

There was no other way. The farmers only had grain left. Either the government directly expropriated the grain and let it rot in the warehouse, or it could only be exempted.

Once the market was full, no matter how cheap it was, no one would dare to take it. Every time a major economic crisis broke out, there would be capitalists pouring milk into the river because the market was saturated.

Carr's plan now was to crush the UK's grain price before the Anglo-Russian transaction was completed.

The international grain price would naturally not be spared, and Austria would also suffer heavy losses. But as long as the UK defaulted, the Russians, who had suffered heavy losses, would definitely not let it go. They might not be able to do anything to the Government of London, but it was inevitable that they would withdraw from the pound sterling and gold system.

At that time, no matter how unwilling the Tsarist government was, they could only bite the bullet and join the gold system. The losses in the grain market could be recovered in the financial market.

Holls frowned and questioned, "What if the UK fulfills the contract? The benefits brought by currency hegemony are not small. They have no reason to give it up. "

Carr smiled calmly. "Then all the grain exporting countries will suffer together this year. Even if the international grain price was discounted by 30%, the impact on Austria, which exports refined grain, would not be that big.

Don't forget, the refined food industry itself still has more than ten points of profit, and these companies can also share some of the losses.

Overall, the domestic agricultural production can still break even if the price of raw grain falls by 70%. This is enough. I don't think Russia's farmers can make money with the current grain export prices.

The price the government needs to pay is only a portion of the grain reserves and a reduction of 8 to 10 million DND in revenue.

If they directly attack the agricultural system of the European countries, using the Russians as a scapegoat can only fool the ordinary people. The politicians are still clear.

If they take countermeasures and artificially raise the import tariff on grain, what else can cheap grain do other than increase their revenue? "

This was the reality. It was common to flip the table in the face of profit. To protect the country's agriculture, it was normal to adopt trade barriers.