Chapter 1331: Imported Inflation
Berthier continued his military report: "Regent Frederick has guaranteed at least three shipments of our 'goods' per week. The first batch of supplies, primarily uniforms and gunpowder, should have arrived in Gdańsk a few days ago."
Joseph knew that of the three armies poised to attack Russia, only Poland possessed significant combat power, so French support was mainly directed at the Polish forces.
Considering that Prussia would certainly be unwilling to see Poland grow stronger, relying on them for overland transit of supplies to Poland would likely result in deliberate delays.
Therefore, he sought Denmark's help to transport military supplies, disguised as commercial cargo, to Gdańsk. After Prussia's surrender, the "Gdańsk Corridor" had been reopened, and the mature transportation system that had developed there over centuries was sufficient to sustain Polish logistics.
Poland had abundant food supplies of its own. Coupled with the military funding, weapons, and ammunition provided by France, their blood feud with Russia meant they would not back down, even if the war lasted over a decade.
While the Persian army's combat strength was moderate, they held a geographical advantage, allowing them to sustain a war of attrition against Russia with very low logistical costs.
As for the Ottomans, the best option was actually to fight Russia along the Danube River. However, Salem III feared this would provoke Austria's intervention—the area was very close to Wallachia. Moreover, he wanted to take advantage of the Persians distracting the Russian army to seize territory in western Georgia.
"Excellent," Joseph nodded. "The British will have a headache now."
"Britain?" The Chief of Staff paused, then replied, "Yes, Your Highness, the Russians will indeed seek aid from Britain, but given Britain's current financial situation, they will most likely just give them a token dismissal."
...
10 Downing Street.
Pitt looked at the reports in his hand, frowning as he addressed Sir Watkin, Governor of the Bank of England. "With such high interest rates, we've only sold 850,000 pounds sterling?"
A month and a half had passed since the significant increase in interest rates for British National Debt, yet bond sales showed no improvement.
According to the plan, 5 million pounds sterling in National Debt needed to be sold before the end of the year, with an additional equivalent amount required in the first quarter of next year, just to ensure domestic financial stability.
And now it was almost the end of November.
Watkin sighed helplessly. "You know, grain prices have soared recently, which has also driven up the price of potatoes."
"What does that have to do with National Debt..."
Pitt stopped mid-sentence, suddenly realizing the connection.
Large investors were pouring their money into speculating on foodstuffs, given the rapid returns. As for ordinary people, worried about affording their next meal, who would dare buy government bonds?
"Those damned French!" He slammed his hand on the table angrily.
Just after Britain raised the interest rates on its National Debt, Algiers, previously the most important wheat supplier, suddenly announced it would no longer sell wheat to Britain. There was no doubt the French government was behind this mischief.
Immediately after, Poland signed some sort of "long-term agreement" with France, exporting most of its grain to France.
When these two pieces of news reached London, British grain prices surged by 15 percent, and they were still rising.
Previously, Pitt had only been troubled by bread subsidies in major cities. Now, he realized this would also cripple National Debt sales.
He squeezed his cane firmly, then nodded. "Alright, it seems we'll have to import large quantities of grain from Russia."
"We could even buy some potatoes, Prime Minister," Sir Watkin suggested.
Russia was too far, making transportation costs expensive, so Britain typically avoided buying Russian grain. But now, domestic food prices in Britain far exceeded those shipping costs.
After discussing ways to boost National Debt sales for a while longer, Sir Watkin took his leave.
Pitt took up his pen to begin writing to the ambassador in Russia, asking him to negotiate a bulk purchase price with the Russians in advance, when Earl James Harris, Chairman of the Board of Trade, rushed in. "Prime Minister, there's a huge problem at the Øresund Strait!"
Pitt gestured towards a chair. "Please, don't rush. Tell me slowly."
"The Danes claim they've discovered Russian merchant ships smuggling weapons to Norway and have begun to strictly limit Russian vessels passing through the strait!"
Pitt's brows furrowed instantly.
While Norway had always shown separatist tendencies, Russia had no reason to interfere in its affairs—disrupting Norway would only benefit the Swedes.
"How long do they say it will take to clear passage?"
"I hear Frederick just sent envoys to Saint Petersburg to negotiate. It might take about two months."
Pitt's frown deepened further, and he quickly ordered, "You and Lord Hawkesbury must go to Copenhagen immediately. Oh, and have a special task force from the North Sea Fleet accompany you."
At least 70 percent of Russian merchant ships exiting the Baltic Sea were bound for British ports, carrying goods vital to Britain like timber, flax, oils, and ropes. A shortage of these items would severely impact British industries, from shipbuilding to glassmaking and dyeing.
However, Pitt believed that with the Foreign Secretary and a fleet to intimidate the Danes, the Øresund Strait should soon reopen.
Yet, he was completely mistaken this time. A week later, Lord Hawkesbury sent back word that the Danes were furious, threatening to go to war with Russia if necessary to get to the bottom of the matter.
By then, news of Russian merchant ships being unable to reach port had already spread through London.
Normally, such an incident wouldn't cause much market fluctuation, but the previous skyrocketing food prices seemed to have left the British as jumpy as startled birds. First, the price of flax rose by 10 percent, followed by whale oil and furs.
Naturally, Joseph had already arranged for "white gloves" in Britain to start buying up these goods at high prices as soon as word got out, thereby triggering market panic.
Moreover, this operation did not waste capital; in fact, if managed well, it could even turn a profit—as prices continuously rose, choosing the right time to sell would yield returns.
Pitt once again busied himself with finding sources to stabilize prices and increasing diplomatic pressure on Denmark, completely oblivious to the fact that, under the influence of this series of events, Britain's inflation level was rapidly increasing.
Indeed, in that era, there were no systematic methods for assessing inflation, and governments did not specifically calculate it. Typically, it was only when the effects of inflation became clearly apparent that the British Treasury would realize intervention was needed.
For ordinary Britons, the feeling during these last few months of the year was that everything kept getting more expensive, while only their wages stayed the same.
On Sir Watkin's side, he found that not only were National Debt bonds not selling, but the number of people depositing money in the bank was also continuously decreasing—
With their money stretching thinner and thinner, who had spare cash to save?
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