Chapter 630: Trade War and Deterrence
The day after Talleyrand left for Russia to attend Potemkin's funeral.
On the second floor of the Tuileries Palace.
Joseph frowned, looking at the solemn expressions of Brienne and Mirabeau, his gaze finally resting on Bailly, the Minister of Trade. "So, which countries support Salzburg's proposal?"
Bailly took a breath. "Currently, aside from Baden, which has sent representatives to seek our nation's opinion and hasn't yet declared its stance, all other signatory nations are expected to agree to a vote on Britain joining the Rhine-Seine River Treaty."
Brienne exclaimed indignantly, "Britain has absolutely no need to join a trade agreement between France and Germany. Someone is clearly manipulating things behind the scenes."
With Britain's vast colonial empire and industrial might, why would it willingly open its markets to these small South German states and act out of pure altruism?
Bailly nodded. "I assess that the South German states wish to propose other conditions during negotiations. In fact, Bavaria and Salzburg have repeatedly requested to renegotiate tariff rates before, but we rejected them all."
Mirabeau added, "Your Highness, recently, large-scale protests from workshop owners have erupted across the South German states. These are mainly directed against our nation's competition."
"For the past two years, under the pressure of our products, they have been losing a significant portion of their market."
The room fell silent for a moment. Brienne said with some hesitation, "Your Highness, perhaps we could negotiate with Austria and Bavaria in advance, agreeing to an appropriate increase in their tariffs."
"As long as these two nations oppose it, Britain's admission to the trade agreement certainly cannot pass."
The South German states generally act according to Austria's wishes, and Bavaria is the second-largest nation.
Joseph shook his head thoughtfully. "Archbishop Brienne, how much do you think they would need to raise tariffs to achieve their desired trade structure?"
Brienne turned his head and looked at Bailly.
Bailly quickly replied, "Your Highness, I've estimated that Austria would need to raise tariffs by at least 40% on our advantageous industries, and about 15% on others, to be barely satisfied. Other nations would require even higher rates."
Joseph smiled faintly. "That would be even higher than the tariffs we had before signing the Rhine-Seine River Treaty."
"Currently, our nation's industry is in a period of rapid development. If we suddenly lose the South German market as a result, it would lead to a wave of factory bankruptcies. It would then take at least three to five years to regain upward momentum."
Such is the law of economic development. The faster the pace of growth, the more confident investors become, leading them to take out large loans and expand their production scale.
If the market can absorb the produced goods at such a time, profits will multiply several times over. Conversely, if the market experiences problems, a large backlog of goods will immediately accumulate, and those hefty previous investments will transform into terrifying debts.
Brienne sighed. "Your Highness, but we can hardly..."
Joseph narrowed his eyes and said in a deep voice, "When we signed the agreement, we gave them ample preferential conditions."
"Afterward, we gained our competitive advantage through diligent development, so we absolutely should not compromise for their lack of ambition!"
He had introduced numerous advanced technologies from future generations, as well as concepts like standardized production. He then implemented financial and tax reforms, abolished domestic market barriers, and even constructed extensive rail transport networks.
With this series of coordinated moves, how could the South German states, relying solely on "natural evolution," possibly compete with France?
Not to mention them, even Britain has been surpassed by France in many aspects of industrial production technology and domestic systems. It is only by virtue of its massive colonial market that Britain can still maintain its industrial advantage.
Bailly reminded cautiously, "Your Highness, even if our nation resists, as long as most signatory nations vote in favor, the British will still join the Rhine-Seine River Treaty."
Brienne let out a breath and declared forcefully, "If that is the case, then we can only use war to make them make the correct decision."
Joseph, however, immediately shook his head.
France's current development momentum was excellent, and engaging in war would inevitably interrupt this trend.
Furthermore, judging by Britain's eagerness to get involved in the trade disputes between France and Germany, it clearly hoped France would go to war with the South German states.
The ministers immediately looked at each other in dismay.
Brienne said with some difficulty, "Your Highness, at present, we must choose between compromise and war..."
Joseph, however, was recalling how similar situations were handled in the 21st century, an era when great powers were reluctant to initiate war.
After a moment, he revealed a smile. "Between compromise and war, there's actually another option: deterrence."
"Deterrence?"
Joseph nodded, looking at Bailly. "Monsieur Bailly, when is Salzburg's proposed voting date?"
"Two months from now, Your Highness. The vote will take place in Munich."
Joseph thought for a moment, then instructed, "Please notify the other nations that the vote will be held in Karlsruhe in 20 days."
Karlsruhe was the largest city in northern Baden and also an essential route from eastern France to South Germany.
Although Bailly didn't know the Crown Prince's intention, acting on his absolute trust in His Highness, he immediately bowed. "Yes, Your Highness. I must depart at once to notify so many nations in time."
Joseph continued, "You must also conduct secret negotiations with Baden, Württemberg, Augsburg, and Hesse. Offer them low-interest loans in exchange for their 'no' vote on the motion to admit Britain."
Bailly paused for a moment and said cautiously, "Your Highness, if I may speak frankly, the South German states clearly all hope to use this opportunity to change the trade structure, so a small amount of loans will likely do little to change their stance."
Joseph smiled. "Then lend them a bit more. Baden and Württemberg will receive four million Francs, Augsburg six million, and Hesse ten million. I believe they will consider it seriously."
This time, it was Brienne's turn to turn pale. He waved his hand in a panic. "Your Highness, we don't have that much capital at the moment..."
Joseph interrupted him. "No, we do. Print twenty-four million Francs in banknotes for them. As long as this money can be used to purchase goods from France, they will certainly be willing to accept it."
Brienne tried to dissuade him again. "Your Highness, such a large influx of banknotes into our country will severely impact the stability of our currency's value."
He also remembered the horrifying scene during the Mississippi Company Bubble of that year, when France's banknotes depreciated by more than half every single day.
That crisis made France shudder at the mention of banknotes for decades afterward, and it wasn't until the Crown Prince gained control of France's banking industry that confidence in banknotes could be rebuilt among the people.
If severe depreciation of banknotes were to occur again, it would certainly reawaken the painful memories of the populace and might even lead to a boycott of banknotes.
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