Holy Roman Empire

Chapter 1005: Chapter 19, Conscience Bank
 

Unlike those who revel in chaos, Franz, as a pacifist, had always detested disorder.

Watching the European Continent about to fall into chaos, Franz, as a responsible sovereign of Europe, knew he must do something.

Essentially, this disturbance across Europe was due to an economic crisis. Artificially delaying the outbreak of the crisis without proper follow-up measures for relief had resulted in uncontrollable conditions once the crisis erupted.

Previous economic crises were typically caused by one or two factors: errors in economic policy, imbalance in supply and demand of money, overheating of investments, stock market bubbles, excessive debts, natural disasters, financial storms, overcapacity…

This economic crisis was different; it included every factor except natural disasters. Consequently, the impact was unprecedented.

Governments worldwide lacked experience in dealing with such a massive economic crisis and merely adopted a laissez-faire attitude, watching as the situation worsened to its current state.

According to information gathered by the Vienna Government, the unemployment rate in various countries had skyrocketed following the outbreak of the economic crisis.

Although countries were sending immigrants overseas to alleviate domestic employment pressures, immigration was not an easy task.

Shinra immigrants had a wealth of experience, and many Aristocratic Lords were competing to take them in. Offering a full-service system benefited every country in the German-speaking cultural sphere from beginning to end.

Other European countries faced different situations; not every noble was a linguistics expert, and immigrants unfamiliar with the language and culture were not readily accepted.@@novelbin@@

Without organized teams to actively recruit people, immigration mainly relied on spontaneous civilian actions. Even with government facilitation, not many left. More tragically, those who could leave were mostly middle-class; ordinary people couldn’t even afford tickets to the colonies and had to rely on funding cobbled together by friends and family.

Under these circumstances, the progress of immigration naturally slowed. If everyone acted like Shinra, immediately recruiting the unemployed, what risk of revolution would remain?

Emerging from the economic crisis was not a quick fix. Cheating the system wasn’t feasible; one had to adhere to the law of natural market adjustment. Relying on policies to forcefully stimulate the economy would only provide temporary relief while creating severe lasting issues.

Since the problem couldn’t be solved, it’s necessary to address those who created the problem. Despite the extensive challenges faced by his subordinates, there weren’t many who actually caused them.

Calculating quickly, the total population of the seven Sub-States in the Italian Area was around fifteen million, Greece had over a million, Belgium had about four million, Switzerland approximately two million, and Spain a maximum of around eighteen million—altogether about forty million.

With this population count, the labor force of employable youth and adults peaked at twenty million, though the actual number could be even lower. Even with an unemployment rate as high as twenty percent, this accounted for only four million unemployed.

The unemployment rate could not likely be higher. Besides Belgium, which had a slightly higher level of industrialization, the rest were agricultural countries. The industrial population was less than thirty percent—it couldn’t possibly all be unemployed.

Even among the unemployed, not everyone faced a livelihood crisis; those who migrated didn’t need to be dealt with. Those slightly wealthy enough to survive the economic crisis also didn’t need attention.

Considering the actual circumstances, solving the employment issues of just three million people would stabilize social order initially.

Franz certainly didn’t have employment positions, but that didn’t matter; the Shinra Empire’s colonies certainly did. With so many Aristocratic Lords, even just employing them to build castles, estates, and farms could create three million jobs.

The nobility did not employ overseas laborers, not because they did not want to, but because of the language barrier, which hindered flexible command.

For individuals, this posed a significant challenge; however, for the government, it was not a problem. As long as they could manage it uniformly, whether through language training or providing translators, both were viable options.

Even without government intervention, labor dispatch companies could handle it. In recent years, several labor dispatch giants had emerged in the Shinra Empire.

They had supplied tens of millions of laborers to the American Continent, making significant contributions to its economic development and accumulating vast experience in labor dispatch.

Now that the American routes were no longer viable, these companies had started focusing on domestic sales, continuously organizing migrations from the European Continent to the colonies, and earning commissions from the nobility.

Frankly speaking, if it hadn’t been for Franz’s effective leadership, the fief aristocrats of Shinra would definitely not have been as well-off as they were now.

Territorial development was extremely costly, and although the nobility’s fortunes were quite substantial, without proper planning, it was easy to go bankrupt.

To assist everyone in developing their territories, Franz had specifically hired nobles with experience in territorial development to serve as consultants for everyone, helping them formulate development plans based on actual conditions.

However, this alone was not sufficient; in addition to the development plans, there were also bank loans with sufficiently low interest rates. Compared to the commercial loan rates on the market, which could reach double or even triple digits, the Royal Bank only charged a symbolic two percent.

It was indeed symbolic, with no additional conditions, just two percent interest, barely covering operational costs, let alone making a profit. Saying it was charitable would not be an exaggeration.

In fact, from its inception, the special nature of the Royal Bank meant it was not driven by the same goals of high interest rates and high returns typical of commercial banks.

Therefore, the Royal Bank never dealt with standard commercial loans, only engaging in international loans or government policy loans, which never had high interest rates.

Of course, the Royal Family Wealth Group Enterprises were an exception. Their own enterprises could still obtain preferential loans from the Royal Bank because, after all, even emperors need to eat. Although not focused on making profits, the Royal Bank never said it couldn’t indirectly make money through other channels!

Including providing low-interest loans to the nobility, which appeared unprofitable, there were extraordinary benefits hidden beneath the surface.

If it weren’t for Franz being the emperor, he wouldn’t have access to such dealings. The loans might not seem significant, but inherently, they were the economic lifelines of the many fief aristocrats in the Shinra Empire.

Franz could see this, and so could others. From the beginning of the enfeoffment of the nobility, restless capitalists had intervened, although these individuals didn’t end well.

There was no way around it; the fief aristocrats of Shinra had fought their way through battles. Trying to control their lifelines through economic means was nothing short of suicidal.

Especially for those who fantasized about taking over through loan traps, their graves were now overgrown with grass. Failing at contracts was acceptable as long as one could outgun them.

Fief Aristocrats were equal to Vassal Kings, and this was no laughing matter. On their territories, if they decided to turn hostile, how could a few capitalists turn the tables?

Refusing to repay debts was a tradition left by the ancestors. Just by reading history books, one would know failing to repay money and eliminating the creditor was nothing new.

The Royal Bank could conduct such business because Franz was the lord of the nobility and offered loans at very low interest rates; he could openly declare that he was helping his younger brothers through financial difficulties, thus gaining both reputation and profit, without any trouble.

Others simply couldn’t do it, it wouldn’t work for anyone. Predecessors had set an example, borrowing usurious loans was no problem, no matter how harsh the loan conditions, they dared to sign as long as they could eliminate the creditor afterward.

Even if they couldn’t eliminate the creditor, it didn’t matter; in their own territories, lords had the authority to make laws and levy taxes, just as long as they did not conflict with the Central Government’s decrees.

For example, some lords enacted the “Exemption Law of Usury Debt,” legally stipulating that any business loans with interest rates exceeding 8% were not protected by law.

This was completely in line with the constitutional spirit of the Shinra Empire, except they removed a digit from the usury recognition standards, effectively lowering the usury interest rate from 48% to 8%, legally defaulting on the debt.

As for the spirit of contract, it couldn’t be eaten. Once integrity was abandoned, capitalists were powerless against these Vassal Kings who could make the rules.

Once burnt, twice shy. With the bloody lessons from their predecessors, bankers had become smart, promptly blacklisting these Vassal Kings from receiving loans.

Even if commercial banks really wanted to offer loans, they insisted on signing the loan contracts back in their homeland, and even the collateral had to be domestic, fearing that these fellows would default and flip the table.

Excluding political potential gains, low-interest loans could indeed be profitable, but the time cycle needed to be pulled to twenty to thirty years or even longer.

The Royal Bank did not handle personal commercial loans, but that did not mean it refused personal deposit services. Despite the current poverty of these Aristocratic Lords, once their domains were developed, they would each become wealthy magnates.

With their deposits, the Royal Bank would become the world’s bank richest in cash flow.

Otherwise, a meager two percent loan interest would be ludicrous, especially when setting up branches in colonies; even with central bank support, it would still be a sure loss. The political benefit alone, handed over to state-owned banks, would be just the same.

According to public financial statements from the Royal Bank, just operating branches in overseas colonies resulted in losses of millions of Divine Shields every year.

If it weren’t for agency bond issuances and helping companies go public to raise funds, this top ten global bank would perennially top the world’s banks’ loss charts.

Making money has its advantages, not making money has its own as well. A constantly unprofitable Royal Bank also greatly boosted Franz’s reputation.

Even though the bank’s asset size had been consistently expanding since its establishment, its unprofitable nature made it difficult even for onlookers to feel jealous.

Of course, that was just what the general populace thought. Those in finance were green with envy, only they knew the vast potential profits a cash-rich bank could bring.

But envy was useless, for ostensibly, the Royal Bank operated like a charity. Once it generated “profit,” besides covering previous financial losses, the surplus was all used by the Emperor for charity.

In contrast to all other banks, the Royal Bank was seen as the paragon of banking integrity. To criticize it would render the other banks untenable.

In some sense, the Royal Bank also played a role as an “Intelligence organization,” monitoring every action within the colonies.

Though it didn’t reach the detail of knowing what every noble ate each meal, it was still very clear about the general development of the colonies.

Which guys were settled, which harbored grand ambitions, and which ones wanted to stir trouble—all were documented.

The Grand Vizier could hide a boat in his belly, and Franz’s breadth of mind was not lacking either. As long as these individuals did not challenge his bottom line, their relationship remained harmonious; if they crossed the line, then they couldn’t blame him, the Emperor, for ensnaring them.

Yes, ensnaring them. Under the European social context, so long as nobles committed no grave crimes, the Emperor couldn’t do much to them.

Even an authoritative Emperor like Franz couldn’t judge them before they acted out. What the Emperor could do was either throw spanners in the works or dig a few pits in their path.

Throwing spanners was too low-tech and often criticized. By contrast, secretly setting traps was far more satisfying. Many fell into pits and got buried without knowing who was responsible.

However, such treatment wasn’t for everyone; ordinary small nobility, unless they were outright rebelling, simply did not catch Franz’s eye.

Franz had seen plenty of nobles courting death, but none had truly raised a banner in revolt, and the most foolish only joined the Revolutionary Party. The slogan “Why should the lords, marquis, ministers, and generals have all the breeding,” really was unclaimed.

With a helpful ideology, Franz decided to give his younger brothers a hand. With the colonies currently lacking vigorous labor, nobles were almost fighting over people.

He dared not absorb millions of foreign immigrants at once, but providing millions of temporary job positions was no-pressure.

He didn’t fear the nobles would refuse—such rare cheap labor, once missed, wouldn’t come again.

Now was the harshest time of the economic crisis; wages of European workers had fallen to their lowest point in ten years and were still slowly sliding.

Despite French mercenaries earning almost 15 Divine Shields a month, those were desperate wages in wartime, demanding life-risking efforts. Ordinary workers, even if they went to the colonies, wouldn’t earn much more.

Considering the current labor market on the European Continent, hiring a robust worker to develop lands in Africa, providing food and lodging for just 5 Divine Shields a month was feasible.

Considering income disparities among nationals, some impoverished countries could hire labor with just basic food and lodging, paying a salary of 3 Divine Shields a month.

Such cheap labor was unimaginable in the Holy Roman Empire; without doubling the salary, hiring workers was a joke.

Affected by large-scale immigration policies, labor costs in the Shinra Empire had unknowingly climbed to the highest in Europe, on par with Britannia.

“Cheap” labor had become a thing of the past. If not for the industrial advancements of the Shinra Empire, just the high labor costs alone would have been enough to kill labor-intensive industries.

Labor costs were determined by both economic level and market supply and demand; high native labor costs in Shinra meant even higher costs in colonies.

Without high wages, who would be willing to go to remote and harsh regions?