Re: Blood and Iron - Chapter 938: National Capitalism

Chapter 938: National Capitalism

The autumn sky fell over Vienna… Sitting at the Hofburg in its courtyard were two men. One was dressed in a formal suit, its craftsmanship was fine, but its style was humble.

The other was dressed in full royal regalia. There was roughly twenty years of difference between the two men, but looks could be deceiving, and if one didn’t know better, they might say there was thirty.

Erwin sipped his tea and nodded in silence. A simple but respectful gesture, all the same, Archduke Karl von Habsburg pushed a file over on the table between them.

“I thought you should know… The Swiss recently approached the Austrian Royal Bank, perhaps out of ignorance of our banking system works. But… they came to us for a loan. After they couldn’t make their minimal payments and interest back to the National Bank.”

Erwin picked up the folder and looked over the numbers, shaking his head and sighing as he skimmed the figures. He flipped the folder back down on the table and handed it back to Karl.

“Utterly disgraceful… What kind of economy operates purely on speculative growth, and not proven returns? Is their argument really ’We know that we haven’t paid the German Reich National Bank what we owe it, but we believe that in five years we will make five time what we owe in full, so please, give us a loan so we can pay back the National Bank what we owe in minimum payments and interest?”

Karl chuckled when he heard this; he too couldn’t help but shake his head at the thought.

“They would essentially be paying us with our own money…. Do they not realize the Royal Austrian Bank is a subsidiary of the German Reich National Bank? Just as is the same with your branch in Tyrol?”

Erwin joined Karl for a brief laugh as he took a sip from his tea.

“It would appear they do not. Honestly, it is no wonder their economy is the way it is. We gave them a bunch of money because they asked for it, some project or another twenty years ago. And rather than pay off the debts and reinvest the returns, they simply borrowed more for the next project. At what point does a casino kick out an addict because his collateral is no longer worth anything?”

Karl could no longer laugh, the analogy was too grim and far too accurate. His voice took a far lower and more somber turn.

“I can’t even imagine it… A nation becoming addicted to spending someone else’s money. It is as you said… utterly disgraceful. Tell me again how you came up with the idea? What do you call it?”

Erwin rolled his eyes and shook his head.

“National Capitalism… and I didn’t come up with the term, its just what stuck when people needed a simplified explanation. As for how I came up with it, I didn’t, really. I simply applied the logic behind my father’s lectures on finance to the nation.”

Karl looked up from his glass at Erwin, more confused and intrigued than ever before. “Go on…”

Erwin sighed as he heard this, sitting upright he prepared himself for an extended lecture to the Austrian Archduke.

“My father used to say… back when I was a young boy, growing up in the family’s old manor in Berlin. That wealth meant nothing if it couldn’t be used for the betterment of our family. Our family’s survival, our family’s health, our family’s growth, our family’s power, and quality of life. If any of those things suffered, yet we still held a treasury filled with gold, then that gold was in effect worthless.”

He took a pause to soothe his throat with another sip of tea before continuing.

“He said that our family doesn’t borrow money from others. We do not incur debt. Production creates wealth, accumulation preserves it, and investment expands it. We are wealthy not because we extract, or borrow, but because we produce something of worth.”

Karl reflected on how the Habsburg had lost their power as sovereign monarchs… They had borrowed Bruno’s value, his men, his guns, his steel, his armor… and in doing so they had incurred a cost they could only repay by surrendering all of Austria to the German Reich.

That was nearly 30 years ago… And the more Karl thought about Erwin’s age. The more he realized that Erwin was still growing up beneath Bruno’s tutelage then… He stared at Erwin in astonishment.

Erwin had personally watched his father practice what he preached and took the man’s lessons about personal finance and family wealth, which he then scaled to national economic policy.

Bruno had built the foundation of Germany’s modern economy and scaled it towards the purpose of war… But in the years that followed the Weltkrieg. Erwin had taken it and made it into something that could survive peace.

Karl stared in silence for a long while. He had finally seen it for what it was… He cracked into a bitter laugh and shook his head. Resting it in his palm.

“So…everything that is happening in Switzerland. Everything that happened in Austria all those years ago, this was your family’s doing?”

Erwin sipped his tea once more, not answering immediately. All the while Karl’s eyes fixated on him more and more. As if trying to trace the deceit from his mind to his words.

But when he spoke, it was devoid of any malice or lies.

“Yes, and no… Austria’s fate was not my father’s intention or his doing… I remember the situation very clearly… It was the fault of your generals… Do you remember a stimulant called pervitin?”

Pervitin… How could he not…. It had played such a large role in the chaos that followed the end of the First Weltkrieg.

He was just about to say something when Erwin cut him off.

“When my father’s pharmaceutical companies invented the substance, they did thorough testing and discovered its more nasty side effects. Due to the looming war approaching, it was approved for military consumption only, and only under strict guidelines. Guidelines with your own generals in the Austro-Hungarian armed forces ignored.”

Karl bit his tongue and looked away in shame. But Erwin continued to hammer the point home.

“Knowing the effects it would have on soldiers, especially those who returned home after the war. The Reich had established extensive treatment centers and programs to help these men overcome their addiction and their shell-shock. This was of course… well within the guidelines we gave to your general staff when we began selling you the stimulants. These were once more ignored. And in the end, Franz Josef was forced to hire the infamous Werwolf Group to quell the unrest exasperated by addiction. A debt, as you know, he couldn’t repay through normal means.”

Karl knew the rest of the story all too well. He had lived through it after coming home from the war. He had witnessed it all unfold. There were those in his family who blamed Bruno for the loss of their sovereignty, still to this day.

And for a long time, he had been one to hold his suspicions. But Erwin’s words… they made too much sense.

Their generals during the war had been exactly the type to see the performance advantages of a chemical stimulant like pervitin, ignoring guidelines and medical warnings, instead issuing it wholesale.

He could only lament their shortsightedness and all that it had cost them…. Sure, the House of Habsburg, and Austria as a whole was better off as a part of the German Reich… But they had lost their status as Kaisers of their own realm as a result.

When he thought of this, and how Austria had developed after joining with the Reich, he saw their position as very similar to Switzerland’s current predicament. He couldn’t help but scoff at the idea.

“This is why debt, credit, and interest are tightly regulated within the Reich for the average citizen?”

Erwin nodded his head slowly but certainly. There was a cold and detached expression in his eyes when he finally spoke.

“Yes, debt is a tool of foreign policy, but not domestic development. When other nations approach us with loans, we hand them a rope. Now it is up to them how they choose to use that rope. They can either use it to pull themselves out of the pit they have dug, or to hang themselves. Either way, we still profit in the end….”

Karl could feel the hairs on the back of his neck stand up with how calmly Erwin spoke of this. However, in the next moment Erwin looked over at him, and the expression in his eyes was anything but emotionless.

“But we would never offer our own people that same choice. Rather, we would prefer to build a bridge with the profits we have already made to ensure they get out of that hole safe and sound. And that, my friend, is the principle behind what you call national capitalism.”

Karl didn’t respond immediately.

His gaze drifted past Erwin, out into the courtyard of the Hofburg. The same halls his ancestors had ruled from as Emperors… now reduced to something lesser, though perhaps… something more stable.

“…A rope or a bridge…” he muttered quietly.

Erwin said nothing while Karl exhaled slowly, shaking his head.

“And Switzerland?” he asked. “Which will they choose?”

Erwin didn’t hesitate.

“They already have,” he said.

Karl glanced back at him.

“They just haven’t realized it yet.”

Silence settled between them once more. Karl leaned back in his chair, his expression unreadable now; not bitter, not amused… simply resigned.

“…Strange,” he said after a moment. “How something as simple as money… can decide the fate of nations.”

Erwin picked up his tea once more.

“It’s never been about money,” he said calmly.

Karl frowned slightly.

“No?”

Erwin took a slow sip before answering.

“It’s about discipline.”