Chapter 18: Economic reform(1)

January 28th, 1895.

Sigmaringen Consortium successfully acquired most of the coal and iron mines in the Kingdom after a brief negotiation. The central government took the opportunity to increase tariffs on the ore exports and all the gold mined in the country must be sold to the central bank.

Although Romania has iron, coal, gold, copper, etc... The primary resource and most valuable is the land itself Romania's most valuable natural resource. All but the most rugged mountainous regions sustain some form of agricultural activity.

Even with Sigmaringen Consortium's great investments in the Ploiesti>Bucharest>Constanta route and Constanta's industrial zone, Romania's economy is still mainly concentrated in agriculture due to its lack of iron and coal mines also the great conditions for agriculture lead the people to mainly develop in food production.

Without secure access to the sea for trade, local mineral mines, and being sandwiched between the Austro-Hungarian Empire, the Tsarist Russian Empire, Bulgaria, and Serbia made it difficult for the Kingdom of Romania's development.

Until now Frederick had concentrated on stimulating Romania's economy through his investments but from now he will concentrate on expanding his consortium.

He couldn't possibly fully invest in every industry in Romania so he created back then the "entrepreneurship program" funded with 100 million pounds, every year Crown Prince Frederick would allocate 6.6 million pounds for 15 years to new businesses, innovative inventions, and groundbreaking research theories.

Frederick even sponsored an academy for these new business entrepreneurs teaching basic marketing, business management, etc...

Romania's 1894 GDP data showed 113,234,000 equivalent to pounds and its total tax revenue was 9,329,287 equivalent to pounds also the extra income from confiscating assets, most of the land confiscated will be sold to peasants at low prices plus other assets from nationals and foreign businessmen involved in fraud, conspiracy, tax evasion, etc... Total valued is 89 million of pounds.

The government's initial budget for 1895 was almost 100 million pounds, the government was able to cash out many assets thanks to Sigmaringen Bank.

The government will actively participate in the development of the country. The central government will allocate 40 million pounds to aid peasants in developing their new land and modernizing agriculture all over the kingdom.

10 million pounds of aid for Romanian people in foreign countries to emigrate to the kingdom and help in its development.

30 million pounds for the expansion of the education system with an extra 5 million pounds for promoting the Romanian language in border cities where foreign workers resided. The royal family already built several schools, colleges, and military academies in Romania.

Also, he proposed a plan to create a raw materials reserve system, the country would allocate funds every year for purchasing strategic materials scarce in Romania like coal, iron, copper, rubber, etc... Frederick wanted to prepare for a long period of war, although Romania won't be joining the world war as soon as it explodes, it will be hard to import cheap raw materials as the great war will surely drive up the prices and even cause scarcity of resources, slowly purchasing raw materials would go unnoticed and cheaper.

It's essential to establish good diplomatic relationships with resource-rich countries so the Kingdom can continue with its industrialization smoothly.

Romania's diplomacy priority for the next decade is the Ottoman Empire and the Tsarist Russian Empire. Frederick is aware of the significant risk on the industrial chain if essential resources like coal or iron are lacking but at least for the next 10-15 years, Romania won't involve itself with European wars and make an effort not to provoke these two countries to a degree that they could cut off their raw material supply or in the case of the ottoman empire block or raise the tariff on Romanian ships that pass through the Turkish maritime straits.

"What was the response of the Ottoman government, Minister of Foreign Affairs?" Frederick asked

"Your Highness they replied positively to our proposal, the details have to be further discussed but overall we can reach a beneficial agreement and sign a treaty of economic cooperation," The minister said respectfully

"Your Highness, why chose the Ottoman Empire over Russia? We can get better terms if we cooperate with them" the Secretary of Business and Trade asked with a frown on his face.

Frederick was a little surprised by the question but calmly replied:

"That's because our diplomacy strategy is focused on the German empire for now and we need to continue to cooperate smoothly with them. Also, the Ottoman Empire is declining as time passes for our kingdom it's best to cooperate closely with a country that won't try to interfere with our government or national policies"

The new secretary of business and trade immediately understood. Since our kingdom is close diplomatically with the German empire, we should be careful dealing with hostile countries as the Russian empire is allied to the Third French Republic.

Technically Romanian diplomacy focuses is against the Russian Empire's interests but they would never cut off trade or take hostile actions against them for a simple reason, the Russians always are in dire need of money as a consequence they don't have the energy to play like the parallel USA goverment in sanctioning hostile countries.

It must be noted that a great part of the provisional government although excellent talents in their respective fields but still amateurish in politics.

"The Ottoman Empire's importance for our country is greater than Russia right now as they control all the maritime routes linking the black sea to the Mediterranean Sea. Although we can't sign an agreement with the Russian Empire for cheaper raw materials, reducing the tariff on our imports and exports that pass through the Turkish straits would greatly enhance our product competitiveness." Interjected the Minister of Foreign Affairs.

'And we need good relationships with the great powers for our future intervention in Persia. In a few months, we will be ready to launch an expedition there' Thought Frederick.

Frederick is meeting with his political faction in the Romanian government as he is discussing sensitive information about the future of the country and the Sigmarigen consortium.

Although his father doesn't care about his private meetings, he still is the king of the country and the head of the state so Frederick always informs him of the contents of his meetings. As the crown prince, all his proposals had been met without obstacles thanks to his father's trust and his high capabilities demonstrated as the years went by, his behavior disgusted a lot of political parties in Romania but he didn't care since his "radical" policies are mostly funded by his own money, not the taxpayer money.

Something that has to be noted is that the government money is not equal to Frederick's money... Frederick's fortune, investments, and social programs are all advertised and labeled as "The royal family's belief in their subjects and the kingdom's future", "the royal family supports the kingdom" or "The king looks over you".

"Your Highness, as you ordered before we collected the GNP report of several countries...

(NOT COLONIES INCLUDED)

Austro-Hungarian Empire, 1,050,333,333 pounds.

Belgium, 253,600,000 pounds.

Denmark, 73,000,000 pounds.

France, 1,400,000,000 pounds.

Germany, 1,967,000,000 pounds

Italy, 866,000,000 pounds

Spain, 360,000,000 pounds

United Kingdom, 2,300,000,000 pounds

Russian Empire, 1,700,000,000 pounds

Ottoman Empire, 220,000,000 pounds

United States of America, 2,975,000,000

As for the industrial capacities of each country, we are having trouble finding out the exact numbers of steel production, coal, etc... As it's highly confidential information in each country"

Although Frederick was prepared, he still is shocked by the report. If someone said that Romania planned to defeat Austria-Hungary and Germany during the Great War it would be a great joke even the declining Ottoman Empire seemed mighty against our kingdom.

'GPD is not the only factor during a war population, industrial power, resources, etc... also play an important role, our kingdom of less than 7 million people it's nothing compared to the great countries' population, our industrial power nor our natural resources.' Frederick tried to comfort himself but failed miserably.

'We had a long road ahead... We just need to work harder, I don't believe Romania can't even catch up with the Ottoman Empire in 10 years' Frederick Thought with renewed determination.

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Author note: (1) I used real data and just modified the GNP of each country a little and the GDP of Romania increased a lot but I found a lot of different estimates, but this novel is a parallel world so it doesn't matter that much... We just need an approximate.

(2) Gross domestic product (GDP) is the value of the finished domestic goods and services produced within a nation's borders. On the other hand, gross national product (GNP) is the value of all finished goods and services produced by a country's citizens, both domestically and abroad. It might appear different to you but the values didn't differ too much...I used GNP because the information I found about the economic data of each country was based on GNP, and GNP was used worldwide at that time. I used GDP in Romania because it's a special case... Now you know the difference between the two so don't get confused.

(3) Yeah, the US surpassed the UK GDP but not the British Empire as a whole... That happened during WWI.