Empire's Fiscal Dilemma
Elisabeth, open the door. The national finances are in peril.
While crushing Hungary through sheer force, there were no meaningful results to show for the enormous costs.
"Currently, 30% of national expenditures are drained by interest on government bonds."
In such dire straits, reports were piling up declaring the military dictatorship in Hungary far too expensive and utterly unsustainable.
Lombardy-Venetia was holding steady, and even the war with Prussia had ended in a draw, but Austria was still staggering under financial distress.
Not even able to pay the interest, let alone repay the principal.
To control Hungary, Austria had stationed massive armies and police forces, racking up astronomical maintenance costs, while tax revenues from Hungary itself hovered near zero—the worst kind of deficit structure imaginable.
If they'd won the Austro-Prussian War, there might have been reparations; if they'd lost, they could have downsized the military.
But a draw? It just meant throwing money into the fire for nothing.
'At this rate, the industrial development promises to Lombardy-Venetia will be delayed...'
Franz Joseph read through the financial statements to the end, then flipped back to the first page.
"Say it again."
Schwarzenberg summarized the report.
"The costs of garrisoning troops in Hungary and maintaining order consume a massive chunk of annual spending. Including manpower, gendarmes, railway protection, food supplies..."
"Summarize in numbers."
"Around 100 million gulden per year."
"And the taxes collected from Hungary?"
"...Excluding administrative costs, there's essentially nothing left."
Franz Joseph nodded.
Rather than surprise, his face showed he already knew. Hungary wasn't so much a territory of the empire anymore as a colony sucking it dry.
"Lombardy-Venetia and Bohemia are fine, then."
"Yes, their tax revenues are stable. Including customs and financial income, they're incomparable to Hungary."
Bohemia in particular was seeing rises in both industrial and consumption taxes.
Lombardy-Venetia had also boosted its cargo volumes since the new railways.
'Places that make money have few complaints; places that bleed it demand autonomy.'
"Your Majesty, but we can't let go of Hungary."
Franz von Zodenstein spoke of Hungary's potential.
"Hungary doesn't just produce food— it controls most of the Danube's lower reaches."
The only vast plain opening toward Russia, the Ottomans, and the Balkans.
If Hungary broke away, Austria proper would become the front line.
Most crucially, it was a manpower reservoir. Despite the Hungarian nobles' backlash, it was the only region capable of large-scale conscription. Abandoning it would force the Habsburgs to overhaul every military operation.
"...Zodenstein is right. Our Finance Ministry is focusing on cutting Hungary's costs and turning it into a revenue source. We haven't budgeted for separate profits, but if we lose Hungary, we'll pay them tariffs every time our ships pass down the Danube."
That would burden the subjects.
"What about importing from Croatia and shipping by rail to Vienna?"
Schwarzenberg shook his head at Zodenstein's question.
"Railways help a lot with transport, but they can't match the capacity of steamships."
'Ditch Hungary, and we still go bankrupt. Keep it, and same result.'
"Let's discuss other regions first."
The bureaucrats immediately clashed.
"How about increasing investments in Lombardy-Venetia?"
"It's already a key military stronghold. Are you suggesting we stir up the Italian question again?"
"Not stir it up—settle it."
The first speaker didn't back down.
"Hungary's a sinkhole, Bohemia's saturated. By return on investment, Lombardy-Venetia is the only winner."
"What if the Italians revolt again?"
"Then it's a policing issue, not military. Half the money we pour into Hungary would suffice to control it."
Hungary's iron-fisted rule was the exception.
Schwarzenberg drummed his fingers on the table before continuing.
"Lombardy-Venetia is already linked by rail, finance, and commerce. Industrial capital flows in on its own—no need for bayonets like in Hungary."
"But it's on the empire's periphery."
"Bohemia was once too."
Schwarzenberg judged that with Greater Germany gone, the empire needed new pillars.
"If we reorient around Vienna, Prague, and Milan as the core, Hungary stops being the empire's heart—it's just a buffer zone."
"That sounds like pushing Hungary to the margins."
"Realistically, it already is."
Zodenstein cut in as the Finance Ministry bickered.
"The army's in Hungary, the money's from Bohemia and Lombardy-Venetia. This imbalance makes any reform impossible."
From Vienna to Prague.
From Vienna to Milan.
"Is there no way to cut costs without provoking Hungary?"
Opinions poured out at Franz Joseph's question.
"Keep direct rule but separate administration from policing."
"Leave the military but hand over civil government?"
"Hold the nobles accountable—not for taxes, but order."
"If they fail, they foot the bill themselves."
'Not crushing Hungary under the empire, but letting Hungary sustain itself within...'
It was dual monarchy without the name.
"But that would doom centralization."
Schmerling voiced the priority of central authority.
"Baron Schmerling, but do we have the numbers? Industry needs money. Military reform needs money. I'm a duke, not some baron Bruck, but that's reality."
"So we seek alternatives without abandoning centralization? Give Hungary a parliament, and the others stay quiet?"
'Hungary again...'
Bohemia paid taxes yet demanded a voice.
Lombardy-Venetia wanted investment guarantees.
Croatia sought separation from Hungary.
But Hungary's demands couldn't be met.
Its own parliament, internal affairs, Hungarian-language administration, joint army and finances—through negotiation.
All non-starters for Franz Joseph.
He ended the meeting for today.
"Regroup on this next Monday and hash it out."
War, revolution, finances—exhausting.
'Damn it...'
Franz Joseph thought of his wife at Laxenburg.
'Gisela's with her these days.'
"Grüne."
"...Her Majesty the Empress sent no letter today either."
Franz Joseph sighed.
Every time the horse's hooves crunched over the gravel, Gisela giggled delightedly.
Should I have played with her more often?
"Having fun?"
"Yes!"
If I'd known she'd love it this much, I would've suggested it sooner.
Aigo.
"Hold tight to Mama's waist."
I'd planned to ride separately, but there was no suitable pony for Gisela here.
She clung to me tightly in my arms.
'Franz Joseph...'
Probably the busiest time right now.
Hungary was still just shouting loud.
Hungary, Hungary, Hungary.
Half the empire, yet not part of it.
Unlike other ethnicities, their nationalism burned hottest.
I didn't hate Hungary, but I hated how they demanded love.
Bohemia's craftsmen,
Lombardy-Venetia's merchants,
Croatia's soldiers,
And Hungary's nobles.
All wanted an empire.
Just different ones.
Franz Joseph and I were the same.
"Gisela, gonna write to Papa again today?"
"Yeah... I miss Papa."
Yet even saying that, Gisela stayed glued to my side.
We were leisurely strolling on horseback when it happened.
"Papa!"
I yanked the reins, stopping the horse.
"Going to Hofburg?"
"No, Papa's over there!"
Where Gisela pointed, there stood Franz Joseph.
I reflexively looked up, then down again.
Struggling to keep my lips from curving up.
'Mother wouldn't have taught me to do this.'
Franz Joseph approached slowly and scooped Gisela into his arms.
"I've missed you."
No, damn it, don't smile. Please.
He was the one who told me to leave.
"...You're so busy—why come?"
"I just said. I've missed you."
As I dismounted, Gisela—now in his arms—whispered to me.
"Mama's smiling 'cause it's been ages since seeing Papa, right?"
...Had I smiled without realizing?
"Let's go see Karl."
Our youngest.
No ugly scenes in front of the kids—better wrap it here.
...Though that felt like an excuse too.