A Shrunken Economic Crisis

"Useless, a bunch of useless trash!"

"They can't even control their own people, they deserve to be in trouble!"

It seems I overestimated them. Those guys in the North are utterly useless except for their strong military!

The Church is a bunch of useless idiots; they couldn't even seize the opportunity. They were well-prepared to ambush, but they got utterly thrashed. What are they even good for?!

Having suffered such a huge loss, those idiots actually remained inactive, without even the courage to retaliate. How dare they call themselves the number one power on the mainland?

..."

For a moment, Count Pierce's curses echoed throughout the entire hall. The servants were so frightened that they hurriedly fled, fearing that they might overhear something they shouldn't know and then be silenced.

"My lord, please calm down. Things are not as bad as they seem. Although we were unable to thwart the enemy's relocation plan, we have created a formidable foe for them."

Those cowardly Northern Nobles didn't lift a finger, but the people from the Church really did.

They've both spilled each other's blood; I refuse to believe they can coexist peacefully. Next, we just need to find an opportunity to expose the attacker's identity and incite Count Hudson to seek revenge.

Neither of them are good stuff anyway. If the Coslo Family and the Church clash, regardless of who wins or loses, it's a good thing for the family!

Schäfer patiently persuaded him.

"It's not that simple. On the day of the attack, it was the Coslo Family's private army that launched the first attack."

Whether the Church's people accidentally exposed their presence during the ambush, or whether the Coslo Family had discovered the problem beforehand and made preparations in advance, no one can say for sure.

It's possible that Hudson already knows it was the Church that did it, but he's too weak to openly confront the Church due to his limited resources.

If that's the case, then our role in all of this has probably been exposed by now.

Hudson's current inaction doesn't mean he'll never act. Just wait and see; he'll definitely retaliate in the future!

"The Count Pierce said with deep apprehension."

Being targeted by an enemy with unlimited potential is not a good choice. But since we're neighbors, there's no way to avoid it.

Hudson, who was immersed in the joy of becoming a father in the Mountain Territory, soon received bad news: the territory's mainstay industry was in trouble.

The rampant expansion of production capacity during the war has finally come to an end, and even though Hudson ordered production cuts in advance, the steel industry in the Mountain Territory has still been significantly impacted.

"Earl, this is the territory's financial report for last month. Without considering immigration expenses, our fiscal deficit increased by 15,000 gold coins compared to October, and the total monthly fiscal deficit has exceeded 40,000."

Among them, the food industry, animal husbandry industry, and service industry have all achieved considerable growth, driven by the Warcraft breeding base.

The rapid increase in the fiscal deficit was mainly due to the impact on the steel industry. Investments by major powers on the grasslands fell short of expectations, leading to a significant decrease in demand for iron products.

Affected by the shrinking market, several chambers of commerce announced the termination of order deliveries last month, impacting all domestic iron product manufacturers.

Under your guidance, we opted to ship ahead of time to mitigate losses, but the market crashed faster than anticipated.

Compared to October, iron product prices have generally fallen by more than 40%, and there are signs that they will continue to decline.

Given the current price levels, most iron product manufacturers are nearing the cost line, and those without mines have even started to lose money.

Although our steel production costs are slightly lower than those of our peers, at current prices, we can only maintain a small profit.

The sharp drop in profits in the steel industry masked the profit growth in other industries, leading to a rapid expansion of the territory's fiscal deficit.

This impact will last for a long time.

In theory, it would take at least two years for the revenue growth from other industries in the territory to offset the impact of the lack of profits from the steel industry.

The reality may be even worse. The economic growth brought about by Warcraft breeding bases will gradually level off after its peak.

If the steel industry fails to recover, the territory will likely have to wait until the land reclamation project achieves a major breakthrough and complete food self-sufficiency before it can achieve a balance between income and expenditure.

After hearing Jacob's report, Hudson immediately fell silent. The unbalanced industrial structure of the Mountain Territory was not a recent development.

The collapse of the once highly profitable steel industry directly increased the territory's fiscal deficit, but this was only the beginning.

Although the territory swap successfully absorbed the original infrastructure, continued investment is still inevitable after the large-scale migration.

Putting aside other issues, repairs and maintenance are definitely in order. Some unreasonable water conservancy projects and roads will now need to be replanned.

In short, all these projects have costs. Even if labor is free, people still need to eat!

Besides, Hudson isn't one to sit idle; he launches a new project every now and then, and all of these require money.

"Don't worry, the situation isn't that bad. Apart from the steel industry, the territory is generally developing in a positive direction."

The current huge food shortage is largely due to the emergence of monster breeding bases, which has led to a sharp increase in demand for meat and stimulated the development of animal husbandry.

After accounting for this impact, our food shortage has actually been continuously decreasing.

In theory, once the immigration program is completed, we will be able to meet more than 80% of our food needs.

However, the development of animal husbandry has encroached on a lot of agricultural land and consumed a large amount of grain, which makes the food crisis seem very serious.

The problem of fiscal deficits is even less of an issue. The slump in the steel industry cannot last indefinitely; after all, it is a monopolistic industry, and once the inventory is depleted, the market will recover.

Moreover, we have the canal project to look forward to. Once this project is completed next year, transportation within the territory will be greatly improved.

Even if we don't consider maritime trade in the short term, we can still catch some fish to make up for the lack of meat in our territory, right?

At the very least, we can organize people to go and produce salt. Even if we don't sell it, just meeting our own needs will save us tens of thousands of gold coins every year.

As long as the economy continues to grow at this rapid pace, the territory's fiscal deficit will soon be eliminated.

Hudson said optimistically.

Under the traditional feudal economic model, an economic development model based on fiscal deficits was not common. Without a mature financial market for financing, Hudson wouldn't have dared to be so aggressive if he didn't have money in his pocket.

Generally speaking, when a major power experiences a huge fiscal deficit, it is either because military spending has increased too rapidly during wartime, or because it is nearing the end of a dynasty.

The unknown is always frightening. Faced with the territory's ever-increasing fiscal deficit, the management inevitably fell into panic, and at this time Hudson had to step in to reassure everyone.

In short, reality is harsh, but the future is bright. We must paint a rosy picture; otherwise, how can everyone focus on their work when they're constantly worrying about the deficit?

The limitations of the era prevented Hudson from having a multitude of ideas but being unable to realize them.

To date, the core industries developed by the Mountain Territory remain rooted in traditional feudal economics.

Besides agriculture and animal husbandry, the economy mainly relied on the steel industry. In the short term, this pillar was difficult to function, so he had to turn his attention to another pillar of the feudal economy—salt.

The Mountain Territory has no salt mines, and if it weren't for its proximity to the sea, Hudson would never have had the opportunity to enter the salt industry.

Unfortunately, the monopoly in the salt industry has long been established, making it extremely difficult for newcomers to enter.

Even if they force their way in, they can only do business with acquaintances, and the market size is limited, which means it is difficult to make huge profits.

To avoid unnecessary trouble, Hudson refrained from intervening before his influence extended to the sea.

"My lord, judging from the situation in Hansen Port, the opening of the canal has indeed been beneficial to the economic development of the territory."

If our commercial prosperity reaches even half of theirs, we can generate enormous economic benefits.

The problem is that the prosperity of Hansen Port is not just a port issue, but also has the influence of the Dalton Family.

Nearly one-fifth of the ships entering and leaving the port each year belong to the Dalton Family. It can be said that the local economy was driven by the Dalton Family.

If we want to follow suit, we will have to build our own fleet, which will be another huge expense.

Moreover, skilled seafarers are in short supply everywhere. It will be difficult to gather enough talent within the territory in a short period of time.

I suggest we develop the salt industry first, and then gradually get involved in maritime trade and build our naval fleet after accumulating enough capital.

Rudolf hurriedly offered some advice.

His fearful expression revealed that he was genuinely afraid that Hudson would propose building a naval fleet at any moment.

As the territory's treasurer, Rudolf was most afraid of Hudson's wild and unconventional ideas.

The Mountain Territory appears to be thriving, but that's all built on money. In the monster breeding base, quite a few female beasts have already become pregnant.

Different magical beasts have different gestation periods, with the fastest cubs expected to be born in the first half of next year. After the cubs are distributed according to the agreement, the Mountain Territory will gain another group of big spenders.

Monsters aren't like livestock that's easy to raise; they need to eat meat. Rudolf wouldn't mind just the small amount of meat, but the key was that to shorten the monsters' growth cycle, he needed to use a lot of magical potions.

This extravagant "pay-to-win" development method destined it to be anything but cheap. It's fair to say that "Warcraft Legion" was built on burning through money from its very inception.

"Rest assured, Sir Rudolf. Naval fleets are a matter for the future. In the short term, our military development focus is still on the Warcraft Legion."

The air force, in particular, is of paramount importance for future development.

We can have the air force handle the potential pirate threat that may arise after the port opens.

When necessary, a sea monster legion can also be developed as a supplementary force.

In this respect, we have a natural advantage; there's no need to rigidly follow in others' footsteps!

Hudson said, feigning disdain.

Contending for supremacy at sea is not something a small lord like him can compete for. Even if the entire Mountain Territory were to sail, it wouldn't be able to support a powerful naval force.

If you're not qualified to compete for supremacy, then change your strategy and focus on defense.

Just to deal with pirates, a strong air force can handle most emergencies.

If that's not enough, then raise a few magical beasts in the sea to guard the house. The main reason is that humans cannot survive in the sea; otherwise, the power of a sea monster army would be no less than that of a fleet.

It seems that no country on the entire continent has developed a sea monster army. The female beasts sent by various countries are all flying or running, but none that swim in the water.

Things that no one wants to do are not necessarily right, but the risks and rewards involved are likely disproportionate.

In an instant, Hudson silently rejected his unreliable idea. Following the mainstream might not yield excess returns, but at least it could prevent him from making mistakes.

When everyone falls into the same "pit," that "pit" is no longer a "pit," but a process that must be experienced in life.

As it turned out, Hudson was far too optimistic. After a general drop in steel product prices in November, December saw a continuation of the previous downward trend.

Last month, the Mountain Territory dumped their iron products in a rush to sell, causing a collapse in the kingdom's iron goods market. This month, the crisis has escalated further.

The problem now is no longer whether iron products are expensive or cheap, but rather that there are not enough buyers in the market.

Iron products are not fast-moving consumer goods. Whether it's farm tools or pots and pans, they are used for many years.

The sudden default on a huge order resulted in the loss of almost the entire grassland market. How could such a small amount of liquidated damages make up for it?

With overcapacity and a saturated domestic market, it's impossible to find a sales channel in a short period of time.

A large amount of products are piling up, and daily maintenance needs to be arranged. The longer it's delayed, the higher the costs will be.

Realizing something was wrong, more and more people followed suit and sold off their shares, but there were very few buyers.

Panic had been building until December, finally erupting. Pessimistic giants frantically sold off their holdings in the market.

Not only was its own market devastated, but it also spread this sentiment to neighboring regions.

The Southeast Province was naturally not immune. Under the influx of cheap iron products from abroad, the output of iron products in the Mountain Territory was halved and then halved again.

The entire steel industry of the Alpha Kingdom has entered a desolate winter. A biting wind howls, and even Hudson feels the chill in his home.

Unsurprisingly, the first to fall were small and medium-sized processors, followed by small and medium-sized mine owners.

As for the industry giants, they are all gritting their teeth and holding on, just waiting for their competitors to collapse first.