Winter Palace, Saint Petersburg
The contract for the Russo-Austrian arms transaction had already appeared on Nicholas I's desk. Delivered alongside it was a document stating that the loan had run into obstacles, with the Austrian Government suggesting the issuance of bonds.
Nicholas I had no objections to purchasing weapons production lines and directly marked his approval on the document.
The gap between the Russian Empire's military industry and that of the European nations was enormous, not something that could be bridged in the short term. Purchasing production lines was the only way to level that gap quickly.
Nicholas I asked, "What do you all think of Austria's proposal to issue bonds?"
Minister of Finance Arestanli Rod analyzed, "Your Majesty, I'm afraid this will be very troublesome. It isn't as though we have never issued bonds before, but our previous bonds were all met with cold reception in the capital markets.
"If we want to sell these bonds now, then aside from using collateral as the Austrians proposed, we must also offer sufficiently high interest rates to win capital's favor.
"This would greatly increase our financial costs. Previously, the loans we obtained from Austria carried a monthly interest rate of only 0.2%. If we issue bonds, I fear the rate will have to rise drastically.
"The military expenses for this war have far exceeded our expectations. If our financial costs rise further, the fiscal pressure we face in the future will be immense."
The Tsarist Government had not anticipated that Britain and France would intervene directly. All their battle plans had been based on fighting the Ottoman Empire one-on-one.
According to the original plan, with control of the Black Sea, the Russian army could receive supplies by sea, greatly reducing logistical pressure and allowing far more Russian troops to be committed