Recaps

The Russian default crisis spread through international markets, forcing investors and banks to absorb heavy losses as credit tightened. Franz told Chancellor Mirabelon that Austria would buy Russian bonds cheaply and later sell them to Russian nobles, who could use them to offset taxes.

• Russian grain exports collapsed, undermining the collateral behind the Tsarist Government’s loans and triggering defaults that shook financial markets in London, Paris, and New York.
• Protesters marched in Paris, while banks faced mounting bad debts and tightened credit to guard against bank runs.
• Philippe sought a loan from Wealthy Nation Bank, but Albert offered harsh terms, so Philippe decided to sell his Russian bonds instead.
• Chancellor Mirabelon worried that Wealthy Nation Bank’s growing stock of Russian bonds could not be redeemed for years.
• Franz explained that Austria would buy Russian bonds at low prices and resell them to Russian nobles, who could use them to offset their taxes.

Franz abandoned his plan to establish a venture capital company after judging that the era lacked enough suitable projects and reliable supervision. As Russia’s debt settlement exposed how little creditors could recover, the chapter contrasted the Tsarist Government’s corruption and weak institutions with Austria’s education system and expanding pool of talent.

• Franz decided that the costs and limitations of the era made a large venture capital company impractical.
• The Russo-Austrian negotiations concluded with Russia postponing repayment for five years and offering pledged assets worth less than one-sixth of the debt.
• Franz considered how Austria used the Anti-Corruption Bureau and public pressure to restrain officials, while Russia’s powerful nobility and low literacy hindered reform.
• Franz concluded that cultivating many educated people was more reliable than trying to nurture specific famous individuals.
• Austria’s universities attracted wealthy auditing students who paid high fees for education and valuable connections.

After the African wars ended, Austria held the continent’s strongest position while Britain and France vied over Sudan and Mexico remained unstable. In South Africa, Governor Delfo reviewed evidence that the Boer Republics were becoming increasingly pro-Austrian and considered how to protect British rule.

• Britain ended its costly war in Ethiopia without establishing control, while Austria and France expanded their African influence.
• Britain and France competed for Sudan because control of it could shape their position in Egypt and East Africa.
• The French army defeated Mexican rebels, but Maximilian I’s reforms and domestic opposition kept his rule fragile.
• Governor Delfo faced growing pressure in South Africa as Boer ties with Austria and unrest among Black tribes weakened British control.
• Delfo examined immigration records showing that Germans made up over eighty percent of immigrants to the Boer Republics and concluded that their governments were turning pro-Austrian.

Governor Delfo’s plan to turn Boer factions against Austria failed, so he prepared a British backup plan to disrupt Transvaal and Orange. In Portugal, Louis I weighed Britain’s demand for support against the danger of provoking Austria and was left facing a difficult choice.

• Blair told Governor Delfo that British efforts to recruit Boer allies had failed after the plan was exposed and public opinion turned against cooperation with Britain.
• Governor Delfo ordered preparations for a backup plan to break the cooperation between the Boers and Austria before Austria could annex them.
• Louis I learned that Britain wanted Portugal’s African forces to help drive Austria out of South Africa.
• Louis I rejected the appeal of British promises, fearing that siding with Britain would expose Angola and Mozambique to Austrian retaliation.
• Louis I recognized that refusing Britain would also be difficult, as Britain was unlikely to let Portugal’s strategic position go without a struggle.

Franz and his ministers investigated Britain’s sudden maneuver in South Africa but could not determine its purpose, so he ordered Austria to monitor British interests and stir up trouble with Portugal. In Lisbon, Portugal remained divided over whether to support Britain or stay neutral, while uncertainty disrupted merchants’ plans and the government continued to delay its decision.

• Stephen reported that Austria had not provoked Britain and that negotiations with the British in West Africa were progressing.
• Wessenberg judged that Britain’s effort to win Portugal over made little sense and suspected a larger motive behind its actions.
• Franz dismissed speculation that Britain was moving for South African gold or diamonds, ordered increased surveillance, and told Austria’s agents to stir up trouble in Portugal.
• British and Austrian ambassadors maneuvered in Lisbon as Portugal’s government and public split between supporting Britain and remaining neutral.
• Roston and Julian complained that Portugal’s indecision was threatening the season for ocean voyages and worsening merchants’ discontent.
• Louis I could not declare neutrality because Britain and Austria kept pressing Portugal to engage with their dispute.

Franz moved to accelerate France’s annexation of the Italian states while shaping the political boundaries of a future Italian Empire. He ordered an international conference in Vienna to classify Lombardy and Venetia as part of the German region, giving Napoleon III a clearer path toward Italian unification while reassuring other powers with a proposed convention.

• Napoleon III pursued an Italian Empire and considered becoming its emperor, while Italian state governments bargained with France under Austria’s tacit support.
• Franz decided to withdraw Austria’s potential claim to the Italian throne and hasten Napoleon III’s plans.
• Franz instructed Foreign Minister Wessenberg to notify France that Vienna would host a conference to redraw disputed European regions.
• Franz proposed classifying Lombardy and Venetia as part of the German region because they belonged to its German-speaking cultural sphere.
• Wessenberg warned that redefining regions could alarm other countries, and Franz proposed an international convention stating that regional terms could not legally justify unification.

British leaders feared that France and Austria had formed an alliance after Austria accepted French gains in Italy, and they debated how to counter it. They chose to set aside plans to seize Austrian colonies and focus on splitting the alliance, while Britain’s mounting debt constrained its options.

• Prime Minister Benjamin Disraeli convened an emergency meeting and said Britain needed to decide how to respond to a suspected Franco-Austrian alliance.
• First Lord of the Admiralty Robert assured the meeting that the Royal Navy could defend Britain, and Benjamin ordered the navy to prepare for war.
• Foreign Secretary McLean proposed drawing France and Austria into an international alliance and then sowing discord between them.
• Colonial Secretary Louis outlined Austria’s overseas colonies, and McLean argued that the valuable regions were too difficult to seize while the poorer ones could be sold.
• Benjamin suspended the colonial plans and prioritized breaking up the Franco-Austrian alliance; Chancellor of the Exchequer Molito warned that debt repayments already consumed thirty-four percent of Britain’s annual revenue.

Franz investigated New Brook’s unusually high birth rate and found that local welfare and housing benefits tied to having children had helped drive it. He handed the successful but harsh pronatalist program to the prime minister to implement across Austria.

• Franz reviewed a verified report showing that New Brook’s birth rate had exceeded 5.1% for three consecutive years.
• Franz learned that New Brook tied unemployment relief, housing benefits, maternity support, and pensions to the number of children a family had.
• Franz concluded that the policies had genuinely increased childbirth and saw them as a possible way to boost Austria’s population growth.
• Franz recognized that school meals under compulsory education could also encourage families to have children.
• Franz passed the New Brook policies to the retiring prime minister so the cabinet could implement them nationally.

Franz and the cabinet considered region-specific subsidies to encourage childbirth, while a Vienna conference agreed that European regional terms had no legal force. The conference’s planned conclusion was disrupted when Italians protested the placement of Lombardy and Venetia in the German region.

• Prime Minister Felix argued that working families needed financial support to raise children and proposed government subsidies for wives who stayed home to care for them.
• Franz approved subsidies and asked the cabinet to set their standards and duration, while Finance Minister Karl recommended that local governments adapt policies to regional conditions.
• Franz rejected a uniform flour-distribution plan because its effects on businesses, prices, and tax revenue were uncertain.
• At the Vienna International Grand Hotel, Wessenberg presided over a conference that established geographical regional terms had no legal meaning and approved an international convention.
• After the conference assigned Lombardy and Venetia to the German region, a staff member told Wessenberg that Italians were protesting outside.

A protest disrupted the Vienna conference, damaging Austria’s reputation while leaving its new cultural-regions law intact. As Franz’s officials investigated the suspected plot, Britain proposed an alliance with France and Austria, leaving Franz and the Foreign Ministry weighing its benefits against the three powers’ conflicts.

• Wessenberg ordered police to disperse more than a hundred protesters outside the Foreign Ministry, and the conference passed the law dividing regions according to cultural traditions.
• Franz berated the Minister of Police, while investigators learned that five Italian students had organized the protest and that a disguised man named Robinson had recruited them.
• Tyrone told Franz that Robinson was likely an alias and that intelligence officers had few leads, prompting Franz to order a thorough investigation.
• McLean sent Austria a diplomatic note proposing an alliance among the United Kingdom, France, and Austria.
• Wessenberg advised Franz to discuss the proposal with Britain and France before deciding, while Franz considered the benefits and the powers’ unresolved rivalries.

Marquis McLean and Napoleon III considered Britain’s proposal for a Triple Alliance as they weighed the threat posed by France and Austria’s existing partnership. McLean searched for concessions that could win their support, while Napoleon III decided that France would ally with Britain only if Britain accepted its expansion into Italy.

• The Austrian Grand Hotel’s luxury rooms remained mostly empty, so Franz relied on its commoners’ district, conference facilities, and costly membership system to keep the business profitable.
• McLean concluded that France and Austria had reached an understanding on Italy and might settle their Central European dispute by dividing gains elsewhere.
• McLean considered Britain’s options for countering the Franco-Austrian Alliance and decided that joining it was preferable to provoking a war, but he struggled to find terms France and Austria would accept.
• Napoleon III weighed France’s strength against Britain’s and Austria’s, fearing Britain’s naval power while remaining confident that Austria could not strike France’s core regions.
• Napoleon III decided that France would consider an alliance with Britain only if the British stopped obstructing its expansion into Italy.

The British, French, and Austrian negotiations stalled as the powers continued competing over territory and monetary influence. In South Africa, Martinas Wessel Pretorius watched Austria negotiate with the Boer Republics’ powerful factions, leaving their incorporation into Austria increasingly likely.

• Britain rejected France’s demand to annex the Italian region and Austria’s proposal to annex the German Confederation, fearing either empire would grow too strong.
• Franz continued Austria’s rivalry with Britain and France over South Africa’s gold, which he saw as vital to the Divine Shield–gold system.
• Martinas Wessel Pretorius’s plan to unite the Transvaal Republic and the Orange Free State into the South African Republic failed after Austria opposed it and local elites backed Austria.
• The Vienna Government bypassed Martinas Wessel Pretorius and negotiated directly with powerful factions in the Boer Republics over joining Austria.
• Martinas Wessel Pretorius asked Kallen how the negotiations with the Austrians were progressing and resolved to keep track of them because he could not stop the change.

Martinas Wessel Pretorius watched Austria’s takeover of the Boer republics advance while hoping British intervention would restore his political importance. In Transvaal, Viscount Fikeni secured Skoman’s cooperation by promising him a hereditary title, and Skoman agreed to help remove opponents and prepare the way for the merger.

• Martinas Wessel Pretorius dismissed Cullen while suspecting that he had contacted the Austrians, and accepted that he could not stop the negotiations or openly oppose Austria.
• Martinas Wessel Pretorius hoped the British would intervene, since a crisis could give him a chance to become governor and secure a noble title.
• Viscount Fikeni urged Skoman to accelerate Transvaal’s merger with Austria, citing British preparations and the need to eliminate opposition.
• Skoman promised to build support for the merger and help expose the anti-Austria faction in exchange for becoming Baron Skoman.
• Viscount Fikeni advised Skoman to study noble etiquette before traveling to Vienna for his investiture.

Viscount Fikeni maneuvered to pressure the anti-Austrian faction while Austrian nobles prepared to exploit any conflict with Britain. In Cape Town, Governor Delfo decided to attack the Boer Republic without Portuguese support, confident he could defeat it before Austria intervened.

• William, facing a political offensive, invited pro-Austrian leaders to a banquet and secretly contacted the British.
• Fikeni relied on Austrian caravans, noble private armies, and local recruits while his faction sought to provoke a British attack without making it an official war between Austria and Britain.
• Governor Delfo learned Portugal would not join an attack on the Boer Republic and decided Britain would act alone.
• Delfo argued that Austria would need months to send reinforcements and that Britain could defeat the Boers before they arrived.
• Major General Friedman assured Delfo that the British forces could defeat the Boer Republic.

After the British invaded the Orange Free State, Viscount Fikeni reassured Boer leaders that Austria would support them while using the war to advance Austrian influence. In Vienna, Franz learned of the outbreak and ordered Stephen to secretly teach the British a lesson.

• Governor Delfo led 30,000 men into the Orange Free State, prompting Boer leaders to visit Viscount Fikeni and seek Austrian support.
• Viscount Fikeni assured the visitors that Austria would intervene if needed and told Transvaal and the Orange Free State to keep fighting in their own names.
• Skoman asked about the reinforcements, and Viscount Fikeni explained that Austrian African forces would receive citizenship papers and fight as Transvaal regulars.
• Franz considered the outbreak in Vienna and decided not to involve the Foreign Ministry or publicly signal Austria's intentions.
• Franz orally ordered Stephen to secretly teach the British a lesson.

Britain’s leaders argued over the Anglo-Boer War as they feared Austria’s intervention and struggled to avoid responsibility for the conflict. With Britain and Austria distracted by South Africa, Napoleon III accelerated France’s expansion in Italy.

• Prime Minister Benjamin Disraeli questioned Colonial Secretary Sir Louis about the war, and Louis claimed British forces were advancing smoothly.
• Foreign Secretary McLean warned that Austria’s silence could signal preparations for a larger confrontation.
• Benjamin put the Colonial Office in charge of the war, but Louis tried to shift responsibility to the Cape Town Governor and called for a naval blockade.
• Navy Minister Robert pointed out that the Boer republics were landlocked, exposing the impracticality of Louis’s proposal.
• Benjamin ordered the Colonial Office to prepare a battle plan and win the war.
• Napoleon III took advantage of Britain’s and Austria’s distraction by increasing French troop deployments in Italy and pressing toward annexation.

William I rejected Prussia’s plan to annex the German Federal Empire, warning that Austria and Britain would oppose it and that Prussia was too weakened to risk another conflict. The government turned its attention to economic recovery and the danger of a future war with Russia.

• Chancellor Moltke urged William I to seize the opportunity created by the Anglo-Austrian conflict and French involvement in Italy to unify North Germany.
• William I argued that Austria would intervene to prevent Prussia from annexing the German Federal Empire, and Moltke recognized the political and strategic obstacles.
• William I reminded the cabinet that Prussia needed economic recovery and had to prepare for an inevitable war with Russia within twenty years.
• Finance Minister Roon agreed that Prussia’s dire finances required more active economic policies.
• Prussia had recovered from its postwar food crisis and expanded its industry, but foreign debts still consumed more than half of government revenue.

The British vanguard suffered a crushing defeat against Viscount Fikeni’s expanded Boer Republic forces, prompting Governor Delfo to demand an explanation and request reinforcements. Austria had concealed its role behind the Boer army, while Franz prepared to use the republic’s debt and wartime political upheaval to bring it under Austrian control.

• Viscount Fikeni took control of the Boer Republic, moved its upper ranks to the Zimbabwe region, and raised an army of more than fifteen thousand men.
• The British vanguard of five thousand troops was defeated, and Governor Delfo learned that the Boer forces had Austrian nobles behind them.
• Governor Delfo berated Major General Friedman, who blamed the defeat on the enemy’s unexpected strength and warned that more Austrian reinforcements might arrive.
• Governor Delfo ordered Ketch to request British reinforcements and have the Foreign Office protest to Austria.
• Franz relied on the Boer Republic’s 300-million-Divine-Shield debt and its leaders’ displacement to create an excuse for Austria to take over the republic after the war.

Napoleon III rapidly annexed Italy and proclaimed the Greater French Empire, while Austria and Britain debated how to respond. Franz chose to delay action in Europe and keep competing with Britain in South Africa, leaving Britain to focus on protecting Cape Town Colony.

• Napoleon III forced the Italian states to unite under his rule, then joined France and Italy as the Greater French Empire with capitals in Paris and Rome.
• Prime Minister Felix urged Franz to oppose French expansion, but Franz ordered a public condemnation and refused to annex the German Confederation yet.
• Foreign Minister Wessenberg proposed that Austria accelerate its plans, but Franz chose to maintain the original course and continue the South African contest with Britain.
• Foreign Secretary McLean argued that Austria was waiting to form a wider anti-French alliance, while British leaders worried about French ambitions and their own colonial interests.
• Colonial Secretary Louis warned that British forces were losing ground in South Africa, and Robert stressed that Britain could not afford to lose Cape Town Colony.
• Benjamin Disraeli ordered the Foreign Office to seek an agreement with Austria and the Colonial Office to prepare reinforcements, allowing that Britain might abandon the Boer Republic.

Napoleon III weighed the diplomatic backlash to France’s annexation of Italy and feared his young son would be unable to control the empire he was building. He instructed Foreign Minister Montero to draw Austria into conflicts with Britain, the Ottoman Empire, and the German Confederation, leaving France room to consolidate its gains.

• Napoleon III recognized that no European country accepted the Greater French Empire’s legitimacy and that Belgium and Switzerland were turning toward Austria.
• Napoleon III concluded that France had to absorb Italy quickly because his age and failing health left little time to secure the empire for his fourteen-year-old son.
• Foreign Minister Montero told Napoleon III that the Vienna Government had agreed to check Britain in exchange for French support for Austrian action in the Middle East.
• Napoleon III ordered the Foreign Ministry to encourage Austria to declare war on the Ottoman Empire and offered to divide Mediterranean interests with it.
• Napoleon III ordered money sent to the German Unification Organization to stir up nationalists and pressure Austria into acting against the German Confederation.

Franz declined to support France’s overseas commitments and instead accepted a French promise that strengthened Austria’s future position in the Middle East. France’s strategic retrenchment left Maximilian I increasingly isolated in Mexico as rebels and neighboring powers took advantage.

• Franz rejected France’s offer of the Ottoman Empire and told Stephen that Austria would halt colonial expansion and focus on developing Africa.
• Franz accepted the French olive branch, while France and Austria continued cooperating to weaken British influence in the Mediterranean.
• Napoleon III recognized that Austria would pursue its own interests and worried about securing his dynasty’s future in Italy.
• French retrenchment threatened Maximilian I, whose reforms had left him short of allies and burdened with debts to France, Britain, and Spain.
• After the French decision became known, the United States and the Confederate States of America stirred, and Mexican rebellions erupted again against Maximilian I’s rule.

Lieutenant General Schieder demanded that Maximilian I halt his reforms and pay France in advance for military deployments, leaving the emperor furious and politically trapped. In Vienna, Franz concluded that Mexico offered Maximilian no good options and considered abdication as a way out.

• Lieutenant General Schieder blamed Maximilian I's reforms and foreign interference for Mexico's recurring rebellions and decided France needed a stable country more than further gains.
• Lieutenant General Schieder confronted Maximilian I, demanded an end to the social reforms, and warned that France might refuse suppression missions unless Mexico paid mobilization fees in advance.
• Maximilian I rebuked Schieder for interfering in Mexican affairs, but Schieder left after declaring that the emperor alone would bear the consequences.
• Maximilian I smashed objects in anger and recognized that conceding could destroy his Reform Party and reduce him to a rubber-stamp ruler.
• Franz judged that Maximilian I's reforms and French colonial plunder had intensified Mexico's crisis, and considered abdication and a return to Europe the least damaging option.

Viscount Fikeni surveyed the battlefield after a Boer Republic victory and planned to keep advancing into British South Africa. Despite commanding tens of thousands, he insisted that others address him only as a colonel until his promotion was official.

• Viscount Fikeni inspected the battlefield and reflected on how camouflage and ambushes had given his forces an advantage over the British.
• Viscount Fikeni planned to draw the British deeper into British South Africa before seeking a decisive battle and taking Cape Town.
• A young officer reported 76 dead and 84 wounded among Fikeni's forces, along with more than three thousand enemy troops defeated, 156 annihilated, and 98 captured.
• Viscount Fikeni ordered his units to tend to the wounded, rest for one day, and then continue advancing.
• Viscount Fikeni corrected the young officer for calling him General, explaining that he was only a colonel until his rank was officially promoted.

British leaders debated how to contain France and prevent Austria from unifying Germany, while balancing the need to preserve the Royal Navy’s dominance. Benjamin Disraeli ordered the government to support efforts against French rule in Italy and secretly prepare an Anti-Austrian Alliance.

• Prime Minister Benjamin asked about the suspected Franco-Austrian deal, and McLean inferred that Austria had tacitly accepted France’s annexation of Italy in exchange for support for German unification.
• Motoli and Brandt warned that Austria could mobilize far more troops than Prussia, while Brandt urged expanding the British army; Benjamin postponed the army debate because Britain could not afford to weaken the Royal Navy.
• McLean proposed strengthening Prussia and maintaining a balance of power by breaking up both Greater France and any future unified Germany.
• Benjamin said Garibaldi, Mazzini, Vittorio Emanuele, and Italian nobles were seeking British support against French rule, and McLean reported that other European countries would back the Italian independence movement.
• Benjamin ordered Britain to continue suppressing France and secretly contact other countries to prepare an Anti-Austrian Alliance.

Franz let Britain bankroll European revolutionary groups while Austria avoided openly joining the anti-French coalition, and he used the South African War to train Austrian officers through Boer forces and native troops. With British reinforcements looming, Viscount Fikeni urged his commanders to launch a decisive drive on Cape Town before the year ended.

• Franz judged that Britain had long maintained contact with European revolutionary groups and left their funding to the British rather than spend Austrian money on them.
• European powers condemned France but refused to send troops, leaving France isolated without a force capable of attacking its heartland.
• Austria used the South African War to train reserve officers, whose experiments with native troops mostly failed before Viscount Fikeni's Boer Republican Army repaired the situation.
• By the end of 1870, the Boer Republican Army had advanced to within a little over two hundred kilometers of Cape Town, while Britain struggled to supply enough cannon fodder.
• Viscount Fikeni warned his commanders that British reinforcements could soon arrive and urged them to seize Cape Town in a decisive battle, promising promotions and titles for victory.