Recaps

The United Kingdom, France, and Austria signed a memorandum establishing rules for colonial competition and prepared for a ministerial conference the following February. Franz learned that Britain and France remained at odds over colonial interests, while private companies continued to fuel conflicts overseas.

• The United Kingdom, France, and Austria signed the Memorandum on Mediating International Conflicts in Paris on December 12, 1875.
• Franz asked when the international conference would be held, and Wessenberg said it was planned for February next year.
• Franz asked whether the United Kingdom and France were secretly drawing closer, and Wessenberg reported that their colonial disputes remained severe.
• Wessenberg described British and French clashes over Sudan, Indochina, and the Far East, noting that private colonial companies made government intervention difficult.
• The chapter explained that desert borders between French and Austrian colonies helped prevent conflicts between them.

Franz reviewed Austria’s economic boom, railway expansion, and industrial output, which showed the country overtaking Britain in iron and steel production. The chapter left France pursuing costly charcoal steelmaking and the divided United States struggling with economic weakness and rising racial tensions.

• Franz considered how conflicting interests among Britain, France, and Austria kept their diplomatic balance stable.
• Austria’s rail network reached 76,000 operational kilometers at home, with incorporated African territories adding further operating and planned lines.
• The Vienna Government capped railway prices and profits, while railway companies also earned money from development around stations.
• Austria’s economy grew by more than 8% in 1875, and its iron and steel output surpassed Britain’s.
• French companies pursued charcoal steelmaking to overcome poor coal supplies, despite its high costs and difficulty scaling production.
• The divided United States faced shrinking industry, weak federal authority, and worsening racial tensions as businesses relied on cheap contract labor.

On Christmas, Franz watched the celebrations from a distance and discussed their son Friedrich’s marriage prospects with Empress Helen. The chapter then followed Rennes, a poor grocery-store worker, as he spent Christmas alone in Vienna, grateful for a sack of flour but burdened by long hours and isolation.

• Franz watched the bustling Christmas streets from a building and reflected on the dangers facing Austria and the limits of his life as emperor.
• Empress Helen joined Franz, criticized the street decorations, and reminded him to consider Friedrich’s marriage prospects.
• Rennes made a Christmas tree in his small rented room after receiving a sack of flour from his grocery-store employer.
• Rennes watched a church choir pass, reflected on his loneliness and grueling work schedule, and prepared a modest Christmas dinner.
• Christmas bells rang late at night as Rennes spent the holiday alone.

Franz reviewed the governments’ 1875 finances and planned to merge Austria’s administration with that of the New Holy Roman Empire, but resistance over fiscal integration stalled the plan. He decided to use Jerusalem’s costly reconstruction and proposed accession to pressure the states, leaving negotiations for the Imperial Conference early next year.

• Finance Minister Karl presented the 1875 revenue and expenditure reports, showing Austria with a small surplus and the New Holy Roman Empire with a deficit.
• Franz ordered Austria’s fiscal surplus to be used to reduce its heavy debt.
• Karl warned Franz that the states’ governments opposed merging their finances and might cause trouble in the Imperial Parliament.
• Franz postponed the fiscal merger if the states would not agree and ordered preparations for Jerusalem to apply to join the New Holy Roman Empire.
• Franz planned to use Jerusalem’s expensive reconstruction to pressure the states, while negotiations with the Holy See over governing Jerusalem remained secret.

Franz reviewed Austria’s economic and colonial statistics and learned that Lanfang’s agricultural output was growing rapidly thanks to guano fertilizer. He ordered Austria to protect the guano islands and claim more unoccupied islands before the Paris Conference, leaving Stephen to carry out the policy.

• Franz examined economic estimates and colonial production figures, noting that Austrian South Seas was closing the gap with Austrian Africa.
• Colonial Minister Stephen reported that Lanfang’s population exceeded eight million and that its residents had reclaimed farmland, established rubber and pepper plantations, and found gold and coal.
• Stephen explained that Lanfang improved its yields with guano from Pacific islands that the Colonial Ministry had brought under Austrian control.
• Franz ordered the government to protect guano-producing islands, regulate harvesting, and claim more unoccupied islands before international spheres of influence were settled.
• Stephen promised that the Colonial Ministry would bring as many unoccupied islands as possible under Austrian rule before the Paris Conference concluded.

At an economic conference, Franz confronted Austria’s widening income, regional, and urban-rural gaps and the lack of innovation among comfortable capitalists. Prime Minister Felix proposed sending ten million people to the colonies within five years, while Franz aimed to create pressure on businesses and the labor market.

• Franz reviewed statistics showing severe poverty and growing economic disparities across Austria, while explaining how strict whistleblower rewards and lifelong accountability had curbed official data falsification.
• At Vienna Palace’s economic conference, Franz demanded that the government stop the worsening gaps between rich and poor, regions, and urban and rural areas.
• Prime Minister Felix argued that natural conditions limited regional development, warned against land consolidation, and identified poverty as the central issue.
• Franz concluded that easy profits and cheap labor had weakened capitalists’ incentive to innovate, despite Austria’s advantages over the United Kingdom.
• Prime Minister Felix proposed relocating ten million people from overcrowded, impoverished, and remote areas to the colonies within five years.
• Franz supported using emigration to tighten the domestic labor market and pressure Austrian businesses to pursue technological innovation.

Austria’s labor shortage and widening gap between wages and living costs had increased pressure on traditional industries, while Da Ke'er Textile Mill faced declining profits after failing to modernize. When its workers struck over stagnant wages, Dakel-Lannuo rejected his son’s proposal to negotiate and ordered the company to fire strikers.

• Austria’s population growth and immigration policy had tightened the labor market, while workers’ wages lagged behind rising incomes and prices.
• A strike halted work at Milan’s Da Ke'er Textile Mill, whose market share and profits had fallen after it failed to update its machinery.
• Dakel-Lannuo ordered managers to fire ten percent of the strikers and threatened to dismiss workers who returned last.
• Young Lannuo warned that dismissing experienced workers had increased defects and could further damage the company’s competitiveness.
• Dakel-Lannuo refused to negotiate, arguing that conceding to the strikers would set a dangerous precedent.

The Da Ke'er Textile Mill’s strike dragged on as workers resisted threats and management struggled with mounting losses and pressure to raise wages. Young Lannuo’s attempt to negotiate was derailed when reporters gathered around him, signaling that Ludwig II had helped bring the strike into public view.

• Lake criticized the factory’s tactics, and Uncle Rauls warned him to keep quiet while workers discussed their growing confidence in the strike.
• On the fifth day of the strike, Elder Lanno weighed the factory’s losses and reputational risks but rejected immediate concessions and told Young Lannuo to persuade the workers to wait for a wage increase.
• Young Lannuo recognized that higher wages had become unavoidable as workers struggled to support their families and labor grew scarce.
• Reporters from across the country confronted Young Lannuo in the workers’ district and questioned him about the strike.
• Young Lannuo realized that Ludwig II had likely arranged the reporters’ presence, leaving the factory unable to pressure workers privately without attracting further scrutiny.

The strike at Da Ke'er Textile Mill spread across the Kingdom of Lombardy, prompting Franz’s government to prepare for wider labor unrest without immediately imposing a national minimum wage. As the crisis threatened the mill’s survival, Elder Lanno agreed to negotiate with workers while planning to divide them and dismiss their representatives.

• The Lombardy government investigated Milan newspapers that had ignored the Da Ke'er Textile Mill strike, while Franz learned that Ludwig II was consolidating royal influence over the press.
• Strikes spread from Da Ke'er Textile Mill to nearby factories, and the number of striking workers in Lombardy reached three hundred thousand.
• Franz summoned the cabinet and labor minister, then instructed the Ministry of Labor to warn enterprises with poor benefits to raise wages before the unrest worsened.
• Prime Minister Felix proposed raising the minimum wage, but Franz instead asked local governments to develop standards suited to their regions.
• At Da Ke'er Textile Mill, Young Lannuo urged Elder Lanno to compromise with workers, and Elder Lanno ordered negotiations while directing management to divide the workers and later dismiss their representatives.

Franz ordered the dismissal of striking Venice police officers and continued to limit the government's role in labor negotiations as strikes spread across Europe. In France, Napoleon IV imposed martial law in Paris and ordered troops into the city, despite warnings that the crackdown could inflame the unrest.

• Majori told Franz that Venice police had gone on strike over long hours and demands for higher pay, and Franz ordered the strikers dismissed and barred from future public employment.
• Majori reported that strikes had affected 1,876 Austrian companies and more than three million workers, with fewer than one-third of the disputes settled.
• Franz instructed the government to mediate labor negotiations without forcing agreements, leaving workers and capitalists to follow the Labor Protection Act if talks failed.
• Parisian workers marched outside the imperial palace, and Allen warned Napoleon IV that political enemies might exploit the strike movement.
• Napoleon IV ordered the Fifth Division into Paris, declared citywide martial law, banned demonstrations, and called workers' and capitalists' representatives to negotiate.
• Ansoqi warned Napoleon IV that bringing troops into Paris could worsen the crisis, but Napoleon IV insisted that military control was necessary.

As uprisings and strikes spread across Europe, Franz watched political tensions mount while Austria remained comparatively stable. In Milan, Elder Lanno and Young Lannuo debated whether to release Da Ke'er Textile Mill’s loss-making report as its share price fell and a wider stock market crash loomed.

• The Italian Independence Organization seized Rome during the strike wave, while Franz expected the French to suppress the uprising.
• A riot involving workers and capitalists broke out in the Rhineland over Berlin’s immigration policy, worsening Prussia-Germany tensions and creating an opportunity for Austria.
• Republicans’ uprising in Madrid was suppressed, and Austrian police uncovered a supposed empire in a Prague manor after its residents illegally taxed a traveling peddler.
• Franz noted that Austria’s people could seek work and food through emigration, helping keep domestic unrest at bay.
• Elder Lanno worried that Da Ke'er Textile Mill’s share price kept falling after its strike, while Young Lannuo warned that releasing its loss-making report could trigger a crash.
• Elder Lanno refused to conceal the loss, arguing that falsifying the report would be worse and suspecting financial interests had prepared to profit from a crash.

Da Ke’er Textile Mill’s disastrous financial report triggered a sell-off that became a stock market crash across Austria and spread through Europe. As strikes and market turmoil deepened, Franz faced struggling businesses and banks unwilling to lend, while violence and worker uprisings spread across the continent.

• Maldonado and his investor friends checked Da Ke’er Textile Mill’s financial statement and saw a loss of 1.248 million Divine Shields, prompting Maldonado to decide to sell.
• Investors dumped Da Ke’er Textile Mill shares after the report, and the Vienna Stock Exchange fell sharply over the following days as the Austrian stock market crash began.
• News of Vienna’s crash spread across Europe, where investors sold shares and capitalists used negotiations, bribery, coercion, and violence to force striking workers back to work.
• Bloody crackdowns sparked workers’ uprisings and widespread chaos across Europe.
• Franz considered the crisis in Vienna Palace as cash-strapped businesses struggled to obtain loans from banks tightening credit, and he judged that many failing companies might be better dismantled and rebuilt.

Franz and the Vienna Government faced an unavoidable economic crisis, and he ordered the government to stop trying to rescue the market. The crisis spread across Europe, while Franz recognized the growing power of conglomerates and continued to keep most of his own industries under secret control.

• At a Vienna Palace concert, Franz asked Prime Minister Felix about the worsening strikes and international turmoil, and Felix warned that a stock market crash made an economic crisis unavoidable.
• Franz blamed government inaction and capitalist favoritism for labor unrest, then ordered the government to let the crisis come rather than delay it.
• On June 18, 1876, the Austrian central bank raised its benchmark deposit rate by 16%, signaling that the Vienna Government would not rescue the market.
• On June 24, the Munich Vida Textile Factory sought bankruptcy restructuring, and hundreds of other Austrian enterprises soon collapsed as the crisis erupted.
• The economic crisis spread from Austria to the Russian Empire and the German Federal Empire, then across Europe and into London by August.
• Franz saw conglomerates growing stronger and acknowledged that he secretly controlled most of his industries to avoid drawing attention to the imperial family.

Franz reviewed the economic crisis and Austria’s growing immigration effort, which was drawing unemployed people toward the colonies. He learned that the Rhineland handover remained stalled amid Prussian efforts to remove its skilled population, while the Paris Conference made little progress.

• Prime Minister Felix reported record bankruptcies and unemployment, with severe losses in textiles, shipbuilding, and steel.
• Franz asked about immigration, and Stephen said more than 1.2 million people had registered and 680,000 had been resettled, with the total potentially exceeding three million.
• Franz ordered the Colonial Ministry to keep expanding immigration while the crisis made workers more willing to leave.
• Wessenberg reported that France had suppressed the Italian uprising and that tensions between Prussia and the German Federal Empire had worsened over the Rhineland handover.
• Wessenberg said Prussia had forcibly relocated many Rhineland residents, including skilled workers, while the Paris Conference stalled over colonial disputes and British interference.

Franz considered the effects of the economic crisis and the Confederate States of America’s efforts to build a cotton textile industry, while Austria promoted immigration to Africa. By the end of 1876, departing unemployed workers had unsettled employers, but rising wages helped domestic-market businesses recover.

• Franz welcomed the Confederate States of America’s industrial development as a way to strengthen the South, though he expected it to pose little threat to Austria.
• Larsfu tried to discourage his general store employees from immigrating, but Rennes told him he had already signed up and insisted on leaving.
• Larsfu accepted Rennes’s decision and offered him a place to return to, winning the approval of the other employees.
• Unemployed workers from Austria’s industrial regions emigrated in large numbers, leaving capitalists worried about losing cheap labor.
• Workers’ departures and failed labor disputes contributed to factory closures, while higher wages boosted domestic purchasing power and helped many businesses recover by the end of 1876.

Britain’s new Benjamin Cabinet debated how to use colonial wars to ease the economic crisis and protect its overseas trade, then chose to restart the Ethiopian War. The decision passed Parliament and disrupted the Paris Conference, leaving European powers free to pursue expansion by force.

• Colonial Secretary Robert, First Lord of the Admiralty John Vassil, and Chancellor of the Exchequer Arthur Balfour each urged wars in Persia, Ethiopia, or the Konbaung Dynasty to open markets and counter rival powers.
• Foreign Secretary Edward warned that Britain could not fight on several fronts and argued that the cabinet should protect its interests around the Red Sea and Suez Canal without provoking a Franco-Austrian war.
• Prime Minister Benjamin ended the cabinet dispute by calling for a vote, and the cabinet chose to restart the Ethiopian War.
• The Benjamin Cabinet swiftly submitted the proposal to Parliament, which passed it on November 28, 1876.
• Britain’s decision drew international condemnation and undermined the Paris Conference as other European countries considered pursuing colonial expansion during negotiations.

Franz chose the Somali Peninsula as Austria’s next colonial target, while the Paris Conference lost influence amid competing alliances. In Vienna, Mexican student Morse discovered that the military academy he had attended was a diploma mill that trained soldiers and junior officers rather than senior commanders.

• Colonial Minister Stephen and Foreign Minister Wessenberg recommended East Africa, and Franz approved Austria’s occupation of the Somali Peninsula to limit British expansion.
• Delegations left the Paris Conference as governments pursued new alliances and colonial claims outside its negotiations.
• Morse studied military affairs at the Austrian Army and Navy Higher Command Academy after choosing it to save on tuition.
• A classmate revealed that the academy was an unrecognized institution whose training qualified graduates for soldier and junior-officer roles, not senior command.
• Morse realized that his studies would not give him the military expertise he had hoped to bring back to Mexico.

Morse learned that Austrian schools had exploited him and that legitimate university admission was costly and difficult, while Brian Hager befriended and quietly evaluated him. Brian was revealed as a member of the Maximilian I Restoration Group, which had grown to over four thousand members amid Mexican unrest, though Franz remained uncertain whether restoration would succeed.

• Morse joined the Mexican International Students Mutual Aid Association and asked Brian Hager for help with his studies.
• Brian Hager explained that legitimate Austrian universities were difficult to enter and charged high fees, while Morse could continue at his vocational college or apply again.
• Morse and Brian bonded over their anger at Mexico's warlords, and Brian secretly recorded Morse's political views for monitoring.
• Brian was revealed as a member of the Maximilian I Restoration Group, which had recruited many Mexican students in Austria.
• Franz's efforts to present Maximilian I's reign favorably and blame Mexico's troubles on his opponents helped the restoration group grow from a few hundred members to more than four thousand.
• Franz reflected that Maximilian I's restoration was uncertain and that the emperor's family had supplied much of the group's funding.

Franz learned that France was trying to restart the Panama Canal project and ordered Austria to prepare to seize Panama if construction began. In Colombia, President Aquileo Parra Gómez rejected France’s proposal, and Nino offered an interest-free loan as pressure mounted.

• Wessenberg told Franz that France had contacted Colombia about restarting the Panama Canal project, and Franz ordered Austria to wait for construction to begin before making a pretext to declare war on Colombia and seize Panama.
• Aquileo Parra Gómez refused Nino’s canal proposal unless France could persuade Austria to accept it.
• Nino argued that an open canal would deter Austria by drawing in the European powers, but Aquileo Parra Gómez said Colombia could not rely on their support or control the canal.
• Aquileo Parra Gómez warned that Panama’s difficult terrain and construction costs made the canal project uncertain, leaving France unable to guarantee its success.
• Nino offered to secure Colombia an interest-free loan of 100 million francs in exchange for canal development rights, and Aquileo Parra Gómez viewed the offer as an attempt to exploit Colombia’s economic crisis.

Nino failed to persuade President Aquileo Parra Gómez to authorize restarting the Panama Canal project, so he sought French Minister Tom’s help. Tom warned that Austrian influence in Colombia threatened the canal and that France would need a powerful partner, leaving Nino to weigh a project whose control and profits would be difficult to secure.

• President Aquileo Parra Gómez refused Nino’s offer of an interest-free loan and declined to authorize the canal project without guaranteed security in Panama.
• Nino went to the French embassy and asked French Minister Tom to help secure authorization from the Colombian government.
• Tom warned Nino that Colombia’s unstable politics, Austrian-backed factions, and German-descended population could let Austria seize control of the canal region.
• Tom advised Nino to bring Austria or the United Kingdom into the project, but Nino objected because either partner would reduce France’s control and profits.
• Nino asked Tom to obtain Colombian authorization first, and Tom agreed to assist on behalf of France.
• Nino left the embassy considering possible partners, but concluded that Spain, the United States, and the Confederate States were all unsuitable or impossible choices.

Minister Tom authorized funds for a deeper investigation into Colombia’s canal project, while Nino decided to recruit the United States of America and Spain as partners against Austria. Nino’s first approach to Morgan failed, leaving him without the consortium’s support.

• Minister Tom ordered Secretary Disifu to investigate Austria’s activities and Colombia’s canal project, then approved ten thousand francs for the work.
• Nino concluded that the United States of America had strong economic and strategic reasons to support the canal and sailed there to recruit partners.
• Nino visited the Morgan Estate and argued that canal control could help the Morgan Consortium overcome local protectionism.
• Morgan refused to participate, citing the Union’s limited 21% share, the investment risks, and the threat of Austrian influence in Panama.

French financiers planned to exploit the Panama Canal project by promoting it to investors despite doubts that it could succeed, while Morgan recognized the scheme and chose to cooperate. Franz agreed to let Austrian consortia join the venture but barred the canal company from listing in Austria.

• At a Paris private club, Bells persuaded French financial magnates to secure the canal rights, package the project, and draw in British and Austrian capital despite Old Duke's warnings about its prospects.
• In New York, Morgan saw that the French sought American and Spanish participation mainly to prevent Austria from obstructing the venture, and he decided to cooperate for profit.
• At Vienna Palace, Franz reviewed the intelligence and allowed Austrian consortia to cooperate with France, but forbade the Panama Canal company from listing in Austria.
• Franz left further negotiations and the division of profits to the participants, while Austria's strict securities rules made a domestic listing unlikely.

British commander Ismail sought reinforcements after Ethiopian forces inflicted heavy losses, while Napoleon IV weighed a French plan to develop the Panama Canal. Minister of Finance Allen persuaded him to let private capital lead the project, though Allen intended to leave the risks to others.

• Ismail blamed France and Austria for Ethiopia’s modern weapons and training, then concluded that his forces needed reinforcements to win.
• Napoleon IV focused on France’s slowing economy and rejected Allen’s claims that the Panama Canal would boost French exports, citing the risk of strengthening the United States.
• Allen argued that French control of the canal could give France leverage over trade throughout the Americas and proposed having private capitalists lead the project.
• Napoleon IV was persuaded by Allen’s proposal, while Allen privately resolved not to take responsibility for the risky venture.

France obtained the rights to develop the Panama Canal, while President Nino pushed the risky project toward construction and an IPO despite its costly conditions and labor shortages. In London, Prime Minister Benjamin confronted inflated British battle reports and received revised casualty figures.

• Minister Tom secured French authorization, and France obtained the Panama Canal development rights from Colombia in exchange for material aid.
• Nino organized a survey and examined findings that exposed Panama's difficult terrain, disease risks, and likely construction costs.
• Secretary Ralph told Nino that Colombia had refused to provide workers, and Nino ordered further negotiations while directing him to share survey data with the board but omit disease risks.
• Prime Minister Benjamin challenged a telegram claiming Britain had annihilated two hundred thousand enemy troops while losing a fifth of its forces.
• Secretary of State for War Fox said the telegram likely contained an extra zero and reported 5,876 British casualties and 15,796 enemy soldiers killed.

Benjamin’s cabinet concealed the British defeat in Ethiopia by blaming France and Austria and using the Panama Canal dispute to divert public attention. Franz declined to seize more Ethiopian territory and approved the French canal company’s request to recruit 200,000 laborers from Austria’s African colonies.

• Benjamin’s cabinet accepted Fox’s revised battle report, announced British victory claims, and ordered reinforcements of 80,000 troops for Ethiopia.
• Edward told Benjamin that France had obtained Panama Canal development rights, and Benjamin decided to accuse France publicly to distract the British public from the Ethiopian losses.
• Franz declined Stephen’s proposal to seize more Ethiopian territory before British reinforcements arrived, saying he wanted to test Ethiopia’s strength against Britain.
• Wessenberg reported that the French canal company offered 30 Divine Shields per laborer to import 200,000 workers from Austria within three years.
• Franz approved the French proposal and ordered the laborers recruited from the Somali Peninsula and other regions as needed.