Chapter Summaries

Franz used the Austrian New Energy Electric Company’s licensing deals and city partnerships to expand its influence across Europe and ordered Mark Oliver to secure more cities. Meanwhile, a Japanese delegation led by Iwakura Tomomi visited Vienna after its treaty negotiations with European powers stalled, and Hirobumi Ito and Okubo Toshimichi marveled at the city’s electric lights.

• The Austrian New Energy Electric Company made a profit from technology sales and signed strategic cooperation agreements with more than a hundred cities.
• Franz instructed Mark Oliver to expand the company’s reach, improve its public image, and complete its European layout before extending worldwide.
• Okubo Toshimichi and Hirobumi Ito discussed Vienna’s prosperity and wondered why its streets showed no factory smoke despite Europe’s economic crisis.
• The Japanese delegation’s efforts to revise treaties had failed, and the Austrian Foreign Ministry had demanded concessions or payment in exchange for treaty rights.
• Hirobumi Ito estimated that Vienna’s streetlights cost hundreds of thousands of silver taels monthly, shocking the delegation, while Iwakura Tomomi dismissed the question as irrelevant to Japan.

Franz dealt with the consequences of Prussia’s territorial handover and considered how Austria should manage the former French Balkan Peninsula. He left the region largely undeveloped for now, preferring to preserve stability and keep it as a possible bargaining chip with Russia.

• The Japanese delegation left Austria after establishing an embassy in Vienna, while Hirobumi Ito and the others continued their inspection tour in Prussia.
• Franz learned that Prussia had recovered Saxony and Silesia with most of their populations removed, and he considered how property owners and the remaining residents would respond under Austrian rule.
• The Kingdom of Saxony demanded that the New Holy Roman Empire sanction Prussia after discovering that its recovered territory had been emptied, but Franz declined to interfere with Saxony’s independent retaliation.
• Franz used his inspection of the former French Balkan Peninsula to investigate legal violations, prosecute offenders, and replace much of the local ruling class.
• Franz weighed the costs of developing the Balkan Peninsula, whose population and labor force had been depleted, and chose to maintain stability rather than invest heavily in it.
• Franz considered keeping the Balkan Peninsula as a future bargaining chip for Ukrainian lands if Russia sought access to the Mediterranean.

Franz approved Bosnia and Herzegovina’s plan to develop mineral extraction and heavy industry, hoping to improve the poor province’s economy. Meanwhile, Prussia pursued Japanese trade, and the newly formed Nordic Federation added pressure on Russia.

• The Nordic Federation was established, increasing Russia’s concern about its northern frontier as Alexander II struggled to contain the rebels in the Moscow Region.
• Franz publicized the Moscow rebels’ damage to the economy, while European media largely blamed Russia’s bureaucrats for the Prusso-Russian defeat and withheld great-power standing from Prussia.
• The Berlin Government welcomed the Japanese delegation and sold it military goods, signing a 1.58-million-Divine-Shield trade order in 1869.
• The Bosnia and Herzegovina government proposed exploiting local minerals and building heavy industry in steel, copper, and salt production.
• Franz approved Bosnia and Herzegovina’s development plan and left its execution to the provincial officials.

Thor and Wells debated whether to invest in Bosnia and Herzegovina Province's heavy industry, weighing its mature prospects against the Austrian Steel Group and the risks of new technology. They left the argument unresolved as Lawrence Lovsky suggested they go to lunch.

• Thor told Wells and the other Austrian Savings Bank shareholders that he planned to invest in heavy industry in Bosnia and Herzegovina Province.
• Wells warned Thor that the Austrian Steel Group's dominance made the steel business difficult and argued that salt mining offered a faster return.
• Thor argued that heavy industry could grow alongside the Austrian Steel Group, while the Austrian New Energy Electric Company's technology and standards made its market far harder to challenge.
• Wells clarified that his electric company was developing industrial machinery, not competing in power supply, and explained that he wanted to share the risks of funding new technology.
• Lawrence Lovsky changed the subject and suggested that the group have lunch, and Thor said he preferred the restaurant's roast goose.

Franz focused on Austria’s growing colonial rivalry with Britain and France and worried that France’s slow Greater France strategy would leave it too strong in the long run. He asked his advisers how to push Napoleon III toward expansion, but insisted Austria must avoid triggering a war before it was ready.

• Austria occupied territory in Yemen and disputed its African gains with the Ottoman Empire while France and Austria competed with Britain in Tunisia and Egypt.
• Franz learned that Britain was supplying weapons and instructors to African tribes resisting Austria’s expansion, as Austrian Africa’s population surpassed seven million.
• Franz asked his advisers how to accelerate France’s Greater France strategy, hoping France would overextend itself and decline.
• Wessenberg said France lacked the strength to expand further while its troops were tied down in Egypt, Tunisia, and Mexico and Sardinia remained unstable.
• Felix proposed provoking French expansionists to push Napoleon III into enlarging the army, and Franz approved the idea only if it could be kept from causing a war.

Franz ended Austria’s pirate campaign and weighed a major canal project while confronting the brutal costs of convict labor. In Mexico, Maximilian I alienated powerful groups with sweeping reforms and an heir declaration, prompting Franz to cut off Habsburg support and sever ties.

• Austria’s navy continued its anti-piracy campaign through 1869, killing more than ten thousand pirates and devastating pirate organizations.
• Franz postponed the proposed Vienna-to-Trieste canal pending further surveys and sent captured pirates to join the convict labor force.
• Maximilian I introduced sweeping reforms in Mexico, but landowners and capitalists opposed them and supported the rebels while ordinary people largely stayed passive.
• Maximilian I adopted Agustín Jr. and Salvador and named Agustín Jr. heir to the Mexican throne without consulting the Habsburg family.
• After Habsburg archdukes demanded that support for Maximilian I end, Franz agreed and sent him a letter declaring that their sides would separate.

Olabif tested an improving telephone connection for the Royal Academy of Sciences, while the chapter surveyed Austria’s research projects and the industrial support behind them. Telephone and internal combustion engine research remained works in progress, and Franz continued to fund experiments while keeping their dangerous waste contained.

• Olabif conducted a long-distance telephone test with Oscar and found that the call quality had improved.
• The Royal Academy of Sciences divided telephone research among teams working on voice quality, exchanges, lines, and equipment.
• The phonograph was expected to reach the market after Christmas, while Franz reflected that broad research investment could be more valuable than pursuing famous inventors.
• The internal combustion engine team continued developing a second-generation engine after an earlier laboratory model proved too weak for practical use.
• Franz’s laboratories pursued difficult research, and their scientists carefully disposed of experimental waste to reduce the danger of harmful releases.

Austria’s vast colonial reach and Franz’s balance-of-power strategy left it influential but constrained, while France and Russia relied on expansion to manage domestic tensions. Alexander II’s reforms gained support from nobles after he offered government-funded land reclamation to peasants, but the policy drained the treasury and left his government facing a severe fiscal crisis.

• Austria’s colonial holdings spanned six continents, but Franz avoided further conquests because Austria lacked the strength and population to hold them securely.
• Franz’s diplomacy kept Russia to the east, France to the west, and Prussia contained, though politicians had begun to consider the possibility of an Austrian threat.
• Napoleon III accelerated France’s expansion to secure his dynasty and ease tensions between the government and capitalists.
• Alexander II replaced senior officials after three ministers were assassinated and appointed Reform Party members willing to serve despite the risks.
• Alexander II allowed nobles to keep land they refused to sell and funded peasants’ efforts to reclaim undeveloped land.
• The Tsarist Government paid for tools, seeds, and food for the poor settlers, and the resulting costs made fiscal problems Alexander II’s greatest challenge.

Facing a fiscal crisis driven by the land reclamation campaign, Alexander II suspended debt payments and the Tsarist Government declared bankruptcy, forcing Austria to pursue collateral and manage its guarantees. In Vienna, Russian bond defaults threatened securities firm owner Philippe, who tried to delay early redemptions and limit his losses.

• Finance Minister Yevgenkis warned Alexander II that the Tsarist Government would go bankrupt within three months unless it acted.
• Alexander II chose to suspend payments on international debts and prioritize the land reclamation campaign over railway development.
• On July 7, 1869, the Tsarist Government announced its bankruptcy to major creditors, sparking outrage and public attention across Europe.
• Prime Minister Felix told Franz that Austria could face 38 million Divine Shields in compensation and urged him to demand Russian collateral and repayment.
• Philippe learned that his firm’s Russian bonds had triggered demands for early redemption and instructed Berg to offer eighty percent of the principal after three days while seeking buyers.

Russia and Austria remained deadlocked over repayment of Russian debts as financial institutions struggled with the fallout from the default. Philippe learned that Wealth Securities was buying certain Russian bonds and ordered Alpha to test whether it would buy his holdings, leaving the truth behind the move uncertain.

• Wessenberg rejected Soreis’s request to postpone Russian debt payments for five years and waive interest and penalties, though he said repayment could be delayed.
• The Russo-Austrian negotiations stalled, and European financial institutions continued to suffer losses from Russia’s default.
• Philippe calculated how he could cover his company’s bond-redemption losses and considered raising money without selling his bank shares.
• Alpha told Philippe that Wealth Securities was buying Russian bonds at twenty percent of face value, but only bonds issued specifically to Austria.
• Philippe ordered Alpha to contact Wealth Securities and offer his bonds, hoping to learn whether the company’s move signaled real progress in the negotiations.

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.