Since the establishment of the Hungarian Republic, the government had already promulgated a series of laws conducive to the economic development of the bourgeoisie, including the abolition of a series of harsh donations and taxes which had hindered their growth. These reforms had won the support of the bourgeoisie, but greatly increased the government's financial pressure.

Therefore, when someone had previously suggested that they should issue a Hungarian currency, Kossuth didn't think twice before giving the go-ahead. Unfortunately, soon, he understood the concept of hyperinflation, first hand, as the value of the Hungarian currency plummeted and it became no different from waste paper. After all, the Hungarian Republic's silver reserves were nowhere close to the amount of bills printed and, unlike the future United States, it lacked the prestige and currency domination to be able to print money without worry.

Since the failure of currency issuance, a financial crisis had broken out within the Hungarian Republic as it was left with no other option than to levy more taxes. However, considering their previous failures, the wealthy were no longer willing to give them money so easily. In fact, Kossuth's casual tone had made it clear that he didn't understand what 200 million guldens meant to Hungary.

Carl Howell, a representative of the domestic Hungarian bankers, asked, "Mr. Kossuth, do you understand the significance of 200 million guldens?"

This sudden question stumped Kossuth. He had thought that these aristocrats would bargain with him to lower the tax amount, but he did not expect them to ask this question.

Calculated from the value of the currency, one gulden was equal to 11.69 grams of silver, so 200 million guldens was equal to 2.338 billion grams of silver or 2,338 tons of silver. During the mid-19th century, the value of silver hadn't depreciated since the vast gold reserves of South Africa and Australia had yet to be mined. Therefore, 200 million guldens was equivalent to a little over 20 million British pounds.

The exchange rate of gold to silver was 1:10 or so.

Trans_Later

Author's note: The exchange rate of gold to silver was 1:10 or so.

In 1847, Austria's fiscal revenue was only 155 million guldens (excluding Hungary) while Britain's fiscal revenue barely crossed 50 million pounds or 500 million guldens. Meanwhile, in Hungary, it was considered a good year if the annual fiscal revenue crossed 100 million guldens. However, since its establishment, the Hungarian Republic had already spent more than 100 million guldens.

These funds were predominantly obtained by selling a large amount of state-owned assets, mainly the land and workshops owned by the Habsburgs and the Austrian nobles, plus the taxes collected by the government. Previously, the nobles hadn't opposed the sale of these assets since they had been the buyers. After all, who would refuse to buy large swathes of land and industrial workshops at throwaway prices.

Kossuth cleared his throat and calmly replied, "Of course, 200 million guldens might be a big number for others, but for the people sitting here, it isn't impossible to arrange."

Indeed, for the nobles and financiers present at this meeting, 200 million gulden was within their affordability. However, being able to afford something and actually purchasing it were two very different concepts. After seeing the speed at which the government was spending money, no one was willing to fill this bottomless pit with their own money. Even if the interest rate is high, it was simply too risky.

In addition, there was a bigger issue at hand.

"Mr. Kossuth, when you went to school, you probably flunked in economics. Would you like to check how many Hungarian bills are currently circulating in the market, and then answer this question?" retorted Carl Howell.

Many times, net worth didn't equal actual wealth, especially during the early modern era, due to the many restrictions on the bills of a certain currency circulating in the market. Too many bills would lead to a depreciation in the value of the currency while too little bills would cause a panic in the market.

From an economic point of view, if 200 million guldens were withdrawn from the fragile Hungarian market at once, it would certainly lead to a panic in the market. Then, a run of banks would begin as people would rush to withdraw their money, leading the banks to run out of cash and become unable to give out loans to businesses on the verge of bankruptcy. The bankruptcy of these businesses would lead to unemployment for many which would directly lower the market's spending power and push other businesses on the path to bankruptcy.

Ultimately, it would be nothing short of disaster.

Trans_Later

Author's note: Source - 1848 Austrian National Savings Bank 

Hearing Carl Howell's words, Kossuth's face turned red from embarrassment. Fortunately for him, the bigwigs of Hungary weren't as short-sighted as him and his subordinates. Unfortunately, before Kossuth could solve Hungary's financial problems, war had reached Hungary.

On May 8, 1848, the Austrian corps stationed in Bohemia passed through Krakow before turning south to launch an offensive against the Republic of Hungary.

On May 9, 1848, the Austrian corps stationed in Croatia and Transylvania also marched towards the Hungarian capital of Budapest.

On May 10, 1848, the Viennese corps, formed from 50% of the officers and soldiers of the Vienna City Defense Force, which had been bolstered by new recruits, led by Archduke Albrecht, who had been promoted to the post of General, arrived at Pressburg before it continued to march east towards Budapest, and the Austro-Hungarian war began.

The four Austrian corps, except for a few soldiers left to garrison the cities of Prague and Krakow which were close to the border with Prussia, launched an attack on Budapest from all four directions at the same time. If the logistics transport unit was included, the total strength of this army would exceed 200,000. Of course, less than 100,000 would actually fight in the war, but even that was a frightening thought for the Hungarians.

* * * * * * * * * *

Hofburg Palace, Vienna

Thanks to the absolute difference in strength between Austria and Hungary, it was impossible for the rebels to reverse the adverse situation by shouting slogans or the like. Still, in order to ensure victory, Franz replaced the commander of the Bohemian corps, Prince Windisch-Grätz, with General Julius Jacob von Haynau and made the former the army's Chief of the General Staff.

Prince Windisch-Grätz took up his baton and pointed it at the map on the wall before he said in a spirited manner, "Your Imperial Highness, the Croatian corps led by Governor Jelačić has now reached Lake Balaton and conquered Balatonfüred; the Viennese Corps led by General Albrecht is currently attacking Fort Győr; the Bohemian corps, led by General Haynau, has just defeated the Hungarian People's Army and is now less than one hundred kilometers from Budapest; the Transylvanian corps, led by General Lengyel, is still stuck in Debrecen due to some issues in the supply line.

Overall, so far, all the corps had progressed very smoothly. According to our estimates, the Bohemian corps can begin the siege of Budapest within four days at the latest."

He had reasons to be proud since, as the Chief of the General Staff, this war was fought under his leadership. Of course, because of the lack of quick communication in this era, the General Staff really only formulated the strategy on paper. It was up to to the division's commanding officer to modify it according to the situation on the ground.

Despite hearing the good news, Franz did not rush to a conclusion regarding Prince Windisch-Grätz's competence. His current strategy was quite feasible and nothing had gone wrong yet, but, historically, he had still failed to suppress the Hungarian rebellion.

"The siege of Budapest should be postponed. It is enough for General Haynau to force the enemy to retreat. Tell him to wait a few days to join General Albrecht and Governor Jelačić before launching the attack!"

Even though it seemed like the Austrians had the Hungarians on the run, historically, the Austrian army had been forced to retreat at the last minute, and finally had to ask the Russians for help. In fact, the army composed of students which was considered the most capable in the Hungarian Republic had not yet appeared on the battlefield.

In addition, Franz was still in the dark regarding the feelings of the Hungarians people towards the Republic. If the people fully supported Kossuth and his government, then Budapest would be a hell hole for a single corps even if they managed to breach the city.

"Your Imperial Highness, the rebels are not worth so much thought. We can conquer Budapest and end this rebellion in one week!"

Prince Windisch-Grätz spoke deeply with a frown on his face, seemingly accusing Franz of abusing his right to interfere in the army's affairs.

Franz smiled calmly and explained, "Prince, this war is only a means to an end, not the end, itself. You must remember that."

-TO BE CONTINUED-