Empire Conquest
Chapter 60 - 56 The Disaster of the Great Depression

Chapter 60: Chapter 56 The Disaster of the Great Depression

Returning to the Imperial Capital, Bai Zhizhan’s first feeling was an intense cold that seeped into his bones.

Although it was only early winter, Bai Zhizhan felt it was colder than the harsh winter he first experienced twenty years ago when he first came to the Imperial Capital, as though the air itself was about to freeze solid.

It was not only the temperature that was cold but also the depressed marketplace.

The Great Depression, which started in the year 89 of the New Calendar, had now lasted for ten years.

Although three years ago, the Newland Federation’s New Deal initially showed success, and countries around the world subsequently declared they had weathered the most difficult period, that the Great Depression was over, and a new golden age was about to begin, the reality was quite the opposite, and even more brutal than what the media had propagated.

Had Keynesianism defeated the Great Depression?

Clearly, this was a false proposition.

When the Newland Federation began implementing the New Deal, the Empire’s most famous economist asserted: it was just as if one had added a ladle of cold water into a boiling pot, or thrown in a huge block of ice, temporarily bringing the water’s temperature below the boiling point; because the fierce fire under the pot had not been extinguished, it would not be long before the water boiled once again, and with the pot already full, there would be no room to add more cold water or ice chunks.

What then should be done?

Around three years ago, the Saiyi Imperial Kingdom provided an answer through action.

At the beginning of year 96 of the New Calendar, the Newland Federation issued another call to arms, proposing a new treaty based on the "Huacheng Treaty" and the "Luntai Treaty," to extend the limitation on Navy armaments by another five years, ideally ten, as a way to cool down the increasingly tense international situation.

This proposal received full support from the Liangxia Empire and the Bulan Kingdom but was opposed by the Saiyi Imperial Kingdom.

Although in the end, the three main treaty nations reached an agreement and signed what was called the "Second Luntai Treaty," a second phase of armament limitation treaty, it also stipulated that if the Saiyi Imperial Kingdom did not become a treaty nation by the first day of the year 97 of the New Calendar, then all limitations on Main Battle Ships and mother ships, to be more accurate, any limits on various performance indicators would be lifted, equivalent to having no limitations.

The result was that the Saiyi Imperial Kingdom did not become a signatory the following year, and the "Second Luntai Treaty" became null and void.

Fundamentally, it was caused by the Great Depression.

If they had signed the treaty and continued the strict limitations on naval armaments, it would not take five years before the Saiyi Imperial Kingdom’s economy would be destroyed, with many enterprises including shipyards and steel factories closing down, resulting in thousands of workers being unemployed, and potentially even triggering nationwide riots.

Therefore, the only choice was to use the surplus industrial capacity to produce armaments.

Even if it was like drinking poisoned wine to quench thirst, it was much better than an immediate doom.

Moreover, if everything came to a dead end, a more substantial military force would be necessary to create the possibility of transferring domestic conflicts through external expansion.

In the middle of that year, the Saiyi Navy initiated the construction of the "Super Battleship." It was also at this time that the outside world learned that before the "Navy Holiday" concluded, the Saiyi Navy had secretly completed the design work of the Super Battleship, and its various indicators substantially exceeded the treaty limits.

It was evident that the Saiyi Imperial Kingdom had long been determined to withdraw from the treaty and would never agree to extend the period by five years.

This set the stage, and the Great Powers returned to the competition.

Economically speaking, developing armaments was the same principle as investing heavily in infrastructure in the New Deal, namely, to use outlays without direct output to consume the severely surplus industrial capacity, providing new orders for the businesses, starting up factories, and securing jobs for workers to support their families.

The difference was that the arms race required military expansion to realize its value.

Moreover, the effectiveness of this poisoned wine as a solution varied from one to another.

For Great Powers like the Saiyi Imperial Kingdom and the Bulan Kingdom, with a population in the tens of millions, building a few more Battleships and expanding the Navy by one-third could create hundreds of thousands of jobs in the short term, ensuring millions, or even tens of millions of people in countless families, were free from worry about food and clothing.

With millions of starving populace addressed, the domestic situation would surely be stabilized.

However, for superpowers like the Liangxia Empire and the Newland Federation with populations in the billions, that was not an option.

At the height of the Great Depression, the unemployment rate in the Newland Federation neared thirty percent, while the Liangxia Empire also surpassed twenty percent.

What did this mean?

Based on household numbers, there were sixty million people in the Newland Federation and one hundred million people in the Liangxia Empire living hand to mouth, faced with the constant danger of starvation.

Build a few more battleships to feed these people?

Clearly, this was unrealistic!

Let alone a few battleships, even constructing several fleets would be of no help.

The sheer size of the Liangxia Empire and the Newland Federation meant that only by reshuffling the global order, recolonizing territories, and redistributing markets and resources could they overcome the predicament brought about by the Great Depression and create a stable, peaceful situation that could last for decades.

Of course, reshuffling the deck would certainly require considerable military strength.

In fact, this was precisely the fundamental difference between the Liangxia Empire and the Newland Federation’s military expansion and that of the Bulan Kingdom and the Saiyi Imperial Kingdom.

What does that mean?

The difference between strategic foresight and short-sightedness!

From the beginning, the Liangxia Empire and the Newland Federation were aiming for the ultimate goal of becoming the sole superpower after the reshuffle following a major war, to become the creator and maintainer of the international order and the architect of global interests, effectively ruling the future world.

Therefore, when expanding their military, the Liangxia Empire and the Newland Federation focused on laying a solid foundation and invested a great deal in infrastructure.

What about the Bulan Kingdom and the Saiyi Imperial Kingdom?

At most, they only considered military expansion as a means to solve their economic crisis, lacking in any long-term plans, and even if they had any, whether they had the capacity to execute them.

Over two years ago, the Imperial Navy proposed a long-term plan to build four main battle ships every year, and this proposal received support from both houses of the Cabinet and the legislature. After receiving funding, the Imperial Navy launched the first round of construction plans in the year 97 of the New Calendar and ordered a main battle ship from each of four shipyards. In the years 98 and 99, they placed orders for another four main battle ships each year, getting the shipbuilding plans fully implemented.

Crucially, the Imperial Navy considers aircraft carriers as main battle ships.

The Newland Navy didn’t regard carriers as main battle ships, but with the same steady pace of starting construction on three or four ships each year, it began steadily expanding the size of its fleet.

However, as mentioned earlier, the benefit of military expansion on the economy wasn’t as significant as one might imagine.

The reverberations of the Great Depression had not yet dissipated, and the economy of the Liangxia Empire was still gloomy.

If anything, it was just somewhat better than ten years ago. At least the public was no longer so pessimistic about the future and began to actively face challenges.

Although life was still difficult, as long as there was hope, there was the motivation to strive for improvement.

In fact, there were significant changes in the Imperial Capital as well.

The most obvious of which was the airport on the outskirts.

Though civil aviation was still in its infancy and airplanes were seen as playthings for the wealthy few, after twenty years of rapid development, airplanes had already become well known to the public.

After being used for mail transport, the next purpose for planes was to become another means of travel for people, following in the footsteps of automobiles, trucks, and ships.