Rise of Empires: Spain.

Chapter 414 Britain's Response

Although a large number of Spanish companies contributed 2.6 million pesetas to the national debt, the remaining 2.4 million pesetas were purchased by the Spanish people in just two and a half months, which was far beyond what the Spanish government had expected.

The fact that 5 million pesetas were raised in just two and a half months not only demonstrates the strong willingness of the Spanish people to support the government, but also indicates that the current standard of living in Spain is relatively good.

After all, even if the public is willing to support the government, they still need to have money in their hands to buy government bonds. If they don't have money, they can't buy government bonds, and the issuance of government bonds will naturally not be so smooth.

Now that enough funds have been raised, the next steps are quite simple.

Starting in November 1902, Spain officially launched its naval construction program, planning to build Dreadnought-class battleships over the next decade to give Spain a naval strength sufficient to rival the British Royal Fleet.

In the first few years of the naval construction program, Spain was unable to build two Dreadnought-class battleships a year.

This is, after all, a giant ship with a full-load displacement of over 2 tons. The preparation of materials alone would take a long time, and a large number of people would be needed to build it. In fact, only the Royal Guanizo Shipyard and the Valencia United Shipyard are qualified to build the Dreadnought-class battleships.

Because the Dreadnought-class battleship HMS Courage was built at the Royal Guanizzo Shipyard, the second Dreadnought-class battleship HMS Courage will also be built at the Royal Guanizzo Shipyard.

Because the Dreadnought battleship was completed in just under a year, Spain planned to complete the second capital warship of the Dreadnought class in about a year as well.

Construction of the second battleship, HMS Courage, officially began in November 1902. According to the Spanish naval authorities' estimates, HMS Courage was expected to be completed by December 1903 and commissioned in early 1905.

The construction of the third battleship, HMS Fury, at the Valencia shipyard, will be delayed until February of next year. Because of this three-month delay, the Fury's completion date will also be postponed until around April 1904.

As a result, by the time the battleship HMS Fury entered service, it was already around June 1905.

Looking at the commissioning dates of the battleships HMS Courage and HMS Fury, Spain actually had quite a bit of time. Historically, the British battleship HMS Dreadnought didn't officially enter service until December 1906, meaning Spain had the potential to possess at least four Dreadnought-class battleships before that date.

Of course, Spain's large-scale naval buildup will certainly attract the attention of Britain and even more European countries.

The British battleship HMS Dreadnought took only one year and two months to build. If they had been determined to join Spain in building up their navy, Spain's naval construction speed might not have been able to match that of the British.

Of course, apart from the British, no country can surpass Spain in terms of dreadnoughts in a short period of time.

Although France, Germany, and the United States possess such industrial strength, their research on dreadnoughts is still very weak. The United States does not invest much in its navy, after all, its position is quite secure, and competition from European countries cannot interfere with the United States.

In order to minimize the suspicion of European countries, Spain did not disclose its naval construction plans to the public and kept the movements of its two major naval shipyards highly confidential.

However, the news that Spain had previously issued large amounts of naval construction bonds still attracted the attention of many European powers, including Britain, France, and Germany.

The British are extremely sensitive about naval matters. The fact that Spain has issued naval construction bonds implies that Spain certainly has undisclosed naval building plans for the next few years.

Combined with previous reports that Spain might be building a very large warship, it can be basically confirmed that Spain's naval construction bonds were issued to build the latest type of battleship.

Although Britain still doesn't know the specific data of the Dreadnought-class battleships, the fact that Spain spent such a huge amount of money to build them suggests that the battleships must have had some very impressive specifications.

Spain's unusual behavior immediately alerted the British government. For Germany and France, a powerful navy was unnecessary.

Because their homeland is located on the European continent, they need to pay more attention to the situation on the European continent, and the development of the army is more important than that of the navy.

But the British were different. Britain's colonial system was maintained by a powerful navy, and as an island nation isolated from the European continent, the importance of its navy was even greater.

Without a powerful navy blocking the English Channel, both German and French armies could easily have landed in Britain through the Channel.

Although the British army was not weak, the British knew they had no chance of winning against powerful armies like those of Germany and France.

This is also why Britain places excessive emphasis on naval development. The navy is Britain's only trump card in standing among European powers and its greatest means of protecting its colonial system.

After the British ambassador to Spain noticed something amiss with Spain's actions, he immediately reported the news back to London.

The British government also immediately convened a meeting to discuss the impact of Spain's unusual behavior on Britain.

At that time, the British Prime Minister was Arthur James Balfour, a man of some historical renown.

In 1917, he put forward the famous Balfour Declaration, the main content of which was to propose the establishment of a Jewish homeland in the Palestinian region, which is also the origin of the formation of Israel.

Leaving aside the impact of the famous Balfour Declaration on the world order, let's just talk about the current Prime Minister Arthur James Balfour, who is still a relatively unknown politician.

Although Prime Minister Balfour was not very famous at the time, the British government had a fairly unified understanding when discussing naval matters.

For the British government, they could accept challenges to Britain's international standing from European powers such as Germany and France, but they would not allow these countries to challenge Britain's maritime dominance.

Britain can remain low-key on the European situation, but it absolutely cannot remain low-key on global maritime power.

Sea power is the foundation of Britain's nationhood, and any country that challenges Britain's sea power will face a strong counterattack from Britain.

"Your Excellency Prime Minister, in my opinion, we should immediately retaliate against Spain's naval construction plans. If they are indeed building a very powerful battleship, we must also develop an even more powerful warship in response."

According to information relayed by the diplomatic ambassador, the total amount of national debt issued by Spain has reached 5 million pesetas, or about 2000 million pounds.

Based on the current construction costs of major battleships in various countries, this so-called naval construction bond could build at least 15 major battleships.

If Spain truly intends to invest all of these funds in naval development, then we should be prepared.

This would severely impact our naval standing, and we must adjust our naval deployments across Europe and appropriately strengthen our naval forces in the Mediterranean to prevent Spain's plot from succeeding. At the very beginning of the British cabinet meeting, the First Lord of the Admiralty eagerly presented his views.

For Britain, few countries have dared to provoke it in terms of naval development over a long period of time.

On the one hand, Britain was already very wealthy at this time. The Indian colony alone could contribute a lot of revenue to Britain every year, not to mention that Britain's colonies were all over the world, and the income from important colonies such as Canada and South Africa was also considerable.

Although the British government spends a considerable amount of money on its colonies, it could easily spend tens of millions of pounds to build warships if it were serious about it.

Spain needs to issue domestic bonds to raise £2000 million, while the British government doesn't need to issue bonds at all; it can easily raise the funds from its own coffers.

"That's right. We will never allow any country to challenge the British Empire's maritime dominance, let alone Spain, with whom we have a strained relationship."

What is our current financial situation? What are the Navy's plans? If we are to respond to Spain's naval construction plan, how many battleships do we need to build? How much capital will be required?" Prime Minister Balfour nodded, showing agreement with the Navy Minister's opinion.

Because of its vast colonies, the British Empire's fiscal revenue far exceeded that of other European countries, and the funds it could invest in the construction of its army and navy were naturally far greater than those of other European countries.

Since Spain wanted to provoke a naval competition with Britain, Prime Minister Balfour didn't mind letting Spain understand just how vast the financial gap between the two countries truly was. Upon hearing the Prime Minister's question, the First Lord of the Admiralty stood up and presented his pre-prepared naval construction plan: "According to our information, Spain has invested approximately £2000 million in naval construction."

Considering the composition of the fleet, I believe that Spain invested approximately £1500 million in the construction of battleships, which would have enabled them to build about 10 battleships.

"If we simply want to respond to Spain's naval construction program, I think investing £2000 million in battleships would suffice. We only need to build 15 battleships to ensure that our battleship numbers will always exceed Spain's."

Prime Minister Balfour was not satisfied with the Navy Minister's answer.

In his view, if the British navy could only barely outnumber the Spanish navy, then Britain's naval power would be impossible to maintain.

To ensure its naval dominance, it must build far more warships than Spain, and even more than Spain and other European countries combined.

Since Spain has invested a total of £2000 million, Britain should simply double that amount to demonstrate the strength of the British Empire.

Before the other cabinet ministers could speak, Prime Minister Balfour directly expressed his opinion: "I believe that simply investing £2000 million to build battleships is far from enough."

Our task is not merely to respond to Spain's naval construction plans, but also to make it clear to all European countries that the British Empire is not to be trifled with in matters of naval construction.

I believe we should invest at least £5000 million to build at least 25 battleships over the next decade, far exceeding the number built by Spain.

In this way, even if other European countries follow Spain in building their own navies, we can still ensure that our naval status will not be affected in any way.

As early as 1889, the British government passed the Naval Defence Act, deciding to maintain the size of the British navy at the dual strength standard.

What is the dual-power standard? It's actually quite simple: the total tonnage of the British Navy is equal to the total tonnage of the warships of the two most powerful naval powers besides the UK.

To put it simply, Britain's naval targets are not just one enemy, but the two most powerful naval powers.

This is why Prime Minister Balfour decided to invest £5000 million directly. Even if other countries invest £2000 million to build their navies like Spain, Britain can maintain its naval superiority.

£5000 million is a huge sum of money for the UK's treasury, but if it is paid out over ten years, it will not put much financial pressure on the UK.

Britain's domestic fiscal revenue had already exceeded £100 million by 1900, and that was in the most valuable pound sterling.

It's worth noting that Spain's total fiscal revenue last year was only 15.678 billion pesetas, which translates to just £6271 million.

This revenue was obtained after accounting for the fiscal revenue of all Spanish colonies, and it was still far behind that of Britain.

Currently, among all European countries, only Germany and France, two industrial powerhouses, have fiscal revenue at the same level as the UK.

Despite Russia's large population and land area, its income is far less than that of the three great powers: Britain, France, and Germany.

The subsequent Austro-Hungarian Empire and Italy need no further explanation; Spain's income has already surpassed those two countries, and the gap has widened considerably.

A significant portion of the tax revenue comes from royal estates, and Spain is no longer the agricultural country with a relatively singular industry.

Industrial transformation is the reason for Spain's continuous growth in fiscal revenue. For Spain 30 years ago, the government's fiscal revenue mainly came from farmers' taxes, and farmers were one of the poorest classes in Spain.

This resulted in the Spanish government having very little domestic fiscal revenue at the time, making it difficult to have enough funds to support domestic industrial development.

Now, the main sources of Spain's fiscal revenue have become personal income tax, import and export tariffs, and industrial and commercial taxes.

The main contributors to fiscal revenue have shifted from farmers to workers and capitalists, and the taxes that farmers need to pay have been significantly reduced.

Following several reforms, Spain has made significant improvements to its tax-related laws.

Spain employs a progressive tax system for personal income tax. All taxpayers in Spain are divided into different income brackets, with each bracket requiring a different tax rate.

The lowest-income farmers pay very little in taxes, which is done to ensure that their income is enough to live on.

For factory owners and capitalists who make more money, the tax rate they need to pay is relatively high.

Even Carlos's factories and businesses need to pay substantial taxes every year. The Royal Mercedes-Benz alone pays tens of millions of pesetas in taxes annually, which is a reason for the continuous growth of the Spanish government's total annual fiscal revenue.

While this taxation method may offend high-income groups, it significantly reduces the burden on the majority of low-income people in Spain.

Although these people don't pay much tax each year, if they can save some of it, the savings can effectively improve their quality of life.

Carlos repeatedly pushed for tax cuts for farmers in Spain precisely to improve the quality of life for these low-income groups.

So far, Spain's tax cuts seem to have been quite effective. The fact that Spanish government bonds sold out in just two and a half months also shows that most ordinary Spanish citizens currently have some savings.

Regardless of how much savings they have, the standard of living for Spaniards today is much better than it was thirty years ago.

For governments and officials, the evaluation of performance is very simple. Whether they can make the country better and whether they can improve people's lives is the most basic way to evaluate performance.

If these two points can be achieved, it will be a contribution to the country and to the Spanish people. If these two points cannot be achieved, no matter how good the surface data is, the final political achievements will be greatly diminished.

After a period of discussion, the British government unanimously agreed with Prime Minister Balfour's viewpoint and decided to allocate £5000 million to respond to Spain's naval construction, thus consolidating the British Empire's naval dominance.

Compared to Spain's somewhat clandestine warship construction plans, Britain's response was much stronger.

The British government first exposed Spain's underhanded tactics in naval construction, and then announced with great fanfare that it would invest at least £5000 million in naval development over the next 10 years.

This decision immediately drew attention from the British public and even the whole of Europe, because £5000 million is no small sum for any European country.

How staggering is £5000 million? For most countries today, their total annual fiscal revenue does not reach such an exaggerated level.

Not to mention those non-powerful countries, even among the powerful countries, many countries did not have fiscal revenues of £5000 million.

Based on the current cost of a battleship ranging from over £100 million, this £5000 million investment could build at least 25 battleships.

This is quite outrageous. Currently, only the United Kingdom has 25 battleships in Europe. If European countries were to follow the British example, would they even need to build navies?

No matter how many navies we build, we can't compete with the British Royal Navy, and building a navy requires huge investments from all countries. Instead of continuing to build navies to challenge Britain, we should save those funds and invest them in areas where investment is more needed.

(End of this chapter)