Chapter 98: Fiscal Revenue And Budget
Regarding the government’s development report, what Carlo was actually more interested in was the Spanish Government’s fiscal report.
After all, whether it was carrying out reforms or construction, it all required large amounts of pesetas. If the government’s funds situation was not monitored, perhaps the country would go bankrupt without anyone knowing.
Regarding the government’s fiscal situation, Prime Minister Primó actually had a lot to say as well.
“Your Majesty, according to the Ministry of Finance’s summary of the 1870 total fiscal report, our economic situation is relatively good, and it is expected to maintain fairly stable growth in ” Prime Minister Primó smiled as he spoke, appearing somewhat more relaxed when mentioning Spain’s economic situation.
Economic development is always interconnected. Although it seemed the government had reduced taxes on farmers, once the farmers had money, whether they deposited it in banks or spent it on consumption, it would similarly stimulate Spain’s fiscal growth.
In addition, with Spain’s various construction projects, many jobs above the per capita income level had emerged, which were welcomed by many Spaniards.
The most popular currently were the workers at the steel mills. Although working at steel mills was tough, the money earned was real.
Not to mention anything else, just the steel mill that Carlo had integrated after recruitment in 1870 alone hired over 400 workers in one year, and across all of Spain, there would only be more.
The public was getting richer, and their consumption levels would naturally rise steadily. The public’s consumption could also stimulate development in all industries, and Spain’s economy would naturally rise accordingly.
If Spain during Queen Isabella’s rule was more like a stagnant pool of murky water, then current Spain was more like living water connected to rivers, because the various construction projects advocated by the government and the Royal Family were gradually revitalizing the entire economic system.
Carlo nodded, appearing to listen attentively.
Just the Royal Family had earned quite a lot of funds during this period, so the government’s fiscal revenue should have seen considerable growth as well. After all, the Royal Family had become one of the government’s major taxpayers so far, paying over a million pesetas in taxes to the government in
“According to incomplete statistics, our Gross National Product in 1870 was approximately 1828 billion pesetas, an increase of about 5% compared to
Fiscal revenue was approximately 48 million pesetas, accounting for about 7% of the Gross National Product. Our fiscal expenditure reached 8 million pesetas, with a fiscal deficit as high as 60 million pesetas.
However, because we issued national debt and obtained war indemnity from Morocco, we could barely cover our fiscal deficit.” Prime Minister Primó handed Carlo a detailed report on Spain’s finances and explained.
Understanding national development is also a right befitting a king, and Primó naturally would not refuse Carlo’s understanding of the national situation, as a king indifferent to state affairs was not a good thing either.
“60 million pesetas fiscal deficit?” Carlo felt a bit of a headache. Originally, hearing that Spain’s total fiscal revenue reached 48 million pesetas had put Carlo in a pretty good mood.
But after hearing that the fiscal deficit alone in 1870 was as high as 60 million pesetas, Carlo’s mood was not so great anymore.
60 million pesetas! Converted to pound sterling, that was nearly 3 million, which was absolutely a huge sum.
“Where did this 60 million pesetas go?” Carlo hurriedly asked.
No joke, the Royal Family’s total assets so far had not exceeded 60 million pesetas. Even the Royal United Bank’s total savings funds barely reached that figure.
The Spanish Government’s annual fiscal loss was as high as 60 million pesetas, which meant that just one year of government losses equaled the total property of the Royal Family?
Primó had anticipated Carlo’s question. Hearing it now, he was not panicked at all and smiled as he explained: “Your Majesty, our major expenditures currently consist of three items: military expenses, accounting for 1% of total fiscal expenditure, with approximately 6 million pesetas annually as military expenses.
The remaining two items are railway construction and industrial construction.
Over the entire year of 1870, we built over 500 kilometers of railways and 4,000 kilometers of roads. The construction costs for these railways and roads were also one of our major expenditures.
The Transportation Department’s expenditure was also as high as 23%, with our expenses in transportation construction reaching 95 million pesetas.
Industrial construction was not as exaggerated, but the funds spent on purchasing production materials from abroad, building industrial bases, and encouraging private enterprises also reached 70 million pesetas.
Adding in expenditures for education, medical treatment, and other areas, as well as government personnel wages and so on, 8 million pesetas was already the result after the government had practiced frugality multiple times.”
For Spain to achieve reform and industrial expansion, it was fundamentally impossible without investing large amounts of funds.
Spain’s technology in the industrial aspect was already behind, requiring the purchase of large amounts of industrial equipment and related technology information from abroad.
At the same time, building factories, laying production lines, and recruiting workers all required costs, which was also why the Spanish Government’s fiscal expenditure remained high.
However, all of this had returns, at least in Primó’s view; these expenditures had hope of yielding results within the next three years, contributing to Spain’s economic development.
Just the various factories and enterprises blooming across Spain during this period destined Spain’s economy to enter a phase of stable growth in the future.
This was also why Primó was willing to have such huge government expenditures, because with investment came returns; the funds spent would feedback to the government in various ways, allowing the government to earn even more in the future.
Hearing Prime Minister Primó’s reply, Carlo nodded, dispelling the doubts in his heart.
Although Spain did not have a large-scale navy, military expenses were still considerable. Especially in 1870, after successively experiencing the Cuban War of Independence and the Carlist faction rebellion, the military expenses for suppressing those two rebellions were not small.
In addition, the Spanish Government needed to maintain an army of over 100,000 people, so military expenses were actually not excessive and were within a reasonable range.
Fortunately, the indemnity from Morocco basically wiped out Spain’s 1870 financial loss.
Plus loans from the Italian Government, and the full-year total fiscal revenue in 1871, the upcoming Spanish Government still had plenty of confidence to handle new construction and expenditures.
In the end, it was because of the separatists in Cuba and the Philippines that Spain was forced to maintain an army size of over 100,
After all, these two regions not only loved to stir up independence, but were also separated from the Spanish Mainland by very long distances. Every suppression of rebellion required the government to pay a heavy price, and regardless of the final war outcome, it was actually a loss for the Spanish Government.
Carlo nodded and continued to raise his question: “Is next year’s available fiscal budget sufficient? If next year’s finances still face huge losses, I’m afraid there will be no one to help us fill the gap.”
Primó had actually considered this question long ago: “The government’s current available fiscal budget is close to 150 million pesetas, plus next year’s fiscal revenue, continuing our construction is no problem.
1871 has hope of being a year of peace; if there is no war, our military expenses can be reduced to around 75 million pesetas.
The reduced military expenses can be used for railway and road construction or industrial expansion, or to continue promoting literacy education, which is basically sufficient to meet the government’s fiscal needs for the new year.”
Don’t think that Spain’s fiscal revenue of 48 million pesetas was high; in reality, many of the government’s expenditures were fixed and basically impossible to reduce.
This was also why Prime Minister Primó had to calculate even millions of pesetas carefully. If a project overspent by a few million pesetas, adding up dozens of construction projects, the wasted funds would be enough to bankrupt the Spanish Government.
“Prime Minister Primó, since our fiscal budget is sufficient, then for the new year, the government’s focus should continue to be on the construction of heavy industry, as well as broader literacy education and infrastructure construction including railways and roads—what do you think?” Regarding the use of next year’s fiscal budget, Carlo planned to offer his opinion.
48 million pesetas in fiscal revenue seemed like a lot, but converted to US dollars it was only about 21 million, and converted to pound sterling only 531 million pounds.
If this funds were only placed on a few key projects, perhaps certain results could be achieved. But if wanting comprehensive construction blooming in multiple areas, it was a bit too idealistic.
Carlo’s purpose was also simple: influence the government to focus on constructing heavy industry as much as possible, with secondary goals of literacy education and infrastructure construction; everything else could be put on hold for now.
Fields like medical treatment and agriculture currently had little room for development. Spain’s land situation determined that agriculture’s ceiling was just like that; even achieving self-sufficiency was problematic, let alone large-scale export of agricultural products.
Medical treatment was completely limited by the current technology situation. If money was invested into medical treatment, it might not break even within ten years.
For the funds-scarce Spanish Government, these two projects could be temporarily abandoned for now, and focus should be placed on the more profitable heavy industry.
Of course Carlo had the right to offer suggestions on some of the government’s work. Prime Minister Primó also did not oppose Carlo’s suggestions; he just did not want Carlo to interfere too much in the government’s work and impose his own ideas on the government for execution.
“Your ideas are the same as mine, Your Majesty.” Primó nodded, clearly recognizing Carlo’s ideas to some extent: “For current Spain, the development of agriculture and medical treatment can be postponed for a while.
The government’s current focus will be on the construction of heavy industry and railways, and the promotion of literacy education will also be pushed forward as much as possible.
Before Spain’s finances have sufficient budget, other construction can be postponed; currently, only heavy industry, education, and infrastructure construction are the most important to us.”
First update of 3,000 words, seeking support!
Day 6 of Riwandi, already updated 3,000 words, seeking support!
