Date: October 17th, 1905 – Belgrade, Kingdom of Serbia
The comprehensive and ambitious report from Milan Stojadinović's Royal Commission lay on Petar's desk like a declaration of intent, a blueprint for a future Serbia vastly different from its current, struggling iteration. Peter had spent the few days since receiving it rereading its key sections, cross-referencing Stojadinović's projections with the grim realities of Minister Paču's financial statements, and preparing himself for what he knew would be another arduous battle of wills. The modernization of the Vrška Čuka coal mine, nationwide geological surveys, the establishment of a School of Mines and Metallurgy, and the creation of a National Industrial Development Fund were not minor undertakings. Each demanded significant capital, skilled personnel, and, above all, a sustained national commitment.
He was under no illusions. Lazar Paču, his fiercely diligent Minister of Finance, having already been stretched to the breaking point to fund the initial phase of the machine gun program under a regime of painful austerity, would view these new, sweeping economic proposals with profound alarm. Peter decided that the presence of Prime Minister Nikola Pašić would also be essential for this crucial discussion. Pašić, with his deep political acumen, would need to understand the scope of these plans and help navigate the inevitable political fallout of any further significant financial reallocations or new initiatives.
On the morning of October 17th, the three most powerful men in the Kingdom of Serbia, after the King himself, gathered in Petar's main working study. The atmosphere was palpably tense. Paču looked even more gaunt and severe than usual, his briefcase likely containing page after page of fiscal warnings. Pašić, ever the inscrutable statesman, observed the young King with a keen, watchful gaze.
"Gentlemen," Petar began, his voice calm but imbued with a new level of authority growing steadily over the past months. "You are both aware of the Royal Commission for National Resource Development, which I established under Gospodin Stojadinović. It has delivered its initial report, and I have found its findings and proposals to be… exceptionally promising for Serbia's long-term prosperity and self-sufficiency."
He proceeded to outline the key recommendations from Stojadinović's report, focusing on the strategic importance of each initiative: the Vrška Čuka modernization as a first step towards energy independence and cheaper fuel for industry and railways; the geological surveys to unlock Serbia's untapped mineral wealth; the School of Mines to create domestic expertise; and the Industrial Development Fund as a mechanism to foster broader economic growth. He framed these not as mere expenditures but as fundamental investments in the nation's future, essential for breaking the cycle of agrarian poverty and foreign dependence.
"These initiatives," Petar concluded, looking directly at Paču, "will require significant initial funding. I would like to discuss how we can best secure these resources.
Lazar Paču did not hesitate. When Petar finished speaking, the Finance Minister opened his briefcase and drew out his own set of documents. His voice was strained but firm when he spoke. "Your Majesty, Prime Minister," Paču began, "while I do not doubt the potential long-term benefits of such ambitious undertakings, I must, as Guardian of the Royal Treasury, state unequivocally that the kingdom's current finances cannot support new expenditures of this magnitude without catastrophic consequences."
He then launched into a detailed, almost brutal, recitation of Serbia's financial state. He reminded them of the existing national debt, the ongoing austerity measures, the unpopularity of the recent National Defense Levies, and the already stretched capacity of the administration. "To fund these new projects – the geological surveys, the mine modernization, the establishment of new institutions – would require sums that dwarf even the initial outlays for the machine gun program. Where is this money to come from, Your Majesty? More taxes on an already burdened populace? Deeper cuts that would cripple essential services entirely? Or shall we seek more foreign loans, plunging Serbia into a debt spiral from which it may never recover and making us even more beholden to foreign interests?"
Paču's arguments were powerful, delivered with the conviction of a man who genuinely believed he was standing between the kingdom and fiscal ruin. He painted a picture of a peasantry pushed to revolt by over-taxation, a state unable to pay its officials or maintain basic order, and foreign creditors dictating domestic policy.
Prime Minister Pašić listened intently, his expression grave. He interjected, his tone measured, "Minister Paču speaks to the harsh realities, Your Majesty. The political climate is… sensitive. The current austerity is borne with difficulty. Imposing further significant burdens without clear, immediate, and widely understood benefits could lead to serious internal instability. The Skupština would likely be ungovernable."
Peter had anticipated this resistance. He let both ministers fully articulate their concerns before he responded. He knew he could not simply dismiss their warnings. "I understand your grave concerns, Minister Paču, Prime Minister Pašić," Petar said, his voice remaining even. "And I do not propose to act recklessly nor to ignore the sacrifices already made by the Serbian people." He rose and walked towards the large map of Serbia that was now a permanent fixture in his study.
"Look at this land," he said, his hand sweeping across the territory. "It is a nation of hardy, resilient people. It possesses resources that lie dormant and untapped. For too long, Serbia has been a pawn of larger powers, its economy beholden, its people's potential unfulfilled." He turned back to face them. "The measures Minister Paču has already implemented, the austerity, were a painful but necessary first step to address our immediate security vulnerabilities. But austerity alone is a slow death. It is not a strategy for growth and strength. However, for the kind of future I envision for Serbia – a future where we are masters of our destiny, reliant on our resources and the ingenuity of our people."
He then began to address Paču's points directly, drawing on his royal authority and the innovative financial thinking Stojadinović had proposed. "You speak of the source of these funds, Minister. Gospodin Stojadinović's commission has not just identified projects but also potential new mechanisms for funding them. He proposes the 'Resource Development Bonds,' specifically tied to the future profitability of a modernized Vrška Čuka mine. These would appeal to a different kind of investor, perhaps even patriotic Serbs with capital, offering a direct stake in a productive national enterprise, rather than just another general government debt."
"The National Industrial Development Fund," he continued, "is envisioned to be seeded, in part, by profits from such modernized state enterprises, creating a self-sustaining cycle. It would not initially require massive injections from the general treasury but rather a strategic reallocation of future gains. And the geological surveys, while an upfront cost, are an investment in knowledge – knowledge that can attract precisely the kind of targeted foreign investment in joint ventures that Gospodin Stojadinović outlined, where Serbia retains control and a significant share of the profits while benefiting from foreign expertise and capital."
He looked at Pašić. "Prime Minister, you speak of public understanding. We must campaign to explain this vision to the Serbian people. Not as further burdens but as an investment in their children's future in a stronger, more prosperous Serbia where opportunities exist beyond subsistence farming or emigration. We must show them tangible progress, like the modernization of Vrška Čuka, and explain how it will lead to more jobs, cheaper fuel, and a stronger nation."
Petar's counter-arguments were delivered with passion and a detailed grasp of the proposals that surprised both older men. He wasn't just expressing a wish but presenting a reasoned strategy. "I am not asking for all of this to be funded tomorrow, Minister Paču," he conceded, softening his tone slightly. "But we must make a significant start. Geological surveys are paramount – we cannot plan without accurate information. The detailed engineering plan and initial site preparations for Vrška Čuka must begin. And we must lay the groundwork for the School of Mines and Metallurgy. These are the foundations."
He then made his directive clear. "Minister Paču, I charge you with finding the means to fund these initial phases within the next fiscal year's budget. Work with Gospodin Stojadinović and his commission. Explore the feasibility of these Resource Development Bonds. Identify specific, targeted reallocations from non-essential, non-military expenditures that can be diverted to the National Industrial Development Fund's initial capitalization. Present me with a plan within two months. It will not be easy, I know. But it must be done. Serbia's future cannot wait for a balanced budget achieved through stagnation."
There was a long silence. Paču looked down at his papers, his expression of deep internal conflict. Pašić watched the King, a new understanding, perhaps even a grudging admiration, in his eyes. The young monarch was not just a figurehead but a driving force with a clear, if audacious, vision.
Finally, Paču looked up. "Your Majesty," he said, his voice raspy with fatigue, "your will is clear. The task you set is… monumental, given our current state. But I will, as always, endeavor to serve the kingdom to the best of my ability. I will examine every possibility of funding these initial phases. However unorthodox the means may have to be." It was not an enthusiastic endorsement, but it was not a refusal. It was the acceptance of a loyal, though deeply worried, servant.
Pašić then spoke. "Your Majesty, if this is your chosen path, then the government will work to prepare the political ground. It will require careful management of public expectations and a clear articulation of the long-term national benefits. But a vision of progress, of a stronger Serbia, can also be a powerful unifying force."
Peter felt relief, knowing the most challenging work was still ahead. He had secured, for now, the reluctant acquiescence of his key ministers to embark on a path of proactive economic development. "Thank you, gentlemen," he said. "I have faith in your abilities and your patriotism. Together, we will secure the foundations for a greater Serbia."
After they had left, Petar stood before his map again. The lines on it no longer seemed to represent just borders and administrative districts but a vast field of potential waiting to be cultivated. He had initiated military reforms and was launching an economic offensive. Each step was fraught with risk, each demand on his kingdom's meager resources a gamble. But Alex Volkov's soul within him, armed with the bitter lessons of future history, knew that inaction, timidity, and failure to adapt were the most significant risks of all for a small nation in a predatory world. He was demanding much of his people and himself. But the vision of a new, resilient, and robust entity rising in the Balkans, an echo of an ancient glory, burned ever brighter in his mind.