Date: May 28th, 1905 – Belgrade, Kingdom of Serbia
The weeks following Petar's approval of Minister Paču's "Path of Extreme Austerity" were instructive. The royal decree, translated into ministerial orders and new tax regulations, began to bite across the kingdom. From his vantage point in the Stari Dvor, Petar received a steady stream of formal and informal information, painting a picture of a populace and a bureaucracy groaning under the new burdens.
Newspaper articles, particularly those from opposition-leaning presses, grumbled about the "King's Taxes" and questioned the wisdom of such severe measures. Whispers reached him through palace staff of discontent in the marketplaces of Belgrade, of merchants complaining about the new levies on tobacco and imported goods, and of ordinary folk feeling the pinch as government departments tightened their belts, delaying payments or reducing services. Even within the ministries themselves, Petar heard through Colonel Mišić, there was considerable resentment over the ten percent budget cuts, with various department heads subtly attempting to shield their fiefdoms or plead for exemptions.
Petar knew it was inevitable. Alex Volkov's historical studies were replete with examples of public backlash against even necessary reforms. However, knowing it intellectually was different from experiencing the pressure, however indirect, as the responsible monarch.
Prime Minister Nikola Pašić requested an audience at the end of May. The old statesman entered Petar's study with his usual composed demeanor, but his eyes betrayed a certain weariness. "Your Majesty," Pašić began after the initial pleasantries, "I must report on the public and political mood concerning the recent fiscal measures."
"I have been anticipating your assessment, Prime Minister," Petar said, gesturing for him to be seated. "Speak frankly."
"Frankly, Your Majesty, there is discontent," Pašić stated. "The new levies are unpopular, as expected. The cuts to ministerial budgets are causing friction and slowing some administrative processes. Members of the Skupština, particularly from the opposition parties but even some within the governing coalition, face pressure from their constituents. There is talk of formally debating these measures, of calling for their repeal or modification."
Petar listened without interruption. This was the political reality he had to navigate. "And what is your counsel, Prime Minister? Do you believe these measures threaten the government's or the kingdom's stability?"
Pašić stroked his long, grey beard. "The stability of the kingdom is not immediately threatened, Your Majesty. The Serbian people are resilient and patriotic; they will endure if they understand the necessity. However, sustained discontent can be exploited by those who do not wish us well, both internally and externally. The government can weather the criticism in the Skupština for now, but we must be mindful of the pressure. Perhaps some… minor adjustments to the implementation, or a clearer public articulation of the strategic imperative, might be warranted."
"A clearer public articulation, yes," Petar agreed. "The people must understand that these sacrifices are for the long-term security and strength of Serbia, to ensure our soldiers have the tools to defend our homes. As for minor adjustments… I am wary of appearing to retreat from necessary decisions in the face of predictable complaints. That would only invite further pressure on future reforms, perhaps even more difficult." He was resolute. The machine gun program and the army's modernization were non-negotiable.
"However," Petar continued, "I am always open to ensuring the burdens are borne as equitably as possible and that no unnecessary hardship is inflicted. Suppose there are specific instances where the cuts are causing genuinely critical failures in essential services, rather than mere inconvenience. In that case, I expect to be informed, and we can review them on a case-by-case basis. But the overall fiscal targets, Minister Paču's targets for funding our military preparedness, must be met."
Pašić nodded slowly. "Your Majesty's resolve is clear. The government will endeavor to manage the political consequences and communicate the necessity of these measures to the public more effectively."
The conversation with Pašić reinforced Petar's conviction that while the established ministers were necessary for running the existing state machinery, he desperately needed fresh thinking, particularly on the economic front, to move beyond mere austerity and towards genuine growth and development—the kind of growth that could eventually support his larger ambitions without continually squeezing the populace. His thoughts returned to Milan Stojadinović and his insightful memoranda.
The time had come, he decided, to assess the young economist in person. "Colonel Mišić," Petar said later that day, "I wish to have an informal conversation with Gospodin Milan Stojadinović from the Ministry of Commerce. This is not to be an official summons. I do not wish to cause undue speculation or alarm his superiors. Perhaps you could arrange for him to be invited to a private supper here in the palace, not in a state dining room, but in one of my smaller, private apartments. As a young man of ideas, whom I have heard is… interested in the kingdom's economic future."
Mišić, ever discreet, understood the subtext. "I will make the arrangements, Your Majesty. Perhaps for an evening late next week?"
And so, on a cool evening in late May, Milan Stojadinović was quietly ushered into one of Petar's private sitting rooms, looking both honored and distinctly nervous in his best suit. The room was comfortably furnished but lacked the imposing grandeur of the official state rooms. Petar, dressed in a simple civilian lounge suit rather than a uniform, greeted him with a welcoming smile, hoping to put the young man at ease. A small table was set for a light supper.
"Gospodin Stojadinović," Petar began when a servant poured them a glass of Serbian wine. "Thank you for accepting my rather informal invitation. Colonel Mišić mentioned your keen interest in economic matters, and I confess, I have had the opportunity to read some of your memoranda. I found them… stimulating."
Stojadinović visibly brightened, his initial nervousness receding slightly. "Your Majesty, it is an immense honor. I… I am passionate about Serbia's economic potential. I believe we can achieve far more than our current circumstances suggest."
"A sentiment I wholeheartedly share," Petar said. "Tell me, in your view, what are the most significant, yet perhaps overlooked, opportunities for our kingdom's economic advancement?"
For the next two hours, Petar primarily listened as Stojadinović spoke with eloquence and a surprising depth of knowledge once he found his stride. He reiterated many of the points from his papers but expanded on them, his arguments buttressed by figures and examples from other developing European nations. He spoke of the need for a national industrial policy, not just piecemeal efforts. He emphasized the importance of technical education in creating a skilled workforce. He passionately argued for modernizing agricultural practices to increase yields and free up labor for industry. He even discussed the potential for developing specific export-oriented industries where Serbia might have a natural advantage.
Alex Volkov, the engineer, found himself nodding along to many of Stojadinović's points regarding infrastructure and technical development. King Petar, the ruler grappling with Paču's austerity, was intrigued by Stojadinović's more optimistic, growth-oriented perspective. "Your ideas regarding leveraging state assets and attracting targeted foreign investment are exciting, Gospodin Stojadinović," Petar interjected at one point. "Minister Paču is, rightly, cautious about increasing our foreign debt. How would you balance the need for capital investment with the imperative of maintaining fiscal sovereignty?"
Stojadinović's response was nuanced. He acknowledged the risks but argued that carefully selected investments in productive enterprises, especially those that could generate export revenue or substitute for current imports, would eventually pay for themselves and strengthen the economy, making debt more manageable. He suggested creating special economic zones with tax incentives to attract specific types of industries, and even the possibility of the state entering into joint ventures with foreign companies where Serbia retained a controlling interest and a share of the profits, ensuring technology transfer and local employment.
Petar was impressed. Stojadinović was not just a theorist; he had thought about practical implementation. His ideas were bold, some perhaps overly optimistic given Serbia's current administrative capacity, but they were a refreshing change from the pervasive caution he encountered elsewhere. Here was a mind that saw solutions, not just obstacles.
As the evening drew close, Petar knew he had found a potential asset. Stojadinović was young, ambitious, and possessed a modern economic outlook that was sorely lacking in his current circle of senior advisors. "Gospodin Stojadinović," Petar said, "your insights have been invaluable. You have given me much to consider." He paused, then made a decision. "I have many concerns about Serbia's long-term economic health and development. While necessary for immediate security, the current fiscal measures are not a sustainable path to prosperity. I would like you, in a purely informal and confidential capacity for now, to draft a more detailed proposal on one or two of the ideas you discussed tonight. Perhaps focus on a strategy for developing a specific domestic industry that you believe holds the most promise, outlining the necessary state support, potential funding mechanisms, and projected benefits. Take your time, be thorough. Colonel Mišić will be your point of contact."
Stojadinović looked overwhelmed, his face a mixture of elation and shock. "Your Majesty… I… I would be deeply honored. I will not disappoint you."
"I have a feeling you won't, Gospodin Stojadinović," Petar said with a smile.
After Stojadinović had departed, Petar sat for a long time, staring into the remnants of his wine. He had taken another small but potentially significant step in building the kind of Serbia he envisioned. Pašić was the experienced navigator, Paču the stern quartermaster guarding the stores, and Putnik the master of arms. But Stojadinović… Stojadinović could perhaps become one of the architects of the kingdom's new economic engine.
The path was still long and fraught with challenges. The whispers of discontent over austerity would not fade quickly. But tonight, Petar felt a renewed sense of optimism. He was not just imposing his will; he was actively seeking out and cultivating the talent needed to translate that will into lasting achievement. The old guard could manage the present; new counsel, new blood, helped him build the future.