At this time, the principality of Graustark was in a most prosperous condition. Its affairs were under the control of an able ministry, headed by the venerable Count Halfont. The Duke of Perse, for years a resident of St. Petersburg, and a financier of high standing, had returned to Edelweiss soon after the distressing death of the late Princess Yetive and her American husband, and to him was entrusted the treasury portfolio. He at once proceeded to endear himself to the common people by the advocacy of a lower rate of taxation; this meant the reduction of the standing army. He secured new and advantageous treaties with old and historic foes, putting Graustark's financial credit upon a high footing in the European capitals. The people smugly regarded themselves as safe in the hands of the miserly but honest old financier. If he accomplished many things by way of office to enhance his own particular fortune, no one looked askance, for he made no effort to blind or deceive his people. Of his honesty there could be no question; of his financial operations, it is enough to say that the people were satisfied to have their affairs linked with his.
The financing of the great railroad project by which Edelweiss was to be connected with the Siberian line in the north, fell to his lot at a time when no one else could have saved the little government from heavy losses or even bankruptcy. The new line traversed the country from Serros, capital of Dawsbergen, through the mountains and canyons of Graustark, across Axphain's broad steppes and lowlands, to a point at which Russia stood ready to begin a connecting branch for junction with her great line to the Pacific. All told, it was a stupendous undertaking for a small government to finance; it is well known that Graustark owns and controls her public utility institutions. The road, now about half completed, was to be nearly two hundred miles in length, fully two-thirds of which was on Graustark territory. The preponderance of cost of construction fell upon that principality, Dawsbergen and Axphain escaping with comparatively small obligations owing to the fact that they had few mountains to contend with. As a matter of fact, the Dawsbergen and Axphain ends of the railroad were now virtually built and waiting for the completion of the extensive work in the Graustark highlands.
The opening of this narrative finds the ministry preparing to float a new five million gavvo issue of bonds for construction and equipment purposes. Agents of the government were ready to depart for London and Paris to take up the matter with the great banking houses. St. Petersburg and Berlin were not to be given the opportunity to gobble up these extremely fine securities. This seemingly extraordinary exclusion of Russian and German bidders was the result of vigorous objections raised by an utter outsider, the American, John Tullis, long time friend and companion of Grenfall Lorry, consort to the late Princess.