Chapter 445: It’s All Because of the Canal
Chapter 435: It’s all because of the Canal
War is not child’s play, looking for war excuses can be ignored, but mobilizing troops, raising strategic supplies, these are still rare.
Don’t look at Egypt’s weaklings, that also depends on and who than, at least people in the African continent is still bearer, known as the first African power.
Their biggest competitor is Ethiopia, but this rival British help weakened, when they finished fighting Ethiopia is also finished.
No need to doubt that the powers still want to save face. Unless it’s a small power like Afghanistan, the British will have to cripple Essaouria to save face.
Hegemony needs to be maintained by force, losing to an equivalent European power is fine, losing to an indigenous African is not.
The Parisian government was still pragmatic and made careful preparations so as not to make a joke. Napoleon III decided to go political and military in parallel, defeating the Egyptian government before bringing in pro-French elements.
This was a common tactic used by European countries for overseas colonial expansion, including Austria in Central America, with the exception of the African continent where the situation was unique.
In London, the news of the opening of the Suez Canal caused an uproar in the financial market. Many people were pessimistic that the age of sail was coming to an end.
This is still based on the fact that after the opening of the Suez Canal, Austria’s voyage to the Indian Ocean was shortened by more than 12,000 kilometers, and France and Spain’s voyage to the Indian Ocean was shortened by more than 10,000 kilometers.
The British were at an absolute disadvantage in this respect, having shortened their voyage the least. The capital market was down on the British local enterprises, engaged in the Indian Ocean, Southeast Asia, the South Seas and other regions of the export enterprises, stocks have fallen off a cliff.
This fall, it spread to the entire London market, upstream and downstream related industries naturally can not be spared, followed by a crash, the stock market crash broke out.
The capitalist world economy affects the whole body, the outbreak of the stock market crash, other industries do not want to be alone, the first to be affected by the financial industry.
From the beginning of 1868, the streets of London were lined with long lines. The crash led to the bankruptcy of speculative financial institutions and banks, triggering panic among the public and a run on the bank.
This was just the beginning; a problem in one link in the circular economic chain inevitably involves other links.
Undoubtedly, the run crisis broke out, banks stopped lending to the public in order to protect themselves, and the financial crisis spread to enterprises.
The opening of the Suez Canal was only the trigger that set off the economic crisis. The British economy had been in trouble for a long time, and overcapacity had appeared in the UK a few years earlier.
This is also related to the rise of Fao, the world’s market is so big, more competitors to grab the market, resulting in the British industrial and commercial products in the international market share continued to decline.
With a smaller market and no cuts in capacity, there was a natural surplus. Only first the American Civil War, followed by the Russo-Prussian War, the war delayed the outbreak of the crisis.
Now that the war is over, there is no outlet for the goods produced, and an economic crisis is already brewing. At this time, it so happened that the opening of the Suez Canal triggered the crisis in advance.
In the original time and space, the economic crisis started in Britain in 1864. Now that the time has been delayed by three or four years, the overcapacity is naturally more serious.
This was caused by the inconvenience of communication and the lack of market news. Capitalists did not keep up with the rhythm of the market to regulate production, leading to serious overcapacity.
Without any new tricks, the outbreak of the economic crisis naturally led to the need to find ways to survive the winter. Enterprises without strength went bankrupt outright, and industries with strength began to lay off workers and cut capacity.
In the summer of 1868, the Great Depression hit London. The scale of British railroad construction alone was reduced by 78%, a dozen large and small railroad companies declared bankruptcy, and more than twenty railroads under construction were announced to be indefinitely suspended.
Shipbuilding also peaked in production in 1867, then began to contract, and by the end of 1868 the industry had shrunk by 34%.
The textile industry, moreover, was the hardest hit by this crisis. Hit by the Austrian cotton spinning industry, they lost the market in Central and Eastern Europe, and the Western European market was hit by the French.
The British this pillar industry, in this economic crisis was hit hard, five workers more than 100,000 giant enterprises, in the economic crisis in the bankruptcy.
Bankrupt people are all over the street, half a year ago was a great tycoon with boundless splendor, but now it has been reduced to the street refugees.
Meanwhile, exports have shrunk dramatically as a result of the economic crisis. The gold outflow is serious, money is tight, banks and enterprises have gone bankrupt and closed down, the British ushered in the eleventh crisis in economic history – the canal crisis.
After the outbreak of the economic crisis, the British government did not take timely measures to cope with the crisis, but allowed the crisis to ravage and let the crisis become out of control.
Countless unemployed people took to the streets of London to demonstrate and the capitalists cried out in agony. The opposition party attacked the government for its inaction in the newspapers, and the economic crisis triggered off another political crisis.
John Russell’s cabinet encountered the biggest crisis of confidence since he took office. However, it was really none of their business. According to British law, the government had no right to interfere with a free economy.
The Mouthbreathers won’t care that much, it’s all the government’s fault anyway. It’s a good thing Prime Minister John Russell didn’t interfere with the market, or he would have been guilty of “interfering with the free economy and causing an economic crisis”.
Needless to say, the most common tactic used by politicians when they can’t solve a problem – resign.
……
Vienna, the sudden economic crisis triggered Franz’s attention. Unless it’s a planned economy, there’s no way to avoid this overcapacity stuff.
Since Britain was having problems, it was only a matter of time before they spread to Austria.
Franz asked with concern: “The economic crisis is back, what measures does the cabinet have?”
Prime Minister Felix replied, “Your Majesty, judging from the situation coming from England, the impact of this economic crisis will be very great.
In order to get out of the crisis, the cabinet decided to have the state-owned enterprises start de-stocking and dumping their stock of goods at low prices all over the world.
We have to grab time with the British and the French, the market is just so big, if we react slowly it will be smashed in our hands.”
In times of economic crisis, it’s no longer time to count profits. Selling all the products in exchange for a lot of cash in hand to keep the business alive is what matters.
Allowing the SOEs to de-stock just requires an executive order to be enough. Everyone would certainly carry it out in earnest, and not many bureaucrats would be stupid enough to go against the government.
Private enterprises are a different story, and there is no way to give such an order for the government to directly interfere with the market. In a capitalist economic market, the government cannot interfere with the normal operation of the business.
Role law maker, the government naturally can not break the law. Moreover, so many enterprises have overcapacity, we can not directly administrative order, order them to reduce production, right?
Anyway, the survival of the fittest in the market, always have to die off a number of. Long-term pain is better than short-term pain, who lives and who dies depends on their own skills.
There is nothing wrong with the Cabinet choosing to save the SOEs first, as their own sons are always given preferential treatment. State-owned enterprises exported their slow-selling products, the domestic overcapacity pressure will also be reduced.
Franz continued to ask: “contingency plans are ready?”
Private enterprises are not not saved, mainly depends on the specifics of the economic crisis, according to the actual situation to take measures.
The government is not a nanny, and it is impossible to guarantee that a business will not go bankrupt. Whether they can survive or not depends on the capitalists’ own judgment.
If they make a fool of themselves, they will really die. Smart people saw the big move of the SOEs and started to follow the trend early on.
Those who can’t react deserve to be unlucky. Can’t you see the royal industries are running for their lives?
Royal Bank can be seen as the wind vane of the Austrian economy, as long as the bank to tighten the monetary root, it is certain that the economy has problems.
Open economic crisis is even more unlikely, then dry, there is no economic crisis, but also will create an economic crisis artificially.
Once the market panic occurs, the damage brought about is more terrible than the economic crisis. According to Franz’s experience, the economic crisis is in the race, who runs fast who is the winner, who took over the plate who deserves bad luck.
Prime Minister Felix explained, “Your Majesty, this economic crisis is different from the past, it is completely and simply overcapacity. Not only us, the vast majority of European countries are experiencing overcapacity.
The American Civil War and the Russo-Prussian War have made this crisis even worse. The first signs of overcapacity appeared in various countries even before the war.
If the crisis had broken out then, the market would have quickly adjusted itself. Now it is different, and preliminary estimates suggest that domestic production capacity should exceed 30% of market demand, and certain industries may exceed half of market demand, and possibly more.
We simply have no choice but to let the market win and weed out the weak. The world can’t find such a large market to set off such a large capacity.”
This was the aftermath of making war money, most of the supplies during the Russian war were supplied by the Austrian monopoly, which led to overcapacity in many Austrian industries.
After the war ended, the market carried out some self-regulation. However, economic transformation cannot be accomplished in a few months.
Now that the economic crisis is here, it is only natural that many companies that reacted one step slower could not escape.
Of course, the impact on large enterprises may not be too fatal; after all, they made war fortunes in the previous two years and accumulated capital strength.
As long as there is no blind expansion, there is still some money in their pockets now, and they have the ammunition to get through this crisis.
The serious overcapacity also means that relying on foreign output will not get rid of the crisis. With the outbreak of the economic crisis, the international market would soon shrink, and the only markets for Austria would be the mainland and the colonies.
Other overseas markets are not worth mentioning at all. It is not a question of market size, but of purchasing power.
In any case, Austria is the world’s largest economy in this era. There are two other countries with populations larger than Austria’s, yet the market is nowhere near that.
Of course, counting colonies moves that ranking back one place. The British are still the kings of this era, and no one can compete with them.
Franz nodded, the solution wasn’t unavailable, it just didn’t fit the period. The economic crisis erupted, allowing the traditional industrial crisis to erupt.
In a way, it also accelerated the outbreak of the second industrial revolution. The traditional industries didn’t have enough profits, so the capitalists had to look at the new industries.
It was conceivable that it would not be long before Austria’s new industries blossomed on all sides. Against this background, Franz naturally would not intervene.
Fall in the economic crisis capitalists, they can only count their bad luck. Their own investment vision is not good, who can blame?
Think of it as a sacrifice for the new era, for the second industrial revolution to shine.
(End of chapter)