Chapter 533: Detonating the Crisis
Chapter 521 Detonating the Crisis
After the closing of the Austrian Agricultural Economy Conference, the Vienna government announced to the outside world: before the new grain harvest, to replace some of the strategic reserves.
This happens almost every year, except that it is usually bought when international grain prices are low and sold when prices are high.
This time is obviously an exception, although it is not known how much grain the Vienna government is prepared to sell out, the international grain market has triggered violent turbulence.
Compared to the beginning of the year, food prices on the international market has fallen nine percent, and now by the Vienna government to sell the impact of food prices plunged four points.
Pallet capitalists have been unable to hold out, the Anglo-Russian deal let them lose a lot of money, Austria now make up a knife.
It was a good thing that the Vienna government announced a replacement rather than a mere sell-off, or this effect would have been even more drastic.
London grain trading market, a middle-aged man in fancy dress, as usual, in the market to understand the price.
The middle-aged man named James, is a small capitalist, owns a flour mill. Since the signing of the Anglo-Russian grain agreement, he panicked.
Before the cheap Russian grain could enter, the share was divided up by the capitalists with connections. By the time James reacted, it was too late.
Of course, it was useless to react fast, this kind of fat meat was not something he was qualified to share. Originally James was acquiring native wheat for processing, but not anymore.
Domestic wheat is not that cheap, if the purchase price is pushed down, it is estimated that he will be directly beaten out.
In order to find a cheap source of grain, James turned his attention to the grain trading market. Influenced by international grain prices, sure enough grain prices over here fell much more.
Suddenly seeing Austrian wheat appear on the billboard, James immediately stopped in his tracks. It should be known that in the last decade or so, there has been very little Austrian wheat on the international market, and what has appeared is flour that has been processed.
“Raul, what’s wrong with this batch of grain and why is the price so low? I remember that Austria doesn’t export wheat to the outside world, this shouldn’t be smuggled goods, right?”
James asked half-jokingly, no wonder he was surprised, the main reason was that this was not generally low, but low to the limit, a price beyond James’ imagination.
“Mr. James, you really know how to joke. If we were really smuggling, we wouldn’t be smuggling grain! This kind of bulk commodity is inconvenient to transport, and the tax rate is low there’s no need to risk it at all.”
James ignored Raul’s snorting and grabbed a handful of wheat and looked at it, initially judging it to be stale grain, but that wasn’t a reason for the price to be so low.
“Spare me the bullshit, tell me what’s wrong with this grain? Don’t tell me that it’s our turn to have this kind of cheapness to take advantage of!”
Raul smiled blandly and took out a newspaper and handed it to James.
“Mr. James, you can all see that this batch of grain is all stale. Not long ago, the Vienna government announced the replacement of the reserve grain, and the stale grain in the warehouse was sold to the public at a discount.
You are also a professional, so you must be well aware that the price of stale grain will be discounted by one. Now that this batch of grain has been stored for more than three years, processing it into flour will definitely have an impact on its taste.
In Austria, this kind of grain is usually not processed into flour, but used to brew wine, or processed into feed.
This time, the Vienna government released a larger stock of grain before it flowed into the international market. The reason why it is so cheap, of course, is that the group of bureaucrats in London did a good job.
The Russians’ new grain is so cheap, these old grains naturally can only be even cheaper, or else who would they be sold to?”
It was obvious that Raul also had a deep grudge against the London government. The Anglo-Russian Trade Agreement, which directly allows companies to sign contracts with the Russians, naturally eliminates business for them as middlemen.
If they hadn’t gotten Austria’s stale grain back for sale, they would have had to close up shop. The price of grain on the international market is not as cheap as Russian grain.
James put down the wheat in his hand and grabbed another handful and rubbed it in his hand.
“Are you sure all this grain is okay?”
Raul: “Of course, I’ll go to hell if there’s a problem!”
Seeing that James was still hesitating, Raul added, “Mr. James, if there is any doubt, you can inspect it yourself.
This kind of opportunity to pick up a bargain doesn’t come around often, and it’s unlikely that international food prices will fall this low in the future.
You should know that if you sell at this price, farmers all over the world will go bankrupt. This has already fallen below the cost of production price for just one batch.”
James was moved, if there was nothing wrong with the grain and it was merely stale, there was every value in buying it. Gritting his teeth, he seemed to have made up his mind.
“I want 30,000 tons, can it be cheaper?”
This was almost all the money James was able to mobilize, but in order to seek a greater benefit, he decided to gamble anyway.
The price of the grain was fifteen percent cheaper than what the London government had gotten from the Russians. On the surface, it was normal for there to be a difference in price between old and new grain, but in reality, this price was still excessively cheap.
The deeper reason, James wisely did not explore. Anyway, as long as he can get rich, what does he care so much!
……
From the beginning of May, grain from Austria quickly appeared on the British market. As soon as this cheap grain appeared, it was sought after by unscrupulous capitalists.
Everyone was smart enough to know that such prices were abnormal, and some even speculated that this was Austria’s intention to sabotage the Anglo-Russian deal, but that didn’t stop them from getting rich.
Grain is different from other commodities, and storing it for three to five years is not a problem. Anyway, it is stale grain, and then put or stale grain.
The deterioration of taste is even a minor problem. As long as the processed flour is a little cheaper, there is no worry about sales in the market.
To be able to fill the stomach is good, but also want to pursue the taste of food, the ordinary British people have not been so generous.
So fanfare action, naturally attracted the attention of the London government. However, this action, not Austria alone, there is a group of British local capitalists involved.
The London government and the Russians deal, the same can not be everyone benefited, many capitalists are still the interests of the damaged.
If no action is taken, when the Russian grain pours in, it will be very difficult for them to survive.
Against this background, they naturally didn’t mind cooperating with Austria. Anyway, it was a legal trade, and the London government had no right to interfere.
Want to set restrictions to stop the Austrian grain dumping. Sorry, Congress that pass can not be easy to pass, in order to their own interests opponents, holding up the banner of free trade, so that Benjamin’s Cabinet can not do anything.
The free trade system can not be overturned, which is the core of Britain’s economic policy. Of course, this kind of annoyance has little effect on Prime Minister Benjamin.
A new round of election results have come out, he is now the former prime minister. What should be fretting is the Liberal cabinet that is being formed, which is sort of digging a hole for rival William Yurt Gholston.
At the critical moment of the changeover, Benjamin’s cabinet responded negatively, and by the time the handover of power was completed, it would be too late for the London government to take action.
Just in these few short months, Austria has already dumped eight and a half million tons of rye, three million tons of wheat, four and a half million tons of corn, three and a quarter million tons of soybeans into Britain ……
What happened in Britain also affected the international grain market, which would be a real bloodbath, plunging fifteen percent.
The Russians’ cheap grain has not yet appeared on the international market, and as a result the prices have all fallen pretty much.
At the beginning of the year, rye on the international grain market was still 25 guilders per ton, and now it has fallen to 18.6 guilders per ton; corn has also fallen from 18.8 guilders per ton; to 14.1 guilders per ton ……
In short, the prices of all staple grains are falling wildly, and along with it, the prices of other agricultural products have also been greatly affected. People’s panic heart is the culprit for all this.
When it comes to this point, it’s better for everyone to lose money together. Everyone knows clearly that the current prices are not the lowest point, and after the fall harvest, food prices will usher in a new low.
Grain supply exceeds demand, and the good times are over for all the major grain exporting countries. Without the fuse of the Anglo-Russian grain loan agreement and the Vienna government’s grain dumping, this agricultural crisis would have erupted slowly.
Now it is impossible, the crisis is just approaching the direct detonation. 1872 is destined to be a year of tragedy, grain stagnation will become the hot topic of the second half of the year.
It was no longer a question of price, but of not being able to sell at all. The best way to stabilize grain prices was to cut back on grain production and destroy the surplus produce.
As a responsible big country, Austria naturally has to take active measures. in July, the Austrian Ministry of Agriculture issued a call to the world’s major food-producing countries to cut food production capacity at the same time.
On August 12, the Vienna government introduced the Land Fallow Law, which explicitly stipulates in law that the land on which food is grown must be left fallow. The exact duration of the fallow period is determined by the local government according to the actual situation.
The law seems to be very effective, but in fact its influence is very limited. Austria already has a tradition of agricultural fallow, but this time it is only explicitly provided for.
According to the estimate of the Ministry of Agriculture, Austria’s grain production can be reduced by about two or three percentage points in this way. This is not a small number, which can alleviate the overcapacity crisis.
On August 15, the government in Vienna introduced another Open Land Act, which explicitly prohibits the cultivation of wheat, corn, rye, potatoes, and many other crops for five years on newly reclaimed land on the mainland in the European region.
These measures are far from being able to quench the thirst of the near, in any case, has been planted to the ground crops, it is impossible to give the pull.
Austrian grain production in 1872, still will not be reduced, a short period of time can not affect the price of the international grain market.
(End of chapter)