Chapter 765: Debt Extension

  Chapter 748 Debt Extension

Berlin Royal Palace, Frederick III only felt the pressure. Affected by the war, the Kingdom of Prussia fell into the Great Depression early after the economic crisis broke out.

The Berlin government was able to support itself until now, and that was all by overturning the table and plagiarizing the family to obtain a sum of money.

Overthrowing the table is also costly, although Frederick III took decisive measures to restore production in time, but the government’s revenue was still greatly affected.

If that was all, it was nothing; it could always be recovered in a few days.

Instead, it was just when the factories were distributed and everyone was about to roll up their sleeves, the economic crisis that swept across the globe came.

A large number of products were piled up, but could not be sold. The officers and soldiers who got the factories, of course, had to look for the government to solve their problems.

There wasn’t enough of a market, and Frederick III couldn’t turn one. All of Europe is overcapacity, and the two big rogues of England and Austria play dumping with impunity.

Now the international price of industrial and commercial products is lower than the production cost of Prussian enterprises. Not only is the price can not be compared, the quality of Prussian products is far worse.

Berlin government and British debtors have an agreement, in theory they can use industrial and commercial products to offset the debt, unfortunately the pricing power is in the hands of the British.

Now, for example, the British refer to the international market wholesale price of 70% discount, and then comprehensive quality assessment deductions, is the final price.

According to the British pricing, the price of most goods is less than half of the cost of production.

“Selling” is a bloody loss, this loss can not be borne by the producers, or else all the factories in the country, one for each, all of them will go bankrupt.

This was unacceptable to the Berlin government, and the factory owners were now the cornerstone of the Kingdom of Prussia.

It was not easy to use economic benefits to buy, so that the Junker nobility accepted the disarmament, and now immediately smashed their rice bowls, that is the death of the government.

With the wave of revolutions in Europe so raging, the Kingdom of Prussia was able to remain stable because of the preservation of employment.

The factories were owned by the workers themselves, so naturally there was no unemployment. In order to appease the people, the Berlin government is the one who assures everyone that the cost price is pocketed.

When the economy was functioning normally, there was naturally no problem with this promise. Businesses are trying to make money, and no one would intentionally produce a bunch of stagnant products and throw them at the government for trouble.

Now it’s different, the economic crisis broke out, the market is terrible is a mess, companies simply can not make money.

As agreed, now that people can’t sell their products, the Berlin government is obligated to help them get rid of them at cost price.

Prussia had no colonies, and if it wanted to dump goods, it had to compete with European countries.

From a purely economic point of view, the British pricing was reasonable. Prussia’s industrial and commercial products were really not competitive and had to play the price war.

Don’t count on the European continent, affected by the economic crisis, most of the European population is poor, unless it is just need goods, it is difficult to find a market.

For many people, this time the immediate needs of goods is food, unfortunately this thing Prussia themselves are not enough to eat, exports are non-existent.

These poor quality industrial and commercial products could only be dumped overseas. There is no doubt that Prussia did not have the ability to dump globally, and most of the overseas markets were inaccessible to them.

There were only a few countries that had a well-developed commercial network and were capable of dumping in most parts of the world.

They are Britain, Austria, France, Spain, the Netherlands and Portugal, and these six countries all have one common characteristic – colonial empires.

Of these, Spain, Holland and Portugal were all in decline, with their commercial networks still in place but few colonies, incapable of absorbing Prussia’s industrial capacity.

France has a lot of colonies, but the market is not big, the domestic capitalists will not be enough to divide, naturally impossible to put Prussian goods into.

Austria’s colonies are well developed, the market is relatively well developed, but unfortunately Austria’s own industrial capacity is very large, there is no extra market.

Moreover, even if Prussian goods were let in, they could not be sold in the face of competition from Austrian goods.

The British, with the most colonies, a relatively well developed market, and not so fierce internal competition, could be said to be Prussia’s only option.

Against this background, it was natural for the British to press prices. On the one hand, they exported industrial raw materials to Prussia, and on the other hand, they accepted industrial and commercial products from Prussia to offset their debts. It seemed that they were doing a favor to the Berlin government, but it was really Prussia who was working for them for nothing.

Not only working for nothing, but now the British are going one step further, to make the Kingdom of Prussia work at a loss.

Frederick III’s current mood is like: after a year of hard work, at the end of the year, the accounts did not earn a penny, but also owed a debt.

He could not refuse, otherwise he would lose his job, mortgage, credit card, ~ ~ chanting together, that is simply ……

The day is always to live, “blood loss” is better than “blood money”. The government of Berlin had to accept the loss of the price.

Frederick III asked expectantly: “How is the situation, the British agreed to extend the debt?”

There is no way, the Kingdom of Prussia lack of resources, must be imported industrial raw materials, the Mark is not recognized, which must consume foreign exchange.

The agreement reached with the British in-kind offset, not that the goods thrown to the debtor on the line, the Berlin government has not been so overbearing.

Prussian debtors are mostly banks and financial institutions, these people are playing with finance, not interested in international commodity trade.

The real situation is that Prussia sold industrial and commercial products to the British capitalists in exchange for foreign exchange, after deducting the cost of the rest of the money to pay off the debt.

The effect of the “agreement” was that the British government let in Prussian goods as well. Otherwise, under the free trade system, the sale of Prussian goods would have been limited to the British mainland, and it is not necessary to think that they would not have been sold at all.

Now the prices have plummeted, and the selling price of goods is not enough to cover the cost of industrial raw materials, so the Berlin government naturally does not have the “foreign exchange” to pay off the debt.

Foreign Minister Feldman’s face immediately sank: “We have thought of every possible way, and even obtained the support of the London government, the final negotiation or failure.

The impact of this economic crisis on the United Kingdom, more than we expected, the bank is now also short of money.

One of our debtors, the Garrett Bank, went bankrupt on the way to negotiations because of a broken capital chain.”

The fact that the debtors are also short of money is a big problem. Especially the likes of Garrett Bank, which had itself gone bankrupt because of a broken financial chain, was even less likely to agree to a debt extension.

Frederick III sighed deeply and asked the finance minister, “How much foreign exchange do we have now, and how long can we support it with normal debt payments?”

Minister of Finance Ovitz frowned and replied, “The situation is very bad, now our entire foreign exchange adds up to about 7,656,000 pounds worth, including 3,540,000 pounds, 5,680,000 sacred guilders, and 8,000,000 francs ……

Theoretically, if no other expenses are made and it is only used to pay the debt, it will be able to support us for a maximum of seven months.

In practice, this is impossible. We must import industrial raw materials, machinery and equipment, and agricultural products to meet our domestic production and living needs.”

Foreign exchange comes in and out, and under normal circumstances, with the export of industrial and commercial products, it still manages to break even.

After all, the domestic production of industrial raw materials, labor costs, do not need to pay foreign exchange, with the mark can solve the problem.

7.656 million pounds equivalent to gold is 56.04 tons, in this era has been a deservedly huge sum, more than the total amount of gold reserves of many countries.

If there is no foreign debt to be repaid, for a small country, so much foreign exchange reserves, has been enough to live a small life.

Unfortunately, there is no if, the Prussian kingdom of the huge amount of foreign debt needs to be repaid. This huge amount of money, just enough to pay the debt for seven months.

In fact, it could not last that long, affected by the falling prices of export commodities, the Kingdom of Prussia has now entered the era of trade deficit.

Unless the creditors were willing to accept payment in marks, it was impossible for the Berlin government to pay its debts on time.

……

Having received a telegram from the Berlin government asking for help, Franz’s first reaction was: to encourage the Prussians to renege on their debts.

Once this thought came out, it was as if it had entered a magic barrier and could no longer be waved away.

“What would happen if the Berlin government reneged on its debt?”

Foreign Minister Weissenberg’s face changed slightly, “Your Majesty, Prussia’s economy is heavily influenced by the British, and the Berlin government does not have the ability to default on its debts.

If the Berlin government defaults on its debts, the British will only need to impose trade sanctions on them, and it won’t take half a year for Prussia to collapse.”

This is true, with the Royal Navy sealing off the coastline, the Kingdom of Prussia would be in dire straits with a lack of industrial raw materials and a lack of markets for its products.

Of course they could still go overland and bypass the neighboring countries, except that the cost would be enough to bankrupt any business.

Prime Minister Felix countered, “Not necessarily! In normal times perhaps the British would do it to make an example of them.

But not now, with the wave of revolutions growing in Europe.

The French revolutionaries have even occupied Paris, and the Kingdom of Prussia is in such bad shape that a revolution could break out at any time.

As long as the British were not prepared to collect debts from the revolutionaries, they could not let the Kingdom of Prussia be finished.

Now that the Berlin government was really incapable of repaying the debt, it was only a matter of time before the debt defaulted, and the London government should have been prepared for it.

As long as the Berlin government doesn’t directly declare a debt default and find a sensible and reasonable excuse for debt extension, the British government won’t take extreme measures.

Lending money to the Berlin government are banks, financial institutions, speculators, these interests in the United Kingdom, although the influence of the group is large, but not to the point of decision-making for the government.

It is impossible for the British government to disregard the national strategic situation for their interests. Without the support of the government, these people could not do anything about the Kingdom of Prussia.

If the situation in Europe deteriorates further, then the Berlin government can still negotiate with the British and seek partial debt relief.”

It’s not yet post-World War II, the aristocracy is in its heyday, and it’s simply a fool’s errand for the consortium to try to control the government.

The French revolution was scary enough, if the Prussian revolution was allowed to succeed, then the wave of revolutions in Europe could no longer be contained.

Although Britain was isolated overseas, the wave of revolutions did not leave them alone.

Britain and France had been exporting each other for many years, and they could not be left alone as the revolution spread.

……

On May 1, 1882, the Kingdom of Prussia erupted into a powerful anti-starvation movement, with countless people taking to the streets to demand that the government import more food to solve the food shortage at home.

After the outbreak of the anti-hunger movement, the government in Berlin reacted very quickly and came to the aid of the international community in the shortest possible time.

At the same time, on the grounds that the repayment of foreign debt had consumed a large amount of foreign exchange and there was no money to buy food, it asked its creditors for an extension of debt payment.

There is no doubt that this was less of a “request” and more of a notice.

At the same time that the request was made, the Berlin government had already suspended the payment of the debt for the month of May.

It was announced to the public that the funds for the May debt service would be used to purchase food to solve the domestic food shortage.

The Kingdom of Prussia’s debtors were mostly concentrated in Britain and France, which together held 95.4% of the Berlin government’s foreign debt.

Fixed the two big debtors of Britain and France, can be said to have fixed all the debtors, to be precise, to fix the British on the line.

The French are now very busy, the civil war has broken out, for a moment can not care about this trivial trivial.

Is it true that famine has broken out in the Kingdom of Prussia?

That depends on what the British think!

If the government in London accepts this, then there was a “real” famine in Prussia.

If the government in London does not accept it, then there was no famine in Prussia.

Politics is only about weighing the pros and cons, the truth is not important.

(End of chapter)