Chapter 287 The Economic Crisis Breaks Out

Quartet negotiations are still in progress, and a crisis has crept in. Overcapacity in the capitalist world has been fed back to the market. In order to destock, British capitalists have increased their dumping to countries around the world.

The Americans were the first to suffer. Even under the butterfly effect of Franz, Austria diverted some international capital, but this did not solve the crisis in the United States.

From 1848 to 1858, Americans built 25,000 kilometers of railways, 8,000 kilometers less than in history. The railway bubble is not as serious as it has been in history.

Unfortunately, with the rapid development of the American railway industry, the surrounding industries have not been driven. Under the competition of British commodities, the metallurgical industry has also shrunk, and the cotton spinning industry has also developed slowly.

Railroad tracks, pig iron, locomotives, cotton cloth, hardware, machinery... are all full of British products, and it is difficult for the local industry to be squeezed.

Now that the British have stepped up their dumping efforts, these industries can't stand it. The cotton spinning industry, which was hit first, opened the prelude to bankruptcy.

It soon spread to the stock market, the stock price fell out of control, and more companies were implicated.

A large number of factories went bankrupt, and banks and financial companies were naturally unable to survive alone. A large number of bad debts appeared, a run on crisis broke out, and banks went bankrupt.

The economic crisis in the United States soon spread to the United Kingdom, the market shrank, and the British industrial and commercial exports were also affected. A large number of enterprises went bankrupt, and British capitalists as investors also suffered heavy losses.

The capitalists responded keenly. In order to stop losses and deal with the economic crisis that may break out in the country, the British capitalists have withdrawn funds from the US market one after another.

Against this backdrop, in the fall of 1857, there was a money shortage in the U.S. financial market, the entire banking system was paralyzed, 62 of the 63 banks in New York stopped paying, and the discount rate exceeded 60%.

The economic crisis broke out in the United States. The unprotected American market is fragile. This economic crisis directly triggered the American Civil War.

Northern capitalists needed cheaper labor to increase profits and tariff barriers to protect their interests; Southern planters, on the other hand, needed lower tariffs to export cotton and buy cheap industrial and commercial products.

Stimulated by the economic crisis, the industrial owners in the north decided to overturn the table and began to advocate the benefits of abolition of slavery and trade barriers, preparing to strangle the wealth of the southern plantation owners from the source.

Obviously, this was not acceptable to the plantation owners in the South. The abolition of slavery was acceptable to everyone. The contract labor system was not much worse than slavery, but the issue of tariffs could not be negotiated.

The industrial and commercial products in the north are of poor quality, low efficiency and high prices. Why should we use them?

What's more, the increase in tariffs will fatally hit the export of grain, cotton and tobacco. For every dollar of tax increase, they will reduce their profits by one dollar, and they are completely robbing them of their money.

The conflict of interests between the two sides was too serious to reach an agreement at all. In the end, the southern planters who were at a disadvantage began to fight for independence.

The outbreak of the economic crisis in the United States has little to do with Austria. The trade volume between the two countries is very small. Everyone is an exporter of agricultural products. The competition between the two sides is greater than the cooperation.

However, when the economic crisis spread to the United Kingdom, it was difficult for all European countries to survive on their own, and Austria was no exception.

Vienna Palace

Prime Minister Felix said solemnly: "Your Majesty, the outbreak of the economy in the United States has spread to the United Kingdom, and it will affect us soon.

Once the British withdraw funds and leave, many domestic enterprises will have insufficient funds, and then an economic crisis will break out. "

Franz replied nonchalantly: "This is an inevitable result. At least we have been prepared. There will be no money shortage in the country. As long as the normal exchange rate of the banking industry is guaranteed, the crisis will be within control."

Everyone nodded. In order to deal with the economic crisis, the Vienna government made a lot of preparations. First, they locked up a part of the capital so that they could not flow out, and then issued a huge amount of bonds to accumulate funds.

Now even if some British and French capital retreat, the Vienna government also holds a large amount of pounds and francs, which can be directly redeemed without causing an outflow of gold and silver.

Chancellor of the Exchequer Carr proposed: "Your Majesty, the crisis is still under control, so can the implementation of the approval system for huge capital flows be postponed?

After all, doing so will damage our reputation, and there is no need to do so unless it is a last resort. "

In this era, capital can be freely circulated between countries without any restrictions. As the first master to eat crabs, it is possible to become a hero, and more likely to become a martyr.

Once it is disgusted by the capitalists, it will be very unfavorable to Austria in the future international trade.

Franz thought for a while and said: "Approval is still required, a notice can be issued, and the capital flow of more than 100,000 Aegis must be declared 1 to 3 months in advance.

We guarantee that all legitimate capital flows are unrestricted, and that the source of funds that cannot be determined must be explained clearly and verified that it is not illegally obtained before leaving the country.

The government can find more excuses, for example: some underworld groups are transferring funds; or some corrupt officials are transferring finances...

Take advantage of the economic crisis before it hit Austria, lest people think that we are restricting the free movement of the economy. "

Checking the legitimacy of the funds will add a lot of work to the government, but in order to fight crime, a little extra cost is acceptable.

As for restricting the flow of funds

, this is not worth mentioning at all, you can declare it in advance. At most, it adds a layer of protection to the financial market, giving the government time to prepare in advance.

Otherwise, a currency crisis like the one in the United States is a lesson in the past. Suddenly, a large amount of foreign capital is going to leave, and the government has no time to react, so it can only swallow the bitter fruit.

"Yes, Your Majesty!"

...

Apart from adding a financial firewall, the Vienna government has done nothing. It is still the era of capitalist free market economy. Too much government intervention in the economy will arouse many people's disgust.

Besides, Franz didn't know how to intervene. In any case, overcapacity is an indisputable fact, and this problem is simply an unsolvable problem.

In 1857, Austria's industrial production capacity was more than four times that of 1847, far exceeding the world average. The sequelae was naturally overcapacity.

This is an inevitable result of industrialization. The efficiency of mechanical production is much higher than that of manual production. Obviously, the growth of the market cannot keep up with the growth of industrial production capacity.

Therefore, after the first industrial revolution, every once in a while, an economic crisis will break out in the capitalist world.

Looking for a new market is actually very nonsense at this time. In the context of economic crisis in countries all over the world, where is there any market.

This is not the future, where there are people there is a market. The current productivity is limited, the social wealth created is also limited, and most people have no purchasing power at all.

Taking the Russian Empire as an example, its population of more than 70 million ranks first in Europe. On the surface, it appears to be a big market.

In fact, apart from the more than 10 million nobles and free people, the rest are all serfs, and they have no personal freedom. What is the purchasing power?

This limited market has long been carved up. If you want to continue to increase exports, wait for the tsarist government to complete the serfdom reform!

Relying on the colonial market is also nonsense. Except for a few colonies such as India, Cuba, the Philippines, and Southeast Asia, most of the other overseas colonies are under development.

The number of immigrants is small, and the local people have no purchasing power. If they want to export industrial products, they cannot find buyers.

In this case, once overcapacity appears, an economic crisis is inevitable. The best option is not to cover the lid, but to let the crisis erupt.

Survival of the fittest, the strong survive, and the weak die. This is also the driving force for the advancement of science and technology. Companies that do not want to stand still and be squeezed to death by their competitors must replace equipment in time and eliminate outdated production capacity.

Even if it is a copycat enterprise, it must work hard. If it is not fast enough to respond, not strong enough in imitation ability, and not low enough in cost, it will die.

Time flew by, and by the end of 1857 the economic crisis had spread from England to France. By the beginning of 1858, the economic crisis continued to expand to Belgium, Austria, Germany...

In the entire European continent, except for the Russian Empire, which has not yet completed its reforms, no one can survive alone. Under the blow of the economic crisis, all countries suffered heavy losses.