Chapter 748 Debt Extension

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

The Berlin government has been able to support up to now, it is by overturning the table and raiding the home to obtain a sum of money.

Overturning the table also came at a price, and despite the decisive measures taken by Frederick III to resume production in time, the government's revenue was greatly affected.

If that's the case, then it's nothing, it will always be able to recover in a few days.

However, the house was leaking because of the overnight rain, and the factory had just been allocated. When everyone was about to roll up their sleeves and work, the economic crisis that swept the world came.

A large number of products are piled up in mountains, but they cannot be sold. The officers and soldiers who got the factory, of course, have to find the government to solve the problem.

Without a sufficient market, Frederick III could not make a market. All of Europe has overcapacity, and the two big hooligans of Britain and Austria are playing dumping recklessly.

As a result, the international prices of industrial and commercial products are lower than the production costs of Prussian enterprises. Not only is the price incomparable, but the quality of Prussian products is far worse.

The Berlin government has an agreement with British creditors. In theory, they can use industrial and commercial products to offset their debts. Unfortunately, the pricing power is in the hands of the British.

For example, now, the British take a 30% discount with reference to the wholesale price in the international market, and after comprehensive quality assessment and deduction, the final price is obtained.

At British prices, most goods cost less than half the cost of production.

"Selling" is a blood loss, and this loss cannot be borne by the producers. Otherwise, there will be one factory in the whole country, and all of them will go bankrupt.

This is absolutely unacceptable to the Berlin government. Now these factory owners are the cornerstone of the Kingdom of Prussia.

It was finally bought with economic benefits that made the Junkers accept the disarmament, and now they will lose their jobs immediately, which is the government's death.

The European revolution was so turbulent that the Kingdom of Prussia was able to maintain stability because employment was preserved.

The factories are owned by the workers themselves, so there is naturally no unemployment. In order to appease people's hearts, the Berlin government assures everyone that the cost price is the bottom line.

When the economy is functioning normally, there is no problem with this promise. Enterprises want to make money, and no one will deliberately produce a bunch of unsalable products and throw them to the government to find trouble.

It's different now. The economic crisis broke out, the market is a mess, and the company can't make money at all.

According to the agreement, now that everyone's products cannot be sold, the Berlin government is obliged to help them deal with them at the cost price.

Prussia had no colonies, and in order to dump goods, it had to compete with European countries.

From a purely economic point of view, the British pricing is reasonable. Prussian industrial and commercial products are indeed not competitive, and they can only play price wars.

Don't count on the European continent. Affected by the economic crisis, most Europeans are very poor. Unless they are just in need of goods, it is difficult to find a market.

For many people, the just-needed commodity at this time is grain. It is a pity that Prussia does not have enough food for itself, and there is no export.

These low-quality industrial and commercial products can only be dumped overseas. There is no doubt that Prussia does not have the ability to conduct global dumping, and most overseas markets they cannot enter.

There are only a few countries that have a relatively complete business network and are capable of dumping in most parts of the world.

They are Britain, Austria, France, Spain, the Netherlands, and Portugal. These six countries have one thing in common - colonial empires.

Among them, Spain, the Netherlands, and Portugal all declined, and the commercial network was still there, but there were not many colonies, and they were unable to absorb the industrial production capacity of Prussia.

There are many colonies in France, but the market is not large, and the domestic capitalists are not enough to divide it up, so naturally it is impossible to let Prussian goods enter.

Austria's colonies are well developed, and the market is relatively complete. Unfortunately, Austria's own industrial production capacity is very large, and there is no redundant market.

Moreover, even if they put in Prussian goods, they would not be able to sell them in the face of competition from Austrian goods.

The British have the most colonies, the market is relatively sufficient, and the internal competition is not so fierce. It can be said that it is the only choice for Prussia.

In this context, the British will naturally lower prices. While exporting industrial raw materials to Prussia, and accepting Prussian industrial and commercial products as debt relief, it seems that they are helping the Berlin government, but Prussia is actually working for them for nothing.

Not just working for nothing, but now the British have gone a step further and want to make the Kingdom of Prussia work at a loss.

Frederick III's current mood is the same: Fortunately, he worked hard for a year, and at the end of the year, he didn't earn a penny, and he still owed a lot of debt.

But he couldn't refuse, otherwise he would lose his job, and the mortgage, credit card, and chanting would all come together, and it would be like...

Life is always going to pass, and "blood loss" is better than "no return". It can only be recognized that the price was suppressed, and the Berlin government had to bite the bullet and bear the loss.

Frederick III asked expectantly: "How is the situation, have the British agreed to the extension of the debt?"

There is no way, the Kingdom of Prussia is lacking in resources and must import industrial raw materials. Mark everyone does not recognize it, which must consume foreign exchange.

The in-kind settlement agreement with the British did not mean that the goods should be thrown to the creditors, and the Berlin government was not so domineering.

Most of the creditors in Prussia are banks and financial institutions. These people play with finance and have no interest in international commodity trade.

The real situation is that Prussia sold industrial and commercial products to British capitalists in exchange for foreign exchange. After deducting costs, the remaining money was used to repay debts.

The effect of the "agreement" was that the British government also let in Prussian goods. Otherwise, under the free trade system, the sales scope of Prussian goods is limited to the British mainland.

Now that the price has plummeted, the sales price of commodities is not enough for the cost of industrial raw materials, and it has made a loss-making business. Naturally, the Berlin government has no "foreign exchange" to repay its debts.

Foreign Secretary Friedman's face suddenly sank: "We have tried everything we can, and even obtained the support of the London government, but the negotiation failed in the end.

The impact of this economic crisis on the UK is greater than we expected, and banks are now short of money.

One of our creditors, Garrett Bank, went bankrupt during the negotiation because of a broken capital chain. "

Creditors are also short of money, which is a big problem. Especially the Garrett Bank, which has gone bankrupt because of the broken capital chain, is even less likely to agree to the debt extension.

Frederick III took a deep sigh and asked the Chancellor of the Exchequer: "How much foreign exchange do we have now, and how long can we support it with normal debt payments?"

Chancellor of the Exchequer Ovitz frowned and replied: "The situation is very bad, and now our total foreign exchange is worth about 7.656 million pounds, including 3.54 million pounds, 5.68 million Aegis, 8 million francs...

In theory, it can last up to seven months if no other expenses are made and it is only used to pay the debt.

Actually, this is not possible. We must import industrial raw materials, machinery and equipment, and agricultural products to meet domestic production and living needs. "

Foreign exchange comes in and out. Normally, with the export of industrial and commercial products, the balance of payments is still achieved.

After all, domestically produced industrial raw materials and labor costs do not need to pay foreign exchange, and the problem can be solved with marks.

7.656 million pounds is equivalent to 56.04 tons of gold, which is already a well-deserved huge sum of money in this era, exceeding the total gold reserves of many countries.

If there is no foreign debt to be repaid, for a small country, so many foreign exchange reserves are enough to live comfortably.

It is a pity that there is no if, the Kingdom of Prussia has a huge foreign debt to repay. This huge sum is only enough to pay the debt for seven months.

In fact, it can't last that long. Affected by the falling prices of export commodities, the Kingdom of Prussia has now entered an era of trade deficit.

Unless creditors are willing to accept the mark, the Berlin government will not be able to pay its debts on time.

...

Franz's first reaction when he received a telegram for help from the Berlin government was to incite the Prussians to renege on their debts.

As soon as this thought came out, it was as if he had entered a demonic barrier, and he could not get rid of it again.

"What will happen if the Berlin government defaults on its debts?"

Foreign Minister Wesenberg's face changed slightly: "Your Majesty, the Prussian economy is seriously affected 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, as long as the British impose trade sanctions on them, Prussia will collapse within six months. "

This is a fact, the Royal Navy seals the coastline, and the Kingdom of Prussia will fall into the embarrassing state of lack of industrial raw materials and lack of market for products.

Of course they could go overland, bypassing neighboring countries, but the cost would be enough to bankrupt any business.

Prime Minister Felix retorted: "Not necessarily! Maybe the British would do this in normal times to kill chickens and set an example.

But now is different, the wave of revolution in Europe is intensifying.

The French Revolutionaries have occupied Paris, and the situation in the Kingdom of Prussia is also very bad, and there is a possibility of a revolution at any time.

As long as the British are not prepared to collect their debts from the revolutionary party, the Kingdom of Prussia cannot be destroyed.

Now the Berlin government is really incapable of repayment. It is a matter of time before the debt defaults. The London government should also be prepared.

As long as the Berlin government does not directly declare default and find a reasonable excuse for debt extension, the British government will not take extreme measures.

Banks, financial institutions, and speculators lend money to the Berlin government. Although these interest groups have great influence in the UK, they have not reached the point of making decisions for the government.

It is impossible for the British government to ignore the overall national strategy for their benefit. Without the support of the government, these people would not be able to do anything to the Kingdom of Prussia.

If the situation in Europe further deteriorates, the Berlin government can also negotiate terms with the British to seek some debt relief. "

It is not yet after World War II, the aristocratic group is in its heyday, and the consortium wants to control the government is simply a nonsense.

The French Revolution was already scary, and if the Prussian Revolution was allowed to succeed, the wave of revolution in Europe could no longer be contained.

Although Britain was alone overseas, the revolutionary wave did not let them go.

Britain and France have been exporting to each other for many years, and they will not be immune to the spread of the revolution.

...

On May 1, 1882, a massive anti-hunger movement broke out in the Kingdom of Prussia. Countless people took to the streets to demand that the government import more food to solve the domestic food shortage.

After the outbreak of the anti-hunger movement, the Berlin government responded very quickly, providing assistance to the international community in the shortest possible time.

At the same time, a large amount of foreign exchange was consumed to repay foreign debts, and there was no money to buy food.

For this reason, a request was made to the creditors for an extension of the payment of the debt.

There is no doubt that this is less of a "request" and more of a notification.

At the same time as the request, the Berlin government has suspended debt payments for May.

It was announced that the debt repayment funds in May would be used to purchase food to solve the domestic food shortage.

Most of the creditors of the Kingdom of Prussia are concentrated in Britain and France, which together hold 95.4% of the foreign debt of the Berlin government.

Once the two big creditors, Britain and France, have been dealt with, it can be said that all creditors have been dealt with, to be precise, the British can be dealt with.

The French are very busy now, the civil war has broken out, and they can't take care of such trivial matters for a while.

Was there really a famine in the Kingdom of Prussia?

It depends on what the British think!

If the London government accepts this, then there is a "real" famine in the Kingdom of Prussia.

If the London government did not accept this statement, then there would be no famine in the Kingdom of Prussia.

Politics only has to weigh the pros and cons, the truth doesn't matter.