Chapter 4 Combine Harvester
The news of Roosevelt's death was quickly offset by the news of Hoover's election. The voice of a state candidate was too weak after all. Only Roosevelt's wife Eleanor thought that the matter was not so simple. She was also sitting in the car, but luckily escaped from the ghost gate. Now she is recovering in the hospital. She thinks that the matter is not so simple. Especially after hearing that the perpetrator was an Italian driver, she felt a strong sense of crisis, but it was useless for her to say so, so she planned to investigate it carefully after she recovered from her injuries.
This information is not worth mentioning in the face of the momentum of the stock market. On the first day of Hoover's presidency, stock markets around the country saw a surge in prices. Some leading stocks even climbed by $5 to $5, and the trading volume on that day was about 5 million shares.
At the beginning of the year, stock market forecasters still believed that a daily trading volume of 5 million shares was an impossible astronomical figure, but now a daily trading volume of 5 million shares has almost become commonplace. On the 23rd of the month, the stock market became even more excited because the news that the United Group paid a deposit of 200 million yuan was released. The trading volume for the whole day reached 7 million shares, which was extremely shocking.
The American people were very confident in the high return rate of the stock market. They boldly took out loans and put all the borrowed money into the stock market. Although the interest rate of this current loan was as high as 8% to 9%, people didn't care at all. At this time, the United Group's repayment of the loan with an interest rate of 4.75% would not make the bank angry, but would allow them to invest more resources in the crazy stock market credit. However, in this wave, the United Bank seemed a little strange. Not only did it not make short-term loans, but it tightened its credit. It only subscribed to the long-term construction bonds issued by the United Group and denominated in US dollars. The interest rate was only 5%, and the amount was 100 million US dollars.
The banking industry couldn't understand this situation, but the United Bank explained that it was preparing funds for the subsequent 4 billion contracts of the United Group. Everyone also expressed their understanding of this. How could a bank under a group not work for the group? This is the case with the Rockefellers and Morgans, and the Cianos are no exception...
In this wave of rising prices, Contini naturally continued to step up the pace of selling. The stock that was sold the most this time was American Radio, which had risen to more than $300. Compared with Contini's initial position cost of $2-3, it has risen more than 100 times!
In the third and fourth weeks of the month, Contini sold more than $800 million in stocks. Part of these dollars turned into cash and flowed out of the United States, and part of them turned into the gold reserves of the United Bank, which would eventually flow out of the United States.
Of course, the outflow from the United States is not a simple exchange of funds. Such a large-scale flow of funds will definitely arouse the suspicion of Americans. This time, Francesco's method was used: setting up several American branches such as United Pharmaceuticals, United Shipping, and United Airlines, and then transferring 200 million US dollars from this channel through domestic orders in Italy, and then transferring the order money of S2 motorcycles... Through a series of methods packaged as trade, 400 million of 800 million US dollars went away, 200 million turned into gold, and another 100 million was directly exchanged, and finally 100 million was returned to Chase Manhattan's loan.
Entering February, the stock market, which had been rising endlessly, began to be possessed by evil spirits, and stock prices began to fall continuously. The decline of many stocks was even greater than that of February. At this time, the United Group issued a statement again, announcing that it continued to be optimistic about the stock market, and then the United Bank used real money to buy 1.5 billion worth of stocks from the stock market. Together with the stocks that Contini publicly operated last time, the overall holding value was nearly 230 million US dollars, and reiterated that the newly added stocks would not be reduced before the Dow Jones broke through 350 points.
This statement quickly boosted market confidence, and the falling stocks immediately began to rebound in retaliation. By February 7, all stocks had recovered their losses, and some stocks hit new highs, with the stock index within reach of 350 points. Contini and others in Rome were very happy about this. In fact, many of the 500 million stocks purchased came from some stocks that had just been sold some time ago. This wave operation added nearly 100 million US dollars to the account of the United Group.
But Fed officials are getting more and more restless. They realize that the expansion of speculative activities has caused more and more national surplus funds to flow into the stock market, and credit expansion has also reached a precarious point. On the 22nd, the Fed raised the discount rate again. However, this approach did not cool down the investment enthusiasm. The discount rate reached more than 5%, and the investment enthusiasm did not retreat but rose, putting the Fed in a dilemma, because if the discount rate continues to rise, the stock market may be hit hard, and although this measure can crack down on speculative activities, it will also drag down those companies that are operating normally, and even cause the entire country's economy to stagnate.
In addition, the government also had to raise funds through loans. If the discount rate continued to rise, the government would have to pay higher interest rates. In the eyes of the Federal Reserve, the stock market frenzy could only be cooled down when the United States encountered a huge disaster. This move made Hoover unhappy. He had not yet taken office and had not begun to fulfill his promise of "another four years of prosperity", but the Federal Reserve was messing around. So he openly and secretly called on the Federal Reserve to control the pace and not mess around.
Taking advantage of the stock market rebound, Contini continued to order stock reductions after the New Year. By the 8th of the month, the funds he obtained through stock reductions had accumulated to more than $700 million, but there was still nearly $800 million on the books (including the newly purchased part of United Bank). Because of the repeated use of high-selling and low-buying techniques to harvest leeks during this period, the income was rising wildly. Basically, Contini's account sold about $100 million, and then United Bank publicly subscribed for 20 million to hedge and boost confidence. This way of fighting and retreating achieved a large amount of capital spillover without causing the index to fluctuate greatly.
Since United Group repaid $300 million in loans in January and paid interest on the previous bonds, the market funds could barely be maintained. Contini continued to order stock reductions, and finally reduced his position to only $500 million by the end of the month. At this time, he had taken more than $2 billion through stock market reductions, and in addition to repaying the 200 million loans from the bank, there was an additional surplus of $800 million.
This $800 million plus the income from Contini's convertible bonds made the United Group's foreign exchange cash (including gold hard currency) exceed the $2 billion mark, far exceeding any bank in Italy. Even in Europe, there is no such large bank with a net asset of $2 billion.
At this time, Contini
The Federal Reserve has always been unwilling to be led by the stock market. They gathered many economists across the country to come up with a way to cut off the fire: prohibiting Federal Reserve member banks from lending Federal Reserve bank funds to securities brokers. On February 2, 1929, the Federal Reserve issued this ban, and two weeks later added a notice saying, "It is necessary to prevent the federal reserve funds of various banks from flowing into the hands of speculators in the form of securities as much as possible." At the same time, the Federal Reserve gradually reduced the number of various securities that are freely sold in the open market, hoping to stop raising the discount rate.
The method of cutting off funds played a big role. The stock market was in mourning overnight, and the Federal Reserve took advantage of the victory and raised the interest rate of demand loans again. The front sent instructions asking what to do. Contini thought about it and thought that the bubble was not yet completely burst, so he instructed to absorb appropriately, but not to make a big fuss.
In February, in addition to the long-awaited US dollars flowing into Italy, Contini's long-awaited medium-sized joint tank was successfully produced. Since United Power produced the United Power 928 diesel engine with a power of 100 horsepower, the performance parameters of the tank changed. Christie boldly thickened the armor, increasing the front armor from 22-25 to 25-28, the turret armor was 30+8 shields, the overall length was increased from 5.0 meters to 5.34 meters, the width was increased from 2.9 meters to 2.25 meters, the height remained unchanged, and the total weight increased from 0.5 tons to .7 tons. Due to the increase of more than a ton of weight, although the engine power increased, the speed decreased slightly, but the decrease was not large. The maximum off-road speed dropped from 40 kilometers/hour to 3 kilometers/hour, and the maximum road speed dropped from 0 kilometers/hour to 55 kilometers/hour. At the same time, the cruising range was reduced from 250 kilometers to 200 kilometers, unless an external fuel tank that can run 20 kilometers was added.
The main gun uses Ansaldo's 37/38 gun. Contini reserves the ability to replace it with 50 or 57/3 guns, but it cannot be realized for the time being. However, thanks to the participation of German engineers, a turret design with no auxiliary machine guns but 2 20 machine guns is also designed, and the elevation angle can reach 5 degrees.
Contini laughed: Isn't this the prototype of a self-propelled anti-aircraft gun?
The tank quickly passed the test of the Army Department. At this time, Fiat also took out their new tank based on the Fiat 3000a tank type b, which was also equipped with Ansaldo's 37 guns, but the total tonnage was only tons, and the armor was only half of the joint tank. Although Fiat's new model has also passed the verification, it is far behind the joint tank in terms of mobility and defense performance. Even Fiat's engineers dare not compare it with the joint tank, saying that the two are different products, and it is unfair to compare them together: it is a medium tank, and 3000b is a light tank.
But why is the medium tank faster than the so-called light tank? The Fiat representative was hesitant to answer this question.
The final solution was very unexpected: the Army Department purchased 25 Fiat 3000b tanks with military expenditures, and the United Group paid for the purchase of 25 tanks, but all the old tanks had to be handed over to the United Group for sale. The Army Department was overjoyed and naturally agreed. Who doesn't want bigger, thicker, better and stronger tanks?
In Contini's words: The Army should add some new stuff. 25 tanks are only 3 million US dollars. Just now, he used a combine harvester to harvest leeks in the United States and made 2 billion US dollars. It would be a waste if he didn't spend it. He turned around and placed an order for 75 tanks for the Oil Guard.
300,000 Army has 25 tanks, and 20,000 Oil Guards will have 75 tanks. This ratio is very harmonious!