Chapter 419 Crisis breaks out
February 3, 1873.
Vienna, Austria.
For the Austrians, the whole year of 1872 was unforgettable. In 1872, like other countries in the world, the Austrian market was unprecedentedly prosperous. In addition, Austria defeated Italy and recaptured Venice, which made the Austrians even happier.
The double victory in economy and military is the most confidence-boosting thing for the citizens of any country. With the overheated economy, a large number of job opportunities are created. The outbreak of war also triggers military conscription. Under such circumstances, Austrians are not very keen on immigrating overseas.
The most direct manifestation of this is that in 1872, the number of Austrian immigrants to East Africa dropped sharply to less than 5,000 throughout the year. Because the Austrian government intended to import German population to Venice, the immigration flow changed from mainly to East Africa to mainly to cities and Venice.
Since 1848, the only major setback the Austrians had suffered was their defeat in the Austro-Prussian War, which saw them kicked out of Germany by Prussia.
However, Austria's economy was not affected in the slightest. Although its industrialization was slower than that of France and Prussia, it was also developing rapidly.
The construction of railways was a direct reflection of this economic situation. From 1859 to 1872, the entire Austro-Hungarian Empire built more than 7,000 kilometers of railways. The data may not be as high as that of other powerful countries, but it is also astonishing. This period was also the privatization stage of Austrian railways.
However, all this changed at the end of 1872, when 76 railway companies in the Austro-Hungarian Empire defaulted on their bonds. Among the 384 listed railway companies, 279 companies had no dividends to distribute.
However, railway stocks continued to be popular and the market was full of applause, which gave the fanatical investors the illusion that they could not buy them unless they rushed to buy them.
By February, the bad news came.
On February 4, the Barclays Railway defaulted.
On February 5, Cook Railway Company defaulted.
On February 6, Kenyonx Bank defaulted.
On February 7, all railway stocks fell, and then, under the watchful eyes of investors, stock prices in the Vienna Stock Exchange plummeted like a waterfall. That night, many gamblers went to the rooftop.
Vienna Court.
"Your Majesty, according to statistics, more than 400 million guilders evaporated from the Vienna Stock Exchange in one day. Countless stockholders became penniless overnight. According to preliminary statistics yesterday, there were 17 suicides. Credit is completely paralyzed and securities trading has been suspended. Austria's economic winter is coming."
Franz listened to the Chancellor's report with an expressionless face. As a mature emperor, Franz was obviously much more stable.
Franz asked directly: "How far will this crisis affect the empire?"
"We don't know yet, but the impact may be even greater than that of 1848, because the scale of this crisis is obviously much larger. Except for a few state-owned enterprises, the entire railway industry is at risk of paralysis, and the crisis is now spreading from railways to other fields."
1848 was a scary number for Franz. At that time, the Habsburgs were nearly overthrown, and Franz came to power in a turbulent situation. In the following ten years, Austria's development was also quite unsatisfactory. It was only recently that it reversed its downward trend. However, before it could enjoy a few days of comfort, the economic crisis broke out again.
In fact, it is not surprising that the capitalist economic crisis first broke out in Austria. The economic crisis is a game of passing the parcel. In recent years, as the Austro-Hungarian Empire has become increasingly industrialized, it is natural that it cannot avoid the capitalist development cycle.
The prosperity before the economic crisis was a typical case of data falsification and living beyond one’s means. The financial and stock markets were distorted and remained at abnormally high levels for a long time.
The economic crisis of 1873 was a far-reaching global economic crisis. The crisis first broke out in industrial countries and then spread to other countries. Any country that joined the world market was the first to be affected.
Regions that are not affected include the Far East, South America and others. Historically, Africa was also unaffected, but because of the variable of the East African Kingdom, it will now be affected. The East African Kingdom is not large, but it represents nearly one-third of Africa. Together with North African countries such as Egypt, they will not be able to escape this economic crisis.
As for why Austria became the first place to break out, it was entirely due to the national conditions of the Austro-Hungarian Empire. The industrialization of the Austro-Hungarian Empire was originally one step slower than other countries, and the development of the financial industry was relatively chaotic. In addition, the Austro-Hungarian Empire had a dual political system, and its regulation of the financial industry was inevitably worse than that of other countries.
The capitalists in other countries could still band together before the collapse, fool the small fry first, and then withdraw safely. However, there were many ethnic groups and factions within the Austro-Hungarian Empire, so the Austrian capitalists were less martial and lacked communication. They were suspicious of each other under vicious competition, which led to the collapse of the Vienna Stock Exchange first. It would be better for me to die than for my friends!
Although all countries have economic problems and everyone is cheating, the better the cheating skills, the later the crisis will break out. It is obvious that the banks and entrepreneurs in Vienna are not as good as the old foxes in Britain, France, the United States and other countries.
With the outbreak of the Austro-Hungarian economic crisis, the business of the Hexingen Group will inevitably be affected first. What is certain is that the export of grain from East Africa will inevitably be frustrated because this crisis is accompanied by a strong agricultural crisis.
International food prices are already rising due to fierce competition from the output of newly developed lands in North America, Tsarist Russia, and Australia. With the addition of a new player, the East African Kingdom, this agricultural crisis will be even more severe.
On the day when the Vienna Stock Exchange collapsed, Ernst received the news. On that day, all the companies under Hechingen began to lower their product prices and became the first to join the dumping war.
It should be noted that the food companies under the Hechingen Consortium not only do business in East Africa, but also do business in Germany and Austria-Hungary. It is the largest grain distributor in the whole of Germany. Therefore, the dumping of products by the companies under the Hechingen Consortium is not just a matter of the East African Kingdom, but the Hechingen Consortium is dumping agricultural products from East Africa, Germany and Austria-Hungary together.
East Africa, Germany, and the Austro-Hungarian Empire are all important grain-producing countries in the world. When the Hechingen Consortium started the grain dumping war, huge amounts of cheap agricultural products from the three countries flooded into the whole of Europe.
At the same time, East Africa also stepped up negotiations (orders) with the Sultanate of Zanzibar to export grain to the entire Arab region and parts of Southeast Asia through the Sultanate of Zanzibar.
The Heixingen Group caught the whole world off guard as soon as the crisis broke out, and international food prices skyrocketed.
Ernst was fearless about this. Even if other countries wanted to liquidate, Germany and Austria-Hungary would have to be involved. The Junker landlords and Hungarian landlords would actually become passive beneficiaries. Obviously, this was impossible. As for the aggravation of the food crisis, that was exactly what Ernst wanted to see, because East Africa was not a free economic market and the crisis would not have any negative impact on East Africa.
Although the plummeting grain prices will cause Ernst to earn less money, it is good enough to make money now. If it is a little later, it will not be a question of whether to make money or not, but that he will not be able to sell it at a loss unless he really gives it away for free.
In fact, as long as the grain exported from East Africa can be sold for one cent, the Heixingen Consortium can earn one cent of profit. This is the result of the special economic system of the East African Kingdom.
From the moment the grain was shipped out of East Africa, it was decoupled from the East African Kingdom and directly allocated to the Black Hingen Consortium. The manpower and production costs of these grains were almost non-existent, because the grain was not given economic value in East Africa. The land was robbed, the labor was directly taken from the indigenous workers, and the East African farmers only had to maintain basic food and clothing needs, but their needs were not worth mentioning compared to the profits they created for the Black Hingen royal family.
(End of this chapter)
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