Holy Roman Empire

Faced with the joint onslaught of Anglo-Austrian capital, the French government did not surrender. Napoleon IV exhibited a side that was willing to take responsibility.

First, he called for domestic enterprises to withdraw their investments from abroad and increased foreign exchange reserves by buying francs on the international market.

He then issued an administrative order strictly prohibiting domestic banks from lending francs to international speculative capital and personally met with several domestic finance groups.

No one knew exactly what was discussed, but after being summoned by the Emperor, the figures in the French financial world became much more disciplined.

Quite a few people symbolically pitched in funds to join the resistance.

By this time, it was already too late. The attacking side had already stockpiled a large amount of francs, and even if the domestic finance groups were being watched, it was of no use.

All in all, the Paris Government’s handling of the crisis was commendable, and its measures were timely.

Unfortunately, the fundamental cause of this crisis was the severe insufficiency of France’s foreign exchange and gold reserves. Without solving this problem, it was impossible to escape the crisis.

Theoretically, France had a large amount of investments overseas. If only one-fifth could be withdrawn, it would be enough to weather the storm.

However, this was the 19th century, not the 21st, and withdrawing capital from overseas was simply not something that could be accomplished in a day or two.

Time waits for no one; before overseas funds could return, the French government’s foreign exchange reserves were about to run out.

The Paris Government became anxious. If this continued, in a few days, they would have to tap into gold reserves to fill the gap.

The French government’s gold reserves were already insufficient, and a massive outflow of gold would undoubtedly precipitate the collapse of the franc currency. Rather than that, it might be better to surrender now.

...

Inside the Palace of Versailles, Napoleon IV no longer possessed his usual spirited demeanor; he became much more despondent.

Clearly, the crisis had struck him hard— the French Empire was not as strong as he had imagined.

Economic Minister Elsa said, "We have already limited the amount of each exchange, but the number of people coming to exchange currency each day keeps increasing.

Panic has already been created. The market is pessimistic about the future of the franc, and there are more and more short sellers in the financial market betting against it.

According to the current situation, if no other forces join in, a market collapse is only a matter of time."

Faced with the attack of Anglo-Austrian capital, is there any force in the world that can counterbalance it?

The answer is: Yes.

Although the French finance group was somewhat weaker than Anglo-Austrian capital, not all of the Anglo-Austrian capital had been fully invested, and if the French finance group joined the defense, they would be fighting on home ground. Coupled with the power of the French government, they would certainly be capable of putting up a fight.

After hesitating for a moment, Napoleon IV slowly said, "Send someone to talk to the domestic finance groups again. Everything else is negotiable, but the right to mint currency is not on the table.

Tell them if they still refuse to compromise, we will make concessions to Anglo-Austrian capital, and then no one will come out unscathed."

The French finance group was willing to cooperate with Anglo-Austrian capital’s actions, not only for the financial gains on the market but more so to force the Paris Government to yield.

If the franc were to collapse completely, it wouldn’t necessarily be advantageous for the French finance group.

In the short term, they might make more money through speculation, but this would cost them the future.

If the franc lost its status as an international currency, the cost for the French finance group to develop overseas would significantly increase.

Of course, this did not scare them. Most capitalists do not think so far ahead, and many finance groups rooted in their homeland have little interest in internationalization.

However, nobody dared to ignore the threats of Napoleon IV.

If the French government were to directly compromise with Anglo-Austrian capital and let them in, it would be deadly.

In the face of interests, nothing is impossible. The French government needed stability, while Anglo-Austrian capital sought profits.

Disregarding political factors, the likelihood of both sides making concessions was very high.

As long as they could achieve their objectives and obtain the anticipated profits, it did not matter to the capitalists whether or not the franc would be hit hard.

Although this financial storm was stirred up by Franz, by this time, it had already attracted capital from all over Europe and had gone far beyond Franz’s control.

Even if the governments of the Anglo-Austrian two countries called a halt together, it might not have any effect.

Real money had already been invested, and the capitalists were not about to withdraw without reaping the benefits. How could that be possible?

...

"Stock market crash + financial crisis + overcapacity = economic crisis." This equation might not be 100% accurate, but it certainly holds 99.9% certainty. Nôv(el)B\\jnn

It started with England and Austria dumping products in France, followed by a stock market crash. Before the French could catch their breath, Anglo-Austrian capital launched an attack on the financial market.

Connecting all these events leads to one conclusion— shifting the crisis abroad.

The two countries most severely affected by overcapacity were the industrial nations of England and Austria. Even if an economic crisis were to erupt, they would suffer the most substantial losses.

The Anglo-Austrian two countries were facing not only overcapacity but also capital surplus. Having just made a fortune from the war, capitalists in both countries had bulging pockets.

Normally, everyone would take this capital and invest it, rather than leaving it in the bank to earn interest.

Unfortunately, the whole world was now facing overcapacity, and investing in any industry would be a disaster.

However, before the crisis that should have hit the Anglo-Austrian two countries could erupt, France ran into trouble first.

In the Vienna Palace, holding the intelligence report, Franz breathed a sigh of relief.

Better you than me—at least Austria wanted to safely get through this crisis, and shifting the crisis was an indispensable part.

Looking around the world, was there a better target than France?

If they didn’t take advantage of the fact that everyone hadn’t reacted yet and press France down with the British, there would be no chance in the future.

No matter how low-key Franz tried to be, it was only a matter of time before the theory that Austria was a greater threat than France took hold, and then it would be England and France banding together against Austria.

By taking preemptive action against the French, just the grudge from this could push back the time England and France would come closer by many years.

If this grudge were blown up too big, it was likely that after the crisis, the alliance of England, France, and Austria would come to an end.

By shifting the economic crisis and at the same time dealing a blow to the biggest competitor on the European Continent, Franz rated this divine maneuver as "perfect".

Setting aside the intelligence report, Franz instructed, "Have our people stir the pot in the shadows, make this financial war even more bloody.

Especially focus on hitting French heavy industry. There are many French steel factories still desperately trying to hold on, and we should lend them a hand.

Keep international coal prices ultra-high, and if necessary, we can even ban the export of domestic coal—let the French continue to explore charcoal steelmaking technology!"

By the way, spread the word in France that the blame for this incident should be placed on the British."

Heavy industry was the most important and also the most vulnerable industry in France. Due to a lack of coal resources, even by 1881, a considerable number of companies in France still used charcoal for smelting iron.

As for "charcoal steelmaking technology," that was a joke. After multiple improvements by the French, charcoal steelmaking had become quite stable.

Very stable indeed—the qualification rate had even surpassed ten percent. It’s probably best not to mention the quality anyway since neither England nor Austria acknowledged that stuff as steel.

Knowing full well it was inadequate, French enterprises had to push forward with determination. There were only a few steel production areas in Europe, none within French control.

The Rhineland region would have been the perfect source of raw materials for France, but, tragically, after the Prussian land deal, the coal mines in the Rhineland region largely fell into the hands of the Anglo-Austrian consortium.

In those days, consortiums had not yet given up on the real economy. Both sides had their own factories and naturally wanted to hit their competitors.

Both sides tacitly controlled coal production to artificially inflate international coal prices and profit massively from it.

If someone were to tally it up, they would be surprised to find that Belgium, a seemingly insignificant country, was actually the largest exporter of coal to France.

Under these circumstances, French enterprises that consumed a lot of coal were in dire straits. The simplest way to strike at French industry was to raise coal prices.

Blaming the British wasn’t exactly unjust, as the capital army attacking the Franc was indeed dominated by British capital.

Whoever has the most money is the boss; whoever gains the most is the culprit.

No matter how you looked at it, the British were the most suspect. To say they weren’t the masterminds, probably not even the French public would believe that.

As for Austria, even though Franz was very active in the scheme, his position paled in comparison to the deep heritage of the British, whose mobilized capital couldn’t match John Bull.

Right from the start of the operation, the UK consortium took the lead. The Austrian finance group could only follow and play a supporting role, with their impact possibly even less than that of the French finance group—their greatest contribution was likely setting up this play.

…

Franz’s decision dealt the final blow to the French economy.

It wasn’t the steel companies that were on the brink of death that toppled first but the high-profile Moore Textile Group.

High trees catch much wind. Compared to those steel businesses that were constantly losing money, everyone preferred profitable companies like the Moore Textile Group.

Internationally, it faced blockade by British textile enterprises, and downstream sales channels breached contracts; domestically, it suffered the covetous gaze of the consortium—not only was it impossible to secure loans, but there was even a farce where several merchants delayed payments at the same time.

Driven to desperation, the only recourse was to take the merchants to court. However, before the trial could even begin, the cash-strapped Moore Textile Group had to declare bankruptcy and restructure.

The once-renowned Moore Textile Group was devoured by a swarm of sharks amidst the reorganization, leaving behind only a mess.

This was just the beginning. Those targeted by the consortium were not limited to Moore Textile Group. As the international capital galloped across the financial markets, the French finance group wanted a piece of the action as well.

Valuable enterprises were divided and consumed, and those without value had to truly go bankrupt. The wave of bankruptcies spread, and an economic crisis erupted in France.

…

(Note: There were no electronic devices, everything was operated manually, and the financial system was very different from later eras, especially in terms of transaction speed. It was impossible to transfer billions with a keystroke as one does now.)