To survive the economic crisis, Austria was the first to open the floodgates of dumping. Starting in September, Austria’s export figures skyrocketed. Agricultural products, being essential goods, did not suffer severe price drops. Most were sold at 10% or 5% discounts. However, the prices of daily-use textiles fell more sharply, with 20-30% discounts being common, and many products even saw their prices halved. By this point, profits no longer mattered. The priority was to sell off stagnant inventory and secure cash flow. It was only when action was taken that the true scale became apparent. Watching the daily surge in export trade figures, even Franz was left stunned. Austria was the world’s leading industrial power, but it was also the world’s largest holder of unsold goods. After the Russo-Prussian War, not only did the Prussian government default on its agreements, but the Russians also followed suit. With the war over, outstanding orders were naturally left unfulfilled. In a way, the current frenzy of price cuts could also be attributed to the Russians. Since the Russian government had defaulted, the deposits paid for the orders were forfeited. Unquestionably, this money became revenue for the companies, effectively reducing the cost of their goods. This world is never short of clever people. The state-owned enterprises’ cost-blind price cuts and exports immediately caught the attention of the observant. The sharp-minded quickly realized: “The economic crisis is here.” In times of crisis, cash is king. Looking at their mountains of inventory, everyone knew they were in deep trouble. There was no question about it, they had to follow the trend. In this era, the market wasn’t as transparent, and corporate profits were relatively high. Discounting and promotions could still help them break even. If they reacted too slowly, once the economic crisis fully erupted, there would be no buyers left. Whether or not someone was orchestrating this trend was unclear, but starting in September, most of Austria’s capable enterprises joined the rush to develop overseas markets. There was nothing wrong about it. It was purely about developing overseas markets. “Dumping”? Absolutely not. Discounts and promotions were simply businesses sharing profits with consumers. The main goal was to expand market share and seize market opportunities, all perfectly normal commercial practices. Large enterprises had to have some ambition. They couldn’t settle for small gains so internationalization was an essential step. At least, that’s what the Austrian media claimed. How many people believed it was anyone’s guess, but the capitalists certainly did. Especially among publicly listed companies, the response was the most enthusiastic. Capitalists eagerly stepped forward to champion the benefits of internationalization, going so far as to rally shareholders... Thanks to the establishment of a free trade system, favorable conditions were created for Austria’s “dumping” of goods. The first to feel the impact was the European continent. As it turned out, the lower classes in Europe at the time were not well-off. Austrian industrial products, heavily discounted, were met with overwhelming enthusiasm as soon as they hit the market. The influx of large quantities of cheap foreign goods naturally disrupted local markets, inevitably stirring resentment. Conflicts over interests are the most terrifying. Having encroached on the profits of local capitalists, retaliation was inevitable. Just as everyone was preparing to take action, the situation changed. It wasn’t just Austrian goods flooding in, British and French products also surged into the market, or at least their labels bore “English” or “French” text. “Counterfeiting” was a hallmark of the era. Everyone was copying each other, and over half of the industrial and commercial products on the market were high-quality imitations. Patent protection only applied in the country of registration, and many nations lacked patent laws altogether, making outright piracy a common and accepted practice. Unsurprisingly, the volume of British and French exports did not increase. The surplus of products on the market was clearly questionable, but there was no way to distinguish genuine goods from counterfeit ones. All these goods were imports, and in an era without the internet or surveillance, who could possibly know where they were coming from? Austria’s dumping efforts also had local collaborators. Any attempt to take targeted action would inevitably drag Britain and France into the fray. While it’s said that a strong dragon cannot crush a local snake, accidents where the local snake gets crushed are not uncommon. Unless everyone immediately rewrote the rules of the game, ushering in the era of patents early and having governments crack down on counterfeit products within the framework of these rules. But this was impossible. With their own hands far from clean, how could they act recklessly? According to data published by the Austrian Information Gazette, over 80% of capitalists across Europe had built their fortunes on “counterfeiting,” and more than 95% of businesses were guilty of patent infringement. This was an inevitable outcome. Britain’s Industrial Revolution had begun much earlier than on the European continent, and most of the technologies from the first Industrial Revolution originated in the British Isles. With the British having already paved the way, latecomers aiming to develop their industries had no choice but to copy, there was simply no other path forward. When the Second Industrial Revolution shifted to Austria, the former “counterfeiting powerhouse” suddenly entered the era of patents. But of course, everyone had to keep copying! Without imitation, forging a new path would not only incur enormous costs but also carry no guarantee of success. “Patent protection” was, in reality, a tool used by Britain and Austria to shear the sheep. After the establishment of the free trade system, goods from all nations could circulate freely. Naturally, Britain and Austria, with their vast reserves of patented technologies, raised the banner of patent protection high. Their own goods moved unimpeded across borders, while products from other countries, accused of patent infringement, were blocked at the gates. The essence of this world is simple: whoever sets the rules gains the upper hand in competition. On the surface, the free trade system appeared fair and equitable, but in reality, it was a tool for Britain and Austria to extract wealth from the outside world. This was an open secret. While it might fool the general public, the upper echelons of society understood the true nature of free trade. Knowing the truth, however, did not mean they could change it. Perhaps if all nations united, they could overthrow the free trade system, but no one was willing to take the lead. It wasn’t that they didn’t want to, it was that they didn’t dare. Britain and Austria might not be able to fight the entire world, but they could easily crush the leader to set an example for the rest. Theoretically, France was the most likely candidate to assume this role. Unfortunately, the French government had succumbed to the temptations of sweet promises and had long since fallen in line. The political landscape of the world being dominated by the three great powers was a price Britain and Austria had set. To reject it meant facing the threat of an anti-French alliance. Next was the Russian Empire. Due to geopolitical reasons, as long as the Russian government didn’t recklessly provoke trouble, no one could touch them. Unfortunately, Russia’s influence was too limited. Despite its status as a great power, its actual influence was confined to Eurasia. This was determined by its capabilities. The Russian navy had fallen behind by an entire era, leaving the army to shoulder the burden of maintaining its great power status. Beyond its immediate neighbors, Russia had little influence on other nations. The massive dumping wave made market competition even more brutal. The more astute capitalists quickly caught on and joined the discounting and promotional frenzy. Those unwilling to cut their losses and choosing to tough it out were plunging into an abyss. The first to buckle under the pressure was the Kingdom of Prussia. The war had cost Prussia vast territories and devastated its domestic industry and commerce. Already struggling to stay afloat, Prussia had barely caught its breath when it was hit by Austria’s dumping. Small and medium-sized enterprises were the first to collapse. Starting in November, layoffs, bankruptcies, and debt collection became the hottest topics in the Kingdom of Prussia. Outside the Berlin Palace, large crowds of protesters had gathered. Unsurprisingly, this was orchestrated by the capitalists. Waving banners demanding “Debt Repayment,” they pressured the Prussian government to settle their outstanding payments. This was an aftermath of the war. During the war, too much currency had been printed. If Prussia had won, this wouldn’t have been a problem. Unfortunately, the Kingdom of Prussia lost. With a massive influx of marks returning to the market and capitalists short-selling the currency, the mark rapidly depreciated after the war. Before the war, one mark could buy two kilograms of high-quality bread. Now, even one kilogram of the lowest-grade black bread cost seven marks and this was just the beginning. The purchasing power of the mark continued to plummet. After realizing that the mark’s value could not be sustained, the Prussian government made a bold decision: to print more money to repay domestic debts. Naturally, the capitalists refused to accept this. They demanded that the government compensate for the losses caused by inflation, insisting that debts no longer be quantified in marks but instead converted into gold. Some even outright refused to accept marks, demanding that the Prussian government pay in pounds, guilders, or gold. Such demands were, of course, rejected by the Prussian government. The government was already financially strapped. The fact that it hadn’t declared bankruptcy or defaulted on its debts was a testament to its integrity. How could it possibly refuse to accept its own currency? The protesters outside were mobilized by capitalists unwilling to accept their losses. The sounds of protest drifted into the Berlin Palace, where Frederick III, his face dark with anger, asked, “Have we identified who is behind this?” Chancellor Leo von Caprivi responded with a bitter smile, “Your Majesty, the situation is extremely dire. Nearly half of the nation’s major capitalists are involved, representing various interest groups. It is said that they are even planning to form a Debt Collection Committee, specifically to oppose the government. To force the government to concede, they are preparing to organize a large-scale market strike in the near future.” Hearing this, Frederick III felt a headache coming on. The saying “the law cannot punish the masses” does not mean that the law is incapable of holding many people accountable for their crimes. Rather, it highlights the immense impact such actions would have, potentially destabilizing the nation. After a moment of hesitation, Frederick III sighed, “It seems our attempts at persuasion have failed. The capitalists want the government to cover their losses, but who will cover the government’s losses?” No one would. This meant the door to compromise had been firmly shut. The Prussian government, unable to shoulder the massive debt, had no choice but to let the currency depreciate to weather the crisis. The rapid devaluation of the mark was not only due to the massive influx of previously issued currency causing inflation and the capitalists short-selling the mark in financial markets, but also the Prussian government’s reckless printing of money. If you can’t solve the problem, solve the people causing it. This is a universal rule. Deep down, Frederick III had already made up his mind to flip the table. The capitalists might become powerful in the future but now was not their time to dominate. Originally, the plan was to target the Jews, but now the scope would have to be expanded.
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Thanks for the chapter, as usual.
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