The Prussian government’s unconventional maneuvers have left the entire European world astounded. For the bourgeoisie, it was a severe blow. If Prussia could play this way, other countries could naturally follow suit, making it a sword hanging over everyone’s head. The court of public opinion was filled with criticism, but it was of no avail. Having dared to overturn the table, the Prussian government naturally wasn’t afraid of being scolded. Prussia’s actions not only caused heavy losses to domestic capitalists but also led to a chorus of wails from overseas investors. Since the news broke, the number of people contemplating jumping off buildings in Frankfurt has significantly increased. Including the somewhat famous Flores, who, due to misinformation, inadvertently took on a bad deal and is now hesitating whether to head to the rooftop. Fortunately, after the Russo-Prussian War, all Prussian company stocks had hit rock bottom and were already in a state of being locked in. As long as one wasn’t foolish enough to go long, taking on the bad deal was at a low position, so the losses weren’t too severe. Additionally, the Prussian government only confiscated the shares of criminals. Theoretically, the shares held by overseas investors were still valid. This is also the main reason why the great powers did not intervene. Although the Prussian government’s methods were a bit extreme, they were, after all, dealing with internal affairs. The most crucial point is that the fait accompli has already been established, and interference would only complicate matters further, increasing everyone’s losses. As long as the enterprises are still operating, the stocks hold value. It’s just that the major shareholder has become the Prussian government, making the investment prospects uncertain. … Vienna Palace “Your Majesty, the situation has changed. Prussia’s approach is likely to trigger a chain reaction. If the French follow suit, our plan will be difficult to succeed,” Finance Minister Karl said with concern. The sudden turn of events is also a significant blow to the Anglo-Austrian conspiracy to short the franc. If Prussia can overturn the table, so can the French. Perhaps the French government wouldn’t dare to fully emulate it, but even just implementing financial controls would be enough to cause them trouble. Franz shook his head. “It’s not the same. The Prussian government was forced into a corner with no way out and had no choice but to gamble. The size of France is there for all to see. At most, we can only suppress the value of the franc and make a profit in the process, which won’t be fatal to them. The French government won’t be so extreme. If the French government really does impose financial controls, it would actually be a great help to us. Prussia is a ready example, with the mark’s value completely collapsed. Perhaps we will lose out on this speculation, but if the franc exits the international market, the share it leaves behind would be enough to compensate for our losses.” For the sake of currency hegemony, Britain, France, and Austria have been in contention for many years. Although France has already been knocked out of the game, the franc still holds a significant share in the international market. During the era of the gold standard, the larger the economic size, the greater the demand for gold. France’s economy was vast, yet its gold production was very limited, unable to meet the growing demand. The reserve funds for issuing francs were always insufficient, creating safety hazards in the financial market. In recent years, international hot money has frequently visited. However, the scale was not significant, and even if there were gains, they could not shake the position of the franc. Profit moves the hearts of people, and after speculators tasted the sweetness, they naturally wanted to earn greater profits. This time, the British and Austrian capital joined forces, seemingly driven by Franz behind the scenes, but in reality, it was just a catalyst. Even without this catalyst, it would have happened sooner or later. Of course, this catalyst was still very important. Without government involvement, even if the capitalists took action, it would not have been on such a large scale. In essence, the French were being suppressed by Britain and Austria because they had encroached on the interests of both countries. The French government’s African development plan was too hateful. In recent years, France’s textile industry had developed rapidly, seizing a significant market share from the British. This was already painful for the British, and the French African development plan prioritized cotton cultivation, which was intolerable for John Bull. While planting cotton, the French African development plan also aimed to promote new agricultural technologies in North Africa and expand the area for agricultural products, which again encroached on Austria’s interests. Under such circumstances, it would be strange if they did not face suppression from Britain and Austria. In comparison, the competition for the international market share of the franc is relatively secondary, mainly of interest to those in the financial sector. After a moment’s pause, Franz added, “The plan has progressed to this point, and it’s no longer a matter of being able to withdraw at will. I’m not very knowledgeable about financial matters, so I’ll leave it to the professionals to handle. For now, we should proceed with the plan to increase the dumping pressure on France, trying to deplete their foreign exchange reserves as much as possible.” … What was bound to happen did happen. Influenced by the Prussian government’s special policies, on November 11, 1881, the Berlin Stock Exchange plummeted as soon as it opened. A halving of stock prices was already considered a good performance. Many stocks were only worth 20-30% of their original value, and some stocks’ market capitalization was even less than ten percent of their original value. The net assets of certain enterprises were several times higher than their market capitalization, a typical case of market cap inversion. This is a normal phenomenon as assets do not equate to cash. During a stock market crash, asset shrinkage is inevitable. To raise funds to overcome the crisis, there are many who have to sell at a loss. With the expansion of free trade, the economies of various countries have become increasingly interconnected. The stock market crash in Prussia means that other countries cannot expect to remain unscathed. Frankfurt and London were naturally the first to be hit. The former couldn’t hold out for even three days before collapsing entirely; the latter managed less than five days before suffering the same fate. Once Pandora’s box was opened, the stock market crash rapidly spread throughout continental Europe, with every nation’s market echoing with cries of despair. In less than a week, Vienna’s stock index fell by 10%, hitting its lowest level in five years. Both Britain and Austria experienced stock market crashes, and France was no exception. In Paris, enraged investors actually set the stock exchange on fire. Fortunately, staff arrived in time to extinguish the blaze. At the Palace of Versailles, before Napoleon IV could recover from the stock market crash, Minister of Economy Ezra hurriedly entered. “Your Majesty, we have a major problem. Over a hundred banks, including the Bank of Paris, the Banque de France, and the Imperial Bank, are simultaneously facing a bank run. The situation is extremely critical. Many people are holding deposit slips, specifically demanding to exchange for pounds or guilders. Our foreign exchange reserves are rapidly depleting. It is certain that someone is trying to short the franc. The bank run is just the beginning. The enemy will launch further attacks.” Hearing this bad news, the term “financial storm” instantly flashed in Napoleon IV’s mind. After a brief pause, he urgently asked, “Do we know who is behind this?” Minister of Economy Ezra replied, “There are many participants. Almost all of the world’s top-ranked banks and securities firms are involved. It can be roughly determined that the main force is Anglo-Austrian capital. The enemy’s influence is very strong. Based on the intelligence we have gathered, it is preliminarily estimated that they may hold between 3 to 5 billion francs.” “3 to 5 billion francs,” seemingly insignificant for a major country like France, roughly equivalent to the French government’s annual revenue. However, this is cash, not assets. In the financial markets, such a huge sum of money can easily leverage tens of billions in international hot money to impact the French financial market. Napoleon IV was shocked and said, “The enemy has raised so much money, and our financial agencies knew nothing about it?” Since the shield and the pound are both international settlement currencies, the foreign exchange reserves of Britain and Austria are relatively low, and they simply cannot produce so many francs. The total circulation of francs in the international market is actually only a few billion. This means that the funds used to initiate the bank run can only come from within France. Minister of Economy Ezra replied in a low voice, “A while ago, several major domestic banks issued large loans overseas, all for ordinary commercial projects, which did not attract much attention.” This is determined by the system. Banks are free to issue loans, and the French government has no right to interfere. Since they cannot control it, naturally, they do not pay much attention. After all, profits and losses are the responsibility of the banks themselves, and the government does not need to foot the bill. Napoleon IV hesitated to speak, knowing full well that domestic financial groups were involved in this bank run, but he was powerless to do anything. If it weren’t for the recent actions of the Prussian government frightening the bourgeoisie, the French capitalists would definitely be among the forces shorting the franc. Now that they have gone into hiding, it is already a great favor to the government. After all, they can’t stop them from making money, can they? After pondering for a while, Napoleon IV asked, “How do you plan to deal with this crisis?” Minister of Economy Ezra replied “Unlike before, this time the enemy is coming fiercely and definitely not just to gain a small advantage…”
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