Faced with the joint offensive of British and Austrian capital, the French government did not surrender. Napoleon IV demonstrated a sense of responsibility and determination. First, he called on domestic enterprises to withdraw investments from overseas to increase foreign exchange reserves and buy francs in the international market. Next, he issued an administrative order strictly prohibiting domestic banks from lending francs to international hot money. To this end, he personally held talks with several domestic financial groups. No one knows exactly what was discussed, but after being summoned by the emperor, influential figures in the French financial sector became much more disciplined. Many even symbolically contributed funds to join the resistance effort. However, by this time, it was already too late. The attacking side had already amassed a large amount of francs, and even if domestic financial groups were restrained, it would not make much difference. Overall, the French government performed commendably in responding to the crisis, and the measures taken were timely. Unfortunately, the root cause of this crisis lay in France’s severe shortage of foreign exchange and gold reserves. Without solving this problem, the crisis could not be resolved. Theoretically, France had substantial overseas investments, and withdrawing just one-fifth of them could have alleviated the crisis. However, this was the 19th century, not the 21st century. Withdrawing funds from overseas was not something that could be accomplished in a day or two. Time waits for no one. Before the overseas funds could return, the French government’s foreign exchange reserves were nearly depleted. The French government grew anxious. If this continued, they would have to dip into their gold reserves within a few days to fill the gap. Originally, the French government’s gold reserves were insufficient. If there were a large-scale outflow of gold, the value of the franc would certainly collapse. Given this, it might be better to surrender now. … At the Palace of Versailles, Napoleon IV was no longer the confident and spirited figure he once was. He appeared much more subdued. Clearly, this crisis had hit him hard. The French Empire was not as strong as he had imagined. Minister of the Economy Ezra stated, “We have already limited the amount that can be exchanged each time, but the number of people coming to exchange money continues to grow. Panic has set in. The market is pessimistic about the future of the franc, and there are more and more short positions against the franc in the financial markets. Given the current situation, if no other forces intervene, a market crash is only a matter of time.” In the face of the offensive by British and Austrian capital, is there any force in the world that can counterbalance them? The answer is: Yes. Although French financial groups are slightly weaker than British and Austrian capitalists, not all of the British and Austrian capitalists have been mobilized. If French financial groups join the defense, they would be fighting on their home turf. Combined with the strength of the French government, they would have the power to put up a fight. After a moment of hesitation, Napoleon IV slowly said, “Send people to negotiate with the domestic financial groups again. Other issues can be discussed, but the right to mint currency is non-negotiable. Tell them, if they still refuse to yield, we’ll compromise with Anglo-Austrian capital. By then, none of us can expect to come out any better.” The willingness of French financial groups to cooperate with British and Austrian capital stems not only from potential gains in the financial markets but also from their desire to pressure the French government into making concessions. If the franc were to really collapse, it wouldn’t necessarily be a good thing for French financial groups. In the short term, they might profit from speculation, but they would lose out in the long run. If the franc loses its status as an international currency, the cost for French financial groups to expand overseas would significantly increase. Of course, this doesn’t scare them. Most capitalists don’t think that far ahead, and many locally rooted financial groups have little interest in internationalization. However, no one dares to ignore Napoleon IV’s threat. If the French government directly compromises with Anglo-Austrian capital and lets them in, it would be disastrous. In the face of interests, nothing is impossible. The French government needs stability, while the British and Austrian capital seeks profit. After disregarding political factors, the possibility of a compromise between the two sides is very high. As long as they can achieve their goals and secure the anticipated profits, the capitalists are indifferent to whether the French franc is crushed or not. Although this financial storm was stirred up by Franz, it has now gathered capital from all over Europe, far beyond Franz’s control. Even if the governments of both Britain and Austria were to call for a halt, it might not necessarily have any effect. Real money has already been invested, and without reaping the benefits, how could the capitalists possibly be willing to stop? … “Stock market crash + financial crisis + overcapacity = economic crisis.” This equation may not be 100% accurate, but it’s 99.9% correct. First, Britain and Austria dumped products on France, then the stock market crash hit, and before the French could catch their breath, British and Austrian capital launched an attack in the financial markets. Connecting all these events leads to one conclusion—shifting the crisis externally. The most severe overcapacity is in Britain and Austria, the two industrial nations. Even if an economic crisis were to erupt, these two countries would suffer the most severe losses. Britain and Austria are not only facing overcapacity but also a surplus of capital. Having just profited from the spoils of war, the capitalists in both countries are flush with wealth. Under normal circumstances, such funds would be invested rather than left in banks to earn interest. Unfortunately, the entire world is currently grappling with overcapacity, making any industrial investment a potential disaster. However, before the crisis could erupt in Britain and Austria, the two nations most expected to be affected, France encountered problems first. In the Vienna Palace, Franz breathed a sigh of relief as he reviewed the intelligence in his hands. “Better them than us.” For Austria to safely navigate this crisis, shifting the crisis elsewhere was an indispensable step. Looking around the world, is there a more suitable target than France? If Austria doesn’t seize the opportunity to join forces with Britain to suppress France before others catch on, there will be no chance in the future. No matter how low-key Franz tries to be, the theory of an Austrian threat surpassing the French threat is inevitable sooner or later. When that time comes, it will be a scenario of Britain and France uniting against Austria. By preemptively striking against France now, the sheer amount of resentment generated could delay any Anglo-French alliance for many years. This time, the resentment stirred up is too great. If nothing unexpected happens, the alliance among Britain, France, and Austria will likely come to an end after the crisis. While shifting the economic crisis, Austria also managed to strike its largest competitor on the European continent. Franz described this masterstroke as “perfect.” Putting down the intelligence report, Franz instructed, “Let our people secretly add fuel to the fire and make this financial war even bloodier. We should particularly focus on targeting France’s heavy industry. Many French steel plants are still struggling to hold on. We ought to give them a ‘helping hand.’ Continue to keep international coal prices excessively high. If necessary, we can even ban domestic coal exports, forcing the French to continue researching charcoal-based steelmaking technology! At the same time, arrange for people to spread rumors in France, pinning the blame for instigating this incident on the British.” Heavy industry is France’s most important and yet most vulnerable sector. Due to insufficient coal resources, even as late as 1881, a significant portion of French enterprises still relied on charcoal for iron smelting. As for “charcoal-based steelmaking technology,” it is nothing short of a joke. Despite multiple improvements by the French, the technology has stabilized—truly stabilized, with a success rate exceeding ten percent. The quality, however, is another matter entirely, as neither Britain nor Austria recognizes the resulting product as proper steel. Even though they know it’s ineffective, French companies have no choice but to press on. The major steel-producing regions in Europe are few and far between, none of which are under French control. Originally, the Rhineland was the most suitable source of raw materials for France. Unfortunately, after the Prussian-German territorial exchange, most of the coal mines in the Rhineland fell into the hands of British and Austrian financial groups. At this time, financial groups had not yet abandoned their industrial interests. Both sides had their own factories and naturally sought to undermine their competitors. Through tacit agreement, they controlled coal production, artificially inflating international coal prices to reap exorbitant profits. If anyone were to compile statistics, they would be surprised to find that the country exporting the most coal to France was the unassuming Belgium. Under these circumstances, French companies with high coal consumption were struggling. The simplest way to cripple French industry was to raise coal prices. Shifting the blame to the British was not entirely unjustified, as British capital indeed constituted the largest portion of the forces attacking the French franc. Whoever has the most money calls the shots, and whoever reaps the greatest profits is the prime culprit. From any perspective, the British were the most suspicious. If someone claimed they weren’t the masterminds, the French public probably wouldn’t believe it. As for Austria, despite Franz's active involvement, it couldn’t match the deep pockets of the British. The funds mobilized by Austria were far inferior to those of the British. From the very beginning of the operation, the initiative fell into the hands of British financial groups. Austrian financial groups could only play a supporting role, possibly even less effective than the French financial groups. Their greatest contribution was likely setting up this entire scheme. … Franz’s decision delivered the final blow to the French economy. The first to fall was not the struggling steel enterprises but the highly regarded Moore Textile Group. A tall tree catches the wind. Compared to the perpetually loss-making steel companies, everyone preferred a profitable enterprise like the Moore Textile Group. Internationally, it faced blockades from British textile firms and breaches of contract by downstream distributors. Domestically, it became the target of financial groups, not only unable to secure loans but also embroiled in a farce where multiple distributors simultaneously defaulted on payments. Forced into a corner, the Moore Textile Group had no choice but to take the distributors to court. However, before the trial could even begin, the group, with its cash flow severed, had to declare bankruptcy and restructuring. The renowned Moore Textile Group was devoured by a pack of corporate giants during the restructuring, leaving behind only chaos. This was just the beginning. The financial groups had their eyes on more than just the Moore Textile Group. Watching international capital dominate the financial markets, French financial groups were also eager to feast. Valuable enterprises were divided and consumed, while those without value were left to truly go bankrupt. As the wave of bankruptcies spread, an economic crisis erupted in France. … (Author’s Note: Without electronic devices, everything was done manually. The financial models of the time were vastly different from today’s, especially in terms of transaction speed. The idea of pressing a keyboard and moving billions was impossible.)
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