The turmoil in the stock market quickly spread throughout society. Before the curtain was lifted, capitalists artificially created the illusion of a booming market in order to shift their losses. Now, there was no need for that anymore. Once the illusion was shattered, companies began laying off workers and cutting production. The economic crisis had not even officially started, yet a wave of unemployment had already hit. News that was previously concealed no longer needed to be kept under wraps. It was only at this point that people realized the so-called “positive news” had been entirely fabricated. The so-called procurement orders did exist, but the contracts were not signed by the Russian or British governments. Instead, they were signed with a series of newly established shell companies. Since these were shell companies, they obviously could not represent the governments. The so-called procurement commissions were utterly fake. Frankly, this scheme was not even sophisticated. In other countries, it might be possible for the government to commission private firms for procurement, but in the Russian Empire, such a thing was absolutely impossible. The Russian government had a loyal and hardworking bureaucratic system. How could such exhausting tasks be outsourced? The so-called Procurement Department, allegedly the cleanest in the Russian Empire, would never tolerate middlemen profiting at the expense of national wealth. Before the crisis broke out, France’s financial groups showed their strength by coordinating with one another to control mainstream opinion and artificially create market prosperity. The Fidoren Machinery Factory, as a rising star in French manufacturing, was founded in 1867 and had already become the leading enterprise in the French machinery sector. Industrial technology takes time to mature. To stand out from many competitors within just twenty years, the founder, Baron Fidoren, deserved much of the credit. Baron Fidoren, who should have been enjoying the fruits of his success, was now puffing on a cigar and exhaling clouds of smoke. A secretary reported in a low voice, “Baron, based on the latest figures, eighteen companies including Saide Textile Mill, Eidolon Canning Factory, and Allenburg Spinning Plant have requested to return products. The total value of these returned goods is around 30 million francs, and we still have not received a remaining balance of roughly 6.57 million francs. Additionally, twenty-seven companies that have not yet received their machinery have announced that they will default on their orders and not make further payments. We already scheduled production of this equipment last year, so halting production now is too late. If we cannot find new buyers, the initial estimate is that our losses will amount to 54 million francs. We can offset about 14 million francs with penalty fees, leaving a net loss of around 40 million francs.” Birds of a feather flock together. As an aristocratic capitalist, Fidoren had relatively distant ties with France’s financial elite. He was excluded from the financial consortium’s planned retreat, making him one of the victims. Fidoren Machinery specialized in upstream industrial equipment manufacturing and relied mostly on the domestic market. It had almost no international orders. The aging baron lacked sensitivity to global market changes and had no foresight that overcapacity would emerge during the Anglo-Russian War. One mistaken judgment had now led to bitter consequences. The company accepted a slew of orders, only to receive default notices before delivery was complete. After a moment of silence, Baron Fidoren snapped, “Tell them that returns are out of the question. As long as product quality meets standards, we do not provide return services. Also, urge them to pay the remaining balances quickly. For the canceled orders, pursue breach-of-contract penalties according to the agreements. Issue an order to halt all ongoing production. Contact the remaining clients to confirm whether deliveries can proceed, and only then resume manufacturing. For the orders that have been canceled, if possible, reallocate them to other active orders. If that's not viable, then dismantle the parts and reuse them! At this point, no buyers can be found. We must cut our losses immediately.” Unlike other products, industrial equipment incurs maintenance costs once produced. The longer it stays in inventory, the higher the holding costs for the company. Based on current trends, Baron Fidoren did not see any short-term recovery in the market. Prior to the crisis, the warning signs might have been ignored amid the market euphoria. But now that the crisis had erupted, Baron Fidoren quickly grasped the deeper underlying cause. The shortfall in material consumption during the Anglo-Russian War was merely the trigger. At its core, this was a matter of capitalism’s economic cycle reaching its turning point. Based on past experience, overcapacity would not just be a French problem. The entire capitalist world would be affected. Only a few countries at the time had the capacity to experience a full-blown economic crisis. France’s production costs were higher than those in Britain and Austria, putting its companies at a natural disadvantage in international competition. Now that a crisis had arrived, it was only natural that French firms would be the first to collapse. The French financial consortium, which had hoped to profit from war, became the first casualty. However, these groups were quick to act. Before the crisis fully broke out, they had already begun shifting risk onto retail investors. The crisis was triggered so quickly not because the financial consortium had already satisfied its appetite, but because the market was nearly out of money. In the era of the gold standard, the issuance of francs was limited by gold reserves, and the amount of currency in circulation was even more constrained. To harvest retail investors, there had to be something to harvest. The previous wave of positive news had lured them in, and those who failed to exit in time were now trapped. Now everyone has become a shareholder instead of a trader. If the harvest didn’t happen soon, a leak of the truth would make it impossible to profit. Based on prior experience, Baron Fidoren estimated that, barring any surprises, the crisis would last one to two years. And it would take even longer for the market to recover after the crisis ended. In this era of rapid change, no one could predict when machinery would become obsolete. Holding on to a large inventory of machines was sheer recklessness. Not only would it risk a total loss, it would also deplete the company’s precious cash reserves. Dismantling semi-finished equipment could reduce losses by about 50 to 60% of production costs, but continuing production could result in losses exceeding the cost of production by 1.5 times. The secretary reminded, “Baron, some of our earlier contracts included clauses allowing partial refunds if the equipment was found unsatisfactory. If—” Baron Fidoren impatiently interrupted, “Don’t worry about that. If they’re not satisfied, they can sue us. At this stage, do we still fear lawsuits?” With tens of millions of francs in sudden losses, the previously well-run Fidoren Machinery Factory had been dragged into disaster. The bank had been calling non-stop, pushing Baron Fidoren to the brink of collapse. The unplugged phone on his desk was a clear sign of that. Knock, knock, knock. There was a knock on the door. “Come in!” Baron Fidoren said coldly.
A middle-aged man entered and whispered, “Baron, representatives from Paris Bank are here. They’re waiting in the reception room.” Just as he finished speaking, two well-dressed middle-aged men entered the office. The one in the lead said, “Apologies for the sudden visit, Baron Fidoren. We’re here today primarily—” Baron Fidoren cut him off directly, “I know what you’re here for. But there’s still a month until the bank loan is due. If there’s an issue, we’ll talk then, or you can speak with the public relations department. For now, please don’t interrupt my work. Thank you. Fick, please see these gentlemen to the lounge.” Hearing this, Fick gestured politely and said, “Gentlemen, this way, please.” But the lead man didn’t move. He said, “Baron Fidoren, you’ve misunderstood. We’re not here to collect early. We’re actually here to help you resolve the problem. If it’s convenient, may we have half an hour? What we’re about to discuss is confidential, so it would be best to talk privately.” Baron Fidoren was momentarily taken aback.
*** https://postimg.cc/gallery/PwXsBkC (Maps of the current territories of the countries in this novel made by ScH)
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