Chapter 287: Economic Crisis Erupts
The four-party negotiations were still underway when a crisis quietly arrived. Overcapacity in the capitalist world had begun feeding back into the market, and in order to clear their inventories, British capitalists stepped up their dumping of goods across the world.
The Americans were the first to suffer. Even with Franz's butterfly effect diverting part of the international capital toward Austria, it could not resolve America's crisis.
From 1848 to 1858, the Americans built 25,000 kilometers of railway—8,000 kilometers less than in history—so the railway bubble was at least not as severe as it had been historically.
Unfortunately, while America's railway industry developed at breakneck speed, the surrounding industries were not driven forward with it. Under competition from British goods, the metallurgical industry even shrank, while the cotton textile industry developed only slowly.
Rails, pig iron, locomotives, cotton cloth, hardware, machinery... British products filled every corner, squeezing domestic industries until they could barely take a step.
Now that the British had intensified their dumping, these industries could no longer endure it. The cotton textile industry was hit first, opening the curtain on a wave of bankruptcies.
It quickly spread to the stock market. Once stock prices began plunging, there was no stopping them, dragging even more companies into the mess.
A vast number of factories went bankrupt. Banks and financial companies naturally could not remain unscathed; huge amounts of bad debt emerged, a run on the banks erupted, and banks collapsed.
America's economic crisis soon spread to the United Kingdom. As the market contracted, British industrial and commercial exports were also hit. Large numbers of companies went bankrupt, and British capitalists, as investors, suffered devastating losses as well.
Capitalists were quick to react. To cut their losses and prepare for a possible domestic economic crisis,