A Misunderstood Economic Crisis

Chapter 21: An Accidental Economic Crisis

Ham was not angry that he could not persuade those old foxes; he knew they were already tempted, only held back by their own cowardice.

He was no revolutionary, merely someone who had entangled himself with the revolutionary party for the sake of profit. If he could achieve his goals through peaceful means, only a fool would want to revolt.

This was the European Continent; even if a rebellion succeeded, what then?

Are kings and nobles born with a higher status?

The answer was: Yes!

If he succeeded, he would at best become the president of a bourgeois republic. Once in that seat, he feared his life would be less comfortable than it was now.

If he failed, exile abroad would likely be the best outcome.

Faced with such cruel reality, Ham's already low revolutionary enthusiasm plummeted even further.

Like the vast majority of capitalists, supporting the revolutionary party was fine, but leading the revolution himself? That was out of the question—they had no desire to be president.

Banquets are difficult to keep secret. The story of what transpired at Veris Manor on the outskirts of Vienna soon reached Metternich, though the details of the subsequent secret meeting were not among them.

However, Prime Minister Metternich was a man who played by the rules. He strictly adhered to the bottom line of political struggle and did not use this as an excuse to lash out or arrest the capitalists who attended the banquet on charges of colluding with revolutionaries.

Because he followed the rules, he was troubled.

Knowing full well that the capitalists were conspiring, he could only defend passively; naturally, Prime Minister Metternich's mood was far from good.

"Internal strife and external aggression" was the most fitting way to describe his predicament. Internally, the nobility were restless; externally, the capitalists were eyeing him like tigers, and everyone shared a common goal: to make him get out.

From the winter of 1847, the people of Vienna had a visceral realization: prices were rising, and they were climbing rapidly at a speed visible to the naked eye.

By the end of December 1847, prices in Vienna had risen by 47 percent. The capitalists were testing the limits of the public's endurance bit by bit.

At this time, everyone turned their eyes toward the Vienna government, hoping it would come up with a solution.

Clearly, they were to be disappointed. The Vienna government lacked the capacity, or perhaps the function, to intervene in prices. Although Prime Minister Metternich took measures repeatedly, they yielded little result in the end.

For instance, the government posted notices ordering merchants not to drive up prices, but it proved utterly useless.

Or again, the Prime Minister held multiple meetings with capitalists to no avail.

The government also scrambled to mobilize supplies from outside to bring into Vienna in an attempt to stabilize prices, but unfortunately, due to the obstruction of the capitalists and the corruption of the internal nobility, it ultimately failed.

Of course, it was not entirely without effect; at least the speed of the price hikes was suppressed, and they did not climb to their peak all at once.

After the previous failure, there was little trust among the capitalists themselves. Seeing profit to be made, many smaller, weaker capitalists could not wait for the peak of the price surge.

People are inherently selfish. Franz knew very well that behind the sharp rise in Vienna's prices, there was also the participation of the nobility, though their actions were spontaneous, driven by greed, and they had not joined the capitalists' coordinated efforts.

Perhaps these people's initial thought was just to make a quick buck, but by now, wealth had gradually clouded their eyes. Many had become trapped, unable to extricate themselves.

However, their luck was poor; they had happened to run headlong into a European economic crisis.

Starting in 1845, crop failures appeared frequently across Europe, and international grain prices began to skyrocket. Affected by the rising cost of food, the already impoverished European populace had to spend a massive portion of their funds just to eat, causing private purchasing power to decline continuously.

In 1846, the price of American cotton and cotton textile products nearly doubled, and the high costs caused sales of cotton goods to slide.

As the volume of commodity trade fell, capitalists naturally chose to lay off workers. Unemployment in England continued to grow, and railway freight volumes hit new lows. Many railway companies fell into a state of loss, and in the autumn of 1847, the British railway bubble burst.

The capitalist world has always been one where a single move affects the whole body. With the bursting of the railway bubble, railways under construction were halted, and the demand for steel plummeted.

This crisis soon spread to the steel and coal industries. In Staffordshire, 58 out of 137 blast furnaces ceased production. Pig iron output dropped by a third within a month to a month and a half, and coal production fell by nearly 20 percent.

In November 1847, in Lancashire, one of the centers of the British textile industry, 200 out of 920 cotton mills shut down completely, while most of the others operated only two to four days a week. Over 70 percent of workers suffered the blow of unemployment or underemployment.

The industrial crisis that erupted in England did not attract the attention of Austrian capitalists. Neither the British economic crisis of 1825 nor the one in 1837 had reached Austria.

As a non-industrialized nation, it wasn't even qualified to have an industrial crisis, and the possibility of an economic crisis erupting was infinitely low.

Many had forgotten that the Austria of today was no longer the Austria of the past. As a semi-industrialized nation, Austria could no longer stay out of the economic crisis.

The first to suffer were the French. After the British economic crisis broke out, in order to survive the crisis, British capitalists began dumping goods overseas, and the caught-off-guard French became the first wave of victims.

By 1848, France's total industrial production had fallen by 50 percent.

The German regions were no exception; because their industrial strength was weak, the impact was even greater.

In the winter of 1847, 3,000 out of 8,000 looms in Krefeld stopped working. In the first half of 1848, only 3 out of 14 factories in Cologne remained in operation, and the industry in Erfurt was almost completely wiped out.

The Austrian capitalists wept, and the nobles who had wanted to fish in troubled waters wept as well. To stabilize prices, the Vienna government had lowered import tariffs, and a flood of cheap British goods poured in. This was truly impossible to hold back.

Driving up prices costs money, too. Faced with the dumping from an industrial power, the Austrian capitalists realized they were not fools. The sharp-witted ones chose to retreat at the first opportunity.

In January 1848, apart from grain prices, which remained relatively firm, the prices of all industrial and commercial products in Vienna collapsed. In a time of crisis, everyone was too busy looking after themselves to care about anyone else.

Capitalists who ran quickly could use the time difference to stop their losses; those who ran slowly were trapped directly.

With supply exceeding demand, the selling prices of industrial and commercial products in the Vienna market had fallen below their production costs. The capitalists and nobles who had driven up prices were forced to cut their losses in pain.

Everyone knew the economic crisis had arrived. To reduce losses, capitalists began laying off workers one after another, and more capitalists, having suffered heavy losses in this crisis, simply closed their factories. Unemployment in Vienna climbed sharply.

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