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Falling prices do not equate to a decline in production costs for enterprises; on the contrary, due to increases in labor and industrial raw materials, many enterprises’ production costs have not decreased but have risen instead.
The orders provided by Britain and Russia fell below market expectations, leading to a situation where supply exceeded demand in multiple industries. Against this backdrop, the days were naturally tough for the processing and manufacturing industry.
To survive, everyone had no choice but to engage in price wars. Those companies that reacted quickly fared better, at least making a fortune at the outset of the war last year.
There was a market pullback in the first quarter, but overall the profits were still decent. After entering the second quarter, however, it was tragic as a bunch of people, fantasizing about war fortunes, joined in, further intensifying market competition.
Exiting was impossible, as funds had already been tied up in machinery and factories; at this point, it was simply not feasible to find a buyer to take over.
Relatively speaking, British enterprises were the least affected, as the government prioritized domestic procurement, giving them an intrinsic advantage.
The most miserable among the major nations were undoubtedly the French industrial and commercial sectors. They couldn’t snag orders from the British Government, and Russia’s orders faced competition from Austria.
The French government was willing to issue bonds to the Russians, which was essentially a bid to compete for the market — after all, taking Francs naturally meant purchasing French goods.
Even so, French industry and commerce could only secure a portion of everyday goods orders, with the most profitable military industry sector being unable to compete with Austria.
It wasn’t for lack of effort among French enterprises, nor was it preferential treatment by the Russians; the primary issue was the difference in military industrial systems. Enjoy new chapters from freewebnovel
The Russian-Austrian weaponry had compatible calibers, which made them directly usable, with convenient logistics maintenance.
If French products were purchased, not only would soldiers require retraining, but logistics supplies and maintenance would be a huge problem. The Tsarist Government had to consider practicality during times of war.
...
May 24, 1890, another day for listed companies to publish financial reports, and the Paris Stock Exchange was packed with people.
The bustling crowd, all smiles and laughter, indicated high spirits. They had been longing for the outbreak of war between Britain and Russia and now was the time to reap the benefits.
Since the start of the conflict, the average stock price on the Paris Stock Market had surged by an astonishing 23.7%, and the foreign trade enterprise sector had even seen its increase breach 57% at one point, with numerous stocks doubling in value.
Based on the lucrative returns from the Prusso-Russian war, expectations for the conflict between Britain and Russia were sky-high. The financial reports from the last quarter of the previous year had confirmed as much.
As for the drop in prices, sorry, but the French public didn’t feel it. Due to tariff barriers, French prices were relatively less affected by the international market.
In those days, the dissemination of news was slow, and capitalists were shrewd; export earnings falling short of expectations and severe product overstock were naturally secrets well kept.
If the news had leaked in advance, who would be their buyer? Market regulation was virtually non-existent at the time, and since sales issues emerged in the first quarter, everyone had been slowly offloading their shares.
Amid a continuous stream of positive news, ordinary investors remained blissfully unaware that a crisis was nearing.
Outside the exchange, a somewhat middle-aged, portly man was engrossed in a financial newspaper.
"Amexes, what are you reading there?"
The middle-aged man, Amexes, replied with a hint of regret, "The financial paper. The Hex Textile Factory is currently negotiating with the Russians; barring any surprises, that’s another massive 30 million Franc order!
It’s a shame that I was too cautious and pulled out half my investment in Hex after hearing about their serious product backlog and switched to Phaidon Machinery Factory. I missed out on this price surge."
The newcomer consoled, "It doesn’t matter, Phaidon Machinery Factory is also doing well. With such a booming downstream market, how could the performance of upstream equipment manufacturers possibly be bad?"
That was the most prevailing wisdom — once an industry took off, all businesses along the supply chain stood to benefit.
Amexes shook his head, saying that upstream enterprises would indeed benefit, but the stock price increase would absolutely not be as significant as that of the actual businesses involved.
In times of war, industries connected to strategic materials were all expected to fare well, so how could there be a large-scale backlog of products?
Even if there was a backlog, it would have to be due to businesses hoarding goods! With this thought, Amexes cursed the family of the person spreading such rumors.
Looking at the beaming newcomer, Amexes tentatively asked, "Anthony, I remember you bought that stock too, so you must have made a decent profit this time."
Anthony smiled modestly, "I just happened to catch the wave, didn’t buy much, just about twenty thousand shares.
But Amexes, you’re too timid. In our business, mentality is key. One must analyze the overall market, and there’s really no need to pay attention to rumors.
Capitalists aren’t fools—if there was a severe product backlog, they would have known to lay off workers or cut back production, not like now where there are help-wanted signs on every corner!"
Hearing his friend’s analysis, Amexes face turned even more sullen, as if he had lost a billion.
Judging the performance of a business from the labor market was the most rudimentary skill for a casual investor, something even stock market novices should understand.
Especially for manufacturing, when a business was on a hiring spree, it was undoubtedly the best of times for the market.
Seeming to realize he had gone too far, Anthony quickly added, "It’s alright, Amexes. Now we just wait patiently for the companies to publish their reports. We’re all going to make a profit anyway; it’s just a matter of how much.
Chances are, the machinery factories’ performances will outshine, and stock price gains might even surpass those of the textile factories. You know, there have been quite a few new factories popping up recently, and they all need to purchase equipment."
No sooner had he spoken than someone else shouted, "This is impossible!"
"This can’t be true; you must be fooling me, right?"
...
As one business after another revealed their financial reports, similar exclamations became increasingly frequent.
Sensing something amiss, Amexes and Anthony, still at the periphery of the crowd, hurriedly squeezed their way into the exchange.
But it was too late. Investors who had received the reports, after the initial panic, had begun to dump their stocks.
The market was flooded with sell orders, with hardly any buy orders to be seen. All the investors on site knew the market was doomed.
Seeing the situation spin out of control, a group of policemen, who had prepared in advance, appeared at the scene, starting to maintain order.
By the close of the day, the Paris Stock Market had plummeted by 8.6%, with some stocks cut in half.
This was just the beginning. The companies that published their financial reports today were but a small number, with the rest slated to reveal theirs in the following week.
If the majority underperformed market expectations, that would be the real catastrophe. What was happening now was merely an appetizer.
But even this appetizer had wiped out half of the gains the Paris Stock Market had accrued over the previous six months.
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