NOVPUBThe turbulence in the stock market soon rippled through the entire society.
Before the curtains were fully drawn back, capitalists had created a false market boom to transfer their losses, but that was no longer needed now.
Once the thin veil was pierced, companies began laying off employees and reducing production. The economic crisis hadn’t even started yet, but the wave of unemployment had already arrived.
The news that had been concealed was now open for all to see. It was only at this point that everyone realized the so-called good news was completely fabricated.
The so-called purchase orders did indeed exist, but they were not signed by the Russian Government or the British Government; instead, they were signed by a series of newly established shell companies.
Since they were shell companies, they naturally didn’t represent the government’s stance. The so-called entrusted procurement was fake to the core.
Put bluntly, this game was not very clever. Perhaps in other countries, there might be government-entrusted company procurement, but in the Russian Empire, it was utterly inconceivable.
The Tsarist Government had the most exasperating and resentful bureaucratic team. How could such tedious work possibly be outsourced?
The department known as the most incorruptible procurement office in the Russian Empire absolutely would not tolerate such middlemen milking profits and wasting the nation’s wealth.
Before the crisis struck, the ability of the French finance group to unite numerous capitalists to act together and control mainstream opinion, artificially creating a market boom, all evidenced their immense power.
Phaidon Machinery Factory, as a rising star in French manufacturing, was established in 1867 and had now become the leading enterprise in French mechanical equipment.
Industrial technology requires time to mature. Having stood out from among many competitors in just twenty years, Baron Friedrich, the founder, had rendered great service.
Sir Friedrich, who should have been basking in success, was now puffing on a cigar, steadily exhaling swirls of smoke.
His secretary reported softly, "Your Excellency Baron, according to the latest statistics, eighteen companies including Sed Textile Factory, Aidolon Canned Food Factory, and Allensburg Spinning Mill, have requested to return their orders.
The total value of these returned products is approximately 30 million Francs, of which about 6.57 million Francs in final payments have not yet been received by us.
Furthermore, twenty-seven companies that have not yet received their machinery equipment have declared their orders void and will not be making any further payments.
We had already arranged the production of this machinery equipment last year, and it’s too late to stop production now.
If we cannot find new buyers, our preliminary estimate of our losses will be as high as 54 million Francs. The forfeiture of deposit can offset about 14 million Francs, so the final loss will be around 40 million Francs."
Birds of a feather flock together. As an aristocratic capitalist, Baron Friedrich had a rather ordinary relationship with the domestic capital circle.
In this retreat strategy planned by the finance group, Baron Friedrich had been excluded and became one of the victims.
The Phaidon Machinery Factory, engaged in the manufacture of mechanical equipment—an upstream industry—had its main markets domestically and virtually no international orders.
The aging Baron Friedrich, lacking sensitivity to international market fluctuations, had no prior inkling that the England and Russia war would lead to overproduction.
A momentary lapse in judgment had brewed the present bitter outcome. The company took a pile of orders, only to receive breach notifications before delivery was completed.
After a brief pause, Baron Friedrich said sternly, "Tell them, returning goods is out of the question.
As long as there is no problem with the product quality, we do not provide a return service. They better hurry up and make the follow-up payments as well.
For the orders that are in breach, according to the contract, we will pursue their liability for the breach.
Instruct them to suspend production of all orders temporarily. Send someone to contact the remaining customers to confirm that the orders can be delivered smoothly before continuing production.
As for orders confirmed to be in breach, immediately reallocate them to other orders if possible. If that’s not feasible, then use the parts separately! Discover exclusive tales on freewebnovel
Right now, we simply can’t find buyers, we must cut our losses in time."
Mechanical equipment, unlike other products, incurs maintenance costs once produced. The longer it is held in inventory, the higher the cost to the company.
From the current situation, Baron Friedrich did not believe that the market would warm up again anytime soon.
Prior to the emergence of the problem, it might have been overlooked due to the market’s optimism; now that the problem had erupted, Baron Friedrich naturally perceived the deeper reasons behind it.
The Anglo-Russian War’s material consumption did not meet expectations, but it merely detonated the focus of the conflict. Essentially, it was the cyclical phase of capitalist economic development that had arrived.
Based on past experience, overcapacity would not only be a problem for France, but the entire capitalist world would struggle to fend off the impact.
In these days, there were only a few countries qualified to experience an economic crisis. France, with its higher industrial production costs than those of the Anglo-Austrian two countries, was naturally at a disadvantage in international competition.
Now faced with a crisis, the first to be unable to hold out were naturally French enterprises. The French finance group, set on making a fortune from the war, became the earliest victims.
However, these guys reacted very quickly. Before the crisis erupted, they started to shift risks, letting the shareholders bear the brunt.
The crisis erupted so swiftly not because the finance group had already filled its coffers, but mainly because there was little money left in the market.
In the era of the gold standard, constrained by gold reserve limits, the issuance of the franc was limited, and even less capital circulated in the market.
You need the leeks to grow before you can harvest them, the bullish trends earlier had already lured the retail investors in. Those who didn’t escape were effectively trapped.
Now everyone ended up as stockholders because of stock speculation, and if the harvest wasn’t performed soon, it would be impossible once the news leaked.
Based on past experience, Baron Friedrich could assert that, barring any accidents, this crisis would last for one to two years.
The market would need even longer to recover and warm up once the crisis was over.
In this rapidly changing era, no one knew when the mechanical equipment would need updating and replacement.
Having a bunch of mechanical equipment on hand was simply asking for trouble. It not only posed the risk of a complete loss of capital but also consumed the precious cash flow of the company.
It was akin to dismantling half-finished equipment, the company’s loss could be as high as fifty to sixty percent of the production cost, and continuing production might result in losses several times the production cost.
The secretary reminded him, "Baron, in the contracts we previously signed, there was an agreement for a partial refund if the product fails to satisfy.
If..."
Baron Friedrich interrupted him impatiently, "Don’t fuss over that. If they’re not happy, they can sue us in court.
At this point, are we afraid of lawsuits?"
All of a sudden, there were losses of tens of millions of francs, and Phaidon Machinery Factory, which was operating well, was directly dragged into the mire.
The banks’ collection calls were almost driving Baron Friedrich to the brink. The telephone with the cord unplugged on his desk was the most telling evidence of his state.
"Thump, thump, thump," the sound of knocking rose. Baron Friedrich said coldly, "Come in!"
A middle-aged man spoke softly, "Baron, people from Paris Bank have arrived and are resting in the parlor."
As soon as he finished speaking, two middle-aged men in suits walked in.
The leader said, "I apologize, Baron Friedrich. Our visit this time is certainly presumptuous. It’s mainly because..."
Baron Friedrich interrupted directly, "I understand why you’re here. However, there is still a month left before the bank loan is due.
We can talk about any issues at that time, or you can contact our public relations department. Please do not disturb my work right now.
Thank you!
Fick, please take the gentlemen to rest."
Upon hearing the words of Baron Friedrich, Fick, the middle-aged man, immediately gestured invitingly and said, "Gentlemen, please follow me."
The leading middle-aged man stood firm, "Baron Friedrich, you’ve misunderstood. We’re here today to solve your problems, not for early collection of the loan.
If it’s convenient for you, please spare us half an hour. The following discussion needs to be confidential, and it would be best to communicate privately."
Baron Friedrich was taken aback...
