Chapter 433: Chapter 6, The Great Dumping
 

New York, the largest city in the United States, had become even more prosperous after the war. Since 1865, the American economy had started to recover, and it seemed as if everyone’s life had suddenly improved.

Of course, this was just an illusion. Happiness is relative, and compared to the war years, living standards had indeed risen significantly.

The United States was rich in resources. Due to the war, there had been a significant decrease in population, especially among young adults.

Under the influence of supply and demand, in order to secure enough labor, capitalists had no choice but to introduce cheap black labor on one hand and to raise wages on the other to retain their original workers.

The increase in income had eased social conflicts. It was the weekend, and Tom had asked his girlfriend Eilinna out for a date.

“Tom, have you noticed that goods have gotten a lot cheaper recently? A skirt I admired last month has dropped by half in price,” Eilinna said.

With an anxious expression, Tom replied, “Sorry, my dear. We’ve already spent our budget for this month. How about we wait until next week’s payday?”

Influenced by American culture, the young generation didn’t have the habit of saving money. As a member of the Moonlight Clan, Tom only cared about prices in the half month after payday.

Apart from reserving money for living expenses, his salary could only last him for half a month at most. And that was because he had a decent job, working for a reputable securities company, barely allowing him to qualify as middle class.

New York was both heaven and hell.

It was a city suitable only for the wealthy; the poor were better off staying indoors. The more they saw, the harder their lives would become.

In deference to Franklin, Eilinna nodded her head. There was no alternative; with limited income, one couldn’t survive in this city without being very prudent with finances.

“Don’t aim for the best, aim for the most expensive,” was the motto of this era’s New York. The highest prices in America, one might say, in the entire world.

As they strolled around, Tom’s face grew increasingly grim. Discount and sale promotions were everywhere. From clothes and socks to large mechanical equipment, it seemed everything was on a clearance sale.

As a gifted graduate of Columbia University, working in finance, Tom was particularly sensitive to the economy.

This kind of large-scale price reduction made him sense that something was amiss. The masses may be fervently buying now, but the total market demand remained unchanged.

The current rush to buy effectively amounted to borrowing against future purchasing power. Thankfully, America had the tradition of the Moonlight Clan; without the advent of credit cards, there was no premature consumption.

The capitalists were not benevolent; the technology was simply not up to par. If they could have, they would already be promoting excessive spending.

Tom said with a wry smile, “Eilinna, it looks like we’re going to have to prepare for some hard times.”

If he could sense the problem, wouldn’t the upper echelons of capitalists be aware as well? Every economic crisis is preceded by warning signs.

With almost every crisis, the financial elites at the pinnacle of capital usually made a killing. If they lost out, it was either because they were outsmarted by a rival or too greedy, trying to make every last Franklin.

Surprised, Eilinna asked, “What’s going on? Did you lose your job?”

“Not yet, but it’s likely to happen soon,” Tom replied.

Eilinna comforted him, “Don’t worry, with your skills, finding another job will be easy. If need be, we will just have to cut back on our spending starting next month.”

…

While the couple was discussing their situation, the market had already delivered its impact to the end producers. Affected by the influx of cheap Austrian goods, many products from local companies had become hard to sell.

The economic crisis in the UK was not known to the general populace, but it was no secret within capitalist circles.

…

At Citibank’s executive meeting, President James said, “Gentlemen, according to intelligence we’ve gathered, there’s been a recent surge in the number of ships coming from Austria, all filled with industrial and commercial products.

From items as small as toothbrushes, screws, and nails to large machinery—almost every industry is involved. There’s no doubt this is a case of dumping.

It’s not just the Austrians who are active; the British are not sitting idle either. The number of ships coming from London to the United States has increased by a third.

The British are also dumping goods on us, and this is certainly not good news. Our clients, facing the price wars they have instigated, are virtually powerless.

Or rather, the vast majority of American companies are powerless. Therefore, we must take action, or it won’t be long before a flood of bad debts arises.”

Citibank is Wall Street’s oldest bank, not yet the colossal Citigroup of later years. Its main business wasn’t in arms but in loans and financial securities.

In this era, the American military-industrial complex was small, and the international arms market was monopolized by European powers. In peacetime, these industries were not enough to sustain a bank.

Citibank’s connection to military enterprises was limited to commercial loans, with no direct investments. In the face of this crisis, the bank naturally had to protect itself first.

Shareholder Babno asked Mr. James, “What do you plan to do? It might be too late to push Congress to enact legislation, raise tariffs, and restrict the entry of foreign goods.”

Taking action was inevitable, a detrimental legacy of the civil war. While interfering in the American Civil War, the UK, France, Austria and Spain had also opened up America’s markets.

Imposing higher tariffs to protect the market was certainly not simple. This was why Austrian goods could quickly flood the American market with dump sales – there were no tariff barriers, and their low prices were virtually unstoppable.

What was most troubling was that these industrial and commercial products were not only competitively priced, but their performance in various aspects also surpassed American goods.

In this era, American industrial and commercial products had always been synonymous with knockoffs and inferior quality; compared to imported goods, they could only compete by being cheaper.

Now, tragedy struck as Austrian goods started to be sold off with tears in massive discounted sales, followed closely by the British engaging in discount promotions too, heralding the onset of a harsh winter for American manufacturing.

Mr. James shook his head and said, “Of course not, we are not saviors. The outbreak of the economic crisis is inevitable, and even raising tariffs to protect the market would be the same.

What we need to do now is to stop the loss, and to make a profit in this crisis. I need the board’s authorization to temporarily halt foreign loans.

I am also prepared to preemptively collect on high-risk loans. At the same time, I will sell off most of the securities and stocks at hand, and the bank will draw professional traders to prepare for short-selling in the stock market.”

This is not about saving the market, but about kicking someone when they’re down. However, that’s not the main point; as long as it makes money, that’s what matters.

A competent capitalist always puts profits first. Conscience and social responsibility are just grandiloquent terms that are fine to mention, but anyone who takes them seriously is a fool.

Especially in the 19th century, the most blood-soaked age of capital, every Franklin bore traces of blood and sweat.

There was nothing to discuss; it was time for a reshuffle. Before fighting back against the invasion of European capital, it was imperative to ensure our own survival.

The events that occurred during the last economic crisis were still vivid in everyone’s mind. Due to inadequate preparation and a lack of sufficient cash on hand, a frantic panic for money erupted in the United States, and Citibank nearly went bankrupt.

As the capitalist economy developed, economic crises became as commonplace as household meals. Initially occurring every few decades, they escalated to every dozen years or so, and were about to become biennial events.

Many financial capitalists made the same choice—there is no sentimentality in the face of interest. In this dog-eat-dog era, everyone must be ruthless to survive.

As banks tightened credit, it quickly triggered a chain reaction. Many enterprises found themselves in dire straits, including some efficient ones, which, due to broken capital chains, fell into a battle for survival.

Suddenly, layoffs and production cuts became the hottest topics in American society. The streets were filled with people looking for work, yet there were hardly any hiring companies. The post-war economic boom had just begun, and it was abruptly aborted.

It wasn’t just the United States; similar scenarios unfolded in many places around the world. Austria had merely taken the lead in opening the floodgates, transferring the economic crisis elsewhere.

Following the actions of the British, they dragged the entire world down with them. The world’s largest industrial nation was also the country with the most severe backlog of goods.

In a bid to survive, British capitalists directly dumped their goods onto the European Continent.

France was the first to suffer; massive amounts of British textile products were imported at rock-bottom prices, and repeated hikes in tariffs by the Paris Government failed to stem the tide.

There was no alternative but for Austria to make the first move, dumping goods into economically backward countries. By the time the British caught on, the market purchasing power had almost been spent.

These countries barely had any industry to begin with, and dumping industrial products hardly impacted the agricultural economy; in fact, many people were glad to buy cheap goods.

It was different for the countries of Europe—all were at the dawn of industrialization. The dumping of British goods severely affected their economies. There was no need for discussion; one by one, they erected tariff firewalls.

The crisis escalated across the European Continent, with Austria included; no one could save themselves, as numerous businesses went bankrupt daily.

Under the influence of tariffs, everyone’s international market was rapidly withering. Colonial Empires were faring better, at least having colonies to release some pressure, and thus relieving the crisis somewhat.

But it was dismal for nations without colonies, such as Belgium—a small industrial stronghold that was greatly damaged. With no overseas markets, Belgium’s industrial capacity was cut in half by 1868.

Newly independent Poland also didn’t escape the disaster. Without the large market of the Russian Empire, Poland’s fragile industrial system collapsed under the first wave of impact.

Even agricultural exports couldn’t evade the crisis. International grain prices plummeted due to the economic crisis.

Because they had no ports, added tariff costs directly deprived Polish agricultural products of their competitive edge.

This only served to complicate the already fraught Prusso-Polish relations further. The Polish grew increasingly resentful of the Kingdom of Prussia for imposing tariffs on their agricultural products.

In reality, the Kingdom of Prussia was struggling to save itself and had no concern for the Polish. After the outbreak of the economic crisis, the British didn’t spare their proteges.

An influx of British goods swept over Prussia, devastating its fragile industry and leading to a spike in bankrupt enterprises and unemployment.

With industry heavily impacted, agriculture naturally needed protection. The ruling Junker aristocracy had to prioritize their class interests.

After the Prusso-Russian war, the Kingdom of Prussia acquired vast tracts of land, transforming from a grain importing country to a grain exporting one.

Prussia and Poland became competitors in grain exports. Fortunately, everyone had just ended a war not long ago, and grain production hadn’t returned to its peak, so the initial competition between them wasn’t intense.

The contradiction became pronounced come the autumn harvest of 1868. Coinciding with the most severe period of the economic crisis, purchasing power declined, and international grain prices dropped by 28%.

Every major grain-exporting country in Europe went through tough times. To ensure their own interests, the Junker nobles, who dominated the Berlin Government, had no choice but to restrict Polish grain exports with tariffs.

It wasn’t entirely Berlin Government’s fault; the Polish capitalists directly dumped their grain into the Kingdom of Prussia, didn’t they?

Initially, both governments had agreed that Polish farm products could not be sold in Prussia. Such government constraints, obviously, couldn’t stop the capitalists.

Seeing the higher grain prices in Prussia, the capitalists naturally couldn’t hold back any longer.

At first, they discreetly sold a bit to locals en route, with no large amounts to attract attention. Later the trade grew, until it was too big to cover up and exploded.

There is no sentimentality in the face of interests, and when their interests were harmed, the Junker nobles made a fuss, and naturally, the Berlin Government knew which side to take. After fruitless negotiations, they directly resorted to the heavy-hitting tariff solution.