Chapter 433: Mass Dumping |
New York, the largest city in the United States, became even more bustling after the war. Starting in 1865, the American economy began to recover, and life seemed to improve rapidly for everyone.
Of course, this was just an illusion. Happiness is relative, and compared to wartime, living conditions have indeed improved significantly.
America, rich in resources, saw a significant population decline due to the war, with the greatest losses among young adults.
Affected by the laws of supply and demand, capitalists had to attract sufficient labor by importing cheap Black labor while simultaneously raising wages to retain their existing workers.
The increase in income alleviated social tensions. Today was the weekend, and Tom had arranged to go out with his girlfriend, Elena.
“Tom, have you noticed that goods have become much cheaper lately? The dress I had my eye on last month is now half the price.”
Tom said apologetically, “Sorry, dear. We’ve already spent this month’s budget. How about we wait until next week when I get paid?”
Influenced by American culture, young people generally do not have the habit of saving money. As a member of the “living paycheck to paycheck” group, Tom only paid attention to prices for the first half of the month after receiving his salary.
Besides setting aside money for living expenses, his paycheck only lasted about two weeks. This was despite having a decent job as an employee at a securities firm, barely qualifying him as part of the middle class.
This city is only suitable for the wealthy so the poor should avoid going out. The more they see, the harder their lives become.
Out of respect for Tom, Elena nodded. There’s no choice—without careful budgeting, one cannot survive in a city like New York.
Not the best, but the most expensive—this describes New York in this era. It is the region with the highest prices in the United States, or even in the entire world.
As they strolled around, Tom’s expression gradually darkened. Discount sales advertisements were everywhere, from clothing and footwear to machinery, almost everything was being sold at tear-inducing prices.
As a top graduate of Columbia University and working in the finance sector, Tom was particularly sensitive to economic changes.
Such large-scale price reductions made him sense that something was wrong. Don’t be fooled by the many people rushing to buy now; the overall market demand hasn’t changed.
This rush of purchases is essentially pre-spending future buying power. Fortunately, Americans have a tradition of living paycheck to paycheck without advanced consumption because credit cards haven’t been invented yet.
It was not out of capitalist benevolence, but rather technical limitations. If they could have, they would have promoted advanced consumption long ago.
Tom said with a bitter smile, “Elena, it looks like we need to prepare for hard times.”
If he could sense the problem, wouldn’t the high-ranking capitalists notice it too? Any economic crisis always has precursors.
Almost every economic crisis results in the financial conglomerates at the top of the capital pyramid making huge profits. If they lose money, it’s either because they were too stupid and got outsmarted by their competitors, or they were too greedy and wanted to squeeze out the very last dollar bill.
Elena asked in surprise, “What’s going on? Did you lose your job?”
“No, but it might happen soon,” Tom replied.
Elena comforted him, “It’s okay. With your abilities, finding another job won’t be difficult. Starting next month, we can just cut back on our expenses.”
…
As the two were discussing, the market had already sent feedback to the production companies at the end of the chain. Due to the impact of cheap Austrian goods, many companies were unable to sell their products.
The fact that an economic crisis had occurred in Britain was unknown to the general public, but it was no secret within capitalist circles.
…
At a Citibank executive meeting, President James said, “Gentlemen, based on the intelligence we’ve gathered, the number of ships coming from Austria has increased dramatically, all carrying industrial and commercial products.
These range from small items like toothbrushes, screws, and nails to large machinery. This is clearly a case of dumping.
Not only are the Austrians taking action, but the British are also not sitting idle. The number of ships arriving from London to the United States has increased by one-third.
The British are also dumping goods on us, which is not good news for us. Our clients are unable to withstand the price war they are waging.
In fact, the vast majority of American businesses cannot resist it. So we must take action, or soon we will face a large number of bad debts.”
Citibank is the oldest bank on Wall Street, not yet the behemoth Citigroup of later times. The bank’s main business is also not arms, but lending and financial securities.
In this era, the American military industry is small, and the international weapons export market is monopolized by the European powers. During peacetime, these industries cannot support a bank.
Currently, Citibank’s connection with the military industry is limited to commercial loans, without direct investment. Now, facing a crisis, the bank must prioritize its own survival.
Shareholder Babineau asked, “Mr. James, what do you plan to do? Trying to push Congress to legislate higher tariffs to restrict foreign goods may already be too late.”
Taking action is inevitable; this is a lingering issue from the Civil War. While intervening in the American Civil War, Britain, France, Austria, and Spain also opened up the American market.
Raising tariffs to protect the market is naturally not that simple. This is also why Austrian products can quickly be dumped in the United States. Without tariff restrictions, their low prices became unbeatable.
What’s most troubling is that these industrial and commercial products are not only cheap but also outperform American goods in every way.
In this era, American industrial and commercial products have always been synonymous with knock-offs and poor quality. Compared to imported goods, they could only capture the market through low prices.
Now it’s a tragedy—Austrian products are being dumped at rock-bottom prices, and the British are following suit with discounts and promotions. The winter of American manufacturing has arrived.
James shook his head and said, “Of course not, we’re not saviors. An economic crisis is already unavoidable, and raising tariffs to protect the market won’t change that.
What we need to do now is cut our losses and make a profit during this crisis. I need the board’s authorization to temporarily halt external loans.
For high-risk loans, I’m prepared to send out people to collect early. We’ll also sell off most of our securities and stocks, and the bank will deploy professional traders to prepare to short the stock market.”
This isn’t about saving the market, it’s about kicking it while it’s down. But that’s not the main point—what matters is making money.
A qualified capitalist always prioritizes profit. Conscience and social responsibility are lofty words that are good to say, but only a fool would take them seriously.
Especially in the 19th century, the most brutal era of capitalism, every dollar bill was stained with blood and sweat.
There’s nothing to negotiate—the time for reshuffling has come again. Before resisting the invasion of European capital, one must first ensure their own survival.
Everyone still vividly remembers what happened during the last economic crisis. Due to inadequate preparation and a lack of sufficient cash, the United States experienced a frenzied cash panic, and Citibank almost went bankrupt.
With the development of the capitalist economy, economic crises are becoming more frequent. Initially, they occurred every few decades, then every decade, and now they are about to become an occurrence every few years.
Many financial capitalists are making the same choices—there is no room for sentiment in the face of profit. In this era of survival of the fittest, one must be ruthless to survive.
The contraction of bank credit quickly triggered a chain reaction. Many companies fell into trouble, including some well-performing ones that found themselves on the brink of collapse due to broken cash flows.
Suddenly, “layoffs” and “production cuts” became the most popular terms in American society. The streets were filled with people looking for jobs, yet there were few companies hiring. The newly blossomed post-war economic boom was abruptly cut short.
This scenario was not limited to the United States; the same thing was happening in many parts of the world. Austria was merely the first to open the floodgates and transfer the economic crisis abroad.
Following the British actions, the whole world was dragged down. As the world’s largest industrial nation, Britain also had the most severe product surplus.
British capitalists, fighting for survival, began dumping goods on the European continent.
France was the first to suffer. A large influx of British textile products at rock-bottom prices hit the market, and even after repeatedly raising tariffs, the French government couldn’t stop it.
There was no choice—Austria acted first this time, dumping goods in economically less developed countries. By the time the British reacted, most of the market’s purchasing power had already been exhausted.
These countries had little industry to begin with, so dumping industrial products didn’t impact their agricultural economies much. In fact, many people were even pleased to get cheap goods.
It was different in the European countries, where industries were already established. The dumping of British goods severely affected their economies, leading them to set forth tariffs.
The crisis expanded across the European continent. Including Austria, no country could remain unaffected, with numerous businesses going bankrupt daily.
Due to tariffs, international markets were shrinking rapidly. Colonial empires fared better since their colonies could absorb some of the excess production, alleviating the crisis somewhat.
Countries without colonies suffered greatly. For instance, Belgium, an industrial power, was severely hit. Without overseas markets, Belgium’s industrial capacity was halved in 1868.
Newly independent Poland also couldn’t escape the crisis. Without the vast Russian market, Poland’s fragile industrial system collapsed under the first wave of the crisis.
Even agricultural exports weren’t spared. The economic crisis had already caused international grain prices to plummet.
Furthermore, without their own seaports, increased tariff costs directly led to Polish agricultural products losing their competitiveness.
This situation further complicated the already tense relationship between Prussia and Poland. Poles grew increasingly resentful of the Kingdom of Prussia for imposing tariffs on their agricultural products.
In reality, the Kingdom of Prussia could barely protect itself and had no time to worry about the Poles. After the economic crisis erupted, the British did not spare their ally.
A flood of British goods devastated Prussia’s fragile industry, leading to numerous bankruptcies and a sharp rise in unemployment.
With the industry in ruins, agriculture had to be safeguarded. The ruling Junker aristocrats had to protect their class interests first and foremost.
After the Russo-Prussian War, Prussia acquired vast tracts of land, transforming it from a grain importer to an exporter.
In grain exports, Prussia and Poland had become competitors. Fortunately, both nations had just recently ended their wars, and grain production had not yet returned to its peak, so competition was not initially intense.
This changed during the autumn harvest of 1868, coinciding with the peak of the economic crisis. With declining purchasing power, international grain prices dropped by 28%. Major grain-exporting countries in Europe were struggling.
To protect its interests, the Prussian government, led by the Junker aristocrats, had to impose tariffs to restrict Polish grain exports.
It wasn’t entirely the Prussian government’s fault; Polish capitalists had been dumping grain directly into Prussia.
Initially, the two governments had agreed that Polish agricultural products would not be sold in Prussia. Such governmental agreements, however, could not restrain capitalists.
Seeing high grain prices in Prussia, capitalists could not resist the opportunity for profit.
At first, they sold small quantities to locals along the transport routes, which went unnoticed. As business grew, it eventually became too significant to hide, leading to a backlash.
There is no mercy in the face of interests. Faced with the unrest from the affected Junker aristocrats, the Prussian government knew which side to support. After failed negotiations, they resorted to imposing tariffs.
