Holy Roman Empire

The Berlin Government’s audacious operations left the entire European world in shock.

For the bourgeoisie, this was a direct blow to the head. If Prussia could pull off such a stunt, other nations could naturally follow suit, and this was essentially a sword hanging over everyone’s head.

The public opinion was full of criticism, but it all proved ineffective. Since they dared to upset the table, the Berlin Government naturally wasn’t afraid of getting scolded.

Not only did domestic capitalists suffer heavy losses due to Prussia’s actions, but overseas investors were wailing as well.

Since the news spread, the number of people wanting to jump off buildings in Frankfurt increased significantly.

Including the somewhat famous Flores who, due to misinformation, accidentally took over a deal and was now hesitating whether to head to the rooftop or not.

Luckily, after the end of the Prusso-Russian war, the stocks of all Prussian companies had plummeted to rock bottom, and were already trapped at low values.

As long as no one foolishly went long, even those who did take over did so at low positions, so the losses weren’t too severe.

The Berlin Government only confiscated the shares of criminals, in theory, meaning the shares held by overseas investors were still valid.

This was also the main reason the great powers didn’t intervene; although the Berlin Government’s methods were a bit drastic, after all, it was dealing with internal affairs.

The most critical factor was that a fait accompli had been created, and intervention would only make things more complicated, increasing everyone’s losses.

As long as the companies were still operating, there was value in the stocks. It’s just that the major shareholder had become the Berlin Government, making the investment prospects uncertain and perplexing.

...

Vienna Palace

"Your Majesty, the situation has changed. Prussia’s actions could trigger a chain reaction. If the French follow suit, our plan is unlikely to succeed," Finance Minister Karl said with deep concern.

The unexpected turn of events was a huge blow to the secret plan of the Anglo-Austrian two countries to short the Franc.

If Prussia could flip the table, so could the French. Even if the Paris Government didn’t dare to copy it in full, just implementing financial regulation would be enough of a burden for everyone.

Franz shook his head, "It’s not the same. The Berlin Government was forced into a corner with no other option, so it was a desperate throw of the dice.

Considering the scale of France’s economy, we can only try to depress the value of the Franc a bit and make a tidy profit from it. It won’t threaten their survival, so the Paris Government wouldn’t go to that extreme.

If the Paris Government really did enforce financial control, it would actually be doing us a huge favor. Prussia is a ready example; the value of the Mark has already completely collapsed.

We might lose out on this speculation, but if the Franc exits the international market, that share alone could make up for our losses."

The struggle for currency supremacy between England, France, and Austria had been going on for many years. Although France had been ousted from the contest, the Franc still held a significant share in the international market.

In the Gold Standard era, the larger the economy, the greater the demand for gold.

France had a large economy, yet its gold production was very limited and couldn’t meet the rising demand. The gold reserves backing the issuance of Francs had always been inadequate, posing a safety hazard in the financial market.

In recent years, international speculators have been frequenting the market. However, the scale was never very large, and even with some gains, the position of the Franc remained unshaken.

With profits tempting the heart, speculators having tasted sweetness naturally wanted to reap even greater benefits.

This time, with the Anglo-Austrian capital collaborating, it seemed as though Franz was pushing it from the shadows, but in truth, it was just a catalyst. Even without this catalyst, it would have happened eventually.

Of course, this catalyst was very important. Without government involvement, capitalists would not have acted on such a large scale.

Essentially, the French were being suppressed by England and Austria because they threatened the interests of both countries.

The Paris Government’s African development plan was too infuriating. In recent years, France’s textile industry had developed rapidly and had already taken over a considerable market share from the British.

That alone was enough to cause the British pain, and with the African development plan prioritizing cotton farming, how could John Bull stand it?

In addition to cultivating cotton, the French African development plan also included the introduction of new agricultural technologies in the North African region to expand the cultivation area of agricultural products, which again infringed on Austria’s interests.

Under such circumstances, if France hadn’t faced suppression from the Anglo-Austrian two countries, that would have truly been an issue.

Compared with the struggle for the international market share of the Franc, which was secondary, it was mainly financial circles that were interested.

After a brief pause, Franz added, "The plan has progressed to such a point that it’s no longer possible to simply pull out.

I don’t know much about financial matters, so I leave it to those who have transferred from other careers to take charge.

For now, let’s stick to the plan and increase the dumping on France to consume as much of their foreign exchange reserves as possible."

...

What had been expected finally arrived; influenced by the special policies of the Berlin Government, the Berlin Stock Exchange plummeted as soon as it opened on November 11, 1881.

A fifty percent loss was considered a good performance, as many stocks were left at only twenty or thirty percent of their value, with some even falling below ten percent of their original market cap.

The net assets of certain enterprises were several times higher than their market value, a classic case of market value inversion.

This was all normal; assets are not the same as cash. During a stock market crash, assets inevitably shrink. There were plenty laments of those forced to sell off at low prices to raise funds to get through the hard times.

With the unfolding of free trade and increasingly tight economic ties between nations, a stock market crash in Prussia meant other countries could not expect to escape unscathed.

The first to be impacted were naturally Frankfurt and London. The former held out for less than three days before collapsing completely; the latter lasted hardly five days before following suit.

Pandora’s box had been opened, and the stock market crash swiftly spread across the entire European Continent, with stock markets in every country wailing in distress.

In less than a week, Vienna’s stock market index had fallen by ten percent, hitting its lowest in five years.

With both the Anglo-Austrian two countries experiencing stock market crashes, France naturally could not be an exception.

Paris, angry investors directly set the Stock Exchange ablaze, but thankfully the staff arrived in time to extinguish the fire.

At the Palace of Versailles, Napoleon IV had not yet recovered from the shock of the stock market crash when Economic Minister Elsa hurriedly rushed in. Nôv(el)B\\jnn

"Your Majesty, we have a serious problem. Hundreds of banks, including Paris Bank, French Bank, and Imperial Bank, are facing bank runs; the situation is incredibly dire.

Many people are holding their deposit certificates and demanding to exchange for British Pound, Divine Shield, and our foreign exchange reserves are rapidly depleting.

We can be certain that someone is short-selling the Franc. This bank run is just the beginning; the enemy still has attacks to launch."

Upon hearing this bad news, the word "financial storm" instantly surfaced in Napoleon IV’s mind. After a brief pause, he anxiously asked, "Do we know who’s manipulating this?"

Economic Minister Elsa answered, "There are many participants, almost all the world’s leading banks and securities firms are involved. It can be roughly inferred that the main force is Anglo-Austrian capital.

The enemy is extremely powerful, and according to the intelligence we’ve gathered, it’s preliminarily estimated that they might hold between three to five billion Francs."

"Three to five billion Francs" might seem insignificant to a great nation like France, which is about the French government’s annual revenue.

However, this is cash, not assets. On financial markets, such a large sum of money could completely leverage hundreds of billions of international capital to strike at France’s financial market.

Napoleon IV turned pale and said, "The enemy has amassed so much capital, and our financial department knows nothing about it?"

Since the Divine Shield and pound sterling are international settlement currencies, the foreign exchange reserves of both England and Austria are relatively low, indeed incapable of coughing up so many Francs.

In actuality, the total circulation of Francs on the international market is only a few billion. This means that the funds initiating the bank runs could only come from within France itself.

Economic Minister Elsa replied in a low voice, "Recently, several of our major domestic banks have issued substantial loans abroad, all for normal commercial projects, which did not attract much attention."

This is determined by the system; banks have the freedom to provide loans, and the French government has no right to interfere.

Since it can’t be controlled, it naturally isn’t taken seriously. After all, the banks themselves are responsible for their profits and losses; the government need not foot the bill.

Napoleon IV stopped short of speaking, knowing full well that domestic financial consortia were involved in this wave of bank runs, and yet he was powerless to do anything.

If it weren’t for the recent moves by the Berlin Government that had frightened the bourgeoisie, there would certainly have been no shortage of French capital in the forces now shorting the Franc.

Now that they’ve gone into hiding, they’re already giving the government considerable face. Surely, we can’t expect them to stop making money, right?

After contemplating for a while, Napoleon IV asked, "How do you plan to deal with this crisis?"

Economic Minister Elsa: "Unlike before, this time the enemy is ferocious, and they definitely won’t be satisfied with just a little advantage.

..."