Rise of Empires: Spain.

Chapter 146 The Economic Crisis is Coming

"Your Majesty, your prediction is simply amazing. The US government has begun to suspend railway construction. According to our investigation, many US railway companies are currently facing bankruptcy risks, and the economic crisis may be coming soon." The director of the Royal Security Intelligence Agency, Kader, reported to Carlo excitedly.

"Oh? Really? What's the situation in other countries? Has Spain been affected as well?" Carlo was a little excited when he heard this and asked his own questions in succession.

Since the government work report meeting, Carlo has focused all his attention on the economic crisis that was about to break out in 1873.

The Royal Security Intelligence Service was even mobilized to collect intelligence in European countries and America to determine when economic crises would break out in various countries.

The economic crisis mainly broke out in the United States, but it also affected European countries and the impact lasted for a long time.

Carlo was worried that the earlier outbreak and end of the Franco-Prussian War might cause the economic crisis of 1873 to break out earlier or later.

It is very necessary for Spain to prevent this economic crisis, and it cannot afford to be careless. This is also the reason why Carlo directly asked the Royal Security Intelligence Agency to pay close attention to the economic trends of various countries, because it can be simply judged from the stock market and industry trends of various countries whether an economic crisis will break out, and the approximate time of the outbreak.

To put it bluntly, the economic crisis of capitalism is that production far exceeds demand, which seriously damages the market.

It is also very simple to judge whether an economic crisis will break out. It is just to look at the situation in various countries and industries to see whether they will face the crisis of large-scale bankruptcy.

The economic development of this era was not well regulated, and the impact of the economic crisis was extremely wide, even causing chain reactions in various industries and countries.

Under the continuous attention of the Royal Security Intelligence Agency, the economic situation in the United States finally underwent unusual changes.

Why focus on the United States? In addition to being the country most affected by the 1873 economic crisis, another major reason is that the United States is a beneficiary of the Second Industrial Revolution.

Carlo was well aware of the threat posed by the United States. Although the United States was only a big country with good industry and economy at that time, the country's potential was absolutely extremely strong.

Since he arrived at a time when the United States was not yet completely strong, Carlo naturally could not allow the United States to become stronger.

Even if European powers become more powerful, they will not pose too much of a threat as they will be restrained by other European countries in the future.

But Americans are different. If the United States becomes truly powerful, there will be no country in North America that can threaten it.

North America and South America will become America's backyard. With the barriers of the Atlantic and Pacific Oceans, no country will be able to threaten America's status.

Fortunately, there is still a long time before the United States truly rises, and there are many opportunities to limit its rise.

It has to be admitted that the fastest way to develop in this era is to build railways. Because a small railway is related to various industries, the most important of which is heavy industry such as steel.

Steel is related to the production, mining and smelting of coal and iron ore. The construction of railways can directly promote the development of the entire heavy industry and allow the country to quickly enter the fast lane of development.

美国就是这么做的。1865年到1873年8年的时间，美国的生铁产量就从75.5万吨增加到了232.3万吨，增长了2倍还要多，是相当夸张的。

煤产量从2215.9万吨增长为5191.7万吨，增长了1.3倍。1865年至1872年，美国新建成的铁路总里程高达31092英里，换算成公里超过了5万。

It took only 7 years to build 5 kilometers of railways. How exaggerated is that?
Spain's current railway mileage has not yet exceeded 7000 kilometers, and the total railway mileage of superpowers such as Britain, Germany and France is only 2 to 3 kilometers.

The total mileage of railways built by Americans in these seven years is equal to the total mileage of railways in Germany and France combined, and twice the total mileage of railways in the United Kingdom.

With such an exaggerated scale of railway construction, it is impossible that the economic crisis of 1873 did not break out. Moreover, the funds for the construction of railways by Americans did not all come from the United States. More than half of the investment came from European countries, with the largest number coming from Britain, France, the Netherlands and Germany.

This is also one of the reasons why the economic crisis that broke out in the United States has affected Europe. After all, the capital invested in the United States by these countries is real money, and the bankruptcy of American railway companies will naturally affect the capital operations of these countries.

Fortunately, Spain's domestic capital strength is not large, so naturally it will not participate much in investing in American capital.

The collapse of the US railway industry does not have much impact on Spain. After all, Spain only builds 300-400 kilometers of railways each year, which basically does not attract the attention of capital from other countries.

Currently, there are two ways to build railways in Spain. One is direct government investment, and the other is issuing railway bonds to domestic capital and the public.

The disadvantage is that there is very little money available to build railways, and the capital and people in Spain cannot raise much money.

But the good thing is that the cost of building railways is within the country's affordable range, and the construction of railways will not lead to negative impact events such as economic crises.

However, Spain's development is relatively slow. But if it can stay out of the economic crisis, it will be able to use this time to develop faster.

At the same time, Spain, which has not suffered too much economic crisis, can also attract the attention of capital from other countries, thereby providing more capital support for domestic development.

However, development is development. In the construction of Spain, both Carlo and Prime Minister Primo will always pay attention to the influence of capital.

Capital is certainly allowed to exist in Spain, but it is not allowed to have too much power, nor is it allowed to influence the government through its own power.

In the future, the only capitals that will have greater influence are the royal family's capital and the government's capital. The combination of the two official capitals can easily control the workers in Spain and turn Spain into a constitutional monarchy supported by the working class and peasant class.

According to the current Royal Security Intelligence Agency's investigation of the United States, the economic crisis will break out sooner or later, and it is even possible that it will break out within a year.

Railroad construction in the U.S. has slowed since last year, and the stock market for the railroad industry has not been as profitable.

Since it has been confirmed that an economic crisis is coming, the most important thing at the moment is naturally to frantically expand one's own financial reserves.

Because the gold standard is generally adopted in the monetary systems of various countries, even if they are affected by an economic crisis, the currency depreciation will not be large.

In some cases, the currency will even appreciate. After all, the value of gold is relatively stable. In chaotic times such as economic crises, it will only appreciate and not depreciate.

There is only one reason to expand cash reserves, and that is to prepare as much money as possible to buy at the bottom after the economic crisis breaks out.

The outbreak of an economic crisis means that many companies and enterprises go bankrupt, and this is also the time when the value of these companies and enterprises is at its lowest.

Carlo can easily acquire these companies with less money. Whether they continue to develop locally or ship important equipment and means of production back to Spain, it is a sure win.

In fact, Carlo also thought about notifying the Austro-Hungarian and Italian governments in advance to prepare for the economic crisis, but after thinking for a long time, he finally gave up. Advance notice may cause unexpected events, which is not cost-effective for Carlo. Besides, the economic crisis is borne by the governments of various countries, and the impact on the royal family is not that great.

Compared with the Spanish royal family, the Austro-Hungarian and Italian royal families are obviously more influential. They can cope with this economic crisis more easily and there is no need to create additional trouble for themselves.

Even if the two royal families suffered heavy losses in this economic crisis, Carlo could help them with interest-free or low-interest loans in the future. There was no need to take such a big risk.

Cash reserves and gold reserves are the two most important things in an economic crisis.

The former can purchase low-priced assets from other countries and obtain many industrial equipment and means of production.

The latter can serve as the most valuable capital reserve to prevent domestic bank runs and aggravate the economic crisis in Spain.

“Continue to monitor the economic conditions of various countries and report promptly if there is a possibility of an economic crisis.

In addition, I need specific information on the investigation of companies in the United States and European countries." Carlo ordered.

After the economic crisis broke out, the most important thing was to acquire companies and factories in Europe and the United States.

But the total number of factories in these countries is at least tens of thousands, or even more than 100,000.

In such a situation, if proper investigation is not carried out, there is a high possibility that what one buys are shell companies that caused the economic crisis, rather than excellent companies that truly own equipment, a large amount of production materials, and many skilled workers.

By purchasing a company with real assets, one can not only acquire a large amount of equipment and means of production, but also recruit several outstanding workers to come to Spain.

But if you buy a shell company, apart from a few bankrupt railway projects, all you might get is the company's IOUs.

Hearing Carlo's order, Kadir, the director of the Royal Security Intelligence Bureau, nodded very solemnly and said as if to assure you: "As you wish, Your Majesty. I will thoroughly investigate the factories and enterprises in Europe and America, and write a report to you."

Carlo was quite confident in the capabilities of the Royal Security Intelligence Service. Even the previous assassination of Prime Minister Primo was investigated with the assistance of the Royal Security Intelligence Service. Whether it was domestic surveillance or foreign intelligence investigation, the Royal Security Intelligence Service had quite good capabilities.

With Carlo's investment at all costs, the Royal Security Intelligence Service has become the largest intelligence department in Spain, with excellent intelligence capabilities.

Currently, there are more than a thousand intelligence personnel scattered across Spain and Europe and the United States, bringing a large amount of intelligence information and first-hand news to Spain.

This intelligence information can also help Carlo better judge the situation and events in various countries, so as to prepare for Spain's response.

In addition to the thousands of intelligence personnel, the number of non-staff intelligence personnel cooperating with the Royal Security Intelligence Agency is even higher at several thousand.

Together, these people formed the Royal Security Intelligence Agency's intelligence network, allowing Carlo to learn about the latest news happening around the world and the latest policies of various governments in Madrid.

Letting the Royal Security Intelligence Agency investigate corporate data from European and American countries will allow Carlo to more clearly identify whether these companies are suitable for acquisition.

After all, only truly valuable companies are worthy of being acquired. Railway companies that were set up just to catch up with the wave of railway construction, and other companies that have no technology and are established simply to make money, are naturally not on Carlo's acquisition list.

For Carlo, he can open many factories like this one whenever he wants, even if they don't have much means of production or excellent skilled workers.

But those factories with unique production technology and excellent production workers cannot be bought with money at ordinary times.

Only in times of economic crisis, only when these factories go bankrupt, is it possible to acquire all the shares of these factories and enterprises with very little capital, and then transfer their equipment, technology and workers to Spain as much as possible.

Of course, while paying attention to the economic trends and stock market fluctuations of various countries, it is also necessary to pay attention to the two major stock exchanges in Spain.

Although the Madrid Stock Exchange and the Barcelona Stock Exchange are not large in scale, they are stock exchanges after all, and there are also various entrepreneurial activities and securities issuances.

In 1872 alone, Spain's two major stock exchanges had more than 70 entrepreneurial events and securities issuances, with a total amount of 4651 million pesetas.

If not enough attention is paid to stock trading in Spain, the economic crisis caused by stock exchanges in other European countries is likely to spread to the stock exchanges in Madrid and Barcelona.

Spain's capital system is inherently fragile. Even if it is only affected by a minor economic crisis, it will be a devastating blow to Spain's fragile capital.

In order to protect domestic capital, it is necessary to impose certain restrictions on securities trading in Madrid and Barcelona, ​​and to conduct more stringent screening of companies issuing securities to ensure that no companies established solely for securities trading appear in Spain.

This is not groundless. Because of the marriage relationship with the Austro-Hungarian Empire, the economic exchanges between Spain and the Austro-Hungarian Empire were also closer.

The Vienna Stock Exchange has more frequent entrepreneurial activities and securities issuance than the two major Madrid stock exchanges, and involves a larger total amount of funds.

In 1872, the Vienna Stock Exchange had more than 200 entrepreneurial activities and securities issuances, three times the total of the two major Spanish stock exchanges.

Although this scale seems impressive, it is not a good thing. Due to the lack of supervision, a large part of it is banks and construction companies set up for speculation.

These banks and construction companies, which specialized in speculation, did create a brief boom when they flooded into the Vienna Stock Exchange.

However, if faced with the impact of the economic crisis, these companies will definitely face bankruptcy at the first opportunity. The bankruptcy of a large number of companies will inevitably affect the overall trading volume of the Vienna Stock Exchange, leaving the entire stock market in the red.

What followed was a variety of chain reactions, and because the entire stock exchange market lacked supervision, the chain reactions were extremely rapid and deadly.

By the time the Austro-Hungarian government reacted, the economic crisis might have destroyed the Vienna Stock Exchange and a large number of shell companies that existed only for speculation.

If there were no shell companies that exist only for speculation, the order of the stock exchange could be maintained even when an economic crisis comes.

Especially for a stock market like Spain, because of its small overall size, the impact of the economic crisis is destined not to be too serious.

The update is a little late, sorry.

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(End of this chapter)