Persian Empire 1845

Chapter 587 Spread
The plunge in the London Stock Exchange was just the prelude to the economic turmoil in Britain. Just one month into the crisis, British economic data had already shown a precipitous decline, with the former "world's factory" revealing signs of fatigue for the first time.

The collapse of this industrial pillar came suddenly and unexpectedly. The textile industry, the lifeblood of the British economy, saw its futures prices on the Manchester Cotton Exchange plummet by 43%.

The Port of Liverpool is piled high with raw cotton, worth over £600 million, with no buyers due to factory shutdowns. The number of textile mill closures in Lancashire surged by 127 in a single month, and the unemployment rate soared from 3.2% before the crisis to 9.7%. Textile workers in tattered overalls and carrying unemployment certificates are a common sight on the streets.

Birmingham's steel industry is also in dire straits, with blast furnace operating rates plummeting from 82% to 41%, and the price of rails falling from £18 to £9.50 per ton. Twenty-three coal mines in the Welsh mining region have ceased production due to broken funding chains, leaving nearly 30,000 miners without income. Long queues form in front of bakeries in the mining area, and more than 500 people rely on relief porridge to barely survive each day.

The ripple effects on the financial sector were even more devastating. The Bank of England's emergency injection of £500 million was woefully inadequate in the face of the panic-driven bank run.

Within a month, 17 local banks in the UK declared bankruptcy, with the Glasgow United Bank, founded in 1823, being the most representative. Because it held a large number of plummeting railway stocks and mining bonds, the bank's vault reserves were depleted on the day of the run, leaving 23 depositors with nothing. Commercial banks in London tightened lending, with business loan interest rates soaring from 4.5% to 12%. 80% of small and medium-sized enterprises were forced to close due to their inability to renew loans. Freight volume at London docks fell by 62% compared to the same period last year, and dozens of merchant ships remained docked along the once-busy Thames River, with no one unloading their cargo.

As the epicenter of the crisis, France's economic situation was even more dire than Britain's. Following the collapse of the Paris Stock Exchange, France's economic system crumbled like dominoes, with economic data reaching catastrophic levels.

Following the cessation of payments by the National Discount Bank of Paris, 34 banks in France went bankrupt, accounting for 28% of the country's total banks. The reserves of the National Bank of Paris fell from 1.2 million francs before the crisis to 1800 million francs. Depositors queued overnight outside the bank to withdraw their cash, some even bringing their bedding and waiting for three days, only to receive 5% of their deposits in the end.

The banking crisis directly impacted businesses: 80% of silk factories in Lyon were forced to shut down due to the inability to obtain loans, leaving 200,000 textile workers unemployed; in the shipyards of Marseille, three steamships under construction were halted due to a lack of funding, the slipways were rusty, and workers carried toolboxes around looking for a living.

French industrial output fell by 53% compared to the same period last year, and railway construction almost came to a standstill—the planned construction of the new Paris-Lyon railway was shelved, and the already laid tracks could not be extended due to insufficient funds. Railway company stocks fell by an average of 76%, with Normandy Railway's stock price dropping from 120 francs per share to 18 francs, becoming synonymous with "worthless paper."

Following Germany's receipt of its first war reparations from France, stock prices on the Berlin Stock Exchange briefly rose by 15%, but the gains were short-lived. As the French economy collapsed, Germany's export markets shrank dramatically—iron exports to France plummeted from 1.2 tons per month before the crisis to 2000 tons, steel mill operating rates in the Ruhr region dropped from 90% to 55%, and steel prices fell from 80 thalers per ton to 38 thalers. German industrial output fell by 19% compared to the previous month, the non-performing loan ratio of banks soared from 3% to 17%, and Berlin's Norddeutsche Commerzbank declared bankruptcy due to excessive lending to steel mills, resulting in depositors losing 800 million thalers.

Austria's industrial base was already weak, and the economy collapsed instantly after the crisis broke out. The Vienna Stock Exchange index plummeted by 60%, with railway stocks falling 72% and mining stocks dropping 81%. In Prague, the empire's textile center, cotton exports were only 18% of the previous year's level, 1.2 textile workers lost their jobs, hundreds lined up daily at bakeries, and bread prices soared from 2 crowns to 7 crowns per kilogram. Many families were forced to subsist on potatoes and wild vegetables. According to the Imperial Treasury, in 1870, the empire's revenue fell by 32%, the trade deficit widened to 1.8 million crowns, and the economy stagnated completely.

This crisis has long transcended the scope of a single country, forming an economic noose across Europe. The industrial decline in Britain led to a decrease in demand for raw materials from the European continent, the shutdown of railways in Germany caused unsold steel in Belgium, and the bankruptcy of French banks caused a break in trade credit in the Netherlands. The economies of various countries, like dominoes, dragged each other down, falling into a vicious cycle.

Moreover, the United States, spanning the ocean, faced a similar situation. The American economy was heavily reliant on exports to Europe, and the European crisis directly severed America's "lifeline" of foreign trade. Agricultural exports plummeted by 60%. Exports of manufactured goods were equally dismal. Textile mills in the northern United States depended on the European market; in November 1870, cotton fabric exports from New England to Europe were only 32% of the same period the previous year, and 47 cotton mills in Boston went bankrupt. Outside the factories, hundreds of workers lined up daily, waiting for a few odd jobs.

In a London slum, a family of seven crammed into a 10-square-meter room. The father, unemployed, had to work as a porter at the docks, earning only 6 pence a day, not enough to buy two pounds of bread. On the streets of Paris, Margaret, a former textile worker, knelt at the church door, begging for food, her child crying silently from hunger. Her husband had been arrested for participating in a strike, and the family had long since run out of food. At the Vienna train station, an old farmer named Johannes carried his last sack of wheat, intending to transport it to Prague to sell, but was told that the railway was shut down. He squatted by the tracks, watching the trains smoking in the distance, tears mingling with snowflakes falling onto his frozen, purple hands.

The European continent was devoid of its former joy and laughter. In front of St. Paul's Cathedral in London, thousands of unemployed workers gathered, singing "Ave Maria," but their voices betrayed their despair. In Place de la Concorde in Paris, people lit bonfires to keep warm, the firelight illuminating their frostbitten faces and the dark windows of the stock exchange in the distance. On the streets of Vienna, vendors hawked "cheap potatoes" in hoarse voices, but few paid any attention.

By May 1870, economic data from major European countries was bleak: industrial output had fallen by an average of 46%, foreign trade had decreased by 53%, the number of bank failures had tripled compared to previous years, and the unemployment rate had risen to an average of 12.5%. In the streets of London, Paris, and Berlin, marches of the unemployed grew longer and longer; factory chimneys no longer emitted smoke, railway tracks were rusted, and merchant ships were quietly moored in ports—the industrial civilization that had once driven European progress revealed its vulnerability in this crisis.

(End of this chapter)