Empire Rising: Spain

Chapter 184: Chapter 144: The Economic Crisis Is Coming

“Your Majesty, your prediction is truly remarkable. The United States Government has already started to freeze railroad construction. According to our investigation, many railroad companies in the United States are facing bankruptcy crises. The economic crisis might be imminent,” reported Kadir, the director of the Royal Security Intelligence Bureau, to Carlo with excitement.

“Oh? Really? What about other countries? Has Spain been similarly affected?” Carlo, hearing this, felt a sense of anticipation, and quickly asked his questions.

Since the government work report meeting, Carlo had devoted all his attention to the economic crisis expected to erupt in 1873.

The Royal Security Intelligence Bureau was dispatched in full force, gathering intelligence from European Countries and America to determine the timing of the crisis in various countries.

The primary focus of this economic crisis is in the United States, but European Countries are also affected, with a long-lasting impact.

Carlo’s concern was that the Franco-Prussian War, due to its earlier outbreak and conclusion, might lead to the economic crisis of 1873 erupting sooner or later.

Preventing this economic crisis is of utmost importance to Spain, with no room for error. This is why Carlo directly ordered the Royal Security Intelligence Bureau to closely monitor the economic trends of various countries. From the stock market and industry trends of various countries, one can simply judge if an economic crisis is about to happen and the approximate timing of its outbreak.

The so-called capitalist economic crisis is essentially production far exceeding demand, thereby severely disrupting the market.

Judging whether an economic crisis will erupt is also quite simple, just look at the situation across various countries and industries to see if there is a looming mass bankruptcy crisis.

Economic development in this era does not have comprehensive oversight, and the impact of an economic crisis is extremely vast, often causing a chain reaction across industries and countries.

With continuous focus from the Royal Security Intelligence Bureau, the economic situation in the United States finally began to show abnormal changes.

Why focus particularly on the United States? Besides being the country most severely affected by the 1873 economic crisis, a major reason is that the United States was a beneficiary of the Second Industrial Revolution.

Carlo is well aware of the threat posed by the United States. Although the United States at this time is merely a nation with decent industry and economy, the potential of this country is undoubtedly exceptionally strong.

Since it’s yet to see the United States fully rise, Carlo naturally cannot let the United States become stronger.

European powers, despite being very strong, have other European Countries to restrain each other, preventing them from posing too great a threat.

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

North America and South America will become the backyard of the United States, with the Atlantic Ocean and Pacific Ocean serving as barriers, no country can threaten the position of the United States.

Fortunately, there is still a long time before the true rise of the United States, with many opportunities to limit its ascent.

No doubt about it, the fastest way to develop in this era is through building railroads. Because a small railroad construction project is connected to various industries, most importantly the heavy industry such as steel.

Steel is tied to the production, mining, and smelting of coal and iron ore. Railroad construction can directly drive the development of the entire heavy industry, allowing the country to quickly enter the fast lane of development.

This is exactly what the United States has been doing. From 1865 to 1873, over 8 years, the United States saw its pig iron production increase from 755,000 tons to 2,323,000 tons, more than doubling, which is quite dramatic.

Coal production grew from 22,159,000 tons to 51,917,000 tons, an increase of 1.3 times. From 1865 to 1872, the United States built new railroads with a total length of 31,092 miles, converting to kilometers surpassing 50,000.

Constructing 50,000 kilometers of railroads in 7 years, how exaggerated is this data?

Currently, Spain’s railroad mileage has not yet broken through 7,000 kilometers, while superpowers such as the UK and Germany and France only have total railroad mileage between 20,000 to 30,000 kilometers.

The total railroad mileage built by Americans in these 7 years is already equivalent to the total mileage of railroads in Germany and France combined, and is twice as much as the UK’s railroads.

Such an exaggerated scale of railroad construction makes it impossible for the economic crisis of 1873 not to erupt. Furthermore, not all the capital for railroad construction in the United States originates domestically; over half of the investment comes from European Countries, especially the UK, England and France, Netherlands, and Germany.

This is one of the reasons why the economic crisis originating from the United States affects Europe, simply because the capital these countries invested in the United States is spent in real gold and silver. The bankruptcy of American railroad companies naturally impacts the capital operations of these countries.

Fortunately, Spain’s domestic capital is not substantial, so naturally it does not participate much in investing in American capital.

The collapse of the American railroad industry does not have a significant impact on Spain, after all, Spain only constructs 300-400 kilometers of railroads per year on a small scale, generally not attracting substantial capital attention from other countries.

Currently, Spain employs two methods for railroad construction: one is direct government investment, the other is issuing railroad bonds to domestic capital and the populace.

The downside is the funds available for railroad construction are indeed limited, as domestic capital and the populace in Spain cannot pool much money together.

But the benefit is the cost of railroad construction is within what the nation can bear, and railroad construction will not trigger negative events like an economic crisis.

Although Spain’s development is relatively slow, if it can remain unscathed during the economic crisis, it might utilize this time for faster development.