I Became A Hidden Powerhouse Of The British Empire [EN]: Chapter 52

The Cold Winds of the New World

The final days of 1836 faded, and a new year dawned.

If one were to summarize the outlook of the British people as they welcomed 1837 in a single word, it would be ‘hope’.

The British economy, despite minor hiccups, was generally enjoying continuous growth.

The textile and steel industries expanded daily, and capitalists rejoiced at their ever-increasing wealth.

Stock prices soared, and the market was flooded with money.

Laborers were no exception.

With the repeal of the Corn Laws [tariffs on imported grain], food prices decreased, bringing more ease to their lives.

It wasn’t a complete escape from living hand to mouth, but being able to live for more than two days on a single day’s wage was a significant improvement.

The thriving British economy wasn’t solely due to the expanding domestic market.

“America! Investing in America is like printing money! Are there still idiots who haven’t invested in America?”

“If you see such an idiot, you can beat them up without guilt. Real estate is god, and I am invincible. Pour all your spare money into America, especially real estate!”

As the American economy noticeably developed, British investors gained another market where money poured in.

From nascent industrialization to infrastructure projects like canals, land development, and territorial expansion.

All these ventures required money and resources, and British companies and investors endlessly fed this goose that laid golden eggs [a metaphor for a profitable investment].

The banks, responsible for managing this, recklessly expanded credit and provided unlimited loans, further fueling this trend.

“Real estate always goes up. Especially American real estate. Not buying is foolish.”

Once started, this frenzy couldn’t be stopped with half-hearted measures, and soon, the American government, sensing something amiss, took drastic action.

-From now on, land transactions within the Federation must be conducted using gold or silver, not paper money.

This measure aimed to reduce the excessively increasing liquidity, but unfortunately, it was evidence that even the American administration didn’t realize how severe the situation was.

This attempt to cool down the overheated economy ultimately triggered the worst outcome no one had anticipated.

However, for Europe, which had yet to experience a global economic crisis, this was merely a spectacle across the ocean.

Only a few felt the sense of crisis that this fire could cross the Atlantic and engulf Britain.

At least, until now.

* * *

January 1837.

After finishing the New Year’s celebrations, listening to the Duchess of Kent’s complaints as usual, and completing Victoria’s lessons, it was already a dusky evening.

Unlike the hectic past year, I had a strong feeling from the start that this year would be long and eventful.

Just looking at the scheduled events, wouldn’t you say it’s dynamic?

Victoria, who would come of age this year, would probably be crowned queen around the middle of the year.

I also had to graduate from Eton [a prestigious boarding school], where I had spent a long time, and go to university. Thanks to the thesis I wrote last year, I was already receiving tremendous offers from Oxford and Cambridge.

Of course, I would be focusing on external activities rather than university from next year, as I would be an adult, but the advice from people around me was that I should still have the prestige of a prestigious university.

Since I was already inclined to do so, I readily accepted their advice.

The power of a good education was that it could completely shut down any talk about what a country bumpkin from Ireland would know.

“Graduating from Eton and going to Christ Church, Oxford, is the most easily imaginable elite course in this country. Since there won’t be any problem with you getting in, you should set your course that way, right?”

“I will. I think it’s better to have the title of the best university student in the British Empire.”

“Yes, yes. You’re starting to get attention, so you need to manage your image well. You know there’s been a lot of talk about you within the party recently, right?”

“I suppose so. I’ll be an adult next year.”

“Right. So, there was quite a heated debate between those who wanted to give you an English peerage [a title of nobility] and bring you into the House of Lords [the upper house of the British Parliament] around that time and those who thought it was too early.”

“Was a conclusion reached?”

As expected, Wellesley shook his head, looking embarrassed.

“No. It seems that the side arguing that it’s too early to bring you into the House of Lords as soon as you become an adult is more dominant.”

“That’s a great development. Either way, it means they’re going to let me into the House of Lords eventually.”

“Daniel O’Connell continues to wield influence in the House of Commons [the lower house of the British Parliament]. Even though the Duke is constantly being mentioned in various newspapers, he’s still holding on, so the nobles within the party have no choice but to have expectations for you.”

“So, it’s not a bad flow. If they’re arguing about when to grant the peerage rather than whether to grant it, it’s only a matter of time. Once this year passes, opinions will lean to one side, so Wellesley, please don’t try too hard to take my side and just watch.”

Although no one knows yet, if William IV dies this year, a general election will have to be held to convene a new parliament.

If it’s proven that Ireland’s influence is still strong there, will the senior members of the party still be able to gauge the situation while talking about timing?

“There’s a separate issue to focus on right now. If you don’t want to hand over the hard-won government, you need to prepare in advance. You shared the information I told you last time with Disraeli and Gladstone, right?”

“Of course, I did. Both of them didn’t seem to take it very seriously, but recently, they seem to be starting to feel that something is wrong.”

“That’s good. Wellesley, you’ve caught on now, right? That the Bank of England’s policies are unusual.”

Wellesley, as well as James, who had been buried in a pile of documents and hadn’t lifted his head once, looked up at me for the first time.

“They’ve announced that they’re going to raise interest rates continuously, right? I heard that raising interest rates this quickly is unusual.”

“That’s not all. As you warned, the bank is almost blocking new loans. It’s either because they don’t have the capacity to lend, or they expect that the people who are taking out loans now won’t be able to repay them.”

“Still, isn’t it a temporary phenomenon? Won’t it stabilize again in a few months?”

Looking back on my actions so far, he should know that’s not the case, but he’s still asking such a question.

“Wellesley, if that were the case, would I have rushed to cash out all the land I bought in Chicago last year?”

“That’s right… Thinking about it, it was a really absurd timing, but how did you predict that?”

“Land prices tend to rise in the long term over time. That’s true, but the real estate market is too overheated right now. The money in circulation and the loan situation are not normal. This applies not only to the United States but also to this side. That’s why they’re even putting out policies that you can’t buy land with currency. The banks here have realized that their feet are on fire.”

“But even so, it’s just a problem that broke out in the United States, so will it have such a big impact here? Ah, of course, I think it was a really good choice to take all the money out of the United States.”

To someone accustomed to modern economic conditions, it would sound like a dog barking [meaningless or nonsensical], but this was the general way of thinking of people in this era.

They are familiar with the economic crisis of a single country, but they have no experience of a global economic crisis.

There have been several crises in the past that have had a huge impact on a country.

The Dutch Tulip Mania, the French Mississippi Bubble, and the South Sea Bubble that occurred here in England were representative economic crises of the classical economic period.

However, most of these crises were settled as problems of the country concerned, or even if they affected foreign countries, the impact was limited.

Because capitalism was not mature enough, the capital of each country was not as closely intertwined as it is today.

However, the situation was different in an era where modern capitalism was maturing.

The economies of European countries were gradually influencing each other and were beginning to be linked by various connections, especially between England and the United States, which were actively interacting not only in capital but also in finance.

There was a good reason and background for the economic crisis that started in the United States in 1837 to be regarded as the world’s first economic crisis.

“Wellesley, do you know how many investors have money tied up in the American market right now?”

“Of course, I do. We took all the money out, but even around me, there are still congressmen who haven’t come to their senses and are trying to buy land in Illinois.”

“Not just money, but also steel and coal companies. The amount they sell to the United States is increasing day by day, so they are operating the company on the premise that the market will continue to grow in the future. But what happens if the American market suddenly collapses, exports plummet, and the money that should be coming in doesn’t come in? The human body cannot survive without enough blood circulating. And what is the blood in the economy…?”

“It’s money.”

Wellesley’s face stiffened as he understood the seriousness of the situation.

James quickly rummaged through the data from the United States to accurately grasp the current situation.

“We are only managing loans and interest rates at the bank, but it seems that the market is already shaking in the United States. The Chicago land prices, which had been soaring, have begun to fall rapidly, and people who have taken out loans are lying down, saying they cannot fulfill their debts. If this trend is not caught… a chain of bank failures may occur.”

It’s not just ‘may occur,’ it will happen.

In modern times, it’s somewhat overshadowed by the Great Depression of 1929, but before the Great Depression, the 1837 Panic was considered the largest and worst economic recession in the United States.

“If that aftermath reaches here, does that mean that our banks and companies can also go bankrupt? Even if they don’t go bankrupt, they will operate in an extremely contracted manner.”

“That’s right. But conversely, this is also an opportunity for me.”

“Opportunity? Why?”

“No matter how good a company is, it cannot avoid the aftermath of a recession. Stock prices will hit rock bottom, and the amount of cash in their pockets will hit rock bottom, making it difficult to maintain the size of their business. The steel companies that are growing in momentum will also be hit directly. James, how much do you think the stock prices of these companies will fall?”

“It’s difficult to predict right now, but… if it goes as you expect, at least less than half is certain. Ah, does the word ‘opportunity’ mean…?”

Of course, that’s what it means.

Why else would I have kept most of the cash I took out of the United States and the cash I earned from the casino until now?

“Yes. James, first, I want you to investigate a list of solid companies engaged in the steel and coal mining industries in the UK and the US that can recover after the recession ends. And Wellesley, please get together with Disraeli or Gladstone right now and come up with a plan to deal with the economic crisis in a timely manner when it actually breaks out. There is a high possibility that an election will be held in the near future, so the number of seats in the next election will depend on how you deal with it here.”

“Election? His Majesty is old, but… no, sorry. As you said, I’ll think about countermeasures on the assumption that an election may be held this year.”

That’s what he should do. If he had said again that there was no way that would happen, I might have seriously wanted to swear, but thankfully, he didn’t.

“The storm that will reach here soon may seem like an unprecedented crisis, but this too shall pass. And those who are prepared find opportunities in crisis. When this year passes, a lot will probably have changed.”

A faint smile appeared on the lips of Wellesley and James, who had been stiff with tension at my bold statement.

We returned to our respective positions, clearly recognizing what we had to do.

* * *

An economy is bound to face a period of adjustment if there is an upswing.

Not many people don’t know that fact.

However, most people are hypnotized that this boom will not stop while they are putting money in.

This illusion, which seemed to last forever, swells endlessly by eating people’s expectations and disappears like a mirage at some point.

Only then do most people get hit on the head with the iron hammer of reality and reason and come out of the collective hallucination.

“Fuck! Nooooooooo way!”

“This doesn’t make sense! No! That can’t be! Something is wrong!”

“What the hell do you mean you can’t give me a loan! If you don’t give me a loan, I can’t pay off the overdue payments!”

As defaults poured out of the United States and the economy plummeted endlessly, the British stock market, which seemed to be sailing smoothly, was also hit directly.

Those who saw the stock price, which had been 꺾여버린 [bent or broken] at an angle as amazing as a major league pitcher’s forkball, turned pale.

“Aaaaaaah!”

“Here! A body has surfaced north of London Bridge!”

“Oh! Oh! Isn’t that person over there trying to fall?”

People submerged in despair threw themselves into the Thames, and the black river, polluted by industrialization, swallowed the poor victims.

But even at this moment, there were still many people who believed that this phenomenon was only temporary and that there would be an opportunity for a rebound.

How could an economic crisis that broke out in the United States, which is far weaker and more backward than the British Empire, shake this country?

Those who believed so denied reality and could not let go of a handful of hope.

And ironically, around the time when the perfect spring weather covered the whole country, contrasting with the increasingly frozen psychology of the people.

-New York Bank suspends specie payments [stops exchanging paper money for gold or silver].

The death sentence that silver and gold coins could no longer be obtained with paper money fell on the American economy.

A deep and inescapable nightmare came to the capitalists of England.

And I will take a sweet sleep on this terrible storm.