Napoleon in 1812 - Chapter 84
Chapter 84
13. Golden War – 8
On 10 February 1813, a mass assault and murder in front of the London Stock Exchange was enough to resonate greatly in the British society.
There were some low-class people who were really struggling among the assailants, but most of the people who invested in securities and bond markets were upper-class British men, intellectuals, and people who belonged to the ‘successful group’ that many envied.
The fact that such upper-class people wielded weapons and assaulted each other, killing five people, was news that caught the public’s attention. But Britain’s true misfortune was not social but economic.
London Post: Endless crash! Is it the end of London’s stock market?
Weekly News: Fathers threw themselves into the River Thames. Who drove them into a corner!
Weekly News: The worst down shock since the South Sea Company crash! What will be the impact on the kingdom’s economy?…
Oxford Gazette: Oxford economics faculty warning, the British financial markets could regress at least 10 years…
News Letter: The stock investors’ reasonable anger. So what is the cause of this crash?
Some might question the fact that the fall of the value of bonds and securities could shake the whole economy of the kingdom, but that was because they did not know the economic and industrial structure of the country. It was no exaggeration to say that the United Kingdom’s economy was a collection of numerous businesses.
There were many foreign trading companies, including the East India Company[1] that was devouring India, textile manufacturers including cotton, wool, etc.
There were miners who mined coal, needed for mechanized power, silver and iron, and steel mills to process them.
In addition, businesses dealing with canals, transportation, weapons manufacturing, chemicals, paper and glass industries had sprung up and were developing one after another.
Finance was the capital for entrepreneurs who established these businesses. Only a few people set up and run a business entirely on their own capital.
Most of the businessmen received investments from financial firms using their shares, family property, and land.
Britain’s economy was run by businesses in various industries. And the businesses were run by capital invested in the financial market.
In the end, Britain’s finance and economy were inseparable. If finance collapsed, Britain’s economy collapsed. In the meantime, a line of articles came out. It was enough to catch people’s attention.
Daily Current: What caused this ‘big crash’ was the Cabinet’s new tax amendment? A low-level trick started by Prime Minister Jenkinson destroyed the stock market.
Now it was everyone’s turn to look at Westminster and 10 Downing Street.
===
The largest and oldest bank in the United Kingdom was by far the Bank of England in the heart of the City of London.
In 1694, Britain, which was at war with France, established the Bank of England with investment from numerous investors to pay for the war, and even granted the sole right to mint the British currency, pound sterling.
The right to mint money was simply a powerful force that could shake a nation’s economy. But the Bank of England could not project as much influence as it was given.
First of all, this bank, which had the right to mint money, had been constantly checked and monitored by the British government.
The British royal family, Westminster Parliament, high-ranking hereditary aristocrats, Jewish merchants, and even foreign capital, held the bank’s shares evenly.
No one could own the Bank of England entirely because they had been wary of each other’s presence and the emergence of overwhelming majority shareholders who would control the bank. So who would succeed the Bank of England?
Although each businessman had a different opinion on this, six out of ten of them would pick Barings Bank.[2]
Barings Bank was founded in 1762 and had a long history. It was hard to see, but it had made its name known not only in the United Kingdom but also in the international community, by taking on many famous contracts and guarantees.
The British East India Company also recognized the value of the bank and invested hundreds of thousands of pounds, and bought foreign capital at a bargain price when Amsterdam was occupied by France.
It was Barings Bank that established branches in Washington, Massachusetts, and Virginia as soon as the United States became independent, and it was also in charge of broadcasting the Louisiana transaction between France and the United States.
Based on the above significant success and performance, Barings Bank had grown into a financial organization that could deal with huge size of capital, just next to the Bank of England.
“Rothschild, D’Israeli, Mendelssohn, and other Jewish families from continental Europe were established in London and emerging in the financial sector, but they were still small seedlings with potential growth. But there is a true giant that can sink larger, heavier, and deeper, reaching the depths of the ground. The only real financial conglomerate in this era who can say this with confidence is the Baring family. They’re the ones who can control and lead all this from behind… The author of this column is very imaginative.”
“Well, that’s not quite wrong, though. I don’t feel so bad because that shows how much our family rised, right, brother?”
The middle-aged man who nervously laid down the newspaper was Thomas Baring, the eldest son of the Baring family.
The relatively young man with a twirling smile next to him was Henry Baring, the third son. Barings Bank, as you could see from its name, was owned by the Baring family.
After the death of its founder Francis Baring, his sons ran the giant bank, cooperating with each other, following their father’s teachings.[2]
And they did so while trying not to deviate from the Cabinet’s line as much as possible. But now the story was different when there was a crossroads between Baring’s interests and the direction of the British Cabinet.
“Prime Minister Jenkinson seems to be suspicious of us, right? Wondering if we have led this ‘big crash’. And about getting media exposure before the tax amendment was released.”
“It’s not a very absurd claim. But they shouldn’t blame their failures on us. How much money did they steal from our family?”
Their tone was soft, but the Baring brothers’ eyes were cold. It was true that they had sold huge securities and bonds in the market before the crash.
But the Baring family was not the only one to do so, as numerous financial institutions that foresaw a stock market contraction did the same. It was only natural. No investor would want to hold securities knowing that a crash was coming.
However, Prime Minister Jenkinson and his current cabinet were describing it in the media as if it were the doing of the Baring family and Barings Bank.
It was unbearable to the Baring brothers. As they were thinking about how to repay this, one person came to them, as if sent by fate.
“This is a letter from the boss of L.V.C. Financial.”
The rulers of Barings Bank recalled the name of L.V.C. Financial, with its faceless and nameless boss.
It was a group with sophisticated concealments whose identity could not be revealed even by those who controlled information in the underworld. They did not know where they were, but they were very professional. It smelled suspicious, but they did not care.
It did not matter who they were in this world anyway. There was only one thing to argue about, and that was whether it would be beneficial to them or not.
In that sense, the letter brought by Baring’s butler and the words contained in it were very satisfying to them.
“We have been leading a boring war for too long. It’s time to wrap this up.”
Thomas Baring folded the letter nicely. Peace could bring wealth and money to many people, but war presented enormous wealth to a few people.
However, there was also an expiration date. War was the closest word to destruction after all. If handled well, it could give convenience, otherwise it could be seen as a dangerous, bloody toy.
The Baring brothers thought it was time to sort out the dangerous toys. Some people might laugh at this.
How could the owners of a bank stop a war between the powers competing for supremacy in Europe?
However, at least in this situation, it had become possible. Because they had the power of the Baring family, the ruler of London’s financial district.
===
Investors who purchased securities or bonds, whether small or large, flocked to the front of the Palace of Westminster and 10 Downing Street to demand the truth.
Another group staged a sit-in in front of Barings bank’s headquarters, saying, ‘spit out the money you earned from unjustified speculation’.
The royal family remained as silent as ever, the prime minister came to the residence through the back door as if he was fleeing, and Barings Bank remained calm.
Whigs men, including Charles Grey, attacked Prime Minister Jenkinson, and the media stabbed and attacked him everywhere, revealing their presence (in order to gain advertising).
Cabinet figures put the blame on each other, and economists poured out crisis and apocalyptic theories as if it were the end of the century. As society became extremely chaotic, they shot at each other.
But the real crisis came without a sound. And that was how they found themselves drowning in the abyss when it came piercing their chest and splitting their heart.
London’s biggest steelmaker, Marias, went bankrupt!
===
Prime Minister Robert Jenkinson, who had not slept well in the past few days, barely grabbed his forehead with a dark face. The Cabinet officials and bureaucrats were all speechless.
Marias Corporation collapsed. The news itself was a shock, but everyone here knew it was just the beginning.
“…The steel industry is already in a semi-coma state. The companies are on the verge of bankruptcy for failing to pay their workers’ salaries and are demanding bailouts from the government.”
“God damn it! The government has no money right now!”
“Though they are in a little better shape than the steel industry… Paper, glass and textile industries are also all in a state of emergency. Financial firms and banks, which have squandered capital in the stock market, are in danger of being overthrown as they withdraw investments.”
It could not have happened if companies were in good financial shape. The problem was that Britain’s unstable economy, a long war, and a cut in the trade market (Europe) caused by the continental blockade had been constantly damaging their financial base. And the difficulties in the New World trade market were adding to it.
When the continental trade blockade was implemented at the initiative of France, Britain turned its eyes to the market on the new continent.
Spain’s colonial countries, including Nueva España, did not follow the policies of their home country (at that time Spain was fighting against Britain along with France) and continued their business with Britain.
Then, as the war broke out between Spain and France, the total volume of trade over the Atlantic Ocean exploded, and Britain was able to make up for its loss of not being able to trade with Europe.
Merchants in the United Kingdom competitively increased their credit limits by selling goods. Gold from the New World was what merchants wanted most.
However, as always, the international situation changed dramatically. Social and economic turmoil came as countries in the New World raised their weapons to gain independence from Spain.
Customers in the New World put off paying with gold or money their potential enemies, the British merchants. The chain effect occurred immediately.
Manchester and Glasgow businesses went bankrupt one after the other, and even London’s major banks stumbled and the value of the pound plunged. This was exactly what happened between September and October 1812.
“Never! No more damage should be done to the market! Even if we draw up an extra budget right now, we must prevent businesses from going bankrupt! Otherwise, things may get out of hand!”
Economic officials who participated in the meeting spoke in unison. The bosses and businesses that had been recently hit were reeling from the shock.
A small gap could break down an embankment. If one collapsed, the entire British industry could collapse as rapidly as falling dominoes.
“…These fucking capitalists! You look at the current situation and dare say this!”
Prime Minister Robert Jenkinson gritted his teeth. The capitalists only took care of their own profit until the end, no matter what happened to the country.
Prime Minister Jenkinson and the Tory cabinet had set up emergency aid for businesses at risk of bankruptcy. As technology and industry develop day by day, the wealth they generated was on the rise.
The trade values and resources brought from the expanded Indian colonies by the East India Company made it no longer necessary to rely on the New World and the European continent.
Obviously, if they got through this crisis, Britain would be able to enter a boom again. Everyone in the Cabinet thought so.
The problem, however, was that the threshold of this ‘challenge’ was too high. The embankment that began to burst was unstoppable with only small repairs. The funding had melted away.
The paper company, Courant, went bankrupt. The glass factory in Norwich closed. The bankruptcy procession happened in an instant, like dominoes.
It took only eight days for major industrial cities in the United Kingdom to be paralyzed, including Birmingham, Manchester, Nottingham and Glasgow.
Tens of thousands of unemployed people who lost their jobs poured out into the streets. Some of them were workers who continued to work with unpaid wages because of the difficulties in their companies.
When businesses went bankrupt and could not even pay wages, the tools they used in their jobs suddenly turned into weapons.
“Comrades! Let’s get our rightful rights back into our hands!”
“If you don’t stand for yourself, this damn country won’t do anything for you!”
“Bread and wages for the workers!!”
The angry workers ran to the factories and businesses they had been working for. Their huge hammers broke the gates without hesitation. And they smashed the machines. It was an extreme machine destruction, the re-emergence of the Luddite movement.[3]
TL notes
[1] East India Company
[2] In the Baring family, Francis Baring founded the Barings Bank in 1762, and withdrew from business in 1804, leaving the bank in the hands of his three eldest sons: Thomas, Alexander and Henry.
[3] Luddite movement
