Vol 4 Chapter 124: Ready to save the market

War is a continuation of politics, and there is no doubt that this world war is no exception!
The capitalist economy has developed to a certain extent, and countries have accumulated a lot of social contradictions. In order to transfer internal contradictions, this world war has finally been triggered!
In contrast, the contradiction between Germany and France, the conflict between Britain and Germany, the conflict between Bulgaria and Austria, and the conflict between Russia and Austria are just one of the incentives for the outbreak of the World War. It just determines who fights with whom!
As for not hitting, when does it start? These are not determined by these contradictions, but depend on the internal contradictions of the major powers. When the internal contradictions cannot be suppressed, the war will break out!
And the older the empire, the more serious the internal contradictions. Some countries have even reached the point of irreconcilability. If there is no war, wait for the revolution!
A series of social problems such as inflation, unequal distribution of social wealth, polarization between the rich and the poor, solidification of the social class, the unscrupulous exploitation of the working class by capitalists, overproduction, and rising unemployment rates have plagued governments.
In this context, everyone chose to transfer domestic contradictions by default, and the World War broke out.
Bulgaria is no exception. As a rising star, domestic contradictions naturally have no class consolidation. Even wealth distribution and the gap between the rich and the poor are not very serious. Capitalists have no courage to exploit workers unscrupulously. Only overproduction One is very serious!
Since Ferdinand's succession, in order to increase domestic industrial strength, he has worked out three five-year plans. The so-called ups and downs, the central government will try its best to increase the country's industrial strength, and local governments will naturally follow suit.
Of course, in order to strengthen the comprehensive national strength and the local government's vigorous development of industry and commerce, Ferdinand was naturally happy to see it happen. Instead of stopping the local government's behavior, it encouraged it!
When the domestic overcapacity crisis was about to erupt, the World War also broke out, and all industries served the war during the war. Naturally, there was no overcapacity!
But once the war is over and the economy returns to normalization, these troubles come. Of course, as long as the war is won, these crises can be survived by the war dividend!
However, the preparatory work is still indispensable. On January 6, 1917, the Bulgarian government held an economic seminar in the parliament building. The purpose is to study the issue of post-war economic transformation and to avoid the Great Depression as much as possible !!
...
On January 15, Ferdinand also convened a cabinet meeting in the Royal Palace to discuss new issues that Bulgaria will face after the war, including the issue of economic transformation.
Ferdinand directly raised the following questions:
1. How to deal with allies after the war?
2. How should new territories be governed after the war?
3. Post-war Bulgaria's diplomatic strategy?
4. National issues after the war?
5. How did the domestic economy transform after the war?
6. What about the resettlement of post-war recovery soldiers? And the placement of "mercurials"?
...
Of course, with so many problems, naturally it can't be solved in a short while!
Ferdinand just threw it out in advance to let everyone have a mental preparation. It is really necessary to come up with a specific treatment plan, and wait for the end of the World War to make a decision based on the actual situation!
At present, the domestic economic situation in Bulgaria can no longer be described as good or bad. Due to the war, many enterprises are converted to the army, even Ferdinand's own industry is no exception.
In this context, the production of civilian goods is naturally greatly reduced. For ordinary people, in addition to the most basic necessities of life, other goods have risen or fallen in varying degrees!
For example, the prices of luxury goods have plummeted, one of Bulgaria's pillar industries, the Rose Industrial Park, has had a great impact, and many of its brands have seen a sharp decline in sales.
During the war, everyone's spending power was reduced, and sales of perfumes, skin care products, health products, and drinks, which are usually hot, were greatly reduced.
Of course, it is not an increase in output. Unfortunately, these increased products are strategic materials purchased by the army. They can only be charged at cost, and there is no profit at all.
This is determined by Bulgaria's special mobilization mechanism. In order to prevent the possibility of capitalists making trouble in the country, Ferdinand has specifically issued the "Wartime Strategic Materials Procurement Law." All strategic supplies are purchased at cost and are also mandatory!
Therefore, until the outbreak of the World War, capitalists in many countries around the world have made a fortune. Only Bulgarian capitalists are doing voluntary labor.
Of course, they are not unbalanced, and many people are happy!
Anyway, they are all treated equally. All companies in the country are treated the same regardless of their size and background size. Even royal companies have been requisitioned for free. What's more to say?
Even the loans issued to them by the banks were directly postponed, and they did not have to pay interest during the war!
Therefore, the interests of many enterprises have been severely affected, and even threatened the survival of the enterprises, but the capitalists are not worried, they think that the government must not sit idly by.
This is also the result of the economy that the Bulgarian government often intervenes in. Whenever an economic crisis occurs, the government comes out to clean up the mess. Everyone is used to it, and it feels safe!
Facing this situation, of course, Ferdinand could not let the government sit idly by. If these companies go bankrupt due to the war, it will inevitably cause very serious social adverse effects!
Simply put, it will make the capitalists sorrowful, and then become a firm anti-war, and even resist the government to requisition their factories for free!
There will also be extreme anti-war factions. After all, when a company goes bankrupt, some people will inevitably lose their jobs. Some of these people will have their personal interests damaged, and they will have a strong sense of fear of war in the later days. Want to avoid war!
These are obviously not what Ferdinand wanted. Isn't France in World War II a living example? Because the people fear the war, first let the rise of the Soviet Union, and then let the rise of Germany, and ultimately can only survive by pretending to be dead!
...
Ferdinand asked with concern: "Mr. Kennedy, how many companies in your financial crisis nationwide are close to bankruptcy due to the effects of the war? How many are caused by our government's wartime procurement law?"
Kennedy thought for a while and then said, "Your Majesty, there are now more than 1,800 companies on the verge of bankruptcy across the country due to the effects of the war, and a total of 765 due to the Government Procurement Act!
Among them, there are 8 large enterprises, including bulgarian machinery group, bulgarian automobile group, bulgarian steel group, bulgarian railway group and other giant enterprises. The total assets of these eight companies before the war totaled 5.86 billion levs and 1.76 million supporting industrial workers. Social influence is huge!
And other more than 1,800 small and medium-sized enterprises have a combined total assets of 2.56 billion levs and employ nearly one million people! "
Ferdinand frowned, but fortunately found out that if these companies really went bankrupt, the Bulgarian economy would burst, which is also a consequence of this deep mobilization.
However, it is all worthwhile. Now that the same strategic materials are purchased, the Bulgarian government spends less than one-third of John Niu because of the advantages of this extreme mobilization mechanism!
After all, this started from the production of raw materials, all came at a cost price all the way, without adding a penny of profit!
Of course, materials purchased from overseas do not have such a benefit.
If there is no cost advantage, why would Ferdinand dare to support so many troops?
If you purchase at market prices, even if Britain and France provide more than three billion pounds of loans, plus more than four billion dollars borrowed from Americans, it will not be enough for a year of war expenses!
Ferdinand pretended to be surprised: "These companies are Bulgaria's leading industries? How could they be on the verge of bankruptcy?"
Kennedy quickly explained: "Your Majesty, these companies are engaged in heavy industry production, and basically all production lines have been requisitioned by the government.
In order to be suitable for military production, we have carried out a large number of modifications to a large number of production lines and workshops. After the war, civilian products must be produced. These must be changed back again. The cost must be inevitable.
There is also the wear of the machinery. Many times, in order to catch up with the construction period, we have not taken into account the maintenance of the machinery. Therefore, after the war, their machinery and equipment will basically be replaced.
In this way, in the first few months after the end of the war, they were unable to resume production. In addition, the loss of these equipment required more money than the company could afford.
Although our law also has a compensation plan, but because the war lasted too long, unlike the two short-term wars like the previous two, this time the losses to the company were too great. These supplements are simply a sloppy salary! "
Ferdinand nodded. How could he not know these things? You have to know that the companies inside are basically his industry. What is he still not aware of?
The heavy losses are inevitable. Although it has not yet reached the point of bankruptcy, it will be fast. If the war continues, it will not be far from bankruptcy!
Especially for the Bulgarian Railway Group, the transportation of military materials is free. This loss is even greater. The annual loss in freight alone is at least 500 million levs.
Of course, they are state-owned enterprises, and no one will complain, but it is inevitable to reach out to the government without money!
Since the separation of government and enterprise has been completed, now they are all holding bank loans and maintaining operations, plus loans for railway repairs before,
They have owed a huge loan of 3.19 billion levs from the three major domestic banks. They are already insolvent. If the government does not approve them in the future, they will go bankrupt!
And the banks provide them with loans, which is also coordinated by the Bulgarian government, otherwise who dares to lend them? Now the government can't let them go bankrupt!
Not only the railway group, but the other companies are also the same. They are all giants in the industry. Each company even brings a large number of affiliated companies to move the whole body. When a giant collapses, it will also The gang of affiliates followed suit!
After a moment of contemplation, Ferdinand said, "This is indeed a serious problem. We must increase our support for heavy industry. This is related to our national defense cause!
Even these companies going to bankruptcy, we can not let them go bankrupt, at least not because our government requisitions their factories, or purchases their goods at cost, causing them to go bankrupt!
Does the Ministry of Finance have a corresponding salvation plan? "
Kennedy said in a dilemma: "The Ministry of Finance does have a rescue plan, but because there are too many companies involved, the amount of funds required is too large for the finances to pay.
Therefore, we revised our plan to give priority to the rescue of these eight large enterprises, and then work hard to save SMEs within our capabilities! "
Ferdinand's face became embarrassed. If so, will Bulgaria not become a monopoly enterprise in the future?
Ferdinand's previous monopoly business was because Bulgaria's plate was too small. In order to avoid wasting resources, it had to focus on supporting several giants.
But now it's different. Bulgaria's plate has become bigger after the end of the World War. In order to maintain the vitality in the market, we must break this monopoly mechanism!
Ferdinand did not rush to oppose, but continued to ask: "How much money is needed to save the market, and how much money is needed to save these eight companies?"
Kennedy thought for a while and said, "Your Majesty, as the war continues, companies that may face crisis in the future will continue to increase.
Our Ministry of Finance preliminary estimates that if you want to save the market, you need at least 3 billion levs, and the eight major companies also need at least 2 billion levs, of which railway groups account for two thirds! "
Ferdinand sighed and said, "Be prepared to save the market. It is estimated that the lives of European countries will not be better in the future, but we still have to keep these companies, otherwise the social impact will be too bad!
After this war, our domestic market will expand by at least one-third, plus the markets within our sphere of influence, we should be able to digest our production capacity!
As for the funding gap, we can think of ways to solve it, and we can give up the gold standard when necessary! "
Well, Ferdinand is planning to print banknotes to survive the crisis. This is also no way out. He knows that countries have abandoned the gold standard after World War I. It ’s important that Bulgaria take the lead this time!
Kennedy's face changed drastically, and he asked in horror: "Your Majesty, why do you think so? Once you give up the gold standard, Lev will become worthless and the consequences will be very serious!"
Ferdinand smiled and said, "Go and find out, after the outbreak of the World War, the flow of gold in European countries is converging to one place. After the war, can everyone keep the gold standard?"
Kennedy blurted out: "It's the United States! Your Majesty, even with the outflow of gold now, Britain and France should be able to hold on, right?"
Ferdinand shook his head and said, "Don't worry about them, take a look at us first! Since the outbreak of the World War, there are more than 100 tons of gold flowing out of us!
However, due to the trade with the Russians, we have made up for this loss and added more than a hundred tons of gold, but it cannot change the fact that our gold flows to the United States in large quantities!
Of course, I did not calculate the gold seized by the military. This is abnormal income and cannot be counted in trade! "
Kennedy thought for a while and said, "Your Majesty ~ EbookFREE.me ~ I think we should be able to keep the gold standard. The military harvested nearly two hundred tons of gold in Italy and more than one hundred tons of gold in the Ottoman Empire. Once it captured Ankara, There should be another income, plus our original gold reserves, it should be enough!
If you are lucky, if our army can get another harvest in the Austro-Hungarian Empire, it will be more sure! "
Ferdinand shook his head, so why stay on the gold standard? There is a price to reverse the trend, so why not do it? Does Bulgaria want to become a financial hegemon?
"You think too well, for the sake of our gains in Italy, the British and French ambassadors are still talking to the Ministry of Foreign Affairs, and we will not be able to show them in the short term.
And gold is not so easy to obtain. Our troops are almost three feet high in the Ottoman Empire. Is n’t it just that?
Don't you think we can do the same with the Austro-Hungarian Empire?
Moreover, gold is not a big object, as long as they want to hide, just dig a pit in this place and bury it, can you find it? "
Kennedy nodded reluctantly, a fact he had to agree with, but he still didn't change his original thoughts.
In his view, although of course the gold standard can get some benefits in the short term, it hurts the value of Lev too much.
And after the government abandons the gold standard, Lev ’s massive devaluation will cause drastic inflation. Many Bulgarians ’wealth accumulated in their lives will shrink instantly, which will cause a very serious social crisis.
Don't you know all of Ferdinand? Of course not, the problem is that he can't help it? You ca n’t give up the gold standard in European countries, just stick to the Bulgarian family! Still want to export?