After the conclusion of Austria’s agricultural economic conference, the Austrian governnt announced plans to replace part of its strategic grain reserves before the new harvest.
This happened almost every year, typically done when international grain prices were low, with the governnt buying grain and then selling it when prices rose.
However, this ti was different. Although no one knew exactly how much grain the Austrian governnt planned to sell, the international grain market experienced intense turmoil.
Compared to earlier in the year, international grain prices had already dropped by 9%, and now, under the influence of Austria’s sale, prices suddenly plumted by another 4%.
The speculators and capitalists in the market were no longer able to hold on. The Anglo-Russian grain deal had already caused them significant losses, and now Austria had delivered another blow.
Fortunately, the Austrian governnt had announced this as a grain replacent rather than a straightforward sell-off, or else the impact would have been even more severe.
In the London grain exchange, a middle-aged man dressed in fine clothes was, as usual, checking the prices.
The middle-aged man, nad Jas, was a small-ti capitalist who owned a flour mill. Ever since the Anglo-Russian grain agreent was signed, he had been panicking.
Russia’s cheap grain hadn’t even entered the market yet, and well-connected capitalists had already taken the quotas. By the ti Jas realized what was happening, it was too late.
Of course, even if he had reacted sooner, it wouldn’t have made a difference—such lucrative deals weren’t within his reach. Jas had originally been purchasing dostic wheat for processing, but now that was no longer feasible.
Dostic wheat wasn’t cheap, and if he tried to push the purchase price down, he would likely be thrown out.
In search of a cheaper grain supply, Jas turned to the grain exchange market. Sure enough, the price drop here, influenced by international grain prices, was much more significant.
Suddenly, he noticed Austrian wheat appear on the billboards, and Jas imdiately stopped in his tracks. Austrian wheat had rarely appeared on the international market in the past decade. What was usually seen were already processed products like flour.
“Raul, is there sothing wrong with this batch of grain? Why is the price so low? I rember Austria doesn’t export raw wheat—this isn’t smuggled, is it?” Jas half-jokingly asked. His surprise was understandable, as the price wasn’t just low—it had hit rock bottom, a price far beyond what Jas had expected.
“Mr. Jas, you’re quite the joker. If we were smuggling, it certainly wouldn’t be grain! Bulk commodities like this are hard to transport, and the taxes are low. There’s no reason to take that kind of risk.”
Jas ignored Raul’s lighthearted comnt and grabbed a handful of wheat, examining it closely. He could tell it was old grain, but that alone didn’t seem enough to explain the rock-bottom price.
“Cut the nonsense and just tell what’s wrong with this batch of grain. Don’t try to convince that a deal this good would fall into our laps!”
Raul smiled calmly and took out a newspaper to hand to Jas.
“Mr. Jas, you’ve already figured it out—this is old grain. Not long ago, the Austrian governnt announced they were rotating their reserve stock, so the older grain from their warehouses is being sold off at a discount.
As an expert in the field, you must know that old grain typically cos discounted. This batch has been stored for over three years, so if it’s milled into flour, the quality won’t be as good.
In Austria, this kind of grain usually isn’t turned into flour but is used for brewing or processed into animal feed.
The Austrian governnt released a large amount of this reserve grain, which is why it ended up on the international market. And the reason it’s so cheap? Well, you can thank those bureaucrats in London for that.
With Russian grain being so cheap, this older stock has to be even cheaper to sell. Otherwise, who would buy it?”
It was clear Raul was quite resentful of the British governnt. The Anglo-Russian trade deal allowed businesses to sign contracts directly with Russian suppliers, cutting out middlen like Raul.
If they hadn’t brought back Austria’s old grain for sale, they would have had to close down. The prices on the international market were nowhere near as low as Russian grain.
Jas put down the wheat in his hand, grabbed another handful, and rubbed it between his fingers.
“You’re sure there’s nothing wrong with this grain?”
Raul replied, “Of course. If there is, I’ll go to hell!”
Seeing that Jas was still hesitant, Raul added, “Mr. Jas, if you have any doubts, you can inspect the grain yourself.
Opportunities to snatch up deals like this don’t co around often. No matter how much international grain prices drop in the future, they’ll never sink this low again.
You should know that if we sold at this price on a larger scale, farrs across the world would go bankrupt. This price has already dropped below production cost—it’s just this batch.”
Jas was tempted. If the grain had no serious issues and was rely old stock, it would still be worth buying. After a mont of internal struggle, he seed to make up his mind.
“I’ll take 30,000 tons. Can you give a better price?”
This was nearly all the funds Jas could gather, but to secure a bigger profit, he decided to take the gamble.
The price of this batch of grain was 15% cheaper than the grain the British governnt got from the Russians. On the surface, it seed normal for old grain to be priced differently from new grain, but in reality, this price was still excessively cheap.
Jas wisely chose not to dig deeper into the underlying reasons. As long as he could make a fortune, why worry about the rest?
...
Starting in May, Austrian grain quickly flooded the British market. The mont this cheap grain appeared, it was eagerly snapped up by unscrupulous capitalists.
***If you are able, you can support the translation at /dragonlegion***
Everyone knew that such low prices were abnormal, with so speculating that Austria intended to disrupt the Anglo-Russian trade agreent. However, this didn’t stop them from making a profit.
Grain, unlike other commodities, can be stored for three to five years without issue. Since it was already old stock, keeping it in storage longer didn’t change its status.
The fact that the taste had deteriorated was a minor concern. As long as the flour produced from it was cheap, there would be no shortage of buyers on the market.
For the average British citizen, being able to fill their stomachs was already good enough. They couldn’t afford to be picky about the taste.
Such large-scale action naturally caught the attention of the British governnt. However, this operation wasn’t solely orchestrated by Austria—there were also British capitalists involved.
Not everyone benefited from the trade deals between London and Russia and many capitalists had actually suffered losses. Without action, they would struggle to survive once the Russian grain flooded the market.
Under these circumstances, these capitalists didn’t mind cooperating with Austria. After all, it was all legal trade, and the British governnt had no right to interfere.
If they tried to impose restrictions to prevent Austrian grain dumping, Parliant would pose a significant hurdle. Opponents, waving the flag of free trade to protect their interests, left Benjamin Disraeli’s cabinet powerless.
The free trade system was not to be overturned, as it was the cornerstone of British economic policy. Of course, this issue didn’t trouble Pri Minister Benjamin too much.
The results of the new election had already been announced, and he was now the forr pri minister. The person who had to worry about this was William Ewart Gladstone, who was forming the new Liberal cabinet. This grain crisis was essentially a trap set for his rival.
In the critical mont of the transition, the Benjamin Cabinet took a passive stance, and by the ti the power handover was complete, it was too late for the British governnt to take effective asures.
In just a few months, Austria had already dumped 8.5 million tons of rye, 3 million tons of wheat, 4.3 million tons of corn, and 3.2 million tons of soybeans onto the British market…
The events in Britain also had a significant impact on the international grain market, leading to a dramatic price crash, with prices plunging by 15% almost overnight.
Russian grain hadn’t even hit the international market yet, but prices had already dropped significantly.
At the beginning of the year, rye on the international grain market was priced at 25 guilders per ton, but it had now dropped to 18.6 guilders per ton. Corn had also fallen, from 18.8 guilders to 14.1 guilders per ton…
In short, the prices of all staple grains were plumting, and this decline was dragging down the prices of other agricultural products as well. The root cause of all this was the widespread panic among people.
At this point, everyone might as well lose money together. It was clear to everyone that the current prices weren’t the lowest yet, and after the autumn harvest, grain prices were expected to hit new lows.
The oversupply of grain ant that the good tis for major grain-exporting countries were over. If it weren’t for the Anglo-Russian grain loan agreent and the grain dumping by the Austrian governnt, this agricultural crisis would have developed more slowly.
But now, the crisis had been triggered imdiately, even before it had fully arrived. The year 1872 was destined to be a tragic one, with the issue of unsold grain likely to dominate discussions in the second half of the year.
This was no longer just a pricing issue—it was a matter of not being able to sell the grain at all. The best way to stabilize grain prices was to reduce grain production and destroy the surplus agricultural products.
As a responsible major power, Austria naturally had to take active asures. In July, the Austrian Ministry of Agriculture called on the world’s major grain-producing countries to reduce their grain production simultaneously.
On August 12, the Austrian governnt introduced the “Fallow Land Act,” which legally stipulated that land used for growing grain must be left to fallow. The specific fallow periods were to be determined by local governnts based on their circumstances.
Although the law seed effective, its actual impact was limited. Austria already had a tradition of leaving agricultural land fallow, and this law rely formalized it.
According to the Ministry of Agriculture’s estimates, this could reduce Austria’s grain production by 2-3%, which was not an insignificant number, and could help alleviate the crisis of overproduction.
On August 15, the Austrian governnt issued the “New Land Cultivation Act,” which explicitly prohibited the planting of wheat, corn, rye, potatoes, and other crops on newly cultivated land in Europe for five years.
These asures were far from solving the imdiate problem. No matter what, the crops already planted in the fields couldn’t be pulled out.
Austria’s grain production in 1872 would still not decrease, and the short-term impact on international grain prices would be minimal.
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