PFC Chapter 126 The Panic on Wall Street
Chapter 126 The Panic on Wall Street
Chapter 126 The Panic on Wall Street
Meanwhile, on Wall Street.
The mining exchange's main hall was bustling with activity.
Stockbrokers crowded around the price board, their eyes glued to the fluctuating numbers.
"It's dropped again! Newland Light Metals' stock price has fallen by another dollar!"
"Damn it, I just bought fifty shares yesterday at seventy-two dollars a share!"
A stockbroker could no longer sit still. He strode to the trading counter and slammed the stock certificates in his hand on the table.
"Sell! Sell them all! At the current price!"
The brokerage clerk behind the counter said expressionlessly, "Yes, sir, sell at sixty-nine dollars per share, fifty shares in total."
Since the news of the Chinese taking over California spread, some investors have been gripped by panic.
They believe that New Continent Light Metals, having lost access to California's aluminum mines, is unlikely to be able to produce more aluminum in the future.
Since that's the case, it's better to sell them as soon as possible to avoid being stuck with the stocks.
Under this trend of thought, the stock price of Newland Light Metals began to fall. In just half a day, it dropped from a high of $72 to $68.50.
"Another bunch of idiots are dumping their shares."
Inside the New York Stock Exchange, Charlie glanced at the prices on the price board, then looked at his friend and smiled slightly.
"I have a feeling, Potter, that we're going to make a fortune this time."
Porter nodded and took a sip of coffee: "Yeah, these short-sighted idiots only thought about the interruption of aluminum mining, but forgot the most important thing."
"While the aluminum mines discovered in Nevada by Newland Light Metals are important, what is most important is the method they have for extracting aluminum."
"As long as this method exists, even if the mines are gone, their company's stock price won't drop much. At worst, they can buy aluminum mines in France, and maybe they can even produce aluminum faster."
"That's right, Potter!"
Charlie laughed out loud, but his expression quickly turned serious.
"What we should be most worried about right now is gold."
"Those mining companies that are mining gold in California?"
Porter put down his coffee and said, "Their stock prices will indeed plummet by more than half. There's no way around it. California's gold mines are now all in Chinese hands; it would be strange if their stock prices didn't fall."
"However, it's worth buying at the bottom. Once the military takes back California, the stock price will rise sooner or later; after all, the gold mines aren't going to run away on foot."
"You know that's not what I meant, Potter!"
Charlie glanced around and lowered his voice: "What's the secret to the current prosperity of the domestic financial system?"
It all comes down to the continuous flow of gold shipped from California. How much gold has been mined in California's mines from six years ago to now? Tens of millions, hundreds of millions of dollars.
This gold was shipped from San Francisco to New York, where it was minted into coins and stored in bank vaults. With gold reserves, banks dared to lend out large sums of money.
Loans were given to railway companies, to factories, to real estate developers, and to anyone who wanted to expand their business.
"But now, this artery that supplies blood has been severed."
He made a pinching gesture and slowly said, "Right now, the banks still have gold in their vaults, and people haven't reacted yet, so everything is calm. But what will happen once all this gold is redeemed?"
Potter sighed softly and said in a low voice, "Charlie, you're worrying too much."
"I know what you're thinking. You're worried that in the end, it might lead to a financial panic like in 1819 or 1837, and then a Great Depression, right?"
"I'm telling you, this kind of thing is impossible."
He leaned back on the sofa, crossed his legs, and said, "The government is already sending troops—a main naval fleet plus three regiments. That's more than enough to fight the British, let alone the Chinese."
Even if we take a step back and assume that the army didn't annihilate all the Chinese, and they escaped into the Sierra Nevada Mountains, those people went into the ravines, and the gold mines couldn't resume operation for the time being.
Don't forget, the government has gold reserves; they won't just stand by and watch the entire financial system collapse.
Finally, he laughed and said, "Charlie, instead of worrying about that distant future, worry about something else."
Charlie paused for a moment, then asked, "What?"
"Western Gold Mining Company, huh? Their funds are based on gold mines in California. The interest payment date is in a few days; will they really be able to make the payment?"
Charlie's expression became subtle.
Porter is right; Western Gold Mining's fund is the biggest powder keg right now.
Unlike Newland Light Metals, this company doesn't have technological barriers; its value is entirely based on five gold mines in California. Now that California is occupied by Chinese, the gold mines are gone, so how will they pay interest?
One street away, outside the offices of Western Gold Mining Company.
Someone knocked on the door.
The person knocking on the door was a well-dressed old gentleman, about sixty years old, holding a fund certificate in his hand.
No one opened the door, and no one inside responded to him.
Behind him, a second, a third, and a fourth person quickly gathered, each clutching a fund certificate.
After a while, the stairs were full of people.
"Why isn't she answering the door after all this knocking? Could she have run away?"
Someone muttered something under their breath.
This murmur was like a drop of water falling into hot oil; the murmurs in the crowd immediately grew louder, turning into a buzzing cacophony.
"No way? Could they be stuck in traffic?"
Do you even believe that yourself?
"Break down the door!" someone shouted.
Without needing a second prompt, three or four men pushed forward with their shoulders.
The oak door was much sturdier than it looked. The first thud made only a dull thud, the second the door frame began to loosen, and by the third thud, the entire door and frame had fallen inwards.
The crowd surged in.
Then, everyone was stunned.
The office was completely empty.
Papers were scattered on the carpet, the filing cabinet door was wide open, and the folders inside were gone. The California gold mine map that had been hanging on the wall was missing, and even the Boston fern in the corner had vanished without a trace.
"My God—"
Some people's legs buckled and they sat down on the ground.
A middle-aged man wearing a top hat began to tremble: "They ran away, they ran away!"
"My money! My money!"
An elderly man in a striped suit, his face pale, exclaimed urgently, "I've invested my entire fortune! That's twelve thousand dollars!"
No one responded to him, because everyone was pretty much the same.
The minimum investment for the Western Gold Mining Company's fund was $10,000, a huge sum in New York in 1855.
It means a decent townhouse in Brooklyn, the salary of a skilled worker for twenty years without eating or drinking, and all the savings many people accumulate in a lifetime.
More footsteps echoed in the hallway as newcomers continued to push their way in, while those already inside stood motionless, as if they had lost their souls.
"Call the police! Call the police right now!" someone shouted. "Bring him back! Bring him back!"
"Get our money back, and then hang that beast!"
As if waking from a dream, the crowd surged toward the police station.
This scene quickly attracted the attention of reporters, whose eyes gleamed as they recorded another big news story with delight.
After all, everyone enjoys watching the rich people have fun.
"Wow, ten thousand dollars."
A reporter from the New York Tribune said to his colleague, "Kevin, I bet you, Western Gold Mining has made at least a million dollars off this!"
"Wall Street is about to be in turmoil again."
Kevin laughed and said, "Let's go, let's hurry back and finish our article. Tomorrow's front page will definitely be ours."
The two hadn't walked far when they suddenly heard a loud shout from not far away, which clearly reached everyone's ears.
"The offices of Newland Light Metals Company are also empty!"
The two companies are on the same street, separated by only a few buildings.
Upon hearing this, the reporters rushed over to see what was going on and found that the interior was even cleaner than the offices of Western Gold Mining Company.
The safe door was open, the three-inch-thick iron door hanging askew on the hinges, revealing its empty interior. There was no gold or aluminum ingots left, not even a scrap of paper.
Why did they run away too?
Some people, unwilling to give up, went to check the jewelry store, only to find it closed as well.
Panicked people smashed open the jewelry store, and when they pushed open the door, they saw that the glass display cases that had originally contained necklaces, earrings, and brooches were now completely empty.
The news spread like wildfire through various stock exchanges.
The numbers on the price board were jumping at a dizzying speed.
Newland Light Metals' stock price plummeted almost vertically from $68.50.
Sixty-five, sixty, fifty-five, fifty-two —
Every time the clerk called out a new number, a commotion would erupt in the hall.
"Fifty dollars! New Continent Light Metals Company, sold for fifty dollars!"
No one answered.
"Forty-five dollars!
No one answered my heart.
"Forty dollars! Anyone want forty dollars?"
A stockbroker squeezed to the front of the counter and slammed a thick stack of stock certificates on the table.
"Sell! Sell at any price!"
By the close of trading in the afternoon, Newland Light Metals' stock had fallen to eight dollars per share.
Many people fainted upon seeing the price, while others desperately pointed their revolvers at their temples.
The storm escalated completely at this moment.
Wall Street.
Ohio Life Insurance & Trust, New York Branch.
The building, located at the intersection of Wall Street and William Street, is a three-story granite structure.
Inside the second-floor office, the cashier supervisor, Edwin C. Ludlow, was deathly pale, looking as if he had lost his soul.
He had just received news that his two investments, the stock in Newland Light Metals and the fund in Western Gold Mining, had both resulted in losses.
His $100,000 investment went down the drain.
This money was funds he had embezzled from the bank!
Once this hole is discovered, he's finished. The board of directors and the depositors whose money was misappropriated will tear him apart!
"No, no, I have to run!"
Ludlow took a deep breath and made up his mind. "I'll buy a ticket to South America right now, and fly away to never return to America!"
'
The next day, the bank manager was surprised to find that his chief teller was absent from work.
"Where is Ludlow?" the manager asked the cashier.
"I don't know, Mr. Manager," the cashier said. "I thought he had asked you for leave."
"I'd rather he had taken the day off!"
The manager said irritably, "All the bank's funds, bills, drafts, and other debt instruments are managed by the cashier supervisor. Every hour Ludlow disappears means the bank can't conduct any transactions involving fund transfers!"
"Send men to his house to find him. Whatever he's doing, bring him back to the bank!"
Three days later, The New York Herald published its investigative report.
The front page dedicated an entire column to this news, with the headline consisting of only one line, each letter shockingly large.
"Eight million US dollars."
The subheading reads: "New Continent Light Metals and Western Gold Mining have absconded with funds of unprecedented size in New York's financial history."
The article details the timeline of the two companies from their establishment to their collapse, and provides estimates of losses for banks, brokerage firms, and individual investors.
"According to our investigation, the owner of Newland Light Metals Company began secretly selling off his shares a month ago. He amassed over $3.5 million by anonymously selling shares in batches across various cities!"
Western Gold Mining's fund attracted over 400 upper-middle-class individuals, and the two companies likely embezzled more than eight million US dollars!
The newspaper's publication was like dropping a bomb into the water.
Everyone is talking about the eight million dollars.
Those who participated in the investment were sighing and lamenting, while those who weren't involved were watching the situation unfold with a sense of schadenfreude.
But things changed faster than anyone expected.
News broke that Edwin C. Ludlow, the cashier at the New York branch of Ohio Life Insurance and Trust, embezzled $100,000 from the bank to invest in two companies, and then absconded after losing all his money.
Depositors who felt distrustful made their own choices.
Withdraw money.
Take the money you have in the bank, exchange it for real gold and silver, and hold it in your own hands.
The line started at the bank entrance, stretched along the sidewalk to the street corner, then turned and continued. Everyone clutched their passbooks or checks tightly, eyes fixed on the head of the person in front of them, inching forward step by step.
When the person at the front of the line stepped out, they were carrying a heavy cloth bag that made a crisp, metallic clanging sound. Those behind them heard this and their eyes grew even more anxious.
By the afternoon, the New York branch, which was experiencing a run on deposits, had no choice but to put up a sign suspending payments.
Despite the bank manager's loud assurances at the gate that they had sent a telegram to headquarters promising new funds would be injected into the branch in four days, guaranteeing everyone could withdraw their money, the situation remained unchanged.
But the angry people no longer wanted to listen to him.
"Open the door! Give me my money back!"
People pounded their fists on the tightly closed iron bars of the bank entrance, making a loud clanging sound. Some tried to climb over from the side but were pulled back by the police.
The cries and curses mingled together, turning the entire street into a giant vortex.
Meanwhile, in Cincinnati.
The directors of Ohio Life Insurance and Trust Company gathered to discuss matters in New York.
"What do the banks in New York say?"
"They don't trust our bills and won't lend us cash temporarily," one director said. "The New York branch has a huge funding gap, and the money we sent over today isn't enough to fully cover it."
"Then there's only one way."
, 7
The chairman slowly said, "Notify all our clients—railway companies, landowners, and farmers—that we are calling back our loans ahead of schedule!"