Having at least finished high school and seen a bit of the world, Frederick was now quite certain that an economic crisis was looming. Although he didn't know the exact day it would erupt, he had already confirmed Niall's "prediction."
Reverse-engineering from the conclusion—starting with the premise that a crisis was imminent—made it easy to uncover signs of social unrest in every corner of society once he began investigating.
What would be the trigger?
If you asked Niall, he would, of course, say "Black Thursday." But Niall would never say it outright; he'd just shake his head and pretend not to know. Detecting signs that a crisis might occur from countless subtle threads wouldn't raise too many eyebrows—at most, people might think you're observant or quick to react.
But if you could pinpoint the exact day a crisis would break out, people would start suspecting you're crazy. And in this era, being diagnosed as mentally ill in America could mean getting actual electroshock therapy.
Even more appalling, they performed prefrontal lobotomies in those days—a now-notorious brain surgery that even won a Nobel Prize in Medicine.
Patients often ended up as literal "idiots" after the operation.
Reportedly, the surgery involved drilling two small holes on either side of the skull and inserting a leucotome to sever white matter in three selected spots on each side of the brain. The tool looked like a slim, elegant screwdriver, but with an open side and no tip. When the handle was pulled, a wire loop at the side would extend and slice through nerve fibers.
Terrifying…
Better not be declared insane.
"Anything else to look at?" Niall whispered to Frederick. Things were already clear—no point in dwelling on it.
"Do you think the government will bail out the market?" Frederick paused for a moment, then asked.
It was a very practical question. The U.S. government had repeatedly promised that prosperity would continue. Even President Hoover, smugly overconfident, claimed the American economic system was "perfectly sound," boasting that "America is nearer to the final triumph over poverty than ever before in the history of any land."
Perhaps, to preserve face, the government and capitalists would attempt a limited market rescue. Historically, figures like J.P. Morgan had indeed intervened in such times.
But when an economic crisis erupts, it represents a total collapse of confidence in the economy across all of society. A few bucks won't be enough to save the market.
"The government might try to intervene, but I'm afraid it won't help at all," Niall said with confidence.
"Why?" Frederick didn't quite get it.
The United States government was immensely powerful—a victor of World War I, with wealth flowing in from around the world. The Allied nations all owed huge debts to America. With such strong finances, surely the government could act?
"It's simple. The stock market bubble in New York alone is worth over four billion dollars. Now guess how much the entire U.S. GDP is?" Niall snapped his fingers, confident.
"A hundred billion?"
"Wrong. It's one hundred and eighty billion."
"Then why not?"
"Can the government seize the entire GDP? Do you think that's possible? The entire World War only cost about thirty billion. So if the New York bubble bursts, the money needed to bail it out will exceed what it took to fight a whole world war and aid Europe!"
The string of numbers completely convinced Frederick. These were all publicly available in newspapers or government announcements. Niall didn't need to fake anything. A little math was enough to show that even combined, the U.S. government and big financial groups couldn't scrape together the cash to stabilize the market.
Since they couldn't produce the funds, once the bubble burst, only total collapse and a panic sell-off would follow. Even the government's finances might take a severe hit.
"Got it!" Frederick no longer hesitated and nodded in understanding.
The two didn't return to the hotel but instead went to the telegraph office. Although Brooke County had telephone lines, Frederick's home didn't have one installed. After all, it was a tiny county with just over 20,000 people—there was hardly any need for a phone. Yelling in the street was often faster than making a call.
So the telegraph was still the most convenient method, and sending one didn't cost much. Frederick and his father clearly had some sort of code arranged in advance. He sent a simple telegram and considered the matter done.
Niall warned him not to withdraw huge sums like eighty or a hundred thousand all at once. The local banks were small-time institutions, and a sudden big withdrawal could spark panic. With some time left before late October, he suggested withdrawing twenty or thirty thousand per week, even splitting it across nearby counties at the same banks if needed.
Frederick waved it off, saying he'd already explained this to his father. America had tons of private banks, most of which couldn't handle major risks—certainly not a bank run. His father was an old hand at this and understood these things better than any of them.
Since the family was aware, that settled it. Niall had nothing more to add. In the coming years, any property, cars, or stocks would be worthless. Only cash would retain real value.
In a country of 110 million people, there were 26 million cars. Real estate prices were overinflated by more than 50%, and the stock market was bloated by several hundred percent. Once the crisis hit, all that stuff would be garbage.
"Oh right! Should I stock up on more goods this time?" Frederick now had full faith in Niall's judgment.
"What do you think?" Niall laughed. He had already said it—cash would be king in the coming years; everything else was fake.
With money, you could buy anything. You wouldn't even need to go to Pittsburgh again—people would come to your door to deliver. Besides, who would you sell bootleg liquor to in a collapsed economy? Coal mines were shutting down and miners were losing jobs. If they had no money, who'd be buying booze?
"I wasn't thinking straight… I see now…" Frederick scratched his nose awkwardly. He'd finally figured it out.
Everything was clear now. With nothing more to discuss, the two happily returned to the hotel. It was lunchtime—no need to rush today. They'd rest and restock tomorrow.