Chapter 143: Dividing the Fruits
Chapter 141: Splitting the Fruit Fruit
Anything is easier said than done, Franz would not ignore the limitations of productivity. Railroad construction technology has gradually matured in this era, but construction efficiency is still not high.
Building 38,000 kilometers of railroads in twenty years, an average of 1,900 kilometers of railroads per year, was undoubtedly challenging in the mid-19th century.
Financing was also a problem. 20 million guilders was needed to build 1,900 kilometers of railroads, with an average budget of just over 10,000 guilders per kilometer, which may have been barely enough for construction in the plains when labor was essentially free. (Only the cost of the work is calculated, not taking into account compensation for demolition or geological conditions.)
In reality, the Austrian Empire was anything but a plains country, with a handful of complex terrains, which in turn severely constrained railroad construction.
These natural constraints can be overcome, the big deal is the detour, anyway, in this era of Austrian railroad construction, it is not possible to cut hundreds of meters long, or even several kilometers long tunnels.
When it comes to special terrain, both the detour and the difficult task mean a significant increase in costs.
No one can answer the question of how much it will cost, but perhaps the engineers will be able to give a preliminary budget after the fieldwork has been completed.
The government’s revenues were limited and could not be invested in the construction of the railroad. In Franz’s opinion it would be better to compress the annual cost of railroad construction to less than five percent of the revenue.
The shortfall can only be made up by private capital, simply put, it is to find a way to make the nobles pay for the construction of railroads.
This is a special situation in Austria, although the capitalist economy has developed, but most of the wealth of society is still in the hands of the nobility.
Of course, now the Austrian central government also holds a large amount of wealth in the hands of these wealth is mainly manifested in the land, forests, real estate, state-owned enterprises, in fact, the cash that came from the plunge, this time has been spent almost, only less than one hundred million guilders left.
Real estate is already being sold out of the hands, land revenue is still mainly leased to farmers, by collecting rent and redemption money, in the next few decades, every year can provide the government with 150 million guilders of income.
Not all of this money belongs to the government, there are also payments to the nobles land compensation, Franz is a credible, this money must be given.
That must be paid back to them even if it is divided into twenty, or even forty years.
There was no way, these nobles were too cooperative, and the Austrian government couldn’t even find an excuse to renege.
Together with the influence of human connections, in order not to cause national unrest, the Austrian government now has to pay one hundred million guilders a year in compensation.
This is the situation of the country decided, the aristocracy dominated the government, naturally have to consider the interests of this interest group. Franz is still clear about what can and cannot be done.
Such a large sum of money had gone into the aristocracy’s pockets, and it would obviously be a waste if it wasn’t taken out and invested. And sitting on it, the compensation money is not permanent, after giving it, there is no more.
As a good emperor, it’s natural to think about their future lives for them. How risky it is to invest in other projects, a bad one is blood money.
Investment in the railroad is much safer, as long as a car, running on it is not all gold?
Cabinet meeting, Franz asked with some hesitation: “you think it is the issue of railroad bonds, or the formation of railroad companies to sell shares, or simply authorize the capitalists to a certain line, let them build their own railroads, that one is more suitable for us?”
Minister of Finance Karl hurriedly said, “Your Majesty, issuing railroad bonds is not desirable, railroad investment is a long term investment, and you won’t see any return for several years.
Considering the actual situation, many railroad lines are even in the red for more than ten years, such a long period of time, huge debts need to be borne by the government, it will easily drag down the finances.
Besides, if we hold so many railroads all in our hands and the government operates them, this management cost is too high, so it’s better to give them to the enterprises to manage, and we’re just responsible for collecting taxes.”
Is it profitable to invest in railroads?
There is no doubt about it.
Only if the prerequisite is to invest in railroads in commercially prosperous areas, and the Austrian railroad network is obviously not just about economics, but also about political and military factors.
Once this railroad network was completed, all of Austria’s major cities were connected, even the most remote province of Dalmatia, a railroad was planned.
This meant that many sections of the railroad operated at a loss. Of course Austria is not a vast country, the natural conditions are considered favorable, there are no too remote areas, as long as the economy has developed, the prospects of these railroads are considerable. (698,700 square kilometers)
It’s fine for the government to be in charge of building the railroads so that quality can be assured, it’s not fine for the government to be in charge of operating the railroads.
Corporations definitely do a better job than government agencies when it comes to cost savings, and private companies in turn do a better job than state-owned companies.
There’s no way around it, Austria has the Labor Protection Act, which the capitalists try to avoid and cut expenses as much as possible, but absolutely no one in the government dares to not enforce it.
“Your Majesty, the issuance of company shares is not a big problem, but according to the Austrian Securities Law, it is not possible to raise shares on the market before the construction of the railroad has begun.
We still need to advance the funds upfront, why don’t we use the land to invest in the shares, look for some social shareholders to contribute, and then list the shares to raise funds after the construction has begun?” Archduke Louis proposed
This is to share the fruit, Austria although conservative, but investment in railroads to make money is not a secret. Several sections of railroads have been built in the country, and I have not heard of anyone losing money.
In this case, after the Austrian government will be the railroad as a national policy, that even the conservative nobles also moved.
After all, the railroad is not compared to other industries, the risk is visible, as long as the choice of route is good, still afraid of not making money?
“Can, but in the investment ratio to be limited, all the social shareholders to contribute the total amount, shall not be less than forty-five percent of the funds for the construction of the railroad.” Franz thought about it and said
Franz does not exclude the nobility to participate in making money, originally he wanted to shell out money, the precondition is that you must come up with real money, want to empty gloves that will not work.
The joint-stock company appeared, the capitalists want to enter the field is much more difficult. Franz just needs someone to pay to get the railroad built, he doesn’t care who pays for it.
The final result of the negotiation is the government to set up five railroad operating companies, the five companies are responsible for the investment and construction of the five railroad lines.
Undoubtedly, this is just a pilot project, if it succeeds, it will continue to be promoted, and if it fails, it will be played in a different way.
Investment and construction can be given to private capital, but the railroad design work, still to be responsible for by the Ministry of Railways, they must be constructed according to the plans, and accept the supervision of the Ministry of Railways.
These five railroad operating companies only share a part of the railroad investment, the selected sections are also mostly easy to build and profitable in a short time.
It is said in a beautiful name that the people who invested first should be allowed to make money, and then more people will be motivated to join in the construction of railroads to speed up the pace of railroad construction in Austria, but in reality, everyone understands the situation.
Franz has no moral cleanliness, with the interests of the railroad to pull together interest groups, in exchange for a better advancement of this plan, he naturally will not refuse, which is not without a share of the royal family.
Money-making business some people rush to do, money-losing business no one asked. People do not want to do, it can only be done by the government.
Commercial railroads private to repair, the government is only inside a certain share, political, military use of the railroad can only be the Ministry of Railways on their own.
Franz was the one who paid attention to the food, so he didn’t get personally involved.
This statement is estimated that no one will believe, the truth is that he has no money in his hands, after all, the mine owner than the iron boss more profitable, but the Habsburg family is invested.
Anyway, these railroad companies will become listed companies, as long as Franz is willing to casually dig a pit for them, the stock market crash came to cool, the rest is to buy buy buy.
Georgia Jin Chengwu’s 10,000 reward, plus more, still owe 20 chapters. Thank you for your support, Hai Yue endeavors to pay off the debt within a month!
(End of chapter)