Chapter 123: Capital’s Game (Next) (,Words)

Chapter 123 – The Game of Capital (Next) (Four Thousand Words)

Lionel raised his hand at the servant standing beside him, and soon a document was brought to his eyes.

He set the copy on the coffee table and smiled as he introduced it for Arthur, “Mr. Hastings, it’s actually very coincidental that if you are planning to invest in the more stable sovereign bonds, then you can just catch this wave.”

“Sovereign bond investments are stable?” Dumas leaned back on the sofa as he spoke, “As far as I know, within the public bonds issued by South American countries, only the Brazilian treasury bonds are still paying interest as usual now, right?”

Lionel smiled and stretched out his hand to Dumas as he said, “So this gentleman has had experience in investing in public debt? This is not a field that ordinary people can be involved in. However, your appearance is not familiar to me, you should not have operated in this field in London before, right? Can I take the liberty of asking for your name?”

Dumas shook his hand and said, “Rothschild’s people really have extraordinary eyesight. That’s right, I did have investments in this area before, and also opened an account in the Rothschild Bank, but it’s possible that you have already frozen my account. After all, I am now a wanted man by the French government, I am Alexandre Dumas, nice to meet you.”

Lionel couldn’t help but keep his mouth slightly half-open at the name, he was slightly taken aback but quickly came around.

He smiled and patted himself on the head, “I should have thought of that, Mr. Dumas, when I traveled to France before, I even accompanied my uncle to the theater to see your production of Henry III and his Court, as well as the historical drama, Christina, which is really quite a wonderful play. I heard my uncle say at the time that you had made nearly a hundred thousand francs with that play, and were one of the most distinguished of French playwrights.”

This ass-kissing of Lionel’s made Dumas quite comfortable, and he nodded his head proudly and said, “That was just some little work written off the top of my head, you are really over-acclaimed.”

But Lionel quickly turned the conversation back to Arthur with a smile.

“I knew that Mr. Hastings’s friends, too, would not be of a general nature. Outstanding people will always be attracted to each other, and Rothschild is not only investing in wealth, but is also very willing to invest in outstanding people of the present as well as the future.

Mr. Hastings, for you, I will not hide anything from you. It is true that the sovereign bonds of South America are not trustworthy, but Rothschild has recently been authorized by the Treasury to issue a not too large amount of British public debt for the government.

I can give you a little information, it is a batch of ten-year urban construction bonds with a total value of two hundred thousand pounds, and the interest rate should be 3.15% per annum.

If you want to invest in a stable asset, I can privately order a thousand pounds in advance for you. That would give you a return of £31.50 per year for the next ten years.

That’s not a particularly high return in the current climate, but it beats safety and stability.”

Arthur nodded slightly at his words as he turned to ask, “What about if it’s for real estate investment?”

Lionel opened the file in front of him and unreservedly released the information on it in front of Arthur.

That was the summary data of the price trend of all the rental and sale properties represented under the name of the London Real Estate Property Consulting Company.

While Arthur turned the pages to scrutinize it, Rothschild patiently explained it to him.

“As you can see, property prices in London have always been relatively stable, with the exception of individual popular areas that have risen faster, most other areas have maintained an average annual upward trend of 1% to 2%, while the annual return on a rental property after purchase fluctuates around 4.8%. After deducting your home maintenance, taxes, and other costs, the approximate rate of return should be in the neighborhood of 3.5%.

This is a better return than a UK bond, but it will take a little more time and effort to manage. Of course, if you don’t want to waste your time managing these properties, you can also entrust us to operate them on your behalf. However, in this case, we have to charge a certain service fee.

All things considered, the profit of property ownership may be about the same as purchasing public bonds, and its advantage in comparison with new public bonds may be the hidden income such as voting rights for the owners.”

Arthur nodded slightly, Lionel had not lied to him, and even went so far as to display the trade secrets that various real estate brokers could only dream of in front of him in order to gain his trust.

But he also understood very well what the other party meant by doing so, there was no free lunch under the sky, there were things that didn’t need to be said too clearly, only a simple action was needed for both parties to reach a tacit understanding.

Arthur will slowly close the document in front of him, he looked at the smiling Lionel, also understood that from now on, he is considered to be with the Duke of Wellington and these people together on the Rothschild this cruise ship floating on the Thames.

He asked, “What about the stock market?”

Lionel raised an eyebrow, and instead of talking about stocks first, he smiled and asked, “You are well-informed, so you must know that the railroad industry is very hot these days, right?”

Arthur nodded, “Of course, everyone says that the first thirty years were the domain of the canal industry, while the next thirty years belong to the railroad industry.”

“Hearing is certainly an important reference, but I have an even more important piece of data here.”

Lionel smiled and opened another document in his hand, “Look here, in 1821, the first railroad company in Great Britain was officially authorized to be established, but it wasn’t until 1824 that we had a second railroad company. However, look here, since 1824, there has been a rapid rise in the number of railroad companies approved.

In 1826, Parliament approved five new railroad companies in one fell swoop. This year, Great Britain has 21 railroad companies, and last year Parliament granted permission to build 105.25 miles of railroads, which is more than half the total of the last eight years.

Although there was a little unfortunate mishap at this year’s opening of the Manchester-Liverpool Railway, we don’t think this hiccup should interrupt Britain’s railroad building spree. As you have said before, the next thirty years belong to the railroad industry, and I would even go so far as to assert that the nineteenth century should be the century that belongs to the railroads.”

Arthur asked tentatively, “So your suggestion is to invest in railroad stocks?”

“No.”

Lionel smiled back, “On the contrary, we highly discourage you from touching the stocks of railroad companies. This is because, as I understand it, quite a few of the railroad companies listed on the London Stock Exchange are taking advantage of the railroad boom to fraudulently raise capital.

Many of them are only in the planning stage, and some of them are already eager to take on lobbyists without even getting their railroads approved by Parliament. If you don’t have a deeper understanding of the industry and get involved, it’s easy to be swindled out of your money by them.”

Hearing this, Arthur seemed to gradually understand a little, recommending the railroad industry, but not recommending the railroad company, then the answer is already crying out. He asked, “Do you mean to say that you recommend road and bridge construction companies that have the ability to master the technology of building railroads?”

Lionel laughed and clapped his hands together, pointing at Arthur, “Mr. Hastings, you really do have a talent for finance. That’s right, I’m recommending exactly these construction companies, or more precisely, I’m recommending the Thames Tunnel Company and Brunel Road and Bridge Construction Company, which are currently at the lowest point of their stock value.”

“Brunel Road and Bridge Construction I haven’t heard much about, but Thames Tunnels ……”

Arthur couldn’t help but suck in his breath at the name.

Speaking of this company, it should be considered as a familiar company to the citizens of London, and at the same time, it was also the subject of the London newspaper industry’s beloved reports.

As the name suggests, the original purpose of establishing this company was to build an underwater tunnel railroad of the Thames River, which, according to the design plan, will connect Wapping and Lothian on both sides of the Thames River after completion.

But underwater tunnel this kind of thing, just listen to the name to know it’s difficult to build, not to mention now is still the early 19th century.

Its slow construction progress confirms this idea, with the tunnel only slowly advancing three to four meters per week.

Not only is the construction slow, but the worst part is that since the tunnel was built in 1825, there have been many incidents of water seepage in the underwater tunnel. Not only water seepage, but the foul-smelling Thames water also releases large quantities of methane gas into the tunnel, which can cause explosions.

The engineers and workers who work in these conditions often fall ill, and a number of the project’s resident engineers have been rushed to hospital since the start of the project.

One of the worst construction accidents on the project occurred in 1828, when the foul-smelling Thames flooded the tunnel, drowning six workers working on the project, and even the son of the project’s chief designer, Marco Brunel, who had come for a traineeship, nearly drowned in the tunnel; the poor young man lay in the hospital for six months before he recovered.

Since this serious accident, the Thames underwater tunnel project has been in a state of long-term stagnation, in order to make up for the cost overruns of the project and to restore public safety concerns about the tunnel, after the tunnel pumping repairs are completed, the tunnel company even came up with a tour of the tunnel to open up the program’s strange tactics.

Surprisingly, the London public were quite happy to pay a shilling to see this ‘hot spot’ that had been in the headlines time and time again.

But such a sightseeing frenzy did little to salvage the goodwill and stock of the Thames Tunnels Company, whose shares on the London Stock Exchange were practically stinking up the place.

For a rational investor, buying their shares would be like throwing money into the Thames.

Arthur asked, “Didn’t I hear that the Thames Tideway Tunnel project has come to a standstill due to lack of funding?”

Lionel saw Arthur’s misgivings at a glance and asked with a smile, “Do you remember the upcoming city construction bonds from the Ministry of Finance that I mentioned to you before? That bond of two hundred thousand pounds, and with your intelligence, I’m sure you’ll be able to think at once what the money is for.”

Arthur woke up as if in a dream, he picked up his teacup and savored the aftertaste of this sentence for a long time, he looked at Lionel and gently sipped his tea, “If you don’t say so, it’s still easy for you Rothschilds to make money.”

Lionel smiled and nodded, “Mr. Hastings, you have to know that for us in finance, news is life. Only a fool would stare at the numbers of the stock for a day, and those who really make big money rely on all of them being well-informed.

In addition, I can share two more pieces of information with you, one of the major shareholders of the Thames Tunnel Company is another major client of ours, Arthur Wellesley, the Duke of Wellington.

As for the other company I mentioned, Brunel Road and Bridge Construction, its major shareholders are Mark Brunel, the chief architect of the Thames Tunnel Company, and his son Isambard Brunel.

Both of these gentlemen are top design and construction minds in railroad construction. Moreover, Brunel Road and Bridge Construction’s share price has hit rock bottom recently due to the impact of the Thames Tideway Tunnel project.

But as you know, you can’t have bad luck all your life, and I’ve learned that Mr. Brunel Jr.’s design has a very good chance of winning the bid for the bridge across the Avon Gorge. Once he wins that bid, then Brunel Road and Bridge Construction will soon be back from the dead.”

Speaking of this, Lionel lifted the teapot and refilled Arthur’s half-empty teacup with some more.

As he poured the tea, he spoke, “You know, Mr. Hastings, life is so wonderful.”

Arthur looked at the ripples in his teacup and couldn’t help but nod his head in agreement, “That’s right, life is indeed marvelous. It’s time for Brunel and his son to have some good luck. By the way, I would like to ask you to put 500 pounds of market capitalization in each of the Thames Tunnel Company and Brunel Road and Bridge Company for me.”

Lionel smiled and got up with satisfaction, he took off his hat and bowed slightly: “Thank you for your wisdom, you have shown strong investment strength and foresight today. Mr. Hastings, Rothschild is very honored to provide you with consulting services today.”

Dumas, who was sitting on the side, biting on a donut, was furious when he heard this, and he muttered, “You call this a discerning eye? I’d do the same for me. It’s all news, all fucking ‘luck’.”

Who knew that Lionel, upon hearing this, laughed and shook his head as he retorted, “Mr. Dumas, you have to understand that ‘luck’ only comes with strength. In my opinion, Mr. Hastings is extremely powerful, so it’s only natural that he has ‘luck’.”

No sooner had he said this than the estate agent, who had left the meeting earlier, came running back from the back room huffing and puffing and gasping for breath.

He came in front of Arthur and respectfully handed over the house price assessment in his hands with both hands.

“Mr. Hastings, excuse me, this is my reformulated housing recommendation report, please take a look.”

Lionel sniffed and nodded at Arthur with a smile, “Here, Mr. Hastings, you’re in luck again.”

(End of chapter)