Chapter 286: Capital Without Borders
Chapter 276: Capital Without Borders
In July 1856, the Vienna government formally began to implement the “hedge plan”, the government increased infrastructure investment, open bidding to the outside world.
At the same time, the railroad network also began to re-planning, almost every city was planned on the railroad line, and then tenders.
This time not only the domestic railroad companies can participate, overseas railroad companies can also participate in the bidding, without any investment restrictions.
Or the old rules of a railroad line is only authorized to a railroad company, do not allow duplication of construction and waste of resources, to meet the desire of monopoly management.
It looks very good, the prerequisite is that the railroad company must start and finish the project on time, if you can’t do it, you’re ready to cry!
According to the new plan, once the construction of the railroad network is completed, the total mileage of railroads in the new Holy Roman Empire will reach an astonishing 97,000 kilometers.
The current total railroad mileage of the country is only 15,800 kilometers, and the railroad projects under construction are only 32,100 kilometers, which is now almost doubled in size.
Considering that some of the newly planned railroad routes were too remote and difficult to make a profit, in order to attract investors, the Vienna government also promised to exempt the remote sections from taxes forever.
It was okay to fool ordinary investors with favorable news; smart people knew that it was just a tempting pie. However, in the era of market frenzy, who cares so much?
Smart people know that whether the project ultimately succeeds or fails, as long as they do not become the last receiver, they can make money from it.
Despite the fact that none of the Austrian railroad companies ever made a profit, the railroad stocks were bullish and very much favored by the capital markets.
The railroads that are currently open to traffic are all making profits, which creates an illusion that the railroads are a sure thing, especially since the Austrian railroads have a monopoly.
Tender project, the Vienna government is also in the full boast, such as the current economic development rate of the new Holy Roman Empire, the demand for rail transportation, high population growth rate, these are all good news.
After so packaged down, many speculators have been tricked, theoretically all of these railroad lines will be profitable, even the most remote region of Bosnia and Herzegovina railroad, the future will be profitable.
These figures don’t lie, it’s really only a matter of time before the railroads become profitable. In this day and age there are no automobiles, no airplanes, and no means of transportation that can compete with railroads in land transportation.
The territory of the new Holy Roman Empire was not too large, there were no places too remote, there were no uninhabited frontiers, and there was potential for discovery in the future.
Franz estimated that if the government in Vienna did not put restrictions on the price of railroad transportation, then after ten years, more than seventy percent of the routes could be profitable; after twenty years, more than ninety percent of the routes could be profitable; and by the time thirty years had passed, all of the routes could be profitable.
This profitability is based on the construction costs are not taken into account, but simply operating income over the operating costs, want to recover the investment do not know how long it will take.
The construction cost of the railroad has not been recovered, and then need to carry out major repairs, even if the maintenance is good, after a few decades, most of the rails and sleepers will have to be replaced.
Since it was a pie in the sky, Franz didn’t mind making it look a little more enticing. The Vienna government, for example, promised to subsidize the heavily money-losing routes to ensure the normal operation of the railroad.
This promise was practically the same as none. Railroad companies would surely give up on rail lines that couldn’t even recover their operating costs!
As the receiver of the Vienna government, whether to give subsidies, and finally to ensure the normal operation of the railroad. Guarantee the smooth flow of basic transportation facilities, which is the responsibility and obligation of the government, the money is simply not less.
Moreover, can not wait for that time, the economic crisis broke out, the railroad company’s capital chain broke, accept the government shares will become inevitable, a few more times to the economy, the largest shareholder will become the Vienna government.
Able to grasp the controlling stake in the railroad within the rules, why break the rules?
Economic means to get the controlling stake in the railroad, than overturned the table, roughly declared the railroad state-owned to be much more clever.
Besides, the management system of a joint-stock cooperative company is much less costly than the government directly appointing bureaucrats to manage it.
……
London.
Barclays Bank now has the semblance of a Barclays Bank Consortium in a few ways, except that it has not publicly announced the creation of a consortium, essentially the capitalists attached to the bank’s periphery already have the strength of a consortium.
Barclays Bank itself has more than 100 million pounds, through the financial market can mobilize funds is more than 300 million pounds, affecting the industry more than 500 million pounds, in the United Kingdom many consortiums are also ranked in the first few.
President Jenos took out an iteration of information and distributed it to the crowd, and then said, “Gentlemen, just a short while ago, the Vienna government suddenly announced a strong investment in infrastructure.
Including: railroads, harbors, urban drinking water projects, municipal engineering reconstruction, and even some water conservancy projects, all included in the bidding scope.
The total investment amount is expected to be as high as 480 million guilders, that is, 240 million pounds, driving the market of peripheral industries more than 500 million pounds. This is a capital feast, also accompanied by very serious challenges.
How can we take the biggest cake while keeping the risk to a minimum is the topic we want to discuss today.
The information has already been sent to you, and it’s broadly similar to what we knew before, only now it’s a bit more detailed and involves specific projects.”
Simon, the big capitalist, questioned, “Mr. Janos, as far as I know the Vienna government’s total revenue last year was only 121 million shillings, and this year it won’t be more than 128 million shillings, can they afford to take this huge amount of money out for investment?”
Jenos calmly replied, “In recent years, Austria’s economy has been developing rapidly, and the Vienna government has successfully gotten rid of its financial difficulties by taking advantage of the Near East War.
Especially after the annexation of several German states, the new Holy Roman Empire that was just born has a total population of more than fifty million, and its economic total alone surpasses that of the French, just ahead of us.
Currently, their government’s total debt is less than 80 million divine guilders, a debt ratio that can be said to be quite low, so if they want to raise external financing, I’m sure you won’t refuse, right?”
Refuse, how can one refuse? Who would have a problem with money, the Brits, who are severely overcapitalized, are looking around for places to invest these days. Faced with a high-quality customer, how could one refuse for no reason?
If one could influence the financial markets of the new Holy Roman Empire through loans, then the potential benefits would be even greater.
Simon replied without hesitation: ”Of course, the Vienna government is now a high-quality customer, as long as they are willing to join the pound-gold system, there is no problem in providing them with a loan.
But they won’t join, the Austrians still want to engage in the Sterling – Gold system, it’s impossible to easily compromise with the London government.
In this case, do we still want to do this business?”
Capitalist Burnett asked rhetorically, “A profitable deal, why not?
Controlling their financial market through loans, and then influencing the Vienna government’s decision-making through finance to make them accept the pound gold – system, this is a long-term job.
Our approach is in line with the government’s strategy, it just needs a little more time. The New Holy Roman Empire is also a big country, trying to get them to compromise is not something that can be done overnight, it’s more prudent to take it slow.”
Except for the first sentence, which was sincere, the rest was all bullshit. Controlling the financial market through loans could indeed be done, but that was in a theoretical state.
Austrian capital is not a fool, for their own interests, will also resist the invasion of their capital, the Vienna government will stand on which side is very obvious.
Never heard of a single loan controlling the finances of a large country.
Unless they can get the Vienna government in financial trouble and depend on overseas loans for a long time, then inevitably they will be influenced by them.
But in that case, the high-quality customers become inferior customers again, and there is no point in doing business.
Jenos said seriously, “The London government’s plan, it’s better to let them implement it themselves, it’s fine for us to support them, but on the condition that we don’t jeopardize our own interests.
We must not forget that the bait thrown out by the Vienna government is loaded with poison, they require investors to advance the construction funds upfront, and they also have to pay a security deposit.
Once there is a change of heart in the middle of the project and the capital chain of the project breaks, not only will the initial investment go down the drain, but the security deposit will also be confiscated, and all the risks will be borne by the investors.
This kind of project that squeezes a lot of money seems to be specially prepared for us, which is too abnormal.
Analyzing the current economic situation, this round of economic development seems to be reaching its limit. The fruits are ripe and the day of harvest is not far away.
At a time when the economic crisis is approaching, the Vienna government has thrown out this big program, and I highly doubt that they are just trying to cheat the deposit.”
Burnett said without hesitation, “Even if they are cheating on the bond, it is based on the premise that the project is rotten, as long as it is successfully completed, they will have to make payments, and I don’t think the Vienna government will renege on the debt.
Compared to the security deposit, I think it is more likely that they are still pulling people down, once everyone has invested their money in these unperformable infrastructures, there is no way to pull money out of Austria even if the economic crisis breaks out.
In order not to let the initial investment go down the drain, investors will also have to continue to invest, and as long as these projects are under normal construction, then the impact of this economic crisis on Austria is minimized.
However, I am very skeptical that an economic crisis will break out in Austria?
Although the capitalist economy has developed to the present time, affecting more and more countries, the impact on the conservative Austria should not be too big.
Even they have never felt what a real economic crisis is like, is there a need to make such a big deal out of it?”
Simon sneered, “Burnett your thinking is still stuck in a few years ago! Since 1850, the Austrian market has been the most sought after area for British capital.
Until now, the total investment of British capital in the New Holy Rome area should be more than 180 million pounds, and the investment of French capital over there will not be less than 50 million pounds.
Barclays Bank alone has invested more than 15 million pounds over there, and if we pull our funds out together and leave, the economic crisis in Austria will immediately erupt.”
They had pride of place; this was the age when the British Empire had the greatest advantage of capital, and even the French, who were nearest to them, could not match it.
Janos scanned the crowd and said, “No matter what schemes the Austrians have, as long as they don’t get in the way of us making money, we can continue to work together.
It is very unreliable to guess their plans just based on the information we currently have in our hands. Regardless of what conspiracy the Vienna government has, the project they took out this time does have a lot of quality assets.
We just need to screen out the high-quality assets here, and then find a way to get our hands on it, and let whoever loves to take over the rest of the junk assets to do so.
If possible, we can all still make an effort to see if we can throw certain wonderful looking junk projects to our competitors.
In my personal opinion, the City Safe Drinking Water Pipeline Network Project is very good, it can be swallowed, once this project is completed, you guys can imagine the profits of monopolizing a city’s tap water supply.”
Simon said very cooperatively, “Jenos, you are still so good, picking the most effective value project at a glance.
The several tap water companies under our umbrella have always been the most stable source of wealth, almost unaffected by market fluctuations.
However, I think it’s fine for the Austrians to take on a portion of the municipal engineering project as long as their bid is high enough, and by the way, we can help them issue construction bonds to solve the project’s financial needs.”
Obviously, what he was looking at was not any municipal construction project, but the issuance of bonds, which was the drought and flood business.
These bonds are not their own eat, but for the Vienna government in the London financial market sales, no matter whether the final can cash and they have nothing to do, anyway, the handling fee and exchange fees earned first.
Burnett added: “Our railroad company can not be idle, now the growth of domestic business has almost stagnated, the potential for development is not much.
No matter what, we should also take this opportunity to pick up a few railroad lines, push the stock price up a bit more, and then find an underling to take over the business.”
Obviously everyone knew there was a crisis here, but that didn’t stop them from making money, as long as the profits were big enough, who cared what the Vienna government really wanted?
Everyone’s different opinions, in fact, also represents their different interests. In the same consortium, it is impossible for everyone to develop in the same direction.
We all have our own goals, and it is only when there is no conflict of interests that we can achieve close cooperation.
If this cannot be done, then those who should be separated should still be separated. To put it bluntly, a consortium is just a combination of interest groups, and once everyone’s interests clash too much, it’s only natural for them to fall apart.
(End of chapter)