Chapter 292: Bonds
Chapter 282 The Bonds
The Minister of Finance, Carl, said joyfully, “Your Majesty, the 50 million pounds of bonds we issued in London have been sold out.”
It was really too smooth, or rather the British had too much surplus capital. Exclusively dominating half of the international trade market, the British had accumulated too much capital.
The domestic market could not be digested, so naturally they had to face overseas. However, the overseas market also has a threshold, not everyone is qualified to play, the strength is not enough can only invest in stocks and bonds.
The construction bonds issued by the Vienna government, how to look at it is a high-quality asset, naturally by the small capitalists and the middle class hot.
Fifty million pounds sold out in less than a week, this speed is completely in the rush to buy, to know that this time the annual interest rate of the bond is also only 6.5%, is not too high.
Of course, this is not the final cost of issuing bonds, but also to pay the handling fees, publicity, printing costs of the bonds, the money in the hands of the exchange fees.
Franz asked with concern, “What about Paris and the country?”
Since it is the issuance of bonds, naturally, it is not possible to target only the London financial market, Paris, Vienna and Frankfurt is also the financial center of Europe, how can Franz ignore it?
Finance Minister Karl replied, “Paris has sold out 650 million francs, the rest is expected to be sold out within a month; the domestic has sold 94.8 million guilders, and is expected to be sold out within two months.”
(1 pound sterling ≈ 2 shillings ≈ 25 francs ≈ 7.32 grams of gold)
Franz was surprised and asked, “Vienna’s financial market carrying capacity is that strong?”
Doing a full set of theater, since we want to fool the capitalists to jump into the pit, the Vienna government must also have real money in their hands. The capitalists are not fools, one by one, they are not seeing the rabbit not spreading the eagle’s main.
To this end, the Vienna government issued construction bonds to the outside world 350 million guilders, and to ensure that this money is earmarked for the sole purpose of infrastructure construction in the country.
Among them to London issued 100 million guilders bonds, to Paris issued 80 million guilders, the remaining 170 million guilders, respectively, in Frankfurt and Vienna issue.
According to Franz’s estimation, with the carrying capacity of the domestic financial market, the economic crisis broke out before the construction bonds were digested.
The private money bought the bonds, then the money flowing into the stock market is reduced, and the money flowing into the real economy will be reduced as well.
When the economic crisis breaks out, everyone’s losses can be minimized, and the number of people jumping off buildings should be much smaller, preserving as much vitality as possible.
Karl explained, “Your Majesty, Frankfurt has a great influence in Central Europe, attracting investors from the German Federal Empire, Switzerland, Belgium, and the Kingdom of Prussia to join it, and the volume of bond sales has also surpassed Vienna.”
After a few moments of contemplative effort, Franz suddenly understood. Under normal circumstances, it was impossible for Frankfurt to match Vienna, even if it attracted capital from the neighborhood.
However, Frankfurt’s capital consortium has this strength, they can completely buy the bonds themselves first, and then slowly sell them to the public.
They do this in addition to showing goodwill to the government, but also to the Vienna government to show the strength of the meaning, as a way to obtain a higher political status.
The meaning Franz read and naturally knew to throw in the towel. Frankly speaking if Vienna is not the capital, has too many resources, but also gathered a large group of rich people, otherwise simply can not compete with Frankfurt.
In recent times, Frankfurt has always been the financial center of the German region. In another time and space, into the 21st century, Germany’s largest financial center are Frankfurt.
Thankfully Frankfurt is a free city, empty of economic strength, but no possibility of making it big, or Franz will have a headache.
Franz thought for a moment and said, “Add another Frankfurt to the Navy’s new shipbuilding program.”
“Yes, Your Majesty!” Minister of the Navy Philcox replied joyfully
Franz personally opened his mouth, the increase naturally couldn’t be a sail battleship, the only thing worth everyone’s attention right now was the ironclad.
As a land power country, the navy’s military budget was naturally limited. That is, even after taking advantage of this naval technological revolution, the Vienna government had no plans for a major naval expansion.
The Ministry of Navy fought again and again, and finally got the budget for two ironclads, which was not even for one year, but for three years of shipbuilding.
One was the Reichsmarine, or “New Holy Roman Empire”, and the other was the Vienna.
Nothing wrong with that, all of them were heavily politicized. The addition of a Frankfurt at this time certainly reflected the importance of Frankfurt in the Empire.
It was Franz’s affirmation of the goodwill of the Frankfurt capitalists, and he didn’t mind adding a few more ironclads if other state governments would sell out to the central government.
To put it bluntly, an ironclad cost only a few hundred thousand guilders, and the larger the better. The cost of the first “Frederick” was 800,000 Shenduan, now the second batch of improved warships, performance has increased slightly, but the cost has been reduced.
The main reason for this is that the research and development and testing of new technologies in the early stages of the project increased the cost of building the ship. Now a one-time start of two ironclad, the unit price fell to 580,000 Shenduan, if the start of three ships the unit price will continue to fall.
The number of states in the new Holy Roman Empire was not large, even if each state named one, it would only increase the expenses by two to three million divine guilders, which was completely within the affordable range.
The navy really burns money or from the era of the dreadnought, a battleship moves a few million divine guilders, is the real gold swallowing beast.
Moreover, military expenses are not borne by a single Austrian state, all states have to share proportionally according to their respective revenues.
Franz said seriously, “Since the collected funds are already in hand, the winning capitalists are urged to start construction as soon as possible, and all projects are carried out according to contractual agreements.
The Ministry of Finance and the local government cooperate with each other, and the Anti-Corruption Bureau closely supervises, absolutely no irregularities will be allowed.”
Starting construction is a must, or else the economic crisis breaks out and the capitalists who won the bids admit defeat and give up their deposits to leave the field, that would be embarrassing. If word got out people wouldn’t say: the Vienna government cheated everyone out of their deposits.
In order to avoid this terrible result, Franz must ask everyone to start work, so many projects within the small projects, these small projects may be completed in a few months.
When they are finished, they will be settled, and as long as they get the money, no one will be able to say that the Government of Vienna is cheating on the deposits.
Because of the outbreak of the economic crisis, the capital chain broke and could not complete the large project, that is the responsibility of the winning bidder. There is no strength to take on projects indiscriminately, but also need to pay the price.
“Yes, Your Majesty!”
……
(End of chapter)