Chapter 443: Opening of the Suez Canal to Navigation
Chapter 433: The Suez Canal Opens for Navigation
Egypt, the Suez Canal has also reached a critical moment, after nine long years of construction, finally nearing the end.
This time there was no stoppage of work in the middle, not to mention the lack of labor. France and Austria had joined forces to build the Grand Canal, and the British had failed to disrupt it, but had instead aborted their plans to plant cotton in Egypt.
There was no other reason why the construction took so long, mainly because the canal was four meters deeper than the Suez Canal design of the original time and space.
Later, during the actual construction, the engineers sent by the Austrian side, who were required to make sure that everything was in order, lowered it by another two meters.
With the increase in depth, the width naturally increased accordingly, and the amount of work naturally increased as well. In the days of the lack of machinery, the increase in the amount of earthwork was not a small project.
The amount of work increased construction costs also followed the increase in the original time and space of the Suez Canal after several twists and turns finally opened to navigation, the cost of up to 18.6 million pounds, and now has not yet opened to navigation costs up to 37.7 million pounds.
Rising costs, so that the Suez Canal stock all the way down, many people doubt that this canal can not return to the capital.
This was a bargain for Franz, who took over when some people sold their shares. Anyway, it couldn’t lose money, and it was only a matter of time before a profit was made.
It was because of him that the Suez Canal stock did not fall to a cabbage price. Of course, a fall below the issue price was inevitable.
After issuing two additional shares, seeing that the stock was so low that it looked as if it could not be sold, the Canal Company directly mortgaged the property rights of the canal to borrow money from the bank.
The good thing was that this was a strategic project, seen by the French and Austrian governments as an opportunity to break the British monopoly on the Straits of Gibraltar.
With the guarantee of the two governments, the bank was willing to provide loans. Originally Franz was prepared to take over the business himself, but was opposed by the bank staff.
After all, the outside world is not optimistic about the Canal Company, the issuance of such huge loans, easy to trigger a chain reaction, in case the impact of the Royal Bank’s ability to absorb reserves will be troublesome.
It is important to know that most of Franz’s investments were actually made using loans. In this context, to ensure that the Royal Bank’s ability to absorb reserves is crucial.
Loan from his own bank, left hand to right hand, he needs to pay the cost of funds is only the deposit rate. In fact, it was even lower than the deposit rate.
Funds are rolled over. Even when money is spent, many times it is transferred from one account to another and not taken out of the bank.
There was no UnionPay in this day and age, and you had to do all the interbank transfers yourself. Generally, very few people do this.
This is an opportunity for banks to recycle a sum of money many times over. As long as there is no financial crisis or run on the bank, there is no problem in recycling it dozens of times.
Even if there was a financial crisis, it wouldn’t hit the Royal Bank very hard, and reputation was a good thing.
Over the years the Royal Bank can collect a lot of gold, part of the sale, most of them are stored, in the headquarters in Vienna there is still a hundred tons of gold reserves placed there.
This is where the Royal Bank’s credibility lies, on the surface it seems that a hundred tons of gold is a lot, but in reality the value is only 27,322,400 Shendian.
It only sounds overbearing, making people feel wealthy and secure.
Of course, the most reassuring is the “royal family” brand. As long as the royal family does not fall, the Royal Bank will not fall. This is equivalent to the face of Franz, it is impossible to let it go bankrupt.
Most of the funds are used for their own investment, out of lending funds naturally less. In fact, so far the Royal Bank does not do small business.
Simply put, it is less than 100,000 guilders of loan business, this place does not receive, have collateral are not received. Deposit limit is much lower, five guilders can open an account.
There is no way, this era is limited by technology, all rely on manual business. Deposit is okay, the problem is the loan audit, to investigate the information is very troublesome.
Royal Bank to do small loans, only the government commissioned policy loans can be an exception. The government is responsible for guaranteeing the repayment ability of the customer, these problems naturally do not exist.
The real small loans, only small and medium-sized banks are doing in this era, and the interest rate is much higher than ordinary commercial loans. Not much money has been made, and the name of usury has topped it first.
The positioning of the Royal Bank in the beginning was to serve Franz himself. For lending is not keen, do most of the business is conservative-oriented.
In this way, the Royal Bank’s development in the personal loan business is very general, but there are not many bad debts, overall just a small profit.
Most of the profits come from corporate loans, government loans, international loans, these big intricate loans small banks can not play, the market competition is much smaller.
The interest rates may be lower, but the overhead costs that need to be invested are also lower, and the profits are rather more lucrative.
Especially international loans, the surface interest rate is not high, but in fact the revenue is very rich.
For example: handling fees, exchange fees, usually this is three or four points. When the loan is issued, it usually deducts the principal and interest that should be repaid in the first year, and in some cases, a one-time deduction for three or five years.
Often the bank also moonlights as a salesman, especially for limited-use loans. Banks can bundle and sell a certain amount of goods to their customers and earn the difference in price.
Generally speaking, if a loan of ten million Shenduan is issued to the outside world, the debtor can get his hands on nine million Shenduan, even if it’s a conscientious loan. If the conditions are harsh, it is not unheard of to have a loan that is directly discounted by 50%.
The most tragic is still installment lending, but have to bear the full amount of interest. With this kind of loan, in the end, the actual funds in hand might be less than four layers of the total number of loans.
International loans wouldn’t be so abhorrent if it weren’t for these pitiful clauses. Just a few points of interest is too small an estimate of the appetite of capitalists.
……
“Mr. Lesseps, the canal project has passed inspection and is ready to be released.”
Lesseps was the chief engineer of the Suez Canal, and his main merit was to fool the Egyptians into sending people to participate in the excavation of this grand canal.
It is important to realize that this time it was even more excessive than the same period in history, and the Egyptians did not get shares in the canal company, but merely the right to a share of the benefits.
Practically all the same, even if the shares were given, the Egyptian government should not want to get the money.
In the original time and space, the Egyptian government until 1937 to fight for the treatment of 300,000 pounds per year, as for their initial 44% of the shares, this who recognize ah?
It’s the same with taking dividends now, you don’t end up with the money anyway. Lesseps was able to fool the Egyptian government into taking the initiative to cooperate, and was naturally recognized by the canal company.
Although the canal company has to pay a sum of money to the Egyptian government every year, but compared with the cost of labor is not worth mentioning at all.
The Suez Canal was not so much built as filled with human lives. But if the Egyptian government itself didn’t care about casualties, the Canal Company naturally cared even less.
Without dragging his feet, Lesseps ordered, “Then let the water go!”
With the order, the dam was blown open with a “roaring” explosion. The sea rushed straight through, and the Red Sea and the Mediterranean Sea were brought together.
With a loud bang, the news of the opening of the Suez Canal quickly spread across the European continent, with different reactions.
There were all kinds of expressions of joy, surprise, worry and disbelief …….
The Port of Venice, as Austria’s busiest commercial port, the public’s attention to the Suez Canal was much higher than in other regions.
Inside the taverns, the discussion has already begun.
A young man proudly showed off: “The Suez Canal is open, have you heard? It is said that it can navigate huge ships of 50,000 tons, isn’t this a joke? The whole world doesn’t have ships that big, it’s a waste!”
A middle-aged man next to him retorted, “What do you know? That’s the maximum navigable capacity, the Suez Canal is located in the main road of Europe and Asia, there must be a lot of ships coming and going, so of course, there must be multiple shipping lanes in parallel.
Moreover, nowadays, shipbuilding technology is so advanced that some people are developing a 20,000-ton ship. If such a huge ship appears, wouldn’t it just be possible to stagger it?”
The young man said unconvincingly, “Come on, the Suez Canal is tolled, where would so many ships pass through. The big deal is to take a detour through the Strait of Gibraltar and run an extra distance, and you won’t pay this unjustified money.
The real use is still military, we dug this canal with the French. Obvious question, this was done to get rid of the British control of the Strait of Gibraltar.
As for the Suez Canal Company, I’m afraid it’s going to lose money. To build such a big canal is to run a few warships.”
Another young man came in and sat down and said, “Filfer, it looks like you need to buy a map and take a good look at it, don’t pretend to know anything and show off your knowledge here.
With the opening of the Suez Canal the voyage to the Indian Ocean has been greatly shortened, so how can it be of no commercial value? Take our Venice as an example, there are no less than a thousand ships traveling to and from the Indian Ocean every year.
After the opening of the Suez Canal, this number will increase. Perhaps Austria alone has tens of thousands of ships traveling to and from the Indian Ocean every year, and all the Mediterranean countries together, I am afraid, have tens of thousands of ships traveling to and from the Indian Ocean.
Even if a ship is charged three to five hundred guilders, the canal company’s annual revenue from navigation fees would be in the tens of millions of guilders. This number will also increase with the increase in international trade, and in the future it is possible to collect hundreds of millions of guilders in navigation fees every year.
As long as the passage fee does not exceed the increased cost of detouring from the Strait of Gibraltar, I’m sure everyone would be happy to reduce a sea journey.”
To make a living at sea in this day and age is to take a risk, and with thousands of ships doomed every year, sea voyages are all about risk.
Being able to shorten still sailing distance is a good thing for every capitalist involved in maritime transportation, it means their sunk costs are reduced.
The average person is still more concerned with the economic value of the Suez Canal than the military value. Looking at the map, the canal was most useful to Austria. Whether traveling to the Indian Ocean or to the Western Pacific, this was the best option.
This has already affected Austria’s economy, especially for port cities like Venice. The shortened voyage has been a great trade boost.
It is certainly a good thing for those who make a living here. More overseas trade means more ships coming and going, which means the local economy will be more prosperous, and everyone’s income will increase as well.
Different people cared about different things. In the Vienna Palace, Franz did not care about the economic impact of the Suez Canal, he was more concerned about the strategic value.
Looking at the basic parameters of the canal: water surface width of 138 meters, the width of the bottom of the river 48 meters, the depth of 15.4 meters, is expected to accommodate 50,000 tons of ships navigable.
This means that even in the era of dreadnoughts, the Suez Canal can be navigated freely, and the strategic value of the Suez Canal has increased by an unknown amount compared to the one in the same period in the original time and space.
This made Franz breathe a sigh of relief, the effort put in was not in vain after all. This value to the era of dreadnoughts are enough, aircraft carrier era do not need to consider, by then the British should also fall.
Looking at the cost of the canal, Franz also couldn’t help but sigh. More than double the original time and space, really is a high investment project. If it wasn’t for foresight, Franz wouldn’t have dared to invest so much.
This huge investment meant that it would be difficult for the Canal Company to recoup its investment over the next ten years. But it didn’t hurt, the Canal Company was still a golden chicken that laid eggs.
With the development of maritime trade, the future money of the canal company could be expected. The investment in the short term was totally worth it, and perhaps a year’s worth of navigation fees in 20 or 30 years’ time could recoup the cost of construction.
In this respect, Napoleon III’s vigor was also admirable. Without prophetic advantage, he dared to follow the big investment.
In the matter of the Suez Canal, Napoleon III showed a strategic vision that was totally impeccable.
The butterfly effect is truly terrifying. Without the aura of winning the Crimean War, it should be considered a good thing for the French that their emperor did not float.
(End of chapter)