<h4>Chapter 273: Capital Has No Borders</h4>
In July 1856, the Austrian government officially began implementing the Trapping n, increasing infrastructure investments and openly inviting bids from external parties.
At the same time, the construction of the railwaywork began, with railway lines nned for almost every city and then put out to bid.
This time, not only domestic railwaypanies but also overseas railwaypanies were allowed to participate in the bidding without any investment restrictions.
Following the usual practice, each railway line was granted exclusively to a single railwaypany, thus preventing redundant construction, avoiding waste of resources, and satisfying everyones desire for monopoly operation.
It all seems very promising, on the condition that the railwaypanies start and finish their work on time. Failure to do so means they must get ready to face the consequences!
ording to the new n, the total railway mileage in the New Holy Roman Empire will reach an astounding 97,000 kilometers when the construction of the railwaywork ispleted.
At present, the country''s railwaywork is only 15,800 kilometers long, with 32,100 kilometers under construction, almost doubling the existingwork.
Recognizing that some of the newly nned railway routes are too remote to be profitable, the Austrian government is promising permanent tax exemptions for these isted sections to attract investors.
While this news could fool ordinary investors, smart people knew it was just a pie in the sky. But in the age of market frenzy, who cared?
Smart people realize that whether the project ultimately seeds or fails, as long as theyre not thest ones left holding the bag, they can still make money from it.
Even though none of the Austrian railwaypanies has ever turned a profit, railway stocks have been on a steady rise and are highly valued in the capital markets.
Currently, operational railways are profitable, creating the illusion for many that investing in railwaypanies is a foolproof venture, especially considering the potential for monopolistic operations in Austrian railways.
The Austrian government also boasted unscrupulously in the bidding for the projects, citing the current economic growth in the New Holy Roman Empire, the demand for rail transportation, and the high poption growth to paint a rosy picture.
After being packaged in this way, many spectors fell for it. In theory, all these railway lines should be profitable, even the most remote ones like the one in Bosnia and Herzegovina.
These statistics are not deceptive; indeed, the profitability of railways is only a matter of time. In this era of no cars or airnes, no mode ofnd transportation canpete with railways.
The territory of the New Holy Roman Empire is not vast, with no extremely remote areas or uninhabited borders. There is potential for discovery throughout thend.
Franz estimates that if the Austrian government does not restrict railway transport prices, more than 70% of the lines could be profitable after ten years. Twenty yearster, over 90% of the lines could be profitable. By the thirtieth year, all lines could be profitable.
These profits are calcted without regard to construction costs, based solely on operating revenues in excess of operating costs. The return on investment may take a long time.
Before the cost of construction was recouped, repairs would be needed, no matter how well they were maintained. After decades, most of the rails and sleepers would need to be reced.
Since it was pie in the sky, Franz didnt mind making it even more tempting, like the Austrian governments promise to subsidize heavily loss-making lines to ensure normal railway operations.
This promise was meaningless in practice. For lines where operating costs cannot be recovered, railwaypanies are likely to abandon them!
In the end, the Austrian government, whether it provides subsidies or not, has to ensure the normal operation of the railways. It is the governments responsibility and duty to ensure the proper functioning of essential transport infrastructure, and this expenditure is unavoidable.
Besides, it wouldnt even take that long. With economic crises, the capital chains of the railwaypanies would break, forcing them to ept state equity investments, so that after several crises, the Austrian government would eventually be thergest shareholder.
Why break the rules when its possible to hold majority control within the regtory framework?
Gaining control through economic means was far superior to overturning the table and crudely dering the nationalization of railways.
In addition, the management system of a joint-stock cooperative is much more cost-effective than the direct appointment of bureaucrats by the government.
London
Barys Bank has now formed the embryonic structure of the Barys Bank Consortium. Aside from not publicly announcing the formation of the consortium, it essentially relies on capitalists connected to the bank and already has the strength of a consortium.
The Banks resources alone exceed 100 million pounds, with the potential to leverage over 300 million pounds through the financial markets. Its influence extends to industries in excess of 500 million pounds, making it one of the leading consortia in the UK.
President Genos presented a stack of documents to everyone and said, Ladies and gentlemen, not long ago the Austrian government made andmark announcement of substantial investment in infrastructure.
This includes railways, ports, municipal water projects, municipal engineering renovations, and even some water conservancy projects, all of which are eligible for bidding.
The expected total investment is a staggering 480 million guilders, or 240 million pounds, spurring rted industries expected to exceed 500 million pounds. This is a feast of capital, but it alsoes with some very challenging obstacles.
Our topic today is how to get the biggest piece of the pie while minimizing risk.
I distributed the information to everyone. In general, it is simr to what we already knew, but now in more detail, with specific projects.
The prominent capitalist Simon asked, Mr. Genos, as far as I know, the Austrian governments total fiscal revenuest year was only 121 million guilders, and it wont exceed 128 million guilders this year. Can theye up with such arge sum for investment?
Genos replied calmly, Austrias economy has developed rapidly in recent years. The Austrian government took advantage of the war in the Near East to get out of financial difficulties.
After the annexation of several German states, the newly formed New Holy Roman Empire now has a total poption of over 50 million, and its economic output surpasses that of the French, just below ours.
Currently, their governments total debt is less than 80 million guilders, which is a rtively low debt ratio. If they seek external financing, I believe none of us would refuse, right?
Refuse? Why refuse? The British, who have a serious capital surplus, are looking for investment opportunities everywhere these days. Faced with a premium client, how could they refuse for no reason?
If loans could influence the New Holy Roman Empires financial market, then the potential benefits would be even greater.
Simon replied without hesitation, Of course, the Austrian government is now a premium client. As long as they are willing to join the pound-gold system, there is no problem providing them with loans.
However, they wont join. The Austrians would still want to maintain the guilder-gold system and wouldnt easilypromise with the British government.
In that case, should we still do this deal?
Capitalist Bernard retorted, Why not do a profitable deal? Controlling their financial market through loans, and subsequently influencing the decisions of the Austrian government through financial means to make them ept the pound-gold system, is a long-term endeavor.
Our approach is in line with the governments strategy, it just needs a little more time. The New Holy Roman Empire is also a great power. Getting them topromise will not happen overnight. It is more prudent to take it slow.
Except for the first sentence, which was true, the rest was nonsense. Controlling the financial market through loans could work in theory.
But the Austrian capitalists were no fools either. For their own interests, they would also resist the capital invasion, with the Austrian government clearly on their side.
Its unheard of for a single loan to control the finances of arge nation.
Unless they can create financial difficulties for the Austrian government, making it heavily dependent on foreign loans, only then would they inevitably be influenced.
But in that case, the premium customer bes a sub-par customer, and there is no need for the deal to continue.
Genos said solemnly, Let the British government proceed with their n; we can support them, but only if it doesnt harm our interests.
Lets not forget that the bait thrown by the Austrian government is poisoned. They require investors to advance construction funds and also pay a deposit.
If unforeseen circumstances ur during the project that lead to a break in the capital chain, not only will the upfront investment go down the drain, but the deposit will also be confiscated, with all the risks borne by the investors.
This project, which requires a significant amount of funding, seems almost tailor-made for us, and thats highly unusual.
Analyzing the current economic situation, it seems that this round of economic development is reaching its limits. The fruits are ripe and the days of harvest are not far away.
As the economic crisis approached, the Austrian government came up with this grand n. I strongly suspect that they are trying to trick investors into paying the deposits.
Bernard said without hesitation, Even if theyre ripping us off with the deposit, its based on the premise that the project will be abandoned. If it is sessfullypleted, they will have to pay. I dont think the Austrian government will default.
Compared to the deposit, I think a more significant risk is that they are trying to involve others. Once everyone invests in these infrastructures that cant show immediate returns, even if there is an economic crisis, it will be difficult to get money out of Austria.
Investors have no choice but to continue to invest in order not to lose their previous investments. As long as these projects continue as normal, the impact of the economic crisis on Austria will be minimized.
However, I highly doubt that Austria will experience an economic crisis.
They have never really experienced what a real economic crisis is like. Is it necessary for them to make such a fuss?
Simon sneered, Bernard, your thinking seems to be stuck a couple of years in the past! Since 1850 the Austrian market has been the most favored region for British capital.
As of now, the total investment of the British capital in the New Holy Roman Empire should exceed 180 million pounds, and the investment of the French capital there would not be less than 50 million pounds.
Even Barys Bank has invested more than 15 million pounds in the country. If we all withdraw our funds together, Austria''s economic crisis will erupt immediately.
They had reason to be arrogant. In this era, it is the pinnacle of the British Empires capital dominance. Even the French, who are closest in power, cannotpare with them.
Genos nced at the crowd and said, Regardless of any schemes the Austrians might have, as long as it doesnt interfere with our money-making, we can continue our cooperation.
Judging their ns based on the information we have now is unreliable. Regardless of the conspiracies of the Austrian government, the projects they have proposed this time do contain many high-quality assets.
All we have to do is sift out those high-quality assets, find a way to acquire them, and let others deal with the remaining mediocre assets.
If possible, everyone can also try to see if we can throw some seemingly attractive but actually inferior projects at ourpetitors.
In my personal opinion, the Urban Safe Drinking Water Pipeline Project is very promising. We can take it over, and once this project ispleted, you can imagine the profits of monopolizing the water supply for an entire city.
Simon said very cooperatively, Genos, youre as sharp as ever, identifying the most effective and valuable projects.
Our waterpanies have always been the most stable source of ie, almost unaffected by market fluctuations.
However, I think as long as the Austrians offer a high enough price, we can take on some municipal engineering projects. In addition, we can help them issue construction bonds to meet the financing needs of the project.
Clearly, his interest is not in municipal construction projects, but in issuing bonds which was a profitable businesse rain or shine.
These bonds are not for their own use, but to be sold on the London financial market on behalf of the Austrian government. Whether they are eventually redeemed doesnt matter to them. Theyve already earned fees for the process and the exchange.
Bernard added, Our railwaypanies cant sit idly by either. Domestic business growth is almost stagnant and the potential for development is limited.
Regardless, we should seize this opportunity to acquire some rail lines, drive up the stock price, and then find another buyer to take over.
Of course, everyone in this situation is aware of the crisis. But that doesnt stop them from making money. As long as the profits are substantial, who cares what the Austrian government is up to?
The different opinions among them also represent their diverse interests. Within the same consortium, everyones development direction cannot be identical.
Everyone has their own goals, and intimate cooperation can only be achieved when interests do not sh.
If this could not be achieved, then those who should split would still split. To put it bluntly, a group was just abination of interest groups. If the conflicts of interest were too great, falling out would be natural.