Chapter 304: Preferred Shares
Allowing the Austrians to establish their own power nts didn''t bother Joseph much. After all, the scientific principles behind it had been widely revealed, and everyone understood the workings of these stations. It was only a matter of time before the English could set up their own. During this window, expanding France''s power nts across the entire European continent seemed promising. It would tether the continent''s electricity standards to France, a definite advantage.
However, producing electric bulbs in Austria posed a different challenge. The scientific principles behind light bulbs were rtively simple, understandable by anyone with a bit of knowledge about electricity. Yet, technically, they were formidable. They fit the bill for being hard to replicate: high craftsmanship and specialized materials.
In bulb manufacturing, one crucial technical requirement was vacuuming the air, directly affecting bulb quality and lifespan. In this aspect, the French had unparalleled technical expertise. Before unveiling light bulbs to the public, "Bonaparte Electric" had already registered numerous patents concerning vacuuming technology. Although these technologies weren''t impossible for others to replicate, having these patents meant Napoleon''s France could prevent the legal sale of any products infringing upon France''s patent rights in most European countries, acting as a formidable barrier for others to enter this domain.
Certainly, there were various methods to create a vacuum, but themonly used, cheaper, and easier implementations had all been patented by "Bonaparte Electric." Any foreign manufacturer attempting to bypass these patents would face substantial costs.
The second issue was the specialized materials. Anyone could buy a bulb, shatter it on the ground, and extract the fment to see it was made of carbon. But the question remained: what specific carbonized material was it? People could only surmise it was from some nt. Identifying the suitable nt among many required significant effort.
Coborating with Austrians in light bulb production, even if they restricted sales to specific regions, risked leaking certain rted technological secrets. Hence, after meticulous consideration, Napoleon instructed Metternich that France had "no particr opinion" regarding economic cooperation with Austria.
This notion of "no particr opinion" meant they could negotiate, and whatever resulted, France wouldn''t intervene. It somewhat echoed a future nation''s "we don''t know what happens next." Essentially: seed, and I im a share; fail, and it''s not my responsibility.
Metternich understood immediately. This was negotiable, but France would likely have additional demands. Yet, negotiations implied a potential oue, and with it, a share of credit and reward.
In recent years, both French diplomats stationed abroad and foreign diplomats in France had be wealthier. While positions like ambassadors and consuls to France still considered factors like loyalty and capability, other roles within embassies and constes were predominantly awarded to the highest bidder. These positions easily facilitated business rtionships with the French, leading to incidental profits.With such lucrative opportunities for subordinates, the heads of embassies and constes weren''t idle. Moreover, fostering economic and trade ties between nations was a key responsibility for ambassadors and consuls.
Thus, a man named Fran?ois, armed with a letter bearing Metternich''s signature, approached "Bonaparte Electric" to discuss purchasing a factory.
While "Fran?ois" might have been an alias, the letter signed by Metternich wasn''t forged. More importantly, the certificate issued by Bon Bank certifying a million francs was unquestionably genuine, clearly outlined on that document.
Subsequently, both sides engaged in candid discussions about coborating for profit. They quickly reached basic agreements on most issues, leaving only one major point unresolved: the fment factory toplement the light bulb factory.
The French insisted that given Austria''s technological and managerial capabilities, managing a fment factory was imusible. Moreover, an Austrian fment factory could potentially expose criticalmercial technological secrets, a risk too significant. Hence, France proposed manufacturing fments in France, shipping them to Austria for assembly, and then letting Austrians sell them in designated areas.
However, Fran?ois argued that this would only escte costs unnecessarily. Besides, France''s technological secrets were safeguarded by patents, rendering concerns about technological leakage baseless.
Representing "Bonaparte Electric," Louis Bonaparte contended that transportation costs for fments were minimal. Moreover, although patent protections were rtively robust across most of continental Europe, they were considerably deficient in some remote regions, notably in Russia, where the enforcement of patentws remained dubious. As for Turkey, the situation was even less certain.
However, these weren''t the most critical points; the paramount concern was the British.
"The British were the first in Europe to have patentws, so nobody knows how to exploit thesews better than they do. Apart from that, in their colonies, they can easily sidestep patentws. For instance, in India, most regions are under the control of the East India Company. Even though these areas nominally belong to Indian rulers, the British can ndestinely establish illegal factories under their names, producing illicit goods not only for sale in India but also smuggling them into Europe. And since it''s the Indians doing it, not the British, theoretically, our retaliation could only be against goods from a particr Indian principality. But let''s face it, we don''t have much trade with India; what kind of retaliation could we even pursue? Therefore, worrying about the risks of technological leakage isn''t baseless. Hence, for the time being, fment production can''t happen in Austria."
In reality, even in France, despite having several bulb factories, they only had one fment factory. Building a dedicated fment factory for a limited bulb production, economically, didn''t make sense.
Thistter argument had more persuasiveness. After all, Austrians were involved in this affair primarily for profit. Moreover, Louis presented a novel counterproposal.
"Additionally, Mr. Fran?ois," Louis stated, "given the high demand and profitability of light bulbs, we naturally want to increase production. This means establishing more bulb factories and more fment factories. We wee anyone willing to be our business partner in making profits. Mr. Fritz, if you''re interested in the fment factory, we suggest you invest in our fment and bulb factories. Would that interest you?"
"Ah, the prospect of merely erecting an electric nt in the Balkans to earn some profit might yield a sum, but oh, the limits it possesses. However, an investment in ''Bonaparte General Electric''? That''s akin to picking up coins off the ground! When Fran?ois heard this suggestion, his eyes lit up as if catching a glimpse of a treasure trove.
Much like Napoleon and Joseph anticipated, this Fran?ois was, in fact, a representative of the upper echelons of Austria. Apanying him were a group of Austrian nobles.
Initially, when France had just settled peace with Austria and other nations, Austria harbored desires for ''a decade of gathering strength, a decade of learning lessons, aiming for retaliation.'' Yet, after these two years, they observed France''s burgeoning development. Presently, there were no signs of imminent downfall. The disparity in power between Austria and France was evidently widening. Formerly, Austria could not defeat France, but with determination, could make France bleed. Now, even if they engaged in war again, even Archduke Karl found it challenging to confront France. It seemed that, at most, they could only stter the French with some blood.
Faced with this perilous scenario, Austria''s upper echelons found themselves divided into two factions. One, led by Archduke Karl, aspired to follow France''s footsteps—industrialize and strengthen the nation. On the other side stood Emperor Friedrich II. The Emperor was cautious about any change. On one hand, he feared that industrial andmercial growth might excessively empower themoners, disrupting the fragile internal bnce of the empire, leading to undesirable consequences. On the other hand, he realized the necessity for change. Continuing in old footsteps would inevitably result in the empire''s copse.
The Emperor understood the need for change but was wary of hastening it. Moving too slow might spell disaster, yet hastening it might yield simr results. It''s said that fearing a fate akin to his aunt and uncle''s, the Emperor was troubled, losing sleep and weight.
It''s rumored that it was Metternich who suggested to the Emperor to align their interests with France''s, making social reforms easier with France''s support. Even if France didn''t actively incite revolution within Austria, as long as they didn''t interfere, Austria''s situation would be far more stable.
Now, the French agreed to assist Austria in constructing power nts and electric factories, aligning with Archduke Karl''s ''strengthen the nation'' doctrine, or at least adhering to the ''enrich the nation'' principle. Additionally, Louis Bonaparte''s proposal to invite Austrians to join ''Bonaparte General Electric'' resonated with Emperor Friedrich''s desire to bind Austria''s upper echelons, particrly the Austrian royal family, with France.
Although France now existed as a republic, under the leadership of Napoleon, his authority surpassed that of most monarchs of sovereign nations. One could argue it matched or even exceeded the authority of the Sun King, the ''I am the state'' monarch of yesteryears. Simultaneously, the Bonaparte family''s influence in France was staggering, rivalling the Bourbon family''s sway. If only Napoleon were not merely the first consul but a hereditary king, the Emperor might have considered proposing a union with Napoleon''s family. After all, marital alliances were a hallmark of Austrian tradition, were they not?
For Fran?ois, this approach appeared to gratify the desires of both factions within the nation, a picture of perfection. He hurriedly inquired about the news regarding investing in ''Bonaparte General Electric.''
''Ah, Monsieur Fran?ois, perhaps you are unaware that ''Bonaparte General Electric'' is an enterprise with numerous investors. The Bonaparte family''s stake in the entire enterprise is less than fifty percent. Ergo, we do not possessplete controlling rights. This signifies that any extensive expansion must obtain approval from the shareholders'' assembly. Nevertheless, as you know, we cannot allow significant alterations in the distribution of thepany''s shares. Therefore, even if we convene a shareholders'' assembly, considering the present circumstances, the share we can offer will not be substantial.''
This statement left Fran?ois somewhat disappointed. However, even a small share would be wee. He hastily inquired, ''So, how much stake could we acquire at most?''
Louis replied, ''Monsieur Fran?ois, you''re aware that ''Bonaparte General Electric'' is sure to generate considerable profits. This ismon knowledge. This renders ourpany''s financing exceptionally easy. We can effortlessly borrow funds from any bank at an interest rate significantly below the market rate. In this situation, I believe the shareholders'' assembly won''t consent to yield a significant portion of ordinary shares. Personally, I estimate it won''t exceed five percent.''
The estimation of ''not exceeding five percent'' disappointed Fran?ois. He understood that investing in ''Bonaparte General Electric'' would not only hold political significance but would assuredly yield substantial economic gains. However, a share not surpassing five percent felt insufficient.
''Why restrict the funds for expanding the business, Mr. Bonaparte? More capital could facilitate quicker business expansion, earning more profits,'' Fran?ois queried, furrowing his brow slightly.
''Because changes in shareholding would alter the internal power dynamics of thepany, thereby affecting thepany''s future. Thepany''s present development is remarkably smooth. Hence, the majority of shareholders are naturally averse to significant changes in thepany''s power structure. Hence, shareholders prefer acquiring expansion funds through loans rather than introducing more partners. I believe this is quite natural and easily understandable, wouldn''t you agree?'' Louis exined. ''However, perhaps we could coborate in a different manner.''
''What do you mean by a different way?'' Fran?ois hastily asked.
''Ah, Monsieur Fran?ois, have you heard of preferred stock?'' Louis inquired.
Fran?ois shook his head in confusion.
Preferred stock refers to shares with ''preferred rights.'' Shareholders of preferred stock enjoy priority inpany assets and profit distribution, with lower risks. However, preferred stockholders usuallyck voting rights on affairs not concerning their interests. They alsock voting and being voted rights, usually without involvement in thepany''s operations. Preferred stockholders cannot withdraw shares but can only be redeemed by thepany through the preferred stock''s redemption use.
This type of ''preferred stock'' was invented by the English in the 16th century. However, due to market irregrities and inadequate business development at the time, the advantages of preferred stock weren''t fully realized. Instead, it caused several management issues, leading to its limited use and near-oblivion. In history, it wasn''t until the 1920s when a Britishpany, facing financial difficulties in developing canals, unable to secure funds from banks due to high interest rates, and failing to attract new investors withmon stock, reintroduced ''preferred stock'' from centuries ago, and achieved remarkable sess. Hence, this ancient ''financial innovation'' began to find widespread use.
However, when Louis mentioned ''preferred stock'' to Fran?ois, centuries had passed since the initial unsessful attempt at ''preferred stock.'' Unless someone specifically studied this area, it would be improbable to understand the meaning of the term. Therefore, Fran?ois''ck of knowledge about this term was perfectly normal.
Louis proceeded to exin the concept of ''preferred stock'' in general terms to Fran?ois. Then he remarked, ''I believe your primary objective in investing
in ourpany is to earn profits. In terms of profit-making, there isn''t much difference between ''preferred stock'' and ordinary shares. In fact, in dividend distribution, there are certain advantages. I assume you''re rather content with ourpany''s current operations and future prospects. You probably don''t intend to alter ourpany''s business model and development strategies. Therefore, this form of ''preferred stock'' should be a suitable solution for both of our needs.''
School''s keeping me upied today, so this is all for now."