Holy Roman Empire

Chapter 279: Chapter 28: Bonds

Finance Minister Karl said with delight, “Your Majesty, the 50 million pounds of bonds we issued in London have all been sold out.”

It was indeed too smooth, or rather, the British had too much surplus capital. Dominating a large part of the international trade market, the British had accumulated too much capital.

Unable to digest it within the domestic market, they naturally had to look overseas. However, the overseas market also had its barriers, and not everyone was qualified to participate; those with insufficient strength could only invest in stocks and bonds.

The construction bonds issued by the Vienna Government were seen as high-quality assets and were naturally highly sought after by the petite bourgeoisie and the middle class.

The 50 million pounds were sold out in less than a week, this speed was a veritable scramble, and it is worth noting that bonds offered an annual interest of only 6.5%, which was not too high.

Of course, this was not the final cost of issuing bonds, as there were additional fees for bond processing, advertising, printing, and also exchange fees once the money was received.

Franz asked with concern, “What about Paris and the domestic market?”

As bonds were being issued, it was natural not to focus solely on the London financial market; Paris, Vienna, and Frankfurt were also financial centers in Europe, and how could Franz possibly ignore them?

Finance Minister Karl answered, “In Paris, we have already sold 650 million francs, and the rest is expected to be sold out within a month; domestically, we have sold 94.8 million Divine Shields, expected to sell out within two months.”

(1 pound ≈ 2 Divine Shields ≈ 25 francs ≈ 7.32 grams of gold)

Franz asked in surprise, “Does Vienna’s financial market have such strong capacity?”

Putting on a full show, since the intent was to cheat capitalists into the pit, the Vienna Government had to have real gold and silver. Capitalists were not fools; they were the type not to take action until they saw clear benefits.

For this reason, the Vienna Government issued 350 million Divine Shields in construction bonds to the outside world, ensuring that the money was earmarked exclusively for domestic infrastructure development.

100 million Divine Shields of the bonds were issued to London, 80 million to Paris, and the remaining 170 million Divine Shields were issued in Frankfurt and Vienna respectively.

According to Franz’s estimates, based on the domestic financial market’s capacity, the economy would crash before the construction bonds were fully absorbed.

With private funds tied up in bonds, the money flowing into the stock market would be reduced, as would the funds entering the real economy.

After the economic crisis erupted, everyone’s losses could be minimized, the number of people jumping from buildings would greatly decrease, preserving vitality as much as possible.

Karl explained, “Your Majesty, Frankfurt has great influence in Central Europe and has attracted investors from the German Federation Empire, Switzerland, Belgium, and the Kingdom of Prussia, with bond sales even surpassing Vienna.”

After pondering for a moment, Franz suddenly understood. Under normal circumstances, Frankfurt could not compete with Vienna, even with the attraction of surrounding capital.

But the financial syndicates of Frankfurt had the strength. They could completely buy up the bonds themselves first and then slowly sell them to others.

By doing so, besides showing goodwill to the government, they also aimed to demonstrate their power to the Vienna Government and acquire a higher political status.

Franz understood the message and knew how to reciprocate the favor. Frankly, if Vienna were not the capital, with its many resources and the gathering of wealthy people, it couldn’t compete with Frankfurt at all.

In modern times, Frankfurt has always been the financial center of the Germany Region. In another timeline, by the 21st century, the largest financial center in Germany is still Frankfurt.

Fortunately, Frankfurt is a Free City with only economic strength but no potential for expansion, else Franz would have had a headache.

After pondering for a moment, Franz said, “Add one more ‘Frankfurt’ to the new shipbuilding plan of the Navy.”

“Yes, Your Majesty!” Navy Minister Filkos replied with delight.

Franz himself made the request, so naturally, it could not have been a sailing warship. At present, the only vessels worth everyone’s attention were ironclad ships.

As a land power, the naval military budget was naturally limited. Even though it held an advantage in this naval technological revolution, the Vienna Government did not plan to expand the navy widely.

The Department of the Navy struggled repeatedly to secure funding, and in the end, they received a budget for just two ironclad ships, which was not for a single year, but for three years of shipbuilding.

One named ‘Empire’, or to be precise, ‘New Holy Roman Empire’, and the other was ‘Vienna’.

No problem there, as both names were heavily politically charged. At this time, adding a ‘Frankfurt’ undoubtedly reflected the city’s importance within the Empire.

This was Franz’s kind recognition of the capitalists in Frankfurt. If other sub-state governments were willing to curry favor with the Central Government, he wouldn’t mind adding a couple more ironclad ships.

To put it bluntly, an ironclad ship cost just a few hundred thousand Divine Shields, and the price would drop with a larger order. The first ‘Frederick’ cost 800,000 Divine Shields; now the cost for the second batch of improved warships, with slight performance enhancements, had actually decreased.

The main costs were initially from research and development, experimenting with new technologies, which increased shipbuilding expenses. Now, by starting construction of two ironclads at once, the unit cost had dropped to 580,000 Divine Shields, and would continue to decrease if three were ordered at the same time.

The states of the New Holy Roman Empire were not numerous. Even if each state were to name a ship, the cost would only increase by two or three million Divine Shields, which was totally manageable.

The Navy truly began to burn money during the Era of Dreadnoughts, as a battleship could cost several million Divine Shields, becoming a true gold-guzzler.

Moreover, military expenditures were not borne by Austria alone. All the states had to share the costs proportionally based on their own fiscal revenues.

Franz spoke gravely, “Now that the raised funds have arrived, let’s urge the winning capitalists to start work promptly. All projects must go forward as contracted.

The Finance Ministry and local governments should cooperate with each other, and the Anti-Corruption Bureau must supervise closely, absolutely no instances of rule-breaking or disciplinary violations will be tolerated.”

Starting the work was essential, for if the economic crisis broke out and the winning capitalists admitted defeat, abandoning their deposits and leaving the scene, it would be awkward. If word got out, wouldn’t people say the Vienna Government tricked everyone’s deposits?

To avoid such a dire outcome, Franz had to make sure everyone started work. Among these numerous projects were some smaller ones that could be finished in a few months.

Once finished, they would be settled, and as long as the money was in hand, nobody could accuse the Vienna Government of cheating to keep the deposits.

Because if the economic crisis erupted and the funding chain was broken, failing to complete the major projects, that would be the responsibility of the winning bidders. Taking on projects beyond one’s capacity was bound to have its price.

“Yes, Your Majesty!”