Chapter 240 Big Loan
Prussia had obviously become more friendly to Ernst recently. Before he even returned to Hohenzollern Castle, Ernst learned that the Prussian royal family had invited him to visit Berlin.
Ernst had long anticipated Prussia's plan, so he turned around in Bavaria and headed towards Berlin.
Kingdom of Prussia.
"Ernst, how have you been recently!" William I said with a smile.
"Your Majesty, I am doing well. I have been busy with business recently, so I am quite busy." Ernst said.
"Just call me uncle. Your father is the king now, and you are the crown prince. We are both members of the Hohenzollern family. There is no need to be so distant." William I said.
"I'm afraid this is not a good idea!"
"What's wrong with that? We are all family. In that case, you can call me uncle in private from now on, and call me Your Majesty in formal occasions."
Then William II would be my nephew! Ernst was secretly happy, but he still said calmly: "Yes, I will listen to you, Uncle William."
"That's right!"
"I called you here today because I have a request for you. I'm not afraid of you laughing at me. Although I have fought many wars in my life as a king, Prussia's finances have become unsustainable and it has owed a lot of debts. However, for the cause of German unification, Prussia cannot stop." William I sighed.
"Of course I understand this. Prussia has indeed made great contributions to the unification of Germany over the years," Ernst complimented.
"Well, now I can tell you something. The French can no longer hold back, but Prussia has already owed a lot of debts from the last war, and it is really hard to raise the military funds this time!"
The real purpose is revealed.
"Well, Uncle William, although Hexingen has developed well in recent years, the investment this year is also relatively large, so the funds may not be too abundant. I also understand the difficulties of the government. So, I will subscribe to 500,000 Taylors of war bonds to show my support for the kingdom."
500,000 thalers is not a small sum, but it is not enough for a big capitalist like Ernst.
Although Prussia is also preparing for war, France has not declared war on Prussia, and the North German federal government is unlikely to agree to allocate funds to the kingdom.
Historically, it was not until July 21, 1870 that the Prussian-dominated North German Confederation Parliament approved a war credit line of 120 million thalers.
So now, the Kingdom of Prussia can only rely on itself to think of more ways and raise some funds. Ernst estimated that Prussia could only raise a few million at most.
Even in the early days of the war, the Berlin stock market was in a state of panic, and even high-quality stocks such as the Cologne-Minden Railway fell by 30%. The Prussian government urgently sold the first phase of 100 million Thaler war bonds, trying to get rid of the underwriting channels monopolized by bankers and sell them directly to the market, with the conditions of 5% interest and 18% discount, while the bankers suggested a 15% discount, which was rejected by the government. Oppenheimer emphasized in a letter to Bleischröder that "this is a ridiculous condition under the current market conditions."
As a result, the sales suffered a huge failure, and the bonds were sold for only 60 million Thalers. In fact, the root of the problem was that if the government sold directly, the bankers could not earn the underwriting fee, so they adopted a collective boycott. This once again shows the power of "channel is king" in the financial market. At the end of October 1870, the Prussian government learned from the last lesson and appointed Hansmann to form an underwriting group to sell the second loan of 20 million Thalers in London and Berlin. With the victory of the Prussian army, the price of these loan contracts rose sharply, and the government was soon able to cancel part of the mortgaged credit line. Finally, the interest rate of the war bonds was finalized at 5% with a term of 5 years.
On November 30, the bankers continued their efforts and successfully issued a 92% discount loan of 34 million Thalers in the UK, with the option to issue a further 17 million Thalers. At the same time, although the British began to sympathize with the unfortunate France, French bonds were almost unsaleable in the UK. On the invisible front of finance, France failed again.
However, until the end of the Franco-Prussian War, Prussia's total war expenditure was only 22 million thalers.
Ernst was not greedy either. He had already started saving money to prepare for the Franco-Prussian War. Currently, the entire Hechingen Consortium had available funds of about 30 million thalers. Ernst was prepared to bet at least 20 million on Prussia's victory. If the bet won, the French would pay for it in the end.
"500,000? This..." William I was a little melancholy. 500,000 was not a small number, but it was a drop in the bucket for a war.
"Ernst, the Hechingen Bank alone has developed very well over the years. I heard that you have also started business in the Far East... Don't worry, we Prussians are sure to win this war. Invest boldly. At the same time, we will set the interest rate slightly higher than the market price. Not only that, the East African Kingdom is just established and I'm afraid it lacks many things. We Prussians can cooperate on these in the future..."
William I was just saying casually that he was sure of victory. In reality, Prussia was still nervous before fighting with France.
But William I knew that the wealth of the Hechingen royal family was absolutely astronomical. Now the Hechingen consortium has taken shape, and its business covers the whole of Europe, and it also has business all over the world. So it is right to ask Ernst for money, so William I made a bold promise.
At the same time, since we are all from the Hohenzollern family, we can play the emotional card. If we can borrow more from the Hechingen royal family, we will be able to be a little more assertive when negotiating with other big capitalists later.
Ernst pretended to be embarrassed and said: "In fact, Hexingen has many industries, but also many workers. The wages of the workers alone are not a small amount..."
"Tell me the truth about how much you can give. Prussia will give you 7% of the profits, and the army will give priority to purchasing the products of Hechingen Company."
"Uncle William, actually this is not a matter of money, but you helped me a lot when I started my business, so it would be too much for me to be so stingy. I won't hide it from you, the total funds that the company can mobilize this year is only about 15 million thalers, which also includes workers' wages, but for the cause of German unification, I will first order a share of 15 million thalers! From now on, if Prussia cannot win, the Hechingen Company will also go bankrupt due to a broken capital chain, so please make sure to win!" Ernst said somewhat "heavily".
15 million! William I was a little confused when he heard this number. According to his expectation, or the goal this time, it was only 3 to 4 million Taylors. After all, he had not yet decided whether to fight or not!
France would have to declare war on Prussia to borrow money on a large scale. In other words, Prussia's finances were too tight now. After all, it did not ask Austria for war reparations in the last Austro-Prussian War, and it owed too much debt, so it wanted to try to borrow some money to deal with the emergency.
Ernst invested 15 million right from the start, which was enough to fund a major battle. It would also greatly alleviate the current financial pressure on Prussia. This also meant that the army could prepare in advance!
William I was very moved. As expected, his family was reliable. Ernst really sold everything he had to support Prussia this time! After all, few people were optimistic about Prussia's victory. If the war failed, the Hechingen royal family might really go bankrupt.
In fact, William I was completely overthinking it. Ernst was such a cautious man that he would never gamble his entire fortune.
Not only that, Ernst planned to continue to buy shares worth 10 million thalers after Prussia issued its first war bond. At the same time, he would use the Hechingen Bank to help Prussia issue bonds and earn some extra commissions. Combined with the privileges promised by William I before, he would make a lot of money by then.
Both parties, thinking they had made a huge profit, quickly signed the agreement. Professionals from the Prussian government and the Hechingen Consortium carefully checked all the terms dozens of times and only signed their names after confirming that they were correct.
(End of this chapter)
Continue read on readnovelmtl.com
