Chapter 247: Foreign Capital
March 27, 1879, at eight o’clock in the morning, Barcelona Stock Exchange.
This was originally just an ordinary day, but the Barcelona Stock Exchange was already packed with people.
The reason these stockholders came to the Stock Exchange so early in the morning was naturally because the Spanish Government promulgated a brand new third Five-Year Development Plan yesterday.
Although the Development Plan promulgated by the government was not detailed, it also mentioned construction in industry and railway sectors. The stockholders had anticipated this, and the reason they came to the Stock Exchange so early was precisely to purchase stocks of Spanish Railway Company.
Unlike other countries in Europe, Spain had not suffered from too severe an economic crisis, which also gave Spanish stockholders great confidence in the stock market.
With the emphasis on railway construction in Spain’s two Five-Year Development Plans, several large railway companies were born in Spain, the most famous of which were Spanish National Railway Company and Spanish Royal Railway Company.
These two railway companies with official backgrounds became the main force in Spanish Railway Construction, and under them there were also a large number of privately backed railway companies, which also contributed their efforts to the development of railways in Spain.
Among these queuing crowds, many were those who had tasted the sweetness in the previous Five-Year Development Plan. After the previous Five-Year Development Plan was promulgated, the stock price of Spanish Railway Company rose with the tide, and those who purchased stocks made a fortune.
The background of the previous Five-Year Development Plan was the economic crisis ravaging Europe, which caused many people not to purchase stocks due to concerns about the economic crisis.
Now that the economic crisis has basically ended, with the Spanish Government promulgating another Five-Year Development Plan, the stockholders could no longer sit still. They rushed to purchase stocks of railway companies, and at worst, stocks of related industries, to get a piece of the pie in the wave of the stock market.
Most of those queuing were ordinary people, but there were also many nobles and capitalists dressed in luxurious clothes.
Unfortunately, because the crowd had completely blocked the door of the Stock Exchange, these nobles and capitalists had no choice but to queue, as they couldn’t get in at all.
“Damn it, why are there so many people today?” In the huge crowded crowd, a middle-aged man dressed in luxurious clothes stuck his head out of the carriage and said cursingly.
He was a noble and could come by carriage. But the problem was that the road at the entrance of the Stock Exchange was completely blocked, and the carriage was trapped instead.
The noble lord was unwilling to stay with the commoners and could only curse a few words before shrinking back into the carriage.
“There’s no way around it. The government promulgated the Five-Year Development Plan yesterday, and these people are all cats that smell the fishy smell, all wanting to eat some fish meat. I just don’t know how much real fish there is here?” Another man dressed in luxurious clothes in the carriage said with a smile. Although the crowd was crowded, he was not anxious at all and seemed to be in a very good mood.
“Hmph! Only we nobles can make money in the stock market. These damn commoners can’t withstand any waves; they will eventually drown in the ocean of the stock market.” The cursing noble also nodded and stopped complaining.
There were not a few carriages trapped in the crowd, and nobles or capitalists dressed in luxurious clothes were not uncommon.
In fact, it was indeed so. Those who could be trapped on the road were mostly nobles with little status and power, or even just a poor baron.
These people had no privileges and had to queue obediently with the commoners no matter how dissatisfied they were.
Those real powerful people, or rather those with some influence, had already entered before the Stock Exchange opened and were respectfully invited to the VIP trading room on the second floor.
Because of the overly crowded crowd, Barcelona Municipal Government also deployed a large number of police to maintain order. As Spain’s second largest city, Barcelona’s public security forces were still very sufficient.
With these police constantly patrolling back and forth in the crowd, it could also prevent some violent incidents and crimes.
After all, the more people there were, the more chaotic the order. In this era without surveillance cameras, theft and robbery in such crowded crowds were not strange at all.
Some people might even take the opportunity to grope, and as long as they weren’t caught, there would basically be no problem.
With the deployment of a large number of police, it did effectively avoid the occurrence of the above incidents. Carlo attached great importance to public security order in Spain, which also led to heavy penalties imposed by the public security department on illegal and criminal acts.
Even ordinary disruption of public order would result in fines of varying amounts, and sometimes even mandatory imprisonment for a period of time.
Such laws might be a bit harsh, but they did effectively reduce Spain’s crime rate. In Madrid and Barcelona, the crime rate had been reduced to a range completely acceptable to the public.
After about a few minutes, the door of the Stock Exchange officially opened.
People did not surge into the Stock Exchange because there were still many police maintaining order at the entrance. The scale of the Stock Exchange was not large, which meant only a portion of people could enter each time, and they had to queue up in sequence.
Those who wanted to cut in line or force their way in would basically have no chance of entering the Stock Exchange once discovered by the police.
Seeing the police lined up at the entrance, people who were originally very anxious became sensible and no longer anxious.
In this situation, people consciously formed a long dragon-like queue and entered the Stock Exchange in sequence.
Inside the Stock Exchange, there were huge blackboards placed. These blackboards displayed some data of the Stock Exchange, and stockholders needed to check the stock market data on the blackboards clearly before finding traders to register transactions.
Unlike posterity, at this time all transactions in the Stock Exchange were done manually. This also made securities trading very troublesome and took more time than in posterity.
But in an era without electronic technology, manual operation was indeed the only solution. Fortunately, the Barcelona Stock Exchange had anticipated today’s grand occasion and deployed additional staff in advance, which effectively sped up the speed of people purchasing stocks.
Inside the Stock Exchange, managers were registering stocks issued by enterprises one by one. The most popular today were railway companies, followed by some factories and enterprises related to railways.
Especially railway companies, their popularity was quite exaggerated. It could even be said that however many stocks railway companies issued, the stockholders could purchase that many.
A small railway company under the Spanish Royal Family was also listed today, issuing a total of 2 million shares, accounting for 30% of the shares.
The issue price per share was 5 pesetas, planning to raise 10 million pesetas externally.
The manager registered this message while loudly announcing it. In addition to the blackboard publishing messages, the managers’ loud shouts were also the main way to convey messages.
After all, there were no loudspeakers, and whether stockholders could hear key information depended on the volume of the managers’ voices.
This listed railway company was indeed a small enterprise, with Carlo investing less than 5 million pesetas in it.
It had to be admitted that industry in this era did make money. After contracting a few small railway engineering projects, this railway company with an investment of no more than 5 million pesetas could successfully list and raise more than 10 million pesetas.
And the stocks issued by the railway company only accounted for 30% of the shares, which meant that as long as all stocks could be sold, the total market value of this railway company, originally invested with only 5 million pesetas, would exceed 33 million pesetas, a full 6 times increase.
And this was just the beginning. As long as the railway company’s subsequent operations went smoothly and it contracted more projects, the stocks issued by the company would become more and more valuable.
With the rise of stock prices, the market value of the railway company could even surpass the threshold of 50 million pesetas, instantly becoming a large enterprise in Spain.
Completing this step only required contracting a few railway projects and listing on the Stock Exchange, which was very simple for those capitalists and nobles. This was also why the Spanish Stock Exchange strengthened its audit system.
There was no way around it; if the audit was not strengthened, the two major Stock Exchanges in Spain might have thousands or even tens of thousands of enterprises listing every day.
Did Spain need so many enterprises? Of course not.
Only those high-quality enterprises could list on Spain’s Stock Exchange; those shell companies would be eliminated by the strict audit system, which was also an important means to avoid Spain suffering from economic crisis.
These shell companies had no resistance at all when facing economic crises. The bankruptcy of a large number of companies would seriously affect the Stock Exchange, and if the Stock Exchange collapsed directly, it would affect the economic operation of the entire country.
Spaniards obviously knew that enterprises listed on the Stock Exchange had been audited, so every message announcement was accompanied by a rush from a large number of stockholders, and the stocks of these newly listed enterprises were also continuously rising.
Although the royal family’s listed railway company issued 2 million shares, in reality, only just over 1 million shares were circulating in the Stock Exchange.
Even before the stocks circulated, those with real influence, namely Spain’s two major official banks and some securities companies established by powerful people, had already subscribed in advance for a portion.
They certainly understood that this was the Royal Family’s industry and naturally knew that the Royal Family’s industries were not shell companies.
Investing in railway companies was a sure profit, because Spain would not abandon the policy of developing railways in the short term.
Although the third Five-Year Development Plan was not so aggressive in terms of railway mileage requirements, the engineering for railway maintenance and transformation was also not small, and Spanish railway companies would still be busy in the next five years.
Pre-subscribing stocks was also a means of stock price operation. If the circulation volume of stocks was too large, the market would become saturated.
Once the market was saturated, even if the stocks and enterprises themselves were very high-quality, the stock prices would collapse.
After all, if the market was saturated, the stocks in the hands of stockholders would not sell. If stocks could not be sold, stock prices would naturally fall.
As a newly listed railway company, it was still very necessary to appropriately maintain the stock price. Only by ensuring that the stock market would not saturate could the stock price maintain positive growth.
The two major official banks and some nobles’ securities companies had pre-subscribed the railway company’s stocks, which also meant that this railway company’s stock price was related to everyone’s profits.
This amount of money was of course not much for Carlo, but it was still a lot for the nobles. Those participating in this transaction also included the new aristocrats, who, because they did not have much land, relied entirely on industry and finance for their income.
This also made Carlo attach great importance to this listing. If this railway company’s stocks could rise with the tide, it would also mean that these new aristocrats could get a piece of meat, making their family fortunes richer.
New aristocrats and old aristocrats were both nobles of Spain, but because the new aristocrats were personally granted by Carlo, Carlo was obviously closer to the new aristocrats.
Of course, this might also be because the new aristocrats posed no threat to Carlo and were instead a great help to him.
The old aristocrats had too strong a foundation in Spain, and sometimes they would not obey Carlo’s orders. Compared to the disobedient old aristocrats, Carlo trusted the obedient new aristocrats more, even if they did not have much power.
The prerequisite for being a good ruler was to ensure that those who followed him could get some benefits. Even if he ate meat and others drank soup, he had to let them all have soup to drink.
This railway company’s listing was actually a gift from Carlo to a portion of the new aristocrats. These new aristocrats received the news in advance, and as long as they purchased this railway company’s stocks, they would basically not lose money.
Of course, even if they couldn’t buy them, because some securities companies had already pre-subscribed the stocks, the new aristocrats could still get some stocks in the end.
It might not be much for the old aristocrats, but for the new aristocrats, it would be a considerable income, allowing them to live more affluently and pursue more luxurious consumption methods.
After all, they were nobles, and Carlo did not want them to live a life no different from commoners. The Spanish people had more ways to become new aristocrats, and the new aristocrats were also a major means for Carlo to attract Spaniards to pledge loyalty to him.
If the life of the new aristocrats was not very good, then Spaniards would naturally not have much interest in becoming new aristocrats.
This also meant one thing: the life of the new aristocrats must be good, at least far ahead of the commoners.
After all, new aristocrats were also nobles. If nobles couldn’t even afford some luxury goods, were they still nobles?
This listing was also very important for the railway company itself. Listing could raise at least 10 million pesetas in funds, which would also ensure that the railway company would not lack project funds for a long time in the future.
As long as it could ensure that truly capable railway companies obtained financing, Spain’s railway development would not fall behind.
Even if some railway companies went bankrupt due to poor management, the Royal Family and the Spanish Government could take over and cover the bottom line, ensuring no impact on Spain’s railway plan.
Railway companies might still worry about the profits brought by constructing railways, but for Carlo and the Spanish Government, the direct profits from railways were not that important.
Even if building railways was loss-making, Carlo was willing to do it. Because railways would drive the development of other industries, and the increased tax revenue from these industries also belonged to the potential benefits of railways.
Still that sentence: to get rich, build roads first. Railways were of course a kind of road, and quite important in this era.
Railway construction could also facilitate the Spanish Army to reach various regions, which was also very important for strengthening national stability.
Of course, there were also political benefits. If one region had more developed railways while another region had little railway coverage, wouldn’t that anger the public who couldn’t enjoy railway convenience?
Although it was impossible to be absolutely fair, at least some important cities should be ensured to have railway access, which was also why Spain was still continuously building railways.
If only considering the railway needs of Spain’s major cities, the existing railway scale was actually completely sufficient for the Spanish people.
The capitals of various regions had all been connected by railways, and some relatively important cities were also within the railway coverage. Such railway construction was not only top-notch but also absolutely quite complete.
It was precisely because the potential benefits brought by railway construction were too great that even if constructing and operating railways was loss-making, many countries were willing to do it.
Even if operating a section of railway was continuously loss-making, there would be countries willing to continuously appropriate funds to keep the railway running.
Because Carlo attached great importance to the development of the stock market, around four o’clock in the afternoon, the Stock Exchange submitted the stock market development situation to the Royal Palace.
Butler Loren, holding the stock market data from the two major Stock Exchanges with a smile on his face, found Carlo and reported the good news to him: “Your Majesty, the two railway companies listed in Madrid and Barcelona currently have stock prices that have gained at least 30% growth.
Among them, the railway company on the Madrid Stock Exchange saw a stock price increase of 7%, reaching 67 pesetas per share at closing.
The railway company listed on the Barcelona Stock Exchange saw an even higher stock price increase of 2%, with the stock price per share reaching 06 pesetas before closing.”
Carlo was stunned, somewhat surprised by the stock price increase.
It was inevitable for these newly issued stocks to rise in price, but the increase should not have been this exaggerated.
After all, the issuance volume of the stocks was large; just the small railway company in Barcelona issued 2 million shares worth a total of 10 million pesetas.
Although only about half of the stocks were actually circulating, it was obviously impossible to be completely bought up in such a short time.
Before all issued stocks were sold, the stock price should not have grown this exaggeratedly in theory. This also meant that the stocks issued by the railway company might have already been sold out. Did the stockholders in Barcelona really have such strong purchasing power? Or was there participation from other capital?
Spaniards could see the development potential of Spanish Railway Company, and capital certainly could too.
Investing in railway companies was a highly profitable business, so it was not strange to attract some foreign capital.
Judging from the proportion of stock price increases in the two railway companies, there was a high probability of intervention by foreign capital.
“According to the news from the Barcelona Stock Exchange, unidentified French people purchased a large amount of stocks.” Butler Loren said with a smile: “The participation of the French led to our stocks being sold out in a short time, and some stockholders even purchased stocks at a premium, which also caused our stock prices to experience significant growth in a short time.”
Hearing about the participation of French people, Carlo’s doubts completely dissipated.
French capital was still very strong, and with the economic cooperation between Spain and France, it was not strange to attract some French capital to flow into Spain.
Moreover, with Spain’s third Five-Year Development Plan being hotly discussed, it was not strange for French capital to pay attention to Spanish railway companies.
Of course, this was a good thing for Carlo. The higher the stock price of the railway company, the more benefits Carlo could obtain. The new aristocrats and other enterprises who followed to eat meat and drink soup could naturally get more benefits.
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