Raising Funds

"Sir Ernst, if you have no objections, we can sign this agreement."

Ernst carefully reviewed the agreement one last time and signed his name.

The visitors were from the Prussian royal family. Recently, Prussia had been embroiled in fierce debate over the privatization of the Cologne-Minden Railway.

This indicated that the Kingdom of Prussia was scrambling for war funds by any means necessary, and Ernst, also a significant player, had caught Prussia's eye.

After all, the Hohenzollern Conglomerate was currently a star enterprise throughout Germany, with a sizable bank, a world-class daily necessities company, and Hohenzollern tobacco under its umbrella...

Ernst's immense wealth, accumulated rapidly in a short period, naturally attracted attention. Fortunately, Ernst was indeed a second-generation heir, lacking any rags-to-riches inspirational narrative. Compared to the self-made geniuses of his time, he was indeed not very conspicuous.

But wealth could not lie, and the Prussian royal family knew this best, as they themselves were Ernst's clients.

The purpose of the Prussian royal family's representative visiting Ernst was self-evident. Rather than selling strategic facilities like railways, it was better to find solutions elsewhere first.

The Cologne-Minden Railway was one of Prussia's earliest built railway lines. Designed in 1833 and fully completed in 1859, it became a hub of the Prussian railway system.

The initial purpose of this railway project was to transport coal from the Ruhr region cheaply to Prussia's industrial production base.

In fact, the Cologne-Minden Railway was a large-scale public infrastructure project led by the Prussian government from the outset. The Prussian government directly purchased 1/7 of the initial shares and guaranteed the issuance of railway bonds at a 3.5% coupon interest rate with a guarantee of 14 million Thalers.

In return, the government could purchase the company's circulating shares in installments and eventually become the sole shareholder of the railway, completing a gradual nationalization.

Railway nationalization was a strategic decision for Prussia, as Prussia valued the railway's capacity for troop and material transport.

However, the conflict between Prussia and Austria had now intensified, and the high levels of the Prussian government were actively preparing for war.

And war was inseparable from financial support. The Cologne-Minden Railway was brought up for discussion under such circumstances.

Bismarck's war preparations against Austria required a total of approximately 60 million Thalers. The burden of raising such a colossal sum for war expenses fell on Breschlau.

In fact, as early as December 1862, after careful calculation and repeated consideration, Breschlau had proposed the highly controversial plan for the privatization of the Cologne-Minden Railway.

The core of his plan was that instead of the government investing a huge sum to fully acquire the railway company's shares in 1870, thus creating immense financial pressure, Prussia could immediately receive compensation from the railway company by forfeiting nationalization, and simultaneously abandon the guarantee for bond interest, thereby immediately activating the 14 million Thaler portion of the reserve fund.

The plan was met with widespread opposition, with many arguing that Breschlau's plan sacrificed the government's long-term interests for the immense profits of railway company shareholders, including Breschlau himself. Under this plan, the government would lose various rights and interests totaling 30 million Thalers, in exchange for only 10 million Thalers in compensation and 4 million Thalers in available reserves.

The fully developed Cologne-Minden Railway was a highly profitable government investment. While the privatization plan could provide emergency funds to the government in the short term, the cost was selling a prime asset at less than half its value, while also losing future long-term revenue rights. It was by no means a good deal for the government.

Ernst, aware of history, knew that a unified Germany would eventually nationalize the railways, so the current privatization was merely a necessary sacrifice.

However, it was impossible to expect capitalists to do good deeds; they pursued higher profits, so patriotism was out of the question.

The Rothschild family's influence was behind the current privatization of Prussian railways, and Breschlau was their employee.

The Rothschild family's current base was in Vienna, Austria. It could be said they were Austrian citizens, yet they were preparing war funds for an enemy nation.

Their methods were indeed questionable, but the benefits they received were tangible. In the East, the Rothschild family would have been executed along with their entire clan by the emperor long ago.

It was the current social system in Europe that protected them, though this had little to do with Ernst.

Ernst was more concerned with the agreement at hand, which was the result of negotiations between the Prussian royal family and Ernst.

Although Ernst was wealthy now, he had many matters to attend to, especially the development of the East African colony. Population migration, food reserves, production tools, armaments for the colony, and staff salaries all required his personal funding.

Therefore, after deducting the operating funds required for the entire conglomerate, the expenses for the East African colony, and emergency reserve funds, the available Thalers amounted to only a few million. However, this was sufficient. The Prussian royal family had not expected much more; a few million Thalers was a fortune in this era. After all, from the privatization of the Cologne-Minden Railway, the Prussian government could only secure an initial 4 million Thalers.

One of the main reasons the Prussian royal family sought Ernst's help was their hope that Ernst would be more conscientious than banks and conglomerates solely focused on economic interests.

After all, Ernst was one of their own, a member of the House of Hohenzollern. Ernst did not really need any railway bonds; what he was interested in now was East Africa.

So, Ernst also put forward his terms: Prussia must guarantee the interests of the House of Hohenzollern in East Africa in the future.

Prussia's immediate priority was the unification of Germany; colonies were not of great concern. Since Ernst wished for Prussia to support all his interests in East Africa after the unification of Germany, they would support him.

Thus, the two parties signed the agreement. This agreement included the Prussian government, the Prussian royal family, and the Hohenzollern Conglomerate represented by Ernst.

The specific terms were that the Hohenzollern Conglomerate would finance the acquisition of 40% of the government's shares in the Cologne-Minden Railway, and the Hohenzollern Conglomerate would not obstruct Prussia's repurchase of Ernst's shares in the Cologne-Minden Railway at a price higher than market value in the future.

This was essentially a sleight of hand. Ernst would use his idle funds to aid the Kingdom of Prussia in its war efforts. After the war, as long as Prussia repaid the amount, it could re-nationalize the railway.

Of course, Ernst was not giving his support for free. In return, the unified German government must recognize the ownership of the House of Hohenzollern over the East African colony and support the expansion of the Hohenzollern Conglomerate throughout Africa.

This gentleman's agreement, though not entirely secure, could avoid numerous troubles. In his previous life, German East Africa had completely lost its foundation and legal basis; now, it would be the territory of the House of Hohenzollern.

As a supplement to the agreement, Ernst also seized this opportunity to obtain the entry ticket he had long dreamed of.