Chapter 291: Suez Canal Equity (Bonus Chapter)
Paris Royal Palace
Napoleon III asked uncertainly, Auvergne, are you sure the Austrian government really wants to join our canal project and isnt just trying to make trouble?
Foreign Minister Auvergne affirmed, Your Majesty, the Austrian government seems sincere. They are willing to invest and cooperate with us in excavating the canal. No one would joke around with millions of francs. Once they invest in the canal company, theyll support us for their own interests.
Its just that the Austrians have always been conservative. They are afraid that according to our plan, the final traffic volume will not meet the demand, so they are demanding that the depth of the canal be increased by four meters.
Napoleon III rubbed his forehead and asked, I remember that the canal companys design depth was nine meters, allowing the largest ships in the world to navigate freely. And the Austrians still think that is not enough? Dont they realize that with each additional meter, the investment increases significantly? Adding four meters now means that the budget will increase substantially.
The budget for the Suez Canal project was 200 million francs, a figure that already challenged the capacity of the investors. Before the canal is navigable, no one knows for sure how profitable this golden waterway will be.
Currently, most people dont believe that the Suez Canal will be profitable, considering that there are free waterways available, and the Suez Canal tolls cannot be set too high.
With such a large investment, no one can guarantee how long it will take to recoup the costs. Capitalists, of course, have little interest in long-term investments with uncertain returns such as this project.
Auvergne explained, We have discussed this issue with the Austrian government many times. However, they are more concerned with the strategic value associated with the emergence of ironclad ships.
The Austrian government believes that ship tonnage will increase significantly, and the newly established Royal Shipyard of Austria is already building 10,000-ton freighters.
It is said that there are even some designers who have increased the tonnage of ships to 20,000 tons. The Austrian government believes that future mainstream ships will exceed 20,000 tons, and there are no major technical problems.
The Austrian government also believes that the tonnage of warships will increase significantly. If investments are saved now and the future navigational capacity is insufficient, the strategic value of this canal will be non-existent.
Napoleon III fell into contemplation. With the advent of ironclad warships, the keel that limited ship size is no longer a problem, and theoretically, a significant increase in ship tonnage is inevitable.
But bigger ships arent necessarily better; market demand must also be taken into account. The million-ton behemoths of the future would be useless in this era; there simply wouldnt be enough cargo to fill them.
Nevertheless, 10,000-ton vessels were already competitive in this period. At least for Austria, which exported agricultural products, such large ships were necessary.
Minister of the Navy Ducos spoke up, Your Majesty, from a strategic point of view, it is indeed better for the Suez Canal to have a larger navigational capacity.
If Austria joins us and shares the financing of the Suez Canal, the problem wont be too great. Even if private funds cannot fully cover it, we can have government investment.
Undoubtedly, the French governments planning of the Suez Canal was driven more by its strategic value than its economic value; otherwise, they wouldnt have invested so heavily.
After hesitating for a moment, Napoleon III boldly declared, Let them join! Since the Austrians dare to invest so much, we have no reason to fear!
During this period, the strategic vision of the French was truly remarkable. They were the first to initiate projects such as the Suez Canal and the Panama Canal. Unfortunately, they were unable to maintain control of either.
On May 10, 1858, France and Austria signed the Suez Canal Cooperation Agreement. The treaty stipulated that both countries would contribute equally to the excavation of the canal, with France as the initiating country holding a 51% stake and Austria holding a 49% stake.
Theres not much to say about that. Given Frances significant initial investment in the Suez Canal, it was inevitable that they would have majority control.
With changes to the design plans, the canals budget rose to 340 million francs. While this was an impressive figure, Franz was dismissive. Even if it were 540 million francs, it might not be enough.
Of course, the use of free labor would significantly reduce construction costs, and Franz was unsure of the final cost. After all, with both countries working together, there was no need to worry about the British sabotaging the project later and forcing a costly switch to paid labor.
Looking at the agreement in his hand, Franz smiled and said, Urge the French to begin construction as soon as possible.
Since they had joined the canal project, they couldnt afford to dilly-dally as the French had done in history, taking over a decade to complete the canal.
Yes, Your Majesty! Metternich replied.
Minister of Finance Karl asked, Your Majesty, should we follow the French and raise money for the canal company on the capital market?
The Suez Canal was a guaranteed profitable investment, but few could see it.
For most people, it was seen as a long-term investment with uncertain returns that was not highly favored in the capital markets.
Historically, the Suez Canal has faced construction disruptions due to a lack of funding. Without the support of the French government, the canal company would have gone bankrupt before the canal was completed.
Franz, accustomed to making a fortune quietly, would not, of course, announce it loudly to the world. If others were unwilling to invest, he could take advantage of that.
Considering the dangers of monopolizing the profits, Franz decided that it was still better for the government to take the lead. Otherwise, if all future wealth went directly into the royal coffers, it could easily lead to criticism.
The economic crisis is not over yet, and the markets capacity is limited. The government will subscribe to half of the shares and the rest will be floated on the market.
Clearly, all shares in circulation will have dividend rights only, while voting rights will remain in the hands of the Austrian and French governments.
It was a turning point in history where what was once a canal project led by private capital now had strong political implications.
London
The joint excavation of the Suez Canal by France and Austria dealt a severe blow to the British governments railway plans, as maritime transportation costs were lower.
Once the Suez Canal became navigable, Britains geographical advantage would diminish, as France and Austria would have a closer route to the Indian Ocean than the British Isles.
Prime Minister Grenvilles concerns were not just about the canal itself; rather, they centered more on the improvement of Franco-Austrian relations, which made the British government uneasy.
Unlike in history, where Russia had already lost its continental hegemony, both France and Austria were still potential competitors, not yet directly competing for hegemony.
Without sufficient interests, the governments of the two countries would naturally restrain each other. Austria was now much stronger than in the past, and the French became more cautious after their defeat in the Near East War.
Gentlemen, the warming of relations between France and Austria poses a significant challenge to our continental balance strategy. What do you think?
Chancellor of the Exchequer John Russell said, Mr. Prime Minister, you are too sensitive. While France and Austria are cooperating on the Suez Canal issue, they still have many conflicts elsewhere. The possibility of true cooperation between the two countries is not significant.
There are indeed conflicts between France and Austria. Not to mention the question of European hegemony, they have repeatedly clashed over colonial territories in Africa. However, these minor conflicts are present between almost all colonial empires and do not escalate to the level of hostility between the two nations.
Foreign Secretary Thomas analyzed: Under the Vienna System, relations between France and Austria have always been quite good in the past decades. It was only after the February Revolution that relations between the two countries gradually cooled. The rupture in relations between the two countries occurred during the previous war for German unification, and now they stand together again due to common interests.
But this does not yet affect our interests. As long as France and Austria harbor ambitions to compete for European hegemony, relations between them will break down sooner or later.
Even the currently close Russian-Austrian alliance will eventually diverge on the issue of European hegemony. I do not believe that the Austrian government lacks ambition.
This was a realistic issue; allies are unreliable when it comes to interests. Unless the strength of each country remains balanced, confrontation is inevitable sooner or later.
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