Empire Rising: Spain

Chapter 70: Chapter 69: The Guaranteed Profits of the Steel Mill

Although we have brought in Graham, relying solely on Graham for electrification is far from sufficient.

Spain must have an adequate reserve of mid-level talent in electrification and internal combustion engines to drive the second industrial revolution in Spain.

The most critical issue for Spain currently is the severe shortage of mid to low-level talent, with illiteracy constituting the majority of the population.

Before cultivating its own talent, the best approach is to continuously poach talent from various European countries.

However, before doing this, ensuring that your wallet has enough funds is most important.

As of August 1870, four months have passed since the establishment of the Royal United Bank.

Carlo finally turned his attention to his finances, asking Steward Loren about the bank’s development.

Steward Loren was well aware of the bank’s development. Upon hearing Carlo’s inquiry, he quickly responded, “Your Majesty, our bank has become one of Spain’s largest banks after four months of development.

We have already established branches in Toledo and Valladolid, and the bank in Madrid has expanded to two branches.

Currently, our total number of depositors has surpassed 57,000, with total savings amounting to approximately 46.12 million Pesseta, and an average deposit of 809 Pesseta per person.

The bank’s next expansion plan is to establish at least one branch in major district capitals like Seville and Barcelona, becoming Spain’s largest bank.”

Carlo nodded.

With the help of the aristocrats, the development of the Royal United Bank is indeed rapid.

Currently, there are already 57,000 depositors, who would have thought this is a bank founded just four months ago?

As branches of the Royal Bank are opened in each district’s capital, the number of depositors will see significant expansion.

However, the average deposit will surely decrease as most Spaniards have relatively low incomes.

The reason the average deposit is still above 800 Pesseta is that there are too many deposits from aristocrats and the middle class, which raises the average deposit figure.

Once a large number of civilians start depositing in the Royal Bank, the income level of ordinary people will become clear.

What makes the Royal United Bank more attractive to Spaniards compared to other banks is the word “Royal” and the union with the entire aristocracy.

It’s related to Carlo’s personal credibility, making it more convincing than those private banks.

Carlo himself also united several major aristocrats to promise anytime, any exchange, and expressed that as long as the Royal Family exists, the Royal United Bank will not go bankrupt.

Bankruptcy has always been a topic that causes fear when mentioned. People worry that banks will go bankrupt, so they scramble to exchange their deposits from the banks.

But such a run on the bank instead causes banks that would’ve been fine to face a crisis, actually leading to bankruptcy.

After all, the operation mode of banks is to collect a large number of depositors’ savings, forming substantial funds, then investing to earn returns.

These earnings are used to pay the depositors’ interest and the operating costs of the bank, and what’s left is the bank’s income.

This means it’s impossible for a bank to pay all its depositors’ savings simultaneously; when the exchange demand exceeds the bank’s existing funds, the bank will face a crisis.

So how do the capitalists resolve this?

By declaring bankruptcy.

In this era, there aren’t as many safeguards as in later generations. Once capitalists declare the bank bankrupt, most depositors won’t be able to recover their savings.

Only a small number of powerful aristocrats and politicians can reclaim their funds, sometimes even getting a larger portion, because of the privileges of the upper class.

This is why it is said that the life of European civilians in this era is extremely miserable, as they cannot escape the exploitation of capitalists, living their lives to the bone, ultimately leading to an early death in their thirties or forties.

“How is our steel mill doing?” Carlo continued to ask.

Currently, Carlo’s two most profitable enterprises are the Royal United Bank and the consolidated steel mill.

Finance and industry are definitely the most profitable businesses of this era, so Carlo certainly wouldn’t ignore the income from industry.

“After consolidation, we have become the largest steel mill in Madrid, currently employing 1,453 workers, with an average weekly wage of about 3 Pesseta.” Loren continued to answer.

Spain wasn’t strong in the industry initially, so it’s not surprising to become the largest steel mill in Madrid after consolidating several small and medium-sized steel mills.

After all, Madrid is not the key industrial development region in Spain; the real industrial base is Seville.

“An average weekly wage of about 3 Pesseta?” Carlo silently calculated in his heart.

Weekly wage 3 Pesseta, monthly income approximately 12 Pesseta, annual income is more than 144 Pesseta.

Although there’s still some distance compared to workers’ wages in other European countries, at least it’s much higher than Spain’s per capita annual income of 87 Peseta.

Moreover, Carlo’s factory doesn’t have to worry about wage deduction issues; work hours are only 12 hours a day, with one day off per month, which is much better than other countries.

“How is the implementation of the agricultural tax reduction policy? When will we see results?” With per capita income being the lowest in Europe, this distressed Carlo, who looked forward to changes.

“It’s estimated that next year’s per capita income could rise to around 100 Pesseta.” Steward Loren quickly replied, “Rest assured, Your Majesty, the agricultural tax reduction and abolition of tithe are effective, and farmers’ incomes will certainly rise.

This is the long-term exploitation of Spain by the Bourbon family and has nothing to do with you, Your Majesty. You are Spain’s chosen one, and under your leadership, Spain will regain its former glory.”

Carlo smiled slightly, not minding Loren’s flattery too much.

Being the chosen one is somewhat exaggerated, but Carlo is certainly not one of those mediocre monarchs; he knows to see people as people, and that’s why the public supports him.

“While increasing per capita annual income, we must also raise our employees’ income.” Carlo instructed, “Royal Family enterprises should set the benchmark for all Spanish enterprises, and there must be no problems in this aspect.”

“I understand, Your Majesty.” Steward Loren nodded, showing he understood.

“How are our steel mill revenues? How’s the construction of the steel mill in Seville?” Carlo inquired.

“Your Majesty, our steel mill is expected to earn approximately 2 million Pesseta this year; maintaining balance in income and expenditure is completely feasible.

Currently, about 1.5 million Pesseta has been invested in building a new steel mill in the industrial base of Seville, expected to come into production in the second half of next year. By then, our number of workers will exceed 2,000, and annual income will also rise to over 3 million Pesseta.” Steward Loren replied.

Ultimately, it was Carlo who underestimated the profitability of industry in this era.

Coupled with the fact that Spanish workers’ income is already not high and Spain’s infrastructure requires a large amount of steel, steel mills in Spain of this era are undoubtedly making steady profits without losses.