Holy Roman Empire

Chapter 132: Want to Get Rich? Let's Start with Embezzlement

Franz had a sense of national responsibility. To help raise funds for the Kingdom of Prussia during the war, this emperor himself led by example, donating one million florins, which were then deposited into the Royal Bank of Austria.

(1 florin ≈ 11.69 grams of silver)

Soon, the Austrian nobility, merchants, students, and many others were eager to contribute. However, these donations weren’t directly handed over to the Prussian government. Instead, they were deposited into the newly established Royal Bank of Austria.

Yes, this Royal Bank of Austria was just created by Franz, and its primary purpose at the moment was to collect donations from the Austrian public while overseeing the use of these funds in the defense of the Duchies of Schleswig and Holstein.

With the Prussian army making significant advances in the Jutland Peninsula, they had already crossed this line, surpassing the conditions for utilizing these donations.

The Prussians probably didn’t concern Franz much. Regardless, he was quite pleased with the situation. The Royal Bank, with its registered capital of just one million florins, managed to attract nearly thirty million florins in deposits, or rather, donations, in just one month.

However, the bank issued receipts to all donors, and these donations were used proportionally. Any unused funds would be refunded. In a display of his patriotic commitment, Franz decided that the Royal Bank would not charge any basic transaction fees, and all services were provided for free.

Since these were donations, there were no interest payments involved. With the activation of this substantial sum, Franz now had additional liquidity at his disposal.

A large amount of cash sitting idle was akin to a crime, so Franz promptly lent himself a sum of money and used it to invest in the establishment of a comprehensive food enterprise. Additionally, he purchased numerous high-quality mines.

In those days, gold and silver could function as currency directly, and naturally, gold mines and silver mines were highly valuable. Even though Franz was an emperor, obtaining them wasn’t an easy task.

On the other hand, resources like iron, coal, lead, zinc, manganese, and rare earth minerals were much more affordable. The Industrial Revolution was still underway, and even the basic consumption of coal and iron was quite limited. Many rare minerals are currently not in high demand in industry.

Franz didn’t bother with contentious resource grabs. Instead, he took advantage of the current low values of these resources and secured valuable mineral assets for the future.

Unfortunately, the Austrian Empire didn’t possess vast mineral deposits; otherwise, Franz would have been set for life after this venture.

In any case, with money in hand, the current strategy was to buy, buy, buy. While others might consider transportation logistics when investing in mining, Franz didn’t want to get bogged down by those concerns. As long as the ore quality was excellent and the reserves abundant, did he really need to worry about transportation issues?

Others might not know, but he certainly did. It wouldn’t be long before the Austrian government had to make substantial investments in domestic infrastructure development.

Now it seemed that even the mines that currently had no development value would become extremely profitable once proper roads were built. Their value would multiply rapidly, especially with industrialization driving up the demand for mineral resources. It would be difficult not to get rich in such circumstances.

In just over a month, Franz had spent over five million florins, which alarmed him enough to stop. Even if he was embezzling public funds, there had to be limits, right?

If he spent this entire enormous sum of money recklessly and someone found out, how would things end for him?

The House of Habsburg had assets, but did not have that much cash on hand, and even as an emperor, it would be challenging for Franz to quickly borrow such a large amount of cash.

If he only embezzled a portion of the funds, Franz still had a way to balance the books, especially since he owned a bank. If it weren’t for the current manpower shortage, the Royal Bank would already be expanding aggressively.

With a treasury of thirty million florins, the bank was a financial giant in these times. It ranked among the top banks worldwide, primarily due to its substantial cash flow.

Currently, the Royal Bank operates more than thirty branches, making it a mid-sized bank in terms of scale. Its business outlets were concentrated in several major Austrian cities.

John Stuart was originally an executive at the First Savings Bank of Austria, and he was recruited by Raul due to his competence to serve as the first director of the Royal Bank.

It wasn’t until this moment that Franz realized the House of Habsburg had shares in many banks. However, he couldn’t be bothered to delve into the details.

After all, every bank had its backers, and in these times, or even earlier times, surviving as a bank was no easy feat.

“Your Majesty, the Royal Bank is ready to start attracting deposits from the public,” John Stuart said nervously.

“Regarding banking matters, you’re the professional in this field, and it’s for your management team to discuss and decide. In the short term, the Royal Bank won’t be engaging in lending to external parties,” Franz said expressionlessly.

Having misappropriated such a large sum of money, it would eventually need to be repaid. It was uncertain how long the Prussian government could hold out, but once they reached a compromise, this money would have to be returned.

“Understood, Your Majesty,” John Stuart replied.

“Can you estimate for me how much of this donation can be converted into our deposits? How much will remain with us?” Franz inquired with concern.

“Your Majesty, our bank’s interest rates are set in line with the average, but the Royal Bank’s reputation far surpasses any competitors.

Approximately twenty percent of the donors are likely to become our customers. This is because about one-third of the donations come from the government. So, we may end up retaining around three million florins,” John Stuart pondered and spoke.

These three million florins shouldn’t be underestimated; in this era, people hadn’t yet developed the habit of depositing money in banks. Most nobles were accustomed to hoarding gold coins in their cellars.

Opening an account in a bank also had its requirements, and the Royal Bank set the threshold at one hundred fifty florins. If someone’s deposit was lower than that, unfortunately, this place isn’t suitable for them.

Retaining three million florins means holding more than three percent of the total savings in the entire Austrian Empire in 1848, which is less than one hundred million florins.

Franz had considered lowering the account opening requirements, but he decided against it due to the need for additional bank staff, increased management complexity, and operational costs.

Banks also had a certain reputation to uphold. During this era, banks served the upper and middle classes of society. If restrictions were lifted, and a large number of lower-class individuals flooded in, losing these high-quality customers would be a significant blow to the bank.

The Austrian people were so poor that if a person could save a dozen florins per year, they could already be considered to have a decent income. Given this context, venturing into this business carried a high risk of running into losses.

“Understood. When you return, initiate the deposit-taking business as soon as possible. All our agents must undergo rigorous training, and I expect everyone to courteously attend to each and every customer,” Franz instructed.

“Yes, Your Majesty,” replied John Stuart.

During this period, bank service personnel generally provided decent customer service. Due to the minimum deposit requirements, most individuals who conducted banking transactions were from the middle class or higher social strata.

In terms of social hierarchy, bank employees didn’t hold a superior attitude, so discrimination was not a significant issue.

Furthermore, since it was a private bank, everyone had to strive for good performance. Those with strong performance would be promoted, while those with poor performance would face consequences. There was no room for complacency in the banking sector during this time.

Franz seemed to be concerned as he still had another financial problem to address. The House of Habsburg didn’t have the capability to produce millions of florins in cash on demand, and the Royal Bank remained his personal asset. He was wary of others getting involved.

Furthermore, he refrained from lending externally not because he didn’t want to engage in that business, but rather due to his apprehension. He was worried that if the Prussians retreated suddenly, he would face an immediate rush of withdrawals.

The Royal Bank had promised that these donations would be used exclusively for the designated purpose. If the money couldn’t be produced when needed, and if it were exposed that the donations were misappropriated, the damage to their reputation would be significant.

Maintaining secrecy was impossible, but for now, no one had dared to cross the line, given that Franz was the Emperor.

However, they were unaware of the exact amount Franz had misappropriated. If it were a smaller sum, filling the financial gap wouldn’t be too difficult. If rumors started to circulate and damage the Emperor’s reputation, the consequences could be dire.