Empire Rise: Spain

Chapter 70: Profitable Steel Mill

Although he had brought in Gramme, electrification could not be achieved relying solely on Gramme.

Spain must possess sufficient mid-level talent reserves in electrification and internal combustion engines to promote the development of the Second Industrial Revolution in Spain.

The most critical problem in Spain currently is the severe shortage of mid- and low-level talent, with illiterates accounting for the majority of the population.

Before cultivating Spain’s own talent, the best approach is to continuously poach talent from European countries.

However, before that, ensuring that one’s wallet has sufficient funds is the most important.

Time arrived in August 1870, four months after the establishment of the Royal United Bank.

Carlo finally paid attention to his own purse and asked Butler Loren about the bank’s development.

Butler Loren was well aware of the bank’s development and immediately replied upon hearing Carlo’s question: “Your Majesty, after these four months of development, our bank has become one of the largest banks in Spain.

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

Currently, our total number of depositors has exceeded 57,000, with total savings of approximately 12 million pesetas, and per capita deposits of 809 pesetas. The bank’s next expansion plan is to construct at least one branch in the capital of major regions such as Seville and Barcelona, becoming the largest bank in Spain.”

Carlo nodded.

With the help of the nobles, the development of the Royal United Bank was very rapid.

The current depositors already numbered 57,000—who could imagine this was a bank established just four months ago?

When the Royal Bank’s branches reach the capitals of every region, the number of depositors will see major expansion.

However, per capita deposits will definitely decrease, as most people in Spain have relatively low incomes.

The current per capita deposit remaining above 800 pesetas is due to too many nobles and middle class depositors, which inflated the per capita deposit figure.

Once large numbers of commoners begin depositing in the Royal Bank, the income levels of ordinary people will become clearly visible.

What makes the Royal United Bank more attractive to Spaniards compared to other banks is the “Royal” name and the unification of the entire aristocracy.

It concerns Carlo’s personal credibility, which is more convincing than those private banks.

Carlo himself, together with several great nobles, gave a promise of exchange at any time, and stated that as long as the royal family exists, the Royal United Bank will not go bankrupt.

Bank bankruptcy has always been a terrifying topic. The public fears banks will go bankrupt, so they rush to withdraw their deposits.

But such a run will instead cause a bank that was fine to erupt into a run crisis, potentially leading to bankruptcy.

After all, the way banks operate is by collecting large amounts of depositors’ deposits to form substantial funds, then investing to generate income.

This income is used to pay depositors’ interest and the bank’s operating costs, with the remainder being the bank’s profit.

This means that a bank cannot pay all depositors’ deposits simultaneously; when the deposits needing exchange exceed the bank’s existing funds, a crisis erupts.

How do capitalists solve it?

Announce bankruptcy.

This era has no such protections as in posterity; after capitalists announce bank bankruptcy, most depositors basically cannot recover their deposits.

Only a few powerful nobles and politicians can recover their funds, even taking an extra share—this is the privilege of the upper class.

This is also why life for commoners in Europe of this era is extremely miserable: they cannot escape exploitation by capitalists, working like oxen and horses their whole lives, only to die prematurely in their thirties or forties.

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

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

Finance and industry are absolutely the most profitable businesses of this era, so Carlo certainly would not overlook the income from industry.

“After integration, we have become Madrid’s largest steel mill, currently employing 1,453 workers, with an average weekly salary of about 3 pesetas,” Loren continued to reply.

Spain was not strong in industry to begin with; integrating several medium- and small-scale steel mills to become Madrid’s largest steel mill is not surprising.

After all, Madrid is not the region where Spain focuses on industrial development; the true industrial base is in Seville.

“Average weekly salary of about 3 pesetas?” Carlo silently calculated in his mind.

Weekly salary of 3 pesetas means monthly income of about 12 pesetas, annual income over 144 pesetas.

Although it is still some distance from workers’ wages in other European countries, it is much higher than Spain’s per capita annual income of 87 pesetas.

Moreover, Carlo’s factories do not worry about withholding salaries; daily working hours are only 12, with one day off per month—this treatment is much better than in other countries.

“How is the implementation of the agricultural tax reduction policy? When can we see results?” The per capita income ranking at the lowest level in Europe gave Carlo a severe headache, and he anticipated change.

“Expected per capita income next year can rise to around 100 pesetas,” Butler Loren hurriedly replied: “Your Majesty, please rest assured, agricultural tax reduction and the abolition of the tithe are effective; farmers’ incomes will definitely increase.

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

Carlo smiled, not minding Butler Loren’s flattery.

“Chosen one” was somewhat exaggerated, but at least Carlo was not one of those inept monarchs; he knew to treat the public as people, and only then would the public support him.

“While raising per capita annual income, we must also raise our employees’ incomes,” Carlo instructed: “The royal family’s enterprises are the benchmark for all enterprises in Spain; we must not have problems in this aspect.”

“I understand, Your Majesty,” Butler Loren nodded, indicating he understood.

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

“Your Majesty, our steel mill is expected to have income of about 2 million pesetas this year, maintaining break-even is no problem at all.

Currently, about 5 million pesetas have been invested in the industrial base in Seville to build a new steel mill, expected to go into production in the second half of next year. At that time, our worker numbers will exceed 2,000, and annual income will rise above 3 million pesetas,” Butler Loren replied.

In the end, Carlo had underestimated the profitability of industry in this era.

Combined with Spain’s originally low worker incomes and the large amount of steel needed for Spain’s infrastructure construction, steel mills in Spain of this era are completely guaranteed to be profitable.

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