I Became A Hidden Powerhouse Of The British Empire [EN]: Chapter 53

Became a Hidden Tycoon of the British Empire 53 (53/537)

The New World’s Cold Winds (2)

May 1837 was a cruel season, starkly contrasting the light and darkness within the British Empire.

Kensington Palace, vibrant with the energy of spring, buzzed with preparations for Victoria’s upcoming birthday celebration.

Although the party was limited to immediate family and a few nobles close to the royal family, their faces showed no hint of the economic anxieties plaguing the nation.

Of course, the Duchess of Kent and Conroy looked displeased, as Victoria had less than a month until she came of age, but their concerns were unrelated to broader social issues.

As economic instability gradually worsened, a number of desperate investors jumped into the Thames, and capitalists voiced their anxieties, but these were stories from a different world, far removed from the palace.

The highest echelons of society still didn’t grasp the severity of the situation.

However, capitalists, especially those heavily invested in the United States, were beginning to feel the pinch.

It would have been manageable if the financial crisis in the United States had been the sole problem.

The British economy itself was already burdened by a significant bubble fueled by speculation in the railway industry and banks.

“As you predicted, young master, companies involved in coal and steel are being immediately affected. Their exports to the United States were substantial, and now that market has virtually disappeared.”

“Their heavy reliance on exports to the United States propped up their production volume, but they didn’t foresee it becoming a liability. Of course, those with strong fundamentals will recover quickly, even if the next few years are difficult.”

“But everyone is disoriented because this type of recession is unprecedented. Here’s the list of promising companies in the UK and the US, as you requested.”

“Let’s see. In the UK, it’s the Dowlais Iron Company in Wales, and in the US, it’s Lehigh Coal and Baldwin Locomotive.”

If any industry was poised to explode after the recession, it was the railroad, but unfortunately, it was too large an undertaking to acquire right now.

I could potentially manage it with a significant push, but it would involve considerable financial strain.

Considering the resource mining in the Canadian Great Lakes that I’m targeting, it’s more strategic to acquire companies in the steel or coal industries, which support the railroads, rather than the railway industry itself.

If the railroad boom continues, the profits of steel companies supplying iron and coal mining companies essential for industrialization will inevitably rise.

In terms of cost-effectiveness, this is definitely the better choice.

“First of all, Dowlais is a foundational company that participated in the construction of the Stockton-Darlington Railway [one of the world’s first public railways]. They’ve recently expanded from ironmaking into coal mining, but an accident occurred.”

“It must have been a devastating blow to the management.”

“Yes. John Josiah Guest, the owner of Dowlais, is a capable man who significantly expanded the company he inherited from his father. Until a few years ago, he was a member of the House of Commons [the lower house of the Parliament of the United Kingdom], and he supplies materials not only domestically but also for the construction of the Berlin and Leipzig railways. He exported a considerable amount of materials to the United States, but now he’s worried because even collecting payments is uncertain.”
A triple whammy of declining domestic steel demand, falling production due to trade contraction, and difficulty in raising funds due to credit contraction.

If the situation is so dire that they started a new business at the worst possible time, there’s little more to say.

The fact that the company is still operating at all in this environment is a testament to Dowlais’s underlying strength.

“What about the US?”

“The situation is worse there. Lehigh is a well-known coal company in Pennsylvania, USA, and its stock price is plummeting, making it difficult to raise funds.

The same goes for Baldwin Locomotive. They produced 40 locomotives last year alone, but this year it will be less than half that, and in a few years, it will be difficult to produce even 10. Matthias Baldwin, the president, is urgently seeking a partner to weather this crisis.”

“Good. If you’ve compiled the list, it means securing enough shares to influence management won’t be a problem, right?”

“Baldwin isn’t a listed company, so buying shares is impossible. But Baldwin is in a very precarious position right now, so negotiations shouldn’t be too difficult. In the case of Lehigh, we can simply acquire the devalued shares.”

James continued, his tone slightly troubled, as if the next issue was more complex.

“The problem is Dowlais, where all the shares are held by the manager, John Josiah Guest, his family, and Wyndham Lewis. Without a crisis like this, there wouldn’t be many opportunities to get involved in such a profitable company.”

“We have no choice but to negotiate with the Guest family. We can’t directly interfere with management rights, but if we provide funds in exchange for a significant, though not controlling, share, an agreement should be possible, right?”

“Then what about the US… ?”

“James, you go and handle Lehigh and Baldwin. I’ll go with the Guest family of Dowlais and persuade them. Set up the schedule immediately.”

Even if I don’t acquire them completely, these are excellent companies to invest in.

Since I can buy stocks that are severely undervalued, there’s nothing to lose. More importantly, my interest in these companies isn’t solely for personal gain.

As long as I hold a reliable strategy that promises substantial profits for everyone involved, they won’t be able to refuse my offer.

“Then I’ll accompany you to Wales and then take a boat to the United States. But shouldn’t we allocate more time?”

“No. I need to be back in London by May 24th at the latest.”

“May 24th? Why… Ah! That’s right.”

James checked the calendar, a knowing smile spreading across his face.

May 24th. It was Victoria’s birthday celebration.

“I heard that only the royal family and very close nobles were invited to the event, so I assume you’re on the list, young master.”

“I suppose so. If I don’t attend, there will be consequences, so I have to participate.”

It would be better if she were simply angry, but I fear she might cry if I don’t go, leaving me no choice.

She’s been increasing the pressure lately, moving beyond subtle hints to openly asking me to define our relationship. I wish she would give me a break.

If rumors spread that I openly seduced her, I’ll be socially ostracized that day.

Perhaps a few years from now, I might be ready, but Victoria’s personality makes me anxious about her reaction if I were to say that now.

Although she has navigated puberty more smoothly than in the original timeline and has become more stable, her inherent tendencies remain.

“Even as the future queen of the British Empire, she’s still a young woman in her prime. Consider it karma for stirring a woman’s heart and accept it willingly.”

“Isn’t that a rather bleak outlook for me?”

“Well, the princess hasn’t become queen yet, has she? Perhaps you can find some small comfort in that?”

“Queen’s accession… Haha.”

James intended to comfort me, but his words sounded different to someone who knew history.

I shook my head, answering with a listless laugh.

William IV would likely pass away 26 days after Victoria’s birthday.

My window of comfort is terribly short.

* * *

Merser Tydfil in Wales, once a small village, is now experiencing tremendous growth.

Iron ore, coal, limestone, and even wood are readily available, and access to industrial water is easy due to its proximity to water sources.

Where else could be such an ideal location for ironworks?

As a result, Merser Tydfil is now renowned as the region producing the most iron in the British Empire.

The four largest ironworks in the British Empire, including Dowlais, Plymouth, Cyfarthfa, and Penydarren, are all located in this area.

However, even this city cannot escape the effects of the coming recession.

If all the steel mills reduce production, workers will inevitably lose their jobs.

Whether this recession is a passing storm or will last for several years is unknown, causing widespread anxiety.

Even those currently employed will eventually be laid off if the steel mills face increasing difficulties.

John Josiah Guest, the manager of the Dowlais Ironworks, whom I was scheduled to meet today, was no exception.

His deeply furrowed brow revealed the business challenges he faced.

If I play my cards right, I might conclude the negotiations on more favorable terms than expected.

As we entered the room, Josiah greeted James first, mistaking me for a secretary.

“Welcome. It was a long journey from London, so thank you for coming.”

“Not at all. Three days by carriage is a manageable distance.”

“Still, it takes a week for the round trip. We appreciate you taking the time. I’ve heard of the reputation of James Detective Agency, but I didn’t expect the president to come in person.”

“You flatter me. I had to come in person to negotiate with the president of Wales’s best steel mill.”

Although it hasn’t been established for very long, the reputation of my information organization is spreading beyond London to Wales and Scotland.

The organization grew too large, so I divided it into two, one of which is James Detective Agency, named after James, the nominal president.

This branch is known as a company that primarily provides private security and detective work.

It’s similar to the Pinkerton Detective Agency [a private security guard and detective agency] that gained fame in the United States in the mid-to-late 19th century, but with a more positive image.

The other branch is called British Detective Agency, which handles work that crosses the boundaries of legality and illegality.

This agency primarily handles cases that James Detective Agency doesn’t, and it generates considerable revenue.

On the surface, they appear to be two competing companies with different specializations, but in reality, they are sister organizations under the same ownership.

Exploiting the fact that the police organization is not yet fully developed, I’ve established influence throughout London and built a strong relationship with the government through Wellesley, leading to soaring business.

If this continues, even if I liquidate all the casinos in three years, these detective agencies will fill the gap and still generate profit, making the outlook promising.

“While we appreciate your visit, may I ask why the president of the detective agency is interested in the steel industry?”

“Because it’s a promising industry. It’s faltering now due to the recession, but I believe we should support industries that form the foundation of the country, especially during times like these.”

“I didn’t realize you were the kind of person who would invest with such patriotic intentions.”

“As you can see from the conditions I presented, we’re not greedy capitalists. Your company can secure the funds to overcome this recession, which is beneficial, and we can be satisfied with owning shares in a promising company and planning for the future together.”

“It’s certainly a condition that would help our company’s operations…”

Dowlais’s sales last year were approximately 500,000 pounds. The operating profit, excluding raw materials and labor costs, was slightly less than 100,000 pounds.

However, sales this year are certain to be almost halved due to the recession.

The company’s value, previously estimated at over 1 million pounds, has shrunk to about two-thirds.

The profit from reselling the real estate I acquired in Chicago is enough to cover the investment, with hundreds of thousands of pounds to spare.

Of course, I also need to acquire Lehigh Coal and Baldwin Locomotive, but I’m not planning to buy Dowlais outright, so funding isn’t an issue.

The main challenge is the mindset of the owner who controls the company.

“The shares we want to acquire are those held by your family, not the president. We’ll pay 10% more than the market value, and it won’t threaten the president’s management rights, so there shouldn’t be any issues, right?”

“But James, as you mentioned, if my company overcomes the recession and grows, it will inevitably list its shares. At that point, your company will be able to exert significant influence on management with the shares it holds, right? Selling all the shares held by my family is a bit… How about negotiating for about half?”

“So that’s…”

James glanced at me with a troubled expression.

I nodded, having anticipated this response, and spoke up.

“President Josiah, shall we talk?”

“… Um? The student is…”

“I’m Killian Gore, Earl of Aaron. James is my agent because I’m not yet of age, but I’m the actual owner of the detective agency.”

“The owner of James Detective Agency is a student… No, an Earl… you say?”

“Yes. I own not only the detective agency run by James but also many other businesses, and I plan to expand further.”

Josiah looked at James with wide eyes, seeking confirmation.

When James nodded, Josiah’s jaw dropped.

“You seem young, but where did you get that money…? Was the Aaron family that wealthy?”

“Of course not. I earned it through business. As I said, it’s not just the detective agency. I currently have over a million pounds in cash, and this money will be used to support not only Dowlais but also other companies.”

“A million pounds? What is that…”

“You need that much money to buy shares in Dowlais and invest in other companies. And as James said, I’m not doing this solely for personal enrichment. It’s to create a new opportunity for mutual prosperity.”

Josiah, overwhelmed by the shocking information, took a deep breath and straightened his clothes.

“Create a new opportunity?”

“Yes, the companies I’m trying to acquire shares in right now are Dowlais in Wales, and a coal mining company and a locomotive company across the Atlantic in the United States.”

“I immediately understand the criteria you used to select these companies.”

“As expected of a businessman, you’re quick to grasp the situation. These companies will recover quickly once the current economic recession ends. But companies must always seek new avenues for growth. Shouldn’t we also explore a market that can generate substantial profits?”

As long as both the UK and the US continue to industrialize, they can generate huge profits for the next few decades even in their current state.

However, it’s natural for a businessman to always seek greater profits and a wider market.

Josiah was now completely engrossed in my words.

“Do you have any specific additional markets in mind, Earl?”

“Yes. The Canadian Great Lakes region has vast deposits of iron ore. And there’s abundant coal in the east and west. However, the steelmaking, mining, and transportation sectors are underdeveloped. Of course, the population is still small, and the cities haven’t developed yet. But it’s only a matter of time.”

“Canada… It doesn’t seem that attractive at first glance. Are there really that many resources there?”

“There are so many that Dowlais couldn’t handle it alone, no matter how large it becomes. So I’m considering forming a consortium with the companies I’m going to acquire in the United States to monopolize the development rights. We have the technology, and the initial investment costs can be covered by government subsidies, maximizing profit with minimal investment. Hiring locals will also improve public sentiment.”

“I know that the extraction of natural resources is heavily regulated by law. Have you considered these aspects?”

This question indicates that he’s almost completely on board.

And of course, the issue Josiah raised had already been addressed.

Why else would I have asked Robert Peel to revise Canada’s resource management laws?

Of course, the Prime Minister can’t imagine that the company I’m backing will expand into Canada, but that’s not my concern.

“Of course. Everything has been discussed with Parliament. As I mentioned, there’s a condition that a certain number of locals must be hired, but that’s something we would do anyway, so there’s virtually no need to worry about it.”

“If we can secure enough investment to weather the recession without any problems and also hold exclusive development rights in Canada in the future…”

“Looking at it from a broader perspective, it’s beneficial for the president if I hold a significant number of shares. That way, I’ll prioritize giving as much business as possible to this company for my own benefit, right? And even if you list the shares, I’ll do my best to protect the president’s management rights. You can include this clause in the contract if you wish.”

“Really?”

Josiah’s face lit up.

It’s over.

I’ve successfully secured one arm of the giant that will become the largest steel industry in Europe.

Moreover, given his business acumen, I can assume that I’ll have little to do in the future.

I simply need to provide capital and bring him lucrative opportunities when the time comes, and he’ll increase the profits on his own.

“Then I’ll arrange for my family and Lewis, excluding the shares I hold, to sell the entire amount to you, President, no, Earl. I’ll send someone to London in a few days once a conclusion is reached.”

“That’s an excellent choice. I hope we have a successful business relationship in the future. You can discuss the details with James here.”

I politely declined Josiah’s offer to stay longer and rest, and immediately returned to the carriage.

I can’t waste a single moment in returning to the princess, who is waiting with burning anticipation in Kensington.

Fortunately, the negotiations went smoothly, so I should have enough time to check the birthday present I ordered.

It would be troublesome if she pouted like she did after the last Christmas event, so should I give her an extravagant gift this time?

It feels like I’m digging my own grave, but I can’t help it.

No matter how I look at it, it’s already inevitable.

If I back out now because I’m afraid of getting hurt, they’ll come after me with a vengeance.