Chapter 53
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Translator: 8uhl
Chapter: 53
Chapter Title: The Cold Wind of the New World (2)
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The spring of May 1837 was a cruel season, a time when the light and shadow of Britain stood in stark contrast.
Kensington Palace, alive with the spirit of spring, was bustling with preparations for Victoria's upcoming birthday celebration.
Though it was a party for immediate family and a few close nobles, not a single dark cloud hung over their faces.
Of course, the Duchess of Kent and Conroy wore expressions as if they had bitten into something foul at the fact that less than a month remained until Victoria came of age, but that had nothing to do with societal problems.
As economic anxiety slowly worsened, a considerable number of investors threw themselves into the River Thames and capitalists voiced their unease, but in the end, that was all a story from another world.
The highest echelons of society still weren't taking the current situation all that seriously.
However, for the capitalists, especially those with deep ties to America, the reality was that cries of distress were beginning to emerge.
It might have been better if only the American financial crisis had been the cause.
The problem was that Britain's own economy was already saddled with a significant bubble from speculation in the railway industry and banking.
“Just as you predicted, Young Master, the coal and steel industries are taking a direct hit. They were exporting a substantial amount to the United States, and now that has all but vanished.”
“The fact that they exported so much to America means their production capacity was high, but they never would have guessed it would become their poison. Of course, companies robust enough to withstand it will recover quickly after a few difficult years.”
“But since this is a type of recession they’ve never experienced before, everyone is in a state of confusion. Here is the list of promising British and American companies you requested.”
“Let’s see. In Britain, it’s the Dowlais Iron Company in Wales, and in America, Lehigh Coal and Baldwin Locomotive.”
If there was one industry that would explode after the recession, it would be the railways, but unfortunately, that sector was too large to swallow up right now.
It might be possible with some effort, but it would require a significant sacrifice.
Considering my plans to mine resources in the Great Lakes region of Canada, it was better to acquire companies in the supporting industries, like steel or coal, rather than the railway industry itself.
As long as the railway boom continued, the profits of the steel companies supplying the iron and the coal companies mining the fuel essential for industrialization would inevitably keep rising.
In terms of cost-effectiveness, this was clearly the better option.
“First, Dowlais is a company with a solid foundation, having participated in the construction of the Stockton and Darlington Railway. They were expanding their business from ironworks to coal mining recently, which is when this disaster struck.”
“It must have felt like a bolt from the blue for the management.”
“Yes. The owner of Dowlais, John Josiah Guest, is a capable man who greatly expanded the company he inherited from his father. He was a member of the House of Commons until a few years ago and is said to be supplying materials not only domestically but also for railway construction in Berlin and Leipzig. He was also exporting a considerable amount of materials to the American side, and he must be frantic now that even collecting payments has become uncertain.”
It was a situation where a trinity of hardships overlapped: a decline in domestic iron demand, a drop in production due to reduced trade, and difficulty in securing financing due to the credit crunch.
Worse, if he had just started a new venture at such an inopportune time, there was no need to say more.
The very fact that the company was somehow still operating under these circumstances was proof of how solid Dowlais was.
“What about the American companies?”
“The situation is worse over there. Lehigh is a well-known coal company in Pennsylvania, but its stock price is plummeting, and it’s struggling to even secure funds.”
“And it’s the same for Baldwin Locomotive. They produced 40 locomotives last year, but this year, it’s expected to be less than half of that, and within a few years, they say even 10 would be a stretch. They already have significant debt, and the president, Matthias Baldwin, is desperately searching for a partner to help put out this fire.”
“Good. The fact that you’ve compiled this list must mean there won’t be a problem acquiring enough shares to intervene in their management, right?”
“Baldwin is not a publicly traded company, so purchasing stock is impossible. However, Baldwin is in a very tight spot right now, so negotiations shouldn’t be too difficult. As for Lehigh, we just need to scoop up their plummeted stocks.”
The problem, James seemed to imply as he continued in a slightly troubled tone, was what came next.
“The issue is Dowlais. All of its shares are owned by the manager, John Josiah Guest, his family, and Wyndham Lewis. But if not for a time like this, there won't be many opportunities to get a foot in the door of such a prime company.”
“There's no choice but to negotiate directly with the Guest family. We could offer to inject capital on the condition that we receive a stake large enough to be influential, even if we can't directly interfere with management. That should lead to an agreement, don't you think?”
“Then what about the American side…?”
“James, you head over and handle Lehigh and Baldwin. I’ll go with you to Wales and help persuade the Guest family at Dowlais. Schedule it immediately.”
With a blue-chip company like that, it didn’t matter if I couldn’t swallow it whole.
I’d be buying shares at an extremely undervalued price, so there was nothing to lose. More importantly, I wasn't poking at these companies just for my own gain.
As long as I held a sure-fire card that would let us all sit on a pile of money, they would never be able to refuse my offer.
“Then I shall accompany you to Wales, Young Master, and then take a ship to America. But couldn’t we arrange the schedule a bit more leisurely?”
“No. I have to be back in London by May 24th at the latest.”
“May 24th? Why… Ah! I see.”
James, after checking a calendar, smiled and averted his gaze with a peculiar look.
May 24th. It was none other than the day of Victoria's birthday celebration.
“I heard only the royal family and very close nobles were invited to the event. I see you were included as well, Young Master.”
“You could say that. A lightning bolt might strike if I don’t go, so I have to attend.”
It would be a relief if she just got angry. If I’m not careful, she might burst into tears, so I have no choice.
Lately, she’s been moving beyond leading questions and openly pressuring me to clarify my stance. Honestly, I wish she would cut me some slack.
I mean, if a rumor spread that I was openly seducing her, I’d be socially ostracized that very day.
It might be a different story in a few years, but with Victoria’s personality, saying something like that would just make her unpredictable and create more anxiety.
Although she had passed through adolescence more smoothly than in the original history and had stabilized a lot, her innate disposition hadn't changed.
“Even if she is the future queen of the British Empire, she’s still a young woman just coming of age. Just think of it as karma for capturing a lady's heart and accept it sweetly.”
“That’s a bit too chilling a thought for me.”
“Well, at least the princess hasn't become Her Majesty the Queen yet, has she? Perhaps you can take some small comfort in that?”
“Her ascension to the throne… Haha.”
James meant it as a form of comfort, but to my ears, knowing history, it sounded entirely different.
I shook my head, answering with a hollow, weary laugh.
If I remembered correctly, William IV would pass away 26 days after Victoria came of age.
Damn, what a ridiculously short time to take comfort in.
***
Merthyr Tydfil in Wales, which had been no more than a village before the modern era, was now experiencing tremendous growth.
Iron ore, coal, and limestone, as well as timber, were readily available, and its proximity to water sources made it easy to secure industrial water.
What place could be more ideal for an ironworks?
Thanks to this, Merthyr Tydfil was now renowned as the region producing the most iron in the British Empire.
The four largest ironworks in the British Empire—Dowlais, Plymouth, Cyfarthfa, and Penydarren—were all located in this area.
But even a city like this could not escape the effects of the coming recession.
If all the ironworks reduced production, the workers would inevitably lose their jobs.
If it were just a passing shower, it would be one thing, but no one knew if this recession was that type or one that would last for years, so many people were surely anxious.
Even those currently employed would eventually have to pack their bags and leave if the ironworks fell on harder times.
John Josiah Guest, the manager of the Dowlais Ironworks with whom we were meeting today, was no exception.
The deep furrows on his brow, rivaling the Ironbridge Gorge, made it abundantly clear that his business was not doing well.
If things went well, I might be able to conclude the negotiations on better terms than expected.
When we entered the room, Josiah, assuming I was some sort of secretary, greeted James first.
“Welcome. It must not have been a short journey from London. Thank you for coming.”
“Not at all. It's a distance that can be covered in about three days by carriage.”
“Still, a round trip takes a week. We are simply grateful you took the time. I have heard of the reputation of the James Detective Agency, but I never imagined the representative himself would come.”
“You flatter me. When negotiating with the head of the finest ironworks in Wales, it is only natural that I come in person.”
Although it hadn't been long since its establishment, the reputation of my intelligence organization was now spreading beyond London to Wales and Scotland.
The organization had grown too large, so I had split it into two. One of them was the James Detective Agency, nominally headed by James.
This one was known to the public as a firm specializing in private security and detective work.
It was similar to the Pinkerton Detective Agency that would gain fame in America in the mid-to-late 19th century, but with a more respectable image, one might say.
The other was a firm called the British Detective Agency, which handled jobs that straddled the line between legal and illegal.
This agency primarily took on cases that the James Detective Agency did not, and it was turning a tidy profit.
On the surface, it appeared as if two companies with different characteristics were competing, but in reality, they were sister organizations under the same owner.
Taking advantage of the still-unsystematic police force, I had embedded our influence throughout London, and through Wellesley, I had cultivated a good relationship with the government, so the business was booming.
At this rate, I thought that even if I liquidated all the casinos in three years, these detective agencies would more than fill the void, so promising was their future.
“We are grateful, of course, but may I ask why the head of a detective agency is showing interest in the steel industry?”
“Because it is a promising industry. It is faltering now due to the recession, but I believe that at times like these, we must protect the industries that can become the nation's foundation.”
“I was not aware that you were a man who would invest out of such patriotic sentiment, Mr. James.”
“You will see from the terms I have proposed that we are not greedy capitalists. Your company benefits by securing the funds to overcome this recession, and we are satisfied by acquiring a stake in a promising company to plan for the future together.”
“The terms certainly provide a lifeline for our company's operations, but…”
Dowlais's revenue last year was about £500,000. After subtracting the cost of raw materials and labor, the operating profit was reportedly just under £100,000.
However, this year, with the recession, it was certain that revenue would be nearly halved.
The company's value, once estimated to be well over £1 million in the market, had shrunk by about a third.
The profits from selling off the real estate I had bought in Chicago, as if to devour all the land there, were more than enough to cover this, with hundreds of thousands of pounds to spare.
Of course, I still had to acquire Lehigh Coal and Baldwin Locomotive, but since I wasn't buying Dowlais outright, funding was not an issue.
The only potential problem was the will of the man who held the company in his hands.
“The shares we wish to acquire are those held by your family members, not you, sir. We will offer a 10% premium over the market value, and it won't be enough to threaten your management rights, so shouldn't that be acceptable?”
“But Mr. James, as you said, if my company weathers this recession and grows larger, it will inevitably have to go public. At that point, won't your company be able to deeply involve itself in management with the shares you hold? That is why selling all the shares held by my family is a bit… would it be possible to negotiate for about half?”
“Well, about that…”
James glanced at me with a troubled expression.
I had anticipated this, so I nodded and opened my mouth.
“Mr. Josiah, may I have a word with you?”
“...Hmm? You are… a student…”
“I am Killian Gore, the Earl of Arran. Although James is acting as my representative because I am not yet of age, I am the true owner of the detective agency.”
“The owner of the James Detective Agency is a student… no, an Earl… you, my lord?”
“Yes. I own not only the detective agency that James runs, but many more businesses, and I plan to own even more.”
Josiah’s eyes widened as if they would pop out, and he stared at James.
He was seeking confirmation of my words.
When James nodded, Josiah's jaw dropped.
“But, you seem so young, where did you get that kind of money…? Was the House of Arran that wealthy a family?”
“Of course not. I earned it through business. As I said, it’s not just the detective agency. The cash I have on hand alone exceeds one million pounds, and this money will be used to support not only Dowlais but other companies as well.”
“One… one million pounds? What in the world…”
“That much money is necessary to buy a stake in Dowlais and invest in other companies. And as James said, I am not doing this just to line my own pockets. I am doing this to create a new opportunity for us all to rake in money together.”
Josiah, who had been reeling from the barrage of shocking information, took a deep breath and straightened his clothes.
“Create a new opportunity?”
“Yes. The companies I am currently seeking to acquire stakes in are Dowlais in Wales, and a coal mining company and a locomotive company across the Atlantic in America.”
“I see immediately on what basis you selected the companies.”
“As expected of a businessman, you are quick on the uptake. Once the current economic downturn ends, these companies will get back on track. But a company must always seek new sources of profit. Don't you think we need to pioneer an additional market from which we can extract enormous gains?”
As both Britain and America continued to industrialize, they could generate massive profits for the next few decades even in their current state.
But it was only natural for a businessman to always want more money and a larger market.
Josiah was already completely engrossed in my words.
“Do you perhaps have another market in mind, my lord?”
“Yes. The Great Lakes region of Canada has immense deposits of iron ore. And the east and west coasts have abundant coal. However, none of the sectors—steel, mining, or transportation—are properly developed yet. It’s only natural, as the population is still small and the cities are undeveloped. But it is only a matter of time.”
“Canada… At first glance, it doesn't sound that appealing. Does it really have that many resources?”
“So many that even if Dowlais grows, it would be impossible to handle it all alone. That is why I plan to form a consortium with the companies I will acquire in America to monopolize the development rights. The technology is already secured, and the initial investment costs can be wrung out of the government in the form of subsidies, allowing us to achieve maximum profit with minimum investment. Hiring locals will also have the added effect of winning over public sentiment.”
“I understand that natural resource extraction is heavily regulated by law. Have you considered this aspect?”
Asking such a question was as good as admitting he was almost completely on board.
And of course, the matter Josiah was concerned about had long since been resolved.
Why else would I have asked Robert Peel to amend Canada's resource management laws?
Of course, the Prime Minister had no idea that a company with me behind it would be advancing into Canada, but that was none of my concern.
“Of course. It has all been discussed with Parliament. As I just mentioned, there is a condition that we must hire a certain number of locals, but that is something we must do anyway, so there is no need to worry about it.”
“If we can secure enough investment to weather the recession without any problems and also seize exclusive development rights in Canada in the future…”
“In the long run, it is better for you that I hold a large stake. That way, I will be motivated to direct as much work as possible to this company for my own benefit. And even if you go public, I will do my utmost to defend your management rights. You can include this clause in the contract if you wish.”
“Is that true?”
Josiah’s face lit up.
It was done.
With this, I had succeeded in getting my hands on one arm of the giant that would come to boast the largest scale in the European steel industry.
Moreover, with a businessman as capable as him, there would be almost nothing for me to do in the future.
All I had to do was provide the money and bring him good projects when the time was right, and he would multiply the profits on his own.
“Then I will mediate to sell the entire stake held by my family and Lewis, excluding my own, to you, sir… no, to you, my lord. A decision will be made within a few days, so I will send a man to London.”
“An excellent choice. I hope we will have a good partnership going forward. You can discuss the details with James here.”
I gently declined Josiah's offer to stay a while longer and relax, and immediately got back into the carriage.
I couldn’t waste a single moment if I was to return to the princess waiting with fire in her eyes at Kensington.
Fortunately, the negotiations went so well that I seemed to have enough time to check on the birthday present I had ordered.
It would be troublesome if she sulked like she did after the last Christmas event, so perhaps I should give her a rather grand gift this time.
It felt very much like I was digging my own grave, but it couldn't be helped.
From any angle, I was already riding a tiger.
If I jumped off now for fear of getting stabbed, she would likely come after me with a gun.