Smooth Growth
Late March, 1879.
In the original history, Waldemar had died of diphtheria on the twenty-seventh of March. Here, he never so much as glimpsed that dreadful plague. When word reached him that the epidemic had not touched the Crown Prince’s household either, he allowed himself a quiet breath of relief.
A divine hint to keep making money if ever there was one. This is what the will of Heaven looks like.
Waldemar issued John Connor a pitiless order.
“Execute the ruble forward contracts.”
“Yes, Your Highness.”
Having thoroughly wrecked the ruble, it was time to harvest the blood and tears. On the settlement date Waldemar bought up the vast quantities of rubles that had been dumped on the market at fire-sale prices. British and German speculators, intent on turning the currency into waste paper, were flooding the exchanges with supply; securing the notes had not been difficult.
As John Connor began to vacuum up the hundred million rubles required for the contracts, the exchange rate—which had already scraped the floor—showed the first faint signs of a rebound. Even so, the ruble remained a corpse in all but name.
By early April, when Waldemar closed out every last forward position, he had pocketed an astronomical profit. Even after fees, discounts, and every other deduction, the contracts alone had netted him more than twenty-five million rubles—roughly twelve and a quarter million marks at the current rate.
The rubles he had drawn from the Russian commercial banks had also left a handsome surplus. By cycling sixty million rubles three times and converting them into gold and marks, he had booked more than fifteen million marks in exchange gains.
After the crushing conversion fees, the banks’ interest charges, and the slight recovery in the rate at the moment of sale, the true net from that operation settled at around ten million marks. In short, against a little over a hundred thousand marks—three months’ interest on the sixty-three million he had borrowed against the gold mines—Waldemar had cleared more than twenty million marks.
He and John Connor stood before the mountain of profit in pure, wordless bliss.
“Your Highness, this money—”
“Must be invested, of course.”
Waldemar already knew exactly where it would go next.
“Is there anywhere worth investing in at a time like this?”
Diligent searching would certainly turn up profitable companies, yet ordinary returns no longer satisfied either of them. They wanted at least twenty percent a year.
“There is.”
“When Your Highness speaks like that, curiosity is inevitable. Stocks? Real estate?”
“A mixture of the two, I should say.”
Waldemar intended to seize Spindletop, the greatest oil field in Texas and the turning point of modern American petroleum production. Located roughly five kilometers south of Beaumont in Jefferson County, Texas, Spindletop would one day pour out a hundred thousand barrels a day—orders of magnitude beyond the few dozen barrels that ordinary wells then produced. With that monster field in his grasp he could wrest whatever share of Standard Oil he desired.
He sent John Connor to America to sound out land prices around Beaumont. A short while later the report arrived.
“In the Beaumont district, forested acreage runs between two-fifty and four dollars an acre. Three dollars should secure most of it. State-owned virgin land can be bought under the fifty-cent law at fifty cents an acre.”
One acre equals 0.00404686 square kilometers.
“How much to buy up the entire hundred-square-kilometer tract five kilometers south of Beaumont?”
“Difficult to be precise, but somewhere in the neighborhood of fifty thousand dollars. If owners refuse to sell at those prices, the cost will of course climb.”
Waldemar now regarded a few tens of thousands of dollars as pocket change.
“Spend several times that if you must, and have Edward buy it all. No—wait. That would be dangerous.”
“Dangerous, Your Highness? For Edward to make the purchases?”
“Rockefeller, the man who runs Standard Oil, is no fool. The moment he sees Edward scooping up land he will stick his spoon in the pot and then some.”
Waldemar never forgot that Rockefeller, the most formidable of the robber barons, could field thousands of private detectives the instant he chose.
“Then I shall bring people from England whom Rockefeller does not know.”
“Men we can trust?”
“All of them of good repute, with families in stable occupations.”
“Very well. I leave the matter in your hands, Mr. Connor.”
Waldemar put the rest of his capital to work with equal vigor. He poured an additional two and a half million marks into Siemens, lifting his stake from thirty-five to forty-nine percent. Another two million one hundred thousand marks went into expanding Playguy, and the number of Russian models on the payroll rose to fifty.
Through English intermediaries he continued to buy vineyards and wine; the 1879 vintage alone cost him eight hundred thousand marks more, while his vineyard holdings doubled from fifty to a hundred square kilometers. All told, the additional outlay on grapes came to seven and a half million marks.
Even after spending so freely, his liquid cash barely shrank. The inexhaustible Canadian gold mines, the royalties from aspirin and phenacetin, and the dividends from the Banque de France, Standard Oil, and the Nobel companies kept his coffers solidly underwritten.
While I’m at it, perhaps I should raise an automobile company.
Germany stood at the very birth of the motor industry and lagged behind neither America nor Britain nor France. Even the first two-stroke gasoline engine had been a German invention. The more he considered it, the better the idea seemed.
Automobiles will spawn a host of ancillary industries—perfect for projecting influence over the nation. And of course they’ll feed the oil companies in which I already hold massive stakes.
Waldemar was a man who moved the moment inspiration struck. He went straight to his mother. The Crown Princess, deep in conversation with her court intimates, looked up in mild surprise.
“Baldi, what brings you here at this hour?”
He almost never sought out his mother or sisters during the midday hours he reserved for business.
“Because I have something to discuss with you, of course.”
Once again he began to coax her. If they were ever to build a British-style constitutional monarchy with his father, they would need the support of the working classes. That meant providing good jobs, and he happened to know of an industry that could do exactly that. The Crown Princess, long accustomed to her son’s maneuvers, saw through him at once.
“You want a hand in this venture yourself, don’t you?”
“For Father’s dream and for yours.”
Victoria understood, in that moment, what it meant to be willingly deceived. Even an obvious falsehood carried weight when spoken by the right person. After a long pause she allowed herself to be “taken in.”
“And how do you propose to grow this industry of yours?”
“By hiring a single engineer-entrepreneur.”
“And then?”
“By pouring money into him.”
“What makes you so certain he can build the business you envision?”
“My eye for talent.”
It was an outrageous answer, yet it carried conviction. This little Hohenzollern genius had taken a mere hundred pounds and, in little more than six years, built a fortune that rivaled the entire family estate. Setting age aside and judging purely on results, who in the house could claim to understand business better than he?
The Crown Princess felt a complicated stir of emotion. To keep from drowning in it she asked,
“Who is the man?”
“Karl Benz.”
“Karl Benz?”
The name meant nothing to her. To anyone from a later age it would have been instantly familiar: Karl Benz, founder of the firm that would dominate the German automobile industry.
“You wish to invest in him?”
“I do.”
After a moment’s thought she agreed to help. It would cost her little effort—only the exercise of her influence to summon the man and assist in the negotiation. Once more she wielded power with breezy efficiency.
Karl Benz was astonished when the Crown Prince’s estate manager arrived and announced a desire to “invest.”
They want to invest before I’ve even founded a company?
Still more shocking was the discovery that the investor was a member of the Prussian royal house. Fear warred with the thrill of the enormous capital they offered. In the original history Benz had been forced to take on Max Caspar Rose, a Mannheim bicycle-shop owner, and the commercial agent Friedrich Wilhelm Esslinger merely to scrape together development funds; only in 1883 had he finally managed to form a company.
Public indifference to the motorcar, quarrels with partners, and chronic shortages of cash had then driven his own stake down to a miserable five percent. Waldemar’s proposal was a lifeline that would spare him every one of those torments.
After several days of hesitation Benz accepted.
“I accept the offer.”
Royal protection and vast capital—he could refuse neither. The royal agent was well pleased.
“Excellent. As first proposed, we shall take a ninety-percent interest in return for an investment of eight million four hundred thousand marks.”
“I am most grateful.”
Benz was more than content. Valuing ninety percent of the company at 8.4 million marks meant valuing his own share at roughly nine hundred thirty thousand—an almost unimaginable sum when the original Benz company, with its twenty-five employees, had been capitalized at scarcely ten thousand marks.
“There is one condition. All of your patents will be assigned to the company, and you will devote yourself entirely to the development of the horseless carriage.”
“Of course. That has always been my dream.”
The negotiation with Karl Benz concluded without difficulty. As with most things in the world, enough money to satisfy the other party can smooth away almost any obstacle. When the royal agent’s report reached him, Waldemar allowed himself a smile of pure satisfaction.
The automobile industry is mine.
Even if rivals later recognized its potential and rushed into the market, competing with a man who had already sunk nearly ten million marks into the field from the very first day would prove no easy task. Henry Ford and his famous mass-production methods? The world would have to wait another twenty years for those.
While Waldemar was still savoring his future superiority over those unborn competitors, an urgent telegram arrived from Britain.