Waldemar's Empire
In 1880, Waldemar watched with quiet satisfaction as his economic empire took shape.
Mines—gold mines especially—oil, rubber, electricity, automobiles, banking, agriculture (the vineyards), magazines, chemicals and pharmaceuticals: across every field his power and influence were swelling at a startling pace.
The total assets of that empire were beyond any precise reckoning. Still, if one forced an estimate, the figure came to something over four hundred million marks—an astronomical sum. How vast was four hundred million marks? It exceeded ten percent of the total deposits held by the national banks of the United States at the time, deposits that stood at eight hundred thirty-four million dollars, or roughly three and a half billion marks.
Waldemar could easily have claimed the title of the richest man in the world, yet inside the royal household he never let it show.
Brag about money and all you’ll hear is people asking for some of it.
As usual, he made his way to the Prussian Royal Theatre.
“Your Highness, shall I prepare only drinks?”
“Please do.”
The box attendant bowed respectfully. In the old days Waldemar had managed his affairs by telegraph from the Crown Prince’s Palace; once the scale outgrew that method, he changed the system. Every business meeting now took place inside the royal family’s private box at the Royal Theatre.
His sisters, of course, had their own theory: that Waldemar had fallen hopelessly for some actress he once saw and was now besotted with the stage.
“I’m right, aren’t I, Valdi?”
“Just try denying it.”
“You’re both right,” he said, too lazy to argue the point.
When Waldemar entered the box, the managers who had arrived early rose to greet him.
“Your Highness.”
“Sit, all of you.”
He exchanged brief courtesies. At the front stood Schneider, the man who ran Playguy; he looked healthier and more self-assured than the last time Waldemar had seen him.
“How is business these days?”
“No problems at all. Since we moved operations to Thuringia, no one bothers us.”
“Good. And circulation?”
“Demand keeps rising. We’re planning to increase the print run to a hundred thousand copies a month.”
Schneider’s report was thoroughly encouraging. Waldemar turned next to Arnold von Siemens, the heir and successor to the doctor from Siemens.
“And Siemens?”
“We’ve brought the light bulb to market and it’s already turning a profit. Factory expansion and the steam-turbine research, however, mean Your Highness should not expect a dividend this year.”
“Don’t worry about that.”
Carl Benz, in charge of the automobile venture, had equally pleasant news.
“The prototype is nearly ready. By the end of next year at the latest we’ll have a factory up and products rolling out.”
“Not as delayed as I feared.”
“No, Your Highness. Take a look at this.”
Benz unrolled a set of drawings. Waldemar studied them carefully and noticed something odd.
Iron wheels? Not tires?
Of course—pneumatic tires had not yet been invented. He tapped a finger on the wheel in the drawing.
“Do the wheels have to be iron? Couldn’t they be rubber?”
“Rubber?”
Benz looked startled, then saw the sense in it.
“Ah—yes. With rubber the ride would be considerably smoother.”
“Exactly.”
“The price of rubber, though—”
“Don’t concern yourself with the cost. If the company runs short of funds, I’ll cover it.”
Waldemar had no intention of selling the world’s first automobile cheaply. Firsts always began as luxury goods. And rubber could be sourced from the Amazon Rubber Company without difficulty.
“Understood.”
“Mr. Connor—how are the negotiations with Standard Oil?”
“They have accepted a valuation of the Spindletop field at eighty thousand barrels a day.”
“So Rockefeller has finally raised the white flag. And the share exchange?”
“Your Highness’s eight thousand shares will be increased to forty-five thousand.”
That would give Waldemar 56.25 percent of Standard Oil’s total stock of eighty thousand shares.
“A bit stingy, considering.”
“They insisted they could concede no more.”
Waldemar thought it over and accepted. Given Standard Oil’s refining capacity, transport network, and market dominance, a compromise at this level was not unreasonable.
“While discussing the shares, did they attach any other conditions?”
“They did. Rockefeller’s side wants a guarantee that management remains in their hands.”
“In exchange for agreeing to that, I want a condition of our own.”
“What condition, Your Highness?”
“Under no circumstances may we cease to be Standard Oil’s first-priority customer. Even if they cut off every other firm, the companies we designate must never be denied supply. Convey that.”
“Yes, Your Highness.”
The managers’ reports were filled with good news from end to end. The worldwide Long Depression of 1873–1896 seemed not to touch them at all—and in truth it did not.
When the reports finished, Waldemar shared his guidelines for future investment.
“Shipbuilding?”
The shipbuilding industry he named was, in fact, a highly risky business. When a yard received an order, it typically took only ten to twenty percent of the construction cost as a down payment; if the client cancelled midway, the yard was left with wasted materials and dock fees.
Even naval contracts placed by governments were not immune. In 1877 the American Secretary of the Navy, Richard Thompson, had slashed naval spending by half and cancelled the monitor Monadnock then under construction, bankrupting the shipyard that held the order.
“Shipbuilding is ferociously competitive. Turning a profit on investment will be difficult.”
So many yards were building vessels that price competition was cutthroat.
“Mr. Connor, that is the present view.”
In the original history, Germany’s shipbuilding industry had consolidated its small and medium yards, achieved economies of scale, and caught up with Britain. Knowing those same yards would soon construct the world’s second-largest navy and merchant fleet made the investment more than worthwhile.
The second target was steel. In 1880 no colossal enterprise like U.S. Steel yet existed; the moment was perfect for entering the industry. Waldemar had no intention of running a steelworks himself. His aim was to buy shares in a company such as Carnegie Steel—one of the precursors of U.S. Steel—and ride the shoulders of the future steel king who would dominate America.
“Carnegie Steel, as I understand it, is privately held.”
Ah—right. Robber barons defaulted to private ownership.
Waldemar had momentarily forgotten. Still, there were ways. Just as he had done with Rockefeller at Standard Oil, if he held something Carnegie wanted, negotiation was always possible.
“I believe a method can be found.”
He intended to acquire the vast Gogebic Range iron deposits in Michigan and other major mines, then sit down with Carnegie. The ore there was low in phosphorus and assayed above fifty-five percent pure; once full development began in the 1890s, the range would yield three to four million tons of iron ore every year.
Anyone chasing vertical integration can’t ignore the high-grade mines along the Great Lakes.
John Connor felt a familiar chill of déjà vu at Waldemar’s confident tone.
The third objective was newspapers.
“German papers would face heavy government interference.”
This was Prussia, after all, with its secret police—not free Britain.
“I have no intention of buying German newspapers.”
“Your Highness?”
“I mean to buy papers in America and Britain.”
Waldemar intended to use them as instruments for shaping Anglo-American public opinion. Should the day ever come when the Empire found itself opposed to Britain and the United States, protecting German—above all, Waldemar’s—assets would require carefully cultivated goodwill.
“Acquiring respectable papers will be expensive. And there’s no guarantee the owners will sell.”
“I have no intention of buying the traditional ones either.”
“Then—?”
“We’ll buy the nameless ones.”
The word “tabloid” had not yet been coined, but papers that fit the description already existed. The New York World, founded in 1860, was a prime example.
“Such papers can hardly exert real social influence.”
“Not if they compete by traditional means.”
Change the approach and everything changed. Embrace yellow journalism—crime, scandal, gossip—and capturing the public’s eye would be only a matter of time.
“Isn’t that rather vulgar?”
“That’s precisely why people love it.”
Just as Schneider’s adult magazine Playguy had proved.
Thus the direction of Waldemar’s investments for 1881 was set: pour capital into shipbuilding and steel and secure as large a stake as possible; expand newspaper holdings until they could move opinion in Britain and America.
He knew the plan might fall short of his hopes. That was all right. He still had plenty of time left to grow his private empire.
Waldemar’s blue eyes fixed on Mephistopheles as the devil tempted Faust upon the stage.