## Chapter 123: The Game of Capital (Part 2) (4000 words)
Lionel raised a hand towards the servant standing beside him, and soon a document was presented before him.
He placed it on the coffee table and smiled, introducing Arthur to it. “Mr. Hastings, it’s quite a coincidence. If you’re looking to invest in relatively stable sovereign bonds, this is the perfect opportunity.”
“Sovereign bonds are stable investments?” Dumas leaned back on the sofa, questioning, “As far as I know, only Brazilian bonds are still paying interest regularly among the bonds issued by South American countries.”
Lionel extended his hand towards Dumas with a smile. “So, you have experience in bond investments, my dear sir? This is not a field that just anyone can enter. But looking at your appearance, you seem unfamiliar. You weren’t conducting this business in London, were you? May I inquire about your name?”
Dumas grasped his hand and replied, “The Rothschilds are indeed discerning. You are correct, I have indeed invested in this area before, and I even had an account with Rothschild Bank. However, you might have frozen my account. After all, I am currently a wanted fugitive by the French government. I am Alexandre Dumas, pleased to meet you.”
Upon hearing this name, Lionel couldn’t help but slightly open his mouth in surprise, but he quickly recovered.
He smiled and patted his head. “I should have known, Mr. Dumas. When I traveled to France, I accompanied my uncle to the theater to see your “Henry III and His Court.” And that historical drama “Christine” was truly an excellent script. At the time, I heard my uncle say that you earned almost 100,000 francs from this play, making you one of the most outstanding figures among French playwrights.”
Lionel’s flattery pleased Dumas immensely. He proudly nodded and said, “Those were just little works I jotted down, you are exaggerating.”
However, Lionel quickly shifted the conversation back to Arthur with a cheerful smile.
“I knew it. The friends of Mr. Hastings wouldn’t be ordinary people. Outstanding individuals always attract each other. Rothschilds not only invest in wealth, but also in outstanding individuals, both present and future.
Mr. Hastings, I will not hide anything from you. South American sovereign bonds are indeed unreliable, but Rothschilds have recently been authorized by the Treasury to issue a small amount of British government bonds.
I can give you a little information. This is a batch of ten-year city construction bonds worth 200,000 pounds, with an annual interest rate of about 15%.
If you want to invest in stable assets, I can privately reserve 1,000 pounds for you in advance. This way, you will receive an investment return of 5 pounds annually for the next ten years.
In the current environment, although this return rate is not particularly high, it is safe and stable.”
Arthur nodded slightly and asked, “What about real estate investments?”
Lionel opened the document in front of him and revealed the information to Arthur without reservation.
It was a summary of the price trends of all rental and sales properties listed by London’s real estate consulting firm.
Arthur flipped through the pages while Rothschild patiently explained.
“As you can see, London’s real estate prices have always been relatively stable. Apart from a few popular areas with faster growth, most other areas maintain an average annual growth rate of 1% to 2%. The annual rental return after purchasing a property fluctuates around 8%. After deducting your home maintenance, taxes, and other costs, the approximate return rate should be around 5%.
This return is indeed higher than British government bonds, but it requires you to invest some time and effort in managing it. Of course, if you find managing these assets too time-consuming, you can entrust our company to operate them for you. However, we will charge a certain service fee.
Overall, the profit from real estate may be similar to buying government bonds. Its advantage over new bonds might be the implicit income like voting rights for the owner.”
Arthur nodded slightly. Lionel had not deceived him. To gain his trust, he even shared the coveted trade secrets of real estate agencies with him.
But he also understood what the other party meant. There’s no such thing as a free lunch. Some things don’t need to be explicitly stated; a simple gesture can achieve mutual understanding.
Arthur slowly closed the document in front of him. Looking at the smiling Lionel, he understood that from now on, he would be joining the likes of the Duke of Wellington on the Rothschild yacht floating on the Thames.
He asked, “What about the stock market?”
Lionel raised an eyebrow, but instead of talking about stocks, he smiled and asked, “You are well-informed, so you must know that the railway industry is very hot lately, right?”
Arthur nodded. “Of course, everyone says the past thirty years belonged to the canal industry, and the next thirty years will belong to the railway industry.”
“Hearing is important, but I have even more important data here.”
Lionel smiled and opened another document at hand. “Look here, in 1821, the first railway company in Great Britain was officially approved for establishment. However, it wasn’t until 1824 that we had a second railway company. But look here, since 1824, the number of approved railway companies has risen rapidly.
In 1826, Parliament approved five newly established railway companies. By this year, Great Britain already has 21 railway companies. Last year, Parliament even approved 25 miles of railway construction applications, which is more than half of the total construction applications over the past eight years.
Although there was a small unfortunate accident at the opening ceremony of the Manchester-Liverpool Railway this year, we believe this minor setback should not interrupt Britain’s railway construction boom. As you said, the next thirty years will belong to the railway industry, and I can even assert that the 19th century should be the century of railways.”
Arthur tentatively asked, “So, you suggest investing in railway stocks?”
“No.”
Lionel smiled and replied, “On the contrary, we strongly advise against touching railway company stocks. Because as far as I know, many railway companies listed on the London Stock Exchange are raising funds by taking advantage of the railway boom.
Many of them are just in the planning stage, and some are even eager to absorb capital without even obtaining railway construction permits from Parliament. If you don’t have a deep understanding of this industry and jump in rashly, you could easily lose everything.”
Hearing this, Arthur seemed to gradually understand. He recommended the railway industry but not railway companies, so the answer was obvious.
He asked, “Do you mean you recommend bridge and road construction companies that possess the technical capabilities to build railways?”
Lionel smiled and clapped his hands, pointing at Arthur. “Mr. Hastings, you indeed have a talent for finance. Yes, I recommend these construction companies, or more precisely, I recommend the Thames Tunnel Company and Brunel Bridge Construction Company, which are currently at their lowest stock value.”
“I haven’t heard much about Brunel Bridge Construction Company, but the Thames Tunnel Company…”
Arthur took a breath upon hearing this name.
Speaking of this company, it should be familiar to Londoners. It was also a favorite subject of reporting for the London press.
As the name suggests, the company was established with the intention of building an underwater railway tunnel under the Thames. According to the design plan, this underwater railway tunnel would connect Wapping and Rotherhithe on both banks of the Thames after completion.
But underwater tunnels, just hearing the name, you know how difficult they are to build, let alone in the early 19th century.
Its slow construction progress also confirmed this idea. The tunnel could only advance slowly by three to four meters per week.
And it wasn’t just slow construction. The most frustrating thing was that since construction began in 1825, the underwater tunnel had experienced numerous water leaks. Water leaks were bad enough, but the smelly Thames water also released large amounts of methane gas into the tunnel, triggering explosions.
Engineers and workers who worked in this environment for long periods also frequently fell ill. Since the project began, several resident engineers had been rushed to the hospital.
The most serious construction accident of the project occurred in 1828. The smelly Thames water directly collapsed the tunnel, drowning six workers who were working. Even the project’s chief designer, Marc Brunel’s son, who was there for an internship, almost drowned in the tunnel. The poor young man was in the hospital for six months before he recovered.
After this serious accident, the Thames Underwater Tunnel project fell into a long standstill. To compensate for the overspending on the project and to regain public confidence in the tunnel’s safety, after the tunnel was repaired and drained, the tunnel company even came up with a unique trick: opening the tunnel for sightseeing.
What was even more amazing was that there were actually quite a few Londoners who came to visit. They were quite willing to spend a shilling to see this “hot spot” that was repeatedly featured in newspaper headlines.
However, this sightseeing boom could not restore the Thames Tunnel Company’s reputation or its stock. Their stock on the London Stock Exchange was practically worthless.
For rational investors, buying their stock was like throwing money into the Thames.
Arthur asked, “I heard the Thames Tunnel project wasn’t stalled due to lack of funding?”
Lionel saw Arthur’s doubts immediately. He smiled and asked, “Do you remember the Treasury bonds I mentioned earlier that are about to be issued for city construction? With your intelligence, you must have immediately figured out what that 200,000 pounds is for.”
Arthur suddenly realized. He picked up his teacup and savored the aftertaste of those words for a long time. He looked at Lionel and took a sip of tea. “No wonder, the Rothschild family is so good at making money.”
Lionel smiled and nodded. “Mr. Hastings, you must understand that for those of us in finance, information is life. Only fools stare at stock numbers all day. Those who truly make big money rely entirely on informed information.
I can also share two more pieces of information with you. One of the major shareholders of the Thames Tunnel Company is another major client of ours – the Duke of Wellington, Arthur Wellesley.
As for the other company I mentioned earlier, Brunel Bridge Construction Company, its major shareholders are the chief designer of the Thames Tunnel Company, Marc Brunel, and his son, Isambard Brunel.
These two gentlemen are top designers and construction personnel in railway construction. And because of the impact of the Thames Tunnel project, Brunel Bridge Construction Company’s stock price has recently plummeted.
But you know, a person can’t be unlucky forever. I accidentally learned that young Brunel’s design方案 is likely to win the bid for the bridge across the Avon Gorge. Once he wins this bid, Brunel Bridge Construction Company will quickly come back to life.”
Lionel picked up the teapot and added some tea to Arthur’s half-empty cup.
He poured tea while saying, “Mr. Hastings, you know, life is so wonderful.”
Arthur looked at the ripples in the teacup and couldn’t help but nod in agreement. “Yes, life is indeed wonderful. The Brunel father and son should be in for good fortune. By the way, could you please buy 500 pounds worth of stock each for me in the Thames Tunnel Company and Brunel Bridge Construction Company?”
Upon hearing this, Lionel stood up with satisfaction. He took off his hat and bowed slightly. “Thank you for your keen eye. You have demonstrated your strong investment capabilities and visionary investment perspective today. Mr. Hastings, Rothschild is honored to provide you with consulting services today.”
Dumas, who was sitting beside him, heard this and laughed, biting his donut. He muttered, “That’s called a keen eye? I could do it too. It’s all information, it’s all damn ‘luck’.”
But Lionel heard this and shook his head in rebuttal with a smile. “Mr. Dumas, you must understand that ‘luck’ comes from having the ability. In my opinion, Mr. Hastings is very capable, so it’s only natural that he has ‘luck’.”
As soon as he finished speaking, the real estate agent who had left earlier came running back from the back room, panting heavily.
He came to Arthur and respectfully presented the property price evaluation in his hands.
“Mr. Hastings, I apologize, this is the revised property recommendation report I made. Please take a look.”
Lionel heard this and smiled at Arthur, nodding. “Come, Mr. Hastings, your luck has come again.”
(End of chapter)