Time is the best remedy for pain. After two years of settling down, investors had finally recovered from the panic of the stock market crash. A glance at the Vienna Stock Exchange told the whole story. Though the daily trading volume was still only half of what it had been at its peak, the market had returned to normal. After the disaster washed away the weak and left only the strong, the number of companies in circulation had decreased somewhat, but their quality had risen by more than a notch. With the bubbles squeezed out and reason returning to the market, the overall system had become much healthier. As the economy resumed its steady course, a new wave of bright-eyed, hopeful investors began to enter the fray. Compared with those who had entered during the boom years, these newcomers were much luckier. They had bought in at low prices and were riding the tide of rapid economic growth. Not everyone was making a fortune, of course, but most were earning something. If the memory of the crash had not left such a lingering fear, another bull market might already have been on the way. It was in this environment that the plan to list the royal oil companies was launched. Unlike in later centuries, when oil would become a declining industry, in this era petrochemicals were the cutting edge of technology. As the world’s leading producer and consumer of oil, the Holy Roman Empire had seen its demand for petrochemical products grow at double-digit rates every year for more than a decade. Even though oil-based products were not yet widespread across the world, the empire’s consumption alone showed just how massive this market really was. According to estimates by socio-economic scholars, global demand for crude oil was expected to reach 35 million tons per year within five years, with the Holy Roman Empire alone accounting for 25 million tons of that total. Such numbers might seem insignificant in later generations, easily surpassed by any industrial nation, but in this era they were astronomical. Based on current international prices, crude oil alone represented a market worth 350 million guilders annually, nearly equivalent to the Austrian government’s entire yearly budget. Yet crude oil was only a small part of the greater petrochemical industry. If the entire sector were developed, it would easily become a market worth at least 1 billion guilders per year. More importantly, this market was in a period of explosive growth. A doubling of demand in five years was merely the beginning; doubling again within ten years was entirely within reach. Although the royal family was not the only oil producer, their extraction costs were the lowest in the world. If Franz had not deliberately restricted crude exports, the royal consortium would likely have monopolized the entire European oil supply. As for competitors—did they really exist? At this point in history, Europe had only two oil-producing powers: the Holy Roman Empire and Russia. The Baku oil fields might have had low extraction costs, but the high expense of overland transport made them far less competitive. With pipeline technology still underdeveloped, transportation was the foremost challenge facing the oil industry. The Russians were not alone in this struggle as even across the ocean, the Americans faced the same problem. The only difference was that America was blessed with vast plains, making it much easier to lay down pipelines than in rugged Europe. In contrast, the Baku region was not doing well. With the technology available at the time, even if an oil pipeline were built in Baku, the oil still could not be transported out. “The most expensive oil pipeline in the world” was by no means an empty boast. By comparison, the royal consortium’s oil companies were in a far better position. Their oil field reserves were abundant, and simply extracting from easily transportable coastal fields was enough to meet market demand. With both extraction and transport costs low, combined with the most advanced extraction and refining technology in the world, it was a clear case of dimensional superiority. With so many advantages, profits naturally followed. By now, these oil companies had become the largest cash cows within the royal consortium. Now that they were preparing to go public, there were many issues to consider. Whether to merge into a single giant corporation or break up into a number of smaller, strong companies had troubled Frederick for days. The stakes were enormous. Even Frederick himself felt uneasy, as any poor decision could result in losses of tens of millions or even hundreds of millions of guilders in the future. Ever since he took on this task, he had not had a single day of ease. Every day, there were countless documents to read, and he had to make all major decisions himself. With the policy to prioritize petrochemical industry development now in place, the best time for listing had arrived. When Frederick signed his name on the document, the grand oil company listing plan officially began. Four oil companies would go public simultaneously, aiming to raise 200 million guilders in Vienna and Frankfurt to fund the construction of supporting petrochemical industry chains. When the news broke, Europe’s financial media exploded. “Two hundred million guilders,” that number was simply astonishing. Even when divided into four, each company would still average fifty million guilders. That figure alone exceeded the annual income of ninety-five percent of all nations worldwide. At present, the world’s highest-valued listed company, the Austrian Electric Power Group, was worth only 850 million guilders. It should be noted that the Austrian Electric Power Group controlled nearly 60% of Europe’s electricity supply, truly the world’s number one industrial giant. Based on market estimates, the most valuable of these four oil companies had already reached a valuation of 570 million guilders. After going public, it could very well surpass the Austrian Electric Power Group as the market leader in value. Of course, there were reasons for such high valuations. In an age when petrochemicals were regarded as high-tech products, the listing of oil companies was being promoted just like high-tech enterprises. Unlike the lofty dreams of other tech companies, the oil companies’ promises were tangible and real. Their assets and profits spoke for themselves. Setting aside heavy machinery, factories, and technology, each oil company owned oil fields with reserves of billions of tons of crude oil and generated annual profits of tens of millions of guilders. With promises of double-digit annual profit growth and the market’s optimism toward the future of petrochemicals, high valuations were inevitable. In fact, if the companies had not been split into four, those valuations could have risen even higher. Any industry that carried the label of “monopoly” was bound to receive an enormous market premium. Take the Austrian Electric Power Group as an example. At its peak, its market value once broke through the 2.5 billion guilders mark. Its subsequent decline was due not only to a stock crash but also to performance falling short of expectations. There was no helping it. Europe’s common people were simply too poor. Although many cities had already adopted electric grids, the lower classes, who made up the majority of the population, simply could not afford electricity. The expected surge in industrial electricity use never came. Outside the Holy Roman Empire, it turned out that not every country was eager to promote new technologies, and electric motors were far from widespread. On top of that, some nations had to import coal, which made power generation extremely expensive. As a result, many overseas cities that had installed electrical grids were now suffering short-term losses. The industry’s long-term prospects were promising, but in the short run, the slowdown in growth was undeniable, and the capital market naturally reacted accordingly. In contrast, the oil companies were faring much better. With the booming automobile industry, internal combustion engines were spreading far faster than electric motors, and market demand was growing at an equally rapid pace. … “Your Highness, the pre-listing equity incentives and advance subscription work have all been completed. We expect trading to begin on December 21.” No matter how heated the media debate became, the Holy Roman Empire’s largest IPO in history was now officially underway. No one is interested? That was wishful thinking. If not for the need to avoid public scrutiny, the royal consortium would never have even bothered taking the oil companies public. Both the pre-listing financing and the advance subscriptions were handled entirely within the consortium, a game of passing money from the left hand to the right. With arrangements like that, how could the valuations not be high? And if no one else bought shares, all the better. They could simply use smaller front companies to purchase everything themselves. Given the current market demand, the petrochemical industry was clearly the way of the future. According to the consortium’s internal estimates, once the petrochemical industrial chain was fully developed, these companies’ annual profits would surpass their current valuations. In an age when currency was stable and large-scale inflation was rare, global economic growth was slow. A company that could maintain double-digit profit growth under such conditions was a rare gem indeed. In fact, businesses with such high growth potential almost never went public, unless they faced serious funding shortages or had reached a developmental bottleneck. But to avoid attracting too much attention and to better conceal their wealth, the royal consortium had chosen to list even its most profitable enterprises. “I understand. Proceed according to the original plan.” For some reason, once everything was finally completed, Frederick felt an inexplicable emptiness inside.
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