Reborn as King of South America

Chapter 190 Loan Game III

While the American and French envoys were trying to persuade Brazil to accept the loan, British Minister Edmund sent several telegrams to the London government, reporting changes in the situation in Brazil and asking the London government to give the embassy in Brazil greater autonomy.

Edmund's request was not accepted as he had the first time. After two days of discussion, the London government sent a telegram to the embassy in Brazil, stating that Britain must maintain its position as Brazil's largest trading partner. At the same time, the embassy was responsible for negotiating with the Brazilian government to establish a British-led "Brazilian Debt Management Committee to exclusively handle Brazil's foreign debt and loan transactions."

Monopolizing Brazil's foreign debt market and loan business was the bottom line set by the London government for the embassy in Brazil. Although on this basis the London government agreed to coordinate with the Brazilian government on the issue of warship defects, Edmund was still very disappointed.

Before the Paraguayan War, Britain acted as Brazil's exclusive debt broker. Most of the Brazilian army's land and naval equipment was provided by Britain, and various industrial facilities built in Brazil were also mostly purchased from Britain.

Now, with the addition of two strong competitors, the London government is trading with Brazil with the mentality of having only one share without truly understanding the situation in Brazil. Sooner or later, it will suffer a big loss.

Edmund had long been dissatisfied with the bureaucrats who filled the diplomatic department. After unsuccessful communication with his native land, at noon on August 8, Edmund was invited to enter the palace to meet with Pedro II.

In terms of several major principles of the deal discussed by the two parties, although Edmund deliberately downplayed the content emphasized by the London government, Pedro II politely rejected the deal with the British after personally verifying the authenticity of what Witte said.

In the afternoon, Bernardo and Witte entered the Royal Palace in Rio de Janeiro again and had a frank negotiation with Pedro II.

At the request of Pedro II, French Minister Bernard agreed to reduce the price of the warship from 40 pounds to 37 pounds. American Minister Witte took the opportunity to sell the surplus warships at half price and sold the ironclad USS Roanoke, which served in the Civil War, as
Sold to the Brazilian Navy for the low price of £18.

The USS Roanoke had a displacement of 6300 tons.
With a speed of 8.5 knots and a standard configuration of 340 naval soldiers, it is a warship with relatively complete performance.

The Roanoke had been in service for only six years and was not yet ready for retirement. According to normal warship trading procedures, the ironclad Roanoke would have been sold for about 30 pounds. The Americans would rather sell it at a loss than make the deal, and there were naturally other compensations.

The situation was not beyond the estimation of the American Minister Witte. After seeing the offer and the performance of the warship, Pedro II was very tempted. However, considering that he had been deceived by the British once, he was much more cautious this time and asked in advance: "Your Excellency, the Roanoke will not have various defects like the Monarch-class ironclad warships, right?"

"Your Majesty, please rest assured that the Roanoke has excellent performance. In the battle with the Southern Navy in 1865, the Roanoke successfully sank a Confederate ironclad ship with its flexible maneuverability and powerful artillery weapons, and the warship itself only suffered minor damage."

The Roanoke had been tested in actual combat and had sunk enemy ships. In Pedro II's mind, the warship's combat effectiveness, which was his biggest concern, was basically guaranteed. Therefore, he was more forthright and directly put forward the last condition, hoping that the United States would allow the Brazilian Navy to send specialized personnel to the United States to inspect the performance of the warship. If Witte agreed to this condition, all other commodity transactions could be discussed slowly. It was not too much of a request to inspect the goods before paying, so Witte agreed after a little consideration.

American products had some shortcomings in the initial stage, but Witt was quite confident about the Roanoke, which he had learned about in advance. The Roanoke was made entirely of steel, with two 2-inch Dahlgren smoothbore guns, two 15-inch Dahlgren smoothbore guns and two 2-pound Parrott rifled guns installed on the upper part of the warship. The entire warship not only has strong armor protection, but also has a strong artillery attack system.

The United States developed ironclad ships later than Britain, France, and Austria, but in terms of modern warship manufacturing, the United States was the first country to attempt to build all-steel warships. Therefore, the ironclad ships built by the United States are closest to the main battleships of the 20th century.

American warships have their advantages and disadvantages. For example, the biggest disadvantage of the USS Roanoke is its short range, which makes it impossible to sail in the ocean or perform deep-sea combat missions. Of course, in Witte's eyes, this disadvantage is not a big problem. The Brazilian Navy and the newly established Chinese Navy are both novices. It is good enough for both parties to be able to carry out regular maritime operations in the near-shore area. As for ocean operations, that is a problem that only old maritime powers such as Britain and France should consider.

After successfully selling his short-legged warships, Witte first reached a preliminary consensus with Pedro II on three major aspects: loans, mining rights and railway construction rights.

In terms of loans, the United States provided Brazil with a total of US$700 million in two phases. The first phase of the loan was US$200 million, which was delivered within one month of the signing of the contract, and the second phase of the loan was US$500 million, which was delivered over a year.
The interest on the $700 million loan is calculated based on a low interest rate of % per year, and the repayment period is extended to ten years.

In terms of minerals, the Brazilian government authorized American businessmen to explore for mineral resources in Mato Grosso do Sul and Pará in the north. At the same time, it sold a state-owned iron mine in Minas Gerais to American businessmen for 200,000 pounds. The mine was jointly funded by three American banks.

In terms of railways, American and French businessmen will be responsible for jointly planning and building a railway from Sao Paulo to Ribeirao Punas. After the railway is completed, the three countries will establish the Sao Paulo-Ribeirao Punas Railway Management Company, with Brazil holding 45%, France holding 25% and the United States holding 20%.

French and American businessmen obtained commercial contracts of considerable value during the transaction, but in Brazil, British companies still have advantageous control over Brazil's economic interests.

Brazil's iron ore resources are mainly distributed in Minas Gerais, accounting for 70%, Mato Grosso do Sul, accounting for 21.5%, Pará in the north, accounting for 7.3%, and other states, accounting for 1.2%.

Among the three major iron ore producing areas, American and French businessmen only obtained the right to explore and mine iron ore in Pará and Mato Grosso do Sul. The iron ore exploration and mining rights in Minas Gerais, which has the largest iron ore reserves, are mainly concentrated in the hands of British businessmen. The French and Americans can only rely on the administrative orders of Pedro II and accept several state-owned mines that have been mined for many years. In the competition with British businessmen, the United States and France have temporarily won a victory, but are still at a disadvantage in the overall situation.

(End of this chapter)