African Entrepreneurship Record

Chapter 417: Chapter 94: Sudden Wealth

September 3, 1872.

Wall Street, USA.

The New York Stock Exchange, which just relocated to its new address on Wall Street last year, boasts the world’s newest, largest, and most luxurious trading building at present.

In recent years, after experiencing the Civil War, the United States, accompanied by the railroad economy, the great development of the West, and the major industrial boom in the East, has ushered in an unprecedented prosperity,

with capital from all over the world rushing into this hot land. Foreign capital alone accounts for half of the railway investments in the U.S. From 1865 to 1871, more than 6,000 miles of railroads were constructed, which is more than a hundred times that of East Africa during the same period. Moreover, the planned railroad mileage for 1872 by various railroad companies is more than nine times that of 1865. The enthusiasm for railroad investment is unprecedented, with a massive influx of funds being funneled into railroad investments through the New York Stock Exchange.

Railroad construction has driven demand for steel, coal, and oil, with numerous factories being built—even blindly and frantically—while the market’s demand is as endlessly greedy as a black hole.

”Boss, someone sold twelve percent of Aurora Railway Company’s stock, and this stock has been rising for the past few months. Should we follow up and buy it?” Jack asked his boss, Smith.

Smith: ”Of course, Jack, buy all of it for me.”

Jack: ”Boss, the problem is if we buy it all, I’m afraid our funds might be completely drained!”

Smith: ”Jack, railroad stock is hard to come by now. Buy it, sit back and wait; we don’t have to do anything and US Dollars will keep flowing into our pockets. So don’t be afraid, timid people won’t make big money. Go all in, don’t let others get ahead, time is money!”

Jack: ”Yes, boss.”

Despite Smith’s urgency, they were still a step too late and only managed to grab twenty percent of the shares, leaving Smith somewhat frustrated.

He yelled with reddened eyes: ”Jack, listen to me carefully. From now on, keep an eye on the stock market changes at all times. Whenever someone sells railroad stocks, buy them for me. There’s no need to ask for my permission until we’ve spent all our funds. If you succeed, there will be a hefty bonus this month. If not, I’ll dock your pay!”

”Yes, boss!”

Soon, Smith got his wish. Some ”fool” sold another batch of railroad stock, and Jack quickly seized the opportunity and bought it all.

In the following days, stocks of various railroad companies were sporadically sold, but the amounts were insignificant and did not attract much attention. The trading floor was filled with the intense sounds of bidding as the Heixinggen financial group sold off all their railroad stocks.

”Our investment assets in North America from a year ago have nearly multiplied tenfold in value, but now it seems this is far from the limit in North America, and the asset prices are still rising, which is truly a pity!” discussed the staff of the Heixinggen Bank’s North American branch.

In order to grab a bite of the hot meal, Ernst had invested a massive sum of forty million British Pounds in North America, which was almost eighty percent of the profits Heixinggen gained from the Prussia war. After a round in the US stock market, it now turned into 380 million British Pounds, equating to 11.4 billion East African Rhine Shields. Since the silver price hadn’t depreciated at the time, this amount equates to about 1.1 billion taels of silver, roughly eight times the reparations of the Treaty of Shimonoseki (considering the depreciation of silver at the time of the treaty). So, America, as the world’s second-largest economy next to Britain, was indeed wealthy at that time.

Apart from profits in North America, Ernst also sold a large number of assets in Europe, which together amounted to about eighty million British Pounds, pale in comparison with North America.

However, this relates to the main body of the Heixinggen financial empire in Europe, where the businesses under its umbrella in Europe are overwhelmingly high-quality assets, unlike the speculative ”high-quality industries” in North America. For example, when the Aurora Railway Company was founded last year in America, it had only thirty-plus employees. Then, with massive funding injected by the Heixinggen financial group, it expanded its workforce to secure the Philadelphia to New York railroad project. The company’s market capitalization soared by a hundredfold. Subsequently, Heixinggen Bank gradually looked for buyers to take over in the stock market. After Heixinggen Bank sold all its stocks at high prices, only one station of the railroad was completed.

While Ernst has amassed a substantial amount of money from financial market circles, it doesn’t constitute all of his wealth. The vast Heixinggen financial empire is the real heavyweight. Some of the major enterprises under Heixinggen would be leading companies in the world’s top 500 in later generations. Heixinggen Bank is among the top entities.

Currently, the Heixinggen royal family is one of the strong contenders for the title of the world’s richest. This is because no one is truly aware of the foundation of those ancient families, such as the renowned Rothschild family. A group of European royal families and nobles cannot be underestimated. Presently, the visible richest person is America’s Rockefeller with a wealth exceeding a billion dollars, but Rockefeller can no longer be seen as being on the same level as Ernst.

Under Ernst’s command is the political entity of the East African Kingdom, whose value is entirely incalculable. In 1871, the fiscal revenue of the East African Kingdom’s government was over seven million East African Rhine Shields, approximately 800,000 taels of silver.

This amount of money is not much, but it doesn’t mean anything significant. For example, most of the factories in East Africa do not pay taxes. Only the cities of Mombasa and Dar es Salaam are exceptions, serving as the two main sources of tax revenue for the East African government, which relates to their foreign trade.

However, a fiscal revenue of 800,000 taels of silver constitutes about sixteen percent of the Japanese government’s fiscal revenue at the same time, which is not insignificant because, at the same time, the East African population is nearing seven million, compared to Japan’s thirty-eight million people, with East Africa’s population being eighteen percent of Japan’s.

The Japanese government invested in many industries, combined with centuries of accumulated wealth, resulting in higher per capita fiscal revenue than East Africa, which is normal.

Of course, the East African Kingdom has over 23 million natives (including South Africa), but the majority are currently in a state of laissez-faire, mainly concentrated in the western part of the Kingdom and the South African region, with only over nine million natives serving as labor tools at the disposal of the East African Kingdom.

The wealth they create cannot be specifically reflected in monetary terms, such as being used to replace oxen and horses for plowing, collaborating in labor, laying roads, and building water conservancy facilities, etc.

These belong to pure manpower inputs, and the contribution they make to the East African Kingdom is allocated to the heads of East African citizens. For example, the land in East Africa is developed according to the total number of citizens. The grain yield per acre in East Africa requires more human resources than other countries, especially for labor-intensive industries like plantations and rice paddies. East Africa requires more labor to create the value that one person achieves in other similar agricultural nations. However, East Africa still calculates and statistics it based on one person.

The overall production level in East Africa can be said to be rather backward, if not somewhat low, but the difficulties faced by the East African Kingdom are much greater than other countries. Take the land for example, the development of land in East Africa is entirely a process from scratch and requires large inputs, making it hard to achieve results in the short term, whereas other agricultural countries have well-developed fields that have been cultivated for a long time with stable yields.

The number of livestock in East Africa is also far less than contemporary agricultural nations, and it cannot instantly evolve from a human labor empire into a Roman Empire. It requires several years or even decades to meet the needs of the East African Kingdom. This is a hard injury faced by the whole of Africa, as there are no domesticated local livestock available for the East African Kingdom to use, necessitating large imports and introductions.

The inadequacy is also reflected in the agricultural tools, with many basic agricultural tools needing imports, like hoes, shovels, and iron plows that need to be massively imported from Germany. It’s not that East Africa cannot produce them, but the production capacity is limited, and the quality is unreliable.

There are many other issues existing in East Africa, but given the colonial period plus East Africa only spans seven years, one cannot be too demanding.