African Entrepreneurship Record

Chapter 473: Chapter 151 Conflict

Since the Age of Exploration, the prosperity of commerce has become inseparable from ports. A good port can better promote economic development, with populations gathering along the coast. The Industrial Revolution brought the rise of railway transportation, greatly enhancing land transport capabilities, allowing inland areas to develop as well.

However, this development is far more restrictive compared to maritime transport. Railway construction is constrained by various factors, which also leads to disputes between regions. Areas through which railways pass can stimulate regional economic growth and even create new cities, but if a railway does not pass through, even ancient cities might decline as a result.

”In many parts of East Africa, railways came first, followed by settlements. These villages and towns formed along the railway, if the railway does not fall into disuse in the future, are likely to continue to prosper.”

”Moreover, railway construction has increased East Africa’s transportation efficiency by more than threefold. In the past, we needed a large amount of manpower and livestock to transport goods to port areas. Now, inland areas only need to transport goods to the nearest train station, and then the railway can deliver goods to the ports.”

”From the start, railway construction in East Africa was a losing business, an investment made without considering returns. But now we see the returns on that investment, which is the rapid development of inland areas, narrowing the gap between the eastern and western regions of the kingdom, which has positive significance for the kingdom’s governance.”

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”Since 1875, we’ve noticed that the German government has significantly intensified its targeting of our enterprises, especially those bearing the Heixinggen name, facing increased difficulties. Clearly, in the eyes of the German government, we have become a piece of fat meat, and the Bismarck government clearly turns a blind eye to our interests.”

”Bismarck represents the Junker group behind Germany. The barbaric growth of our Heixinggen enterprises in Germany over the years has evidently agitated the Junker landowners.”

”And just yesterday, someone in the German parliament proposed raising tariffs on agricultural products, with our East African kingdom’s agricultural products being a focus.”

Constantine and Ernst silently listened to their subordinate’s report. Clearly, the Germans could not sit still anymore!

Ernst: ”Father, see! I said the Hohenzollern surname could not be our shield. When we chose to develop in East Africa, we effectively broke away from the original group and became their competitor.”

The group Ernst referred to is the Junker aristocracy. While the business scope of the Junker aristocracy cannot be said to be completely aligned with the Heixinggen consortium, it is not far off either.

In the market, it is as if for every extra piece I eat, you eat one less. Clearly, the scale of the Heixinggen consortium is too large, occupying too much market share, posing a severe threat to the business of the Junker aristocracy.

Constantine: ”I just communicated with William I via telegram this year. He promised not to make things difficult for the East African kingdom!”

Ernst: ”You have to distinguish between the Prussian royal family and the Prussian government. Their interests are not aligned, and the Prussian royal family, fundamentally, must comply with the national will, which is their basis of existence.”

Constantine: ”What do we do now?”

Ernst: ”There’s no good solution, we can only gradually withdraw investment from Germany and redirect the funds to other regions.”

After all, the Heixinggen consortium is not East Africa, so when targeted, East Africa cannot do much either. But like Jewish capital, capital has no homeland. If one place does not leave a space, another will.”

Constantine: ”Where do you plan to invest the money?”

Ernst: ”Austria-Hungary, the Far East, and Argentina, these three regions.”

The mention of East Africa is absent, but East Africa has always been the largest bleeding channel of the Heixinggen consortium. The market in the Austria-Hungary Empire is actually quite good with weak political centralization, which means the government has less hold over capital. The Rothschild family is thriving in Austria. As for the Far East, it goes without saying, it’s a vast market with deep cooperation with East Africa, especially after East Africa’s fleet visited, conversations have become more courteous. As for Argentina, its prospects look good, at least enough to follow in the footsteps of Britain and America and catch some leftovers.”

Constantine sighed: ”Alas, let’s do it that way then!”

With instructions from the Heixinggen Bank headquarters, a portion of the funds in Germany began flowing into other countries. Meanwhile, to counter Germany’s pig-slaughtering tactics, East Africa also prepared to stop procuring German steel after contract expirations, increasing purchases from the Austro-Hungarian Empire instead.

The large escape of funds caused a small-scale panic in the capital market, but during this depression period, such panic quickly spread, ultimately triggering a new crisis.

Having just stabilized itself, the German government immediately felt the pressure. With the massive outflow of funds from the German market, unemployment rates rose once again.

William I asked: ”What’s going on? Wasn’t the economy just showing signs of improvement?”

Bismarck, with confidence, said: ”Your Majesty, there’s no need to worry. This is an economic crisis, so a few hiccups aren’t a big deal. Everything is under control.”

That being said, the reality was that the Heixinggen consortium primarily exited the German agricultural investment market. Coincidentally, just as the Heixinggen consortium withdrew, someone else took over the business left behind by the Heixinggen consortium.

However, these businesses were not easy to take over. Previously, because the Heixinggen consortium collaborated with them, Junker aristocracy were given a certain share, helping them sell products in the international market.

Now, that necessity is gone. Many of the distribution channels built by the Heixinggen consortium, particularly the supermarket systems, can substitute many products with East African agricultural produce.

The Junker aristocracy had better find their own channels to sell their goods, or the losses would be considerable. Ernst would certainly show no mercy again. Of course, the Junker aristocracy is not monolithic either.

After an unpleasant experience with the Prussian Junker aristocracy, the Heixinggen consortium strengthened its cooperative relations with the Southern German nobility, benefiting Baden, Württemberg, and Bavaria.

Germany, as a federation, provides the southern German states with relatively full autonomy, at least economically. Pulling in one group while opposing another allows for better differentiation of opponents.

The competition between Germany and the Heixinggen consortium mainly occurs in the grain market; other aspects are less intense. The Junker aristocracy is just a collective name for the German aristocracy.

In the industrial sector, for example, competition between the Heixinggen consortium and the Junkers was not intense. The Heixinggen consortium focused on light industry and emerging industries while the industrial Junkers concentrated on heavy industry, allowing both to develop apart.

However, the Heixinggen consortium’s inclination towards East African agriculture is bound to cause conflicts with the landed Junker aristocracy. Even though the Heixinggen consortium had made compromises, it was far from meeting the psychological expectations of the agricultural Junker aristocracy.

The Heixinggen consortium is not afraid of such competition. Their main investment in Germany is in channels and food processing, not necessarily relying on the landed Junker aristocracy. In modern terms, the landed Junkers are downstream in the industry chain.

However, food processing companies also belong to industry, which is susceptible to management and control, clearly less flexible than financial industry. So transferring food processing companies to East Africa seems urgent.

In practice, East Africa has a set of primary food processing systems, but middle to high-end processing production mainly takes place in Germany and Austria. Now facing setbacks in Germany, Ernst is also convenient to transfer the food processing companies onto East African soil.