African Entrepreneurship Record

Chapter 1319: Chapter 328: The United States Enters the War

From 1917 to 1918, two years of international turbulence unfolded. Already amidst World War I, the establishment of Soviet Russia was a historical event no less significant than the war itself. In 1918, yet another event occurred, further fueling the already fiery international situation.

In March 1918, under the active persuasion of the United Kingdom, the United States finally, albeit slowly, formally declared war on the Allies, invigorating the Allies, who had just lost Russia as a major player, with a dose of new strength.

In Rhein City, the East African Government once again engaged in intense discussions.

The East African Minister of Finance, Logans, said, ”The United States joining the Allies is evidently predictable. From an economic perspective, since the outbreak of war until now, the United States has become the biggest creditor of the Allies. If the Allies were to be defeated, the United States would inevitably face the risk of the Allies unable to repay their loans.”

”This is clearly unacceptable to the U.S. government and enterprises. If the Allies were defeated, Americans would not only miss out on profiting from the war, but would also lose everything.”

”This could trigger a bankruptcy crisis among American enterprises, subsequently causing a nationwide economic crisis. Massive unemployment might pose more severe consequences to the American regime than not participating in the war, hence the United States being firmly tied to the British war chariot.”

Though East Africa is also a creditor to the Allies, East Africa and the United States are, after all, different. Most crucially, East Africa’s interests and exchanges with the Allies are far larger in scale compared to the United States.

This means that the victory or defeat of the Allies and the Allies is not sufficient to have a decisive economic impact on East Africa.

Moreover, since 1917, East Africa has already begun to withdraw significantly from the European market, shifting its focus to conquering the southern national markets and aiming to cultivate its own economic sphere of influence.

Additionally, East Africa’s loan review was apparently unfriendly to European countries. The most typical example being previous trade between East Africa and Russia, where Russia’s national credit was virtually non-existent in East Africa, and trade between the two countries even settled through bartering.

Of course, the underdevelopment of East African financial industry is also a fact. It’s been less than ten years since the opening of the Free City, with private capital being quite weak, and excessive government interference, among others, causing the development of East African financial industry to be very slow. The only advantage perhaps being relative stability.

In the end, the financial industry is a game of big fish eating small fish. No matter what, East African financial industry could not possibly compete with other established financial powers, so initially, the East African government must intervene in the financial market to maintain the stability of the national ”pond.”

Conversely, there were virtually no barriers for American financial institutions compared to East Africa. Furthermore, the U.S. government lacked regulation over the free market. Numerous U.S. financial institutions, enterprises, and even the U.S. government issued numerous war bonds to Europe.

Additionally, there’s another factor that cannot be ignored: the extensive connections of the United States in the financial field with Europe, which East Africa simply couldn’t compare to.

Before the market opened, East Africa’s financial cooperation with European countries was almost limited to the government level. While American enterprises and financial institutions have developed for centuries, some even have a European financial background. Especially considering the United Kingdom, the original Sovereign Country, whose financial industry has, to a certain extent, merged with that of the United States.

This led to American companies and financial institutions with significant capabilities almost all having their channels to connect with Europe.

It also represents that the U.S. government cannot stop American enterprises and financial institutions from having direct contact with Europe, and evidently, the U.S. government had no intention of doing so.

Thus, greedy for European wealth, American enterprises and financial institutions, by all possible means, actively lent to various European countries.

In the field of industrial capital, American enterprises were likewise unable to resist the lure of the European market. Because in the early stage of the war, the U.S. was ill-prepared, allowing East African commodities to thrive in the two major European camps.

Watching East Africa making profits in Europe, Americans couldn’t help but be envious, further fueling the mid-late war competition between Americans and East Africa for the European market.

As for why it’s Europe, the reason is simple: Europe has strong consumption potential and abundant accumulation. It can be said that markets outside of Europe, combined together, hardly compare to the European market.

For centuries since the Age of Exploration, there was no doubt that the majority of the world’s wealth flowed into Europe, or else Europe wouldn’t support the existence of five major powers (UK, France, Germany, Austria, and Russia).

When the United States wanted to enter the European market, it faced restrictions from England and France, unlike East Africa. East Africa had several more trade routes with Europe than the United States (including land trade routes), whereas due to location, the United States couldn’t circumvent England and France in trade with Europe.

Sure, Russia’s Siberian railway was an option, but clearly, railways couldn’t compete with sea routes. Moreover, the Siberian railway was very long, with harsh climate conditions, high maintenance cost, frequent breakdowns, and Russia’s inefficient railway system, among other reasons, caused few countries except Japan and the Far East Empire to pay heed to this trade corridor.

In contrast, the most important land trade artery of East Africa and the Allies, the Berlin—Baghdad—Basra railway, is only one-third the length of the Siberian railway, and the climatic conditions along the line are much better.

However, with the Ottoman Empire joining the war, this transportation artery has also come to a halt. Last year end, the British marched from Persia straight into the southern Persian Gulf territory of the Ottoman Empire.

All in all, the geographic conditions for the United States in European trade make it challenging to compete with East Africa. Of course, the U.S. does have some advantages, given the North Atlantic route favors trade between the U.S. and the Allies.

And England and France, the two core countries of the Allies, are themselves countries along the North Atlantic coast, plus interference from the British, forcing American entrepreneurs hoping for significant wartime profits to continually increase trade with the Allies.

It can be said that over the past four years, the interests between the United States and the Allies, especially the United Kingdom, have increasingly deepened; from an economic interest standpoint, the United States joining the Allies is not unexpected.

Logans continued speaking, ”The United States’ geographical disadvantage leaves them with the Allies as their sole cooperation target. Even if the U.S. government tried to bypass the Allies and conduct large-scale trade activities with the Allies, it wouldn’t be feasible, and today the Allies virtually severed the external trade of the Allies.”

”Americans are like gamblers vexed by losing, constantly increasing their bet on the Allies, even betting their entire fortune. So from an economic standpoint, the United States absolutely cannot allow the Allies to fail.”

”And possibly the ultimate impetus for America to join the war was the downfall of the Russian Tsar regime, causing an imbalance in the war scales between the Allies and the Allies.”

From Logans’ summary, one can roughly deduce the deeper reasons for the U.S. government joining the Allies.

To a large extent, the U.S. government was also coerced to get involved in World War I by the enormous interest groups composed of U.S. financial institutions, enterprises, and other organizations. Even if the U.S. government wanted to emulate East Africa’s stance of sitting back and watching the clouds, it could not.

East Africa does not have such troubles; East Africa indeed has its interest groups, especially the powerful bureaucratic clique in East Africa. But the issue is that the East African bureaucracy doesn’t have deep ties with Europe.

Even the German Region in Europe, where Germany and Austria-Hungary form the core migrant source for East African immigrants, lacks close interests with their upper societies, unlike the bone-deep connected relationship between American high society and British high society.

Ultimately, most East African bureaucrats themselves hail from lower levels, and even if they wanted to ingratiate their aristocratic compatriots from the German region, the nobility might not appreciate these ”political upstarts.”

Additionally, the geographical position of East Africa doesn’t allow the East African bureaucrats to force themselves towards Europe. Traveling from East Africa to Europe inherently requires going by sea, during which just the time would take about ten days. Generally, without important matters, East Africans find it difficult to have opportunities to interact with European nobles, while in Europe, small countries proliferate, and nobility is abundant, making cross-visits much more convenient.

These reasons all impact the exchanges between East Africa and European nations, but Ernst is pleased with this.