#1391 - Rheinshield Internationalization

In fact, compared with late-developing countries such as East Africa, France still has too strong a financial foundation. From the late 19th century to the early 20th century, France has become the world's second largest capital exporter, second only to Britain.

During this period, Europe was the undisputed world financial center. In addition to Britain, France and Germany, the financial industries in countries such as Belgium, the Netherlands and Switzerland were relatively well developed. Even Belgium's capital outflows were around 3 billion Rhine guilders, which was almost US$500 million.

However, before the war, the directions and focuses of capital exports from these countries were different. Britain's investment was mainly within the empire, that is, the vast colonies owned by Britain, and secondly in the entire Americas.

France's overseas investment is mainly in Europe, with Russia accounting for the largest share, followed by East Africa, and finally its own colonies.

The reason for this result is that the quality of French colonies is obviously inferior to that of British colonies. British capital can choose India, Canada and other regions and obtain good returns, while the investment in French colonies is relatively slow to take effect.

Finally, there is Germany. Germany has far fewer investment options than the UK and France. The main areas are Central and Eastern Europe, the Ottoman Empire and East Africa. It is worth mentioning that the Austro-Hungarian Empire is a key area of ​​German investment.

However, since the World War, the structure of the world's financial industry has changed dramatically. For example, the United States has become the world's largest creditor country, and East Africa has gone from being heavily indebted before the war to becoming one of the world's major creditor countries after the war.

This transformation actually corresponded to the economies of the two countries. After the war, the combined industrial output of East Africa and the United States exceeded 50% of the world's industrial output, while Europe's output shrank to around 30%. In the 1970s, around the time of the Franco-Prussian War, Europe's industrial output was close to 65% of the world's industrial output.

It can be seen from this that the rise of extraterritorial countries such as East Africa and the United States has had a powerful impact and damage on the European economy and industry.

For example, South America, which was once a major capital export region for Britain, was actually divided up between the United States and East Africa due to the First World War. After the war, it was almost impossible for British capital to return to this region, and British capital could only flow further into its own colonies.

France is in an even worse situation than Britain. France's largest investment is in Russia, but the Russian Labor Party coming to power caused France to lose all its investment in Russia. The only good news is that the losses suffered by France are definitely smaller than in the past. This is because the rise of East Africa has allowed French capital to find a new investment hotspot.

In fact, from the distribution characteristics of capital outflows from European countries before the war, it can be seen that the flow of capital in Europe is actually more inclined towards the country's own sphere of influence, followed by regions and countries with relatively close international relations, and finally independent sovereign states with relatively reliable credibility.

East Africa is a third party to France, that is, an independent sovereign state with relatively reliable credibility. Under this premise, France's investment in East Africa will not be treated differently.

If East Africa also refuses to recognize old debts like Russia, France's economy will probably go bankrupt after the war. After all, France's investment in East Africa is second only to Russia, and this time France is not a victorious country and can't get reparations from Germany to make up for its own losses.

In response to the new changes in the current international economic situation and the actual economic development of East Africa, Ernst said: "After the war, the world financial landscape has undergone tremendous changes. Although the international status of the pound remains stable, it has been weakened to a certain extent. The status of the French franc may be shaken due to the impact of the war and Russia's default."

“This is the most important impact of the First World War on the old world order. It may lead to major changes in the international economic order.”

"This provides favorable conditions for the internationalization of the Rhine Shield. We are also taking advantage of this good opportunity to build a solid Rhine Shield region."

Before World War I, the three major currencies in the international monetary field were the pound sterling, the US dollar and the franc, corresponding to the pound zone, the dollar zone and the franc zone.

Due to its short history, the East African Rhine Guilder is not as influential as the German Mark in international trade and can only rank fifth in the world.

Of course, this is also closely related to the late development of the financial industry in East Africa and the late opening of the East African market.

Now the East African Rhine Guilder has the conditions to become one of the world's strong currencies, thanks to the rapid rise of East Africa's influence in the world and the rapid development of East African industry since the late 19th century and early 20th century.

From the South African War in the last century to the end of World War I, East Africa successfully extended its influence from mainland Africa to the entire Indian Ocean coast, the Middle East and Central Asia, the South Pacific and East Asia, South America and other places, which laid the foundation for the international circulation of the Rhine Shield.

Among the above-mentioned regions, East Africa has established a relatively stable economic sphere of influence and fulcrum, which can safeguard the flow of the Rhine Shield.

These areas are exactly the ones that the East African Navy and future Air Force can cover and have certain advantages.

For example, the Third Fleet in the Persian Gulf, the two economic free trade zones in East Asia, the deep economic cooperation between southern South American countries and East Africa, the extensive colonies in the South Pacific, and so on.

This also explains to a certain extent why Britain tried every means to block East Africa's northward passage into Europe after the war. Once East Africa's influence extends to Europe, the East African Rhine Guilder will be almost indistinguishable from the world currency, seriously threatening the dominance of the pound.

Against the backdrop of the relatively backward development of Britain's industrial and military strength, the financial industry can be said to be Britain's last straw, so Britain is bound to suppress other currencies that may threaten the status of the pound.

So it was not just the East African Rhine guilder, but also the American dollar, the French franc, the German mark, etc. that were targets of suppression by the United Kingdom.

Among these, the US dollar and the French franc had already become major international currencies after the British pound before the 20th century. For example, the share of the US dollar in the world's foreign exchange reserves is second only to the British pound, thanks to the United States' strong economic and industrial strength, as well as its highly developed international trade.

Since modern times, France has always played an important role in the international community and has even long been one of the leaders of the international order. It has extensive influence around the world and a large colony second only to that of Britain, so the franc has always been a major international currency.

In comparison, the East African Rhine Guilder and the German Mark were actually latecomers. The unification of Germany only took place in the middle and late last century. After the Franco-Prussian War, Germany became a major economy in the world. However, the newly unified Germany had a good economic foundation, which allowed the international share of the German Mark to continue to grow rapidly.

Although the East African Rhine Shield appeared later than the German Mark, it played a less important role than the German Mark.

After all, it was only after 1910 that East Africa fully opened up its domestic market. Before that, East Africa's economic international participation had always been low.

Therefore, Ernst said: "The Rhine Shield's influence in the world does not match its value. This is one of the disadvantages of East Africa as a late-developing country, or even the youngest country in the world."

Countries like the United States, Germany, and Japan are late-developing countries, just like East Africa. However, East Africa also holds the status of being the youngest country in the world. With a history of less than a century, East Africa is much younger than countries that developed from colonies such as the United States.

"Therefore, the internationalization of the Rhine Shield must further increase the popularity of the Rhine Shield in the economic market and make it a widely recognized international hard currency, so as to narrow the gap between us and European and American countries in the currency field."

"Through long-term efforts, we have laid a good foundation for the internationalization of Rhine Shield. In the industrial field, East Africa's industrial scale ranks first in the world. At the same time, East Africa is vast and rich in resources, which provides Rhine Shield with solid intrinsic value."

Of course, Ernst has not mentioned one point, that is, the East African treasury has sufficient gold reserves. In the era of the gold standard, this is a huge advantage for the East African Rhine Shield.

"What the Rhine Shield lacks now is external influence. So in order to improve the international liquidity of the Rhine Shield, under the new economic situation, the Empire should start to establish the Rhine Shield's international payment system, international clearing system, international reserve system, etc."

"This raises higher requirements for us to further improve our country's financial system during the 5th Five-Year Plan."

"The Empire's financial industry was developed to a great extent before World War I. Compared with European and American countries, it can be said to be very immature. Therefore, one of our economic tasks at this stage is to rectify the domestic financial market and build a complete financial system."

"At the same time, at the national level, plans are being made to build a new international financial center to facilitate economic exchanges and communications between the empire and countries around the world."

Before this, Mombasa was the international financial center of East Africa. During World War I, because East Africa became a major industrial and strategic resource exporter in the world, Mombasa's economy developed rapidly and its status as an international financial center was greatly strengthened.

However, one shortcoming of Mombasa cannot be ignored, that is, Mombasa is located on the east coast of East Africa, which is not conducive to the development of financial-related fields in East Africa and the Atlantic coastal countries.

Ernst said: "Mombasa's geographical location is flawed, or the terrain of East Africa has hindered the development of our financial industry. Therefore, in order to strengthen the construction of the financial industry and facilitate exchanges between East Africa and foreign countries, two new international financial centers should be established."

“One is Cabinda and the other is Dar es Salaam. Cabinda has become the international financial center on the west coast of East Africa, while Dar es Salaam has become an important supplement to the development of the financial industry on the east coast.”

In fact, if it were not for the Gabon and Cameroon provinces in the northwest of East Africa, which are difficult to develop economically due to natural factors and have poor transportation, the new financial center on the west coast would definitely be located as far north as possible.

Just like Mombasa, its location is most convenient for exchanges between East Africa and the Far East, countries along the Indian Ocean coast and other regions. Further north is the Somalia region. Although it is also East African territory, the climate environment in the Somalia region is too harsh.

Gabon and Cameroon in the northwest of East Africa are at the other extreme. Somalia is a typical tropical desert area, while the northwest is a typical tropical rainforest area.

East Africa will add two new international financial centers, one on the east and west coasts, namely Mombasa and Cabinda. The city of Dar es Salaam was established with this attribute to facilitate the development of central and southern East Africa.

Although East Africa is a country with two oceans, there is still a gap between the east and west coasts of East Africa. The economy of the east coast is generally a level stronger than that of the west coast. After all, the livable zone of the east coast of East Africa is longer.

The only habitable zone on the west coast is the coast of Angola, which leads to a huge gap in economic size between the two. Of course, this is also related to the later development of the western region, fewer resources and population. After all, the current economy of western East Africa is not even as good as that of central East Africa.

"In addition to the construction of three international financial centers, we will also strengthen the functions and status of the Rhineland-Palatinate as a domestic financial center."

As the capital of East Africa, Rhineland is also a national central city and transportation hub. It has natural advantages in building a national financial center. In fact, if the aviation industry is not underdeveloped, Rhineland can also be built into an international financial center.

However, this goal cannot be achieved at this stage. After all, the current transportation in Rhine City still relies on land transportation, that is, the hub city status of railways and highways. This can only facilitate the gathering and radiation of domestic capital in East Africa, but is not conducive to exchanges with foreign countries.

This is also related to the geography of East Africa. East Africa occupies nearly half of the African continent, but there are no strong countries around it, or even economies of comparable size. Apart from East Africa, the second most economically developed country in Africa is actually Egypt, a semi-colonial country.

Egypt has a population of only nearly 10 million, and its arable land is limited to a narrow strip of land on both sides of the Nile River. Its industry is almost negligible, and it does not have the sovereignty to develop its economy independently.

However, apart from Egypt, the other land neighbors and regions in East Africa can be said to be even more miserable. There was only one independent country, the Kingdom of South Germany, and the others were colonies of various countries. The Kingdom of South Germany was too small, with a population of only a few million.

Therefore, the economic size of East Africa alone accounts for more than 90% of the entire Africa. From an industrial perspective, East Africa can fully represent the entire African continent.

Therefore, the economic situation on the African continent is not sufficient to support Rhine City to become an international financial center at this stage.

Among the inland cities in the world, Moscow is more likely to have such conditions. After all, Russia, where Moscow is located, spans the Eurasian continent, has many land neighbors, and their economies are all considerable.

So theoretically, Moscow can make use of the Eurasian railway and road network to become the financial center of Eurasia. However, this is only in theory. As far as the current situation is concerned, the economy of Europe, especially Western Europe, is much stronger than that of Russia. From a long-term historical perspective, the economy of the Far Eastern Empire will inevitably recover in the future. Therefore, Russia's geographical location seems to have a good location to enjoy both ends, but in fact it has neither. Instead, it may be siphoned off by the developed economies on both ends, and the Russian economy in the past has also proved this point.

However, Russia’s geographical advantage cannot be denied because of this. After all, there is a saying that everything depends on human efforts. The Russians simply do not have the ability to do so.