African Entrepreneurship Records 2

Chapter 1523 Proportion of Electrified Railways

East Africa's initial investment in South America will obviously benefit the west coast of East Africa in the future. Admittedly, the west coast of East Africa has developed well in recent years, but it still lags far behind the east coast.

To change this situation, South America and West Africa, two regions with interests related to the west coast of East Africa, must be prioritized for development, so that the west coast becomes the economic high ground of the South Atlantic, siphoning capital, talent and resources from the entire South Atlantic coastal countries and regions.

Between West Africa and South America, the latter is undoubtedly more attractive to East Africa at present. On the one hand, British power is shrinking, and on the other hand, South America is more developed than West Africa. As for West Africa, various countries are entrenched, and the level of civilization is relatively low. The cultural and ethnic differences between West Africa and East Africa are also too obvious.

……

Time flew by and it became 1932.

Last year, thanks to the sweeping economic adjustments implemented by the East African government, it successfully withstood the headwinds of the global economic crisis, becoming one of the few economies in the world to buck the trend during the economic storm.

However, this was accompanied by a massive expenditure of money, forcing East African governments to resort to austerity measures.

Crown Prince Frederick is meeting at the Ministry of Railways today to discuss the "losses" of the East African Railway.

"Railways are an important transportation facility that concerns the national economy, national defense and military strategy, and basic people's livelihood. Since the beginning of this century, the Imperial Railway has developed rapidly and become the world's third largest railway network."

"It has made significant contributions to boosting national economic growth, driving regional economic development, balancing regional economic disparities, and improving transportation conditions."

"However, with the development of the times, the crisis of railways has now broken out all over the world. Apart from underdeveloped countries and regions such as the Soviet Union, the railway assets of many countries have actually become negative assets. Our East African railway also has this development trend."

"Therefore, I hope everyone can pool their wisdom and come up with detailed and feasible plans on how to reform the East African Railway."

In 1931, the world's three major railway networks were the North American Railway Network, the European Railway Network, and finally the East African Railway Network.

The United States has the world’s longest railway network, with 430,000 kilometers of railways, followed by Europe with more than 350,000 kilometers, and East Africa with more than 310,000 kilometers of railways.

With the outbreak of the economic crisis, the American railway industry suffered heavy losses, the European railway industry performed relatively well overall, and there was also the Soviet Union, where railway construction was in a stage of rapid development. East Africa, although somewhat resilient, was already facing serious problems.

Railway Minister Wells explained, "Your Highness, the problems with the current operation of the East African railway are due to the unique circumstances of our East Africa."

"The losses in the railway sector are due to both internal and external factors. Internally, there are systemic and inherent deficiencies that can only be addressed through continuous adjustments. Externally, the rise of other modes of transportation has created competition with the railway."

“Take European railways, which are currently the best-performing railways in the world, for example. The reason they are able to barely survive is because Europe itself has a large market and demand.”

"Europe has more than twice the population of East Africa and is much smaller in area. In terms of passenger transport alone, it is destined that the profitability of East African railways will not be very good."

In its early days, railways were undoubtedly a profitable business. After all, in the early stages of railway construction, there were few lines, and early railways were mostly built in economically developed, densely populated, or resource-rich areas. In addition, without competition from other modes of transportation such as automobiles, they almost monopolized the main passenger transport market.

In the context of 19th-century railways, before the advent of automobiles, railways were the fastest, most convenient, most comfortable, and most stylish mode of transportation. Therefore, for people in the 19th century, railways were undoubtedly the best option for land transportation if conditions allowed.

However, in the 20th century, the situation was completely different. As the saying goes, scarcity makes things valuable, but look at Europe, North America and East Africa today. Any of these railways would be among the longest in the 21st century.

Not to mention developed cities and industrial and mining areas, railways can be seen even in remote rural areas, and even in forests, rainforests, deserts and deep mountain valleys.

In conclusion, the common problem facing developed industrial countries today is the overcapacity of railway construction, especially in the United States.

Wells emphasized that "the United States has more than 400,000 kilometers of railways, the most in the world, but the total population of the United States is less than a quarter of that of Europe, and even less than that of East Africa by tens of millions."

"At the same time, because of the United States' laissez-faire approach to the economy, the railway industry is in a state of chaos. Many railway companies even build duplicate lines, engage in price wars to attract passengers, and the railway system is incompatible. As a result, the American railway is now suffering the most losses in the economic crisis."

"Besides this, the boom in the US auto industry was also an important factor in the collapse of the railroad industry. Although East Africa is the world's largest auto industry country with more than 30 million cars."

"However, compared with the United States, our automotive industry has developed more restrainedly. The United States has a population of only 120 million, but has more than 25 million cars, which is higher than the Empire in terms of per capita number."

Although the United States is the world's second-largest automobile producer, due to differences in their economic systems, the US government's attitude towards the development of the automobile industry is completely different from that of East African governments.

In terms of transportation industry development, East African governments tend to favor a balanced development model, with comprehensive development of railways, highways, aviation, and waterways. In terms of highway transportation, East Africa focuses on technology and brand cultivation rather than blindly pursuing quantity.

The United States is completely different. American companies in this era are very similar to those in the rapid industrialization phase of the Far Eastern Empire in the past. As soon as they smell a hint of bloodshed, all companies rush in, eventually causing product prices to become "dirt cheap".

This is evident in the development of the automotive industry. Starting in the 1920s, under the guidance and regulation of the government, East Africa's automotive industry upgraded and transformed, steadily expanding into the mid-to-high-end market.

Meanwhile, the US government completely let its domestic automakers run wild, and coupled with the influence of the stock market, the US auto industry expanded rapidly, with no barriers to entry whatsoever.

Therefore, American companies don't care about factors such as technology, workers, or market demand; they just take their money and enter the industry, since shareholders are there to back them up, and they're not afraid of wasting resources.

This ultimately led to the direct collapse of the American auto industry during the 1929 economic crisis. Before 1929, many American economists confidently asserted that "the American auto industry will soon surpass East Africa."

Considering the development of the American auto industry over the past twenty years, this judgment is not without reason. Before 1920, the American auto industry was completely incomparable to that of East Africa.

By 1927, the United States had surpassed East Africa in annual automobile production and was rapidly catching up in terms of total automobile ownership. Meanwhile, the American automobile industry was also experiencing rapid growth. Following this trend, it was entirely possible that within a few years, the United States would surpass East Africa in automobile ownership and become the world's largest producer.

However, the result is also obvious: this trend in the development of the American auto industry is unsustainable. The Great Depression of 1929 dealt a heavy blow to American automakers, and even now, many large American automakers are still struggling in dire straits.

The development of the US auto industry relied on the domestic market and tariff protection. After the outbreak of the economic crisis, the US unemployment rate remained high, residents' income dropped sharply, and the domestic market collapsed.

In the international market, American cars cannot compete with East African, German, or even French automakers. As a result, the United States is now reaping the consequences of its own actions.

Of course, the severe losses suffered by the U.S. auto industry did not diminish its negative competition and impact on U.S. rail passenger transport.

Today, the number of cars in the United States may have reached 26 million, while the population of the United States is only over 120 million. This means that one in five people in the United States owns a car.

However, this is not the most fatal threat to American railroad companies. After all, railroads have an advantage in medium- and long-distance transportation, but there is one situation in the United States that seriously undermines this advantage.

That is, gas prices in the United States are "cheap." Yes, gasoline prices in the United States are the lowest among the world's major countries.

In contrast, East Africa, the world's largest oil producer, has high oil prices, especially for vehicle fuel, because East Africa, like Europe, has a "fuel tax," and the proportion of East Africa's fuel tax is relatively high by global standards.

As a result, East African residents must consider costs when buying cars and traveling, and choose the most suitable mode of transportation.

Americans don't have this concern. Low gas prices mean that Americans won't feel too bad about choosing to drive for long distances, which makes it even less desirable for them to take the train.

Wells emphasized that "in the United States, people can choose private cars because of gas prices, then long-distance buses, and finally trains."

"In addition, American rail passenger transport is also limited by technology. While Europe and East Africa are accelerating the transition of railway technology towards electrification or diesel locomotives, American train locomotives are still mainly steam locomotives. Regardless of speed, efficiency, or comfort, they are still at the level of the last century. Therefore, the travel experience of American rail passenger transport is extremely poor. If I were an American, I would not be willing to choose rail travel. This also takes into account the incompatibility of the American rail system, the inconvenience of changing trains, and the problems of delays."

This has indeed had a significant impact on passenger rail transport in the United States. While Europe and East Africa are moving towards railway electrification, diesel locomotives, and even high-speed rail, the United States is clinging to steam power.

Imagine the breathtaking speed of a steam locomotive, along with its enormous pollution and noise; how could it possibly compete with a car on rubber tires?

By 1931, railway electrification had made tremendous progress worldwide. Not to mention East Africa, European countries had also achieved remarkable results in the field of railway electrification. Switzerland, in particular, achieved a railway electrification rate of over 50%, ranking first in the world.

Other European countries also performed quite well, such as Sweden at 30%, Norway at 25%, Germany at over 20%, Austria-Hungary at 10%, and the United Kingdom at 3%.

Meanwhile, the electrification rate of railways in the United States was less than one percent, almost non-existent. The reason is simple: the United States has abundant coal resources and low coal prices, so steam locomotives have low fuel costs.

Then there's the fact that the United States is predominantly flat, which also affects the need for electrification of U.S. railways.

Conversely, these are the advantages of European countries. Europe has a complex terrain, especially mountainous areas, which increases the demand for electrification. Countries like Switzerland, Norway, Sweden, and Austria, which are mountainous, have electrification rates exceeding 20%.

On electrified railways, electric locomotives have a much greater ability to climb slopes than steam locomotives, which is very important for these mountainous countries or countries with many mountainous areas.

At the same time, these countries have another characteristic: they are rich in hydropower resources. After all, Europe has a lot of rainfall, and the mountains are important water sources, making it convenient to build hydropower stations by taking advantage of the terrain, providing cheap electricity support for railway electrification.

Similarly, the above reasons also apply to East Africa. Coupled with policy support, East Africa's railway electrification has now reached an astonishing 33%, making it the world's largest electrified railway network.

Therefore, the decline of American railroads was not only caused by external factors, but also by its own lack of attention to technological improvement, as well as a chaotic system, lack of unified management and supervision, and other problems, all of which led to the decline of the American railroad industry.

Wells said, "Therefore, there are almost no major problems with East African railways in any area, and losses are unavoidable, even though European countries also have losses in passenger railways."

"However, Your Highness, you must know that Europe's population is more than twice ours. Therefore, passenger transport is destined to be a losing proposition. However, considering factors such as people's livelihood, national defense, and regional development, we cannot cancel some passenger routes at all."

From the very beginning, Ernst set the tone for the construction of the East African railway: it could not be considered solely from an economic perspective, but must also take into account social development, regional balance, national defense, national strategy, and basic livelihood.

Many of these terms have nothing to do with "profitability." For example, the Walvis Bay Railway in East Africa is difficult to make a profit from, but the railway is indispensable. Whether it is for communication between the people of the southwest coast of East Africa and the domestic country, or from the perspective of national defense and security, this railway is essential.

At the same time, he is also involved in driving local economic development, such as the development of mineral resources in the southwestern province and overseas trade in the inland plateau region of the southwestern province.

Friedrich said, "We can't just do nothing, can we? The government is under a lot of financial pressure right now, and you should make some sacrifices, even if it's just to reduce some operating costs."

In response, Wells said, "Your Highness, we do have contingency plans for this, which can be summarized into three points."

"The first step is to cancel some operating lines, especially in resource-depleted cities in some old industrial areas of East Africa. These railways can be canceled to reduce maintenance and operating costs."

"Then we need to accelerate the construction of railway electrification. Electrified railways will significantly improve speed, efficiency, and comfort, enabling them to compete with highways and increase their attractiveness to businesses."

"Finally, we need to accelerate the research and development of high-speed trains to further improve railway speed, efficiency, and comfort. This is also the main focus of the Ministry of Railways at present."

(End of this chapter)