African Entrepreneurship Records 2

Chapter 1552 Trade Situation in 1933

This is East Africa's "reputation" in the international community. Apart from Britain and France, East Africa has been the most aggressive country in overseas colonial expansion in the past fifty years. If East Africa itself is included, even Britain and France would have to admit defeat.

After all, East Africa was acquired through colonial expansion, but now it has been completely assimilated and effectively governed, becoming a country rather than simply a colony, much like the United States.

Zhang Jin was unaware of Governor Badoglio's inner turmoil regarding East Africa; at least on the surface, Governor Badoglio's attitude was quite satisfactory.

"Your Excellency, the North African Railway is a vital transportation route for both East Africa and Italy. Therefore, maintaining security along the railway is of utmost importance."

“East Africa is an important market in the world, and Italy is backed by the European market. The future of the North African railway may not be as bright as the Suez Canal or the Strait of Gibraltar, but it is still a new option, especially for our two countries.”

In terms of countries alone, East Africa was actually the world's largest market in 1933, followed by the United States, Britain, Germany, and so on.

East Africa itself ranks among the world's top in terms of land area, population, agriculture, industry, and economic scale. The United States lags behind East Africa, but it is still in a class of its own compared to other countries.

Then there's Britain, with its vast wealth and the world's largest number and scale of overseas colonies. It controls and dominates the direction of numerous overseas markets, such as India, Canada, and Australia, and indirectly influences countless other market regions.

Germany's main influence is in Europe, and it is currently the strongest country in continental Europe. Although the Soviet Union's economy was larger in size, it was significantly inferior to Germany in terms of quality.

If measured by region, Europe still holds the advantage. Britain controls key global trade routes, such as the Strait of Malacca, the Suez Canal, Cape Town, and Gibraltar. Germany is strong in the industrial sector and has world-class technology. France has vast overseas colonies and its size should not be underestimated. The Soviet Union's domestic industry and economy are second only to East Africa and the United States.

Europe also includes countries such as Austria-Hungary, Italy, Belgium, the Netherlands, and Spain. It would be an exaggeration to say that each of these countries has its own strengths. For example, Austria-Hungary excelled in its military industry, Italy in its light industry, Belgium in its steel industry, the Netherlands in its finance and entrepot trade, and Spain in its influence.

If someone could unite Europe's resources, then Europe would indeed be "invincible," but the reality is that Europe is fragmented, with three major political interest groups currently in existence.

These three blocs were led by Britain, Germany, and the Soviet Union, respectively. Outside of these three blocs, the relationships between European countries were also complex and fraught with contradictions.

Outside of Europe, there are two major markets: North America and Africa. It remains to be seen which of the two is stronger. In North America, there are two major industrial powers, the United States and Canada, while Mexico's strength is also considered average.

As for Africa, East Africa is the only country that can be considered for the fore. Below East Africa, Egypt, South Africa, and the Abyssinian Empire are in the same tier, followed by the Italian Red Sea colonies and the Kingdom of South Germany.

Therefore, when Zhang Jin said that East Africa is an important market in the world, he was referring to the whole of Europe.

He said, "Europe is the most economically developed region in the world, while East Africa's economy, though not comparable to Europe's, is still among the top three. Trade between these two important international markets represents huge economic benefits."

"The annual trade volume between Europe and East Africa is around 50 billion rupees, and before the economic crisis, it even maintained a scale of more than 100 billion rupees."

Governor Badoglio had no intuitive understanding of East African currencies, so when converting them to local lira, 100 billion Rhine guilders was roughly equivalent to 300 billion lira. This was a staggering figure, considering that Italy's current GDP was less than 90 billion lira.

In other words, before the economic crisis, the annual trade volume between East Africa and Europe was equivalent to the total value created by Italy over three years.

And this is only trade between East Africa and Europe. It should be noted that the Far East, the Indian Ocean coast, and South America are all important markets for East Africa, and the trade volume between East Africa and North American countries is also considerable.

Of course, among these markets, Europe and the United States have stronger purchasing power. However, after the outbreak of the economic crisis, the United States resorted to tariff barriers and trade protectionism, which caused the trade volume between the two countries to shrink rapidly.

In Europe, the situation was not good either. In 1932, trade between East Africa and Europe was almost halved compared to before the economic crisis, a drop of nearly 50 percent.

Fortunately, East Africa was already prepared, and recently trade with South America and the Middle East has grown rapidly, while trade with the Soviet Union in Europe has also increased.

However, the Soviet Union was not a long-term, high-quality customer. Now that the Soviet Union's Second Five-Year Plan had officially begun, the pattern of the Soviet Union importing large quantities of foreign industrial products would undergo a major change.

A key objective of the Soviet Union's Second Five-Year Plan was to achieve domestic production in the industrial sector and replace imported industrial products with domestically made ones.

Of course, this does not mean that trade between East Africa and the Soviet Union ended. In the non-industrial product sector, especially in agriculture and minerals, there will not be much change in trade between the two countries.

Food is a basic necessity, and the Soviet Union was weak in this area. Even though the Soviet Union established its own pesticide and fertilizer production system and began to expand agricultural mechanization, it could not change this fact.

The surge in Soviet grain imports from East Africa in 1932 proves this point.

East Africa's grain exports to the Soviet Union were also aided by various favorable factors. First, East Africa was the world's largest grain producer. Second, East Africa was the closest major grain exporting country to the Soviet Union.

For example, in 1932, the world's major grain exporting countries were East Africa, the United States, Argentina, Canada, Australia, Brazil, and so on.

Of these countries, most are located in the Americas, followed by Oceania. Apart from the United States and Canada, East Africa is the closest to the Soviet Union.

However, the United States and Canada prioritize supplying grain exports to Western Europe, namely countries like Britain, France, and Germany. In the Central and Eastern European market, East Africa is more competitive. The trade of grain between East Africa and the Soviet Union can even be traced back to the Tsarist era.

Relying on the Suez Canal and the Black Sea shipping routes, goods from East Africa could be directly transported to the southwestern Black Sea coast of the Soviet Union, and then further into the interior via Soviet rivers to expand into markets.

The Dnieper and Don rivers eventually flow into the Black Sea. The Don River can then be used to transfer water to the Volga River, which leads directly to the Caspian Sea and connects to the Ural River.

This might explain why the Soviet Union and Tsarist Russia have always been so attached to Constantinople (Istanbul).

The three most important rivers in the Soviet Union—the Volga, the Dnieper, and the Don—all connect to the Black Sea.

The Volga River was its "mother river" and the most important inland waterway in the entire Soviet Union, connecting major cities such as Moscow, Kazan, and Stalingrad (Volgograd). In its heyday, its inland waterway freight volume accounted for more than half of Russia's total. The Dnieper River flows through Ukraine and extends into Belarus, regions of great economic importance to the Soviet Union. The Dnieper Hydroelectric Power Station, completed in 1932, is particularly famous, becoming a significant symbol and landmark in the Soviet Union's industrialization process.

Finally, there is the Don River. Once the Volga-Don Canal is completed, all five seas in the European part of the Soviet Union—the White Sea, the Baltic Sea, the Caspian Sea, the Black Sea, and the Sea of ​​Azov—will be connected and navigable.

While the Don River cannot achieve this at present, it is not far from the Volga River, and the cost of transshipment of goods is not high.

In conclusion, due to the river course, population, and economic distribution within the Soviet Union, importing grain from East Africa could benefit more regions of the Soviet Union.

Although the distance from East Africa to the Black Sea coast is greater than that from Canada or the United States to St. Petersburg, St. Petersburg lacked the river system of southwestern Soviet Union to support the expansion of trade.

This only applies to food exports. East Africa's real advantage lies in cash crops. Because the Soviet Union was located at a high latitude and had fewer types of cash crops, it was more complementary to East African agriculture.

From tea and coffee to tropical fruits and vegetables, and then to tobacco, rubber, and so on, East African agricultural products held an unparalleled market share in the Soviet Union.

In agriculture, the Soviet Union imported a lot from East Africa, which in turn led to a greater demand from East Africa for Soviet minerals. This was an important basis for the barter trade between the two countries.

At least for now, the trade volume between East Africa and the Soviet Union is still on the rise, and trade with the Soviet Union is also an important means for East Africa to cope with the global economic crisis.

Governor Badoglio was not familiar with the trade situation in East Africa, but he knew that East Africa was an important trading partner for Italy, especially in the fields of food and industrial goods, where the scale of trade between the two countries was considerable.

If the Libyan railway is completed, trade between East Africa and Italy will expand further, since the railway passes through Italian-occupied territory.

So Governor Badoglio asked a question: "Mr. Zhang Jin, do you think the Libyan railway can replace the Suez Canal?"

According to Badoglio, it would be great if the Suez Canal were blocked after the Libyan railway was completed, thus maximizing the railway's effectiveness.

Zhang Jin rejected his idea: "Your Excellency, it's best not to think too much about it. It's hard to say whether the North African Railway will even be able to recoup its costs in the future. As for surpassing or replacing the Suez Canal, that's complete nonsense, unless the entire Red Sea disappears and the middle becomes land."

The distance between the Gulf of Aden and the Red Sea is about 2,000 kilometers, and the distance from the East African border to the Mediterranean coast is about the same. The North African railway loses out because it is not a waterway.

Assuming the Gulf of Aden all the way to the Red Sea were to become land, then building the North African railway would indeed be more cost-effective, but that's impossible. Blocking the Suez Canal is more realistic than filling in the Gulf of Aden and the Red Sea.

Zhang Jin said, "Of course, you don't need to be discouraged. I think the future of the North African Railway is still very good. After all, there are only two sea routes from Europe to East Africa, and the North African Railway is the third."

"The harsh environment of the Sahara Desert has become a major point of competition for the North African Railway, because apart from the North African Railway, there are no competitors in the entire Sahara region."

Even in the previous life, the North African Railway was the only railway line that crossed the Sahara Desert.

The most likely railway to traverse the Sahara Desert in my previous life was the railway project between Egypt and Sudan, but it remained in the planning stage for a long time.

This means that whether a second railway will be built across the Sahara Desert in the future depends entirely on the ideas of East Africa.

Zhang Jin said, "Once the North African Railway is completed, it will become a major artery for trade between the northern inland areas of East Africa and Europe, involving East Azande Province, West Azande Province, Nile Province, Bavaria Province, Northern Great Lakes Province, and Hesse Province in our country."

The North African Railway directly connects to six East African provinces, but its sphere of influence is actually much larger, including the Kingdom of South Germany and the Darfur colony, which would also benefit from it.

Although the provinces Zhang Jin mentioned are not particularly noteworthy in the context of East Africa as a whole, it wouldn't be an exaggeration to describe them as "economic backwaters of East Africa".

However, it depends on the comparison. These six provinces may indeed be considered "poor performers" in East Africa's economy, but on a global scale, each one is quite competitive. This is similar to a student who is not performing well in an honors class but would likely rank in the middle to upper range in a regular class.

Take the Nile Province as an example. Its economy and industry are not much worse than those of neighboring Egypt, which is a country. The lower limit of these six inland provinces in northern East Africa has been raised by East Africa.

However, East Africa is quite concerned about the economic development of the northern region, and the North African Railway is one of the important strategic projects related to its economic development.

The biggest disadvantage of northern East Africa is actually the lack of access to the sea. Although the western and eastern parts of the northern region are coastal, the quality and quantity are very poor. For example, the eastern part is directly bordered by the Somali Desert and is separated by the East African Plateau and the Ethiopian Plateau. Land transportation has not been developed smoothly, so in the past, a large amount of goods from the north passed through Mombasa in the south, and the northern railway also extended through the East African Plateau to the northern inland.

The western coastal region consists of Cameroon and Gabon. Although the port conditions in these two places are good, they are separated from the northern inland provinces by rainforests and mountains.

At this time, the emergence of the North African Railway presented a new opportunity for the northern inland provinces. After the North African Railway was completed, the northern inland provinces of East Africa could directly carry out trade activities with North Africa and Europe.

Furthermore, it will connect the East African railway network with North Africa. Although the East African railway network is vast, it mainly serves trade in the Indian Ocean and the Atlantic Ocean. As for the Mediterranean, it's not that the East African railway authorities don't want to, but rather that the difficulties are too great.

With the North African Railway, the East African Railway connected the Indian Ocean, the Atlantic Ocean, and the Mediterranean Sea, further enhancing East Africa's position in world trade.

Of course, Zhang Jin couldn't just talk about the benefits to East Africa, since the North African railway passes through Italian-controlled territory.

He painted a rosy picture for Governor Badoglio, saying, "The benefits that Benghazi Port will gain after the railway opens will be enormous. Even a small amount of trade between East Africa and Europe will be enough to make your country extremely wealthy."

"Furthermore, this railway will directly strengthen your country's control over the Libyan interior and promote economic development along the route."

"Italy will also become one of the transit points between East Africa and Europe in the future, so maintaining the construction of this railway requires the joint efforts of both countries."

(End of this chapter)