Chapter 1490 - 34: Rhine Shield Internationalization

Chapter 1490: Chapter 34: Rhine Shield Internationalization

In reality, compared to late-developing countries like East Africa, France’s foundation is still too strong. From the end of the 19th century to the early 20th century, France had already become the world’s second-largest capital-exporting country, second only to the United Kingdom.

During this period, Europe was undoubtedly the world’s financial center. In addition to the UK, France, and Germany, countries like Belgium, Netherlands, and Switzerland had relatively well-developed financial industries. Even Belgium’s external capital export was around thirty billion Rhine Shields, which is approximately five hundred million US Dollars.

However, before the war, these countries had different directions and focuses for their capital exports. The United Kingdom’s investments primarily focused within the empire, in the vast colonies it occupied, followed by all of America.

France’s foreign investments were mainly in Europe, with Russia taking the largest share, followed by East Africa, and then its own colonies.

The reason for this outcome is that the quality of French colonies was obviously inferior to British colonies. British capital could choose regions like India and Canada and achieve good returns, whereas French colonies, relatively speaking, had slower investment success.

Lastly, Germany had far fewer investment options than the UK and France, focusing mainly on Central and Eastern Europe, the Ottoman Empire, and East Africa. Notably, Austria-Hungary was a key area for German investment.

However, since the World War, the pattern of global financial industries has undergone significant changes. For instance, the United States became the world’s largest creditor, and East Africa, from being heavily in debt before the war, became one of the world’s major creditors after the war.

This transformation actually aligns with the economies of both countries. After the war, the combined industrial output of East Africa and the United States exceeded fifty percent of the world’s industrial production, while Europe shrunk to around thirty percent. In the 1870s, roughly during the Prussian War, Europe’s industrial output was close to sixty-five percent of the world’s industrial output.

From this, we can see the powerful impact and disruption to Europe’s economy and industry caused by the rise of external countries like East Africa and the United States.

Take South America, a former key region for British capital export. Due to the war, it was practically divided by the United States and East Africa, and after the war, it was nearly impossible for British capital to return to this region. British capital could only further flow toward its own colonies.

France was even worse off than the United Kingdom. France’s largest investment was in Russia, but the Russian Labor Party coming to power caused France to lose all its investments in Russia. The only good news was that the loss France suffered was definitely smaller than what it had been in the past, due to the rise of East Africa, providing French capital with a new hotbed for investment.

Actually, from the pre-war distribution characteristics of capital exports among European countries, it could be seen that Europe’s capital flows tended to favor its own spheres of influence, followed by regions and countries with relatively close international relations, and lastly independent sovereign states with relatively reliable credit.

For France, East Africa fell into the third category, being an independent sovereign state with relatively reliable credit, under which premise French investments in East Africa wouldn’t receive discriminatory treatment.

If East Africa, like Russia, also refused to acknowledge old debts, then France’s economy would likely go bankrupt after the war. After all, France’s investment in East Africa was second only to Russia, and this time, France was not a victorious country that could obtain compensation from Germany to make up for its losses.

Regarding the new changes in the current international economic situation and the actual situation of economic development in East Africa, Ernst said: "After the war, the pattern of global financial industries has undergone enormous changes. Although the international status of the British Pounds remains stable, it has been weakened to a certain extent, and France, due to the war and Russia’s default, may see its Franc status shaken."

"This is the most important impact that World War I had on the old world order; it might bring about major changes in the international economic order."

"This provides favorable conditions for the internationalization of the Rhine Shield, and we also seize the great opportunity now to establish a stable Rhine Shield area."

The three main currencies in the international monetary field before World War I were the British Pounds, the US Dollar, and the Franc, corresponding to the British Pounds area, the US Dollar area, and the Franc area.

However, due to the shorter historical timeframe of the East African Rhine Shield, its influence in international trade was still not as great as the German Mark, ranking only fifth in the world.

Of course, this also has much to do with the late development of East Africa’s financial industry and the late opening of the East African market.

Now, the East African Rhine Shield already has the conditions to become one of the world’s strong currencies, which benefits from East Africa’s rapid rise in global influence and the rapid development of East African industry since the late 19th and early 20th centuries.

From the beginning of the South African War last century to the end of World War I, East Africa successfully extended its influence from the African continent to the entire Indian Ocean Coast, the Middle East and Central Asia, Nanyang and East Asia, South America and other places, laying the foundation for the international circulation of the Rhine Shield.

In the aforementioned regions, East Africa has established relatively stable economic spheres of influence and strongholds, which can protect and promote the flow of the Rhine Shield.

Moreover, these regions are just where the East African Navy and the future Air Force can cover and have certain advantages.

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

This also somewhat explains why the United Kingdom must find ways to block East Africa’s northward path into Europe after the war. Once East Africa extends its influence deep into Europe, then the Rhine Shield of East Africa would be almost indistinguishable from a world currency, severely threatening the dominance of the British Pounds.