Chapter 404

Chapter 404: Ernst's Unprecedented Wealth and the Prosperity of the East African Kingdom

Date: September 3, 1872

Location: United States, 11 Wall Street

The New York Stock Exchange, having recently relocated to its grand new address on Wall Street just a year ago, now boasted the world's most cutting-edge, expansive, and opulent trading building. In recent years, the United States had been basking in unparalleled prosperity, thanks to a convergence of factors: the railway industry's rapid expansion, westward territorial growth, and the ongoing industrial development in the eastern states.

This was an era where vast sums of capital from around the world flowed into this bustling American land at an astonishing rate. In the realm of railways alone, foreign investments accounted for an astounding half of the total funds allocated. Over the span of 1865 to 1871, more than 6,000 miles of railway tracks were laid—over a hundred times more than the equivalent expansion in East Africa during the same timeframe. Furthermore, railway companies were planning to build over nine times the railway mileage in 1872 compared to 1865. The frenzy surrounding railway investments knew no bounds, resulting in the injection of staggering sums of money into this sector through the New York Stock Exchange.

Smith, an astute and enterprising investor, couldn't ignore the extraordinary potential of this situation. He eagerly discussed a prospective investment opportunity in the Oral Railway Company with his associate, Jack. The stock of this company had been experiencing a consistent and remarkable ascent in recent months.

Smith, ever the forward thinker, didn't hesitate in giving Jack a directive: "Certainly, Jack, buy up every share available."

Jack, while sharing his boss's enthusiasm, voiced his apprehension: "Boss, the predicament is that if we go all-in, we might deplete our available funds."

Smith, undeterred, held firm to his conviction: "Jack, getting hold of railway stocks right now is no easy feat. When you purchase them, it's like sitting back and letting money flow effortlessly into our coffers. Don't let fear hold you back. These opportunities aren't for the faint-hearted. If you're to amass wealth, it's a race against time."

Jack nodded and acknowledged Smith's unwavering commitment to seizing the moment. "Yes, boss."

Smith's resolve was unwavering. He managed to secure 20% of the Oral Railway Company's shares, but it left him feeling slightly unsatisfied. He knew he could have done better.

Frustrated with this missed opportunity, Smith's eyes were ablaze with determination as he barked out a command: "Jack, hear me clearly. I want you to keep a constant vigil on the stock market. The moment someone decides to sell railway stocks, I want you to buy them up without awaiting my permission. Keep doing it until our coffers are emptied. If you succeed in securing these stocks, you'll receive a generous bonus at the end of the month. If you miss out, consider your salary docked."

Jack responded with a resolute "Yes, boss!" and promptly set about his task. He was determined to prove his mettle and secure these lucrative investments for Smith.

Under Smith's relentless pursuit, Jack soon found an opportunity to purchase more railway stocks. He seized the moment and acquired them, driven by the knowledge that success would not only benefit the business but also his own financial well-being.

Meanwhile, the Hechingen Consortium, which included the Hechingen Bank's North American branch, was also reaping the rewards of the railway boom. Ernst, the visionary leader behind the consortium, had invested a substantial sum in North America. His gamble was paying off handsomely.

In just one year, the value of the Hechingen Consortium's North American investment assets had nearly increased tenfold. Ernst's initial 40 million pounds had swelled to an astounding 380 million pounds. This amount was equivalent to a staggering 11.4 billion East African rhine guilders or approximately 1.1 billion taels of silver. To put it into perspective, this sum was nearly eight times the indemnity paid in the Shimonoseki Treaty, a testament to the incredible wealth being generated.

But Ernst's financial prowess extended far beyond the New World. He had also divested a significant portion of his European assets, further boosting his financial portfolio. While the European assets might not have been as lucrative as their American counterparts, they were of superior quality, reflecting Ernst's knack for astute investments.

Ernst's status as a financial magnate was solidified by the impressive performance of the Hechingen Bank, ranking among the top financial institutions in the world. In the eyes of many, he was now a serious contender for the title of the world's wealthiest individual.

Ernst's wealth wasn't confined to the world of finance; he also held dominion over the East African Kingdom. This newfound political entity added immeasurable value to his already vast empire. In 1871, the government of the East African Kingdom recorded a fiscal revenue of over 7 million East African rhine guilders, roughly equivalent to 800,000 taels of silver.

While this amount might appear modest, it was significant considering the context. Most factories in East Africa operated tax-free, with the exception of Mombasa and Dar es Salaam, the two largest tax revenue generators. The fiscal revenue from these cities was closely tied to their foreign trade activities.

Despite its nascent state, the East African Kingdom had already established a significant economic footprint. It was a testament to Ernst's vision and the potential for growth in the region.

Ernst's influence extended beyond his financial empire. The East African Kingdom, which he ruled, had a population of nearly 7 million, making it a formidable presence in the region. While there were over 23 million indigenous people in East Africa, only a fraction of them were actively involved in the kingdom's economic activities. Nonetheless, this population was steadily contributing to the kingdom's growth.

Despite the challenges faced by East Africa, such as limited industrial development and a reliance on imported tools and equipment, the region was on an upward trajectory. It was a work in progress, with room for improvement in productivity and infrastructure.

In conclusion, Ernst's extraordinary wealth and influence were undeniable. His investments in North America, coupled with his ownership of the East African Kingdom, had positioned him as one of the world's most prominent figures. As the world watched his empire expand, it became increasingly evident that Ernst was a force to be reckoned with on the global stage.

[End of Chapter 404]