Chapter 195: Railways
"Why do you want to get involved in this industry?" Prince Karl Anton inquired.
Ernst didn't mince words, stating, "I mainly want to test the waters in the colonies."
Prince Karl Anton didn't hesitate to respond, "I'm afraid this may be a difficult endeavor. While I have faith in your business acumen, this venture might not be profitable."
In Prince Karl Anton's view, if a colony proved to be unprofitable, why venture into it?
Ernst clarified, "Uncle Carl, when I say 'test the waters,' I mean constructing railways over a short distance, not a large-scale expansion in East Africa."
Prince Karl Anton responded, "In that case, if it's just an experiment, there's no need to consult me. You could approach a German railway company directly, and I'm certain they would cooperate with someone of your stature."
To Prince Karl Anton, Ernst was now a prominent nobleman and capitalist in the German region, which made him nearly untouchable.
Ernst elaborated, "While I do have ambitions for the railway market, I'm aware that it differs significantly from my previous endeavors. Railway technology is mature, and the industry has numerous established players. Simply entering at this point wouldn't be wise."
Ernst continued, "I'm optimistic about railways' future, but the current situation doesn't favor a direct entry. Therefore, I plan to start on a smaller scale and accumulate experience for future endeavors."
Prince Karl Anton grasped the essence of Ernst's plan, asking, "So, you wish to begin this business now, but you're cautious about near-term market prospects. You want to start modestly, gathering experience for the future. Is that correct?"
"Exactly, Uncle Carl. Additionally, I have another motive," Ernst explained. "My activities in East Africa mainly revolve around organizing immigrants for farming. We transport bulk commodities like grains and timber back to Europe. However, if we can't efficiently transport these goods to Europe, it would be an unprofitable venture. That's why I'm considering railways."
Ernst detailed the logistical challenges in East Africa. "East Africa lacks cohesive river systems for transportation, and the cost of overland transportation is prohibitive. Railways could potentially solve this problem, but their construction costs are high. I need to experiment in East Africa before making a large-scale decision."
Prince Karl Anton pondered and raised another question, "East Africa's primary industry is agriculture, correct? While it's sizable, the cost of shipping grain from East Africa to Europe is significant. Moreover, you face competition from food producers in Germany, Hungary, France, and Tsarist Russia. Can this truly be a profitable venture?"
Ernst addressed the profitability of the East African colony, saying, "Uncle Karl, the East African colony is a long-term endeavor, not one with immediate returns. It was an abandoned territory, unwanted by the major powers. My aim wasn't to turn it into a profitable venture right away but to minimize losses."
He explained further, "While food production may not be lucrative, it's abundant. This is an advantage few colonies in East Africa possess—vast land. While we may not fetch high prices, our production costs in East Africa are low, given the ready-made land. We're only responsible for immigrants' passage, their sustenance, and clothing. There's also an abundance of inexpensive labor."
Ernst concluded, "East African colonies won't generate profits immediately, but they can sustain a balanced budget or even a slight surplus. After all, East Africa relies on cash crops for income, and its market extends beyond Europe to North Africa and the Middle East."
Prince Karl Anton admitted that he was curious but not well-informed about overseas colony management. Ernst's responses helped clarify the complexities of such endeavors.
Ernst acknowledged the risks associated with developing colonies and added, "There are promising overseas locations, but they've already been claimed by maritime powers."
Prince Karl Anton shifted the conversation back to railways, saying, "Alright, let's focus on railways. What are your plans? Please be direct and spare me any intricacies."
Ernst didn't hesitate, stating, "Uncle Carl, I intend to purchase a railway company, although not a large one. It must possess construction experience. However, I'm not well-connected within the railway industry. I wish to understand the landscape."
Ernst, being a versatile capitalist, intended to avoid unnecessary competition. He believed that entering the railway sector openly would attract attention from other influential players. His primary goal was to accumulate the required expertise for his East African ventures.