Chapter 453: The Loan
While East Africa was booming with development, other regions of the world were far from stable. East Africa's relatively peaceful rise had benefited greatly from the Far Eastern Empire bearing most of the global pressure. Britain, Russia, and Japan—almost as if by prior agreement—launched attacks from the southwest, northwest, and the western Pacific, respectively.
Although East Africa was not small by global standards, European understanding of the region was limited. The Far East, by contrast, was far too prominent to stay hidden.
France had not joined in this round of aggression because it was still digesting the results of the Second Franco-Vietnamese War (1873–1874). On March 15, 1874, France and Cochinchina signed the Second Treaty of Saigon, granting France: authority to maintain security in the Nguyễn-dynasty-controlled areas; undisputed control over Cochinchina; and permission to use the Red River as a trade route into the southwest of the Far Eastern Empire.
Africa, still Europe's final frontier for colonial expansion, could afford to rest a little longer. Clearly, the Far East held more immediate appeal for the great powers than most other regions (excluding North Africa).
Japan's probe at Danwan Island had already been thwarted last year, but the southwest and northwest crises were beyond Ernst's reach. Both were deep in the Far Eastern inland heartland.
In the southwest, the British had yet to move, but if nothing unexpected occurred, a crisis was expected by next month.
The northwest was an old issue, dating back to 1864. A ten-year debate had raged inside the Far Eastern government over whether to focus on maritime or frontier defenses. Incredible efficiency, truly.
Finally, in 1875, the government resolved to recover the northwest. But while the decision was made, no one wanted to foot the bill.
The imperial treasury was riddled with holes—over 30 million taels of unpaid military wages. Fiscal control had long been seized by local cliques like the Xiang and Huai armies. This made life difficult for Zuo Zongtang, who was strongly pro-war and determined to defend the homeland.
May 1875 — Hechingen Bank (Kaifeng Branch)
Kaifeng, as a provincial capital, was relatively prosperous in this era. It also marked the eastern edge of the Huaihai economic zone and served as a key area for Hechingen Bank's inland business, as well as a negotiation hub for the Jin and Hui merchant groups and the Hechingen Consortium.
Today, representatives from both merchant groups visited the Hechingen Bank's Central China director, Mr. Mayweather—bringing with them a special guest.
"Mr. Mayweather, this is Lord Zuo Zongtang, a senior official of the Far Eastern government. He visits today with a special request," said the Jin merchant.
Mayweather, thinking it was a business proposal, smiled. "Of course. As long as it's not too unreasonable, I'd be glad to help."
Qiao Zhiyong added, "To be frank, we're here to raise funds for the military. I believe your bank may have heard of this already."
Mayweather's eyes lit up. "Hades, serve tea to our distinguished guests!"
He hadn't just heard of it—every major bank in the Far East was aware. But Zuo Zongtang's choice to approach Hechingen Bank was thanks to his strong ties with Hu Xueyan and his official post in the northwest, which had brought him into regular contact with Qiao Zhiyong. Their recommendations brought him to Kaifeng.
Zuo Zongtang began, "Mr. Mayweather, we're seeking a loan to suppress separatists in the northwest. The terrain is vast, the conditions harsh—it won't be easy…"
Mayweather cut him off: "Lord Zuo, just tell me how much you need."
So direct? Zuo raised five fingers to test the waters—he wanted to see what kind of power Hechingen Bank really had. After all, he'd also approached HSBC, which had a far bigger reputation and longer presence in the Far East.
"Five million taels of silver?"
"If your bank can't produce the full amount immediately, we can seek help elsewhere."
Mayweather chuckled, "You must be joking. Five million taels is no problem. I'm just wondering—is that enough for your war? Don't forget, the separatists are backed by the Russians."
"You could lend more?"
"I'll put it this way: we could even lend 20 million taels—but not all in silver."
"Pounds sterling would be acceptable."
"No, I mean East African Rhine Thalers—a state-backed currency."
Hu Xueyan explained, "The Rhine Thaler is a paper currency issued by the East African Kingdom. One tael of silver equals five thalers."
Zuo asked, "Is this currency reliable?"
"It can be directly exchanged for gold at Hechingen Bank," Hu replied.
"!"
Mayweather continued, "Rest assured, Lord Zuo. The Rhine Thaler may not be widely circulated yet, but it's the official currency of the East African Kingdom, backed by gold and highly stable."
"But wouldn't it be difficult to use for purchasing supplies?"
"No worries. Just tell us what you need—grain, uniforms, weapons—we can supply it all. Even European military instructors can be arranged."
Zuo hesitated—sounded like they lacked all of the above.
Setting that aside, Zuo asked, "Let's say—purely hypothetically—our government borrows ten million taels. What terms could you offer?"
Mayweather smiled. "That depends—what terms is your government offering?"
Zuo cautiously offered, "Interest rate under five percent."
"Deal!" Mayweather said instantly.
"…" Did I offer too much?
"Of course…" Mayweather continued.
So there were strings attached. Zuo knew no Western bank would agree so easily. The international standard was around 4%. A small increase shouldn't have made them jump at it.
Mayweather added, "We're happy to lend the money—but in return, we want exclusive rights to supply your army with provisions. For armaments, we want a cut too."
Zuo asked, "Your bank deals in grain too?"
Hu Xueyan explained, "Lord Zuo, Hechingen Bank may look like a money house, but it's a top-tier Western financial syndicate with diversified businesses. It's a leading bank in the German-speaking world."
"But the war is far in the northwest. Can you even deliver grain that far?"
Mayweather reassured him, "Easily. We've got trade routes from East Africa straight to Jiaozhou. From there, it's overland to Kaifeng. After that, it's up to you."
Qiao Zhiyong added, "We can handle the rest. From Henan to the northwest, we guarantee smooth delivery."
Business alliances weren't just for show. Even without the war, the Jin merchants moved Huaihai grain to the northwest all the time.
Zuo then raised the issue of weapons.
Mayweather smiled, "No worries. We're quite experienced in arms trading. German and Austrian weapons—whatever you want, we can source it. Cheap rifles like the outdated Dreyse? We've still got lots in stock. Want the latest? We can get Prussia's newest Mauser rifles too."
Wow. Just recently, Li Hongzhang had purchased used Dreyse rifle production lines from the Germans. And now they're already "outdated"?
Mayweather fanned the flames: "Everyone knows your army uses British gear. Britain may be strong—but mainly at sea. When it comes to land warfare, we Germans are number one. Even the so-called unbeatable French Army fell before us."
That defeat would no doubt remain a proud talking point for Germans for decades.
"These are all manageable. What else does your bank require?"
"Just one more thing—we need solid collateral. This is a high-risk investment. Emotions aside, business is business. We can't lend recklessly without security."
"That's really it? No more conditions?"
Mayweather shook his head. "Nothing else."
Not that he didn't want more—but his superiors had given strict orders. Interest rates on loans to the Far Eastern Empire couldn't be too high. Other banks were offering low rates too. Ideally, Mayweather wanted 7%, but 5% was still profitable. Four was already high by normal standards.
Hechingen Bank operated in the Far East on par with HSBC. Like all major players, it dabbled in high-interest lending. For countries like Japan and Korea, loans came with strings—pay up, or repay with labor and resources.
No one dares default. Backed by three nations and armed collection capabilities, Hechingen Bank can't be bullied—even by governments.
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