Chapter 316: The Rhine Shield
Speaking of the financial bonds used in East African–Abyssinian trade, these are a special type of bond issued on behalf of the East African government by the Hechingen Bank, serving as a medium of exchange specifically for the East African region.
The East African government is currently considering issuing its own currency, and Ernst has been quite busy with this matter.
March 14, 1871.
Led by Ernst, an East African Kingdom delegation formally began an inspection of the Swedish Mint, having obtained permission from the Swedish royal family. Most of the delegation members are employees of the Hechingen Bank.
The Governor of Sweden's central bank, Mr. Vaines, was in charge of hosting them. "Our bank was the first in Europe to issue paper money, back in 1661, which opened the European era of paper currency. However, at that time, paper notes were only used because there weren't enough coins; they weren't truly considered a major monetary form. Our mint not only has a long history and rich experience, but also remains at the forefront of Europe in adopting new technology."
Mr. Vaines introduced Sweden's experience in this area. In the 17th century, Sweden mainly used coins for transactions. In 1661, King Karl XI Gustav decided to introduce paper money as legal tender. Issued by the government and backed by gold, it guaranteed value and credibility. Swedish paper money thus became Europe's first officially issued paper currency—called "official banknotes" at the time—similar to the current financial notes in East Africa. However, East Africa itself does not produce metallic currency.
Mr. Vaines added, "The Swedish krona you see here is primarily made from cotton fiber, a small amount of hemp fiber, and a large amount of wood pulp."
Krona comes from the Latin for "crown." Ernst said, "In East Africa, for printing our banknotes, we usually rely on cotton, high-quality sisal, and a small amount of wood pulp."
Mr. Vaines responded, "Oh, really? I'm not very familiar with sisal. Sweden itself never lacks timber, but as for cotton, we have to import a lot. "
Ernst took the opportunity to promote East African sisal. "Sisal is a long fiber known for its high tensile strength, resistance to wear, corrosion, and high temperatures, as well as its ability to absorb and release moisture quickly. This makes paper made from sisal very durable and easier to fold and store. It also feels comfortable. At the Hechingen Bank, we use sisal as one of our main raw materials to make financial notes."
Mr. Vaines asked, "And how about its price and output?"
Ernst replied, "The biggest feature of sisal is its high yield—on average around three tons per acre per year. But it only grows in tropical or subtropical regions. Our entire East Africa is in the tropics, and we've surpassed its place of origin in Mexico. We are now the world's largest producer of sisal."
Mr. Vaines said, "Oh! But we're fine with wood pulp. If sisal is cheap, we could buy some to make our notes higher quality."
Ernst quickly added, "No problem. We have a sisal processing plant in Hamburg that mainly produces rope and cable. If you need any, you can buy it directly in Hamburg. We can offer you a 5% discount."
It's not that Ernst is stingy—East African sisal is indeed in high demand. Yet if there are more buyers, East Africa won't refuse; it can always expand its planting area according to market needs.
Mr. Vaines said with a laugh, "Hahaha, if that's the case, we'll have our technical staff and procurement people look into it."
Then he led Ernst's group to observe the machinery in Sweden's mint.
"This printing machine was specially ordered from Britain. Because of their manufacturing capabilities, we in Sweden have some deficiencies in that area, even though the design was entirely our own. You could say it's an independent Swedish brand. France or Prussia could also produce a machine of this level, but the British offered the lowest quote at the time, so we sent our design drawings to London for them to manufacture the equipment, and then we shipped it back to Sweden for installation."
Ernst asked, "And what level would you say it is?"
Mr. Vaines answered, "Right now, there's nothing much more advanced. If you wanted a set for yourselves, you would certainly need some internal modifications. For instance, the molds must be redesigned, since every currency note is different. There are anti-counterfeiting features, and each client has unique requirements. Of course, at present very few governments require this technology; many countries still produce and use coins."
What he said in that last sentence got right to the heart of why Ernst traveled so far across the sea to Sweden.
If the Austro-Hungarian Empire had mature banknote technology, Ernst would have chosen them first. But Austria-Hungary still uses coins and lacks such experience. Moreover, the Hechingen royal family already has good relations with the Swedish royal family, so they picked Sweden.
Why not choose Germany? Because Germany's paper money technology is almost the same as what Hechingen Bank has. The financial notes that Hechingen Bank issues are already developed using German techniques and experts. But Germany's monetary system at present is still complicated and lacks a unified currency. Like Austria-Hungary, coins are widespread. Although some German states issue paper money, metal currency still dominates the empire overall. Right now, the main goal of the Hechingen Bank is to learn Sweden's anti-counterfeiting methods; Swedish paper money has been in use for centuries, and they have accumulated rich experience.
It's a situation of "the higher the wall, the craftier the thieves." Anti-counterfeiting is the result of constant competition. Sweden has been refining its methods for hundreds of years, facing problems some other countries haven't even encountered.
In East Africa's case, there hasn't been too much worry about counterfeiting. Most people can't even count to five, so forging money is beyond them.
But next, East Africa's new currency will differ from the financial bonds used only within East Africa; it will be meant to circulate internationally, especially in Germany and Austria-Hungary. They cannot afford to skimp on anti-counterfeiting.
The Hechingen Bank has gained some paper-money know-how from issuing its financial notes, including special proprietary techniques, but it's only been two or three years. They can't compare to Sweden's hundreds of years of paper-currency development. So this trip to Sweden is meant to close that final gap: the voice of experience.
Most members of the delegation are technicians from the Hechingen Bank who have come to introduce advanced Swedish technology and expertise. They'll merge it with their own banknote methods, forging a powerful combination to create the East African Kingdom's own currency.
An East African currency has already been planned, with the name "Rhine Shield," although it differs greatly from the current Rhine Shield used in German-speaking regions.
First, East Africa's "Rhine Shield" will be paper money, while Europe's Rhine Shield is typically in gold or silver coin form.
Second, the denominations of the East African "Rhine Shield" will be 1, 5, 10, 20, 50, 100, and 500 shields. "Shield" is a unit like the "krona," but the word "shield" means "gold coin," and "Rhine" is simply the currency's name.
Finally, the East African "Rhine Shield" will use a "beautified portrait" of Constantinoo as the main figure on its front. Since Constantinoo's hairstyle is rather…awkward, Ernst personally decided that the banknote's design will feature Constantinoo in half-length military attire, wearing the distinctive pointed cap of the German states to cover his hair.
On the back, there will be an image of Hohenzollern Castle, plus a coat of arms and other symbols of the Hohenzollern family. The currency is to be backed by gold. One British pound will be worth 30 East African "Rhine Shields." Each East African "Rhine Shield" equals 0.22 grams of gold. There is no worry about the gold reserves, because East Africa has gold mines in the Great Lakes area, which are safely located in the interior. Also, the Hechingen Bank has built several gold vaults around Europe.
The East African currency is simply called the "Rhine Shield," with no other name. But internationally, in order to distinguish it from the Rhine Shield circulating in Austria-Hungary and other places, merchants and financial institutions often add "East African" in front—so it's referred to as the "East African Rhine Shield." That custom will continue until the end of the 19th century, when Austria-Hungary stops minting Rhine Shields. After that, the name "Rhine Shield" will belong uniquely to the East African Kingdom's currency.
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