Chapter 68: Sweet Harbor Storm - Guangzhou

Ma Qianzhu looked at the newly received telegram. After reading the first line, he gasped. The words “Great Leap Forward” jumped into his mind. Deposits? Were they going to open a bank in Guangzhou? The matter in Leizhou was not yet resolved, and now they were going to start a financial storm in Guangzhou?

Reading on carefully, he found that it had nothing to do with banks, not even money houses. This idea was not conceived by the people of the Guangzhou station, but by Shen Fan, the head manager of the Zizhen齋. The reason he proposed this suggestion was not because he had any advanced financial awareness, but because it was a traditional form of fundraising in business at the time.

People would deposit their idle money in a well-run shop and then collect interest annually. The shop obtained working capital, and the depositor earned a certain return on their idle money. This form of fundraising existed in China for a long time, even after the emergence of money houses and even banks, until the complete collapse of the legal tender’s credit in the 20th century. Not only large commercial firms and shops absorbed deposits, but even small cloth shops and oil and salt shops absorbed deposits from nearby residents on a smaller scale. Some shops with a long history and good reputation could even absorb deposits several times or even dozens of times their own capital. For example, the large dried fruit shops in Beijing from Shanxi had deposits of hundreds of thousands of taels before the Gengzi Uprising.

For the jewelry business, which was a capital-intensive industry, absorbing deposits from customers had long been a common practice. Seeing that the owner’s business was doing well and its reputation among peers and customers was growing, Shen Fan proposed this method.

The interest on such deposits was much lower than that of borrowing, with a monthly interest rate of only one and a half li, and an annual interest rate of 18%. By modern standards, this interest rate was not too high. Guo Yi still remembered that the one-year deposit interest rate of banks in his childhood had once reached 12%. For shops with a large turnover that often needed to borrow, it was tantamount to an interest-free loan.

“Who would be willing to make a deposit?” he wondered. He ran a jewelry store. Although Zichengji was a comprehensive trading firm, it did not operate in the financial industry. To suddenly announce that they were accepting deposits, who would become a customer?

“This is the advantage of our jewelry and curio business,” Shen Fan said. “We can reach the families in the inner quarters, and it’s easier to absorb their deposits. The wives, daughters, and concubines of large households, and even the favored maids, all have some private money that they want to earn interest on. The amount ranges from forty or fifty taels to several thousand or even tens of thousands.” He smiled. “Those who are bold and have power at home will lend money. But lending money requires a very reliable person to handle it, and it’s inevitable that they will be exploited by middlemen, and the matter can easily leak out. So most of them prefer to deposit it in the counting houses of large firms.”

After hearing Shen Fan’s suggestion, Guo Yi was a little undecided. It was certainly a good thing to have more silver on hand, but the Guangzhou station’s money supply was not tight. To suddenly absorb deposits now would mean an extra interest expense.

“Master, the benefit of absorbing deposits is not just for our own use,” Shen Fan continued. “The money supply in Guangzhou is sometimes tight and sometimes loose. When it’s tight, we can lend it out for a short period and make several times the interest!”

“For this kind of lending, for a merchant like us with no roots, it’s probably easy to lend out but hard to get back,” Guo Yi had been in Guangzhou for a few months and knew a little about this.

“This is the second benefit. The deposits are from the inner-quarter families of those officials and gentry,” Shen Fan hinted. “The private money of women may be limited,” he said, “but once the word gets out, people will look at Zizhen齋’s resources and influence in a new light.”

At this point, Guo Yi understood. Absorbing these deposits would not only benefit his own turnover but also enhance the status of Zichengji in Guangzhou! Even if he didn’t use these deposits for lending, it would still provide a protective umbrella. From this perspective, an annual interest rate of eighteen percent was really not expensive.

Shen Fan took out a small stack of passbooks from his side and handed them to Guo Yi. He took them and saw that they were only written with some household names in neat regular script: “Su Ji,” “Jinyan Zhai,” “Run Ji,” and so on. There were about twenty of them.

“These are the passbooks of the families who have recently expressed their intention to open a deposit account at Zizhen齋,” Shen Fan said. “Because I haven’t received your permission, Master, I haven’t agreed to it yet, but the account passbooks have already been prepared.”

“Who are these people?” Guo Yi looked for a long time but couldn’t find any names.

Shen Fan took out another small notebook, which was filled with symbols that only he could recognize. Guo Yi knew that this was a kind of commercial code, similar to the Suzhou numerals. It recorded things that couldn’t be “exposed to the sun,” such as account books, names of contacts, and the birthdays of which high official and his wife, concubines, sons, and daughters. He opened it and looked. “Most of them are the precious families of officials and gentry. I’ll copy a list later, but this list must be kept confidential—”

“I know this,” Guo Yi thought. Since it was private money, privacy was very important. He hadn’t expected that our country had anonymous deposits in the Ming Dynasty. It was truly at the forefront of the world.

“These twenty-odd passbooks can probably receive ten thousand taels of silver,” Shen Fan said. “This is a very good business. If there are no major changes, they will usually only withdraw the interest and not touch the principal.”

But this matter was too significant and also involved financial business. The three people at the Guangzhou station considered it for a long time and decided that it would be better to present this plan in person and get approval when they submitted their quarterly report to Lingao. But to refuse the silver that was being offered seemed unreasonable and might even offend the customers. So they agreed that Shen Fan would first absorb this batch of deposits, with an agreed annual interest rate of eighteen percent, with interest withdrawn monthly and the principal untouched.

The matter would have been put on hold if not for the recent “panic selling” in the Leizhou sugar industry, which had suddenly tightened the originally loose money supply. This project, which was originally just a錦上添花 (adding flowers to a brocade), suddenly had the significance of 雪中送炭 (sending charcoal in snowy weather). Guo Yi felt that there was no time to lose and immediately brought it to the Executive Committee’s meeting table.

After reading the entire report, Wu De was finally relieved. He had originally thought that the Guangzhou station was planning to engage in some kind of financial business—Wu De had a natural fear of such things. Now it seemed that it was just a matter of the Guangzhou station preparing for “illegal fundraising.” The interest rate seemed a bit high, but it was a good way to alleviate the tight money supply and poor turnover of the foreign trade department. Although he inevitably thought of the risk of a “bank run” that was often seen in business war novels, after weighing the pros and cons, he decided to support the Guangzhou station’s approach on this issue.

After sending a telegram of his stance on the Dengyingzhou, the journey was uneventful. The ship finally arrived at Haian Port on the morning of the fifth day after departure. As soon as the ship entered the port, Wu De sent someone to the South China Sugar Factory to check the situation—without real-time communication, if the place was already in ruins, wouldn’t it be like sending a sheep into a tiger’s mouth to transport the silver over?

The person sent out returned shortly and said that the entrance of South China was still crowded with people, but it seemed that the business of selling sugar was still going on, and there was nothing unusual. Wu De knew that the South China’s capital chain had not yet broken, so he was slightly relieved. On the one hand, he instructed the people on the ship to be outwardly relaxed but inwardly vigilant, to prevent anyone from causing trouble or sabotage. On the other hand, he changed his clothes and prepared to go to South China in person to discuss the matter of transporting the silver.

Wu De’s estimation was correct. The funds of the South China Sugar Factory had not yet been exhausted, but it was not far from it. The night before the Dengyingzhou arrived, the silver inventory had been reduced to less than one thousand taels. At this rate, it was questionable whether they could survive the next day. Everyone at South China was like ants on a hot pan. The few of them discussed it over and over again but still couldn’t come up with a plan.

Wen Tong was anxiously hoping that Chang Shide, who had gone to Champa to sell rice, could come back soon. If he brought back a shipload of rice, he could get tens of thousands of taels of silver in an emergency. But the Great Whale was like a kite with a broken string, gone without a trace. After waiting for several days, someone from the Executive Committee finally arrived, but they didn’t bring the urgently needed silver, only a radio set. This made Wen Tong almost despair. What was the use of a radio? Fortunately, news came soon: a ship had been sent to the Guangzhou station to pick up the silver.

Fifty thousand taels was still a distance from a safe level, but for Wen Tong and the others, it was a matter of surviving day by day. Being able to mobilize fifty thousand would at least give them a buffer of more than ten days.

But when the silver would arrive became an unknown. The silver inventory was decreasing day by day. To be on the safe side, they also tried various methods. Liao Dahua and Liao Daxing both tried to go to the market to raise some funds, but the harvest season in Leizhou was always a time of tight money supply. All the shops could not spare a large amount of silver. The only ones with a large amount of ready cash were the sugar merchants under the Haiyitang. They had accumulated hundreds of thousands of taels of silver early on to purchase sugar. Borrowing money from them was tantamount to asking a tiger for its skin.

But their efforts to raise funds could not be hidden from anyone. For a time, rumors were everywhere that the newly opened South China Firm was short of silver and was about to go bankrupt. This news spread like wildfire. The cane farmers, who had calmed down a little, began to stir again. Some even traveled overnight to sell their sugar. The outflow of silver actually accelerated.

Wen Tong was filled with regret. If he had known this, he would not have let the Liao brothers go out to raise funds. He didn’t get the meat, but he got a lot of trouble. This was equivalent to showing all his cards. If the Dengyingzhou still didn’t arrive, the situation in South China would probably be difficult to handle!

As for Xiao Gui, Mei Lin, and the other business travelers, they were even more helpless. Seeing that the situation was about to deteriorate, Chen Tianxiong said, “In this situation, we can’t make an omelet without breaking eggs. I’m afraid that if we don’t use some extraordinary means, we will be squeezed out of here!”

“That’s right!” Wen Tong was also exhausted by this relentless commercial warfare. “Even if Guangzhou sends me the silver, how many days can it last? We’ll have to have a showdown sooner or later! Now that Bei Wei’s men are here, let’s just take out the Haiyitang in one fell swoop and see what other tricks they can pull!”

“Snipe the leaders of the Haiyitang and say it’s divine punishment!”

“It’s a pity Bei Wei isn’t back yet. I don’t know where he’s gone. And we can’t contact him!”

“He’s been out for over two weeks. He should be back soon. Besides, the Executive Committee must have a way to contact him,” Wen Tong had already made up his mind. “We’ll send a telegram to the Executive Committee tonight, requesting decisive measures to counter the enemy’s provocation.”

This would reclassify the Haiyitang from a commercial rival to an “enemy.” Uncle Lei Feng had long since explained how to deal with enemies.

“I say we go all the way. Let Bei Wei lead a special assault on the Haiyitang, kill one or two of the leaders, and the rest will naturally be terrified. Then we’ll go in, buy up their assets at a low price, and immediately unify the Leizhou sugar market!”

“That’s too vicious. It’s practically robbery,” Xiao Gui immediately objected. “Besides, the people of Leizhou are not fools. If we do this, everyone will know we are the masterminds behind it. The local gentry and officials will be wary of us, and it will be difficult to carry out our work in the future.”

“Indeed. We can kill one person or burn some of their property to let them know our strength. They will naturally cease their activities. If they want to play for real, we are not afraid.”

“That’s not good. After all, they are a native national capital. If we do this, won’t it look like a monopoly group bullying the market?” Mei Lin, the peacemaker, hesitantly raised his objection.

“They are the monopoly group,” Wen Tong said. “Why don’t you offer a suggestion, old man?”

“Well, I was thinking,” Mei Lin said, “we can use a combination of stick and carrot. The Haiyitang is now acting out of self-interest, trying to force us out. They haven’t used any overly aggressive means. If we were to strike so ruthlessly—whether it’s killing a few people or preparing to burn someone’s house—isn’t that a bit too much?” He saw everyone looking at him, seemingly with disdain, but the words were already out, and he had to continue. “Let’s say we kill someone. People will be afraid of you, and this crisis might pass. But we will have made an enemy—everyone has family, relatives, and friends. There will always be a few who are tough or reckless, and they might do the same to us in the future. You can be a thief for a thousand days, but you can’t guard against a thief for a thousand days.”

“Then we’ll just kill again. What’s there to be afraid of! We’ll just kill all the men, women, old, and young—leave no one alive!” Wen Tong’s face was grim, his eyes filled with killing intent. It seemed that when an intellectual became murderous, he was more terrifying than an ordinary brute.

“Kill them all?!” Mei Lin was even more dismissive. “It’s not that easy to eradicate the roots. Besides, the means are too cruel. It will inevitably arouse public anger. If you were a common person, would you be willing to do business with a company that kills people at the drop of a hat and wipes out their entire families?”

Everyone felt that this made sense. Chen Tianxiong said, “Old Mei is right, but right now, being right is useless. Do you have any ideas?”

“I do have an idea, but I don’t know if it will work,” Mei Lin said. He suggested that they go and talk to the Haiyitang. They had already seen the factory’s processing capacity, and there was room for cooperation between the two sides. They could tempt these sugar merchants with the idea of joint-stock ownership. This would greatly reduce the resistance to their control of the Leizhou sugar industry.

“But,” Mei Lin’s tone changed, “now that we’ve shown our hand, the Haiyitang will most likely pursue us to the end. If we go to negotiate now, there will definitely be no result.”

“After all that, what you said is just a bunch of nonsense,” Wen Tong was disappointed.

“Hmph, I never agreed to rush to Leizhou to open a branch mine in the first place,” Mei Lin said dismissively. “Our power is not great now, and our prestige is not enough to ‘suppress the troublemakers’ along the coast. To come to Leizhou to make money looking like a fat sheep, it would be strange if we didn’t get stabbed.”

“Let’s not talk about ‘originally’ or ‘I told you so’—” Chen Tianxiong said. “It’s annoying to talk about it, and it doesn’t help…”

Just as they were at their wit’s end, someone came to report, “Someone from Guangzhou is here!”

Everyone’s spirits lifted. Wen Tong quickly said, “Please, let them in!”

Wu De’s arrival was a shot in the arm for everyone. Especially seeing that the Executive Committee had sent a committee-level leader to personally transport the silver for the Leizhou Sugar Company, their somewhat panicked mood stabilized.

“Everyone, don’t be nervous,” Wu De said as soon as he entered the office, seeing the expressions on their faces. “We have plenty of silver. The Executive Committee will find a way to mobilize it for you. We will definitely win this sugar war.”

He then handed a receipt for fifty thousand taels of silver to Wen Tong for him to sign. This sum would be offset by sugar in the future.

Hearing that fifty thousand taels of silver had already arrived at Haian Port, and with Wu De’s statement, everyone breathed a sigh of relief. They believed that the Executive Committee was rich in silver. Among them, Chen Tianxiong, with his rich social experience, saw that a single Dengyingzhou had only brought fifty thousand taels of silver, and he knew that the money had not come as easily as Wu De had said.

“Alright, let’s talk about the current situation,” Wu De said.

Wen Tong gave a general account of the current situation. Since the panic selling began, they had already received 3,500 dan of sugar. This was the result of South China deliberately slowing down the pace. But the consequence of slowing down was that the crowd at the door was getting more and more squeezed.

“We are all very worried. Right now, there are almost one or two thousand people and hundreds of oxen stranded in front of the South China gate every day. The ground is full of garbage, and the smell is terrible. The weather is getting hotter and hotter. It’s hard to say if there will be an epidemic.”

“With so many people gathered, all kinds of rumors are flying around, which is very disadvantageous to us.”

“There are at least one hundred and fifty thousand dan of sugar outside waiting to be sold to us. If we continue to buy so slowly, it will lead to two results: one is that the cane farmers will suffer losses due to the deterioration of the sugar, and the other is that they will not be able to wait and will have to sell to the sugar merchants under the Haiyitang at the price of one tael and five qian. We will suffer on both ends.”

Wu De frowned. “Is that so?”

“Yes, some of the heavily indebted cane farmers probably can’t hold on for a few more days. We’ve learned a lot in the past few days. Those who have borrowed money are being pressed by their creditors and are anxious to cash in.”

The last scenario was what Wen Tong least wanted to see. Once it became a reality, the reputation that the South China Sugar Firm had gained by buying at the original price these past few days would be completely ruined. Not only would the profits from the low-priced sugar be taken by the Haiyitang, but South China’s reputation would also be tarnished.

Wu De listened carefully. When he asked about their countermeasures, Wen Tong did not hide anything and told him the results of their discussion: “One is to open the doors wide and buy as quickly as possible. In the end, we will gain both fame and fortune. Of course, this is on the premise that we can mobilize enough silver,” Wen Tong touched his forehead. “This is naturally a happy ending for everyone, and it will be easier for us to open up the situation in the future. If there is no silver, the public consensus is that we can only resort to violence. It will be immediate, but the aftermath will be difficult to clean up.”

After he finished, he added, “Right now, South China’s survival in Leizhou is at stake. The Executive Committee must make a decision as soon as possible!”

“The decision has already been made by the Executive Committee,” Wu De knew that he couldn’t say anything discouraging at this time. “You speed up the purchase. The Executive Committee will do everything possible to raise the money. You must hold your ground here. Use violence with caution; it’s easy to use but hard to clean up! The more critical the moment, the calmer you must be. Don’t give others any excuse. We must seize the fruit of this year’s Leizhou sugar!” He thought for a moment. “I will return to Lingao tonight and request an emergency meeting to discuss this matter.”

“Good, that’s for the best,” Wen Tong’s spirits lifted when he heard the big shot from the Executive Committee patting his chest. “As long as the Executive Committee makes a decision, we will be at ease. We will increase the sugar purchase speed tomorrow.”

“How many dan can you probably do per day?”

“Right now, it’s seven to eight hundred dan. If we open up and speed up the purchase, one thousand five hundred dan per day is no problem.”

One thousand five hundred dan a day, fifty thousand taels could last for almost half a month. In half a month, Wu De estimated that Guangzhou would definitely be able to mobilize enough funds.

Wen Tong instructed Liao Dahua and the others to prepare ox carts, laborers, and escorts to go to Haian Port to transport the silver.

“Should we transport it at night? This way, the Haiyitang won’t be able to figure out our bottom line,” Mei Lin said.

Chen Tianxiong said, “No need. The Haiyitang already knows our bottom line. Haian Street is their territory anyway. We can’t hide this little trick from them.”

Liao Dahua was also very happy to hear that a large amount of silver had arrived. Unlike Wen Tong and the others, he had a blind worship for Patron Guo in Guangzhou. Now that he heard that a ship from Guangzhou had brought silver, he was even more impressed by the owner’s power. He also chimed in, “It’s inconvenient to transport silver at night. It’s dark, and the coolies can’t see clearly. The road is not close, and it’s difficult for the escorts to escort. It’s better to do it during the day. Fifty thousand taels of silver is a large sum no matter what. Right now, people are uneasy outside. Let’s just show it off!”

Wu De nodded in agreement. “That’s right. Let’s just show it off and express our determination. Since the battle has been fought, we must fight it until the officials and commoners of Leizhou Prefecture are convinced!”

“There’s one more thing,” Wen Tong said. “We have a lot of sugar in stock now. Since the Dengyingzhou is here, let’s just ship a boatload of sugar to Guangzhou. Guo Yi said we can cash it in as soon as it gets there…”

“That’s right, that’s right,” Wu De tapped his own head. “I forgot about this part. We can sell as we buy. If we ship it in small batches like this, we might be able to maintain the price. But this involves the issue of ship allocation. We’ll discuss it together when we get back.”

These days, Zhu An had been staying at the Haiyitang during the day. One reason was to keep an eye on the movements of South China—it was inconvenient with people coming and going in his house. The other was to boost the morale of the various sugar merchants. Seeing the cane farmers not coming to sell sugar and the warehouses empty, the torment was unbearable for ordinary people. After all, the sugar harvest season was only three months long, and half of it was already over. The twenty-one sugar merchants had only received less than fifty thousand dan. Any sugar merchant’s manager would be anxious. From time to time, some restless sugar merchant’s manager or owner would come here to complain, and Third Master Zhu would patiently comfort and reassure them. It was thanks to his usual prestige and the trust everyone had in him that the situation was maintained.

The development of the situation was exactly as Third Master Zhu had predicted. As the sugar merchants under the Haiyitang adjusted their sugar prices, almost all the cane farmers flocked to South China. Only in the first few days did a few uninformed cane farmers sell their sugar at a loss on Haian Street. After that, the number of people selling sugar almost completely disappeared.

The ambush he had arranged among the sugar sellers had not yet been tested. Although on the first day of the price change, Zhao Jijiao’s ruffians had a chance to wreck the situation at South China, the other party’s reaction was quite fast, and they immediately brought the situation under control. The few spies he had arranged at South China were also all replaced. Although the loss of these few spies was a pity, it was irrelevant to the overall situation. These days, he not only had people keeping an eye on South China at all times, with a constant stream of reports coming in, but he had also gone to see for himself a few times. Third Master Zhu knew that South China could not hold out for long.

There were two reasons. The first was known to everyone: South China had sent people out to raise funds. This was the most obvious sign—if the money supply was not tight, no one would pay this high interest. The second reason was that he had discovered that in the past two days, although the weighing area at South China still had four scales, only three were frequently used, and the other one was only used occasionally.

The fact that South China had slowed down the weighing speed only showed that their money supply had reached a critical stage of emptiness, and they had to resort to this method to prolong their survival.

Third Master Zhu knew that the time for the fatal blow was approaching. In less than three days, the South China Sugar Firm would completely collapse under his hand.

The only pity was that, according to the report from the person he had sent to Guangzhou, South China seemed to have a deep connection with the Gao family in Guangzhou. He had heard of this Gao Ju; he was a powerful merchant who colluded with sea merchants. With this relationship, he had to give up his original plan of complete annihilation. Although he was not afraid of the Gao family, it was better to have fewer powerful enemies.

Fortunately, without these methods, the remaining few tricks were enough to make South China close its doors. At this moment, he was instructing his subordinates.

“Go to all the places and find the big households who have lent money to the cane farmers. Tell them to press the cane farmers hard for their debts!” Third Master Zhu’s eyes gleamed.

“Yes, Third Master!” Although the person who was assigned the task agreed readily, he was a little hesitant. “But Third Master, it’s natural for the creditors to press for their debts. But if they bring down South China, won’t the cane farmers only be able to sell their goods at the price of one tael and five qian? Won’t the creditors be worried that the cane farmers won’t be able to repay their debts—”