Chapter 292: Hai Shuzu's Predicament

In his cabin below the deck of the Guangding, Lin Baiguang leaned against his bedroll, contemplating the urgent tasks awaiting him in Qiongshan.

His first priority was to win over Hai Shuzu. The Transmigration Group had initially planned to lure him to Lin’gao under the pretext of retrieving his ship and its cargo, hoping to recruit him then. However, Hai Shuzu was clearly suspicious and refused to leave the safety of Qiongshan.

Of course, if I were in his shoes, I wouldn’t dare go either, Lin Baiguang thought. Who knows what the Australians are really planning? After all, Hai Shuzu was a man of some means.

If he didn’t come to Lin’gao, the Transmigration Group would gain a large ship and a great deal of cargo for free, which was certainly a good outcome. But Hai Shuzu himself was far more valuable to them—not for his lineage as a descendant of Hai Rui, which might help win over the local gentry, but for more practical reasons.

The Industrial Committee had been petitioning the Executive Committee to find a way to start mining coal in Qiongshan. The coal deposits in the Haikou area were among the best on Hainan Island. It was primarily lignite, which could be used for coking. After the development of the Tiandu iron mine, coking coal would become a major bottleneck. The Hong Gai coal from Vietnam was high-quality anthracite, not ideal for coking, and came with all the difficulties of overseas mining, not to mention the limitations of their shipping capacity. The Industrial Committee desperately wanted a stable, nearby source of coal.

However, in this era, the coal mines around Haikou had not yet been developed on a large scale. Mining in ancient times was a troublesome affair, not because of difficult paperwork or heavy taxes, but because of excessive interference from local powers. Sometimes this was driven by economic interests, other times by beliefs in “feng shui” or “earth veins.” There were also primitive environmental concerns—mining and smelting inevitably damaged the local environment and caused severe pollution.

The government had no clear standards for whether to permit mining, and their decisions were often arbitrary. Generally, local officials were not enthusiastic about it. The Ming dynasty had no concept of a resource tax, and except for a brief period under the Wanli Emperor, mining brought little benefit to local finances. While it might offer personal benefits to various officials, large and small, it also attracted a large influx of miners. Workers were historically considered an “unstable element,” often putting significant pressure on the government to maintain order. With no real benefits and a high risk of trouble, the government’s default response to any dispute was to simply ban the operation.

Without a powerful local figure to manage the situation or act as a protector, a mine would be very difficult to open.

It was because of these unfavorable factors that the Transmigration Group had not rashly sent an agent like Lin Quanan to directly invest in mining. Instead, they hoped to induce a local to open the mine and then purchase the coal, a much more stable method of resource acquisition. But opening a mine and producing coal was not an overnight process; it required a substantial investment. If the Group’s purchase price was too low, no one would be willing to mine; if it was too high, the Planning Committee would deem it not worth the cost.

So, in the end, they settled on another method: find a local agent to act as a front, with the Transmigration Group providing the actual investment.

In the Executive Committee’s view, Hai Shuzu was an excellent candidate for this role. With the Hai family’s reputation, it would be relatively easy to handle the local government and other influential parties.

How to convince Hai Shuzu? Lin Baiguang pondered. The fact that Hai Shuzu had been willing to pool funds to buy a ship for overseas trade showed he had an adventurous streak and a strong desire for money. With these two preconditions, persuading him to open a mine shouldn’t be difficult. Moreover, according to the intelligence gathered by Chen Tong, the Hai family was currently facing a severe economic crisis. This was a golden opportunity.

Lin Baiguang went over his plan again and again on the cabin floor. There was no time to lose. The current coking furnaces were using coal bought from Guangdong. The consumption was still low, so they could manage. But once the first batch of iron ore from Tiandu arrived next year, coke would immediately become the bottleneck for the steel industry.

After Lin Baiguang arrived in Qiongzhou, the manager and clerks from Leizhou, along with the escorts from Guangdong, arrived one after another. The renovation of their new property began in earnest.

During this interval, Lin Baiguang instructed Chen Tong to intensify his infiltration of the Hai household to get firsthand information. Gao Di was sent out to conduct a general survey of the social situation.

After a week or so, the information gathered from all sides was very promising for Lin Baiguang. Hai Shuzu’s trading venture to Batavia had involved a total of fifty-one households, including his own, who had contributed either money or goods, amounting to ninety shares. Hai Shuzu himself held twenty-three. The composition of these investors was complex. It included his own clansmen, relatives, friends, and local small merchants who had invested in the hope of making a fortune from overseas trade. There were even servants from the Hai family and other households, who had pooled their life savings to collectively buy four shares.

Many of these ninety shares were held by such small investors, some holding as little as half a share. The failure of Hai Shuzu’s venture was a devastating blow to them—many had invested their coffin money. These small investors, with the least ability to absorb risk, were not easily dismissed with a “maritime trade is risky, invest with caution” and sent away to lick their wounds. The ancients didn’t understand the concept of “limited liability.” They gathered at the gate of the Hai residence every day, creating a scene and demanding their money back.

For Hai Shuzu, who valued his family’s reputation above all, this was a public humiliation. Engaging in maritime trade was already not a particularly respectable activity for a scholar-gentry, and now this scandal made his predicament even more miserable.

His troubles didn’t end there. Besides the shareholders, there were also the loans—without them, he couldn’t have built such a large ship. The loans, of course, came with interest, and it wasn’t low. When the creditors heard that the ship had been taken by pirates, they also came knocking.

Finally, there was an even more difficult group of people: the small merchants who were neither shareholders nor creditors, but passengers on his ship. Although most of them had been rescued by the Transmigration Group, saving their lives and even some of their financial losses, many others had lost everything. The widows and orphans of those who had died came to his door, their hair disheveled, wailing and demanding he “give them back their lives.”

“He really can’t defend himself against that,” Lin Baiguang sighed. “It seems this maritime trade business is not easy.”

“Master, as they say, you only see the thief enjoying the meat, not the beating he gets,” Gao Di commented. “Many people have been ruined by maritime trade. When I was serving at the Gao family’s house, I often heard Master Gao talk about it. Some were lost at sea, some went bankrupt, and some lost their capital and couldn’t return home, stranded in foreign lands… Even Master Gao himself lost several shipments, totaling tens of thousands of taels.”

Lin Baiguang nodded. The risks of maritime trade were enormous. What was even more terrifying was the ancient business practice of “unlimited liability.” All of a person’s public and private assets could be seized to cover debts. A single business failure could completely ruin an entrepreneur, with no hope of recovery.

Hai Shuzu was, of course, aware of this dreadful consequence. And as a descendant of Lord Hai, if he were to meet such an end, it would not only be a personal failure but a disgrace to his family name.

Lin Baiguang could fully imagine Hai Shuzu’s current state of mind.

After much deliberation, he asked Chen Tong, “What are the Hai family’s assets?”

“Just an empty shell,” Chen Tong replied. Besides the two hundred mu of ancestral land shared by the clan, the family had less than two hundred mu of their own. As for movable assets, there were practically none. Hai Rui was famous for his incorruptibility and couldn’t even afford a decent coffin when he died. His descendants naturally wouldn’t have much of an inheritance.

Because their family had produced such a renowned figure, famous for his integrity, the Hai family never dabbled in the shady money-making schemes common among the local gentry, all to protect their family’s reputation.

“Truly not easy!” Lin Baiguang exclaimed in admiration. “Worthy of being Lord Hai’s descendant.”

“Isn’t that the truth,” Chen Tong agreed. “Everyone is saying this is a tribulation, a test of fate.”

“If the Hai family can overcome this, they will surely prosper,” Lin Baiguang said cryptically. “It all depends on whether Hai Shuzu is sharp enough.”

Lin Baiguang instructed Gao Di, “Go and find out if the creditors who lent money to the Hai family are willing to sell their IOUs.”

Gao Di understood immediately. “I’m on it.”

“Don’t be in a hurry to buy. Drive a hard bargain,” Lin Baiguang added. “Hai Shuzu’s IOUs will soon be worthless.”

If Hai Shuzu had no other source of income and no external financial support, he was, in fact, already bankrupt. A quick mental calculation told Lin Baiguang that repaying the debts and interest alone would be enough to ruin him completely.

“This business of buying up debts must be done discreetly,” Lin Baiguang reminded Gao Di.

He was not buying the debts out of charity, but to use them as leverage. If word got out, it would be bad for both sides.

Meanwhile, Hai Shuzu had fled to Guangzhou. He was at his wit’s end. Ever since his ship was hijacked in the strait, he hadn’t had a single peaceful night’s sleep. The people from the ship had trickled back, telling him that they had been attacked by pirates in the Qiongzhou Strait but were fortunate to be rescued by the Australians from Lin’gao. They had managed to save their lives and even do some business in Lin’gao. The five-masted ship had also been towed to Lin’gao. Because the manager he had sent with the ship had died, Hai Shuzu didn’t fully trust the words of these small merchants and sailors. It was only when the ship’s fire-master returned with a letter and gifts from the Australians that he learned the exact news.

The letter asked him to come to Lin’gao in person to retrieve his ship and cargo. Hai Shuzu hesitated for a long time. It wasn’t that he didn’t want to go—after all, going to Lin’gao offered a glimmer of hope of recovering some of his capital, while not going meant sitting and waiting for ruin. But his family and friends all advised him against it, saying the Australians might be using it as bait to lure him into a trap and hold him for ransom.