Chapter 52: The Ambitions of the Tiandihui

Currently, the entire island of Hainan is under the jurisdiction of the Senate, and the amount of land infrastructure construction required for agricultural development is enormous. Although various forms of unpaid labor are now widely used—from Southeast Asian slaves, prisoners, immigrants, and conscripted “volunteer workers,” and even the army is mobilized to participate in labor—these people still need tools, food, clothing, and drink. In addition to labor costs, there is also a massive investment of materials.

The development of several directly affiliated enterprises under the Agricultural Committee is also very prosperous. The required working capital is huge. Especially since the start of the Engine Project, the Agricultural Committee has also undertaken the resettlement of a large number of immigrants.

Although the Planning Institute’s investment in agriculture is also increasing, it is disproportionate to the already high investment in industrial infrastructure, huge military expenditures, immigration fees, and administrative expenses. The investment and demand growth of the remaining departments are out of proportion. Many departments have felt a shortage of funds.

When there is not enough money, the main method is to increase revenue and reduce expenditure. However, under the command of the Planning Institute, the current Senate has reached a point where there is nothing left to cut. There are blank spots everywhere, and there is no place where resources can be truly saved. In the end, it is still necessary to increase revenue.

Besides trade and plunder from warfare, many senators have turned their attention to the interior of the ruling area.

The resources obtained through the means of “suppressing bandits and confiscating the property of local tyrants” during the suppression of bandits and the measurement of fields have now been almost consumed, and it is impossible to repeat similar methods. In terms of taxation: the current tax system is not yet perfect, the economic census has not yet been carried out, and it is too hasty to levy new taxes.

The only way is to tap into the private capital in the ruling area. In recent years, under the stimulus of the Senate’s policy of promoting the development of agriculture, industry, and commerce, private capital in Lingao, including the entire Qiongzhou, has developed rapidly. Not only has a group of “nouveau riche” emerged, but also a considerable number of “middle-class families.” The capital in the hands of these two groups of people is a considerable sum. They have a demand for capital investment and preservation. However, the investment channels that the financial sector can currently provide are very limited, mainly only savings.

The naturalized citizens and the native people all know that the “Australian leaders” have the “Midas touch” and can make a lot of money in everything they do. Many large households have tried to invest in the Senate’s enterprises, but so far, only the Grand World project in Guangzhou has set a precedent. In Lingao, on the contrary, only a few large households have enjoyed such benefits.

Wu Nanhai felt that since society had such a demand and the Planning Institute’s investment was not in place, it was not necessary to rely solely on state investment. Absorbing and utilizing private capital was a matter of killing multiple birds with one stone.

Under the current national policy of a planned economy with a state-owned economy as the mainstay, it is impossible to fully open up private equity investment. Moreover, many senators in the Senate detest the stock market as a “deceptive trick” and cannot tolerate state-owned enterprises being “tainted” by “private capital.” Any proposal to open up equity investment in state-owned enterprises would be denounced as a “feast to carve up the Senate’s property,” and the proposer would be “given a pill” on the spot.

Therefore, Wu Nanhai only proposed to absorb private capital through bonds and to release a small amount of equity without involving corporate management rights and ownership. This could greatly reduce the opposition from the “pill party” and also play a role in absorbing private capital.

To increase the success rate of passing it in the Senate, Wu Nanhai had been negotiating with several senators from the financial sector at the Farm Teahouse for a week and was gradually perfecting the proposal. According to the Senate’s rules of procedure, a senator’s proposal needs at least 5% of the senators to second it to enter the agenda. He had already gathered enough co-sponsoring senators from the Agricultural Committee and the financial sector through his activities. The main task at present was to win over as many senators as possible to vote in favor of this proposal.

Last week, the Feiyun Club held a party in the cafe in the annex of the teahouse. Nanhai had specially communicated with the Qian brothers, had private talks with some people from the Forestry Department, and frequently corresponded with the county office directors stationed in various counties. At present, he was confident of passing this proposal with a simple majority in the Senate vote.

The financial sector was most interested in this plan: after all, the financial industry currently had almost no business other than insurance and bank deposits and loans. If issuing bonds and raising funds for state-owned enterprises was launched as a “national policy,” there would be many more financial services to be developed. Therefore, the two sides hit it off immediately.

The draft plan proposed by the financial sector was that the Agricultural Committee would serve as a pilot, and Delong Bank would be responsible for issuing government agricultural bonds for specific purposes. The proceeds from the bond issuance would be used as an additional appropriation for the exclusive use of the Agricultural Committee, and the specific project review would still be the responsibility of the Planning Institute. As for issuing stocks, Wu Nanhai originally planned to restructure several of his subordinate enterprises into joint-stock limited companies. However, the financial sector suggested that it would be best not to use the enterprises under the Agricultural Committee for restructuring, as the pressure to pass it in the Senate would be great. It would be more appropriate for the Agricultural Committee to fund the establishment of a joint-stock limited company to specifically raise funds.

“…Actually, it is more appropriate to restructure the Tiandihui, an association under the Agricultural Committee, into a joint-stock company,” Wu Di said. “First, the organization itself is engaged in commercial activities—the service industry is also a commercial activity; second, the name of the Tiandihui is very famous in Lingao, and it has a high appeal for raising capital.”

“That’s right. I originally had the intention of expanding the Tiandihui. It’s a pity to just treat it as a social organization similar to a farmers’ cooperative.”

“No, the nature of the Tiandihui as a farmers’ cooperative social group cannot be changed,” Wu Di said. “You can establish a joint-stock limited company under the Tiandihui with the Tiandihui as the major shareholder.”

“Then why don’t I set up a Tiandihui foundation?”

“That’s too far-sighted,” Wu Di said with a smile. “Take it slow.”

Wu Nanhai and several senators from the financial sector had discussed the details many times. Now he was concerned about when it could be implemented and when he could get enough money.

“I’m afraid it won’t be very soon,” said Chen Ce, the director of the planning department of Delong Bank. “You know that the most important thing for the financial sector in 1633 is currency reform. Until the currency reform is completed, it’s unlikely that there will be such a big move in the financial field. By then, the monetary unit will have changed, so how will the previous bonds and stocks be calculated?”

“Didn’t Guangzhou already issue bonds and stocks for the Grand World?”

“That was calculated in silver. If we issue securities now, we must use circulation coupons. We don’t have a formal plan for what the final new circulation coupons will look like yet.”

“I see,” Wu Nanhai was a little disappointed. “I was hoping to expand production after getting the money.”

After eating and drinking their fill, the people from the financial sector all got up and left. Of course, Wu Nanhai paid the bill. He asked the waitress on duty to clean the private room, set up a set of kung fu tea utensils, brewed some “Limu Mountain Oolong Tea,” and waited for Ye Yuming while drinking by himself.

After Ye Yuming arrived, Wu Nanhai immediately talked to him about the issue of raising funds for the Tiandihui. The first step, of course, was the work of the Tiandihui starting a commercial enterprise. He would have done this even without raising funds. He couldn’t let all the good business opportunities go to the Ministry of Commerce while he just watched.

In Wu Nanhai’s calculation, the Tiandihui would be the “tertiary industry” department of the Agricultural Committee in the future. The sideline enterprises currently under the control of the Agricultural Committee would be gradually integrated into this system. At the same time, this department would also operate new tertiary industry projects on its own.

Specifically, the Tiandihui would come forward to establish a Tiandihui Holding Co., Ltd., and publicly offer shares.

As the head of the Tiandihui, Ye Yuming had long been restless. He immediately agreed with Wu Nanhai’s proposal and also proposed to find a way to reclaim all fishing rights.

“We have already established a fishery cooperative and control a large part of the fishing rights. The Navy is not willing to let go of the Fishery Fleet for the time being. We can first create public opinion. The Navy’s business is getting bigger and bigger, and they are gradually looking down on those old boats,” Ye Yuming said.

“Yes, it’s a pity that the Fishery Administration Fleet is out of the question,” Wu Nanhai said with regret.

The two looked at each other in silence for a moment. Ye Yuming took out a memorandum from his pocket:

“This is an organizational structure outline I have made for the next step of the Tiandihui’s development.”

The document envisioned the organizational structure of the Tiandihui. In addition to the General Assembly’s Heaven Department, all existing businesses were divided into different halls for management. The most important were five halls.

Heyi Hall: Small and medium-sized self-cultivating farmers organize agricultural cooperative affairs;

Jujing Hall: Responsible for fishery cooperative affairs;

Mengshan Hall: All agricultural technology and agricultural science service affairs;

Fengze Hall: Management of land contracted by the Tiandihui;

Xingwang Hall: Small loan promotion service business for livestock and poultry breeding.

“These halls, except for Heyi Hall and Jujing Hall, can all be established as professional companies,” Ye Yuming said excitedly. “If the Senate can loosen the restrictions a little more, we can also set up an agricultural bank or at least an agricultural credit cooperative. The Japanese have credit cooperatives for their agricultural cooperatives…”

“Let’s discuss this later. Don’t mention the agricultural bank outside. The people at Wudaokou are very shrewd…” Wu Nanhai whispered.

Ye Yuming was startled: “You’re right.” He shook his head with some regret. “It’s a pity we can’t get the Fishery Fleet back, otherwise we could just set up a fishery company directly!”

“I have no objection to your Tiandihui restructuring plan, but I don’t have enough people to set up the framework for you right now. Let’s make do for now,” Wu Nanhai said. “I want to talk to you about small-scale commerce first. I plan to operate it under the framework of the Tiandihui’s commercial company. Set up a special company.”

“Small-scale commerce?”

“Yes, like breakfast stalls, cold drink stalls, and the like.”

“Isn’t that a business for individual entrepreneurs?” Ye Yuming didn’t understand. “We don’t need to hire a group of people to do this specifically…”