The Qing Dynasty

Chapter 601: Loan Required
"Commander."

Xi Ligong said anxiously, "What Director Li just said also reminded me of something. This is probably related to the establishment of the Ministry of Revenue Bank and their ban on the issuance of banknotes!"

Xi Ligong's words made Teng Yuzao instantly nervous. He stopped suddenly and raised his head for a moment, staring at Xi Ligong, waiting for his next words.

Xi Ligong knew Teng Yuzhao's mood and spoke quickly.

"Marshal, this is what happened. Just yesterday, the Capital Commercial Bank suddenly contacted our head office and said they wanted to borrow 8 million banknotes from us to buy the special flour from the Jizhi Flour Mill. The time limit is only three months."

"I have contacted Jizhi, and he told me that this is true. In the beginning, they even wanted Jizhi to give them some discounts, saying that this batch of flour was purchased for the new army in the palace and Shuntian Prefecture, as well as Yuan Shikai's Henan Army, Ma Yukun's Wuwei Left Army, and Jiang Guiti's Jiang Defense Force."

"Jizhi told them that the flour supplied to the Zhi army and the Marshal's Mansion was also sold at market price, and there was no discount. Therefore, he only agreed to give an 80% discount on the 10,000 kilograms of flour in the palace."

"The rest of the requests for preferential flour supply to the new troops in several provinces were rejected by Jizhi, but they still insisted on buying it and wanted to complete the deal within a month."

"Since the flour mills were fully booked, they were even willing to pay a 10% premium to get the flour in time."

"A loan of 8 million to buy our flour! Is time so urgent?"

Teng Yuzao's brows furrowed tightly. "How much flour do we need to buy? Even if the imperial court allocates military funds to them, they have to pay the full amount every month. In order to let Yuan Shikai and Tie Liang expand their armies, they often allocate extra military funds to these two armies. However, their military funds are mainly used to purchase weapons and equipment. How can they have extra money to improve the food for the troops?"

"Besides, the combined forces of Tieliang, Yuan Shikai, Ma Yukun and Jiang Guiti only have a little over 200,000 men. Are they rich enough to feed their soldiers with our flour every day like our Zhi army?"

"Also, even if they only supply one meal of white flour like this every day, this flour is enough for them to eat for several years. What are they going to do with this?"

Just when Teng Yuzhao was puzzled, Xi Ligong spoke nervously again.

"Marshal, there's something even stranger!"

"This morning and noon, the Japanese Specie Bank and the British HSBC, Mercantile Bank, and Liru Bank also came to loan us banknotes for terms ranging from two to three months."

"Among them, the Bank of Japan loaned 50 million, HSBC loaned 60 million, and Mercantile Bank and Liru Bank each loaned 30 million. The reason was that they were in urgent need of purchasing our products."

Xi Ligong said nervously, "Marshal, if you put these things together, you will understand. Marshal, your judgment is correct. A bank run will definitely happen, and it is likely to happen in a month."

"These banks that are eager to lend money to us probably want to take advantage of the opportunity to bite off a few more pieces of meat from us, and use our loans to buy goods or exchange them for silver. When the bank is run and the banknotes depreciate rapidly, they will exchange them for banknotes in the market to repay our loans."

"It's just that I don't know what methods they have?"

"Ah."

Teng Yuzao nodded in agreement and said, "That must be it."

"That is to say, they expect our banknotes to depreciate within three months. And one thing is clear: Yikuang has colluded with the Japanese and the British. This is another way of shorting our banknotes."

At this point, Teng Yuzao relaxed and even smiled.

"Yucheng, as the saying goes, there are thieves who can steal for a thousand days, but there is no such thing as a thief who can guard against thieves for a thousand days. We can't just sit there and wait. We can lend them money."

Teng Yuzhao's words made Xi Ligong stunned at first, but after all, he had been engaged in banking business for many years and had much richer financial experience, and he seemed to have understood something in his heart.

"However, these loans are short-term and large amount loans, so the interest rates are higher, right?"

Xi Ligong nodded and said, "Yes, for a short-term large loan like this, the interest rate is more than 10%."

"We should give them a higher interest rate, set it at 25%. If they accept it, we can lend it to the Japanese and the British, but Yikuang's Capital Commercial Bank cannot be 25%."

“The loan we give them is at 40% interest, the reason being that their principal is low and we are worried that it will not be repaid.”

Teng Yuzao added, "Also, whether it is the British or the Japanese, except for HSBC, the capital of the other three banks is insufficient. Their banks, including the Beijing Commercial Bank, must be guaranteed by a foreign bank with sufficient funds. Guarantees from Citibank and Deutsche Bank will suffice."

Xi Ligong nodded and said with some concern, "Marshal, with such a large loan amount, it will be difficult for us to deal with it if they use these banknotes to run on our bank."

"So, these banknotes cannot be directly loaned to them in cash, but only as loan quotas. They can use these quotas to purchase our products, and the payment will be directly transferred and settled by our bank."

Seeing Teng Yuzhao nodded in agreement with his suggestion, Xi Ligong spoke again with some concern.

"But Marshal, the capital of the Capital Commercial Bank is really insufficient. If we finally withstand the bank run, even if they give us the Capital Commercial Bank, it won't be enough to cover the debt!"

Teng Yuzao smiled and said, "The court has just promulgated the Commercial Law. Yikuang is going to push the Capital Commercial Bank to the Ministry of Revenue Bank. They can't pay it back. According to the Commercial Law, the bank that takes over has to pay it back."

Teng Yuzao's words stunned Xi Ligong and Li Yaoting.

Teng Yuzhao actually wants to attract the attention of the Ministry of Revenue Bank!
Xi Ligong knew that although the Ministry of Finance Bank did not yet have the ability and strength to become a central bank of a country, it was
Xi Ligong soon saw a gleam of excitement in Li Yaoting's eyes.

Xi Ligong, who was shocked, immediately realized that if he could manage the Ministry of Finance Bank, then
"besides."

Teng Yuzao didn't seem to notice the strangeness between the two people, and said to Xi Ligong.

"We can't just passively accept attacks all the time, we have to take the initiative as well." "I'll go talk to Lianfu and Jizhi, and we'll use the two coal mines in Kaiping and Datong and the 30-year operating rights of the Lu-Han Railway as collateral to allow the Governor's Office to borrow funds worth 50 million U.S. dollars for a period of one and a half years."

"When speaking to the public, just say that the Governor-General's Office wants to invest in Aurora Bank."

"You will be in charge of this matter. Contact the Specie Bank and the Russo-Chinese Bank, and then exchange the borrowed yen and rubles for U.S. dollars, British pounds, German gold marks and other currencies in Hong Kong and Shanghai as quickly as possible."

Teng Yuzao has to pay a lot in handling fees just for doing this! This surprised Li Yaoting greatly. However, Li Yaoting has developed a habit over the years. He has absolute confidence in all of Teng Yuzao's judgments and never questions Teng Yuzao's decisions.

But after hearing this, Xi Ligong couldn't help but be overjoyed, "Marshal, are you sure that both the ruble and the yen will depreciate!"

One afternoon a month later, on the second floor of the trading hall of Tianjin Stock Exchange.

Teng Yuzao, Yang Shiqi, Xi Ligong, Zhou Xuexi, Li Yaoting, Tang Shaoyi and others stood in front of the large glass windows, quietly looking at the trading hall below where people were moving around.

They were standing right in front of the trading counter in the lobby on the first floor. Behind the counter was a trading display board that took up almost an entire wall.

Although this trading display board was extremely primitive, it was still much more advanced than the trading display boards of European and American stock exchanges at that time.

The reason why it is more advanced than the display boards of stock exchanges in Europe and the United States is that not only in Europe and the United States, but also in all places in the world where there are stock, bond and foreign exchange trading, the display boards are still controlled by traders using long rods to hang new price tags under the names of corresponding stocks or foreign exchange with constantly changing price tags, so that people who are preparing to trade can loudly report their buying and selling prices to the traders at the counter.

Although the display board in Tianjin Stock Exchange is not electronic, it was designed and produced based on Teng Yuzhao's suggestions at the beginning of its design.

Although there were no electronic display screens at that time, this display board was also related to electricity. Although it was also manually changed by personnel behind the display board according to the market conditions, there were lights behind both the stock names and their changing buying and selling prices.

This allows customers with poor eyesight who are buying stocks to see clearly no matter where they are standing in the hall.

The glass windows in the spacious room where Teng Yuzao and his companions were were not ordinary glass, but one-way light-transmitting glass developed by Aurora Glass Manufacturing Company based on Teng Yuzao's suggestions. Looking from the hall outside, it was just a glass wall, but it was indeed transparent when looking outside from the inside.

This one-way light-transmitting glass was developed the year before last, but according to history, it was invented by Americans by accident only last year.

This room is very large and spacious. It was originally used exclusively by Aurora Bank to facilitate timely detection of stock fluctuations so that the staff sent by the bank can grasp the situation in a timely manner.

Just according to Teng Yuzhao's request, "Aurora Bank" now basically does not participate in the behavior of earning price differences in the stock market. They only do value investment and help stabilize the market, so this room has been vacant.

In the past month, in order to keep me updated on the stock market situation, this place has become Xi Ligong's temporary office, but today is a little special.

Li Yaoting, who rushed to the capital to take command, had already sent back news five days ago that the Ministry of Revenue Bank, which had been established for more than 20 days, would officially announce before this evening that the court would take back the coinage rights of various provinces and prohibit the provinces from issuing circulating banknotes. At the same time, the banknotes issued by the Ministry of Revenue Bank would be officially launched tomorrow.

It will also be announced that the paper money issued by the Ministry of Revenue is the only legal paper money in the Qing Dynasty.

Although there was no mention of the paper money issued by Zhili's Aurora Bank, everyone knew that only Zhili was issuing and using paper money now. This was naturally aimed at the Aurora Bank and would definitely trigger a run on the bank.

Although the news has not been revealed yet and a run on Aurora Bank has not occurred, a fierce secret game has been going on in the stock market.

The two parties in the game were naturally the Aurora Bank on one side and the Japanese Specie Bank, the British HSBC, the Mercantile Bank, the Liru Bank, and the newly established Ministry of Revenue Bank secretly controlled by Yikuang on the other side, as well as a number of domestic and foreign banks.

Other foreign banks also seemed to have noticed this and some followed suit, but these foreign banks did not seem to be aware of the inside story and their level of involvement was not high.

Li Yaoting has also figured out the identities of the seven stock speculators from Beijing. They are the secret operators of Japanese and British banks.

In addition to their open trading seats, these British and Japanese banks mainly rely on these people to secretly purchase large quantities of corresponding stocks.

Two of them are operators of Japan's "Bank of Specie", three represent three British banks respectively, and one is the operator of the former "Beijing Commercial Bank". However, since "Beijing Commercial Bank" has been merged into "Bank of Ministry of Finance", he is now the representative of "Bank of Ministry of Finance".

The last person was from Yikuang's mansion. It seemed that Yikuang himself wanted to gain some benefits from the crowd.

Since January, the stocks of Aurora's bicycle company, electrical company, and flour company, as well as Beiyang's Beiyang Machinery Company and Beiyang United Alkali Company have been pushed up significantly, reaching twice the level of January ago.

The crazy growth of the stocks of these companies has long aroused various suspicions in the market, but neither the companies themselves nor the exchanges have made any comments on these wildly rising stocks, only saying that this is normal market behavior.

However, as the stocks of these companies grew too wildly, most of the businessmen who speculated on stocks in the market took the profits and dared not speculate anymore. Only those seven people were still the minority who persisted, and they had been buying slowly and never sold.

Driven by the crazy rise of these stocks, almost all the stocks of the Aurora and Beiyang groups in the market also saw significant increases.

The reason for the rise in the stocks of these companies is naturally that "Aurora Bank" is competing for stocks with the Anglo-Japanese Bank. According to Xi Ligong's analysis, these stocks bought by them will most likely be owned by a bank and then transferred to the British company behind them.

Because only British companies would be interested in the patents of these companies, and only they have such strength.

Since the Ministry of Revenue Bank will officially announce the so-called banknote cancellation on behalf of the court tomorrow, and these British and Japanese banks have not taken any action yet, Teng Yuzhao is a little worried, so he brought a group of people here early in the morning, and even had lunch in this room.

Just as everyone was getting anxious, the head of the investment department of Aurora Bank, who was holding a telephone receiver in the room, shouted.

"General Manager, they started selling stocks"

(End of this chapter)