Tang Dynasty Xie Lu Lang

Chapter 510 Spending Billions
Bianzhou Feiqian is the mainstay of Zhang Dai's various industries. Upon hearing that this matter had been disturbed, Zhang Dai frowned and gestured for Zhang Yi to sit down first. Then he said in a deep voice, "Tell me the details of what happened."

"The other day, Ah Lang sent someone to deliver a message, and we immediately became alert and carefully investigated everything. Sure enough, we soon discovered some clues..."

Previously, Song Hun had warned Zhang Dai that Li Linfu was planning to join forces with Yuwen Kuan to seize his property. Zhang Dai then wrote a letter to remind the relevant people. As a result, Zhang Yi and others also paid close attention to everything. Originally, everything was relatively normal, but in the period before that, many unusual things happened.

On the one hand, many merchants in Bianzhou are requesting advance payments for dividends and goods, while other businesses are requesting deferred payments for goods and rent. These things are still relatively normal, although they are more frequent than usual, but not enough to cross the warning line.

After all, after August, various goods will be transported to the capital, and the private trade will be affected in various ways by this large-scale migration of wealth. Therefore, people will often increase their cash reserves to cope with various variables, and the buying and selling of various goods will also enter a period of activity.

Because a long, cold winter is coming, the water volume in the northern river network will gradually dry up, the canal transport will enter a period of decline, and logistics costs will increase sharply.

Based on past experience, this period is usually a high-speed period of cash outflow, and this year's phenomenon has not exceeded past experience.

However, at the same time, the amount of money deposited from Dongdu to Bianzhou surged, increasing several times compared to the same period in previous years. Although the scale of money deposits has been growing year by year, such a rapid increase in a short period of time is still very unusual.

This has created a particular business risk: Bianzhou's cash reserves have dwindled to a point where they are completely insufficient to cover the amount of cash needed for the next settlement cycle.

"Merchants in Bianzhou have been secretly informed that a powerful figure in the capital has instructed them to extract as much money as possible from our family's coffers as possible from anyone who has financial dealings with us. Furthermore, the Eastern Capital is constantly issuing new 'flying money' to our family, all of which must be redeemed in a short period of time."

The required payments for September have already reached over 2.3 million strings of cash, but Bianzhou's current savings are only over 300,000 strings. Although Nan Ba ​​and his men have led their troops to Luoyang to collect the money and transport it eastward, all the boats and carts in Bianzhou have already been hired by the authorities to head towards the Huai River. It is estimated that only 500,000 to 600,000 strings can be transported out in September. Even with the return of over 200,000 strings, there is still a huge shortfall..."

After hearing Zhang Yi's account, Zhang Dai realized the problem was serious. If a run on the bank were to occur over this difference of over a million strings of cash, the consequences would undoubtedly be catastrophic.

As a new phenomenon, maintaining sufficient cash flow to ensure successful redemption is of paramount importance for the operation of Feiqian. However, one of the more significant issues is the storage and security costs of large sums of money.

The situation in Luoyang was relatively good. As the eastern capital of the Tang Dynasty, it could rely on the government's resources for both warehousing and defense. However, in Bianzhou, such conveniences were much less available. Bianzhou was a place where all sorts of people mingled, and if too much cash was stored in one place, there would always be desperate criminals who would take the risk.

Following conventional thinking, the money deposited in the system can be lent out again, which would reduce the pressure of storage and security on the one hand, and generate some profit on the other.

However, lending also presents several problems. First, it could create conflicts of interest with the local officials and gentry in Bianzhou, since these people had historically been the de facto controllers of local financing channels. Second, managing the repayment of such a large sum of money would be a very laborious and time-consuming task.

Another point is that Zhang Dai also disliked the brutal and direct exploitative method of usury. Therefore, he chose to establish a large-scale commercial complex in Bianzhou and utilize the money through various commercial activities. This would not only stimulate the development of local productivity and generate continuous profits, but also avoid the storage and security costs associated with storing money.

At the same time, maintaining a good cooperative relationship with merchants in Bianzhou also means partly using these people as a backup cash pool.

These people receive a large amount of dividends from Zhang Dai every year, and of course they hope that this model will continue. At the same time, when Feiqian faces redemption pressure, they can also receive some financial support and earn some interest returns.

At worst, they could use their own transport fleet to send money stored in Luoyang to Bianzhou to replenish Bianzhou's cash reserves. After all, flying money wasn't some overly esoteric financial game; cash had to be deposited into the treasury before an acceptance certificate could be issued.

Through this series of arrangements, the risk of a bank run can be largely eliminated.

However, the situation Bianzhou Feiqian is currently facing is clearly a combination of difficulties. On the one hand, it is suppressing and restricting the cash flow of reserves in Bianzhou, on the other hand, it is strengthening its input in Dongdu, and at the same time, it has chosen the special time of autumn when rented goods are brought to Beijing to launch its attack. It can be said that it has calculated every aspect.

Moreover, there is a very crucial factor at play: the surge in the amount of cash deposited into the Eastern Capital. Originally, if Bianzhou had insufficient cash reserves and faced pressure to withdraw funds, the Luoyang money exchange could have made appropriate adjustments, such as ceasing to issue new cash deposits or only issuing medium- to long-term cash deposits.

However, there is a loophole: the Bianzhou Flying Money system has an obligation to handle the intermediary transactions of the flying money from Chang'an to Luoyang. That is, if flying money travels from Chang'an to Luoyang and then through Luoyang to Bianzhou, Bianzhou is also responsible for its redemption. This is because the flying money from the two capitals is the core system; flying money from other places are branches extending from the two capitals. To join the flying money system, assisting the flying money from the two capitals in handling business is a prerequisite.

Therefore, the surge in the amount of flying money in the Eastern Capital was not due to Luoyang's own greed for performance and large-scale recruitment and absorption, but rather because the flying money from both capitals was forcibly inserted by the eunuchs.

Although these money notes were sent over, the corresponding cash and silk were also deposited into Zhang Dai's money exchange in Luoyang. However, it still took time and cost for the Luoyang money exchange to transport the money to Bianzhou for storage.

Although Zhang Dai had long known that Li Linfu and his group planned to develop their own businesses, he felt that Fei Qian wouldn't be a problem. On one hand, he had a deep understanding with Gao Lishi, and the two families were currently cooperating on the North Gate project; Gao Lishi wouldn't help them target him.

On the other hand, he had made various preparations for Feiqian very thoroughly. If the other party wanted to cause trouble in this area, such as creating the risk of a run on the bank, they would have to invest a huge amount of money, and they might not even succeed.

But now the other party has not only done it, but it seems to have done it very successfully.

Firstly, the intimidation and attempts to win over Bianzhou were clearly orchestrated by Yuwen Kuan with his backing.

Originally, the plan at the beginning of the year estimated that at this point in time, the cash reserves and repayments in Bianzhou would amount to at least 800,000 guan in cash. In addition, the transportation capacity reserved between Bianzhou and Luoyang was 200,000 to 300,000 guan, which would be sufficient to handle the cash withdrawal during this period.

Indeed, during this period, Luoyang itself only received about 900,000 strings of cash. The rest were all cash transferred from Luoyang Station of the two capitals, amounting to more than 1.4 million strings of cash. In the same period last year, this figure was only about 300,000 strings of cash.

The personnel changes in Bianzhou resulted in only about 500,000 strings of cash being available at the same time, which was 300,000 strings short of the expected amount.

This amount seems substantial, but considering that Yuwen Rong once served as the governor of Bianzhou and is now the prime minister in the court, it is reasonable for Yuwen Kuan to reduce his cash reserves of 300,000 guan by leveraging his father's power and influence to intimidate the people of Bianzhou.

The shortfall of 300,000 strings of cash was not particularly serious. As long as some additional transport capacity was added, the shortfall could be made up by transporting goods from Luoyang. Furthermore, it would help Zhang Dai identify which of his business partners were unreliable and then gradually remove them.

The truly serious issue was the more than 1.4 million strings of cash that were sent from the two capitals. Even after deducting the normal amount and the increase from business development, at least 700,000 to 800,000 strings of cash were still irregular.

It's understandable that the two capitals' money-making businesses wouldn't refuse business that came to them. But the fact that Li Linfu and Yuwen Kuan had invested so much money just to cause trouble for him greatly surprised Zhang Dai.

Seven or eight hundred thousand strings of cash is no small sum. Even if Yuwen Kuan were incredibly shrewd, he could hardly amass such a large amount. It should be noted that Zhang Dai's business was so large, yet his entire year's profit at the beginning of the year was only eighty thousand strings of cash.

Yuwen Rong has only been prime minister for a little over two months. Going back further, it wasn't until he defeated Zhang Shuo in the fourteenth year of the Kaiyuan era that he began to act arbitrarily. This was followed by two consecutive years of severe natural disasters.

No matter how ruthless the father and son were, it was impossible for them to accumulate a fortune of seven or eight hundred thousand strings of cash in that period of time, let alone invest it all in this operation.

Needless to say, Li Linfu is in even worse shape. This old fellow is burdened with a huge debt of hundreds of thousands of guan, and according to Ji Wen's follow-up report, his family now even has to borrow money to make ends meet.

So where did they get so much money? Could it be that Li Linfu has some powerful allies he doesn't know about?
Zhang Dai carefully reviewed Ji Wen's report but found nothing suspicious. Although Pei Zhen had told him that Wu Wenshen and Li Linfu were colluding, even if they were plotting against him, they wouldn't have acted or given any feedback so quickly.

While he was still racking his brains without finding a solution, a servant came to report that Song Jing's son, Song Hun, had come to visit.

Upon hearing this, Zhang Dai's heart stirred. He personally stood up and went to the front courtyard to greet Song Hun. After entering the front courtyard and seeing Song Hun already seated in the main hall by his family, he immediately smiled and stepped forward, cupping his hands in greeting and saying, "I did not expect Mr. Song to come to visit. I am so sorry for not welcoming you properly!"

(End of this chapter)