Chapter 75 Finance

To be honest, Lao Deng's abnormality was indeed a bit scary, so scary that Mu Qi always privately suspected that the old Taoist priest would suddenly return to normal after drinking a bowl of medicine, and then issue an edict to retract everything he had promised out of conscience (from the case of Bai Zong, it is not impossible that their Zhu family vomited what they ate), so Mu Qi hurriedly sent someone to invite Ruwang, an Italian businessman who had always been familiar with the Duke's Mansion, that afternoon after getting the permission, to discuss the big deal in timber.

This Confucian scholar has connections in the Western Church and relies on his religious background to get along well in various countries. He is also considered a man with connections, otherwise he would not have been able to get into the circle of nobles. A man of great skill and courage thought about it and agreed generously.

"Since it's the prince, I dare not refuse. But buying wood is a big business after all, so we should be cautious with each other."

"Please rest assured about this." Mu Qi smiled, "I'm sure you know what our family's status is. The title of Duke is already the best among the nobles, so of course we won't lose face, and we will never dare to forge an imperial edict to deceive. If you don't believe me, I can also ask Yan Fenyi, the elder Yan, to guarantee it together. The elder Yan is now the chief minister of the cabinet, the most important minister in the court! With the joint guarantee of the leaders of the nobles and the leaders of the civil servants, and the imperial edict of His Majesty, you should have no doubts, right?"

This set of small combos is indeed very attractive. Moreover, Southeast Asia has indeed been at risk of overproduction recently. Major trading houses have offered rewards of tens of thousands of pounds to adventurers who can open up trade routes. Ru Wang thought for a long time, but in the end, the desire for money took the lead, so he made up his mind and agreed:

"Since Your Highness has said so, there is no reason for me to refuse. May I ask how much you would like to buy?"

The prince asked in return: "With your connections, how much can we buy?"

"According to your country's currency, it's about 200,000 taels."

"Two hundred thousand taels?" The prince frowned: "Isn't this too little?"

Even though wood in Southeast Asia and India is extremely cheap, two hundred thousand taels can only buy three or five pieces of wood; after the wood is delivered, it must be dried, dehumidified and preserved, and carpenters must be recruited to try to build a large ship (since sea vessels have been abandoned for a long time, this process may be quite troublesome). After all this work, it may take seven or eight years to assemble a usable fleet.

Seven or eight years is too long and we must race against time, not to mention that there is an unstable old man like Fei Xuan Zhenjun who may change his mind at any time. Mu Qi thought about it and decided to increase the speed:

"Two hundred thousand taels of silver is not worth much. Is it because there is not enough wood in the south?"

"I have all the wood, but I don't have enough collateral." Ru Wang was a little embarrassed: "With my capital, I can only guarantee a trade of 200,000 taels at most..."

Credit in ocean trade is the biggest problem. The far-away East India Company would not believe in the identities of the dukes and ministers and would demand a real deposit. Of course, it was impossible for Da'an to transport the deposit all the way there. According to usual practice, it was basically a middleman like Ruwang who had assets on both sides who would act as a guarantor and use his own shares in the East India Company or cash as collateral to leverage the transaction of two hundred thousand taels. Wait until the deal is done and then take a commission from it.

For this kind of large-scale cross-border trade, the margin ratio is at least more than 20%. Even though Ruwang has been operating for a long time, it is still difficult to cope with it. That is to say, because of the good relationship and familiarity with the Duke's Mansion, they are willing to take the risk.

"Of course, I can also go to Guangdong and find a few colleagues to jointly guarantee it." Ru Wang said carefully: "But outsiders don't know the importance of the Duke's Mansion, so the price may be higher..."

"How much higher?"

"It's probably a 45% commission."

The corner of Mu Qi's mouth twitched - 45% commission! If two million taels were spent on purchasing timber (this figure was actually very conservative considering the need for subsequent naval battles and repairs), then the agency fees prepaid to the maritime merchants alone would be at least over nine hundred thousand taels. Before even a single piece of wood was even seen, the 900,000 taels of silver had to be paid to the Westerners. Even if Mu Qi was a responsible person, he couldn't bear this huge burden.

The Da'an court has been very conservative until now. If such a large sum of money is handed over, some nosy officials might think of the "annual tribute" of the Song Dynasty!

This is the aftermath of the Song Dynasty’s great lack of virtue. What happened to the Zhao family is the ultimate PTSD for all Chinese people after Yashan, a psychological shadow that can never be erased, and an absolute reverse scale that is enough to shock all the dignitaries speechless. If they were to be forced to lean towards the direction of Emperor Zhenzong of Song or even Wanyan Gou, they would be condemned by thousands of people and their fate would be in vain; the Duke Mu's Mansion should not even bother with the imperial court and should just find a crooked tree to hang itself on.

He couldn't help asking in a negotiating tone:

"Can't the commission be lower? After all, we are doing big business. There are many ways to make money. Why should we make it all at once?"

Ru Wang was in a dilemma: "Of course I am willing to help the Duke's Mansion with the guarantee, but the commission rate is the rule of our Chamber of Commerce and it is not easy to change it."

"Chamber of Commerce?" The prince narrowed his eyes suddenly. He had long suspected Ru Wang's origins, but only now did he finally grasp some solid evidence. So he changed his accent and uttered two extremely shocking names in English: "'East India Company or Rothschild Bank'?"

Although the English accent and grammar were extremely strange, he could still hear it clearly without any mistakes. Ruwang was caught off guard and his face changed suddenly - he was indeed a senior employee of the English Rothschild Bank in the Far East, specifically responsible for developing the Chinese market; but this identity was extremely secretive, and he presented himself as a maritime merchant to the outside world. Who would have thought that nothing had gone wrong for more than a decade, but it was suddenly exposed by a son of a noble family!

Is there someone with great power giving secret guidance? Or is it that this seemingly crazy and eccentric Prince Mu is just playing dumb and has other plans in mind?

After all, he was a wealthy businessman who had been traveling overseas for many years. Although his heart was beating wildly, Ru Wang was stunned for a moment, but still forced himself to calm down. Seeing the other party showing off his strength, he no longer dared to be arrogant and deceive, and could only reply in English:

"It is the rule of the Rothschild Bank; the bank has established a trading house here and provides guarantees for the trade going back and forth."

Mu Qi smiled slightly, thinking that as expected, financial capital is still obsessed with money, and nothing has changed in hundreds of years. As the living embodiment of capitalism walking on earth, a super monster with blood dripping from every pore of primitive accumulation, I am afraid that no one can get a big penny out of the Rothschild family.

But it didn't matter. The prince's expression remained calm:

"I see. To be able to do such a business, one must be a wealthy merchant."

"Although we are wealthy, our profits are actually very slim." Ru Wang explained carefully: "After all, we are a chamber of commerce that is thousands of miles away, and we have to work hard to transport gold and silver to meet the needs of trade everywhere, so the cost is very high."

This is how we work at the Rothschild Bank; Party A and Party B only need to conduct the buying and selling transaction, but the bank has to lend money and provide guarantees, so there are a lot of things to consider.

The prince remained calm: "Is that why the commission is so high?"

"There is no other way." Ru Wang said, "The Chamber of Commerce can only guarantee large transactions, so it has to share the costs among a limited number of trades. Of course, it will be more expensive."

"I roughly understand." The prince nodded slowly: "Let me give you an analogy, please see if it is correct - ocean trade is like a casino, everyone who goes to the casino has to pay the gamble. The bank is like the dealer, taking a commission from the casino's turnover. However, the threshold of the casino is too high, and there are only a few players who are qualified to place bets. In order to ensure profits, the bank can only increase the commission ratio."

Ru Wang complimented, "Your Highness is intelligent."

"I don't deserve it." The prince said, "However, such a high commission is bound to discourage people and stifle potential demand. Your company should also understand the importance of small profits but quick turnover to expand demand. Why do you have to do something like killing the goose that lays the golden eggs?"

Now the truth is out! The East India Bank has been involved in cross-border trade for so long that the commission it stipulates is truly calculated accurately by a large number of experts, without any deviation. How can it allow an outsider to make decisions and demand "small profits but quick turnover"?

Do you think this is buying fruit?

The objective difficulties of ocean trade are there, and the capital flow for bulk transactions is limited. How can you expand demand? Do you really think that just by shaking your body and exuding domineering aura, everyone will bow down to you? Matters concerning money are the most detailed, embarrassing and the things in the world that cannot tolerate mistakes. Financial capital is so powerful that there is no room for outsiders to make comments!

Ru Wang could only smile bitterly: "That's probably very difficult to do."

"I understand the difficulties of your company, and I also know that this kind of bulk trade is very risky, and the rules cannot be changed casually." The prince said slowly: "However, not being able to change the bulk trade does not mean that new mechanisms cannot be introduced. We still need to open our minds."

"Liberate the mind"? What the fuck is this weird word?

"...Please give me some advice, my lord."

"Then I'll show you my ugliness." The prince said calmly, "Let's talk about the analogy of the casino. The threshold for ocean trade is very high. Without 200,000 or 300,000 taels of silver, you can't even smell the smell. Therefore, there is very little business in the casino. The Chamber of Commerce must plunder every customer it catches. This threshold is caused by actual risks, and there is no way to lower it for the time being. So things can only be stuck there. But how can people be hindered by this little difficulty? Mr. Ruwang, since the original casino has such a big restriction, why not open a new casino?"

Ru Wang was stunned: "New casino?"

"It's very simple." The prince persuaded, his voice gentle and calm, and he was very patient:

"Take today's incident as an example. The Da'an court entered the casino of ocean trade and placed a bet of more than one million taels of silver. The Chamber of Commerce then drew money from the bet flow. This is the old rule. But this is not the end. After the court placed the bet, the Chamber of Commerce can immediately open a new betting position outside the casino. What are they betting on? They bet that the Da'an court will win this time, and allow those Zhang Sans who only have 100,000 taels of silver to come in and play. After Zhang San has finished betting, they will win over Li Si, who only has 30,000 or 50,000 taels, and bet that Zhang San's bet will win. And so on. After Li Si places the bet, they will let Wang Wu come to bet. After Wang Wu places the bet, they will let Zhao Liu come to bet. It will continue to expand and derive..."

The prince paused, seemed to think for a moment, and then came to a conclusion:

"...This is truly a legacy for generations to come, and it will never be exhausted!"

He turned around and looked at the stunned Ru Wang eagerly:

"What do you think of this idea, sir?"

What else can Ru Wang think? His eyes gradually became empty, with a hint of fear in his confusion, as if he saw a fire rising from the Hell Cave, and Lucifer flapping his black wings slowly rising from the flames, each wing flashing with the evil glory of money. Even the greedy and money-conscious financial capitalists could not help but be shocked by this grand prospect.

The son has a grandson, the grandson has a son; the son has a son, the son has a grandson; according to this expansion method, the original transaction can be completed with one transaction, and it can easily generate endless branches. The towering capital threshold will disappear invisibly. Only three or five hundred taels of scattered funds are needed to try it out. The flow of water driven by this will be endless and endless, and the bank’s commission from the flow of water will surely be incredible...

Ru Wang's breathing suddenly became rapid!

However, perhaps because the prospect was too broad and too incredible, he instinctively asked:

"The prince said he wanted to open a new market. How do we open this new market?"

"Do I need to say this?" The prince smiled softly. "Ocean trade is blocked by natural barriers, and most people don't dare to ask about it. But are bank financial services also blocked by natural barriers? Stocks, bonds, insurance, options, contracts, so many financial derivatives, which one can't be used to make a market?"

This last sentence is said in English and Latin, because such complex and professional financial terms cannot be found in Chinese today - in this regard you really can't help but admire the creativity of bankers. As a senior banker, Ruwang of course understood what he said as soon as he heard it. He immediately knew that the prince was no novice and that this operation was not just talk but was actually feasible. It is precisely because of this that a heart that has been tempered by so much pain begins to beat unconsciously, pumping out blood as hot as magma!

"Business is about killing two birds with one stone, and the same is true for banks." The prince whispered softly, but it was as if he was the devil's gentle murmur, with an irresistible temptation and charm that could not help but make people dazzled and difficult to resist: "If you just take a cut from trade with China, the proportion will be sky-high, and the profit you get can be seen at a glance. The upper limit is actually very low. But if you use trade with China as a selling point, try to package financial derivatives, and expand financial services, how much money can you attract? How much profit can you get from the money?"

Ruwang was stunned and said nothing.

"Let's use the lever of the ancient Greek philosopher Archimedes as an analogy. We can use a lever as a tool to pry a large object with very little force. Similarly, the trade with the Chinese court may only be a few million taels, but if it is used as a lever, the funds that can be pried may expand tenfold or even a hundredfold. That trading volume..."

——Stop talking! Ru Wang felt his heart beating wildly, almost jumping out of his throat, and he had to grab the chopsticks that the prince was using to demonstrate the lever.

He was silent for a while, and could only speak in a hoarse voice:

"…The prince is truly a genius unparalleled in the world!"

"I dare not take responsibility for it." The prince was very modest: "This is all the achievements of our predecessors. I am just copying their ideas. Of course, the first person who came up with this idea is indeed an unparalleled genius."

Yes, no matter what your position is, you cannot help but admit the subtlety, profundity and grandeur of this system. Use financial means to guide massive capital into the manufacturing industry in the East, and then use the rapidly expanding productivity of the manufacturing industry to endorse financial capital, export currency that is as turbulent as the tide to calm deflation, and use the left foot to pull up onions on dry land with the right foot, creating a perpetual motion machine of endless and limitless profits. Hundreds of years later, this carefully designed system has created hundreds of billions, trillions, and billions of infinite and immeasurable profits for financial capital, and has also created the world's most powerful and terrifying industrial monster, an ancient god like Cthulhu.

No one can refuse such profits, and no one can stop such a trend. Of course, the alliance formed by financial capital and the manufacturing industry is always efficient and cruel. The forces that join the alliance will rise rapidly, obtain incalculable profits and massive industrialization unprecedented in history; and all countries that are excluded from the alliance will be drained of all nutrients in globalization and become the residue of profit extraction. This was also proven by history hundreds of years later.

Survival of the fittest, only the strong will survive, capital is such a cruel thing.

—And now, the time has come to decide who will be the strongest. As the process of industrialization in the East slowly unfolded, new historical odds were already on the table, waiting for all qualified players to place their bets. And at such a delicate and critical moment, Mu Qi looked carefully at this senior expert in financial capital with a calm and composed expression.

Perhaps the bank's elites really have some subtle talents. Ru Wang took a deep breath and whispered:

"If you want to do this kind of business, you have to cooperate with China."

"Yes." Mu Qi said calmly: "The first principle of financial derivatives is storytelling. You have to tell a pleasant, pleasing and realistic story to make people pay money obediently. And the rise of China is such a story - just to rearm, it requires tens of millions of taels of silver in trade, and after the trade is opened up, the economy gradually develops, and there is a huge market with a population of over 100 million and an area as large as three Tianzhu waiting for merchants. This is a big business that can last for decades, a golden rice bowl that can never be spent. Only with such a golden rice bowl can bankers tell stories continuously, add icing on the cake, renovate routines, and have endless tricks to do... Mr. Ruwang, am I right?"

What else can Ruwang say? Based on this knowledge alone, the other party is qualified to be a bank director. So he was silent for a moment, and said solemnly:

"If we want to keep this golden rice bowl, what will it cost us?"

"Mr. Ruwang is so straightforward!" The prince said immediately, "Please rest assured, we won't ask for anything more. We just hope to use Rothschild's channels to issue bonds in Southeast Asia and Europe to raise funds for national construction."

“Issuing bonds?”

Ru Wang was greatly moved - he originally thought that the prince wanted to use this to force the trading companies to give out profits and give away money, which would greatly damage the bank's cash flow; but if the bonds were issued through the bank's channels, the situation would be very different; just as the prince said, as long as they could tell the story and package China's bonds as brand new financial derivatives, wouldn't there be endless possibilities once they were resold?

Profits are the company's money, and losses mean cutting losses; when playing with finance, you are using other people's money, so what does it matter if you lose? Not to mention that this deal is likely to be a huge profit!

He slowly inhaled and exhaled; inhaled and exhaled; finally he could not resist this huge temptation and made up his mind:

"I will go back and talk to my colleagues in the capital, and after convincing them, I will report back to the prince."

He hesitated for a moment, then gritted his teeth and said:

"——To show our sincerity, the commission this time will be 20%."

——Fuck the rules, fuck the company system! What kind of shitty corporate system prevents bankers from making profits at this level without doing anything? I think he has found a way to die!

Now you dare to stop financiers from making money, I dare not even imagine what you will do in the future!

After saying this, Ru Wang stood up sternly, his heart surging with waves, already filled with the decisive determination to kill!

·

After serving tea and seeing the guests off, the curtain behind the study rustled, and Zhang Taiyue, dressed in casual clothes, walked out carefully, still with a bewildered look on his face:

"Prince..."

Having said this, Zhang Taiyue no longer hesitated. The prince had specially notified Zhang Taiyue to attend the negotiation an hour ago. Zhang Taiyue was still quite confused - merchants were the lowest of the four classes of people after all; let alone an important official of a noble status and power like the prince, even ordinary civil servants were often unwilling to take part in the matter personally, as it was a disgrace to the etiquette. But after listening to it behind the scenes for half a day, I was still completely confused and felt bewildered for the first time in my life.

After hesitating for so long, Zhang Taiyue could only squeeze out one sentence:

"Can this Mr. Ruwang convince his colleagues?"

"Absolutely." The prince said, "Once there is a 300% profit, capital will dare to trample on all the rules in the world; not to mention that the profit rate of this kind of financial operation is far more than 300% - for such a profit, they even dare to start a war, so why would they be afraid of any chamber of commerce?"

"War? How dare these merchants be so bold?"

"Of course." The prince turned his head and looked at Zhang Taiyue: "Mr. Zhang, the reason why I asked you to sit in is to invite you to see the power of the maritime merchants. Don't be fooled by this merchant named Ru Wang who is so humble, cautious and careful. Behind him may be the most violent, greedy and unscrupulous force in the world today, a devil with no moral constraints... Cooperating with such a character is even more dangerous than trying to get the skin of a tiger. Every step is like walking on a cliff. You must be careful, you must be cautious, and you must be extremely vigilant."

Why do we have to emphasize these things repeatedly to a mere Hanlin? Zhang Taiyue remained silent.

After thinking for a while, he whispered:

"But the prince still cooperated with them."

"Because the power of the devil is also power. In other words, only with the help of the big devil can China develop and deal with all kinds of small devils; and eventually become stronger and no longer be at the mercy of the devil." The prince said calmly: "In this world, China has only two allies it can trust, one is its strong ships and powerful guns, and the other is its military strength. Using the devil to quickly grow itself is sometimes a last resort."

This statement was extremely crude and blunt, and the wording was rather odd. The prince neither said "court" nor "emperor and father", but repeatedly used the uncommon word "China". Zhang Taiyue hesitated for a moment, and could only nod his head slightly, but then he said in a low voice:

"But your Majesty..."

After all, the court is not a place where the prince has the final say. Even if he uses all his tricks and managed to force his way through the cabinet by chance, can such an unconventional and bizarre negotiation really gain the emperor's trust?

Master Feixuan's suspicion was so heavy that it was enough to make all the light dreams fall to the ground. No matter how beautiful the vision is, he probably won't release something he doesn't even understand.

Such words are exactly what is wrong with the times. The prince could only sigh:

"...You don't have to worry about that, Taiyue. I'll take care of the palace checkpoints."

Of course, this level must be passed. If he really has no other choice, he will have to use his ultimate move.

·

【Historical Echoes·Finance】

[…The cooperation between Mu Qi and Rothschild Bank is regarded as a landmark chapter in the history of world finance and the beginning of a great era. Through this cooperation, funds from Southeast Asia and Europe quickly poured into Da'an, providing endless capital for the industrialization and industrial upgrading of the East; and the industrial upgrading of the East also provided the Banker Group with a dazzling and timeless financial story. Over the past few decades, financial derivatives centered on China concepts have swept across Europe and become a popular code for making money.

Of course, this frenzy of wealth has also aroused widespread suspicion. More than one businessman who lost money in speculation filed complaints, believing that Mu Qi and the Da'an court deliberately manipulated the rise and fall of financial derivatives to plunder funds. But Mu Qi denied all of this and insisted that this was just the natural effect of the "invisible big hand" and the automatic clearing of the market. This explanation is difficult to convince the public, especially after the national debt crisis caused by Da'an's occupation of Luzon, suspicion reached a peak - many businessmen claimed that the Chinese emperor and ministers invested two million taels of silver in the national debt crisis and earned a full nine million taels through financial fluctuations. The insider information about the long position was leaked by the trader Mu Qi.

However, despite so many doubts, no one could shake the status of this financial model. In the twelfth year of the Jiayin Reform, a senior director of the East India Company did express his objection, believing that such unrestrained investment in the East would foster a super-power that would eventually swallow up all Western capital. The director also planned to mobilize his friends to vote in the board of directors to reduce the scale of financial cooperation. But on the way to the theater in an open car, the director was stabbed to death by a resentful servant with a musket, and the motion was shelved.

Later, when facing the questioning of the directors' families, Mr. Ruwang, the chairman of the East India Company, said only one sentence:

“Maybe this is life.”

From then on, the East India Company's board of directors never considered such a motion again.

】