A Man of Science and Engineering in Troubled Times Wandering in the Late Qing Dynasty

Chapter 492 Financial Chaos
Liu Yazi heard that Li Yu also bought a book by Kansonglou, so he must come and take a look.Li Yu did not refuse and took him to Yu Garden with him.

In Li Yu's opinion, these precious ancient books were more like antiques, and he did not dare to touch them casually for fear of tearing a corner of the book.

Moreover, Li Yu always felt that the greatest significance of books should be the carrier, and the important thing is the content inside, so he spent a lot of effort to find a group of people to copy them.

Cultural inheritance originally relies on content.

China has gone through so many wars, but the "Book of Changes" and "The Book of Songs" written more than 2000 years ago have been handed down. They have been preserved from generation to generation and did not appear out of thin air.

However, for literati such as Liu Yazi, Song Shu is really something extraordinary, and its B rating is too high.

Liu Yazi looked at the Song books in front of him, his eyes shining brightly, "Master Imperial, the treasure in your hand is so enviable."

Li Yu shrugged: "I am satisfied that it has not flowed into Japan."

Liu Yazi saw Li Yu's writing desk again, with pens and paper and some rubbings on it. He said, "Is the emperor writing the calligraphy? It's still Dong Qichang's calligraphy."

Li Yu said with a smile: "My handwriting is too bad, I must practice more."

Even scientists like Li Siguang and Zhu Kezhen can write beautiful calligraphy.In this era, if the handwriting is too ugly, it will really cost you your face.

When it was time for dinner, since there were no cooks in Li Yu's Yu Garden, he went to a restaurant in the concession to dine, and happened to meet Zhang Yuanji from the Commercial Press.

In the dining room where several people were eating, several people at the table next to them were chatting happily around a booklet:
One person said: "I bought the stock recommendation book of Langezhi Company on Tuomen Road. Tomorrow I can buy 1000 taels of rubber company stock."

Several other people said with envy: "With 1000 taels, you can get 125 taels of dividends every quarter, which is 500 taels a year, and you can get your money back in two years."

The person who bought the stock recommendation book said proudly: "This is money making money. Foreign stocks are really interesting."

Another said: "How can you afford so much money?"

The person who bought the stock recommendation book said, "I'm still short of 600 taels. How about it? Are you interested?"

"Of course I'm interested, but how do we calculate the dividends?"

"It's simple, I'll take [-]% and give you the rest."

"I think so! I'll pay 100 taels!"

"I give 200 taels!"

"I give 300 taels!"

"Hey, hey! Then I won't be able to share it?"

"Okay, I only offer 200 taels, and I will give you 100 taels."

"good buddies!"

……

Li Yu asked Zhang Yuanji: "Could they be talking about stocks?"

Zhang Yuanji ate a peanut and said: "It is indeed a stock. Now this thing is simply crazy."

As early as when Li Hongzhang founded Lunchao Investment Promotion Bureau, he raised funds through the issuance of stocks, so some people call Li Hongzhang the "ancestor of Chinese stocks."

Domestic stocks were born quite early, even earlier than China’s first stamp.

Li Yu asked again: "What's going on with the rubber company?"

Zhang Yuanji said: "You should know this thing better than me. Haven't you been in the United States for a long time and have business dealings with several large companies in the United States? You are even listed in the United States. I heard that the rubber they are talking about is used for A material used in automobile production.”

Li Yu suddenly realized: "It turns out to be rubber."

Zhang Yuanji said: "I don't quite understand what it is, but I heard that a company called Ford in the United States produced cars that were very popular, and by the way, rubber became a good thing."

Li Yu certainly knows that mass production of cars requires a lot of rubber to produce spare parts such as tires, sealing strips, and belts.

But now there is no technology for synthetic rubber at all. It all depends on the planting and trade of rubber plantations, so rubber is instantly popular.

At present, rubber is mainly grown in Southeast Asia. It is a very unfamiliar thing to the Chinese people. It is only when they heard that this thing seems to flow out from a certain tree by girdling the bark that they call it "rubber".

Not only was rubber booming in the Shanghai trading market, there was also a rubber boom in the London Stock Exchange at the same time.

A year ago, the price of rubber per pound on the London Stock Exchange was about 2 to 3 shillings. By the peak in 1910, it had risen to more than 12 shillings, an increase of several times.

This is just a change in the price of commodities. The changes in the stock prices of related companies are even more astonishing.

Li Yu said speechlessly: "Although rubber is a good thing, no one has ever seen it before. There is not even a local rubber trading company in China. How do you trade stocks?"

Zhang Yuanji explained: "It's a foreign company. The Langezhi company they mentioned is a trading company run by the British. I heard that it specializes in rubber plantations in Southeast Asia and is one of the most promising companies at the moment."

Liu Yazi said: "I have seen many advertisements and articles about Langezhi Company in newspapers. Not long ago, I also read a [-]-word long article called "The Rubber World of the Future", which specifically introduced the glorious prospects of the rubber industry."

Li Yu was even more speechless. In modern terms, isn't this just a typical PPT company? It has only one shell and specializes in hyping concepts and drawing crazy pictures.

It seems that these tricks were used in the stock market 100 years ago, and they are still deceiving the market after 100 years...

But Li Yu was still a little confused and said: "I have seen the stock exchange in Shanghai, and it is not perfect at all. There is no channel for trading stocks of foreign companies. How can investors feel relieved?"

Zhang Yuanji was puzzled after hearing this and said: "Isn't the stock just like going to a store to buy things?"

"Going to the store to buy something?" Li Yu asked.

Zhang Yuanji said: "As long as you take the money to a foreign bank, they will sell you stocks."

By the way, today’s stocks are all in paper form.

Zhang Yuanji took out one: "I also have a piece of rubber stock bought at Xiangmao Foreign Company, worth 50 taels."

Li Yu took it over and took a look. It was all in English, so he asked, "Is it reliable?"

"It's reliable," Zhang Yuanji continued, "the ones who trade rubber stocks are Ocean Bank. If you want to buy their stocks, the money must be transferred to HSBC first. I remember that I sent someone to queue up for an hour. That’s how I saved the money.”

Liu Yazi said: "I remember that I wanted to go, but the queue was too long, and some people even started fighting. Soon, HSBC closed its doors."

Li Yu held his head and knew without thinking that it must be a shill hired by the foreign company to create publicity.

Zhang Yuanji said: "Originally I wanted to buy 500 taels, but Xiangmao Yang Company said that because there were too many people buying, they decided to reduce the price proportionally. If you want to buy 100 shares, you can only buy 10 shares now, but you can refund the extra money. payment."

It is obviously a naked act of market manipulation.It is said that the current financial market in Shanghai does not have any supervision and is a completely free market state.

Li Yu asked: "It sounds like you don't know much about rubber, how dare you do it?"

Zhang Yuanji said: "The dividends are really attractive. I bought it too early. Look at the stock recommendation book on the table next to it. It is from Langezhi Company. This booklet introduces the rubber industry in detail. Only with the stock recommendation book can you buy them." Even I didn’t get the stocks. Even if I bought them, if I enter the market now, the price would be more than ten times higher than last year.”

The situation of chasing the rise and killing the fall is so familiar.

Li Yu said: "How much is the stock in your hand worth now?"

Zhang Yuanji said: "It's 300 taels even if you say less."

Li Yu said: "If Brother Xiaozhai can trust me, it is best to sell them as soon as possible. The sooner the better."

Zhang Yuanji said: "Sell it?"

Li Yu said: "I have already made a lot of money, so I will stop when it's time to stop."

Zhang Yuanji hesitated: "This is making money while lying down..."

Li Yu said decisively: "Brother Xiaozhai, don't forget that I have a listed company in the United States. I definitely know more about stocks than you do."

Zhang Yuanji was stunned: "What do you mean..."

Li Yu said: "The good days are coming to an end."

Zhang Yuanji didn't know much about this aspect, so he chose to believe in Li Yu. Fortunately, the stock was selling well.

Domestic stock reaction is slightly slower than that of international markets.Not long ago, the United States announced a monetary tightening policy and at the same time restricted rubber consumption.The price of rubber in the international market and the stocks of rubber companies began to fall in response.

Langezhi Company obtained the information in advance and ran away long ago.

The leading companies have all run away. The stock price of a rubber company in Shanghai has plummeted. It was 1000 taels a week ago, but now there are only about ten taels left.

Zhang Yuanji happily found Li Yu: "Thank you for listening to Brother Shucai! You are really the stock god in the world!"

Li Yu said: "This can't be called that."

Zhang Yuanji asked curiously: "How on earth did you know that such a terrible disaster would occur in the stock market?"

Of course, Li Yu couldn't say that he was a time traveler, so he could only give him a rational analysis: "Because I am familiar with the American car market, and the current car consumption cannot support such a huge rubber market. Nowadays, there are many products on the market around the world. The rubber stocks being traded are roughly estimated to be worth nearly hundreds of millions of taels of silver, which far exceeds actual demand. Isn’t it a bubble?”

Zhang Yuanji gave a thumbs up: "Brother Shucai is not only proficient in physics, mathematics, astronomy, engineering and literature, but he is also a master of economics. The word bubble hits the mark."

Li Yu said: "The main reason is that information is not smooth, otherwise it would not lead to such a tragedy."

Zhang Yuanji said: "Even if I lose, it's only 50 taels, but those banks are in misery. My money is not stored in Zhengyuan Bank. I heard that they lost 400 million taels of silver and went bankrupt."

Many banks in Shanghai invested money directly into rubber stocks, or lent money to others to invest in stocks, so many banks went bankrupt.

And this Zhengyuan Bank is almost the worst. More importantly, more than 200 million taels of the money invested by Zhengyuan Bank in the stock market was Sichuan-Hankou Railway Company's project funds.

A person named Shi Dianzhang was in charge of the funds, and later he continued to add more than 70 taels, for a total investment of about 300 million taels.

As mentioned before, the money of the Sichuan-Hankou Railway Company was raised by tens of millions of Sichuan people. Later, Sheng Xuanhuai wanted to nationalize the railway. The Sichuan-Hankou Railway Company was afraid that the matter would be exposed, so it promoted the road protection movement; and the road protection movement was the great The prelude to the demise of the Qing Dynasty.

The butterfly effect!
The current Shanghai, to use modern terminology, has experienced "systemic financial risks", which are very harmful.

Shanghai Daotai Cai Naihuang still had some awareness. After seeing banks closing down one after another and the remaining banks experiencing cash runs, he was prepared to use few means to save the market.

Because there are two large banks named Yuan Fengrun and Yi Shanyuan, and there are still a large amount of official bank accounts in their accounts, such as customs duties, Shanghai area finance and taxation, etc.

Cai Naihuang borrowed 350 million taels of silver from foreign investors and deposited it into the bank. He also took out the 300 million taels of Shanghai official silver that he could mobilize, and deposited it all into Yuan Fengrun and Yishan Yuan, temporarily putting a stop to the run on the Shanghai market. Pressed down.

Unfortunately, it was time to repay the Boxer Indemnity at this time, and Shanghai had to hand over 190 million taels of silver.

This money was previously stored in Yuan Fengrun and Yi Shanyuan banks. If it is withdrawn, all previous efforts will be wasted.

So Cai Naihuang sent a memorial to the court, hoping that the Qing government would draw 200 million taels from its own Qing Bank to pay in advance.

This memorial reached the Du branch that had just been established in the Qing Dynasty, which was the former Hubu. The current Hubu Shangshu was Zaize, a member of the royal family, and had no financial knowledge.He believed that Shanghai Daotai Cai Naihuang was unreasonably making trouble and blackmailing the court in the name of market panic. He not only rejected the demand, but also dismissed Cai Naihuang from his post and required him to pay the Boxer Indemnity within two months.

Cai Naihuang took a look and realized that there was no need to save the market. He should save himself first!Just take this money away from the two banks.

This action directly caused Yuan Fengrun to declare bankruptcy in October 1910.

Another company, Yishanyuan, has not yet closed down because it has a major shareholder named Li Jingchu, who also manages the Bank of Communications.

Li Jingchu has an important identity-Li Hongzhang's nephew.

It borrowed more than 280 million taels from the Bank of Communications to barely make up the hole.

But it only lasted less than a year.

A year later, Sheng Xuanhuai became the Minister of Posts and Communications, preparing to attack the forces of the Beiyang Transportation Department and thoroughly investigate the accounts of the Bank of Communications.

Seeing that he was about to be exposed, Li Jingchu withdrew the working capital, so Yi Shanyuan could no longer hold on.

The stock market crash in Shanghai is not described much in history books, but the indirect impact is indeed not small. It is not an exaggeration to say that it led to the rapid demise of the Qing Dynasty.

Just like the famous quote adapted from Voltaire: No snowflake is innocent in an avalanche.

The reasons for the demise of the Qing Dynasty and the demise of the Ming Dynasty were very complicated, or it could be said that many factors came together to cause it.

Even if one of the links did not happen, although the Ming or Qing Dynasties still could not escape the fate of destruction, they might be able to persist for a few more years.

Li Yu couldn't control the chaos in Shanghai's financial market anyway, so he was ready to leave Shanghai.

This kind of thing happened in such a special time period, and there was no chance to evaluate whether it was right or wrong, because it would soon be overwhelmed by larger historical events.

——Under the huge waves of the Revolution of [-] and the fall of the Qing Dynasty, financial institutions and businessmen in the Shanghai Concession lost tens of millions of taels of silver, which seemed not to be a big deal at all.

Li Yu happened to meet Yan Fuqing, who had returned from Yale University, and they took a boat up the Yangtze River to Wuchang.

Yan Fuqing holds a doctorate in medicine. When he returns to China this time, he will first work as a doctor at Yali Hospital in Changsha. He will soon establish the Xiangya Medical College and become an important founder of the Xiangya Department.

Of course Li Yu wanted to see the kindergartens in Wuchang and the middle schools in Changsha and Wuhan.

(End of this chapter)