shadow of britain

Chapter 122 The Game of Capital
Lionel sat on the sofa and asked with a smile, "I wonder if you have some basic understanding of the stock and bond markets?"

Arthur recalled that when he first came to London from the countryside of Yorkshire, his first stop was the London Stock Exchange, the world's financial center in the 19th century.

It's just that his luck was not very good, or his luck was really good. He witnessed the second major collapse of the London Stock Exchange since its formation, and its last collapse had to be traced back to the The 1720 South Sea Company bubble case in the last century.

In 1720, the South Sea Company, which monopolized Britain’s trade with Spain’s South American colonies, relied on various dizzying investment and trade plans and various half-truths and so-called insider information to continuously push up the trading enthusiasm of the London Stock Exchange. .

And when the directors of the South Sea Company discovered that it was far easier to make money from the stock market than the company's hard work of selling black slaves, they felt as if they had opened the door to a new world.

Beginning in April 1720, the South Sea Company began to release various proposals to the outside world, and trumpeted the company's great blueprint in newspapers.

据事后统计，南海公司董事会在那段时间相继宣布了11项渔业计划、10个保险计划，以及未来将会成立2个国际汇兑公司、12个美洲殖民或贸易公司、20个地产和建筑公司、8个专门供应伦敦煤炭、牲畜、饲料和路桥运河建设公司、12个丝绵麻桑等纺织业公司、15个矿业公司，还有60多个莫名其妙企业，并且还胆子相当肥的宣布南海公司将在圣诞节支付60%的股利。

However, it is precisely these visions that normal people seem to know are unreliable, but they have fooled the most astute heads of the whole of Great Britain.

In the eyes of those investors, the original purpose of the South Sea Company was to form a giant monopoly enterprise for the purpose of developing trade in the South Atlantic. For this reason, the South Sea Company also undertook approximately 1000 million pounds of liquid bonds from the British government.

This is a giant company endorsed by the British government, how could their promises deceive investors?

As a result, investors who were blinded by the huge benefits completely lost their rationality and ability to judge. They frantically snapped up the company's shares, and finally made the Nanhai Company's share price rise rapidly from 120 pounds to 1020 pounds within three months.

However, it didn't take long for the wealth myth of the South Sea Company to come to an end.

At the end of July, companies began to sue Nanhai Company in court, accusing them of serious debt default.

And other companies that have a debt relationship with the Nanhai Company also gradually discovered that something was wrong. After everyone vented their anger on each other, they finally realized, damn it, it turns out that these grandsons are playing empty-handed white wolves.

In order to stop the loss in time, they finally decided to jointly write a letter to the parliament and asked the British Ministry of Finance and the Supreme Court to intervene in the audit investigation of the accounts of the South Sea Company.

As soon as the news that the South Sea Company was suspected of fraudulent accounts came out, the stock price of the South Sea Company plummeted from the opening of the London Stock Exchange on August 1720, 8. In just one month, their stock price rose from a peak of 25 pounds. bit down to £1020.

As a result, countless investors went bankrupt, and almost overnight, the roofs of London were filled with shareholders of the South Sea Company.

The fraud case of the South Sea Company also directly caused political turmoil in London.

King George I issued several orders of the Privy Council demanding a thorough investigation of the South Sea Company case.

Almost immediately, the parliament arrested all the members of the board of directors of the South Sea Company and confiscated all the properties under their names, and imprisoned the director of the South Sea Company, George Caswell, who was directly responsible, in the Tower of London. Passed the Bubble Company Suppression Act and established a 13-member special committee to investigate the bankruptcy of the South Sea Company.

In any case, the South Sea bankruptcy still caused huge losses of millions of pounds and caused the London Stock Exchange to suffer a long-term malaise for decades to come.

One of its few positive effects may be the birth of the first prime minister in the British history in a substantial sense. Robert Walpole, then the first chancellor of the exchequer, was firmly established in one fell swoop by virtue of his proper handling of the South Sea Company case. He took the top spot in the cabinet and has since established the British tradition of the first chancellor leading the cabinet.

The time Arthur encountered was the bank bankruptcy crisis of 1825-1826.

The reason for this crisis is also very simple to say, and it is not even different from the South China Sea Company case in essence.

To put it bluntly, before the enactment of the "Banking Act" in 1826, all banks established in England were free to issue bank notes.

The so-called bank notes are actually pounds sterling, and any depositor can go to the bank with the face value of the bank notes to exchange for equivalent gold.

However, in the 19th century, the amount of gold mined was far less than the increase in British wealth, so this directly led to the situation where banks, large and small, printed money indiscriminately in order to seize the bank share without having enough reserves of gold. Happens repeatedly.

The consequences of printing empty banknotes indiscriminately are also obvious. When a customer goes to ask for gold back with bundles of bank notes, the bank teller can only stare at him.

And as soon as this kind of news came out, it naturally triggered a frenzy of runs among the British people. Everyone rushed to take the banknotes and asked the banks to cash them as soon as possible.

Faced with this situation, 70 banks with insufficient gold reserves had to announce the suspension of payment.

The government also had to urgently order the military and police to maintain order in various places and strictly prevent riots in various places.

In order to fill this hole, the Bank of England, the largest bank in Great Britain, had to use its own gold reserves to help them fill the hole, but it's okay not to help, this group, as a result, the Bank of England almost put itself in it.

In a pinch, the partners of the Bank of England almost knelt down directly to Nathan Rothschild and Alexander Balling, two great London bankers who had a lot of gold.

At the time of crisis, Rothschild Bank and Barings Bank, under the persuasion of Tory leaders such as Lord Liverpool, Duke of Wellington and Sir Peel, finally decided to urgently deploy most of their gold reserves to the Bank of England .

In order to show their loyalty to the Tory Party, the Rothschild family, which is the purse bag of the Duke of Wellington, used almost all the gold reserves of their four branches in Paris, Naples, Frankfurt and Vienna. It spent a lot of money to get a part of the gold reserves from Russia, and only then did it squeeze together 1100 million pounds worth of gold to barely plug the hole for the Bank of England.

However, although this crisis has passed unsteadily, as many as 70 banks still declared bankruptcy and delisted from the London Stock Exchange afterwards.

In this way, the London Stock Exchange, which had finally emerged from the shadow of the South Sea Company case, fell into a trough again.

At that time, Arthur was just a poor boy who had just come from the countryside, but even so, he couldn't help but sigh in his heart when he saw the mournful expressions of the capital tycoons on the London Stock Exchange.

Tens of millions of pounds every minute, although it is a loss of money, it is still enjoyable.

If the compensation is not his, it will be even more enjoyable.

Arthur picked up his teacup, pondered for a while, and said carefully, "I do have some doubts about stock trading."

It wasn't a long sentence, but it was enough for Lionel to understand Arthur's tactful resistance.

Lionel said with a smile: "It's nothing. If you don't plan to invest in stocks, I have many options for you to choose from. Well, let me first list the advantages and disadvantages of several asset allocations, real estate, bonds , stocks, which one is more suitable for you, you can judge by yourself.

Moreover, stocks are actually not as scary as the public in Great Britain thinks. According to our analysis and judgment, the London Stock Exchange is at its lowest point in recent years and may rebound upward at any time. It will really not be lower than this in the future. "

Arthur couldn't help frowning slightly when he heard this.

No matter how he heard it, he felt that the words were familiar.

Seeing that he was still hesitating, the Red Devil on the side couldn't help urging: "Arthur, don't hesitate! Mammon is beckoning to you, buy the bottom quickly, and buy the bottom hard for me!"

After hearing this, Arthur finally understood where the key words were.

A simple doubt arose in his heart - which one is greener, the leeks in the 19th century or the 21st century?
But Lionel was so enthusiastic, he was also slightly interested.

He asked: "So what do you think is the best direction to invest in at this time?"

Lionel saw that Arthur finally let go, and the smile on his face deepened, and he replied.

"Don't worry, you are not the first customer to use Rothschild's private financial services. Although we usually do not disclose the private information of customers, since this matter is no secret, I can tell you openly: The Duke of Wellington is also one of our key clients, and your boss, Sir Peel, the Home Secretary, also has part of the funds being managed by us."

After Lionel said this, Arthur was still not tempted, but Alexandre Dumas couldn't stand it.

He asked: "Then I don't know how much personal funds the private financial services of the Rothschild Bank really need?"

Lionel smiled and said: "I think it mainly depends on whether we have a good transaction relationship with our customers. Personal funds will always be our second priority. But if you are Mr. Hastings's For friends, I think £1000 is enough."

Dumas made some calculations when he heard the words, the French fat man gritted his teeth and said: "You wait, I will work hard."

Upon hearing this, Lionel couldn't help but asked Arthur with a smile: "So, Mr. Hastings, can I start the introduction?"

Arthur nodded and said, "Of course, please."

　There are three shifts tonight, writing this chapter is a bit stimulating, readers and friends are waiting for me
　　
　
(End of this chapter)