Chapter 3 Hunt Hu Xueyan

At the beginning of November 1883, Hu Xueyan experienced the most painful torment in his life. The financial empire he had worked so hard to build all his life was about to collapse.This is a super myth created with 20 million taels of silver. If estimated by the purchasing power of grain, one tael of silver is equivalent to about 200 yuan today. assets.However, at this time, Hu Xueyan was facing a deadly "perfect" storm. At the beginning of November, he had a 500,000 taels of HSBC debt that had to be repaid, which made him feel anxious.Under normal circumstances, with the scale of Hu Xueyan's wealth, he would never be stumped by a mere 500,000 taels of silver.Unfortunately, his opponents have already laid a net all over the world, and at this time Hu Xueyan could not escape the fate of being hunted down.He faintly felt ominous: "The market is too bad, and the foreigners are too powerful. I don't know how to turn around?"

Hu Xueyan's frontal enemy is Jardine Matheson in the United Kingdom. At this time, the two sides are engaged in a fierce contest over the supremacy of the raw silk business. Throughout the 1870s, foreign firms firmly controlled the pricing power of China’s raw silk exports. The silk merchants were operating in a miserable manner, and their high profits were swallowed up by foreign firms. After Hu Xueyan started to intervene in the raw silk business, he felt the pain of the foreign firm's high pressure.Seeing that the silk farmer was beaten to the bone by the foreign firm and fell into bankruptcy, he secretly made up his mind that he must seize the pricing power of the raw silk trade and force the foreign firm to make concessions on the price.He began to carefully look for flaws in the foreign firm's price control system.Foreign firms controlled raw silk trade financing, international exchange, export channels and shipping insurance, backed by the gunboats of the British Empire, and seemed invincible.However, Hu Xueyan still keenly grasped the Achilles' heel of foreign companies-difficulty in controlling the source of raw silk production.

Hu Xueyan is determined to occupy the strategic commanding heights of the source of raw silk, and break the hegemony of foreign banks on the pricing of raw silk in one fell swoop. The opportunity finally came in 1882.In the early spring, Hu Xueyan went deep into the raw silk producing areas to conduct a careful investigation. At the same time, he found in the communication with the local raw silk merchants that the raw silk harvest that year was reduced, and there would be a serious shortage of supply.He immediately seized this rare opportunity and began to act quietly, purchasing around the silkworm villages and towns in Jiangsu and Zhejiang, issuing deposits widely, and controlling the supply of goods.

Sure enough, the raw silk harvest in the market in May was estimated to reach 80,000 bales, but "in August, it gradually became clear that the harvest was overestimated by 20,000 bales." Hu Xueyan, who had already completed the control of the supply of raw silk, immediately deployed a general attack.He mobilized every copper coin in his huge financial empire, and invested tens of millions of taels of silver in this decisive battle unprecedented in the history of Chinese business.By the summer of 1882, he had hoarded nearly 20,000 bales of raw silk [1], accounting for more than a third of the total supply.In order to completely control the price, he strongly invited his colleagues in the silk industry to form a raw silk price alliance, insisted on selling at a high price, and tried to win the pricing power of raw silk in one fell swoop.

This trick really worked. Jardine Mathesons suddenly found that it was difficult to buy raw silk without a higher price. They tried to break through one by one, but Hu Xueyan's fence was tightly tied, and silk merchants of a small size were told to abide by everyone's agreement. good offer. "The price of a bale of high-quality raw silk in London is only 16 shillings and 6 pence, but the price of silk in Shanghai, due to Hu Xueyan's acquisition and manipulation, is equivalent to 17 shillings and 4 pence in pounds." [2] The logic of the foreign firm is that they An organized suppression of raw silk prices is not manipulation, but an organized resistance in China is.This kind of logic is still prevailing today. The U.S.'s crazy printing of dollars is not considered as manipulating the exchange rate, but China's countermeasures are judged to be manipulating the exchange rate.

In desperation, Jardine Matheson had no choice but to ask the General Taxation Department of the Qing Customs and the British Hurd to mediate.Yes, you read that right, it is the British who are in charge of the Chinese customs.It is not a special policy formulated by the Qing government to attract foreign talents, but after the British defeated the Qing government, they forced the Qing government to cede territory and pay compensation. In order to ensure that China paid on time, the British were directly appointed to guard the Chinese customs. They were all directly taken away by the British to offset the compensation.

Hurd took charge of the Qing Customs at the age of 28. He is a typical young man with great ambitions, but he is much more immature than Hu Xueyan.He used the invitation of Hu Xueyan to jointly run a silk factory as a bait, and on the condition of "a commission in addition to the market price", he tried to persuade Hu Xueyan to make a price concession.Soon, Japanese merchants also came to buy it. The price offered was based on the market price at that time plus 8 million taels of silver. After negotiation, it was agreed to increase it to 10 million taels of silver.As long as Hu Xueyan nods, the gross profit equivalent to today's 2 billion yuan will be obtained.Things are looking good.However, Hu Xueyan refused, he asked for a higher price.

At this time, "the silk harvest in Europe was bumper, and the London and continental European markets were able to ignore China's poor harvest" [3].The foreign firm turned to seek to acquire native European raw silk.At the end of the year in 1883, the price of silk plummeted, half of the silk merchants postponed settlement, and several large silk firms went bankrupt.Hu Xueyan tried to invite the silk merchants to collect all the new silk in the next year in order to force the foreign firms to surrender, but no one responded. The transaction of raw silk in the Shanghai market was light, and the buyers and sellers had been deadlocked for three months.At this time, the two sides are competing for the strength of funds.

Jardine Matheson is not an ordinary foreign firm. Its backstage boss is the earliest and most powerful British Barings Bank among the 17 major international banking families.In the 19th century, the Bahrain family was known as the "sixth largest power in Europe". Its fortune was earlier than that of the Rothschild family, and it was the undisputed leader in the field of international finance.With this strong support, Jardine Matheson has always been invincible in the confrontation with Hu Xueyan. However, Hu Xueyan's situation began to deteriorate.You must know that maintaining price control requires high costs, such as compensation for the interests of franchised silk merchants, high-priced purchases of raw silk, increased deposit ratios, expensive warehouse fees, huge financing costs, transportation, insurance, and labor.Hu Xueyan's cash flow is in danger of becoming increasingly fragile due to the astonishing capital occupation.

Sheng Xuanhuai, a general of the Beiyang faction who had already seen all this in his eyes, started to act.He is plotting to "abolish" Hu Xueyan. Hu Xueyan and Sheng Xuanhuai don't have too deep personal grievances, they just belong to each other.Hu Xueyan’s background was Zuo Zongtang, then governor of Liangjiang. In the process of suppressing the Xinjiang rebellion, Hu Xueyan, as his general logistics, used the credit and financial network of his own Fukang bank to initiate the first mortgage of customs tariffs in 1867 to foreign banks and foreign capital. The bank borrowed, and in 14 years, it financed 16 million taels of silver for Zuo Zongtang's military operations, and made great contributions to Zuo Zongtang's historical feat in recovering Xinjiang. In 1883, the 500,000 taels of HSBC bank debt that put him in a desperate situation was the guarantee he made with his own credit to recover Xinjiang’s war debts. If the government’s money could not arrive on time, he would have to pay HSBC in advance with his own money. .

Sheng Xuanhuai's background is naturally the Beiyang Minister Li Hongzhang.The contradiction between Li Hongzhang and Zuo Zongtang is well known in the world. In the 1860s and 1870s, China experienced a serious frontier crisis.In the northwest of China, Yaguba in Central Asia took advantage of the ethnic and religious contradictions in Northwest China at that time, and with the support of Britain, Russia and other powers, invaded Xinjiang and established the so-called "Kokand Kingdom".Soon, the Russian army occupied Ili, an important border town, and the situation in the Northwest Fortress was in jeopardy.At the same time, in the southeast of China, Japan provoked another serious incident of aggression against Taiwan, and a war between China and Japan was imminent. After the 14-year war of the "Taiping Heavenly Kingdom", the treasury of the Qing Dynasty was impoverished, and the national finances were no longer able to win two wars at the same time.However, the "Coastal Defense Faction" represented by Li Hongzhang advocated strengthening the navy as a priority, and did not hesitate to give up Xinjiang for this; while Zuo Zongtang insisted that "fortress defense" must not be abolished, and he should not hesitate to carry out military conquest against the Xinjiang rebellion.The focus of the conflict between the two parties is the issue of "payment". If the imperial court decides to give priority to "coastal defense", a huge amount of money will flow into the sphere of influence of the Beiyang faction, and if the national policy of "block defense" is established, Zuo Zongtang will inevitably increase his strength.This is a sharp contest between national interests and personal interests. In the end, Zuo Zongtang successfully recovered the whole territory of Xinjiang, and his prestige and status temporarily overwhelmed Li Hongzhang.At this time, the Sino-French war was clouded again, Zuo Zongtang fought again, and Li Hongzhang fought again.Li Hongzhang was afraid that a large amount of money would flow into the hands of the main fighters again, resulting in insufficient funding sources for the Beiyang faction, so he decided to launch an "inverted left" offensive.The war is about money and food, and if you want to control Zuo Zongtang, you must first abolish Zuo Zongtang's "money bag" Hu Xueyan. It is not an easy task for Sheng Xuanhuai to completely destroy Hu Xueyan, and his energy is limited to cutting off the 500,000 taels of salary payable to Hu Xueyan by the Shanghai Road under the control of the Beiyang Faction.Since Hu Xueyan used the credit of Fukang Bank to borrow money from HSBC for the court, if the court paid late, he had to advance the payment.However, Hu Xueyan is after all a financial player. Being in the capital market center of Shanghai, whether it is asking HSBC to extend the loan, or borrowing from other foreign banks, or borrowing from Shanghai Qianzhuang Bank, or selling nearly ten million yuan What's more, he still has tens of thousands of acres of land, manors and other real estate, as well as huge operating assets such as more than 20 pawnshops, chain ticket stores, and Hu Qingyutang drugstores. It is not too difficult to raise 500,000 taels of silver. difficult thing. Therefore, Sheng Xuanhuai not only needs to cut off Hu Xueyan's source of government funds, but also needs to cut off all financing channels for Hu Xueyan in the capital market, which is definitely not something that Sheng Xuanhuai can handle.He had to unite with the real big names in Shanghai's financial market to stab Hu Xueyan in the back.