Though HSBC was foreign-funded, its headquarters were in Hong Kong. Though also under British legal jurisdiction, the British “respected” colonial culture and sometimes deferred to local customs, calling it “Chinese customary law.”
This meant there was considerable room for maneuvering regarding “women opening accounts.”
In Shanghai’s money-thick atmosphere, moral teachings ultimately couldn’t put food on the table. Lin Yuchan discovered that often, just spending money could buy her near-equal status to men.
Though still far from “equality for all,” at least she’d carved out some breathing space for herself.
Lin Yuchan wore a narrow-sleeved honey-colored yunsha silk jacket with jade gourd earrings, exposing half her forearm and a circle of exquisite silver filigree bracelets. She sat on a small sofa, crossed her legs, held the water pipe they’d given her, pretended to fill it with tobacco leaves, then imitated the dissolute concubines from Republic dramas, squinting and taking a puff—unfortunately, no smoke rings.
Su Minguan watched her put on airs with some amusement, reminding: “You forgot to light it.”
Lin Yuchan: “…”
Showing off failed. She stood up nonchalantly and studied the newly posted HSBC shareholder and director list on the wall.
“HSBC is newly established with weak capital,” Su Minguan said quietly. “Not as reliable as Standard Chartered.”
Lin Yuchan smiled: “But they’re flexible. Just for that, they have unlimited prospects.”
If the materials she’d read were correct, this emerging bank, currently just renting office space in hotels, would participate fully in China’s historical development. It would become the customs duty repository for Chinese customs, the Qing government’s largest creditor. When the Qing fought Japan and desperately needed large military funds, other trading houses wouldn’t lend due to the Japanese government’s pressure, but only HSBC withstood the pressure and rapidly provided loans… of course, also engaging in government-business collusion, taking the opportunity to extort enormous interest.
This was a modern bank practicing pure capitalism to the extreme. The Qing government’s collapse didn’t implicate it, two world wars didn’t defeat it. Even after the founding of New China, it didn’t withdraw from the mainland but was specially authorized to handle foreign exchange business until the reform and opening up…
Of course, it was essentially still a comprador force representing imperialist capital, not some beacon of national capital. But who could blame Chinese people for not having their banks? HSBC was so far the only “local” bank that wouldn’t roll up her money and run back to London at the first sign of political upheaval.
Depositing money in HSBC was currently the most stable option.
HSBC was also handling such a big-spending independent Chinese client for the first time. Its founding capital was only five million Hong Kong dollars. Lin Yuchan’s move of over a hundred thousand taels of silver immediately made her the center of attention, surrounded by several staff members in the reception room.
Who cared about gender? Even if she were a stool, she’d now be a VIP celebrity stool.
Of course, when actually negotiating account opening conditions, it wasn’t as convenient and well-documented as modern banks. Fortunately, Su Minguan had rich experience dealing with foreign banks, helping her with most negotiations and avoiding numerous big and small pitfalls.
“Five-year fixed deposit,” Wang Huaishan ambitiously pitched to her. “Three percent monthly interest, not a cent less. After five years, Madam can withdraw…”
“I don’t want such high interest.” Lin Yuchan calmly stated her requirements. “I want anytime deposits and withdrawals. Two percent monthly interest.”
The comprador was somewhat stunned. If her money could be withdrawn anytime, wouldn’t that just add risk for the bank?
“Then… only half a percent monthly.”
“One percent.”
After much persuasion, they arranged a current account for these one hundred thirty-eight thousand taels of silver. HSBC’s grand opening special also gave Lin Yuchan a private small safe deposit box inside the bank vault, with a ninety-nine-year lease. Taking Lin Yuchan to inspect the basement, that iron door was two feet thick—probably even the Japanese devils couldn’t blast it open when they came.
She gladly accepted and received a small brass key.
However, she currently had no family heirlooms needing hiding. Thinking about it, the box of folk artifacts confiscated from foreign merchant Smith two years ago was now hidden in the attic. She mused about finding an expert to appraise them—if there were valuable artifacts, she’d store them in this small safe deposit box to prevent future fire and flood disasters.
Walking out of HSBC’s main entrance, she was empty-handed, carrying only a thick stack of various deposit documents.
From Standard Chartered Bank’s building window, a blonde head peered out. Manager Macalley beat his chest and watched Lin Yuchan depart.
The dock near the Bund was bustling with voices. Lin Yuchan was curious, tugged Su Minguan’s sleeve, and pressed against the railing to look—
She gasped.
Latest raw cotton price: sixteen pence per pound, equivalent to twenty-six taels of silver per dan.
Within three days, prices had risen another fifty percent.
Lin Yuchan: “…”
Wanted to reload and start over.
Lin Yuchan and Su Minguan looked at each other, each seeing a trace of panic in the other’s eyes.
Su Minguan steeled himself, grabbed her hand, and ran two li in one breath, out of sight, out of mind.
Young people ultimately couldn’t keep their composure. She couldn’t help thinking that if she’d taken these one hundred thirty-thousand-plus taels of payment and continued cotton trading instead of depositing in the bank, her wealth would have doubled now, becoming two hundred seventy thousand taels!
This also meant that if cotton prices maintained this level, this time next year, she’d need to purchase cotton at sixteen pence per pound to repay Sassoon and Jardine Matheson’s inventory.
This item alone would not only waste the one hundred thirty thousand taels but also require an additional one hundred forty thousand.
Not just hers and Su Minguan’s savings. All of Boya would be lost.
The risk had exceeded her expectations.
Going long and going short were different. Going long (bullish) on some commodity, like investing one hundred taels, at worst, the commodity value returned to zero, one hundred taels total loss, limited downside.
But going short (bearish)? As long as the target commodity price kept rising, she’d lose without limit, with no ceiling.
“Crazy…”
She murmured.
Su Minguan gently held her hand. In a corner of the park, shaded by deep green wisteria leaves, he kissed her regardless of everything.
“All contracts with foreign merchants were negotiated and signed by me.” He announced with burning-bridges determination. Boya is a limited company with no joint liability. When truly desperate, just fire me. I’ll default alone.”
Lin Yuchan wasn’t buying it, still somewhat gloomy upon returning. Su Minguan tried every way to please her, but she remained melancholy.
Investigating the reason, she’d advised her employees not to play with fire, yet she was taking enormous risks. This wasn’t originally her style.
Speculation and gambling were truly addictive.
Fortunately, the twenty-six tael sky-high price was just a flash in the pan. With cotton harvest season approaching, this year’s good weather promising bumper crops, prices also fell accordingly.
Impatient cotton merchants hired people to speed up picking and processing, bringing this year’s first batch of cotton to flower markets, preparing for another fortune.
Simultaneously, in a small corner of the Shipping and Commercial Daily—now renamed North China Herald—an inconspicuous announcement appeared.
“Chinese Raw Cotton Water Adulteration Rampant, Shanghai General Chamber of Commerce Urges All Trading Houses to Purchase Cautiously to Avoid Losses”
…
This announcement was mild in wording and neutral in tone. Probably to avoid hurting Chinese people’s feelings, it only generally mentioned someone mixing water into cotton bales, not even exposing merchant names.
Chinese merchants, hearing this news, at most sighed, expressed regret, and then assured their foreign merchant partners that their firms would never do such unconscionable things.
Originally, a minor quality storm, but the next day, cotton merchants stepping onto empty docks felt something was wrong.
“Hey, why isn’t anyone buying… Hey, sir, brother, wait! Our cotton is all first-class grade A, absolutely no water added, you can inspect freely…”
The comprador seats that were previously packed with crowds were now ninety percent empty.
Merchants beat their chests and cursed how “one bad apple spoiled the whole barrel,” cursing the dishonest merchant who added water to cotton, wishing explosions on his ancestors’ graves for eighteen generations.
But what use was that? The entire Chinese cotton industry’s reputation was already precarious.
“Twenty taels per dan… how about twenty taels per dan? Eighteen taels? Sir, you must let us little ones earn something… Our cotton is quality and affordable, honest to old and young…”
But no matter how merchants lowered prices, trading houses remained unmoved. The large and small compradors who’d called Chinese merchants brothers the day before, today, only a few showed their faces, all cold as ice, only knowing two words besides shaking their heads:
“Not buying.”
Cotton merchants panicked. Several major flower companies quickly established a “Cotton Self-Inspection Guarantee Committee,” swearing their raw cotton bales contained no water. The result was silence—foreign merchants ignored them completely.
This was bullying. Many cotton merchants were Yixing Business Association members with rich experience fighting foreign merchants. They immediately saw this was probably foreigners again making mountains out of molehills, creating public opinion to suppress prices.
“Not selling! Below eighteen taels per dan, we absolutely won’t sell!”
But the price alliance strategy that had worked repeatedly before fell flat this time. After several days of a standoff with trading houses, the procurement price boards at the docks remained completely blank, not a single number.
A few perceptive people had already smelled something unusual and ominous in the dock’s damp, cold air.
Could it be… over?
But this was different from last time’s real estate bubble. When real estate collapsed, prices at least had a regular declining process. People remembered real estate company stock prices published in newspapers, though falling miserably daily, at least there were transaction prices. Prices fell step by step.
But this time, there weren’t even transactions. All trading houses seemed to collectively lose their voices, forgetting they had raw cotton procurement business.
The revelry when rising was always similar; the posture when falling was different each time.
Some wondered if the powers were again “sanctioning” China.
Various speculations and rumors arose accordingly, panic spreading along Suzhou Creek.
People didn’t know the same thing was happening in Hankou, Jiujiang, Guangzhou, in India, in Bengal, in Egypt…
News of the American Civil War’s end and Lincoln’s government’s victory had quietly reached a few well-informed people. Southern cotton plantations restarted on a large scale, and to restore the economy, they exported cotton accumulated for years at cost price or even below cost.
American cotton’s variety and quality left Chinese native cotton behind.
Simultaneously, European textile industry that had greatly increased demand during wartime quickly fell into post-war depression, with severe textile factory overcapacity. Large amounts of delicate “foreign cloth” that Chinese people competed to pursue now piled in European big city factory warehouses, ignored.
Global cotton prices crashed accordingly.
Any single one of these events might only cause cotton price fluctuations for three to five days. But as the saying goes, quantitative change produces qualitative change. When all factors accumulated together, no one could say where the landslide began.
Snowflakes gently fell on the dominoes already arranged, instantly pushing down that castle in the air built on a needle tip, vanishing without a trace.
“You’re lying! European textile factories signed orders with you long ago! Supply cotton according to contract!”
Angry cotton merchants surrounded trading house offices, broke down courtyard gates, and argued with a crowd of righteous compradors and translators.
Compradors were also helpless, spreading their hands: “Just received express news—all European textile factories we cooperated with have declared bankruptcy, their orders already defaulted. If you don’t believe it, check newspaper announcements.”
Cotton merchants were dumbfounded: “Textile factories can go bankrupt? But… we agreed in advance to supply goods, we’ve already collected the cotton!…”
Compradors bowed in unison, 120-degree bows: “Then this brother can only break his word, extremely sorry. Honestly, whether I can continue working at this trading house is another matter—Chinese shouldn’t make things difficult for Chinese.”
“You, you’re breaching contract…”
But trading houses were the strong party. When signing with Chinese merchants, they rarely actively proposed breach of contract penalty clauses, and Chinese merchants dared to insist on them. Bulk commodities were a buyer’s market. Anyone daring to assert their rights would be replaced by other merchants.
Shanghai cotton sales stagnated, Hankou cotton sales stagnated, Ningbo Jiujiang cotton sales stagnated—cotton everywhere stagnated. This wasn’t a supply-demand relationship change—”demand” had directly returned to zero.
Without buyers, there wasn’t even a chance to bargain. Cotton merchants eager to return home for the New Year finally had some who couldn’t hold on and began lowering prices.
Eighteen taels per dan, fifteen taels, ten taels, four taels, two taels…
Prices fell off cliffs, faster than they’d risen.
“Two taels of silver per dan! Just let me scrape together travel money home, please help, uncles and grandpas, two taels per dan—if it doesn’t sell it’ll rot here!”
Some small local textile workshops, hearing the news, came happily to pick up bargains. Export cotton for foreign firms had long disappeared from local markets these two years—locals couldn’t afford it. Now, finally, the tables had turned—locals could pick freely!
But local workshops were small-scale, buying cotton very modestly.
“Give me one, dan! But let me open and inspect the bales.”
“I want fifty pounds! Can you break them open?”
“Do you sell ten pounds? It’s getting cold, need to make cotton quilts for the children…”
Cotton merchants gritted their teeth and began retail sales by breaking open bales.
Retail amounts were drops in the bucket, only enough for boat tickets home.
As despair spread, suddenly a neatly dressed young businessman came to the dock. He jumped off a boat, walked into the space piled with unsold raw cotton, carefully inspecting bale after bale.
Cotton merchants instantly surrounded him.
“Are you buying cotton? All export quality, absolutely no adulteration, foreign firms were fighting to buy it last year! Prices are low now, buy and store—good for making family cotton clothes and quilts for the New Year…”
Su Minguan’s eyes swept around, picking several honest-looking cotton merchants, and called them aside.
“First collect six thousand dan.”
The cotton merchants nearly knelt to him!
In Chinese merchants’ eyes, foreign merchants lived in small Western-style buildings, attended concerts, played tennis, bet on horse races, and over wine glasses, sinisterly plotted how to coordinate and harvest Chinese people’s wealth.
This impression was correct most of the time. Only during the 1865 cotton season did people guess wrong.
The fact was that in major trading house offices, foreign merchants were as panicked as Chinese merchants.
Downstream textile factories collapsed one after another, American cotton returned with a roar, and their rapidly expanded cotton procurement business of recent years now faced an unprecedented crisis.
Years of profits had accumulated enormous risks for them. Riding war’s favorable winds and colonial policy convenience, they’d built platforms, erected tall buildings, turned themselves into kites in the sky, soaring alongside eagles, dancing with seagulls, forgetting wind’s supporting force, thinking they could float forever like clouds.
Suddenly, the wind stopped, clouds turned black, and long-absent gravity sinisterly appeared to tell them their actual weight.
Days without solid footing were destined not to last.
Moreover, many trading houses still owed bank loans. They all waited for pending European payments to fill gaps!
Now, wonderful—express reports came across oceans: bankruptcy, defaults, failures, uncollectable loans, stock crashes, credit bankruptcy…
Outside, angry Chinese merchants surrounded them, demanding why they were suppressing cotton prices. Yet even the most cunning foreign merchants now dared not go out to smooth-talk and evade.
Because trading houses themselves hoarded large amounts of cotton, and now the buyers were all dead. How dare they collect more?
Jardine Matheson comprador Tang Tingshu had slept in his office for several days. The magnificent carpet embroidered with “Jardine-Matheson & Co.Ltd.” hadn’t been cleaned for months, already stained with countless tea marks and burned with several holes by anxious cigarette ash. Tang Tingshu’s eyes were bloodshot, his unshaven beard stubbled everywhere. Documents scattered on the floor, his newly fitted nearsighted glasses were missing, and he was turning in circles when crack—something felt wrong underfoot, and he’d stepped on and broken his glasses.
He suddenly remembered Jardine Matheson still had six thousand Dan of cotton currently “outsourced for storage” in some Boya Company warehouse!
Headache. His head hurt even more.
The storage agreement didn’t expire until next year. By then, whether cotton or sand was more valuable was uncertain!
“Please bring Su Minguan here!”
Even during Yixing Shipping’s heyday, when Su Minguan was worth a hundred thousand taels, to Tang Tingshu, he was just a clever young man worth an extra glance.
Now this person was content with poverty, working as some accountant at a local merchant house—to Tang Tingshu, this connection was dispensable.
But when Su Minguan knocked and came, Tang Tingshu still tidied his clothes and hat, courteously went out to greet him, incidentally kicking the wrinkled carpet aside.
“Six thousand Dan of cotton—can we retrieve goods early?” Tang Tingshu made a deep bow, getting straight to the point. “You see the current market…”
“Possible.” Su Minguan handed over the original contract copy. “Must pay breach of contract penalty.”
Tang Tingshu suppressed his breath, asking coldly: “So when you signed this contract, you were hoping for today?”
Otherwise, which warehouse landlord would stipulate retrieval periods? Others wished you’d take goods early so their warehouses could be emptied sooner.
“First, I didn’t chase you to sign this contract—your foreign boss called you into the club.” Su Minguan was seriously reminded. “Second, warehouse rent was far below the market price. Exchanging a fixed retrieval period condition, you can’t have both benefits. Third, everyone thinks about profit when signing. Mr. Tang isn’t doing charity—when putting pen to paper, you certainly expect profit. Now your expectations were wrong—you can’t blame others.”
This lengthy speech’s main point was just four words: “willing to gamble, willing to accept loss.”
As a comprador, Tang Tingshu had countless times educated dejected Chinese merchants that trading with foreigners required strictly following the contract spirit, willing to gamble and accept loss.
Now these four words were returned intact, and he had no temper.
“Quick! Must see goods today!”
“Breach of contract penalty is thirty percent of contract signing cotton price.” Su Minguan friendly reminded. “Mr. Tang, current market cotton prices aren’t worth this price.”
To retrieve those six thousand Dan of cotton early, the breach penalty was three pence per pound, equivalent to four taels eight qian silver per dan. During that blazing Dragon Boat Festival season, this was a cabbage price that people would disdain.
Careful as Tang Tingshu was, he hadn’t thought about this for even a second.
But now, large amounts of ignored quality raw cotton piled at docks had the lowest asking prices, touching two taels per dan.
Tang Tingshu was stunned for a long while, then suddenly sighed deeply and smiled bitterly.
“Good! Old Tang worked for nothing this year! Minguan, congratulations on your fortune.”
Su Minguan gently cupped his hands.
“I’ve already brought cotton merchants to your door. They’re asking two taels of one qian of silver per dan, waiting to sign contracts with you. This transaction’s commission is free; no need to be polite.”
Meanwhile, at Boya Company, Lin Yuchan faced two opponents, her lips nearly smoking from the argument.
After Boya Company’s split, the two managers worked elsewhere separately, unable to back her up. Today, Su Minguan was also absent. So when Xu Run and Zheng Guanying visited together, she was caught completely off guard.
Two big shots, one after another, and they brought her a basket of preserved fruits and dried plums!
She almost gave in, blurting “this servant girl isn’t convenient to receive guests alone,” then felt too cowardly. She had the impulse to ask Su Minguan for support, but this thought just flashed. Get some backbone!
She looked up at the wall. Besides Boya Company’s qualification certificates, Rong Hong’s series of certificates, framed imperial edicts and documents, and customs files, a new enlarged black and white photograph hung there. In the photo’s center, Lin Yuchan bent over holding a billiard cue, with a crowd of tall, short, fat, and thin foreign merchants behind her in amazed poses.
Bear the risks you take yourself. Lin Yuchan generously invited the two Baoshun compradors into the parlor, instructing Aunt Zhou to serve tea and refreshments.