RPAGF Chapter 136 Dreaming of bankrupting banks with interest rates?
Chapter 136 Dreaming of bankrupting banks with interest rates?
Chapter 136 Dreaming of bankrupting banks with interest rates?
Chapter 135 The news of Ping An Bank's opening spread like wildfire throughout the streets and alleys of Beijing.
In the three-courtyard house in the eastern part of the city, a long queue had formed in front of the counter. Most of those depositing money were craftsmen and military households from Shahewei. They had an almost blind trust in Chen Ying, having never suffered a loss following him. An elderly craftsman with graying hair and beard pulled a small cloth bag from his pocket, unfolding it layer by layer. Inside were a few pieces of silver, totaling no more than five taels. For him, this was his entire fortune, his everything. He handed the silver to the counter, his voice booming: "Deposit for one year!"
"One-year term, 5% interest!"
The clerk at the counter took the silver, skillfully weighed it, recorded the transaction, and issued a receipt. A moment later, he handed over a deposit slip. The old craftsman took the deposit slip, looked at it again and again, and carefully put it into his pocket, his face beaming with smiles.
"The bank run by Lord Chen is reliable!"
"Of course! When has Lord Chen ever mistreated us?"
The crowd was buzzing with discussion and the atmosphere was lively. But it was clear to everyone that most of those who came to deposit money were related to Chen Ying, while the real wealthy merchants were still observing.
Within three days of its opening, the Da Ning Ping An Bank successfully attracted deposits totaling over 36,000 taels, but not a single person applied for a loan. Wei Zhongxian quickly noticed this situation. He summoned Chen Ying to his residence and went straight to the point: "Bo Ying, why are there so few people depositing money in your bank?"
Chen Ying smiled wryly and said, "Father-in-law, banks are a new thing, and people don't understand them, so naturally they don't dare to deposit money easily. We have to take it slowly."
Wei Zhongxian shook his head: "Take it slow? We can't afford to wait. How about this, we'll lend you a hand."
Chen Ying was taken aback: "What does Father-in-law mean—"
Wei Zhongxian smiled, a meaningful smile: "I'll have Tian Ergeng and Xu Xianchun deposit some money first. The Embroidered Uniform Guard has made quite a bit of money lately; those two can deposit at least 300,000 taels of silver. Is that enough?"
Chen Ying was overjoyed: "Enough, of course it's enough, thank you so much, Father-in-law!"
Wei Zhongxian waved his hand: "No need to thank me. Helping you is helping ourselves. We also have shares in this bank. We'll get dividends, and the more money we make, the more we'll get!"
At Wei Zhongxian's suggestion—or rather, explicit suggestion—Tian Ergeng, the commander of the Embroidered Uniform Guard, deposited 130,000 taels of silver. Next, Xu Xianchun, the commander of the Embroidered Uniform Guard and the Northern Garrison Commander, deposited 100,000 taels, followed by Fu Yingxing, who deposited 10,000 taels. Key members of the eunuch faction followed suit, depositing 10,000 or 20,000 taels each. In just a few days, the balance of deposits in Ping An Bank exceeded 800,000 taels of silver.
A rumor began to circulate in the capital: "This Ping An Bank is Wei Zhongxian's bank."
Those officials who wanted to curry favor with Wei Zhongxian immediately had an idea.
Giving gifts directly to Wei Zhongxian would be too conspicuous, and if he were impeached by the censor, it would be difficult to handle. However, it would be different to deposit the money in Ping An Bank and give it as a banknote. Banknotes are anonymous, and whoever holds them owns them. This way, you can give a gift while avoiding suspicion, achieving the best of both worlds.
So, long queues formed again in front of the Ping An Bank counter. This time, it wasn't artisans and soldiers from Shahewei who came, but officials and merchants dressed in silk robes and riding in sedan chairs. They were generous, depositing thousands or even tens of thousands of taels at a time, with a knowing smile on their faces.
The Prince Xin's Mansion, study.
Zhu Youjian sat at his desk, his face ashen. Before him lay a gazette detailing the recent deposit situation at Ping An Bank; the names and numbers pierced his eyes like needles.
"Cao Banban, tell me, is this Ping An Bank the money of the Ming Dynasty, Chen Boying's bank, or Wei Zhongxian's bank?"
Cao Huachun cautiously replied, "Your Highness, nominally it belongs to the Ming Dynasty and to Lord Chen, but in reality—Eunuch Wei has taken a stake and had his subordinates lead the way in depositing money, so those officials who fawn over him naturally followed suit. Before long, it became Eunuch Wei's bank."
Zhu Youjian slammed his fist on the table: "Well done, Wei Zhongxian! He's using the banks to amass wealth!"
Cao Huachun dared not respond.
Zhu Youjian stood up and paced back and forth in his study, his pace quickening with each step, his anger growing: "I initially thought that Chen Boying was setting up the bank for the benefit of the country and its people. Now, it's become a tool for corrupt officials to exchange bribes! This bank is better off not being established at all!"
He stopped, panting heavily, and suddenly said, "Someone, prepare the sedan chair. I'm going to the palace to reason with my elder brother!"
"Your Highness, please wait!"
Cao Huachun hurriedly stopped Zhu Youjian and said, "Your Highness, please calm down. What should you say to His Majesty about this?"
"You say Wei Zhongxian used banks to amass wealth? But what's the evidence? Those officials deposited money openly and honestly, and withdrew their banknotes openly and honestly. They called it normal deposits; can you say they were offering bribes?"
Zhu Youjian was stunned.
Cao Huachun continued, "Besides, Lord Chen is also a shareholder of the bank. If you make such a scene, where will Lord Chen put his face?"
Do you still want those tens of thousands of taels of silver you invested?
Zhu Youjian fell silent. He slumped back into his chair, muttering, "Could it be—just let it go like this?"
Cao Huachun said in a low voice, "Your Highness, don't forget, Lord Chen is no ordinary man. He can defeat the Jurchens in Liaodong and make the Huizhou and Shanxi merchants obedient in the business world. Would he not have thought of these things when he starts a bank? In my opinion, Lord Chen knows what he's doing. You might as well wait and see what his next move is."
Zhu Youjian remained silent for a long time before finally nodding.
Meanwhile, at the Chen residence.
The news that Ping An Bank's deposit balance had exceeded 1.2 million taels caused quite a stir in the Chen family.
Inside the accounting room, Song Yanniang and Su Mei sat facing each other, thick ledgers spread out before them. Song Yanniang's fingers flew across the abacus, the clattering sounds rapid and crisp. Su Mei, on the other hand, flipped through the deposit slips page by page, her brows furrowing deeper and deeper.
"One million two hundred thousand taels," Song Yanniang stopped calculating and sighed, "a one-year fixed deposit with an annual interest rate of five percent. The interest alone would amount to sixty thousand taels a year. Add to that the salaries of the accountant, the shop assistant, and the guards, plus the losses from burning the silver and the transportation costs—Sister Su, you do the math, we'll lose at least one hundred thousand taels a year."
Su Mei nodded, her voice tinged with worry: "Sister is right. This doesn't even include the cost of opening branches, or the bad debts that haven't been repaid. Although people are depositing money, no one is borrowing. With money only coming in and not coming out, this bank is likely to be dragged down."
The two exchanged a glance, then got up at the same time to go find Chen Ying.
Chen Ying was writing and drawing in his study. A newly drawn map lay on the table, marking the locations of Tianjin, Dengzhou, Yongning Port, and other places, with sketches of several buildings drawn beside it. Hearing footsteps, he looked up and saw Song Yanniang and Su Mei approaching together. He laughed and said, "What's wrong? You look like the sky has fallen."
Song Yanniang slammed the account book on the table and said sternly, "Husband, take a look at the bank's accounts yourself. 1.2 million taels of silver in deposit, the interest alone is 60,000 taels a year. Add in all the expenses, and you'll lose at least 100,000 taels. If this continues, your meager savings won't last more than a few years."
Chen Ying put down his pen, picked up the account book and flipped through it, but the smile on his face did not disappear.
"Yan Niang," he put down the account book and leaned back in his chair, "do you know why I set the loan interest rate so low?"
""
Song Yanniang was taken aback: "Why?"
"Because I want to make it possible for more people to afford to borrow money."
Chen Ying stood up, walked to the window, and turned his back to them. "The artisans of Shahewei, the military households of Daning Army, and those commoners who want to start a small business but lack capital—it's not that they don't want to borrow money, it's that they dare not. The interest rates at money shops are too high; they're afraid they won't be able to repay them. But my bank is different. The annual interest rate is two percent, more than half that of the money shops. If they do the math, borrowing one hundred taels only requires repaying twenty taels in interest per year. They could use that money to open a shop or set up a workshop and earn more than that in a year. Naturally, they would come to borrow."
Song Yanniang frowned and said, "But no one is coming to borrow it now."
Chen Ying smiled: "It's not that no one is coming to borrow it, it's that they haven't figured it out yet. Once they do, they'll come naturally."
He walked back to his desk, picked up the map, and pointed to the markings on it: "Look, Tianjin, Dengzhou, and Yongning Port—I've already sent people to select locations for these three places. Once the branch is open, depositing and withdrawing money will be more convenient, and there will be even more people borrowing money."
Su Mei couldn't help but ask, "My lord, are you that confident?"
Chen Ying looked at her with a firm gaze: "Confidence doesn't come from nowhere. The craftsmen of Shahewei used to go hungry."
And now? Some have opened blacksmith shops, some have set up carpentry workshops, and some have started small businesses. What do they lack? Money. As long as someone is willing to lend them money, they're willing to do it. Just wait, the first person to take out a loan will come soon.
The rear hall of the Huizhou Merchants' Association.
The room was brightly lit, and the sounds of string and wind instruments filled the air. Wang Wende, holding a wine cup, smiled broadly at everyone present, seemingly in a very good mood. Jiang Chun sat at the lower end of the table; his injuries hadn't fully healed, and his face was still somewhat pale, but his spirits were surprisingly high. Ever since he suffered a great loss at the Chen residence, he had been holding his breath, and now he had finally gotten his chance.
"Gentlemen," Wang Wende put down his wine cup and said slowly, "I've heard that Chen Boying's Ping An Bank has a lot of deposits, but not a single loan. It's just taking in money and not giving it out; the interest alone costs tens of thousands of taels a year. How long do you think this bank can last?"
Everyone echoed this sentiment.
"The chairman is right. The banking industry may look glamorous, but it's actually dangerous. Without some financial resources, you can't last more than a few years."
"Chen Boying is alright at fighting, but as for business... well, hehe."
Jiang Chun stood up, cupped his hands, and said, "Chief, I have an idea."
Wang Wende's eyes lit up: "Speak."
Jiang Chun lowered his voice, a cold glint in his eyes: "Isn't Chen Boying going to open a bank? Let's give him a hand. Deposit a lot of money in, and make him pay more interest. If he can't lend out his loans, the interest alone will bankrupt him. When the bank collapses, let's see how he'll have the face to show in the capital."
Wang Wende pondered for a moment, then slowly nodded: "That's a good idea. However, we need to do it subtly, so that no one can tell that we're the ones pulling the strings behind the scenes."
"Don't worry, Master," Jiang Chun said with a smile. "I've already made the arrangements. I'll find a few unrelated people to act as intermediaries, each depositing tens of thousands of taels of silver, spreading it out so that no one can trace the source."
Wang Wende nodded and raised his glass: "Then let's do it this way. Come on, let's drink to Chen Boying's bank!"
Everyone laughed and toasted.
A few days later, some unfamiliar faces began to appear at the counters of Ping An Bank. They were well-dressed and spent lavishly, depositing tens of thousands, or even hundreds of thousands, of taels at a time. The tellers were extremely busy, but a sense of unease lingered in their hearts.
"Manager, someone else has come to deposit money. This time it's 50,000 taels."
"Manager, someone has deposited 80,000 taels here."
"Manager, over here—someone has deposited 600,000 taels over here!"
Su Mei's expression changed.
She hurried to the counter, her hands trembling slightly as she looked at the deposit slip for 600,000 taels of silver. 600,000 taels! Adding to what she'd already accumulated, in just half a month, the bank's deposit balance had exceeded five million taels!
She practically ran into the accounting room. Song Yanniang was doing the accounts when she heard the news. Her abacus fell to the ground with a "thud," and the beads rolled all over the floor.
"Five...five million taels?"
Song Yanniang's voice trembled, "The interest alone is 250,000 taels a year! Where would we get that much silver to pay the interest?"
Su Mei bit her lip, her voice trembling with tears, "Sister, this doesn't even include the smaller loans. At this rate, our savings will only increase. We can't lend out any more loans, and the profits from Chen's Trading Company alone won't be enough to fill this hole."
The two looked at each other and saw deep fear in each other's eyes.
They got up almost simultaneously and rushed into Chen Ying's study.
Chen Ying was reading a military report sent from Liaodong when he heard the noise. He looked up and saw Song Yanniang and Su Mei standing at the door with pale faces. He couldn't help but frown.
"What's wrong?"
Song Yanniang slammed the account book on the table, her voice trembling with tears: "Husband, look at this! Our bank deposits have exceeded five million taels! The interest alone is two hundred and fifty thousand taels a year! How are we going to pay it?"
Chen Ying picked up the account book and flipped through it, his brows furrowing deeper and deeper. He was silent for a moment, then suddenly smiled.
Song Yanniang panicked: "You're still laughing! The sky is falling!"
Chen Ying put down the account book, leaned back in his chair, and said calmly, "The sky won't fall. Have you checked who deposited these funds?"
"I've investigated," Su Mei said in a low voice. "They're all unfamiliar faces, and we can't trace their origins. However—I suspect that the Huizhou merchants are behind this."
"It's not doubt, it's certainty."
Chen Ying stood up, walked to the window, and turned his back to them. "Those Huizhou merchants are resentful after suffering losses. They're essentially bleeding the banks dry. The more deposits they make, the more interest they earn, and the more the banks lose. When they can't hold on any longer, they'll naturally go bankrupt."
Song Yanniang asked anxiously, "Then what should we do? Return the deposit?"
"Return it?" Chen Ying turned around and smiled. "Why should we return it? They're sending us money, we should just accept it."
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Song Yanniang was stunned.
Chen Ying walked back to the desk, picked up the account book, and looked deep in thought: "Five million taels of deposit, with an annual interest of two hundred and fifty thousand taels."
It sounds terrifying, but have you ever thought about what you could do with five million taels of silver?
He paused, then said, slowly and deliberately, "Loan disbursement."
Song Yanniang frowned and said, "But no one is coming to borrow it."
Chen Ying laughed: "If no one comes to borrow, we'll go find people to borrow from. The craftsmen of Shahewei, the military households of Daning Army, and those small merchants who want to start a business but lack capital. It's not that they don't want to borrow, it's that they dare not. We'll take the initiative to go to them and tell them that banks have money, low interest rates, and they can borrow with collateral. Will they lend?"
Song Yanniang and Su Mei exchanged a thoughtful glance.
Chen Ying continued, "Furthermore, banks don't just lend money. Of the five million taels of silver, half should be invested in Chen's Trading Company..."
The workshops of Shahewei, the shipyards of Yongning Port—which of these industries wasn't making a fortune every day? Profits far exceeded interest. The Huizhou merchants wanted to bankrupt the banks with their deposits, but they didn't realize that banks feared deposits the least. The more deposits, the more silver they could use. As long as the silver was used wisely, interest was just a small amount.
Song Yanniang was still somewhat worried: "But what if—"
"There's no 'what if'," Chen Ying interrupted her. "Yan Niang, remember, a bank is not a money exchange. Money exchanges rely on luck, while banks rely on themselves. For Huizhou merchants to try to deal with new things using old methods is wishful thinking."
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