Chapter 71: Bank Run
The money exchange business was first called "Zi Qian Jia" and was recorded during the Seven Kingdoms Rebellion period of the Western Han Dynasty.
"Records of the Grand Historian: Biographies of Merchants" records: When the seven states of Wu and Chu rose up in war, the marquises and lords in Chang'an went to the army and borrowed money from their sons. Their sons' families thought that the marquisate was in Guandong, and the success or failure of Guandong was uncertain, so no one was willing to lend money. Only Wuyan donated a thousand gold coins and offered a tenth of the interest. In March, Wu and Chu were at peace. Within a year, Wuyan's interest increased tenfold, and he became as rich as Guanzhong.
The general meaning is that the marquises and lords in Chang'an city wanted to join the army to fight, but no one would lend them money at high interest rates. Only Wuyan was willing to lend him a huge sum of gold. In the end, the marquises and lords won a great victory, and Wuyan received interest ten times the principal. This wealth was no less than that of the tycoons in Guanzhong.
If we continue to trace back, the Zi Qian family can probably be traced back to the pre-Qin and Warring States period.
During the Eastern Han Dynasty, more and more people started to run money-owning businesses, which gradually evolved into the money shops of today.
Both the former Ziqian family and the current money houses make a living by lending at high interest rates. Otherwise, the management fees for deposits would not be enough to cover daily expenses, let alone profits.
But once usury is lent, bad debts are inevitable. Although they will be offset by other debts collected, the overall profit is still there, but it still cannot withstand a run.
For money houses, once a run occurs, bankruptcy is just a matter of minutes, because they simply cannot come up with so much money in a short period of time.
But once they cannot come up with the money, they will not be able to gain trust, which will make it more likely for panic to spread, leading to more bank runs.
In Su Che's previous life, even the Silicon Valley Bank in the United States was helpless after suffering a bank run.
In order to cope with the bank run, banks are forced to sell more bonds, resulting in greater losses, which forms a vicious cycle, squeezes liquidity and ultimately leads to the bank's bankruptcy.
Even world-class banks cannot afford the risk of a bank run, let alone these money houses that engage in usury business?
It is somewhat funny to say that on the eve of the bank run, these money house owners and shopkeepers gathered together and discussed how to bring down Chengjin Money House. Even though they were Zhang family's money house, they still could not let it go!
Some people suggested that the government could bring troops to search and confiscate Chengjin Bank. Even if they could not find evidence of their crimes, they could search and confiscate them repeatedly to find some minor problems. The purpose was to prevent them from doing business properly! Even if they were nitpicking, they would have to make them suffer a lot and eventually have to close down or move to another place.
Some people also suggested that the best approach was to attack the psychological barrier and continue to spread rumors about Cheng Jin Money House, so that they would completely lose their credibility and no one would dare to deposit money there. In this way, it would only be a matter of time before Cheng Jin Money House went bankrupt.
Some people even suggested that they could bribe the knights and have them join forces with the guards of Chengjin Money House to take away all the money in their vault. Even if they failed to take it away, if this happened once, it would happen again. Who would dare to deposit money with them?
In short, they used all kinds of shady tricks, both openly and secretly, and they would never be able to sleep well unless they put Chengjin Money House into bankruptcy.
There is no other way. As long as money houses like Chengjin Money House, which offer interest on deposits, continue to develop, it will be the end of these old money houses!
Money deposited in a money house is profitable, so who would be willing to keep it with them?
So this is a hatred that will never end until one of the two sides dies.
Under their promotion, Chengjin Bank saw a large-scale withdrawal of money, which made them quite proud. They smiled and said, "This rumor is really convenient to use!"
But at this moment.
People came one after another to report the situation.
These bosses didn't care at first, but when they listened carefully, their expressions changed immediately.
It turned out that among the many rumors, there was a new rumor, which was about their major money houses. It was actually said that they took the depositors' money to Chengjin Money House to deposit it just to earn the interest!
Driven by their rumors, Chengjin Money House has lost all its credibility.
And now, all the major banks have actually invested the depositors' money into it. Doesn't that mean that all the money has gone into the water, and only the sound of splashing water can be heard?
Naturally, this group of depositors became anxious.
You have to take your money out of the bank, but you can't throw it into the big pit of Cheng Jin Bank!
Although most people don't believe that these banks are really that stupid, it's better to believe it than not. If it really happens, then their money will be lost. Who dares to gamble with their own wealth?
Therefore, many people believed the rumor and followed the trend to go to major banks and started withdrawing money.
Not only Chengjin Money House experienced a bank run, but all other major money houses did as well, and the run became increasingly severe.
Since the money was deposited yesterday, Chengjin Money House had not had time to circulate and spend it yet, and it did not have to pay any interest, so it was easy for it to deal with the bank run.
But the major money houses do not have this ability. They are simply unable to recover all the high-interest loans they have lent out in a short period of time , so how can they deal with the bank run?
Realizing the seriousness of the problem, the owners and shopkeepers of these banks started cursing:
"Will anyone really believe such an outrageous rumor?"
"Don't these people have any brains? Can't they have their own opinions? Are they just following the crowd?"
“How could such a ridiculous rumor cause a bank run???”
They cursed in unison, and then the bank owners looked at each other and instantly realized who did it!
The owner of Chengjin Money House!
If not him, who else could it be?
Damn it!
Don’t you know that spreading rumors is a felony?
At this time, Zhao Junxian, the owner of Baofenglong Money House, stood up.
Although he is only the shopkeeper of Baofenglong Money House in Nanyang County and not the boss of Baofenglong, Baofenglong Money House has many branches all over the country and is one of the largest money houses. Therefore, even if he is just a shopkeeper, he still has a lot of say among this group of money house owners.
Zhao Junxian said seriously: "Everyone, the more we must not panic at this time, we must not let a run on the bank happen. We must work together to issue a statement to clarify the rumors and comfort people, letting them know that those rumors are groundless. We have not transferred the money to Chengjin Bank at all!"
"Besides, although this is a crisis, it is also an opportunity. The owner of Chengjin Bank actually dared to spread such rumors, so he must bear the price of spreading rumors!"
"We need to jointly declare that it was the people from Chengjin Bank who spread the rumor. We have already reported it to the police and will immediately arrest the owner and manager of Chengjin Bank for spreading the rumor!"
"So at this moment, we must let the Lord of the Mansion make the decision for us!"
"As long as we can arrest the people from Chengjin Bank for spreading rumors, even if the person arrested is not the young master of the Zhang family but their shopkeeper, no matter who it is, our bank run will be resolved."
"What do you think?"
After hearing these words, the bank owners, who were originally a little flustered, calmed down instantly and said with great joy: "Good!"
"This is a great plan! It really kills two birds with one stone!"
"Brother Junxian is really resourceful and is our pillar of support!"
"I have a good relationship with the governor Gai Jun, I can talk to him about this!"
"I also have some friendship with the Lord of the Mansion, so I can say something!"
"Everyone, go together! Let the Lord make the decision for us!"
Soon, this group of money shop owners jointly went to see the Nanyang County Governor Gai Sheng, and at the same time spread the rumor through their subordinates, saying that they had never deposited money in Cheng Jin Money House. Now they had gone to see the governor to arrest the people who spread the rumors in Cheng Jin Money House!
This news also reached the ears of the shopkeeper of Chengjin Money House. Ji Renyong came to Su Che in a panic and explained the seriousness of the matter.
Su Che was not panicked at all. He said calmly, "Don't worry. The governor hasn't come to settle accounts with these people yet, but they went to the governor instead. Isn't this just a trap for themselves?"
Ji Renyong was stunned and asked curiously: "Why does the governor want to settle accounts with these people?"
"Because they framed our Chengjin Bank first." Su Che said as a matter of course.
"Ah?" Ji Renyong was confused.
