Volume 3: The Richest Man in the World Chapter 1 Two Proposals
The fire in Shisanhang has been extinguished, but its subsequent impact has just begun.
Milton described it in a letter to London: "This is a disaster for all of Asia, no, it is a disaster for the economy of the whole world!"
Perhaps Europeans would have thought Milton was exaggerating, but it was indeed a terrible challenge for the leaders of the East India Company in China.
Although Guangzhou's autumn trade was already halfway through when the fire broke out, the Baietan warehouse was completely destroyed and almost all of the nine insurance companies suffered immeasurable losses.
If all links were handled seriously, those small insurance companies would go bankrupt on the spot - the goods that they had not had time to sell were destroyed in the fire, and even some of the silver was turned into gold and water in the fire. According to the agreement with foreign banks, they must make double compensation for the part of the goods that could not be delivered, and they would be unable to cope with the upstream suppliers' demands for payment - if everything was really done according to the contract, these insurance companies would have no other choice but to go bankrupt.
If only one guarantor was like this, the East India Company would not be polite at all. As long as it could explain to the board of directors and bankrupt one or two guarantors, there would naturally be other guarantors - even new guarantors approved by the Qing government - to divide the market share of the bankrupt. The punishment of the bankrupt would also deter Chinese businessmen from breaching the contract easily and continue business next year.
But the problem now is that the fire did not just engulf every household, but the entire Thirteen Factories!
If all parties insist on doing things according to the previously signed contracts, the entire financial chain in East Asia will collapse. Under the chain reaction, the East India Company will not be able to escape unscathed. If the subsequent effects of the disaster are allowed to continue to spread, it is foreseeable that an economic crisis will break out in Europe.
"So," Charlie said to Milton with a smile, "Mr. Milton can choose to make next year a bad fiscal year, or he can choose to make the next ten years all bad fiscal years."
Did this ugly, lowly Welsh countryman think that by putting on decent clothes and speaking in a bad London accent he had really become a gentleman?
Milton did not try to hide his disgust for the compatriot in front of him, but he suppressed his inner dissatisfaction and made his tone as calm as possible.
"Charlie!" Milton said, "Your words and attitude make me doubt whether you are still a subject of the Queen."
"Of course I am a respectful servant of Her Majesty the Queen," said Charles, "but I have also accepted employment from Hao Guan. According to the laws of Great Britain, my acceptance of commercial employment abroad does not seem to hinder my loyalty to Her Majesty the Queen."
"If you knew what kind of loss this proposal would mean to the East India Company and the interests of the empire, you might not continue to be loyal to it."
"I don't think this proposal will cause any loss to Great Britain. On the contrary, I think my proposal is to save the East India Company." Charles said: "Not only that, it is the best choice for great Britain and even for the whole of Europe."
Charlie saw Milton's contemptuous look but didn't take it seriously. Wasn't the other party also a pirate two or three generations ago? What's the difference between your ancestors and mine? You just became rich first. Why are you so arrogant?
Of course, he wouldn't say it.
There was a moment of silence between the two sides. Milton didn't intend to reveal more , but Charlie didn't want the silence to last too long.
"I don't think Mr. Milton would be interested in discussing my personal loyalty," Charlie said. "Let's talk about business matters."
Following Charlie's gaze, Milton looked back at the pile of documents on the table and suddenly felt a headache.
He hated those officials in Beijing who were closed-minded, blind and ignorant of the world situation.
But he also hated these Chinese businessmen in Guangzhou who had seen the world and even knew European laws!
The former is too arrogant to cooperate, and the latter is too shrewd to control!
Why can't Chinese be as respectful and kind as Indians?
Milton flipped open the pile of documents, and the first page he saw was Wu Chengjian's friendly greetings. After the greetings, it was his solution to the natural disaster.
Even Milton had to admit that the plan was well-organized, targeted, and took into account the interests of all parties. Some of the proposals were absolutely unthinkable if one did not have some understanding of the European financial and international situation.
The fire at Baietan Lake put all parties in a dilemma. The solution proposed by Wu Chengjian was very complicated. To put it simply, there were two main points: first, the East India Company gave up the claim for compensation for the goods destroyed by the fire; second, the East India Company took the lead or acted as an intermediary to let European banks lend two low-interest loans, the first of which was lent to the insurers in difficulty to tide over the difficulties, and the second was used for the post-disaster reconstruction of the Thirteen Hongs.
"This is such a ridiculous proposal!" Milton couldn't help but punch the table even though it was the second time he had read the proposal. "Our trading companies also suffered heavy losses in the fire. Now not only are we not asked to claim compensation, but we are also asked to continue lending money to the Chinese? This is clearly an infringement on Great Britain's interests!"
"Mr. Milton, in this matter, I think we should not mention the difference between China and Britain." Charlie said, "I think that from a business perspective, this incident was not an intentional breach of contract by Chinese merchants. This fire that fell from the sky was a disaster given to mankind by God. In the face of natural disasters, the fate of all people is tied together, regardless of nationality."
"Even if we don't distinguish between countries, I will never agree to something that will obviously harm the interests of the East India Company!" Milton almost picked up the document and threw it in Charles' face.
According to this plan, not only did Wu Chengjian not have to pay triple indemnity for the goods (according to the agreement between Wu Chengjian and the East India Company, the amount of compensation was even greater), he could also get a huge low-interest loan, which would be repaid in fifteen years including principal and interest. Compared with the huge profits of the Thirteen Hongs, the interest generated by this loan was not worth mentioning at all, and the money was almost equivalent to borrowing for free!
"Just looking at the contract itself, it seems to be unfavorable to the East India Company. However, if we don't do this and allow the subsequent impact of this disaster to continue to spread," Charlie said, "Mr. Milton, the losses suffered by the East India Company may be even greater. Am I right? Hao Guan said that at this stage, we should not think about how to make money, but how to stop losses, right?"
After getting the loan, Wu Chengjian can easily rebuild the warehouse and pay the upstream suppliers of Yihehang. In this way, the upstream suppliers of Yihehang can continue to supply Shisanhang next year without the collapse of one link and the bankruptcy of the entire chain.
The situation of other insurance companies is similar.
Once this positive starting point is promoted, all insurance companies including Yihehang will be able to recover within two or three years. Then, in the next fifteen years, as long as everything goes well, the principal and interest of the loans repaid by the insurance companies year by year will be able to fill the financial holes paid by European banks, and even bring a stable annual interest to European bankers.
Well, Milton had to admit that all European financial groups, including the East India Company, needed the Thirteen Hongs to recover. Moreover, although the amount of low-interest loans proposed by Wu Chengjian was huge, it was completely within the affordability of European banks. European bankers could even afford a war involving several countries, so why would they be afraid of a fire? At most, they could bring a few more ships of silver from America next year. After all, gold and silver were the only things in the world that could realize their greatest value in China.
However, when Milton thought about agreeing to Wu Chengjian's conditions, he felt suffocated!
Wu Chengjian proposed this plan on behalf of all the insurers of the Thirteen Banks. Of course, Yihe Bank was also among them. The deductible amount and loan amount required by Yihe Bank would not be more or less than those of other insurers in terms of proportion. The amount was in line with Yihe Bank's position among the nine major insurers.
But does the Wu family really need this money?
Others may not understand, but Milton is very clear: among the nine major insurance merchants, the Wu family suffered almost the least losses, especially the batch of native tea that accounted for the largest share of the Wu family's profits, which was completely intact - not long after the fire was extinguished, Liu Sanye was "found", and then the pirate with the Hongmen background came running to confess his guilt. After Liu Sanye magnanimously punished Tie Jinchi with a light punishment and a severe warning, the native tea of Yihehang was successfully returned to Hong Kong.
Milton roughly calculated that even without the loan, and even if they had to pay triple compensation, the Wu family would be able to fill the hole. In this case, if they were exempted from deductible, the Wu family would have a surplus. If they got a loan, then that huge loan would be an additional overflow fund for Wu Chengjian .
What would this cunning Guangzhou businessman do with the money? Milton felt that he could figure it out even with his toes: that man would definitely take the opportunity to expand his share in the Thirteenth Bank!
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