1905: Beer Hall Speaker

Page 138

When Zhang Mingqi first found out, he was shocked. Tianjin was the gateway to the capital. Why was the military suddenly assembling so many troops and preparing ships? Was Wang Chongshan planning to flee and betray the country?

Later, Zhang Mingqi personally inquired with Qiu Xingxun and learned that the military, in conjunction with the National Security Intelligence Agency, was preparing to do something big.

If someone else had come to inquire, Qiu Xingxun would definitely have kept quiet, but since Zhang Mingqi came to ask in person, Qiu Xingxun couldn't hide it anymore. After all, Zhang Mingqi was the country's second-in-command, and he had the right to know this much.

"Don't be impatient, it's just a small matter. It's not like we're openly invading or carrying out infiltration activities. The British used to do it all the time, so what's wrong with us doing it a couple of times?"

"Does this mean that only officials are allowed to set fires, while ordinary people are forbidden to light lamps?"

Zhao Yan didn't seem to care, appearing completely unconcerned.

It looks like a serious matter, but it's actually nothing serious. The British have been doing this kind of thing for ages. They used to organize their troops under the guise of archaeology to plunder wealth and set up outposts in other countries.

Even if the British knew about this, they would have to swallow their anger and keep quiet. Even if other European countries knew, they would still have to praise China for its boldness.

Zhang Mingqi said with dissatisfaction, "But this doesn't make sense. Such a big thing, and they even want to keep it from our Prime Minister's Office. What are they trying to do?"

"The National Defense Forces are also the armed forces of the Republic. Although they are not under the jurisdiction of the Prime Minister's Office, shouldn't the Prime Minister's Office still have the most basic right to know?"

"I went to ask a couple of questions, and as soon as I opened my mouth, those brutes started yelling at me to fight and kill, calling me a traitor with bloodshot eyes!"

"I went to find Xiao Qiu, but he was stammering and evasive. If it weren't for my remaining connections, I probably would still be in the dark!"

Zhao Yan waved his hand: "It's just a few dozen tons of gold and gems, a small matter. Your Prime Minister's Office is extremely busy, with the two capitals and twenty-nine provinces on your shoulders."

Seeing how busy you all are, I didn't want to bother you!

Zhang Mingqi said righteously, "No matter how busy we are, we are not afraid of being disturbed. As long as it is an important matter, when has the Prime Minister's Office ever shirked its responsibilities?"

"Besides, tens of tons of gold and jewelry is no small matter. This matter has brought our Prime Minister's Office into the spotlight, and we are determined not to do it!"

Zhao Yan understood a bit of what he meant and looked up to ask, "So what do you mean?"

Zhang Mingqi turned his head away: "I didn't mean anything by it, I just wanted to send a token gesture to the military."

"If the military offers any token of appreciation, we'll keep quiet."

Zhao Yan laughed and said, "Haha, Lao Zhang, explain yourself clearly, otherwise I won't understand!"

Zhang Mingqi gritted his teeth and said, "The Prime Minister's Office should also get a share, otherwise we will resolutely refuse to do it."

"With so much gold and jewels, such a huge treasure, the military can't handle it. Those brutes are blind to the value of real gold. It's better to hand it over to our Prime Minister's Office."

Zhao Yan pondered, "If you do this, the military will probably retaliate. You already cut military spending to that extent during the decision-making meeting, and now you're trying to snatch food from the tiger's mouth. This will cause problems."

"Let bygones be bygones. Honest people can't stand being bullied like this. The Ministry of National Defense has a heavily armed army there."

Zhang Mingqi said, "People die for money, birds die for food. The military only has that one budget, but our Prime Minister's Office has to spend money on everything. Every citizen in the country needs money for their food, clothing, housing, transportation, and even basic necessities."

“I don’t believe Wang Chongshan has the ability to shoot me in the back! When those new army generals had no food or clothes in Changsha, if it weren’t for Lao Zhang taking care of them, they would have disbanded long ago.”

"When Wang Chongshan was still a brigade commander, I, Old Zhang, was already the governor of Hunan. Why would I be afraid of them?"

Zhao Yan asked, "How much do you want?"

Zhang Mingqi said bluntly, "Let's stick to the old rules: 30/70 split, with the military taking 30%. That's enough to get by. We're not fighting a war, so why do we need so much money?"

Zhao Yan shook his head: "Impossible. The Prime Minister's Office and the Security Bureau already take 15%. You want 70%? You're dreaming!"

Everyone is short of money right now. The Security Bureau needs a lot of funding to carry out its overseas agent infiltration program. Every year, it needs to recruit a large number of orphans for training, build bases, and hire instructors. All of these require a lot of money.

The Führer's office is also severely short of money. The Wehrmacht has already removed the SS from its organization because it can no longer afford to support them. The 1st SS Division is now only under the Führer's office. Each division has 13,000 to 14,000 men and they all have to rely on the Führer's funding to support them.

Otherwise, Zhao Yan wouldn't have swallowed his pride and gone to the Ministry of National Defense to discuss the division of spoils; he was simply short of money.

Seeing Zhao Yan's resolute attitude, Zhang Mingqi also backed down: "Then let's go with 50%. Your Excellency, you must treat everyone fairly. How many people are we responsible for, and how many are the military?"

Zhang Mingqi and a group of civil officials didn't feel that life in the military was hard at all. They, numbering in the hundreds of thousands, only took six percent of the budget, while the Prime Minister's Office was in charge of 400 million people.

If 800,000 people complain about the 70 million yuan military expenditure, what about the 400 million ordinary people and hundreds of thousands of civil servants who receive the remaining 1 billion yuan?

Zhao Yan thought for a moment, then made the decision: "How about this, after the gold is brought back, the military will still take 85%, and the rest will go to the Yuan capital and the Security Bureau."

"But all the gold was deposited into the national treasury, and the Ministry of Finance printed money to buy it back. The gold remained untouched, and the military only received cash in Han Yuan!"

The government takes the gold as reserves, and the military takes the cash as military expenses. Everyone benefits. It's like issuing an extra 100 million dollars of anchored currency, but the government won't release the anchor.

There might be a few problems, but nothing serious.

After hearing the plan, Zhang Mingqi nodded in satisfaction, but then began to complain.

"Your Majesty, the fiscal budget deficit this year is still quite large. So much of it has been taken for education, and the rest still needs to be used for infrastructure, industry, supporting people's livelihoods, and investing in the economy. It's not enough."

"How about issuing some more bonds? Since quantitative easing is no longer feasible, we can only borrow money by issuing bonds."

“Many local governments are now seeking loans from banks with collateral for development. Rather than letting local governments borrow haphazardly, it would be better for the central government to issue bonds and borrow money in a unified manner.”

After listening, Zhao Yan asked, "What is the current fiscal debt ratio?"

Zhang Mingqi said, "We have been working hard to pay off debts in recent years. The massive monetary easing has also reduced a lot of domestic debt. The fiscal debt ratio has been reduced to 22 percent, so we can borrow a large sum of money again."

A country's fiscal debt is only 22 percent of its fiscal revenue, which is already a very good debt ratio. Moreover, as the economy develops and the size of the national treasury increases, this proportion of debt will become smaller and smaller.

Now I have all the conditions to borrow money, which is much better than before.

Before the Far East War, the government used all sorts of means to borrow money, almost forcibly. Each province had a quota to meet, and a certain number of national bonds had to be issued to qualify.

At its most outrageous point, government bonds were practically being converted into banknotes and circulating in the market, fulfilling a large part of the function of currency.

In the years following the war, the government of the Republic has consistently fulfilled its obligations and repaid its debts. A large amount of national debt has been converted into cash that has entered the market, and the national debt of the Republic has also established a good credit rating among the public.

Ordinary people know that these are not just IOUs, but real promissory notes, and the government will unconditionally repay the principal and interest upon maturity.

Government bonds generally offer higher interest rates than banks, and they are bearer bonds that can be freely traded and can also be used to obtain bank loans.

There is strong market acceptance of government bonds, and purchasing power is also quite good!

In the years since the war, the economy has recovered quickly and developed rapidly. The government has not exploited the people but has instead reduced taxes and levies. The people now have considerable savings, and it would be a real shame not to lend them some.

During this economic upswing, the general public is optimistic, the situation is excellent, all data are growing, and no one is worried that the government will be unable to repay its debts in the future.

The government does not use the borrowed money to squander, nor does it use new debt to cover old debts. Instead, it continues to invest in the market to stimulate development. Essentially, the government bears the interest and uses national credit as collateral to develop the present with future money.

The better things develop now, the more money they will have in the future—a typical virtuous cycle.

Zhao Yan continued, "It seems you came prepared. So, how much are you planning to borrow?"

Zhang Mingqi made a special trip to the capital, and it certainly wasn't just for that gold. It would be too undignified for the top two leaders of the Republic to gather together for a few dozen tons of gold.

Zhang Mingqi's main objective was to get the head of state to approve the issuance of national bonds. Once the national bonds are issued, they won't just be worth tens of millions of dollars worth of gold, but rather hundreds of millions of dollars.

"Five hundred million, that should be about right!" Zhang Mingqi gave a precise figure.

Including existing debt, the government's total debt will rise to 750 million, which is equivalent to about 60% of the current fiscal revenue.

Zhao Yan tapped the table and said, "You're being petty. At this rate of development, it won't be a problem for fiscal revenue to exceed 1.5 billion next year. Everything is developing and growing. You need to have a longer-term vision."

"Let's just issue 888 million! 888 means all the way to prosperity! Great fortune!"

Zhang Mingqi smiled: "I agree!"

This is the leader he knows well: either he doesn't do anything, or he does something big; he's never petty and always acts decisively and boldly.

"Let's have this bond issued in financial centers like Shanghai, Yingkou, and Guangzhou, and then allocate another 200 million to banks in various regions for sale."

“The government only needs to approve it and doesn’t need to intervene deeply. Now we don’t need to force us to contribute as we used to. We can let the market decide everything.”

"We need to borrow from the domestic market and we also need to borrow from abroad. Our credit is still pretty good now, and it would be a real shame not to use such good credit to meet our needs."

Zhao Yan said confidently that the national credit system that they had worked so hard to build up before would now come in handy, as the acceptance of the republican government's debt was very high both domestically and internationally.

Putting aside other factors, the more conservative domestic capital in the market is extremely fond of investing in government bonds, as they are a sure thing regardless of economic conditions. Anyone can fall from power, but the central government cannot. As long as Zhao Yan is alive, everyone has full confidence in the central government.

International capital is also very interested in Chinese government bonds, which, along with US bonds, enjoy high recognition in the international market.

The French kept asking China if there were any stable bonds available for sale, as they had plenty of money and especially liked to lend it out to earn interest.

As for the inability to repay, no one is worried about that. Everyone has witnessed the booming development of the Chinese market. Foreign companies that invested in China last year made a lot of money, and this year they have increased their investment even more.

Nobody believes that a country of 400 million people could be dragged down by a mere 1 billion in debt.

Even if you can't repay, you can easily offset the debt with a few pieces of copper and coal from any of China's mines. Europeans are drooling over the mines on the grasslands and in Shanxi. If you're willing, Britain, France, the United States, and Germany will fight tooth and nail to lend you money.

This year, we're investing over 800 million yuan more, and it's not a waste. The infrastructure and industrial economic development resulting from that 800 million yuan will translate into an 1.8 billion yuan increase next year.

Everyone's happy to make a fortune! That's the benefit of an economic upswing—everything is thriving and full of vitality, even a vibrant and competitive economy.

Chapter 230 Finance and Industry

"It's gone up! It's gone up!"

"Government bonds are listed! Hurry and grab them! Buy all sell orders below 105!"

Inside the Shanghai Stock Exchange, traders waved checks and orders, staring at the constantly updated data on the blackboard in the trading center, their faces filled with longing and fervor for money.

The Shanghai Stock Exchange was established in 1906. After its establishment, it unified all the previously disorganized trading institutions and became the only recognized financial exchange in Shanghai.

However, the Shanghai Stock Exchange is not an official institution, and it cannot even be considered a state-owned enterprise. State capital only controls 23% of the shares in the Shanghai Stock Exchange, the Zhejiang and Jiangsu consortium controls 35% of the shares, and the remaining shares are divided among domestic and foreign consortia, of which 7% are held by foreign capital.

There are three similar financial trading centers in China, the other two being in Guangzhou and Yingkou. All of them are mixed-ownership enterprises, with state-owned capital accounting for only a small portion and having no controlling stake. The major shareholders are mainly domestic capital conglomerates.

Some people suggested that Zhao Yan nationalize all these treasure bowls, but Zhao Yan refused.

Because Zhao Yan knew exactly what people in finance were thinking. He had been involved in finance in his early years, and he knew it was a kind of legal fraud, but far more profitable than illegal ones.

People who play the financial game are a bunch of guys who only care about profits. If they make money, they will never remember you for a second and will think it was all their own brilliant move. If they lose money, they will blame the institutions and everything else.

State control won't earn you a good reputation; on the contrary, you'll be subjected to a barrage of criticism.

The core issue is that having officials supervise this gold mine is not like letting an old cat sleep on a salted fish pillow, but rather letting the old cat sleep in catnip.

Therefore, the financial trading institutions of the Republic today are all of mixed ownership, with state-owned capital, private capital, and even foreign capital being absorbed, so that multiple parties can check and balance each other and prevent any one entity from becoming dominant.

After several years of development, the three major exchanges of the Republic are now among the world's leading financial institutions. After all, they are backed by a market of 400 million people, which is almost equivalent to the size of the whole of Europe. It would be strange if their trading volume did not increase.

Today, the indices of the three major trading centers experienced a surge as the central government announced its fiscal budget expenditure plan for the year and also revealed that more than 800 million treasury bonds would be injected into the market.

This year, investments in infrastructure, industry, and other sectors have increased dramatically. Stocks of companies in these sectors have begun to rise in the trading center, and large amounts of capital have started to flow into the market for frequent trading. Even foreign capital has been continuously drawn in.

All investors are optimistic about future market growth; unless things are completely bleak, everything they buy will go up.

In recent years, the government has been quite lenient with monetary policy, and bank interest rates are no longer keeping up with the rate of monetary inflation. Smart people know that money held in hand will only continue to depreciate. Investing in the stock market not only preserves value but also increases it. If you don't take action, you deserve to have your wealth harvested by the state apparatus.

"Breaking news! The stock exchange just received a telegram from Beijing!"

"Lord Zhan Tianyou, the Cabinet's Chief Infrastructure Officer, has announced the launch of the Beijing-Kowloon Railway project and the Shanghai-Kunming Railway project!"

"The Industrial Committee of the Supreme Executive Committee publicly announced that it will support a subsidy plan of 300 million yuan, providing tax incentives to all manufacturing enterprises with a scale of 100,000 yuan or more within the Republic!"

"The Agriculture Committee of the Supreme Executive Committee publicly stated that it will continue to promote the rapid growth of agriculture in the Republic and proposed to extend agricultural services (pesticides, fertilizers, and agricultural machinery) to rural areas!"

"The highest-ranking member of the Education Committee publicly stated that this year's investment in the Republic's education construction will reach as high as 400 million yuan, promoting the grand plan of one university in each province, one high school in each county, one junior high school in each town, and one primary school in each village!"

"They're throwing money around! The central government is throwing money around again!"

"Long live the Führer! Long live the Republic!"

"Buy now! Industry, infrastructure, education—buy anything available! Prices are guaranteed to rise!"

In the trading market, all kinds of stocks and securities have begun to experience a more intense upward trend, demonstrating the immense power of investors.

The five-year treasury bond with an interest rate of 3.5% rose to 107.4 yuan per lot after it was listed, which is almost a premium of two years' interest.

Securities dealers on the exchange obtained government bonds from the central bank at a face value of 100 yuan, but sold them at a price of 102.5 yuan. The price speculated on in the market even reached 107.4 yuan.

Traders are updating various price data on the blackboard with chalk every minute, their fingers are smoking from writing, but before one batch is finished, the next batch of changes immediately arrives.

Chen Jiaxie, the owner of Shanghai Tongda Power Company, was dumbfounded as he watched his company's stock rise from 16 cents per share when it was first listed to 61 cents per share now!

It feels like I haven't done anything, but inexplicably my paper net worth has increased almost fourfold, and the valuation of Tongda Power Company has also increased from 700,000 to almost 3 million.

Chen Jiaxie was just curious about how his company's stock was performing in the market, so he came to take a look, only to find that the financial market was absolutely insane.

Suppressing his inner turmoil, Chen Jiaxie quickly left the trading center and got into his own Tongda car to return to the company headquarters building.

He dared not watch any longer; he was afraid that if he continued watching, his Dao heart would shatter, he would sell the company, and start speculating in stocks instead.

Tongda Power Company was founded in 1907. Originally, it produced small low-pressure steam engines for ships, mainly dealing in the power market for inland waterway vessels and offshore fishing boats. Occasionally, it would also receive some orders from mines and power plants.

In 1908, Tongda Power Group began to introduce German internal combustion engine technology and launched diesel and gasoline engine projects.

They found that smaller, lighter internal combustion engines were better suited to their business area. Tongda Company specializes in small power systems, and customers also prefer lighter and more maneuverable internal combustion engines.

Until last year, Tongda Power Company began to venture into the automobile manufacturing field, transforming from a single power manufacturer to a complete vehicle manufacturer. Due to insufficient funds, Chen Jiaxie decided to entrust the stock exchange center to review and list 20% of the company's shares.

Initially, this equity stake was valued at around 180,000, but after listing, it has risen to nearly 700,000. After deducting the profits of investors and the transaction fees of the trading center, the company can receive as much as 500,000 in raised funds.

Chen Jiaxie felt this was even faster than robbery; it was simply outrageous. The company's annual net profit was only tens of thousands of yuan, yet the stock, issued for just over ten days, had brought such terrifying returns—it was simply unbelievable.