Chapter 1142: The Chongzhen Emperor's Retirement Money

"Imperial Father, this is from your son, to show his filial respect for you."

At the Old Mountain Benevolence and Longevity Palace, Zhu Cilang's position as the foremost filial son under heaven was already in grave danger, because his younger brother Zhu Cihuan had come again to present silver notes to the Chongzhen Retired Emperor.

The Chongzhen Retired Emperor took the silver notes and looked them over. There were ten in all, each for three hundred taels, registered notes issued by the Maritime Merchants Bank, with "Chongqing Stock House" written on them. The Maritime Merchants Bank, the Salt Merchants Bank, and certain other banks and large money shops could all issue silver notes. The notes they issued came in two kinds: bearer notes and registered notes.

Bearer notes were the equivalent of paper currency issued by banks and money shops, and all bore the words "payable to the bearer upon presentation." Registered notes, by contrast, were checks: a bank or money shop customer would fill in the amount on a blank silver note, then sign it and affix his seal.

Unlike the way checks worked in later ages, however, the banks and money shops of the Great Ming now kept very strict control over registered notes. To obtain the "signing authority" for a bank or money shop's registered notes, one had to deposit a set amount of guarantee money, and every note carried a maximum amount, noted by the bank or money shop, for which it could be drawn.

The silver notes Zhu Cihuan was now handing the Chongzhen Retired Emperor were registered notes with a three-hundred-tael limit, and the drawer was a firm called "Chongqing Stock House," stamped with the special note seals of both Chongqing Stock House and Zhu Cihuan.

"Huan'er, you've opened a commercial firm?" The Chongzhen Retired Emperor frowned. "This Chongqing Stock House — you started it yourself?"

"Yes," Zhu Cihuan said with a smile. "Your son has no wish to be a useless prince who eats his fill and idles the day away, and no taste for officialdom either, so I thought I would try my hand in the world of commerce."

No taste for officialdom? Chongzhen thought to himself: How is it that We heard that unfilial son of mine said you were slow-witted and far too easily taken in, and unsuited for office? That unfilial son may lack filial piety, but his judgment of people is remarkably accurate!

"Huan'er, does your eldest brother know about this?" Chongzhen asked.

"He knows, he knows, of course he knows." Zhu Cihuan nodded repeatedly — and he was not lying. Zhu Cilang did indeed know, and had even sent Zhu Cixuan to Shanghai to pass word to Zhu Cihuan, telling him to stop dabbling so much in stocks, and that if he wanted to make some money, he should buy land in Shanghai, put up buildings, and collect rent. That could not go wrong!

Zhu Cilang had meant well. He knew that stock investment and speculation carried too much risk, and that Zhu Cihuan took after Chongzhen — too honest, and incapable of playing such games. Buying land, putting up buildings, and collecting rent was the steady course.

Moreover, although land prices in Shanghai had already risen many times over the past dozen or so years, there was still plenty of room to go up! It was a sure investment; once the money was in, the profits came while you lay back. Wouldn't that be just as good as the Sixth Brother, the little Prince of Fu?

But Zhu Cihuan felt he was quite capable. Over the past few months he had made a good deal of money trading stocks in Shanghai. Everything he bought went up. The twenty thousand taels he had borrowed against his princely residence had already been traded up to sixty thousand taels!

After making that money, Zhu Cihuan had gone into partnership with Yao Daqiao, the "imperial broker" under Zhu Cizhao, investing a total of one hundred fifty thousand taels to open a stock brokerage, named after his own princely title: Chongqing Stock House.

Zhu Cihuan was now a big capitalist!

"Good, good." The Chongzhen Retired Emperor nodded repeatedly — he assumed Zhu Cilang supported Zhu Cihuan's opening of the stock house. Zhu Cilang's judgment could be trusted; the things he supported were generally sound.

"What exactly does this stock house of yours do?" Chongzhen asked.

Zhu Cihuan answered, "It buys and sells stocks on behalf of clients, and takes a small commission. Very easy money."

"Truly?" Chongzhen did not quite believe it. "Where in this world is there an easy business? If running a stock house were easy money, everyone would do it, and then the easy money would no longer be easy."

Zhu Cihuan smiled. "Imperial Father, what you do not know is that stocks nowadays are too expensive per share. Face values start at one thousand taels, and the trading price is usually above fifteen hundred taels. To say nothing of ordinary commoners, even merchants and landlords of modest means can hardly afford a single share. And the Shanghai Exchange does not handle trades of less than one share. So many stock houses have taken up the business of splitting shares: first buy one share, then sell tenths of a share to the common people."

This, too, was something for which Zhu Cilang had to be blamed. Because the face value of the stocks was so large, the early market had shut out small and medium investors, leaving only a pack of profiteers and powerful magnates to play. And so it was not so easy to swindle them — none of them were good people; whom was there to cheat? Thus the stocks initially issued on the Shanghai Exchange were of quite decent quality, and the Great Ming's capitalist economy was developing splendidly, so the stocks kept rising.

Up and up they went, until everyone watching grew restless with greed, and so the gray-area practice of "share splitting" came into being.

Chongzhen shook his head. "Does this not break the rules?"

"It does not break the rules," Zhu Cihuan said. "As long as the stock house first buys the shares and then splits them, no rule is broken. To facilitate oversight, the Shanghai Exchange audits the capital of every member brokerage — that is, every stock house. The latest requirement is that no licensed member house may have capital of less than one hundred thousand taels."

"One hundred thousand taels?" Chongzhen asked. "Do you have one hundred thousand taels?"

"Not that much yet," Zhu Cihuan answered. "Your son has only sixty thousand taels. I found merchants to join as partners, and together we scraped up one hundred fifty thousand taels, and only then opened Chongqing Stock House. There are not many stock houses that can put together that much money, so this is not a business just anyone can profit from."

"So that is how it is," Chongzhen said with a nod, then added, "You are a Commandery Prince; taking merchants as partners is, after all, improper. Why did the Prince of Dai, the Prince of Luokun, and the Prince of Fu not lend you money?"

Those three are no true brothers, Zhu Cihuan thought to himself: They all looked down on me, and every one of them urged me not to play so big!

Seeing the dark look that fell over Zhu Cihuan's face, Chongzhen sighed as well. He knew that Zhu Cilang, Zhu Cijiong, Zhu Cizhao, and Zhu Cixuan all looked down on Zhu Cihuan and thought him worthless. And Chongzhen himself also felt Zhu Cihuan was not particularly promising — he could not compare with Cilang, Cijiong, or Cixuan, and was not even the equal of Cizhao.

But no matter how unpromising, he was still his own flesh and blood! He had to help him, and besides, did he not have the means?

"Very well," Chongzhen said. "We shall invest in you." He thought for a moment. "We will give you two hundred fifty thousand taels! Go buy out all the shares the merchants hold, and then go redeem your princely residence as well. With what remains, go buy a plot of land in Shanghai — the very best! After buying it, put up a building, one of those great four- or five-story structures. Keep one floor for yourself, and rent out the rest. Then We shall be at ease."

Imperial Father is the best after all!

Zhu Cihuan was so moved he was on the verge of tears. "Imperial Father, those two hundred fifty thousand taels are your retirement money. Your son cannot take it."

He knew, too, that the Chongzhen Retired Emperor had little in savings. For all that Chongzhen received a million taels of gold-flower silver a year, Chongzhen had too many consorts and too many children; money flowed out like water! In recent years he had been spending more than he took in, and could hardly scrape together any savings at all.

Chongzhen waved his hand and laughed. "These two hundred fifty thousand taels are certainly not a gift. We have saved only five hundred thousand taels in all. This two hundred fifty thousand is capital We are investing. Once you have made money, you must pay Us dividends!"

Zhu Cihuan nodded with absolute certainty. "Imperial Father, rest assured. Your son is confident. This business cannot lose money!"

"Truly?"

"Truly!" Zhu Cihuan said. "It truly cannot lose money!"

Chongzhen laughed. "Then good, then good!"

At that moment something else occurred to Zhu Cihuan, and his brow suddenly tightened.

"What is it?" Chongzhen asked. "Have you lost your confidence?"

"No, no. Your son has one more presumptuous request."

"Is that so? Tell Us."

Zhu Cihuan said, "Imperial Father, about your investing in my business — could you not tell Eldest Brother?"

Chongzhen said with a smile, "You are afraid he will nag you, are you not? Your eldest brother, that man — how to put it — is indeed a bit sharp-tongued. Very well, your father will say nothing."

The Chongzhen Retired Emperor would one day deeply regret what he promised Zhu Cihuan today, because he was soon to bid farewell forever to his retirement money!

Had he told Zhu Cilang about the matter, Zhu Cilang would certainly have summoned Zhu Cihuan and given him a thorough scolding.

Because the share-splitting business in which Zhu Cihuan's stock house was engaged looked risk-free and highly profitable, but in truth the risk was enormous — this share-splitting model had already evolved into something akin to cornering and market-making. The stock house was at once the cornerer and the market maker, and often operated on borrowed capital. Once stock prices fell sharply, anyone without real strength and real judgment would indeed be ruined utterly.

(End of Chapter)