Chapter 200: The Client

Old Man Li said doubtfully, "Is it really that simple? A'xing, you're not just making this up, are you?"

Li Xing shot Old Man Li a dissatisfied look and replied, "Father, why won't you believe me? This method may not look like much, but I've tried it several times, and it really works!"

"Father! A'xing! Come out and unload the cart!" Just then, Li Chong's shout came from the courtyard.

The two hurried out into the courtyard and saw the family's ox cart already parked beneath the thatched shed to the east, piled high with sugarcane like a small mountain. Li Chong had already hoisted a bundle of sugarcane onto the wooden planks under the shed.

"Brother, has the price of rice gone up again?"

"It's a bit lower than last month. This batch is rice from Huizhou and Chaozhou — ten wen per jin cheaper than the rice from Wenzhou and Huguang."

"Once we sell this batch of frost sugar, we should take advantage of the low rice prices and stock up on more. Otherwise, when the price rises again, we'll have to spend a lot more silver!" Old Man Li said as he stacked a bundle of sugarcane onto the wooden planks.

Li Xing chimed in, "Father, you should go rest inside the house. Brother and I can handle this heavy work!"

Old Man Li laughed and said, "Don't underestimate your old father. What's so heavy about this? We farming folk make our living by our strength!"

Li Chong wiped the sweat from his face, looked at Li Xing, and said, "A'xing, when I went out to make purchases just now, I heard a piece of news spreading all over town. I bought the sugarcane and hurried straight back — I want to discuss it with Father and you!"

"Brother, what's so urgent?" Li Xing set down a bundle of sugarcane and asked.

Old Man Li also drew closer, looking at his eldest son with confusion.

The three men of the Li family had clear divisions of labor. In the sugar shed, the work of pressing juice from sugarcane, boiling the syrup, and making white sugar and brown sugar fell mainly to Li Xing and Old Man Li. Li Chong, being sharp-minded, mostly assisted in the shed but spent his days purchasing various supplies and negotiating prices with the merchants who came to buy sugar.

When he was buying rice today, he overheard several fellow sugar-makers talking in hushed voices. After making some inquiries, he learned that a Four Seas Exchange House had opened in town, whose main business was lending to the town's sugar workshops at a monthly interest rate of one-tenth.

Li Chong came into contact with many people and knew more than the average person.

He knew that the major moneylenders charged monthly interest of four-tenths, so the Four Seas Exchange House's one-tenth rate was extremely attractive.

He had long since discussed with his father and younger brother the idea of expanding their workshop — buying a few more oxen, hiring a dozen or so farm laborers to work, and striving to produce over a thousand dan of white and brown sugar a year. That would earn them several hundred taels of silver annually, and within a few years, the Li family would become one of the wealthy households of the area.

But to expand the workshop into what Li Chong envisioned would cost at least several hundred taels of silver.

Li Chong planned to buy twenty-seven stout oxen and hire around twenty workers. With a workshop of that scale, producing a thousand dan of sugar a year would be no problem at all.

But buying land to expand the workshop, purchasing oxen, stocking up on sugarcane and rice, flour, oil, vegetables and other supplies, and paying the hired workers daily wages — all these various expenses would require at least five hundred taels of silver or more.

Their family's sugar shed had been operating for several years, but after deducting the family's living expenses and all manner of costs, they had only managed to save sixty or seventy taels of silver — still far short of the funds needed for expansion.

Old Man Li also agreed to the expansion, but his idea was to use the family's savings to enlarge the operation modestly. Small gains add up; after accumulating for a few more years, they could expand a bit more, and in ten or twenty years they would have a respectable workshop.

But Li Chong was ambitious. He declared that if they were going to build, they should build a large-scale workshop — anything smaller wasn't worth the trouble.

Li Xing also agreed with his elder brother's thinking, and building a large workshop became the dream of the two brothers. They had considered borrowing money to expand, but after learning how high the moneylenders' interest rates were, they had to abandon that notion.

When he heard about the Four Seas Exchange House today, Li Chong — who had been fixated on expanding the workshop — suddenly became interested. After finishing his purchases, he quickly bought sugarcane, rice, and flour, then drove the ox cart home to discuss the matter of borrowing with his family.

After hearing Li Chong's account, Old Man Li was still hesitating, but Li Xing was beaming with excitement and said loudly, "There's such a good thing! The interest is so much lower than those big moneylenders! Father, Brother, let's borrow the silver! Once we finish the sugar-making season, we'll expand — it won't take more than two months to build! In just a few years, we'll be one of the leading households in town!"

Li Chong also spoke with a face full of longing: "With Father and Little Brother's skills, once we build a big sugar workshop, we'll never have to worry about selling our goods!"

Seeing his two sons so fired up, Old Man Li swallowed the words that were on the tip of his tongue. Sugar had never lacked buyers — especially white sugar and rock sugar, whose prices rose year after year. After expanding the workshop, output would multiply several times over, and silver would flow into the house like water. It truly was a fine thing.

The reason the Four Seas Exchange House chose to open its lending business in Jun'an Town was a decision made only after the merchant house had conducted multiple rounds of investigation.

Several months earlier, the Four Seas Merchant House had established a branch in Zhangzhou Prefecture. The branch manager was a man formerly under the Shanxi merchants, named Li Ming, who had once been the chief manager of Wang Dengku's Taiyuan merchant house. At his peak he had overseen a hundred or so men, and later he and his operation were all absorbed by the Four Seas Merchant House.

Not long after Li Ming, who was in his thirties, was transferred to Zhangzhou to establish the branch, he received instructions from headquarters: he was to find places where local specialty industries were concentrated and open exchange houses there, supporting willing family workshops in expanding their scale and promoting the development of the entire industry.

Having been in Zhangzhou for several months now, and with the assistance of the Zhangzhou Embroidered Uniform Guard Chiliarch's office, Li Ming had gained a fairly deep understanding of the local specialty industries and was also well versed in the matter of opening exchange houses.

The Shanxi merchants had also run exchange house lending businesses in the major cities of Shanxi and Shaanxi provinces, but unlike the Four Seas Merchant House, the Shanxi merchants' exchange houses charged very high interest and required land as collateral.

Li Ming naturally approved of headquarters' directive to engage in lending, for he knew it was the fastest and easiest way to make money; but as for the merchant house charging such low interest, Li Ming grumbled inwardly. He had no idea that this was a deliberate instruction from Zhu Youjian — making money was secondary to the merchant house; the main purpose was to support specialty industries in growing bigger and stronger.

Jun'an Town and the neighboring Zhangpu Town were the most developed areas for the sugar-making industry, with over sixty percent of Zhangzhou Prefecture's sugar coming from these two towns. After personally visiting both towns to investigate, Li Ming decided to open exchange houses in Jun'an and Zhangpu respectively, specifically to provide financial support to sugar workshops wishing to expand their production.

Zhang Quan, the manager of the Four Seas Exchange House in Jun'an Town, had been transferred from Datong by headquarters and had many years of experience in exchange house lending. When Li Chong and Li Xing arrived at the Four Seas Exchange House's shop, he was in the middle of a conversation with a merchant who wanted to borrow money.

This merchant was a traveling trader surnamed Wang from Suzhou Prefecture, who specialized in shipping frost sugar, rock sugar, brown sugar, and black sugar from Xinghua County to the Hangzhou area for sale.

Zhang Quan said with a smile, "Master Wang, our humble establishment has only recently been founded, so for lending matters we must require some form of collateral. As for what you mentioned earlier about using your credit as a guarantee, I'm afraid I find it very difficult to agree to that — after all, two thousand taels of silver is no small sum. I do hope Master Wang will understand!"

This traveling trader was named Wang Jing, around forty years of age, who had been in the sugar trade for ten years and could be considered quite experienced. This time he had been in Jun'an Town for over a month. Earlier he had already purchased a thousand dan of assorted sugarcane sugar, sent his steward to hire laborers to transport it to Quanzhou Harbor, where he rented a vessel to ship it to Hangzhou. He himself stayed behind to await word from Hangzhou and, in the meantime, to stockpile white sugar and rock sugar, which were produced in very small quantities.

Frost sugar white as snow and large chunks of rock sugar sold extremely well in the Hangzhou Prefecture area. Almost every time he brought goods back from Xinghua County, they would be snapped up within days at high prices by the local nobles, officials, and wealthy merchants.

But this kind of white sugar was produced in very small quantities — only about one-tenth of the total sugarcane sugar output. So to buy more white sugar, one had to stay in town for extended periods and frequently visit the various sheds and workshops to inspect them, and the moment any stock appeared, one had to use ready silver to buy it up immediately.

Last time, Wang Jing had used a large amount of cash silver to purchase over a thousand dan of sugarcane sugar, far exceeding his usual quantities. But recently, as he searched back and forth between Jun'an Town and Zhangpu Town, he discovered that the accumulated output of white sugar and rock sugar was considerable again. Yet because he had bought such a large quantity of sugarcane sugar last time, his remaining cash silver was running low. In his urgency, he made inquiries everywhere about borrowing money, and happened upon the opening of the Four Seas Exchange House with its extremely low lending rates. So he rushed over at once, hoping to borrow two thousand taels of silver to purchase frost sugar.