In the early 20th century, Shanghai became the most active place for foreign stock trading in China. According to newspaper reports at the time, the Shanghai stock market “had a huge number of daily transactions”. The enthusiasm of foreign stock trading is in stark contrast to the cold stock of Chinese stock trading.
At that time, a large number of stocks in Shanghai accounted for a great deal of interest among investors, and even triggered a stock price explosion in the late Qing Dynasty. That was the “rubber stock.” The so-called rubber is what is now called rubber. The rubber thing sounds bland. But why did the rubber in the late Qing Dynasty become the stock name, and why are rubber stocks sought after? The reason for this is to start with changes in the international market.
The rise of the automotive industry, rubber prices have risen
When the Qing Dynasty was actively setting up various “foreign affairs enterprises” to try to catch up with the pace of the Western countries, the global economic structure is undergoing a dramatic reconstruction. In the second half of the 19th century, the innovation of science and technology made the global economy begin to enter the “internal combustion engine era.” The replacement of steam power by oil power has become the most important fuel for the development of human history in the next 100 years. A new business era has also begun. In 1886, as Bentz applied for a patent for his motor vehicle to the German government, humans bid farewell to the old days of “riding on the horse” and started a new life of “sitting on the wheel”.
One of the most important parts of the car’s various components is of course the car tires. In terms of technology at the time, natural rubber must be used to make tires. At the end of the 19th century and the beginning of the 20th century, the number of automobile manufacturers increased and the output increased. As a result, the demand for rubber in the automotive industry will inevitably increase. The price of rubber is also affected by it, and then rises.
According to statistics, US rubber imports were $57 million in 1908 and increased to about $70 million in 1909. The total amount of rubber imports in the UK rose from £840,000 in 1908 to £1.41 million in 1909. From the changes in rubber prices on the international market, it can be seen that the demand for rubber is very strong, and one of the major rubber producing areas in the world is the Malayan region under British rule.
With the rapid rise of the rubber industry, more and more British businessmen have traveled far and wide to go to the colonies of Southeast Asia to grow natural rubber. They either buy specialized rubber plantations or buy land for their own land. They look forward to making a fortune with rubber planting. . By the beginning of 1910, there were as many as 120 rubber plantations in the Nanyang area.
Rubber planting has become a hot investment because of the development of the automotive industry. The stock company that operates the rubber industry will naturally soar. In 1906, due to the large number of investors buying, the stock price of 27 rubber companies in the London stock market skyrocketed. In 1909, there was a large-scale rubber speculation boom. Rubber companies were continuously established in the UK, and rubber prices were also all the way. Stir high.
The rubber stock bubble was driven by the profitability of British speculators, spreading from the London stock market to the Shanghai stock market in the Far East.
In 1903, the British company Maibian established the Lakeg Extension Company in Shanghai, which claimed to operate the rubber plantation, oil exploration and timber business. These businesses were all popular businesses at the time. Soon, Langezhi Company got the support of the bank, relying on the continuous publication of false advertisements and selling high returns to its own investors to attract people to buy shares.
However, ordinary people will not be so easy to believe in newspaper articles. In order to attract investors into the game, the temptation of real money is certainly not indispensable. In order to make the company look more authentic, Langezhi distributes dividends symbolically every three months. The effect is very obvious, more than a thousand words in the newspaper. Influential investors don’t care so much. People mostly hold speculative purposes and hope to get a return through short-term investment. Langezhi’s stock has become popular.
The success of Langezhi Company allowed other foreign merchants to see the opportunity of wealth, and a large number of rubber companies began to raise funds in Shanghai. In 1909, the rubber company’s stock price bubble has been initially revealed, but the real big bubble and big stock disaster will not wait until 1910.
1910, rubber stocks have a big bubble
Shanghai’s rubber stock market has opened the road to madness. Everyone sees the huge benefits of this speculative bubble, eager to try and want to share a piece of it. Many employees of foreign banks in Shanghai couldn’t sit still. They all left the bank and started to venture into the sea. They started the business of rubber stocks.
According to records, at the time, HSBC had a staff member named Nixon who resigned from the bank and gave up high salaries to Nanyang to open a plantation. More people chose to stay in Shanghai. After resigning from the bank, they became Shanghai stockbrokers. The manager of Jardine Matheson, Langdale, is a private use of the public. It uses the convenience of foreign banks to help many foreign rubber companies to go to China to list their money. All of these listed businesses have not reported to the higher authorities. It can be said that it is serious. In violation of company regulations, the benefits of the middle all flow into the personal pocket.
By the beginning of 1910, there were more than forty Hainan rubber companies based in Shanghai, with a total capital of 25 million. These companies are all operated and raised by foreign banks without exception, and open accounts with foreign banks in Shanghai. Most of the stocks are denominated in pounds sterling, mainly to attract more foreign investors to buy stocks, and on the other hand, to prevent the risk of China’s silver depreciation.
Driven by various “good news”, the international community’s hot money has flocked to China’s capital market.
In March 1910, HSBC was responsible for the issuance of new shares by a newly listed rubber company. It was originally scheduled to be released at 10 am on a certain day, but early in the morning, the bank surrounded the three-story and three-story outside. HSBC had to open in advance, starting to sell shares at 9 am and ending at 10:25. When time is up, even if you take cash, you can’t continue to subscribe for stocks. Those who honestly come to buy shares at 10 o’clock in the morning can only shake their heads and smile that they are too stupid to return.
At that time, Beihua Jiebao commented that a big reason for investors’ crazy investment is that the profit of rubber companies is too easy to calculate. Everyone just needs to take a pen and calculate the difference between the rubber raw material price and the rubber market price. You will understand how huge the profit is, and then you will immediately generate investment enthusiasm.
However, are these companies that operate so-called rubber plantations really operating as they are advertised? This is not the case. At that time, the plantation of Nanyang was not immediately opened for anyone who wanted to open it, and the rubber in the rubber plantation could not be produced every day. Many companies actually had false reports on the area of plantations, and some plantations were abandoned by A. The company sells to company B and is sold to company C by company B. It is the sale of this kind of left-handed right-hand plantation that has already increased the price of the rubber plantation itself.
The land price of plantations is increasing, and the value of rubber companies is also growing. But in fact, this is just a piece of paper wealth made by financial means.
In this way, the share price of rubber stocks was boosted by false prosperity and reached its peak in April 1910. The rubber companies that first entered the stock market all received very high stock returns. During this period of time, it was accompanied by a large number of rubber companies coming to Shanghai to list shares. It can be said that the rubber stocks have a period of bubble.
At that time, the Chinese newspaper “Times” reported that although “the rubber market is flourishing,” people are pursuing rubber companies, but “there are people in the city who don’t know what rubber is.” In order to buy stocks, people will not hesitate to make up their savings for many years, and even sell clothes, jewelry, etc., and use all their wealth to buy stocks of rubber companies.
The sly foreign stockbrokers, flipping two lips and holding a prospectus, dare to boast to investors. When the stockholders heard the propaganda introduction of the stockbroker, they believed it was true, no longer asked, and immediately took out the real money to buy rubber stocks.
According to the reporter of the late Qing Dynasty reporter Yao Gonghe in “Shanghai Gossip”, “At that time, relatives and friends narrated, except for the rubber stocks, there was no conversation.” The enthusiasm of the general public for stocks made “the country is mad, and there are few doubts about the various industries in Shanghai.” To achieve its purpose of making money.”
Chinese and foreign investors are crazy. Not only ordinary shareholders, but also Qianzhuang Yangxing and various financial institutions are deeply involved in this speculation.
These big money companies entered the market, which caused a fundamental change in the market capitalization in 1910. In contrast, the large amount of capital in China’s money industry is occupied by rubber stocks. In contrast, the price of hot money flowing into the stock market is the dilemma of “lack of money” in normal business activities. Entity and finance, the former is sluggish and the latter is prosperous. The situation of “deviation” between the two has once again appeared.
Previously, rubber stocks mainly invested by foreigners, and now investors have gradually become Chinese. When the Xuan Tong two-year trade-related Huayang trade book records the price of the rubber company at the time, it wrote: “The price of the stock is fined for six or seven months. On the list of the Shanghai Stock Exchange, the company added three more. Fifteen, the capital of the beggars is 20 million. And the amount of money paid by Shanghai to London to buy the shares is also very large.”
According to the survey conducted by the East Asian Association of East Asian Studies, in the total rubber stocks of 1910, the total amount of shares held by foreigners was only 20%, and that of Chinese was as high as 80%. In the Chinese investment, the amount invested in the Shanghai market is as high as 30 million, and another 14 million is invested in the London stock market, with a total investment of about 45 million.
In other words, foreigners are selling after the stock price has not soared, but the Chinese are buying big before the stock price rises to its highest point. The difference in admission time has made foreigners earn real money, and Chinese investors have become potential “takers” in the stock market. The so-called “many money is more”, at least from the perspective of the investment market, can be said to be a tradition that has lasted for a hundred years in China.
At this time, the fluctuation of the stock price began. In the stocks that were originally determined to be soaring, prices began to fluctuate, and as the stock price fluctuated, the hearts of the people floated. Investors can no longer remain calm. “Xinlin Hubao” wrote: “At the beginning of the first fight, after the original stocks, the stocks soared, that is, the line went out, the knowing that it failed to rise, but the people are not enough, a little surplus, must be won, but for a long time The surplus can’t be won, but it is a long time. If it is sold, no one asks, it will move eastward to the silver of the West. It is easy to use this paper coupon. Once the creditor urges it, there is no land to cover it, and it will be closed down, and the market will be exhausted. Don’t ask.”
Rubber stocks rose weakly, the stock market turned from bulls to bears
In May 1910, the price of rubber stocks no longer climbed up. The bear market is coming.
According to the stock price of Bisset & Co., which sold stocks in China for many years, in mid-June 1910, the rubber stock price in the market generally fell by 14% from the highest point. Among them, some companies’ share prices have fallen particularly sharply. For example, the share price of Mango Oaks fell 22%, and the share price of Alma Rubber Real Estate fell 50%.
At this time, the rubber market in the international market also showed a downward trend. In the London market in April, the price per pound of rubber was as high as 12 shillings and 5 pence, but by the end of July it was reduced to 9 shillings and 3 pence. Chinese rubber stock speculators have seen this situation and are reluctant to continue to pursue the list. Instead, they will see the situation and hope to completely sell the rubber stocks in the market and withdraw the funds from the stock market.
At that time, the Shanghai Concession Society audited the public auditor (equivalent to the Intermediate Court President) Guan Yuzhi and personally experienced the stock market bubble. He has dealt with a lot of foreigners and bought a number of rubber stocks through foreign relations. Some foreigners in Shanghai know that he has stocks in his hands, and he actually buys them with checks and cash. In the eyes of Guan Yu, I thought I would make a big profit.
However, according to his recollections, the stock market turned sharply in July: “On the day of July, Friday, stocks began to fall. Everyone on Friday of this bad luck was overwhelmed. No way, the enthusiasm was too much, faint. The next day On Saturday, I only opened the market in the morning and fell again. I panicked. I asked an old foreigner who is a stock expert. He said: ‘The stock is falling, it is the first sound of the big rise. According to my opinion, this stock can rise to 200. If you are willing to sell, sell it to me. ‘The next Sunday, there is no market. Unexpectedly, since the opening of Monday, it has fallen sharply every day, falling from above 90, 80, 70, 60, 50, 40. Only fall or not.”
The stock held by Guan Yu was initially bought at a price of 30 or 2 per share. Even if he fell in 40 hours, he would still earn 10 per share. However, he still has a chance in the bear market, thinking that the stock will be able to rise to 80, 90 two in the future, so missed the opportunity to stop loss. Finally, when he sold the stock in his hand, the price was 2 two per share.
The investment failure can not help but sigh: “The big scam is really a big scam. Not only do the Chinese who have money fall into ruin, their wives and daughters are scattered, but even foreigners have all the property losses. Every day, people swallow opium and jump Huangpu. Jumping tall buildings, going to the beach, a ghost crying.”
The value of rubber stocks held in people’s hands is shrinking, and those who gamble on their lives are now forced to go astray. In the process of stock price plunging, China lost a lot of money. At that time, all rubber stocks were 25 million at the face price, and the Chinese lost more than 20 million. Some people estimate that at least twice this amount of funds flowed out of Shanghai. .
The investors who suffered from the losses were unwilling, so they went directly to these rubber companies to discuss the arguments. As a result, the investors gathered to go to the rubber company’s office to prepare for trouble, but found that these places are already ten rooms and nine empty spaces, from the boss to the employees have long disappeared, leaving only the empty office seems to be laughing at the stupidity of the stockholders.
The political game behind the rescue
The market has fallen into extreme chaos, and Shanghai’s business capital has been exhausted. In order to stabilize the situation, the Qing government had to “save the city” this time.
But why did this stock market provoke the court? One of the important reasons is that the debt pressure of the court has increased a lot. This financial burden is a huge amount of compensation for the outside world.
The indemnity was born from the “Gengzi Incident” that occurred in 1900. In the second year, the defeated Qing government had to sign the “Xin Chou Treaty” at the negotiating table. The Western powers lions opened their mouths and demanded that the Qing government take out 450 million yuan of silver from the Customs and other customs duties to compensate the countries. The annual interest rate is four points, and it is paid off in 39 years. The total principal and interest are more than 980 million. The funds are shared annually by governments across China.
The astronomical figures of the Gengzi indemnity undoubtedly added a heavy burden to the finances of various parts of China. Local government officials had to work hard and raise money. At that time, the Shanghai government had to pay 1.9 million yuan a year.
In the second half of 1910, the date of payment of the Gengzi indemnity is coming soon, but Shanghai has already fallen into an unprecedented financial turmoil, bankruptcy, capital flight, and government treasury. At this juncture, it is hard to make it difficult for Shanghai to raise money and pay compensation.
Cai Naihuang, who was then a Shanghai Taoist, saw that Qianzhuang was in trouble and was in a hurry. When Zhengyuan and Qianqian two banks closed down, they met with Zhang Jiangjun, the governor of Liangjiang, and hoped that Zhang could send a telegram to his superiors and request financial support. A few days later, the superior’s decree required Cai Naihuang to deal with the aftermath as soon as possible to maintain the stability of the financial market. After Cai Naihuang took the lead, he met with the British Minister of Shanghai and the Chinese and Western Chamber of Commerce to discuss remedies.
Cai Naihuang (middle) and American Fu Kaisen (right)
Cai Naihuang (middle) and American Fu Kaisen (right)
After several meetings, they initially agreed on a way to maintain the market’s capital flow by borrowing 3.5 million from foreign banks with the strong financial strength of Shanghai. As soon as this news came out, the tension in Shanghai’s financial market was eased, and fewer people were on the run and cash, and people’s confidence in the market temporarily stabilized.
This series of actions marked the beginning of the Qing government bailout.
However, in the financial tide, the government bailout will not save all people, but selectively save the market. Some financial institutions will get help, others will not get help, and finally become a victim of the financial turmoil.
As mentioned above, the urgent need of the Qing government at that time was that the mortgage payment for the Gengzi indemnity might not be paid on time. This is a big diplomatic event, and no one can afford such a big responsibility. Shanghai, as China’s financial center, has been affected by stock market crashes and financial turmoil. With a little carelessness, the financial tide will spread to the whole country, causing a greater crisis. The most important financial institution in Shanghai at that time was not the bank of Zhengyuan, Qianyu and Zhaokang, which faced bankruptcy. The most important financial institution is actually the source of the rich and silver.
Yuanfeng Runyin was originally founded by Ningbo businessman Yan Xinhou. Its capital strength is very strong. It is no less than the Daqing Bank at that time. Compared with other ordinary money houses and ticket numbers, the capital strength gap is even greater. In 1910, Yan Zijun had already taken over the father’s business and managed the size of the source of the rich and powerful silver.
Yan Zijun and Cai Naihuang are closely related to the money in private, so they also hosted the source of the customs official silver. The source of the Customs official silver and the Qianzhuang, which is related to the source of the Fengfeng Run, is a huge amount of tax for the Shanghai Customs. Moreover, the protagonist of the source Fengrun has extended to many regions and industries in China, and the country has many sub-logs. The investment field involves the mining, textile, shipping, transportation and other industries in China at that time.
On August 6, 1910, Cai Naihuang was sent to the Military Aircraft Division, the Ministry of Foreign Affairs, and the Branch Office. This secret electricity directly stated the key position of Yuan Fengrun in the entire financial system in the late Qing Dynasty. The rescue operation was naturally carried out around this most important financial institution. Cai Naihuang then began to actively pursue the arrears of various money houses. The imperial court also issued a severe order, for Zheng Yuan and several other stocks involved in stock speculation, “to mention together” and strictly pursue the recovery. As a result, an action to collect money and arrest people was launched in Shanghai. Finally, the collected arrears were collected and the arrested personnel were arrested. The money house in Shanghai has become the object of severe punishment.
Cai Naihuang also supported Yuan Fengrun while recovering the arrears of the bank. More than three million yuan borrowed from foreign banks, except for the return of 1.4 million yuan owed by foreign banks such as Zhengyuan, the remaining 2.1 million yuan of silver are basically stored in Yuanfengrun and another ticket. No. Yishan source.
After Cai Naihuang borrowed a guarantee, Yuan Fengrun barely supported it for a while, and the market was temporarily stable. However, the deadline for paying the Gengzi indemnity in September is getting closer, and the fundamentals of Shanghai Finance have not been significantly improved. The huge amount that should have been paid was taken by Cai Naihuang to save the market, filling the scorpion of the rubber stock bubble, and the government’s treasury was empty and could not afford to pay. In desperation, Cai Naihuang could only ask the court for a letter, saying that “the deposit of silver can not be mentioned suddenly” and requested that two million two be transferred from the Daqing Bank to tide over the difficulties.
At this time, the imperial branch of the court came down. The branch minister and Cai Naihuang have always had a bad relationship. This time, I saw that Cai Naihuang was not able to save the market, and she played on the court, and she was cheeky and asked for money. So he joined the governor of Jiangsu and reported to his superiors that Cai Naihuang was corrupt and deliberately deliberately threatened the court with the market panic as a reason to defraud the huge appropriation and to take the opportunity to fill the pocket.
The court quickly traced the matter and found that Cai Naihuang “moved the provinces to pay compensation, and the deficit was huge, and now it could not make up.” Cai Naihuang learned the news and was frightened and angry. He explained to the court, “The trend in Shanghai has been repeated. It’s hard to collect it urgently, and warned the court not to be too eager to collect money, otherwise it might “cause an accident”. The court received the telegram, which further confirmed that Cai Naihuang was threatening the court, hoping to defraud the funds and seek personal gain. The court made a more stringent wording in the reply message, ordering it to repay the money on time, without delay.
According to the Qing Dynasty’s law, once officials are dismissed, they must hand over all the money they have handed over to the court. Otherwise, they will be felony. The total amount of Cai Naihuang’s handling exceeded 6 million, and most of them were kept in the Qianzhuang ticket number to maintain stability. In an angry manner, Cai Naihuang immediately asked Yuan Fengrun to withdraw two million yuan from the deposit. The source of Fengrun’s cash is insufficient, so it is once again in crisis. The major foreign banks in Shanghai saw the opportunity to borrow money. Cai Naihuang lost his official position. If the contract changed, he announced on October 7 that he refused to accept the Shanghai Qianzhuang ticket.
On October 8, Yuan Fengrun, the country’s most famous ticket, went bankrupt. Because of the bankruptcy of the source, the financial market that has been temporarily stabilized has once again caused a storm.
The collapse of Yuanfengrun caused financial tsunami across the country, including six million two in Guangdong Customs, four million in Hankou and three hundred and five thousand in Shanghai. The bank notes of major cities such as Nanjing, Beijing, Tianjin, Zhenjiang, Hangzhou and Guangzhou were affected.
In addition, a large number of industrial and industrial enterprises related to Yuanfengrun Investment have also been affected, and many have closed down or been sealed up. From the financial industry to the real economy, it can be said that they have been directly affected. As the banknotes of the bank closed down one after another, foreign banks also stopped accepting the ticket and stopped the short-term loan to the bank. As a result, market liquidity is tightening. Once a large-scale commercial shutdown or factory shutdown occurs in the country, it is not the financial industry that is affected, but the stability of society and the foundation of the Qing government.
How to deal with the crisis? Only continue to borrow and use old debts to pay off old debts. The governor of the two rivers, Zhang Renjun, said that he had already “money-free”. In order to maintain market stability, he only borrowed money from banks in various countries, and he hoped that the imperial court would generously donate funds to the relief market.
The attitude above is still the same as before: it is okay to borrow from foreigners, and there is no fund for the court. In December 1910, Zhang Renjun received a loan of 3 million yuan from Shanghai Dehua, HSBC and Crédit Agricole, with a interest rate of 7%, and was collateralized by the salt levied in the two lakes, Jiangxi, Anhui and other places. .
However, Zhang’s emergency loan program bypassed the Jiangsu Advisory Council and caused dissatisfaction from the advisory council. So they participated in the higher level, saying that Zhang Renjun’s “private loan item” did not meet the norms, and dealt with the crisis. “Fearing inspiration, deliberately breaking the law, destroying the industry”, demanding the impeachment of Zhang Renjun. Subsequently, the Qing branch of the Qing court, the Zizhengyuan and the advisory bureau began various investigations and evidences for Zhang Renjun, and he was prepared to pursue his responsibilities.
However, Zhang Renjun did not end up with the end of Cai Naihuang’s dismissal. Zhang Renjun is a large-scale squadron. He has always relied heavily on the top management. Moreover, the reversal of the branch has been basically solved. The previous arrears of Cai Naihuang were mostly recovered. Therefore, Zhang Renjun’s impeachment case did not go deeper. The high-ranking bureaucrats, after all, are considered to be the pillars of the country, and there are people behind them, not the lower-level bureaucrats of Cai Naihuang.
Cai Naihuang knew that he could not repay the money within the prescribed time limit and would be escorted to Beijing. If so, you must be killed by chickens and monkeys. So, he recovered all his deposits in Shanghai overnight and fled in secret. By the time he was noticed, he had already moved away from Shanghai, the right and wrong place.
It can be seen that one of the main contents of the official culture of the late Qing Dynasty is the nesting, and it is a matter of time and occasion. As long as the opportunity is caught, it is necessary to confuse the political enemy. In the critical moment of the financial turmoil sweeping the Qing Dynasty, officials still think about personnel struggles.