Chapter 339: Increasing Investment
New York, Hechingen Bank's North American Branch.
"Mr. Jonathan! Here's an important letter sent from headquarters. Please have a look."
"Mm, hand it over," Jonathan said, glancing at the envelope.
"You can leave for now. From this moment, unless I give the order, no one is to enter."
"Yes, Director."
After his subordinate left, Jonathan carefully unsealed the envelope and began reading.
Before long, Jonathan's expression turned surprised and even incredulous. Headquarters' decision? Are they insane? If they do this, how much money will be lost?
As for the headquarters' risk assessment, Jonathan wasn't too convinced. Judging by the current situation in America, he felt that its economy was only just getting started. Yes, there might be social unrest, but "infamy is still a form of fame," and chaos can actually boost economic vitality. At least it shows the local policies are relaxed. Just like those Italians running black-market businesses, they, too, can generate value for America.
For example, in the previous era, American drug addicts created a market that supported over a million Mexicans, incidentally helping balance US-Mexico trade. Although drugs are unquestionably harmful, that doesn't stop them from being an industry—gray industries still have value. Such is the inevitable logic under capitalism.
Even if most of the wealth accumulates in the hands of a few, as long as it remains in America, it's still "America's." They're not fools; in America, money can solve ninety-nine percent of problems, representing social status, which is far more comfortable than living in the nobility-dominated Old World.
Yet despite not really understanding, Jonathan prepared to carry out the orders, since he was just an employee.
After destroying the letter, Jonathan called a meeting.
"From now on," he announced, "we're loosening restrictions. We plan to make a big push in America and do our part to help this country's prosperity!"
Right now, America's situation is excellent—anything you do can make money—but Hechingen Bank's review process has not been friendly to certain old-line industries. Following instructions from headquarters, Jonathan was now set to relax those rules and flood the American market with new capital.
"As long as we confirm big profits, bigger risk is acceptable. Throughout the rest of this year, that's our guiding principle for the bank's operations!"
In North America, Hechingen's largest investments have been in technology—mainly the electrical sector. Now, however, they would pour money into every kind of industry. Just like any American bank, they'd invest in everything.
But this wave of investment would only last six months. Starting next year, the North American branch's objective would be to sell off these short-term speculative ventures at top prices. Figuring out when prices peak was tricky, but once headquarters says it's time, they would sell. Jonathan hadn't shared these details with his staff—and he himself found it hardest to understand. What if those assets keep rising in value after they're sold? Wouldn't that mean a huge loss?
…
Not only in America, but also in the Far East, the Hechingen Consortium was increasing investment. However, the industries they were targeting there mainly served the Far Eastern domestic market, rather than exports. Everyday people in the Far East have huge demands, and through partnering with Shanxi merchants and Huizhou merchants, the Consortium planned to develop the northern interior.
It can't be denied that Hechingen's investments would cause many traditional crafts to fail. Moreover, the Shanxi merchants' leader, Qiao Zhiyong, wanted to adopt Western banking practices for reforming Shanxi's "piaohao" system, accelerating that process. As they learned Western banking concepts, they inevitably encountered new things internationally. This was precisely where Shanxi merchants were lacking.
From their peak to their sudden decline, the fundamental issue was that the Shanxi merchants had no global vision. Historically, while Shanxi was prosperous, Western capitalism also blossomed. But when trading with Russia, they paid no attention to large-scale machine production, and when dealing with European ships, they cared only about goods they needed—apparently uninterested in anything else. They chased immediate profits, stayed stuck in place, and failed to see they were drifting out of step with the world. They had no desire to learn new technologies and wouldn't spend their hard-won money on new machinery or techniques, focusing on short-term gains and real estate purchases.
But with the arrival of the Hechingen Bank as a rival, it quickly seized the Shanxi merchants' territory in eastern North China. This made Qiao Zhiyong realize how dire the threat to Shanxi business was: If they can't even keep up in normal trade, one day the bank would absorb the entire northern market. The Qing government, closely connected to Shanxi merchants, also couldn't save them. Long ago, it had tried shutting itself off to protect its markets, but obviously lost under the Westerners' gunboat policy.
Hechingen's dramatic expansion in North China proved the point. After all, behind them stood two world powers, plus one "big country" unknown to the general public. Germany's power alone—able to defeat France singlehandedly—was enough to intimidate the Qing. Coupled with the impetus of Hechingen's expansions, German merchants in China's northeastern interior now possessed real potential to contend with the British, French, and Americans there.
At present, other foreign forces in the Far East only stay along the coasts or lines of convenient transport, whereas the Hechingen Consortium overcame the difficulties of inland logistics to penetrate into the interior. The reason is pretty simple: the southern Shandong Yimeng Mountains hamper transport, meaning the local economy has always been weak, and northern Jiangsu is flat but suffers recurring Yellow River flooding. It wasn't until the Xianfeng era that the Yellow River dramatically changed course, halting centuries of flooding in northern Jiangsu.
Yet that was also during the Taiping and Nian rebellions, so the government was preoccupied with war and had no time for managing the Yellow River. The Governor of the Southern Canal, Yang Yizeng, petitioned the court, suggesting "we suspend repairs." In other words, let it go—leading to more frequent and severe flooding in Shandong, with towns along the Jishui River collapsing, exemplified by Qidong County.
This also explains the origin of East Africa's abundant immigrants—i.e., the Hechingen Consortium's domain in North China had been the Qing's economic backwater. Even in the 21st century, northern Jiangsu remains a "break" in the eastern seaboard's development, far behind the north and the south. There's only one major port, Lianyungang, which lags behind southern Jiangsu and eastern Shandong in growth.
By now, the best city in the Consortium's economic zone is Kaifeng, the only provincial capital. From Kaifeng eastward to the coast is a scene of misery—natural calamities and man-made disasters combined—so no other Western interests want to invest. Plenty of regions are better off than that.
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