Reborn in America, I am a legendary short seller on Wall Street.

Chapter 235 Business is business
The air here seemed heavier than outside, a mixture of old leather, parchment, and the lingering chill of fine cigars. Sunlight streamed through towering stained-glass windows, casting dappled shadows on the dark wood-paneled floor, yet it did nothing to dispel the tranquility and majesty built upon absolute wealth and power.

Led by McKinley, Larry walked through rows of bookshelves that reached the ceiling and finally stopped in front of the huge, intricately carved oak desk.

J.P. Morgan sat behind the desk like a colossal statue sculpted from rock. He raised his hand to indicate that he would be finished soon, while his other thick finger slowly and forcefully turned the pages of a heavy document, the smoke from his cigar swirling above his head as if it were the tangible traces of his thoughts.

After a while, Mr. Morgan tapped his finger on the document, then looked up at Larry, his eyes slightly narrowed.

“Mr. Morgan, it’s a great honor to see you again,” Larry said, his voice humble and smiling, which sounded exceptionally clear in the empty library.

Morgan made no small talk, but simply gestured with the finger holding the cigar to the chair opposite him.

"Sit down. I heard from McKinley that you have 'business' to discuss with me!" His voice carried a hint of teasing, but also a touch of ease.

Larry thought to himself that this was the first time he had made a good impression, so Mr. Morgan felt a sense of familiarity towards him, as if he were a junior.

"I've come to ask for your advice, because there's never been a precedent for this kind of business." Larry gave him that warm smile he usually gave to superiors, making him seem very approachable.

Morgan smiled enigmatically, took a light puff of his cigar, and said, "Has there never been a precedent for this on Wall Street before?"

"There shouldn't be any!"

Mr. Morgan tapped his fingers on the table, a smile he had been unable to contain for so long spreading across his face, as if a child were posing a test to him. He generously said,

"Alright! Tell me about this, and I'll help you answer your questions."

Larry then presented Mr. Porter with a "Fund Custody Business Cooperation Proposal" written by Mr. Porter himself. While Morgan was reviewing the document, Larry took the opportunity to explain to him what mutual funds are, and what fund managers and custodians are.

Morgan flipped through the documents, his smile gradually fading, replaced by a serious expression.

“…Therefore, I would like to appoint Morgan Stanley as the custodian bank for the ‘Progress Partners Fund,’ responsible for asset custody, transaction clearing, and valuation.” Larry finished speaking and calmly looked at the financial giant behind the table.

J.P. Morgan's thick fingers paused on the smooth tabletop. He looked up, his eyes revealing for the first time undisguised surprise, even a hint of amusement.

“A custodian bank?” His voice was deep, with a hint of scrutiny that was barely perceptible. “For a… mutual fund?”

In 1892, these two terms had not yet been coined, but Morgan fully understood Larry's description of a private partnership model that pooled client capital and allowed managers to operate high-risk strategies. This model was extremely rare and highly risky at the time.

“Interesting.” Morgan leaned forward slightly, turning back to review the documents again, cigar smoke swirling in front of him.

"You've designed a near-perfect structure for yourself. You use investors' money to chase high-risk returns. If you make money, you take a huge share of the profits; if you lose, all you lose is your reputation. And now, you want to hand over the risks of asset custody and liquidation—this last and most crucial line of defense—to my bank?"

After Morgan finished speaking, he looked at Larry through the top of the document. At this moment, even McKinley, who had been deliberately keeping silent, couldn't help but glance at Larry.

Larry maintained his smile, his eyes meeting Morgan's scrutiny without flinching.

Morgan's words were precise and incisive, directly exposing the core of Larry's so-called "fund" business model and the underlying motivation for seeking a custodian: credit enhancement. In other words, if Morgan were to act as the custodian, it would be the strongest endorsement of the fund's safety and compliance, attracting more hesitant capital.

Larry remained composed and answered clearly, "It is precisely because of its structural innovation that it needs the most solid foundation. Morgan's reputation is that foundation. And Morgan Bank will obtain stable and considerable fee income from it."

"The fee..." Morgan repeated, smiled faintly, and then said, "This fee is better than nothing."

“But if mutual funds are fully rolled out, this kind of custody is just the beginning. The deposited funds can not only bring additional stable returns, but also allow banks to expand into business areas they haven’t had before… Oh, don’t get me wrong, I’m not trying to persuade you, but I genuinely want to discuss this issue with you,” Larry said sincerely.

“This service is unprecedented, and the risks cannot be based on past experience,” Morgan said slowly, his tone leaving no room for doubt. “Your fund will invest in new technology companies with unknown risks, and may even involve secondary market stock trading. The complexity of its operations and the potential disputes far exceed those of ordinary trusts. Therefore, the fees cannot be calculated as a tiny percentage of the assets under management. That paltry sum is not enough for Morgan to bear the risk to its reputation.”

Business is business. When Larry handed him the fund custody business proposal, Mr. Morgan was already thinking according to his usual business practices. The person in front of him was no longer a junior he admired, but his business rival.

Larry remained silent, waiting for him to finish thinking.

“I propose,” Morgan’s voice carried the air of final decision, “that we adopt a fixed annual fee plus transaction clearing fee model. We will charge a fixed custody fee of $5,000 per year, and in addition, Morgan will charge a clearing and execution fee of 0.5% for every securities transaction that occurs in the fund, whether it is a buy or sell transaction.”

Larry raised an eyebrow at this.

This price is extremely high. The fixed annual fee is a significant expense, and the 0.5% transaction fee will become a huge cost with frequent trading, severely eroding fund profits.

Larry immediately shook his head and said solemnly, “Mr. Morgan, the fixed annual fee is acceptable, as it reflects your risk pricing for the underlying liability. However, a 0.5% liquidation fee is unacceptable. This would force my fund to reduce trading, thereby weakening its strategic flexibility—which is the core source of its potential for high returns in the future. I can accept at most 0.2%, and I propose that the fixed annual fee be reduced to $3,000.”

A brief tug-of-war began.

"Four per thousand. The more frequently you trade, the greater the risk and workload for me."

"0.25%. The fund's size will grow rapidly, and your future absolute returns will far exceed the current small concession."

"A $3,500 annual fee and a 0.3% transaction fee. That's the bottom line. Don't forget, you're not just buying services, you're buying the 'Morgan' name."

Larry paused for a moment, then quickly did the mental calculations. The rate was still high, but within an acceptable range. More importantly, he got what he truly wanted—Morgan's prestigious reputation.

“Deal.” Larry held out his hand. “Three thousand five hundred dollars annual fee, three-thousandths of a transaction clearing fee. It’s a pleasure doing business with you, Mr. Morgan.”

However, his outstretched hand froze in mid-air, as if he suddenly realized that it was extremely inappropriate for him to reach out to Mr. Morgan so abruptly.

But Morgan didn't hesitate to grab Larry's hand in mid-air with his heavy, powerful hand.

“Remember, young man,” he said, his gaze deep, “my bank is responsible for safeguarding assets and clearing transactions, but we are not responsible for the consequences of your investment decisions. If your fund sinks like a wrecked ship, the investors will come to you, and they will also… remember that Morgan’s name was once on its sails.”

“I understand,” Larry replied solemnly. “The ship will not sink.”

Morgan nodded, the matter was over. He looked at Larry again, his expression returning to that curious and meaningful look he had when gazing at a junior.

"You came up with this? This so-called mutual fund?! And this devilish profit-sharing method! Oh my god! Are young people these days so wild?"

Larry smiled again. He knew Morgan was more impressed and amazed than genuinely impressed by the fund's idea, so he continued,
"This is just a small way for a lowly young man like me to make money. You were much more capable than me when you were young..."

Morgan shook his finger, indicating that Larry didn't need to be modest, then tossed his cigar into the ashtray. Suddenly, he looked up and asked, "How can you be so confident that I'll definitely accept your trusteeship proposal? According to what you just said, you're holding the inaugural meeting for this fund on Sunday night. What if I don't agree? Wouldn't all your preparations have been for nothing?"

“I think you’ll agree. The reason you’re Mr. Morgan is because you never let your emotions override your reason,” Larry said.

"Hmph..." Morgan chuckled coldly in response, then placed the file on the table and sighed softly, "It's a business that's unprecedented on Wall Street, but for banks it's just a variation of a business. Is this what you wanted to ask me?"

Larry shook his head, then took another stack of reports from his suitcase, handed it to Morgan with both hands, and solemnly said,

“Mr. Morgan, I don’t have a lot of money, but I want to acquire this company…”

(End of this chapter)