Persian Empire 1845

Chapter 145 Banque de l'Indochine
"Uncle is here, please have a seat."

Abdullah sat next to Nasser al-Din, and a servant brought him a cup of coffee, a popular drink these days.

"Thank you, Shah."

After the war broke out, the entire royal family purchased a large amount of national bonds to support the war effort. Abdullah also purchased 20 riyals worth of national bonds to show his support; of course, he wanted to do something practical, otherwise he would end up like his brothers who were idle.

"Our army has now captured Yerevan, and I believe it won't be long before we recover the other lost territories. This is all thanks to the Shah's wise leadership..."

Naserdin raised his hand to stop Abdullah's boasting, "Uncle didn't come here today just to talk about this, did he?"

"That's right, I'm here today to help the country solve its financial problems."

Compared to the Ottoman Empire and Egypt, the Iranian royal family eliminated a group of rebels through civil war and began to restrict government funding for them, separating royal finances from government finances. This forced members of the royal family to either engage in industry and commerce, study abroad, or become government civil servants through examinations.

Of course, they were obedient on Iranian soil, but they were much more lenient in their colonies. Some princes acquired land in Africa to expand their estates, while simultaneously forcing black people to work for them. Nasser al-Din was aware of this, but he only made them obey the Shah's orders and affirmed his own rights in Africa. The princes also knew that they could not move an inch without the Shah's support, so they obeyed Nasser al-Din.

Some members of the royal family, concerned about the country and its people, are dedicated to changing the situation in Iran and, incidentally, making some money. That's why they sent Abdullah to promote their plans.

"Uncle, please tell me if you have any ideas."

Abdullah voiced their thoughts: "Shah, Iran and Qing China in the East already have trade relations, but I've discovered that Qing China currently doesn't have a single bank to handle business, not even Britain or France have banks there..."

"You mean, let Iran open a bank to handle Qing Dynasty business?"

Abdullah nodded. "Yes, Shah. Iran has acquired a piece of land, and our merchants still have to carry large amounts of cash for transactions, which is really inconvenient. We can set up a bank specifically responsible for Eastern affairs. This will not only solve the problem but also increase revenue."

Nasserdin understood; they had been waiting for him all along. Since banks weren't allowed in Iran, he would go overseas, to the East.

"In that case, I suppose Uncle already has a plan."

Seeing that Shah was somewhat hesitant, Abdullah began to promote their banking plan.

"Shah, this bank will operate as a joint-stock company, raising funds by issuing shares and receiving dividends annually based on the number of shares owned."

According to estimates, 500 million riyals are currently needed, Shah, and within just one year, you will see a steady stream of wealth.

Naserdin listened to his uncle's assurances. It seemed those merchants knew they were outnumbered and vulnerable; venturing into the East rashly could mean certain death. So they brought him along, offering him protection in return, of course, in exchange for their profits.

"This suggestion...is quite good. But I have a request, I wonder if you can grant it?" "Please go ahead."

Shah said slowly, "If Iran takes any action in East Asia, the bank must provide full support."

Abdullah immediately agreed. He thought it was just about banks paving the way for the country's interests, something he had seen a lot of in England, and he just needed to follow suit.

British foreign exchange banks had two main functions: first, to handle international exchange transactions, absorb social deposits, and carry out credit financing; and second, to use financial means to sell surplus domestic goods and capital through loans with stringent conditions.

For Iran, with its limited capital, funds from its colonies and other countries played a significant role in boosting its economy. Coupled with the enormous need for capital and the expansion of trade in the East, the establishment of a banking system was imperative.

"It seems that you have learned a lot in England. I think you will definitely be able to protect Iran's interests in the East."

Abdullah knew that Shah had agreed, and quickly assured him that he would not let him down.

Some believe that privatizing banks can enhance market vitality and promote national development. However, privately owned banks may be more inclined to issue high-risk loans for high profits, neglecting borrowers' repayment ability and asset quality, leading to economic instability. Moreover, banks can still go bankrupt, and the consequences of a private bank failure are unknown.

So when the bank was established, the government issued a law declaring that private individuals could not establish banks. Despite petitions, the Shah still disagreed until the East needed a bank, and they didn't have much money to spare, which gave them an opportunity.

However, while agreeing to open a bank, Shah and the government also had to get involved. The government owns 15% of the shares, and Shah owns 25%. A total of 40% ownership, which was actually within their expectations. After all, their current investments are all in factories, and they can't come up with that much money in a short time.

Nasser al-Din named the newly established bank Oriental Bank, with Abdullah as its president. Its operations spanned the countries east of the Strait of Malacca, while also aligning its policies with those of Iran and Vietnam.

Meanwhile, the first payment from the Saipa Trading Company, totaling 46 riyals, was transferred back. They used this money to buy land and build houses in Shanghai to earn rent, thus securing a stable source of income.

Although this amount of money seems like a lot, it's still a drop in the ocean compared to military expenses. Moreover, the trading company needs to expand its business empire in Qing China, so this is about all the money that can be sent to Tehran.

However, according to the report, Iranian business has already begun to expand in East Asia. To date, more than 90 Iranian merchants have traveled to the East to trade. Besides Sepa, three other trading companies have been established in Hong Kong and Guangzhou. The number of compradors employed has also increased to 25.

Britain, France, the United States, and other countries saw no problem with Iran's inclusion. After all, under the rules of free trade, their status in Qing China was essentially equal. Moreover, Britain already controlled Qing China's customs and secured the most lucrative profits; letting Iran compete in other areas was not a problem.

Iranian businessmen, on the other hand, united and spontaneously formed overseas Iranian chambers of commerce to protect the interests of Iranians. Regarding their own situation, these chambers adhered to rules of trade only, refraining from proselytizing and involvement in politics. However, to gain more benefits, they still needed to cultivate good relationships with high-ranking political figures.

Faced with the rebellion in southern Qing territory, the Chamber of Commerce adopted a wait-and-see approach. If the rebellion was just a flash in the pan, there was no need for it, but if it became a rebellion that could be overthrown, then the profits would be much greater.

(End of this chapter)