Persian Empire 1845

Chapter 524 Loans and Investments

Shanghai had by this time become a trading center in the Far East, with numerous trading companies opening branches there. There were also shipping companies, insurance companies, and banks from other countries.

The influx of foreign capital transformed local agriculture, industry, and commerce, leading to the rise of a number of trading companies founded by locals. Some even considered starting their own banks.

“Mr. Yemar, what you said is like a wake-up call. I never imagined that there were such profound and unfathomable things in the West.”

As Hu Xueyan listened to the explanation from Ye Maer, the head of Crédit Agricole Shanghai, he gained a deeper understanding of the concept of a bank.

Thinking back to his own experience as an apprentice in a money exchange before opening his own Fukang Money Exchange, he realized he had also connected with Zuo Zongtang, rising to prominence through the Taiping Rebellion and expanding into pawnshops, real estate, and even businesses in salt, tea, cloth, shipping, grain trading, traditional Chinese medicine, and munitions.

During this period, Hu Xueyan began making contact with Iran. Regarding the Northwest issue, Hu Xueyan provided Zuo Zongtang with urgently needed funds. This loan, secured by Hu's assets, was obtained from the Banque de l'Indochine. In total, 800 million rials, approximately 320 million taels of silver, were borrowed. This money helped Zuo Zongtang through his most difficult time.

Hu Xueyan also helped numerous Iranian merchants sell their goods, and through this intermediary model, his wealth increased rapidly. As the imperial court began to promote Westernization, he joined in as well. He helped the newly appointed Governor-General of Fujian and Zhejiang, Shen Baozhen, establish the Fuzhou Shipyard. Now, Hu Xueyan wanted to establish modern enterprises; if he could set up a bank, the profits would be immense.

However, he knew it would be fraught with difficulties. Conservatives would certainly object, but that wouldn't stop him from learning about the banking system first. Then he could… hmm?

"This is all thanks to Shah; without Shah's approval, it would have been impossible to build here."

Crédit Agricole's assets have now reached 1.28 million riyals, making it one of the largest banks in East Asia.

"Yes, yes, your bank's development has indeed been smooth sailing. However, I have also come on behalf of Lord Zuo Zongtang's request. He hopes that your bank will grant another loan."

At this time, Zuo Zongtang was the Governor-General of Shaanxi and Gansu, and he naturally devoted himself to the affairs of the Northwest. But now he also had one worry: money!
Nothing can be accomplished without money. Every year, the expeditions to the Northwest cost at least several million taels of silver. However, the imperial court cannot afford it. This is due to some internal struggles, but in short, there is no money at present.

Furthermore, Zuo Zongtang also planned to establish factories in Xi'an and Lanzhou, which would require money and machinery. Given the current situation, it would be better to discuss this with Iran.

“Mr. Hu, the loan you mentioned reminds me of a deal I handled in Batavia last year.” He pulled a gilded ledger from a hidden compartment in his mahogany desk. “The collateral for that previous loan—silk workshops in Hangzhou and tea plantations in Huizhou—is now fetching high prices.”

Upon hearing this, Hu Xueyan unconsciously rubbed his jade thumb ring: "Mr. Ye, you are wise. The Lanzhou Machinery Bureau that Commander Zuo wants to set up this time has received the personal approval of Prince Gong." He took out a document from his sleeve, stamped with the seal of the Governor-General of Shaanxi and Gansu, "Look, even the factory site has been determined here - the land in Huanghe Waterwheel Lane, the feng shui master said it has the pattern of 'Green Dragon Drawing Water'."

That's true, although Yemal doesn't understand Eastern feng shui principles. But it's said that you need to rely on bureaucrats to get things done. If they could really rely on Zuo Zongtang, then Iran's machines wouldn't have to worry about sales.

Of course, this doesn't mean Iran has abandoned another path. Li Hongzhang was also very interested in Western things and was recently discussing whether to continue ordering machinery manufacturing. Iran was also considering it.

"They borrowed a lot this time, no wonder they mortgaged their entire workshop."

Hu Xueyan wanted to borrow 500 million taels of silver, or 1250 million rials. It seems Zuo Zongtang was under considerable pressure. Hu Xueyan decided to mortgage his silk workshops, tea plantations, mulberry orchards, and other assets to raise the 500 million taels of silver to send to Zuo Zongtang.

"This deal is quite good; I hope we can cooperate smoothly." Seeing that the other party had approved the deal, Hu Xueyan felt relieved. But then Ye Ma'er asked another question.

"Mr. Hu, would you be interested in starting your own business?"

Hu Xueyan was stunned. He was going to start his own Westernization Movement? Could that really work?
“Nowadays, businessmen from all countries invest in factories as long as they have money. Doesn’t Mr. Hu want to do the same?”

Hu Xueyan fell into deep thought. His wealth had indeed increased, but it all came from commercial banks and money shops; factories were something he'd never seen or even heard of before. Of course, there were great risks involved. The most serious risk was being impeached by officials, or having his assets seized through trickery and force—that would be disastrous.

But looking at it another way, the factory's profits are also enormous. Their efficiency is dozens or even hundreds of times that of manual labor, so if it were built and put into operation, the profits would definitely be considerable.

"This... it's not that I'm cowardly, it's just that there are too many entanglements involved. If I were to open it rashly, I'm afraid..."

"There are risks in any factory operation; you only know once you've started. Besides, you still need to repay the loan you took out as collateral at the bank, right?"

"Oh, what can I do for you?"

Ye Ma'er proposed a solution that Hu Xueyan hadn't considered: he would partner with a bank to establish a factory, using half of the loan amount as collateral for the factory's shares, while Hu Xueyan would contribute the other half. With their investment, there was no fear of others causing trouble.

“Mr. Hu, do you know that the world always needs explorers, and factories are no exception? Shah was the first to establish a factory, which inspired others to do the same. You are a business leader in Zhejiang. If you succeed in establishing your factory, your prestige will soar to the heavens.”

This did persuade him, and Ye Ma'er casually gave Hu Xueyan a copy of "Enterprise Handbook," a publication compiled by the Industrial Federation, which guided him on how to quickly establish a factory.

"So, what about future cooperation..."

"The bank will help you get a loan and also help you hire foreign workers. So, shall we cooperate?"

Hu Xueyan nodded. Ye Ma'er then pulled a document out from under the table. Hu Xueyan thought to himself, "This was premeditated. Have I fallen into a trap?"
But since things are already like this, don't dwell on anything else. Whatever it is, you should embrace new things.

According to the signed contract, the two parties will jointly establish a textile company in Shanghai. Crédit Agricole will exchange half of its debt for shares and future profits, and it also invited Hu Xueyan to visit the ongoing industrial expo in Baghdad, Iran.

Stepping out of the bank building, Hu Xueyan felt all his strength drain away. He had just made a decision, but he didn't know if it was the right one.

Forget it, since the other party had already planned ahead, I certainly won't lose money. He and the bank are businessmen, how can businessmen do business at a loss?

(End of this chapter)