Bringing the Railway to Daming

Chapter 182 Capital and Leeks, Su Caiwei is pregnant [Please subscribe]

"Your Highness, please ask your attendants to leave."

When Zhu Biao heard this, he knew that Liu Kuan was probably going to talk about future events again, so he immediately ordered the guards and other officials to retreat a few dozen steps away.

Liu Kuan said: "Your Highness, in the future, as companies further develop into joint-stock companies, 'stocks' will be born, which are also share certificates."

"Because the value of a company is not constant, it can rise or fall due to various factors, including operational factors. As a result, the value of shares and stocks will naturally fluctuate accordingly."

"This makes it easy for stock trading to occur—for example, someone buys a share of Sanwei Shuwu at 100 guan per share, and then sells it when the share value rises to 110 guan, making a profit of 10 guan per share."

"If someone buys shares and finds that Sanwei Bookstore is not doing well, with dividends decreasing year by year and the value of the shares falling, and fears that they will eventually lose all their money, they sell their shares at 50 guan per share. In this case, they will lose 50 guan per share."

“Future capitalists will differentiate the value of shares to a level that ordinary people can buy – this way, ordinary people can also participate in the purchase of stocks, making it easier to raise funds.”

"At the same time, it can also boost stock trading, causing the value of each share to rise rapidly - later generations called this practice of selling stocks publicly listed."

"Your Highness, do you think this is a good thing or a bad thing?"

Zhu Biao thought for a moment and said, "That should be a good thing. As you said, when the value of each share decreases, it will be easier to raise funds."

"At the same time, if the threshold for stock purchases is lowered, ordinary people can also participate in a company's operations and share in its profits by purchasing stocks... That's not right!"

As he spoke, Zhu Biao realized something and added, "If a company is poorly managed, the value of its shares will decrease, and the people who bought the shares will also lose money."

"People are driven by profit. Ordinary people, seeing that making money from stocks is almost like getting something for nothing, may ignore the risks involved and end up losing everything on stocks. If they do, a loss in stock trading could lead to real ruin."

Liu Kuan praised, "Your Highness is very impressive for thinking of this."

Zhu Biao heard the hidden meaning and asked, "Could there be another problem?"

"Of course there is," Liu Kuan said. "When stocks have commodity attributes and can be traded, the 'stock market' will be born, that is, the 'stock trading market'."

"With the stock market, those who understand the ins and outs of stock trading and have sufficient funds can use their funds to guide or even manipulate stock price changes, thereby making huge profits."

"For example, if a certain stock unit is worth ten guan (approximately 10 guan), and someone asks someone to bring a large sum of money to the stock market to buy the stock at a premium, this will inevitably cause the unit price of the stock to rise."

"Ordinary people, unaware of the truth, will rush to buy the stock in the hope of profiting, thus driving the stock price up further."

"When the stock price approaches a peak, the person who previously held the stock will sell a large number of shares and make a lot of money."

"However, because the stock was being sold in large quantities, the price per share inevitably dropped, which in turn led other people to follow suit and frantically sell their shares, causing the price per share to drop further, even quickly falling below the initial price."

"When the stock price hit rock bottom, that person would take out another sum of money and slowly buy back these stocks..."

"This cycle will continue, and ordinary people, unaware of the truth, will be driven by profit and take their hard-earned money into the stock market in waves, just like leeks, which are continuously harvested by capitalists."

“The more capital a capitalist has, the greater his ability to manipulate the stock market and the greater his ability to make money in other ways, making it easier for him to make money.”

"If there is insufficient source of income, there will be only a limited number of opportunities to make money. Capitalists will take up more of the opportunities, and ordinary people will naturally have fewer and fewer opportunities to make money. As a result, they will become increasingly poor and eventually have no place to stand."

Zhu Biao was stunned. He imagined the scene Liu Kuan described and couldn't help muttering, "If landlords and gentry want to accumulate wealth, they need generations to slowly transfer the land of ordinary people to their own."

"But this capitalist, in just one generation, can amass a fortune that would take several, even dozens of generations to accumulate, while also impoverishing countless ordinary people. It's terrifying, truly terrifying."

Finally coming to his senses, Zhu Biao looked at Liu Kuan nervously and asked, "Sister-in-law, since shareholding, stocks, and the stock market will become a powerful tool for capitalists to reap the people's wealth after their emergence, why do they still use them for railway operations?"

"Anyway, no one else knows about this except you. Why don't you just pretend that you didn't say this today and I didn't hear it."

Seeing that Zhu Biao cared so much about the people, Liu Kuan was happy but also a little speechless.

He said, "Your Highness, even if we don't tell anyone, can we guarantee that no one in the world will come up with this idea?"

"If Your Highness understood the affairs of private merchants, you would know that some businesses are run by multiple partners, and after making a profit, dividends are distributed according to the proportion of investment. Isn't this the prototype of shareholding?"

"Shareholding is a natural evolution, and the concepts of stocks and the stock market will probably be brought up sooner or later."

"This..." Zhu Biao frowned, hesitated for a moment or two, and said, "Can we prevent the emergence of stocks and the stock market by suppressing commercial development?"

Then he shook his head. "If we try to prevent it by suppressing commerce, the gains will outweigh the losses. It would be better to stop it by law."

Liu Kuan nodded. "Your Highness is right. Although stocks and the stock market make it easier for capitalists to amass wealth, we cannot suppress commercial development because of this."

"Through laws and other means, we can restrain and even control them, preventing them from wantonly siphoning off private wealth, and instead allow capital to be used by the state and even benefit the people."

"Furthermore, shareholding and stocks do facilitate fundraising. If properly utilized, they can enable the state to leverage private wealth to accomplish many significant projects that benefit both the nation and the people." "The reason I propose corporatizing and shareholding the railways today is to leverage private wealth to alleviate the difficulties faced by the Ming Dynasty in building railways."

"Once shareholding was introduced, stocks naturally emerged. This humble official informed Your Highness of the future of stocks and the stock market in the hope that the court would use the law to regulate them early on, preventing them from becoming a tool for merchants and wealthy gentry to plunder the common people's wealth."

Zhu Biaoquan understood and nodded, saying, "If my brother-in-law has any ideas on this matter, please feel free to tell me."

"The first is, of course, to raise the threshold for private equity purchases. For example, after a railway operating company is demutualized, the price per share could be set at 1,000 guan."

"Ordinary people may not be able to raise even a few dozen strings of cash, and even the wealthy can only come up with a few hundred strings of cash at most."

"Those who possess thousands of taels of silver and are willing to spend them to buy shares are definitely wealthy merchants and gentry."

"These people have a lot of wealth, but they either use it to buy land or hide it under their homes."

“If they buy land, it will exacerbate land annexation, which will be detrimental to the country and ordinary people.”

"It's not good for them to hide their money underground. If the Ming Dynasty didn't acquire gold, silver, and copper from overseas, then the amount of gold, silver, and copper in the Ming Dynasty would be limited. It would be fine if these people took it, but if they hid it, wouldn't that mean that the gold, silver, and copper in the world would become less and less?"

"Copper coins have been minted throughout the ages, yet there have always been shortages of coins. Why? It's because the rich here prefer to hoard their money rather than spending it and letting it circulate."

"Money can only function as currency if it circulates. If it's hidden away, how is it any different from unmined gold, silver, or copper ore underground?"

Zhu Biao nodded repeatedly and looked very excited.

He felt that Liu Kuan's words had deepened his knowledge and understanding of gold, silver, copper and other coins, and he even knew one of the main reasons why there had been a shortage of money throughout the ages.

"These words are so insightful. I must tell my father about them later."

Liu Kuan continued, "So, if the imperial court were to set up a railway operating company and sell shares to the private sector, it would be best to target wealthy merchants and gentry as investors."

"Although it would give them the opportunity to share some of the profits from the railway operations, it is better than letting their money rot in the cellar."

"Secondly, there must be clear regulations prohibiting these people from using stocks for trading, and such activities must be severely punished."

At this point, Liu Kuan remembered something and said, "Your Highness may not know that in the Song Dynasty, certificates of ordination could also be used for transactions, and their credibility even surpassed the paper money issued by the Song Dynasty."

"I don't know whether the ordination certificates of the Yuan and Ming dynasties were used for transactions, but in the middle and late Ming dynasty, they were tradeable, just like in the Song dynasty."

"Even because the Ming Dynasty treasure notes had become waste paper at the time, the attributes of the ordination certificate paper notes surpassed their original meaning, or in other words, replaced the Ming Dynasty treasure notes."

"This is not only detrimental to the imperial court's management of Buddhist monks and Taoists, but it also disrupts the imperial currency system. It can be said to be a serious evil. Therefore, the imperial court would be best to strictly prohibit this now to prevent it from developing into a large and unstoppable problem."

Zhu Biao's face turned serious after hearing this, and he nodded and said, "I will inform my father about this matter."

Liu Kuan smiled and said, "In the early stages of corporatization and shareholding of railway operations, the government only needs to do these two things well."

"After several decades or even centuries, when the Ming Dynasty has deepened its understanding and research on finance and cultivated relevant talents, and is able to effectively control the country's finances, we can consider gradually opening up the financial industry."

"By then, not only will we be able to raise funds on a larger scale, but we will also be able to allow the middle and lower classes to share in some of the profits."

Zhu Biao nodded subconsciously, but he was thinking in his heart: Stock trading is really a sharp double-edged sword. After I ascend the throne, I must warn the successor monarch in the secret book "Huang Ming Zu Xun" to use this strategy with caution.

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After Liu Kuan accompanied Zhu Biao to leave the Beijing Railway Station, they returned home.

Some time ago, in order to ensure the normal operation of the five trains, he, the head of the Science and Technology Department, was busy for more than half a month and was very tired.

After this incident, the tasks of the Science and Technology Department were greatly reduced, and Liu Kuan planned to relax for a few days and have a good rest.

As soon as he returned home, he felt a joyful atmosphere.

"Congratulations, sir!"

All the male and female servants in the mansion congratulated him when they saw him, but no one said why they were congratulating him, which made him a little confused.

It was not until he arrived at the central courtyard and met Zhu Huilan and Su Caiwei that he understood what was going on.

"My dear, Caiwei is pregnant."

　First update.

　　
　
(End of this chapter)