Chapter 71: Market
The next morning, Gu Yansheng found Lu Bowen.
He took out the suitcase he had prepared, which contained 6000 US Dollars.
“The timing is about right. Use this money to short sell cotton yarn futures. Call me as soon as you buy.”
“That’s too much. Are you sure?”
Cotton yarn prices have been rising steadily. One misstep, and the futures market will swallow you whole.
“I’m sure.” Since Gu Yansheng had made up his mind to do it, he wouldn’t hesitate in action.
“Alright, I’ll do as you say.” At least Gu Yansheng’s judgments from arriving in Shanghai until now had never been wrong, and he was the key holder of information. Lu Bowen had no reason not to listen to him.
As soon as Lu Bowen left, Gu Yansheng picked up the phone and called for Wen Yan.
He handed over the paperwork for the grain warehouses.
“These addresses are all warehouses. Go verify them quietly. Once confirmed, wait for my message.”
“Yes.”
At noon, Gu Yansheng went to the French Concession to meet Bai Mei.
With a major battle imminent, he had no interest in admiring women, but she was indeed quite beautiful, with a sweet smile and very sharp eyes.
The coffee shop was quite crowded at noon, but as soon as she entered, she scanned the room and smilingly walked over to sit across from Gu Yansheng.
This left quite a few men heartbroken.
“You must be Mr. Gu, right?”
“How did you know?” Gu Yansheng sipped his coffee.
Bai Mei smiled and said, “Among the single men left in the coffee shop, you have the most refined demeanor.”
“Heh.” Gu Yansheng set down his coffee cup. “Miss Bai is so good at flattery. No wonder she dominates the Shanghai Bund.”
Bai Mei suddenly explained the real reason. “Actually, I’ve seen it in the newspaper and recognized Mr. Gu.”
Gu Yansheng smiled faintly. He wasn’t swayed by emotional manipulation. “What would you like to drink?”
“Coffee, thank you.”
Gu Yansheng ordered her a coffee and got straight to the point. “I asked Miss Bai to come this time to ask for a favor. Tonight at the ballroom, find an opportunity to spread a piece of information for me.
Say that you overheard someone say the Japanese are about to fight a major battle, but winter is coming, supplies are short, so they’re preparing to forcibly requisition cotton yarn and grain in Shanghai, Jiangsu, and other places.
As for the source, I’ve already thought of it for Miss Bai. Among your audience, there are Japanese people. You heard them talking at the wine table, catching fragments of the conversation.
The information is just this. How to steer the conversation at the ballroom wine tables to guide it in this direction and let the news spread—I’m sure that won’t be difficult for Miss Bai.”
Bai Mei thought for a moment after hearing this and nodded. “It’s not difficult, but can I ask the reason for spreading this news? Many guests are my friends. If my information causes them losses, I’d be greatly at fault.”
“Miss Bai is very smart. It seems you’ve already guessed why I’m asking you to spread this news. But understand that losses come in sizes. If you tell them and they believe you, they still have time to sell off. At current prices, the sooner they sell, the more they earn.
If they’re really confiscated by me, it’ll be total ruin. You’re actually helping them.”
“That makes sense.” Bai Mei rolled her eyes thoughtfully, then nodded with a smile. “I’ll definitely help with this favor.”
“Thank you.”
In the afternoon, Lu Bowen called.
Now all of Shanghai expects prices to rise. Short position orders for cotton yarn futures are easy to buy—plenty of people want to sell, but no one wants to take over.
“Those holding short positions in futures before this extreme market trend started are now suicidal. They’re losing money every second, and crucially, they can’t sell. Even the dumbest know taking over means loss.”
His willingness to take over was like the God of Wealth descending, and he instantly bought a pile.
“As long as you’ve bought, stay at the exchange. I’ll treat you to a show this afternoon. By the way, what time does the exchange close here—no more trading?”
“3 PM.”
“Good.”
Gu Yansheng hung up and called Liang Youwei at Shen Bao.
“Editor Liang, busy?”
“Depends on what it is. Good news, and I’m free.”
“Heh, Shanghai’s prices are a bit high. I’m planning to bring them down and need your help. Busy?”
“Of course not busy! I can barely afford vegetables!” Liang Youwei immediately perked up. “What does Director Gu want me to do?”
“Heard about the recent price surges and the lively stock market?”
“Of course. We report on it daily.”
As the top newspaper, Shen Bao covers every sector, and the stock market is an indispensable key column.
“At 2:30 PM, find a reporter who knows Japanese, go to the exchange for interviews—anything goes. Five minutes later, there’ll be a good show. Be sure to capture it. Write it up big for tomorrow’s front-page headline.”
“Mysterious is fine, but you must bring down vegetable prices.”
“That depends on whether your writing is scary enough.”
Gu Yansheng hung up and called for Wen Yan.
He handed him the Army Ministry Secret Order.
“Find a bag to put it in, then send two fresh faces to the exchange to put on a show—Zhongye Public Office.
At 2:35 PM, your people find this bag—it’s picked up, but they don’t know whose. So they open it for a look, find this paper, and accidentally read it aloud. Everyone hears it. Reporters will be there—let them take photos. Then report to the police that you found a bag and hand it over.”
“Understood, but what is this?” Wen Yan couldn’t read the Japanese on it.
Gu Yansheng smiled. “A heavy bomb: the secret order from the Japanese Army Ministry to forcibly requisition cotton yarn and grain in Shanghai.”
Wen Yan was quick-witted and burst out laughing. “Mr., this idea is brilliant. It’ll scare countless businessmen to death.”
“Those following Fu Xiao’an in hoarding and price gouging must be prepared for ruin. Shanghai’s judiciary—whoever calls the shots, if they don’t get it, I can’t help.”
At 2 PM, at the stock futures market in the British American Concession, Zhongye Public Office was bustling.
In this era, the poor couldn’t afford stocks, and the rich had limited entertainment, so stock trading was one of the major daytime amusements on the Shanghai Bund.
Ordinary people mostly bought stocks; few bought futures.
Because if stocks fall, you at least have the certificates. Wait it out—they might rise back. Most hold through losses; some wait ten or eight years.
Futures are different. They require periodic delivery. Say you agree to deliver cotton yarn or equivalent money with certificates in a month—then the cotton yarn futures closing price that month is the final delivery price.
Long position holders think 70 yuan cotton yarn is cheap, buy long contracts. If it rises to 120 in a month, they earn 50.
Short sellers think 120 is expensive and will fall, so they buy short contracts.
It’s like borrowing a pack of cotton yarn from the exchange without having any, selling it at what they see as a high price now, planning to buy back cheaper later to return it.
But cotton yarn prices kept rising to 150. Buying back to return means a 30 loss.
With two times leverage, spending only 60 yuan to enter a 120-yuan original price short contract—originally 120 could buy two contracts. It doubles up or down.
So when cotton yarn hits 180, the short seller’s wealth is zeroed.
At 200, it’s time to jump into the Huangpu River.
That’s why short sellers now beg and plead, tearfully dumping short contracts on Lu Bowen.
Futures zeroing isn’t the end. Unsold contracts really mean owing the futures company money. Is that money easy to owe? They’d be done before delivery day; future rises or falls don’t matter.
Now merchants and capital are teaming up to rig the market, jacking up all prices. If Gu Yansheng doesn’t act this wave, short sellers will either run or jump into the Huangpu River.
Outside Zhongye Public Office, Gu Yansheng sat in the car, with Wen Yan driving.
Gu Yansheng checked his watch: 2:30. “About time. Let’s start.”
Wen Yan nodded, got out, instructed the car behind, then handed them the bag.
Two fresh faces from the Inspection Department entered the stock exchange one after the other. Inside, it was packed, everyone staring at the latest stock prices on the blackboard above.
Reporters had arrived, interviewing a few stockholders.
Stockholders’ moods weren’t great now, because Zhongye Public Office was run by British people, trading foreign merchants’ stocks. Due to the city government’s new policy, these foreign shipping stocks were mostly falling relentlessly.
“Prices rising, vegetables deadly expensive, stocks falling—this life is unlivable.” That was a Shanghai auntie’s complaint to the reporter.
The futures side was ecstatic, shouting rise-rise-rise, or utterly devastated like they’d lost their souls, faces pale, bodies trembling.
Waking up to losses every day.
2:35 PM, the show began.
An Inspection Department member stood from the rest bench in the back and shouted, “Whose bag? Whose bag is missing!”
Futures folks were too hyped to notice, but stock people were idle—losses but unwilling to sell—so they turned to look.
“Whose bag is missing! No one claims it, I’m taking it!” The Inspection Department member shouted a few more times to draw attention.
Someone in the crowd chimed in, “Might be empty. Open it and see what’s inside. If not empty, you’re rich.”
“Opening it then.” The bag-finder unzipped it.
Stock-trading onlookers wanted to see if there was money inside, just for the spectacle.
The member opened the bag: first a wallet. “Yo, money indeed—Japanese Yen!”
“Oh wow, rich!” Stock-trading onlookers started jeering.
The member reached in next and pulled out the secret order, flipping it over, unable to read. “What’s this? Can’t read little Japan’s writing?”
“I can.” A nearby reporter raised his hand, pushing through eagerly.
“This seems like a Japanese confidential document.” The reporter recognized the mark, got interested, read it, and his own face changed dramatically.
The editor-in-chief just told him to come today for big news, but didn’t say what.
Reading closely, even he panicked. This news wasn’t just big—it was explosive!
“Tell us, what does it say?” Onlookers were dying of curiosity at the reporter’s expression.
Japanese secrets—must be juicy.
Especially seeing the reporter frantically snapping photos of the document.
“Say it!”
“Yeah, say it, stop shooting.”
“I can too, let me see.”
Another member in the crowd pushed forward, snatched the document from the reporter, and read aloud.
“Order: Command Shanghai Gendarmerie Headquarters to requisition with all might all cotton yarn, grain, and other supplies in Shanghai, Jiangsu, and other places to support frontline combat. Army Ministry.”
