Chapter 68: Short Selling
The verification of the information came the next morning.
Three days had passed, and not a single chamber of commerce had paid up and admitted defeat.
Even the small shipping companies hadn’t paid!
Clearly, they had formed an alliance in private.
And in that day’s newspapers, the concession newspapers responded to the recent price surge issue that residents cared about, with expansive text.
Their statement was that after their investigation, they found it was the new policy of the SH city government that triggered a sense of crisis in the freight industry, making them feel their goods might be seized, so they simply stopped procurement.
British media interviewed concession merchants, and the merchants said: “Unless the city government is willing to abandon the new policy, we won’t change our approach; we will firmly resist this new regulation.”
The spearhead pointed directly at the city government’s new policy and Gu Yansheng’s judicial department.
As for the shortage of land transport’s rice, vegetables, and other supplies, the chamber of commerce’s statement was, “It’s not that we don’t want to procure, but the situation is unstable, transport is difficult; we’re doing our best to solve it, but we can’t guarantee when supply can resume.”
With both sides’ statements appearing simultaneously, the central idea was one sentence: supplies are short, and there might be no rice to eat.
Once the statement spread, it immediately caused panic among citizens; prices rising day by day was one thing, at most just more expensive, but now even with money, goods might not be buyable.
Anxious people had already started queuing to snap up rice, vegetables, and other daily necessities, but merchants had very little stock, sold strictly by weight, limited per person, causing massive queues and selling out early.
And those who weren’t anxious at first, seeing this scene, became anxious too and joined the hoarding army’s troop.
Rice, vegetables, oil, and sugar in the market were snapped up clean; at the vegetable market, even rotten vegetable leaves on the ground were picked up.
The vegetable market opened for thirty minutes and the whole place was cleared out, then directly closed for the day.
This out-of-stock state further intensified the panic, with black market prices for daily necessities skyrocketing.
Those who couldn’t buy goods started cursing the Japanese, cursing this policy; public opinion began to shift, no one cared about the release of prisoners from the previous days, citizens were all worrying about tomorrow’s livelihood.
Only stock traders were happy, because commodity futures prices were skyrocketing.
Cotton yarn price rose another fifty percent, reaching 150 silver dollars per pack.
Fu Xiao’an, as mayor, accepted an interview that afternoon and responded to the concession media’s statements.
“Regarding the recent vegetable prices surge, the city government will definitely take measures to stabilize prices; please citizens don’t worry excessively.
I myself have already used personal relationships to urgently contact out-of-town grain merchants, oil merchants, and vegetable merchants, having them urgently allocate supplies into Shanghai; if fast, they can arrive tomorrow morning.
At that time, they will be sold at flat prices to SH citizens, with purchase limits per person to ensure more people can buy, absolutely no profit will be made; please citizen friends rest assured, we’re always working hard.”
The next day, sure enough, farmers one by one pulled small wooden carts into the city, fully loaded with daily necessities; radishes and cabbages were conspicuously exposed in bamboo baskets outside, swaying with the cart, which for Shanghai people short on vegetables, just one look made their mouths water.
But looking closely, why did the vegetables on the cart seem wilted, as if they’d been waiting outside the city gate for days and dried out?
But for city folk, having something to eat was good enough; they couldn’t nitpick too much.
The troop had 20 people, one after another, a long line of carts fully loaded with supplies, drawing cheers from citizens; the troop slowly pulled a long distance from the city gate to the vegetable market, then started selling.
By the time residents queued up to buy, they found the long line ahead hadn’t even reached them yet, and it was already all sold out.
“All sold out, come back tomorrow.”
Residents could only leave dejectedly.
In the judicial department office, Gu Yansheng listened to secret agent Liu Xiaolou’s report on today’s street observations, quite emotional.
“After this combo of punches, even the Japanese can’t say Fu Xiao’an isn’t doing anything; our Mayor Fu has top-notch showmanship—20 small wooden carts to supply all of Shanghai? What a joke?”
Knock knock knock.
“Division Chief.”
Wen Yan came in to report, and Xiao Lou proactively left.
“Mr., up to now, I’ve recruited 26 people, of whom 14 can shoot; if you want to use them, I can deploy anytime.”
“Seen the newspaper?” Gu Yansheng guessed Wen Yan had figured out the purpose of assembling people quickly; three days, and this was only the second.
Wen Yan nodded: “Merchants hoarding and price gouging—if we can find a few of their warehouses and seal them up, it should serve as a warning; among the people I recruited, there are former Green Gang members familiar with the area; finding some hidden warehouses should be possible with some time.”
Gu Yansheng pondered and ummed: “Fine, scatter the people to search, but don’t act, only observe; even with solid evidence, no action.”
“You’re worried about offending people?”
Now the judicial department was in the spotlight, and behind these warehouses were solid capitalists, some foreign merchants; if it blew up into an international dispute, first Gu Yansheng would be denounced, second even the Japanese might not side with him; Wen Yan, experienced, had this guess.
Gu Yansheng smiled: “Don’t rush; do as I say, there’ll be chances for you to act; newcomers just arrived, let them observe to practice and temper their patience.”
Wen Yan said no more, “Got it, I’ll arrange right away.”
Gu Yansheng nodded, watching him leave.
Wen Yan was right; warehouses aren’t easy to raid.
From Fu Xiao’an’s reaction, he was clearly prepared for a war of attrition, to wear him down until denounced and removed from office.
Raiding warehouses offends people; no need to add pressure on himself.
Who said raiding warehouses had to use his own people.
And which warehouses had cotton yarn, he didn’t know yet; needed someone who knew.
Gu Yansheng picked up the telephone on the desk and called Wu Sibao, cursing as soon as connected.
“Wu Sibao, is it so hard for you to give some money? Don’t I need face with the British? 1000 bucks and you’re dragging your feet; can you do it or not? No money, don’t blame me for not taking you along.”
“That’s 1000 bucks? That’s 1000 US dollars!” Wu Sibao still felt the pinch; not treating US dollars like treasure, but Gu Yansheng’s telephone was a rarity.
Immediately softening his tone with a smile, inquiring: “So, is there a way to make money?”
Gu Yansheng snorted: “Saving you that 1000 is already good; you’re so slow, and still want me to take you to get rich? I’m afraid you’ll mess up my business!”
“Coming, coming, don’t rush.”
“Coming what?”
“No, I mean the money’s already being raised; I’m tight on cash right now; tell that British guy not to rush.”
“Before I get off work, no 1000 US dollars, and I’m not taking you on this opportunity.”
Slam, without giving him time to react, Gu Yansheng hung up.
Picked up again, called Lu Bowen, asking him to come over.
Fu Xiao’an teaming up with foreign merchants to rig the market, hoarding and price gouging for a profit, stock market for another; no reason only they make money—Gu Yansheng needed money too.
“You know stock trading, right?”
“Of course, who doesn’t? It’s just about how well you do it.” Lu Bowen laughed in surprise: “Why would you care about this?”
Gu Yansheng smiled, “So, what do you think the trend of cotton yarn futures will be in the next few days?”
“Definitely up.” Lu Bowen, as an insider, could guess that much.
“Fu Xiao’an and foreign merchants now teamed up like they’re wearing the same pants; as long as Shanghai’s supply pressure doesn’t ease, not just cotton yarn, all futures prices will rise, and skyrocket.
If I had money, I’d buy some cotton yarn futures for a sip of the soup; with you here, this is inside information; anyway, whenever you think it’s solvable, I’ll sell short ahead, feels like steady profit no loss.”
“Then I’ll give you inside information: prepare to short sell.”
“What? Short now? All of Shanghai is buying long.” Lu Bowen widened his eyes in disbelief, but then smiled probing: “Does that mean you can solve this?”
Gu Yansheng nodded: “We lack cotton yarn and money; no choice but to beg from them—who made cotton yarn prices so high?
They pull up cotton yarn prices so I can’t afford, so I find ways to pull them down; you short sell to make money, then buy cotton yarn, use their money to help us buy goods.”
“Reliable? These futures are controlled by big market makers; now Fu Xiao’an and them are teamed up pulling high; if it doesn’t come down, shorting loses big—unless the Japanese are issuing some new policy?”
“No new policy, but I’m shorting with real gold and silver; rest assured, I won’t joke with my own money; definitely full confidence before acting.”
Gu Yansheng didn’t understand stocks and didn’t need to; he understood using power.
“Come to my house tonight; I’ll give you all my money; these days go to the exchange and watch only cotton yarn; when I say act, you act; I’ll grasp the timing.”
“Deal.” Since Gu Yansheng was so certain and putting up his own money, Lu Bowen had no reason not to trust.
