No matter how talented the merchants in ancient China were and had a fortune of over 100 million, they were just a cloud in front of the autocratic imperial power. They were just like the Shen Wansan family in the early Ming Dynasty. The suspicion of wealth led to the destruction of the family. More recently, I am going to talk about Hu Xueyan in the late Qing Dynasty.
Hu Xueyan, because the novel of the same name written by Taiwanese Mr. Gao Yang became a best-seller in mainland China in the 1990s, causing countless mainland businessmen to worship Hu Xueyan’s success. You must read "Zeng Guofan", and "Hu Xueyan" is a must-read for businessmen. In just 12 years, Hu Xueyan has grown from a small bank owner in a small place to a super red-top businessman with tens of millions of taels of capital, tens of thousands of acres of land, a second-grade official award, and a yellow mantle. People are very excited about this. Envy and desire. Unfortunately, many people at that time selectively ignored Hu Xueyan's final outcome in history. That is, he was later ordered to be dismissed from his post and investigated by the Empress Dowager Cixi, and his crimes were severely prosecuted. (A red-top businessman is an official businessman. In layman’s terms, a red-top businessman is an official in the government. At the same time, he appears as a businessman. A person who has both the roles of a civil servant and a businessman is also an official businessman.)
Why did a second-grade red-top businessman encounter such a tragedy? That has to start with his silk factory. Silk was a bulk raw material exported by China at that time. When Sino-foreign trade first began, the market for raw silk in China was controlled by China's silk shops. The silk bank took advantage of the imbalance in information sources to lower the purchase price paid to farmers, and at the same time used its advantage in purchase to raise the foreign trade price, making huge profits. However, after the opening of the Suez Canal, the importance of raw silk hoarding in the European market has greatly decreased; moreover, the production of raw silk in Italy and other places has also increased significantly, so the pricing power of raw silk began to shift to the West. Hu Xueyan felt that silk cocoons from Jiangsu and Zhejiang were exported in large quantities and were dominated by barbarian merchants, unable to compete with them. So in 1882, Hu Xueyan opened a silk factory and collected 15,000 bales of new domestic silk at high prices in an attempt to regain the pricing power of raw silk. So, has he taken it back?
Hu Xueyan’s huge hoarding did give him a certain advantage in negotiating prices with foreign businessmen. At that time, the average price of each pack of raw silk was 320 taels of silver, and the total price of the raw silk hoarded by Hu Xueyan was 4.8 million taels of silver. Foreign businessmen were willing to pay a higher price for the raw silk in his hands, which was as high as half of the total price, but Hu Xueyan refused. Obviously, the reason for Hu Xueyan's refusal could not be based on patriotism, but more likely because the profits did not reach his goal. Jardine Matheson's files show that in April and August 1883, they discussed purchasing raw silk with Hu Xueyan twice. Hu Xueyan was very confident because the silk harvest this season was extremely poor.
However, when Hu Xueyan was extremely confident in the raw silk market, his Fukang Bank had a big problem. The "Declaration" on October 19, 1883 recorded: In the winter of 1882, major shops in this city closed down one after another, and the estimated consumption was in the millions. The market situation has greatly deteriorated. Why is there such a large-scale closure of shops? It turns out that in China in the 1880s, the development of the Westernization Movement led to a lot of private capital participating in the establishment of joint-stock companies. A lot of private capital flowed into shares, and of course there were many banks that pursued profit. Due to the large influx of capital, the stock prices of joint-stock companies have naturally been continuously pushed up. This has led to the public being extremely optimistic about joint-stock companies and would rather borrow money from banks than buy shares. The "Declaration" on January 23, 1884 stated that starting from 1882, the buying and selling of shares was so prosperous that the whole country went crazy. In less than a year, the shortcomings of love were revealed, and thousands of stocks were like waste paper. The collapse of the joint-stock company caused a chain reaction, and Fukang Bank's loan recovery was basically hopeless. The prerequisite for Hu Xueyan's courage to compete with foreign businessmen on the price of raw silk lies in the advantage of his bank. Now it's all over, because a large number of people have poured into various banks to run money, and the banks have no time to take care of themselves.
In November 1883, Hu Xueyan sold the 15,000 bales of raw silk he had hoarded to Jardine Matheson (2,000 bales) and Tianxiang Matheson (13,000 bales), resulting in a loss of 1.5 million taels of silver.
Hu Xueyan would have been able to cope with this loss before. Unfortunately, things are no longer what they used to be. Hu Xueyan's capital chain is leaking everywhere. Fukang's Shanghai head office has collapsed, followed by Fukang banks all over the country. Hu's money was about ten million taels, half of which were deposited by the ministers. Prince Gong, Wang Yi, and co-organizer Wen Yu both bought more than one million yuan.
When things have developed to this point, it is not something that Hu Xueyan, a businessman, can solve through relationships. The Qing Dynasty immediately came forward to investigate the economic incident caused by Hu Xueyan. Under the attention of the Empress Dowager Cixi, the Ministry of Household Affairs telegraphed all provinces to strictly investigate Hu Xueyan's debt arrears. As a result, various provinces found that Hu Xueyan's government owed a total of more than 2.4 million taels of public funds. The key is that these arrears are now basically impossible to return to the government. That’s great! Empress Dowager Cixi Fengyan was furious. At this point, Hu Xueyan's official benefactor Zuo Zongtang, the governor of Liangjiang, could no longer shield him from the wind and rain. Li Hongzhang, who was at odds with Zuo Zongtang, took the opportunity to criticize Hu Xueyan's usual misdeeds. Therefore, the Empress Dowager Cixi ordered Hu Xueyan to be fired from all official positions, his family property to be inspected, and his crimes to be severely prosecuted. Hu Xueyan was completely bankrupt. Originally, the Empress Dowager Cixi wanted to put Hu Xueyan to death, but after Zuo Zongtang tried his best to mediate, he still spared his life. At this point, Hu Xueyan is a little better than the Shen Wansan family.
In November 1885, Hu Xueyan died of hunger and cold at the age of 63. His coffin was buried in a pile of rocks at the foot of Cormorant Ridge in the western suburbs of Hangzhou.