Preparing the Drive Hunt
“Gaju! Gaju!”
Dang Un-sang, reviewing documents in his office, set aside the papers he was holding at the sight of Gong Duchan rushing in with urgent steps.
“What is the matter, Elder Gong?”
“What is the matter, you ask… Just what is the meaning of this? Borrowing five hundred guan of silver out of nowhere!”
“We needed it, so we borrowed it. Hasn’t our family’s business been expanding in every direction of late?”
“Even so! And not from our own Chahwa Bank, but from some third-rate finance house no one’s ever heard of called Hwieon Comprehensive Finance…!”
“A third-rate finance house couldn’t free up five hundred guan of silver all at once.”
Gong Duchan ground his teeth at Dang Un-sang’s casual, what’s-the-big-deal manner.
“To leave the branch family’s bank idle and borrow money from outsiders—this is discarding the clan’s interests just to keep the branch family in check, Gaju!”
“Interests, is it.”
Dang Un-sang gave a short snort of laughter, pulled a file from the wall rack, drew out a single contract, and laid it before Gong Duchan.
“Th-this is…?”
It was a loan agreement between Hwieon Comprehensive Finance and the Sichuan Dang Family.
As Gong Duchan scanned the terms, his eyes began to tremble violently.
“T-twenty percent annual interest? And a thirty-year grace period on the principal? What does ‘grace period’ even mean? It means setting something aside—surely you don’t mean the principal itself is set aside?”
“Exactly that. For thirty years the principal sits untouched, so we need only pay the interest. After thirty years we begin repaying principal and interest together.”
Gong Duchan’s hands shook.
“Th-this… a deal this absurd could never hold, Gaju!”
By Gong Duchan’s common sense, even an ordinary finance house—let alone Yeowangchae—rarely lent for longer than ten years at most. Interest rates varied with the borrower’s credit, but even the most favored client would be charged a minimum of fifty percent.
From a twenty-first-century viewpoint it was highway robbery, yet in this era it was simply the way of things. Without bribing officials and martial artists, a finance house could not operate at all, so a large share of the take was siphoned off in bribes. And compared with the relative safety of the modern world, the Central Plains were far more dangerous—the lender never knew when the borrower might die or his entire clan be wiped out. Those risks were priced into the usurious rates.
To a man of the Central Plains like Gong Duchan, the contract Dang Un-sang held looked no different from a blatant forgery.
Gong Duchan shouted, veins standing out on his forehead.
“This is a deal that will bankrupt the lender! Just think of the opportunity cost of the money lent and the discount rate on future earnings—the answer is obvious! This is fraud! Some conspiracy the Gaju knows nothing about is surely afoot!”
“And can you find that conspiracy in the contract itself?”
“Well, no, but…!”
Whatever the other party might be thinking, if the contract had no defect there was nothing to worry about—after all, they were the ones lending the money, not us. Dang Un-sang’s words left Gong Duchan speechless.
“If calling someone a swindler simply because he does what you cannot is the way of things, there will never be progress.”
“...Even so.”
“Elder Gong, could Chahwa Bank lend to our Dang Family on these terms?”
“...It would be difficult.”
“For the past thirty years, whenever Chahwa Bank lent to the Sichuan Dang Family—even after applying the kin discount—it still demanded fifty-five percent interest. I think the time has come to change our principal bank.”
“...!”
“Ah, and one more thing.”
Dang Un-sang snatched the contract back with a sharp snap and spoke coldly.
“How long do you intend to keep using that insolent half-honorific tone with me, Gong Duchan? Do you find your Gaju amusing?”
“...It isn’t that, but…”
“But?”
“...It is not.”
“Gong Duchan. Elder Gong.”
A cold sneer that seemed to carry the scent of blood curved Dang Un-sang’s lips. The Dang Un-sang who had always smiled awkwardly before Gong Duchan, cleared his throat while begging for extensions, was gone.
“At this point I cannot help but wonder. Has Chahwa Bank truly been a good family to our Dang clan all this time? Why did Chahwa Bank never do what Hwieon Comprehensive Finance can do?”
“That is…”
“That a brand-new fledgling finance house can do something a venerable old bank cannot is simply absurd. You would do well to prepare an explanation I can accept. Because…”
“...”
“From where I sit, this looks very much like your little scheme to suck the lifeblood of our Dang Family and fatten yourself. Unless you want your entire household begging for their lives in the underground torture chambers while they spill thirty years of that same lifeblood, I suggest you hurry.”
“G-Gaju…!”
“Get out.”
“Gaju!”
Gong Duchan lunged forward in panic, but Dang Un-sang flicked his hand and sent a light palm wind. Struck square in the chest, Gong Duchan staggered backward as though shoved by a gale, toppled, and tumbled out through the doors of the Gaju’s hall.
“Aigoo!”
“And from now on, if you have something to say to me, speak during morning assembly or come through proper channels. Lately I’ve grown thoroughly sick of arrogant fools who treat the Gaju’s office like their own private bedroom.”
With that icy sneer the doors of the Gaju’s hall slammed shut.
Left outside, Gong Duchan stared blankly up at the expressionless faces of the gate guards looking down at him, then ground his teeth and rose.
“Those bastards…!”
He immediately sent word to the Assassination Pavilion.
That evening, in a quiet tavern outside the clan grounds, Gong Duchan met the Assassination Pavilion officer who had come at his summons and explained the entire situation.
“...And so I ask you to assassinate the people of Hwieon Comprehensive Finance. Because of those bastards I fear I will soon have trouble collecting the tribute I pay the Pavilion.”
The relationship between Gong Duchan and the Assassination Pavilion was a symbiotic one—crocodile and plover. Gong Duchan, though of the Sichuan Dang branch family, preferred not to rely solely on the military power of the main line—who were his provisional enemies—and so kept another card in reserve. For the Pavilion, it meant a steady stream of income without the usual painful cost of forcing a foothold into Sichuan, where the orthodox sects had long been strong.
Thus Gong Duchan never dreamed his request would be refused. The Pavilion officer cut him off at once.
“Impossible, Elder Gong.”
Gong Duchan flinched at the unexpected answer.
“Impossible? Why?”
“The Provincial Administration Commission stands behind Hwieon Comprehensive Finance.”
“The Provincial Administration Commission? But why…?”
To the stunned Gong Duchan the officer laid out, point by point, everything the Pavilion had already learned about Hwieon Comprehensive Finance. The firm had been an irritation to them as well, so the investigation was complete. The soldiers guarding Hwieon Comprehensive Finance were troops and officers seconded from the Sichuan Provincial Administration Commission. No mere handful of bribes would move regular government troops; that meant the Commission itself was somehow directly involved in the founding and operation of the firm.
Gong Duchan tore at his hair.
“Why in the world would the Provincial Administration Commission—why would the government thrust itself into private affairs like this?!”
“How should I know? Whether the Commissioner is lining his own pockets or some giant we don’t know about sits behind that Hwieon Comprehensive Trading Company…”
“What about Yeowangchae? Don’t you take tribute from them as well?”
“Hmm? Ah, you have that wrong. The ones bankrolling Yeowangchae are the Sura Sword Gate. Nothing much to do with us. And while we’re on the subject, if you go to the Sura Sword Gate you’ll hear the same answer. From their point of view, the tribute they take from you isn’t worth risking clan annihilation.”
“Damn it all! Once those Comprehensive Finance bastards start pouring money out at this insane rate, we’ll have to brace for catastrophic losses! How can you just give up when your own cash flow is about to dry up and die?!”
“We can’t throw away our lifeline just to protect a money line, can we? The Provincial Commissioner is a second-rank grandee appointed by the Emperor. If we make an enemy of him, the Imperial Army itself might move. The Assassination Pavilion has no reason to step onto a board that dangerous. You don’t seriously think the tribute we take from you is enough to stake the Pavilion’s survival on, do you?”
“That… that can’t be…”
“This is no time to stand there dumbfounded, Elder Gong. They probably won’t be able to keep those rates forever either. Finding a way to fight back is your job now, isn’t it?”
“...”
“I’ll take my leave. Sorry we couldn’t be of more help this time, but if there’s anything else, send word.”
“...Go carefully.”
In the end, having failed to get what he wanted, Gong Duchan brooded for a long while.
“Damn it… It’s not as if I asked them to die with me… Wait. Die together?”
Gong Duchan’s mind snapped clear.
“Th-that’s it. Unless they’ve got a bottomless fountain of money, lending at twenty percent simply isn’t sustainable. This must be a short-term all-or-nothing gambit to seize control of the entire Sichuan money market.”
The term “chicken race” did not exist, yet Gong Duchan grasped a similar idea. His fat chin quivered with rage.
“We just lower our rates and hold out with them. No matter how much capital those bastards have prepared, they can’t possibly have more than we do—we’ve held Sichuan for decades!”
He went straight back and summoned every bank master under his command to adjust interest rates. The sudden declaration that the maximum rate would drop to twenty percent left the masters shocked and furious. Yet even in their anger they had no choice but to obey. They too were nervous about the appearance of Hwieon Comprehensive Finance, and most of them either owed Gong Duchan operating capital or had some weakness he could exploit.
“What about Yeowangchae? There’ll be an uproar.”
“Slip them a little hush money and tell them to take a break for a while. If we just leave them to starve, their eyes will roll back and they might bite the hand that feeds them, so keep them fed just enough. Those Hwieon bastards can strut all they like—they won’t last long. Hmph! Twenty percent interest? Money doesn’t just spring out of the ground. Even with the Provincial Administration behind them it makes no sense. We’ll hang on until they start screaming, then make it back several times over!”
At that same hour, Hwi-yeom was speaking with Dang Un-sang.
“Persuading the Provincial Commissioner to station government troops—truly an outstanding move! With regular soldiers standing guard, what can the Assassination Pavilion or the Sura Sword Gate possibly do? But how in the world did you manage to convince His Excellency?”
“That Yeowangchae preys on the common people is already common knowledge. His Excellency himself has long wished to root them out… And the decisive point was that we used the name of Hwieon Comprehensive Trading Company, not the Tang Clan.”
Had they opened a bank under the Tang Clan’s name, it would have been denounced as a breach of the principle of non-interference between officials and martial artists, and a great controversy would have erupted. But in the end this was merely the business of a private commercial house with no ties to the jianghu. Of course government support for a private firm still looked peculiar, yet it was ambiguous enough that no one could easily make an issue of it.
“That aside, the method of conjuring five hundred guan of silver that didn’t exist—that too was a truly marvelous stroke.”
“A mere parlor trick.”
In reality it worked like this: the money Hwi-yeom had already earned became the operating capital of Hwieon Comprehensive Finance. Of that capital, five hundred guan was recorded on the books as a loan to the Gaju’s office of the Sichuan Dang Family. Then, purely for show to the Elders’ Council and the household, they brought over about fifty guan in silver ingots. In truth the silver never moved. The debt existed only on paper.
Book money moved from Hwi-yeom’s pocket to Dang Un-sang’s pocket; then book interest moved from Dang Un-sang’s pocket back to Hwi-yeom’s. From the clan’s perspective not a single coin had vanished, yet from the Elders’ Council’s perspective their Gaju had truly borrowed five hundred guan, and a sense of crisis was inevitable. Spreading that information far and wide would also establish the rumor that Hwieon Comprehensive Finance was no fly-by-night operation but a solid firm with the capital to lend five hundred guan at a stroke.
“Still… our private dealings are one thing, but will there truly be no problem lending to outsiders on those same terms?”
“It will be fine. We will lend only small sums, and only to the customer base that currently uses Yeowangchae—that is, ordinary civilians. Our capital isn’t overflowing to begin with, and our target is not every finance house in Sichuan but Gong Duchan and the Yeowangchae network he controls.”
“Hmm. In that case won’t Gong Duchan simply lower his own rates as well?”
“That is precisely the trap.”
“What?”
“When we lower rates, they will lower theirs to match. They will be calculating that we, with our poorer cash position, will be the first to surrender. But that will be like drinking seawater to quench thirst.”
Surprise lit Dang Un-sang’s eyes.
“Why? Explain in detail.”
Hwi-yeom explained Yeowangchae’s typical profit structure exactly as he had once explained it to Bak Chang-eon. After listening for a long while, Dang Un-sang slapped his knee.
“So that’s it! We may simply fail to make much profit, but they will be locked in a fight where they keep bleeding!”
“Exactly.”
Needless to say, twenty percent interest was by no means low. But Yeowangchae’s baseline was eighty percent. With a finance house offering loans at twenty percent, no fool would go to Yeowangchae. Yeowangchae’s profit structure would deteriorate sharply, and that would immediately translate into a collapse of control for the small and mid-sized banks that owned Yeowangchae franchises—and for their overlord, Gong Duchan.
“Even better, beneath Gong Duchan are not only Yeowangchae but a whole cluster of small and mid-sized banks. Gong Duchan’s Chahwa Bank lends to mid-tier houses; those mid-tier houses lend to small ones; and finally the small ones lend to Yeowangchae. By starving Yeowangchae we strike every layer at once.”
After confirming with Jin Cheong, Hwi-yeom had learned that Gong Duchan, in his bid to dominate Sichuan’s financial world, had lent money down a multi-level chain of banks. That was how he maintained his status as “the bank of banks” and flaunted his influence. Now that structure had become poison. By scattering money like a pyramid scheme he had let every intermediate layer skim fees and thereby seized the market—yet with overall profits collapsing under Hwieon Comprehensive Finance, those same layers now faced a chain of bankruptcies.
“Even when money grows scarce, Gong Duchan will keep sending tribute to the Assassination Pavilion and the Sura Sword Gate. The moment he stops, his backing vanishes and his position collapses.”
The terror that had kept the bank masters obedient—the knowledge that betrayal could mean assassination or the destruction of their businesses—would evaporate.
“The mid-tier and small banks will therefore have no choice but to keep bleeding and hold on. But Yeowangchae… Yeowangchae may be a different matter.”
“What do you mean?”
“Yeowangchae are originally unorthodox, are they not?”
The intermediate banks that had lived comfortably skimming interest would merely feel their blood dry up. But the loan sharks on the ground—the ones who ran about with blades and collected the money themselves—would be driven past rage into pure madness. They were the ones actually earning the money, yet the upper levels ordered them to take lower interest while still demanding the same tribute, on time, every time.
“Yeowangchae’s essence is black-path; they are unorthodox who move the blade before the tongue. How long can a temperament like that endure?”
This was a fight that would bleed Hwieon Comprehensive Finance less than Gong Duchan, and bleed Gong Duchan less than Yeowangchae.
In the end, the first to break would be Yeowangchae.
“Before long, Yeowangchae will come looking for Gong Duchan with blades in their teeth.”