Chapter 66: The Bank

Wu Fengdian was a calm-minded man who always considered potential failures before claiming success. He had long anticipated what conditions Xiliu Camp could not refuse. He also knew that overcoming Liu Yu would equal overcoming Xiliu Camp, and since Xiliu Camp had always maintained good relations with the Front Camp, he could use Liu Yu to persuade Huang Shouzhong. With that, he would have complete control over the Black Flag Army and thus a sure victory.

He said calmly, “Although Shanxi is good, it lacks depth. I am willing to share Xuan Guang with you. I have discussed this with Yuanting, and he agrees.”

Shanxi was originally his jurisdiction, so he knew it well and was aware of its greatest military weakness. Shanxi was prosperous, with natural defenses that made it easy to defend but difficult to attack—these were its advantages. Yet it had a fatal flaw: it was too close to Hanoi. Starting from Hanoi, one could reach Xuan Guang in seventy miles along the Red River, with infantry arriving in a day or two. The French had been in Hanoi for years, with concessions and marines, and they would surely reinforce their forces by land and sea to attack Shanxi during war.

Liu Yu setting up his base in Shanxi resembled an emperor guarding the borders. He must block the French offensive outside Shanxi at all costs, otherwise his base would be threatened. Still, he needed to prepare—Shanxi was too close to Hanoi, so he needed a place for his family, the weak, and military industries.

Xuan Guang lay west of Shanxi, separated by the Red River. It had been one of the main battlefields in the Sino-French War. After capturing Shanxi for months, the French took Xuan Guang. The Black Flag Army and the Qing forces launched a counterattack but failed. Eventually, the remaining French troops received reinforcements and repelled the siege.

Yet the French suffered heavy losses in this battle. The deployment of French forces from the eastern front also led to the great victory at Zhenan Pass. It was because of these records that Liu Yu became aware of this small province under Shanxi’s jurisdiction.

Liu Yu could not refuse this condition and nodded.

Wu Fengdian glanced at Ye Chenglin. “I originally intended to send Chenglin to guard Xuan Guang. Now it seems we’ve achieved both goals.”

It was only after Liu Yu nodded again that Ye Chenglin thanked Wu Fengdian, “Thank you very much, Master Ya Lou.”

“Xuan Guang has troops from the Front Camp, and Shouzhong often visits there. You can discuss how to hand over responsibilities between yourselves. For Xuan Guang, Chenglin only needs to send a small detachment—no need for many troops. However, our Left Camp will also send a detachment there, under Chenglin’s command.”

“Agreed!” Liu Yu agreed readily. “I’ll cover the rations and pay for that detachment.”

Wu Fengdian’s ambitions extended beyond this. “I’ll handle the rations and pay, but there’s one thing you need to take care of: equip that detachment with backdoor guns. Of course, Chenglin will have full control over them. If there are any issues with the officers below, you can tell me, and I’ll ensure they’re removed…”

This was essentially handing over an entire detachment to Liu Yu’s command, but in terms of organization and personnel, Wu Fengdian retained decisive power, while Liu Yu only had advisory authority. The detachment thus became shared between the two.

Since Wu Fengdian was willing to take on the responsibility of the entire Xiliu Camp, he naturally had a broader mindset: “I wonder if this loyal minister has the same determination. I’ll give you a platoon as well.”
Ye Chenglin now dared to interject: “I’ve known Huang Shouzhong for many years—how could I not understand him? He values his own troops more than his own life. He’s willing to discuss anything except this one issue; he’ll never compromise on it.”
“As for the taxes in Xuan Guang and local personnel matters, they can’t be decided by just your family like in Shanxi. It needs to be discussed among us. Especially if Yuan Ting really wants to return home to pay respects to his ancestors, the three of us camp commanders should discuss it thoroughly.”
By saying “the three of us camp commanders,” he naturally excluded Yang Zhenen and Liu Chengliang. But in fact, under Liu Yongfu, it was these three who controlled almost all of the Black Flag Army’s forces.
“That’s good! Let’s discuss it carefully among the three of us. When problems arise, we should talk more, and finally, let Yalou make the decision.” Liu Yu then brought up an idea he already had: “I actually have an idea. I wonder if Yalou is interested?”
“Go ahead and tell me!”
Liu Yu smiled and said, “Yalou, our Black Flag Army now controls several provinces, but whenever problems arise, we face difficulties in managing funds and keeping things running smoothly. Have you encountered such issues?”
“Of course,” Wu Fengdian immediately guessed Liu Yu’s idea: “You want to establish a bank? That would certainly make things easier in terms of fund circulation, but it wouldn’t be profitable.”
With frequent wars in northern Vietnam, it was hard for ordinary merchants to survive there. Only profit-driven speculators like Liu Damaiba and Deng Cunyu could thrive, as businesses like banks carried too much risk.
However, after the run on funds he faced from Desmond last time, although he managed to get by by fraudulently obtaining loans, he deeply understood the hardships of not having financial institutions.
In his own era, as a local warlord, he could simply issue large sums of money directly from banks without even going through cash withdrawal procedures. More importantly, for a military group, there was no more profitable business than printing money.
During the late Qing Dynasty, banks and money houses had capital amounts of hundreds of thousands of taels but issued banknotes worth tens of millions of taels. Meanwhile, banks today only have reserve ratios of around 16%.
The amount of cash he had was limited, yet it was used as reserves to continuously issue more paper money.
After taking over the operations in Lianjincheng, Liu Yu realized he already had all the necessary conditions to issue paper money. Although replicating the franc wasn’t yet fully successful, issuing paper money with a certain level of anti-counterfeiting features was quite easy.
Another point was that once war broke out, a field bank was essential for modern military operations. All armies had accompanying banks that served to handle transfers and also conduct economic warfare by using paper money to acquire strategic supplies.

After considering these points, Liu Yu’s desire to establish a bank became uncontrollable. He said to Wu Fengdian, “I’m not afraid of losses. As long as our Black Flag Army remains in northern Tonkin and we can issue banknotes, I won’t worry about losses. Is Yalou interested in getting involved?”
Wu Fengdian was naturally very interested in such an enterprise. “Officer Liu, issuing banknotes without cash backing won’t work. I also struggle with cash flow issues. Let me contribute from the Left Camp. How much silver do you have ready for backing?”
Liu Yu replied bluntly, “Twenty thousand taels. We can at least issue one hundred thousand taels worth of banknotes. The key is whether you’ll support us.”
“Agreed!” Wu Fengdian was eager to win Liu Yu over. “In my jurisdiction, these banknotes can be used as cash.”
“They’re not banknotes!” Liu Yu explained to Wu Fengdian. “They’re paper money. They can’t exchange paper money for silver from us. It’s like francs or pounds—paper money…”
Since Wu Fengdian didn’t understand the difference, Liu Yu took out the first batch of paper money he had printed. “Yalou, this is the paper money I’ve issued. It has good credibility in Shanxi now. Shops near the old camp are willing to accept it.”
Wu Fengdian examined it closely and saw two big characters clearly printed on it: “…Ration Tickets.”
…
Huang Zuo Yan was seething with anger. He glanced at Zunshi Yunping, “It’s all your fault. Now, trouble piled up on trouble. I have no idea how Liu’s group will handle this.”
Zunshi Yunping could only force a smile. “This wasn’t just my idea. Moreover, the Governor-General also approved it.”
Huang Zuo Yan increasingly felt he was no longer the powerful figure in charge of military affairs in northern Tonkin. Especially now, after the Black Flag Army had lost trust in him, he didn’t even dare return to Shanxi.
In history, he had long controlled military and political affairs in Shanxi, but in this timeline, Liu Yu had taken over his favorite city, Shanxi. He could only wander around Xinghua and Taiyuan.
Zunshi Yunping, however, didn’t take it seriously. “Governor-General, it’s better to take action soon. Give him the rewards he deserves and distribute some of the military pay. The top priority now is to pacify Lu Zhiping in Shaanxi. Tackle the easier tasks first; sooner or later, it will be Liu Er’s turn and Liu Yu’s camp in Shanxi.”
“Liu Yu’s camp in Shanxi is even more ferocious than ten Lu Zhipings. It’s easy to deal with one Lu Zhiping, but hard to deal with Liu Yu’s camp…” Thinking of how he had been forced back by Xi Liu Camp in the Ten Continents, Huang Zuo Yan gritted his teeth in hatred. “This is truly keeping a tiger as a threat.”
Zunshi Yunping, however, was well-versed in military strategies. “Governor-General, although this is difficult, there’s a plan—use the barbarians to control the barbarians.”
Huang Zuo Yan shook his head. “That’s a wrong approach. I thought putting Liu Yu’s camp in Shanxi would put them at odds with Liu’s group, but they didn’t even clash… Hmm, you mean using Lu Zhiping to deal with Xi Liu Camp.”
As a master of political tactics, he thought it was feasible after a brief consideration. “That could work. But Liu Yu’s camp has many hidden weapons behind them…”
“Lu Zhiping also has quite a few foreign guns at the front.”

Huang Zuoyan was quite familiar with Lu Zhiping’s combat capabilities. This man had dominated northern Cochinchina for over a decade, commanding many elite troops, and had acquired a large number of foreign rifles—far superior to the muskets used by the soldiers: “Just act in this way, set up a trap to make those two tigers fight each other to the death.”

……

“Ration tickets…”

Huang Shouzhong looked at the newly printed ration tickets and burst into laughter: “How come I didn’t think of such a good idea? I also have a canteen and even bought a few large iron pots.”

Liu Yu stoked the fire further: “These ration tickets are valid within ten miles around the old camp now. Everyone knows they’re issued by the Xiliu Camp canteen. With these tickets, one can enter the canteen to eat. Sometimes, even the soldiers with full bellies have to exchange these tickets for copper coins outside.”

Huang Shouzhong thought Liu Yu’s plan could work, though he still didn’t understand how Liu Yu’s “bank” functioned. Liu Yongfu understood even less: “Real gold and silver are still the best.”

“One tael of real gold and silver can be used to issue ten taels worth of tickets,” Liu Yu argued differently. “What our Black Flag Army lacks are gold, silver, and contraband goods.”

Liu Yongfu trusted silver tickets but not such military vouchers: “If you don’t offer silver for redemption, what’s the use of these tickets?”

“Of course they have uses. For example, people can use them to pay taxes or deliver grain to our Black Flag Army, or to buy weapons.”

Liu Yongfu didn’t quite understand at first, but later he grasped it—using these tickets, they could purchase weapons from the Xiliu Camp, which were strictly prohibited in northern Cochinchina, thus gaining some credibility.

“Then we don’t need silver?”

“We still need both cash and tickets. We don’t have enough cash, so we can only use tickets to make up for it.” Liu Yu had to add an example: “Our Black Flag Army lacks pay, so we often go to villages to requisition grain.”

It was a last resort. An army like the Black Flag Army couldn’t maintain strict discipline when short of pay. Though Liu Yongfu was lenient with his men, he wouldn’t allow them to commit acts of rape and plunder; he only allowed them to threaten villagers to get a few bags of grain: “Now it’s different. We can use tickets to buy their grain.”

Everyone understood that this was still a form of forced acquisition through force, just changing from unpaid requisition to forced acquisition using printed tickets. But what use could people make of these tickets? Liu Yongfu still couldn’t figure it out: “These paper tickets are useless—they can’t be exchanged for real silver.”

“No! There are many uses. People can pay protection fees to our Black Flag Army, buy goods in the market, or use them to offset corvée obligations. We need to protect the credibility of the tickets we issue.”

Liu Yongfu finally understood. The Vietnamese government required every able-bodied man to serve at least two months of corvée labor each year—a harsh practice. If they could exempt people from this burden, perhaps farmers would collect these Black Flag Army paper bills everywhere.

It was, however, undermining the Vietnamese government’s authority. But thinking about the humiliation they had suffered this time, Liu Yongfu said, “Well… how about we declare that all farmers under our control who pay a sum to our Black Flag Army will be protected by us and not conscripted by the southern officials?”

“Hmm, that works too.”

Huang Shouzhong thought for a long time before saying, “In that case, although we can get our money back, if too many notes are printed, the Vietnamese will have more and more of them, which will naturally cause their value to drop.”
Liu Yu had always believed that moderate inflation was harmless for a currency: “It’s not a problem. We can always sell gold, silver, or contraband to withdraw some of the notes, and their value will rise again. Moreover, in the areas we control, we can allow the Vietnamese to use notes to pay taxes to the authorities. If any officials refuse, we have soldiers to remove them.”
Wu Fengdian also thought of a problem: “In that case, the people in the south surely won’t keep these notes; they’ll all end up in the hands of the southern authorities. What should we do then?”
“Clear up the accumulated arrears,” Liu Yongfu replied with a quick insight. “Cheng Liang, go and make a tally to see exactly how much military pay Huang Zuoyan owes me.”
Liu Yongfu had long given up hope of recovering these arrears and had no intention of pursuing them. But after hearing that Liu Yu had used the pretext of unpaid wages to force the authorities to act, he came up with an idea.
“The new pay can be in cash, while the old pay can be offset with notes,” Liu Yongfu said, determined to take down Huang Zuoyan. “Since he’s been unkind to me, I won’t be unfair either.”
Though the idea of a bank sounded great, everyone under Liu Yongfu—from Wu Fengdian to Liu Chengliang—were complete country folks. Even Yang Zhenen, who held an official title, was just a military scholar with no knowledge of economics.
So after a week of consideration, Liu Yongfu ultimately turned to Liu Yu: “Commander Liu, we still need your help with this.” Liu Yu immediately replied with a smile, “I’ll do my best. But this can’t be rushed; it takes months of planning to achieve anything significant.”
“Let me add that I’ll set up branches in various places. General Liu and my colleagues, if you need funds, just come to the branches and ask.”
After thinking for a while, Liu Yongfu added, “The bank relies entirely on Liu’s camp. I’ll order the camp commanders to give their full support. As for capital…” He hesitated for a moment. “Each camp commander will contribute 500 taels from the public funds, and I’ll add another 1,000 taels. If it works well, they can contribute more.”
“That’s great.”
He was still a typical farmer. To him, a bank wasn’t scary—everything except real money was meaningless. The notes issued were merely a temporary solution to deal with the Vietnamese. So he readily handed over the bank operations to Liu Yu: “Then it really depends on Liu’s camp. If it succeeds, I’ll treat the two camp commanders to drinks. For any initial expenses, Liu Yu, you can cover them first. If you need anyone, just inform the camp commanders—no need to ask me.”
Liu Yu nodded. “Then it’s settled regarding the bank. When we go back this time, we’ll bring the shares with us.”
For the camp commanders, there was no loss in this matter. Even if it failed, they would only lose 500 taels from the public funds, which they could exchange for a huge favor from Liu Yu’s camp in return for more weapons.
“In the future, 70% of the military pay will be in silver, and 30% in paper money. As it becomes more widely accepted, we’ll switch to 70% paper money and 30% silver, until eventually it’s all paper money…”

“In the early stages, to build credibility, we released an appropriate amount of silver and contraband in exchange for withdrawing banknotes, but we never publicly declared that these notes could be exchanged for silver. Please remember: the credibility of these banknotes does not stem from those mere twenty thousand taels in reserves, but from the military power of my Black Flag Army.”

Liu Yu was imparting basic financial knowledge, but although these men had seen much of the world, they lacked fundamental understanding of banks or banknotes. They had only seen traditional Chinese money houses and exchange houses, as well as silver notes that could be exchanged immediately upon presentation. However, Guangxi was remote, and even such institutions were rare, so their understanding of banks was akin to a blind man trying to understand an elephant.

Liu Yongfu narrowed his eyes, staring at Liu Yu like a cunning old farmer. No matter how much Sun Wukong struggled, he could never escape Buddha’s grasp. As long as I hold onto real gold and silver, everything will be secure. If he fails, I can simply turn against him—losing at most a thousand taels of silver. If he succeeds, the one who reaps the greatest benefits will still be me, the commander of the Black Flag Army.

In another timeline, there was also a farmer who stared at several powerful bosses with a similar gaze. He was a rural contractor from Shandong who had taken on a massive villa project in Beijing called Rose Garden. Illiterate and honest, he paid for the project expenses on behalf of the bosses. When those once-powerful bosses collapsed, it was this illiterate farmer who ended up laughing last, taking control of the Rose Garden project and reaping enormous profits.

Liu Yu did not notice Liu Yongfu’s gaze; he was immersed in his own financial world. With the support of the entire Black Flag Army, he could now pursue his vision of establishing a banking empire. He claimed to be releasing silver and contraband to withdraw banknotes, but in reality, he had already made plans. He resolved to produce and sell on his own. Together with Liu Daimai and Deng Cunyu, he set up counterfeit money factories. In addition to these, there were also coin-making workshops that often stopped operating. What was produced there were not small coins but larger ones worth twenty or thirty wen, with quality nearly as good as those minted by the government. He decided that if he wanted to boost confidence in the currency, he would release such large-denomination coins to withdraw banknotes—something he kept firmly in mind.

As for gold, silver, and contraband as hard currencies, he valued them even more than Liu Yongfu did. But these hard currencies were “living” assets that had to be used at the most critical moments. He watched the endless stream of banknotes coming out of the printing presses. Now that he had an army, a government, a bank, and the ability to issue currency, how far was it until he could build a modern nation?