Chapter 74: Coin Minting

To the west of the old camp lay the military industrial zone, marked everywhere with signs reading “Military Area – No Admittance.” Guards armed with Mauser rifles could be seen everywhere, their gleaming bayonets ready to be thrust at any moment.
To the east of the military industrial zone, on the left side of the rifle factory, stood a large, unnamed factory. Its walls were covered in glass shards, and its two iron doors had never been opened. Four guards armed with Remington rifles stood at the entrance, driving away anyone who tried to approach.
There were even more guards at the main gate. The importance they attached to the interior exceeded even their external security measures. The factory’s workers and technicians were required to carry out all their needs inside the factory, with only brief periods of time allowed to go outside each day.
At those times, the guards would stand at the entrance and carefully inspect every part of a person’s body. The factory workers would never reveal their identities. Anyone in Shanxi Province who mentioned this factory would be summoned by the military police to drink.
Even armory factories would wisely avoid this place. While the entrance to an armory factory usually had only two guards armed with Mausers, here there were four guards with Remingtons. The back door also had a whole squad of guards armed with Spencers and Remingtons—at least a row of them.
They only knew one thing: this factory belonged to the Black Flag Bank.
Now, a few workers curiously watched as the iron-barred gate above suddenly opened. The guard captain stood there respectfully, and then they saw Liu Yu and Liu Da, the purchasing agent. They immediately understood what was going on.
The iron gate closed quickly again. This time, eight guards stood at the entrance, with additional patrol guards outside as well. The workers sensitively returned to their posts.
The atmosphere in the coin minting factory was even more solemn. Guards were stationed at every key point, and even snipers, rarely seen elsewhere, appeared on high places. Liu Yu could move freely at the front, but when it was Liu Qing’s turn, he was stopped: “Sir, a special pass is required!”
Even when Liu Yu led people himself, a special pass was needed in this factory. Yet Liu Da showed no signs of anger. He simply stared at those windowless, black factory buildings.
The entire factory had a smell of ink and chemicals. Little sunlight reached inside, making it very dim. Coupled with those fully armed guards, it was practically a prison.
Among the guards and supervisors were many of Liu Qing’s old friends, but they showed no courtesy toward him—everything was handled strictly according to protocol.
Kerosene lamps were installed along the roads on both sides, burning day and night. The guards would regularly refill them with kerosene. When they saw Liu Yu approaching, they immediately raised their guns: “Who is it? Special pass required.”
“It’s me!” Liu Yu spoke up.
The two guards showed no leniency. Holding their fully loaded Spencers and leaning against an iron door, they heard machinery noises from inside: “Sir, please show your special pass!”
For the first time, Liu Yu produced the special pass he had issued himself. The two guards smiled: “Sir, please come in!”

Behind him, the head of the guard squad saluted him: “Sir, I’ll take care of everything. Please go in.” The iron door opened, and Liu Qing stepped inside. Immediately, he smelled a pungent chemical odor—he couldn’t identify the specific substance, only that there was an ink-like scent in the air. The workshop ahead had many kerosene lamps installed at high places. Liu Qing glanced around several workshops, where workers silently operated various machines. What caught his eye first was the machine used to produce copper coins. “We’re here!” With a smile on his face, Liu Qing said, “Mr. Chairman, I’d like to see the results.” He couldn’t help but smile—after all, this factory was worth half of his wealth. Then, Liu Qing clapped his hands in admiration, saying, “This is truly the most wonderful scene in the world.” He saw shiny silver coins coming out of the machine. He picked one up to examine—it was a Mexican silver coin. Mixed with copper and other metals, it was highly professional; only a specialist could detect it, and even then, only with close inspection. Liu Yu pointed at the coin and said, “Not bad, right?” Liu Qing touched the coin, feeling its warmth, and felt a sense of moisture. “Good! Our silver is being spent on such things.” Compared to genuine Mexican silver coins, it was slightly lighter due to its lower silver content, but no one would notice that. “Are there any French franc coins? Although production stopped last year, there’s still high demand in Vietnam.” “Yes! One tael of silver can earn you a piastre!” Liu Yu led him toward the office while saying, “The profits are huge.” Illegally minting francs was exciting, but Liu Qing was more concerned about banknotes. “I want to see the francs.” The investment in this mint totaled about 350,000 Black Flag silver yuan, which was equivalent to nearly 200,000 taels of silver in cash. Now, he could finally see the results. This was one of the biggest investments of his life. “I want to touch the banknotes!” They entered the office, turned on the lights. Liu Yu didn’t sit down right away; he already brought out two banknotes—five-franc notes from the Bank of France, valid for deposit and exchange in any country in the world. “Guess which one is ours?” Five francs was the lowest denomination franc note. Liu Qing gently touched it. It felt wonderful. He realized that the mint indeed had professionals—technological progress served human desires. At first, he hadn’t realized how high-quality the counterfeit money was. He was a professional! As a Chinese comprador for the French Bank of East Asia’s Haiphong branch, he had handled countless franc notes, gold coins, and silver coins, and he was an expert at distinguishing between genuine and fake ones. He dared say that even the top officials at the Bank of East Asia wouldn’t be better than him in this regard. Yet now, he couldn’t tell which of the two five-franc notes was fake. Liu Yu reminded him, “Pay attention to the one on the left.” Liu Qing immediately realized, “The one on the right is fake; the one on the left is genuine!”

He laughed so hard his face almost distorted: “With this treasure, I’m afraid of nothing. I’ll prepare 100,000 banknotes to ensure victory tomorrow. With this treasure, even if they give me another million banknotes, I won’t be afraid!”
Liu Qing reminded him again: “Touch it once more!”
Under the light of the kerosene lamp, Liu Qing touched it once more: “Don’t deceive me! The left one is definitely real!”
Liu Yu gave the answer: “Fake, all of them are fake! One is from the trial production, and the other is the current refined version.”
Liu Qing observed it carefully again. He remained silent for three whole minutes: “It’s indeed fake, but it’s indistinguishable from the real one!”
“That’s the real one!” Liu Yu’s reply was surprising: “The French expert Desmond found was once employed at the French Bank’s mint. He was promoted to branch manager there but was fired for corruption.”
“You could even find someone like that?”
“He had a lover and five illegitimate children to support, and he also owed 220,000 francs! I agreed to give him one franc for every ten francs worth of banknotes printed, and he didn’t need any costs other than his skills.”
“It’s truly wonderful!” Liu Qing praised. “Praise our friend Desmond.”
What he didn’t mention was that he also provided a lot of technical support, reducing the expert’s demand from half to 10%.
This was a story that Liu Yu remembered one night—a story about a genius in counterfeiting.
This man was named Stasi. He single-handedly produced fake francs and exchanged them for real ones at post offices and banks. He was a very careful criminal, but by 1964, before he was arrested, he had already obtained seven hundred thousand new francs (equivalent to seventy million old francs).
He used milk as ink. At that time, he used cigarette paper, tracing paper, and rainwater combined to make banknote paper! It took months to produce, but only three paper mills in the world could manufacture such paper, with stricter controls than gold production.
For the highly complex watermarks, which originally required extremely high-pressure presses, he simply placed the paper on a steel plate with watermarks and let it dry. As for the most difficult issue—simulating wear—he modified a mixer and added ash and fine sand, stirring it for several hours to give the banknotes a natural worn appearance.
The banknotes he made were flawless; even banks couldn’t tell the difference and needed special magnifying glasses to distinguish them. To maintain public confidence, the French Bank was forced to secretly recall these fake banknotes.
Liu Yu had read this story before, but that night, he suddenly remembered all the details, allowing him to say proudly, “Special inks almost identical to the real ones, paper almost the same, serial numbers almost the same—of course, there are still some differences!” He added, “There are also 10-franc and 20-franc banknotes!”
The 10-franc and 20-franc banknotes were printed perfectly, and Liu Qing was particularly satisfied: “This is the most wonderful thing I’ve encountered in my life. This investment was worth it.”
Liu Yu also praised toward the ceiling: “It’s indeed wonderful!”
It must be noted that this was a wonderful era for producing fake francs. If it had been fifty years earlier, what they encountered would have been much more troublesome.

During the previous Second French Empire, franc banknotes were not in circulation in the market but served as instruments for interbank settlements, hence their denominations were extremely high— the lowest denomination was 500 francs, which was reduced to 200 francs only in 1847. At that time, the amount of franc banknotes in circulation was only around 100 to 200 million. After the Franco-Prussian War, the issuance of franc banknotes surged sharply. These gold-backed banknotes originally had a gold content; 1 franc could be exchanged for 0.325 grams of gold or 4.5 grams of silver. When the issuance volume reached 3 billion francs, the French could no longer handle such withdrawals and were forced to stop exchanging them for gold or silver, turning the franc into a pure paper currency or military bills backed by credit, like those issued by the Black Flag Bank. In 1878, the franc underwent a major reform: new 5-franc silver coins were stopped from being minted, and the exchange of banknotes for gold was restored. Now, every banknote in Liu Qing’s possession actually contained gold. It was precisely because of this measure that the franc became highly sought after in Vietnam. Liu Qing couldn’t help but ask, “Are there any 50-franc and 100-franc banknotes? Let me say this—we can use these banknotes to repay the loan from the Oriental Bank of Commerce, or use them to bribe their employees; they won’t notice anything amiss.” Liu Yu had to shake his head: “No! The craftsmanship isn’t up to standard, and more investment is needed. Only these three denominations are currently passable.” The higher the denomination, the harder it is to achieve satisfactory craftsmanship. He added, “We’re trying to print as many 20-franc banknotes as possible, but as you know, these aren’t French silver coins— the craftsmanship is poor, the defect rate is high, and the cost is high.” Naturally, counterfeit banknotes have a much higher cost. Liu Qing insisted, “I think we need to accelerate efforts on 50-franc, 500-franc, and even 1,000-franc banknotes as well. But 20-franc banknotes would also be great.” Could there be anything better than that? Liu Yu also thought it was excellent—using French francs to buy arms to fight the French themselves. “To cover Liu Yongfu’s loan, the Black Flag Bank will transfer 220,000 francs to Baosheng at once. I think that should suffice.” 220,000 francs was roughly equivalent to 30,000 taels of cash. Even if this amount couldn’t sustain the stability of the banknotes indefinitely, it could cover a few months. So Liu Qing shifted the question to another aspect: “Then how many francs can we print per month?” Liu Yu told the truth: “We’ve just started, and we have to print three denominations at once with a high defect rate. So we can print about 400,000 francs per month. If we get more experienced, I think 600,000 francs should be possible.” “What about dealing with defective banknotes?” Liu Qing was concerned about this: “Those are still money.” 400,000 francs per month was roughly equivalent to the annual salary of the Black Flag Army—of course, after deducting costs, especially since a minting factory with nearly 200 people had enormous annual expenses. Now, it had to rely on these francs to sustain itself.

But Liu Yu also knew that such a large amount of francs couldn’t be released all at once, otherwise it would collapse the market and leave no one to trade. As for the defective notes, strictly speaking they were just substandard franc banknotes—still of decent quality, but slightly inferior, making it easier for others to spot them as fake or poor-quality. They were just one notch below high-quality forgeries. Liu Yu had already made plans: “As you know, we’ll eventually have to confront the French. So I’ve had these good-quality notes stored away to use during the war.” Liu Qing didn’t see Liu Yu’s malicious intentions. His concern was, “Then what shall we do with the francs printed next?” Liu Yu wanted to hear his opinion: “What do you think we should use them for?” “Gold! Gold! Gold!” Liu Qing was fixated on gold: “There’s nothing better in this world than gold!” He was praising gold, but it’s an unchanging truth—gold can’t solve everything, but it can solve many problems. Purchasing gold and silver was similar to Liu Yu’s plan: “What else? Haiphong is probably too small.” Indeed, although Haiphong was a French colony and the most prosperous city and port in North Vietnam, it was indeed too small. Both Hong Kong and Saigon were much larger and more prosperous. One million franc banknotes would overwhelm Haiphong, but in Hong Kong they wouldn’t make much of a difference, and in Saigon they would only cause minor impact. Liu Qing asked back, “Don’t you need some military supplies?” “Of course, non-military items work too. Though this is a business with no initial investment, I think it will yield huge profits once spent.” “Huge profits” was an exaggeration, but Liu Yu indeed needed more supplies—even if not weapons, there were many things that could enhance the combat strength of his forces. “That’s a good idea. Let’s bring Lian Jincheng… and Captain Jieken along. We’ll go to Hong Kong together. How shall we pay?” Liu Qing was quick-witted: “Bring tens of thousands of francs in cash. Well, half real and half fake would be best… I suggest using Baosheng francs, also mixed with 30% real currency. That way, with half real and half fake, no one can tell the difference.” Liu Yu accepted his suggestion: “That’s great. This trip to Hong Kong will be like a honeymoon for me and Ningxue.” Liu Qing came up with another idea: “We can have the Oriental Bank of Commerce issue some drafts and checks. You can use checks to pay. In case a large sum can’t be paid, well… it’s best to transfer it through Haiphong. Many friends want to meet you. I believe I can ensure your safety.” Liu Yu agreed: “Then let’s prepare well.” The 220,000 francs and 100,000 Black Flag banknotes transferred to Baosheng Branch, plus Liu Yongfu’s 200,000 loan—Liu Qing went to Baosheng in person to prepare for this upheaval. But Liu Yongfu, though a farmer, was quite astute. He knew that withdrawing 200,000 in cash at once would ruin him, so he displayed his 110,000 taels of silver to boost confidence in the Black Flag Bank before withdrawing the loan.

He kept his word and handed over 110,000 taels of silver to the Baosheng branch as collateral. He sent a supervisor to oversee this collateral, and half of the 30 guards were Liu Yongfu’s personal troops. He didn’t withdraw all the money at once; instead, he first took 8,000 taels and gave it to his own warehouse. Then he reached a gentleman’s agreement with Liu Qing, granting himself a credit line of 200,000 taels, allowing him to withdraw money from the Black Flag Bank whenever needed without interest. Now, the Black Flag Bank had become Liu Yongfu’s ATM. From time to time, Liu Yongfu would personally go to the bank to specify the amount to withdraw—he didn’t trust his secretary with this task and preferred to go in person. Every week, he would also reconcile the accounts himself.