Chapter 207: Setting Out (Part 2)
China has always been a country centered around officials. Throughout history, the influence of officials has been deeply ingrained in everyone’s bloodline, and these landowners with dual status were no exception.
The Black Flag Army promised them that as long as they completed the tasks assigned by them, not only would their property and lives be protected, but they would also be given official positions—more importantly, real positions, not some kind of purchased rank.
These small landowners usually owned fields and houses in the countryside and rarely dealt with matters like seeking official appointments or purchasing ranks. Everyone had a so-called merit badge, but these were merely nominal; even the local officials didn’t pay them any attention, as even schoolchildren were considered more useful.
When they heard about real positions—and according to the Black Flag Army, “not only real positions, but also talents needed by our army in the Ministry of Works; since this is just the beginning, those who make great contributions will eventually become high-ranking officials of the second or third rank”—they became eager. They even agreed to let the Black Flag Army pay them with Black Flag bills or bank checks. The Black Flag Army assured them, “Our bills have been in use in the Western Province for a long time. If you suffer any losses, we will take full responsibility!”
The orders they received were unprecedented. For example, for military uniforms alone, the Black Flag Army ordered 60,000 sets of regular uniforms, enough to keep these workshops busy for years.
Thus, these so-called “sprouts of capitalism” quickly served their new masters. They were even bolder than the Black Flag Army had imagined. Due to a lack of working capital, they soon realized that the Black Flag Bank could help them achieve more with less—so they mortgaged their fields, houses, and ponds in the countryside to obtain large amounts of Black Flag bills.
The paper money issued by the Black Flag Bank had already been in circulation in Guangxi before the war, and the Black Flag Army’s victories further enhanced its credibility. The army also rarely used hard currency when purchasing supplies, opting instead to use paper money.
By now, almost the entire Guangxi Province was under the control of the Black Flag Army. They used bayonets and cannons to maintain the credibility of this paper money. The Black Flag Bank periodically sold off captured opium, silver, and gold to recall excess paper money, preventing inflation from getting out of control.
During war, denying the existence of inflation was useless—the Kuomintang regime openly denied inflation throughout the war effort, but that didn’t change the reality of soaring prices.
Liu Yu had a far deeper understanding than his contemporaries of how to control inflation and how to use various monetary tools at his disposal. Especially with the Black Flag Bank as a powerful asset, adjusting the reserve requirement ratio alone was enough to create fluctuations in the market.
Moreover, Liu Yu was well aware of two typical positive examples: during the Civil War and World War II, proper regulation of inflation, reducing demand, and expanding production led to prolonged prosperity after the wars. The Americans didn’t rely solely on mass issuance of paper money but instead issued bonds through the securities market.
The Black Flag Bank began issuing bonds even before the war against France. During the war and after its victory, the various government bonds issued by the bank received favorable public responses. Now, the Black Flag Bank is replicating its success in Vietnam in Guangxi. Part of the confiscated supplies and bureaucratic assets were often used to issue war bonds, which became an effective tool for the Black Flag Army to raise funds and accumulate wealth. It was through paper money and various types of bonds that the Black Flag Bank quickly became the largest financial institution in Guangxi Province, offering more loans than any traditional money house or banking firm. Along with the Black Flag Bank, several smaller banks run by people like Liu Yongfu entered Guangxi. They adopted more aggressive business strategies, often following the main army closely, and could even be found in areas under confrontation. Their efforts yielded substantial rewards, and thanks to them, the Black Flag Army managed to extend its control to almost every corner of Guangxi Province within less than two months. Although there were still over a dozen county towns and many towns under Qing control, the Black Flag Army continuously concentrated its forces to launch repeated attacks on these remaining Qing troops, dispersing them time and again. Given this situation, it was clear that Guangxi would change hands only a matter of time. Moreover, the Black Flag Army had already significantly expanded its forces in Guangxi in a short period. According to the latest statistics from the Black Flag Army, its total force in Guangxi now approaches 40,000 troops, of which 24,000 are regular troops, rear units, and command structures—nearly double the number when they first entered the region. This includes reinforcements from Northern Vietnam, new recruits and captives added in Guangxi, as well as units formed by combining old troops with newly joined forces. In any case, this constitutes the core strength of the Black Flag Army. Without Liu Yu’s orders, no one could pull away even a complete infantry platoon or squad from this force. All troops that entered Guangxi underwent expansion—units originally consisting of five companies were expanded to nine-company formations, and these nine-company infantry regiments were further reorganized into twelve infantry companies. The few core units among these twelve companies were mostly split in half to form two new infantry regiments. Guangxi had an abundance of manpower and captured modern weapons. Despite such significant expansion, the combat effectiveness of the troops did not decline—this is the power of a modern mobilization system. The remaining 15,000 irregular troops had a complex origin but served as the backbone force at the grassroots level. Among them, over 4,000 were reliable members of the Black Flag Army, formed by drawing cadres, veterans, and platoon leaders from the army, officially designated as county police units, independent companies, and rear guard units. In addition, there were 3,400 troops under Pan Dingxin, whose composition was complex—including units expanded from the Black Flag Army, Pan Dingxin’s loyalists, and assimilated rebel forces. However, this force was quite combat-effective, conducting searches and battles day and night, and in some aspects, performing better than newly formed independent companies or battalions.
The remaining 8,000 were local warlords’ troops, with the most complex composition: some were forced by circumstances, some surrendered with their followers, and some were skeptical. Yet all 8,000 of them survived after being organized, had their pig tails cut off and their uniform numbers removed, and adopted the banner of the Black Flag Army. As for the remaining regular and irregular Qing troops in the province, there were less than 20,000 left, and they were under constant attack from the Black Flag Army, causing their forces to shrink further. Thus, both sides focused their attention on the Black Flag Army’s next target.