The Haijing Royal Commodity Exchange was established in 1854 and was personally led by Zhao Kuo.

He had to do so.

Just because from the day he occupied Guangzhou as a rebel in the Qing Dynasty, the Song Dynasty had to face the battle to compete with Shanghai for the Far East trading window. This could be said to be a life-and-death battle for the Song Dynasty, which was small in area and had a large population and a small land.

If commercial trade cannot be won, Haisong will not be able to obtain the great powers first, and second, it will not be able to obtain the financial resources and tax revenue needed to support the operation of the country and war. War is to make money.

Shanghai's geographical location is much better than Haijing. Not only is the ocean port not inferior to Haijing, but it is also located at the estuary of the Yangtze River, which is equivalent to collecting resources from this continent.

Merchants always have to go to places where they can buy and sell things, and Shanghai is much better than Haijing.

Although Zhao Kuo pursued the free trade system and was ahead of the Qing Dynasty, Shanghai was not inferior in terms of system due to historical reasons.

First of all, Shanghai was a place where colonies of great powers were everywhere. Outside the small city wall of Shanghai County, there were large areas of foreigners gatherings. Moreover, because the Shanghai Xiaodao Association Liu Lichuan's troops revolt in 1853, France shamelessly intervened (humorously, at the same time, the French tried their best to rescue the Xiamen Xiaodao Association at sea, which is politics and interests), suppressed the Xiaodao Association, but because the great powers recovered the Shanghai County, the Zhongyang began to live in Shanghai, and the Shanghai Customs began to fall into the hands of the great powers since then.

After Xiaodaohui failed, Shanghai became a "businessman city" with the joint autonomy of merchants from various countries.

Therefore, Shanghai is no less than Haijing in terms of business system.

If you are a great merchant, where do you choose as your base? Is it Hai Song, a small rebel country that is only a small province that is still in the war on the land, or is it called a "foreign master" and can buy and sell all kinds of bulk goods in the Qing Dynasty in Shanghai?

Of course it is Shanghai, but it is just a stretch of waterway more than Haijing.

This also determines that if Zhao Kuo wants to surpass Shanghai and leave the goods and cargo ships to Haijing instead of crossing Haijing to Shanghai, he can only do something that Shanghai cannot do.

A commodity exchange under the premise of legal opium is one.

The starting point is the highest value opium in the world in the 19th century.

It turned out that this place was just a livestock shed for temporary storage of cattle, sheep and other commodities. Because the site was large enough, Hai Song simply repaired it, made some chairs inside, and circled a circle of walls, and became an "exchange". It was only five years later than the Chicago Exchange, but it was considered to be the most advanced trading system in the world. Although raw silk, cotton and tea still require buyers and sellers to look at each other for trading, opium, the largest trading value of the world in the 19th century, was completely unnecessary.

Because the opium sales contract has been completely standardized, only two types of opium produced in India are sold, including quality, weight, specifications, and delivery location. This work is handled by Haisong's specialized agency to identify opium in the warehouse transaction. Buyers do not have to worry about quality and other issues. They only need to send representatives to publicly yell prices to trade with each other in the venue.

All the opium dumped into the Qing Dynasty was transported from the far continent of India. It was not only affected by the production area, but also had long journeys, with transportation risks and pirates at sea, so the price of such commodities fluctuated greatly.

India's weather and rain are good, and the price will be reduced if the output is high; the sea is calm, and more ocean-going ships can arrive safely, and the price will be reduced if the price will be increased.

British shippers often face risks for several months, and Chinese buyers are also affected by volatility.

Futures can hedge and lock in returns to avoid some risks.

Hedging refers to the trading activities where the futures market is used as a place to transfer price risks, and use futures contracts as temporary substitutes for buying and selling goods in the spot market in the future, and sell goods in the futures market after buying and selling goods or insure the price of the goods that need to be bought in the future. The basic method of hedging is to conduct equal quantity but opposite trading activities on the same type of goods at the same time, that is, while buying or selling real goods, sell or buy the same quantity of futures in the futures market. After a period of time, when the price changes cause the profits and losses in the spot trading, the losses and losses in the futures trading can be offset or compensated. Therefore, a hedging mechanism is established between "current" and "terms", between the near-term and the forward, so as to minimize the price risk.

For example, in April, the price of a box of Indian opium into Hong Kong was 600 taels. A businessman from a Chinese opium restaurant predicted that he would need to repurchase 100 boxes in three months.

If the price rises in the future, he will definitely lose; if the price falls in the future, it will be beneficial to him.

In this way, he can buy an opium contract that will be delivered in three months, with a futures price of 610 taels, and sell an opium futures contract in three months.

Three months later, if the spot price of opium rose to 650 taels and the futures price rose to 650 taels, then when the merchant bought the spot, he paid 50 taels more than three months ago. But at the same time, he made 40 taels on futures, and in total, he only lost 10 taels, which was far lower than the loss of not hedging, and resisted the risk of price fluctuations.

Of course, hedging is for industrialists, and they will not lose too much, but they will not make too much. For example, in the above example, if the price of opium plummets by 100 taels, it is like a memory stick in later generations. If you do hedging, you can certainly get spot stock at a cheap price, but the futures market will definitely lose a lot.

This essentially locks your profit and loss as the position at which time you do hedging.

But this is obviously to attract other people, that is, the naked predictor - the speculative businessman.

They don’t need to touch physical opium at all, they just buy and sell in the market and make money by forecasting. For example, if they predict that opium will rise, they buy long contracts (forward buying); if they predict that if they fall, they buy short contracts (forward selling).

Such speculators are often opponents who bet against hedgers in the market, the latter avoids risks, while the former makes money by taking risks.

Because futures exchanges can successfully help ocean traders avoid the risk of price fluctuations, and with the strict and fair trading system, Haijing Commodity Exchange successfully attracted a large number of opium merchants who needed to ship goods from India, and then this group of people attracted gambling speculators.

For the ocean traders with high risks, Haijing provides a place to determine the price of opium in the Far East and a place to avoid risks. And if you transport opium to Haijing and then transfer it to Shanghai to distribute it to the Qing Dynasty, the risk will be even smaller than transporting it directly to Shanghai, because Haisong's navy will escort the fleet of some big merchants to the vicinity of Zhoushan in the sea of ​​Shanghai, and if you walk by yourself, you will not be as safe as this. You have to face not only pirates but also the anti-smuggling team of the Manqing Water Division (at this time, the opium trade is still illegal and smuggling for the Qing Dynasty, and it requires a huge bribe to be delivered before it can be passed).

Soon more and more opium merchants chose Haijing as the end point of ocean trade rather than Shanghai. This aggregation resulted in greater accuracy of prices and irreversible equilibrium points.

The Far East Sea is like a complex system of trade and commerce, but there are only two equilibrium points: Shanghai or Haijing, but the equilibrium point can only be one of them, and the winner takes all.

Merchants always gather to the place where the most merchants are, and this leads to the most gathering of merchants.

Haijing could not attract all businessmen, but because opium was an illegal smuggling business in other parts of the Qing Dynasty, it provided security and convenience and successfully attracted opium merchants.

However, opium merchants are the richest type of merchants. The large foreign wholesalers are all in Haijing. Small distributors from all over the coast of the Qing Dynasty must have gathered in Haijing to buy and sell Indian opium. Their ships and the fleets of the Navy set out in Haijing will naturally not come empty-handed. They often carry raw silk or tea (all smuggling under the Qing Dynasty laws) and other goods to Haijing, where the tax rate is low.

This is like the sea-like torrent of gold and silver and commodity flows transiting in Haijing. These torrents of gold and silver and commodities naturally attracted other merchants. At least several major commercial banks with bases in Shanghai and Piaohao Bank all set up offices or semicolons in Haijing.

Service industries such as information brokers and finance exploded outside the Haijing City. The land prices in the slums near the port outside the city grew rapidly. The originally dirty beggars and robbers were soon replaced by business staff in suits and ties. The bankrupt brothels or tobacco houses turned into offices of bills, although their blackened beams still emitted a disgusting opium.

Although it was only 6 o'clock in the morning, the Royal Commodity Exchange was already crowded with people, and Chinese and foreign merchants were waiting to learn about the latest quotations of goods or buy and sell their own commodities. Of course, there were many "price forecasters" who did not do trade at all. So many people gathered in this area, which naturally gave birth to the service industry.

It turned out that almost all the livestock sheds were turned into various companies, businesses, Western Banks and Chinese bills, surrounding this area. The second circle was all teahouses or restaurants for people who needed to make money on exchanges to rest and have dinner. The third circle was bars, casinos, brothels or hotels, allowing those who made money to vent their success. Of course, there was also a river flowing through this exchange area. If you lost too much, you could jump down and the body rushed directly into the sea.

Complete one-stop service.

There are children as flexible as mice in the exchange, but they do not sell flowers or newspapers like in the city. All they need is information. They either shout and shout to compile the price of all kinds of undried ink goods, or brothel advertisements, or crew members, or company recruitment notices. Most children, although they are poor and cannot afford to go to school, they will use Chinese and English bilingual pronunciation to attract buyers.

There are small sheds everywhere on the streets of the exchange, all of which are full of theological people. There are Chinese people with braids showing you palms and seeing how they are doing recently, or asking you to throw copper coins to predict the trend of opium or tea; there are also gypsies asking you to focus your energy on the crystal ball to predict whether you will develop in the future; there are also professional French astrologists not only give you predictions, but also issue their own "Futures Astrology Forecast" every week, with good sales.

Nicholas, with a self-defense pistol on his waist, took his servant Afu, and carried a heavy suitcase. When passing by the "Shandong Fried Fried" fast food restaurant, he ordered a spicy big cake rolled with green onions that he loved, and ate it while walking. It stopped until the entrance of the exchange. There were already many people around here looking up at the huge blackboard as if they were looking at the gods.

The above thirty "opium lines" are arranged, which is the price trend of the futures opium with the largest trading volume on exchanges in the past 30 days.

This is actually the K-line in later generations. It is because Zhao Kuo was dizzy when he saw the price fluctuations of opium and casually used the Japanese. However, he did not expect that this thing that could clearly indicate the price situation immediately became a magical recording tool. And because its every move touched the heartstrings of countless people, there was a commonly known name in later generations: "opium line".

Someone in the crowd was recording the line yesterday, and some were shouting: "Oh my God! January futures have already hit 790 taels per box? Oh my god, the money I brought is not enough to purchase the goods at all!" Someone was muttering: "It will definitely fall, it will rise sharply for half a year! I am convinced!" Someone immediately retorted: "The opium was a bad harvest in India last year, and there were also problems with sea transportation. This year, it will definitely hit 1,000 taels! Look!"

Several children were holding a large roll of paper and shouting outside the crowd: "Opium trend chart, tea trend chart, raw silk trend chart! Ten copper coins were sold!"

Looking up at the opium line that was taller than each, Nicholas clenched his fists. In his eyes, it was not a chalk line at all, but his castle, his and his princess's magnificent castle.

At noon, a heavy box of US dollars had turned into a light stack of paper in Nicholas' arms. All his wealth was blocked in the information about the crash of the Jardines Chamber of Commerce's fleet. When this news was posted in the newspaper, the opium line would inevitably break out of 1,000 taels.

He and a few speculative friends walked into an Indian restaurant happily, exchanged information, and discussed the opium price trend this morning.

Nicholas's face was even more blushing. This morning, opium futures rose by 20 taels based on yesterday's closing price of 790 taels, breaking through the 800 taels per box mark! It rose by 60% in half a year.

And he is even more involved in high-leverage speculation, and he makes even more profitable.

Opium futures are margin trading, and you can buy a contract by taking 10% margin.

Take Nicholas as an example. Although his principal is only 120,000 US dollars, he can hold opium worth 1.2 million US dollars.

If the unit price of opium rises by 10%, an opium supplier will only make 10%, but Nicholas can make 100%. In the blink of an eye, 120,000 US dollars will become 240,000 US dollars.

In half a day today, opium rose from 790 to 810 taels, up 2.5%, but Nicholas magnified through leverage and got nearly 3,000 US dollars on paper wealth in half a day!

"I'll treat you today." Nicholas was very happy and shouted to the Indian Asan waiter with a headscarf wrapped around his head: "Come on 5 beers."

"Following this situation, a friend who wants to attend this year shook his head and said, "It's so fucking crazy. At this time last year, the port was only 480 taels per box of high-end opium."

"It doesn't take that long this year, right?" Nicholas smiled: "Maybe 1,000 will be there in three months."

At this time, a Chinese speculator dressed in Hai Song next door, dressed in hair, came over and interrupted loudly, "Three months? Man, at most one month, I guarantee he will break 1,000!"

"Haha, my friend." Nicholas and the others laughed and shook hands with this Chinese multi-friendly army, and invited him to sit down and chat together.

"My whole fortune is betting on long positions. I'm considering whether to borrow usury?" The Chinese people's eyes shone.

"Haijing usury has increased interest rates! Damn, I heard that it was just opium! Hai Song's spare money has been invested in this exchange!" A friend said loudly.

At this time, another Chinese came over, but he had a braid. He stretched out his hands to the foreigners and Chinese on the table and said in Ningbo dialect: "Hello friends, what do you think about this opium? We are all so worried."

When Nicholas saw it, he was an acquaintance. He said, "Brother, I know you, the friend who committed suicide by the Pirate Bar yesterday, wishes him peace of heaven."

"Is that so? Oh, my brother." Old Qin sighed, sat down at the table, and said, "He had to suppress the short sellers. He was originally a rich man. He used to be in three opium halls in Shanghai, and was originally just hedging. Later, he learned futures and came to Haijing to speculate. As a result, he lost all his money in opium futures."

"Oh, I've known the bears recently and committed suicide." Nicholas sighed and said, "People cannot go against the market. This opium is just going to rise. There is no way. Look, the shorts' voices are completely unheard on the exchange. You said last night that you came to hedge to buy opium."

Lao Qin sighed and said, "Yes, but now the opium restaurant is about to go bankrupt. It's too expensive. If you don't add some sawdust or something, selling opium will be a loss. Many people in Shanghai can't afford to get opium. My opium restaurant will be purchased in three months. I will buy a three-month selling contract in advance (three months later Lao Qin sells opium to the exchange at 850 taels). The contract price is 850 taels per box, my god!"

"I happened to buy several three-month forward buying contracts today (three months later, Nicholas bought opium from the exchange at a price of 850 taels). We are the opposite family." Nicholas smiled.

"I can't compare with you. I have to buy it because hedging. However, the spot and futures prices diverge by more than 100 taels, and the spot has also risen sharply. Now there is a price but no market. Damn, opium merchants are hoarding and don't want to sell it!" Lao Qin cursed.

"Buy early and get better. In a few months, it is possible to stock 800 taels in spot." Nicholas smiled.

The Chinese businessman who wanted to borrow usury just now suddenly said: "I wonder, who is betting so many bulls with us, why are you eating up the contracts without blinking?"

But at this moment, a friend pointed to the window and shouted, "Look, Zhong Jialiang is here!"

Four Arab horses with pure white bodies and no hair were all tied to pull a huge golden carriage with a gold-plated shell and drove into the crowded exchange street.

This is the only carriage in Quanhaijing and the Far East with a fully gilded shell. It is customized in France and belongs to Zhong Jialiang, the president of the famous Haisong Yang Pharmaceutical Guild!

Now in Haisong, the domestic sales of opium are completely monopolized by the guild. Others can buy and sell opium, but they can only be used for smuggling to other regions. If sold internally, it will be the result of beheading the house. This also destined that the monopoly Haisong Yang Pharmaceutical Guild is a rich among the rich.

Zhong Jialiang monopolized the sales of various cities in Guangzhou and Huizhou and a fixed number of tobacco shops. This means that people in these areas had to buy opium at him if they wanted to smoke opium. They smoked in his tobacco shops. This monopoly caused the price of opium in Haisong, and most people could not afford to smoke opium. In the original words of Haihuang Zhao Kuo, it was: "What kind of opium is poor? Let me shed blood and sweat to marry my wife!"

In just two years, President Zhong Jialiang, who was defended by the bayonet of the Sea Emperor, jumped into the ranks of top wealthy people in the Sea Song Dynasty, and he also became the "Emperor" of the Sea Song Dynasty opium industry.

The golden carriage stopped in front of the exchange door. Zhong Jialiang, who was holding a thick cigar in his arms, was wearing a Chinese robe and proudly stepped into the exchange amid the attention and screams of merchants and speculators on the street.

"What did he do? Did something big happen?" Nicholas was in the mood to eat, so he ran out to follow him. Not only were they, but there were not a thousand or eight hundred people doing opium-related business on the streets, and suddenly the exchange was surrounded by a flood.

"Doway! Dodge!" Soon another convoy drove over, and the mount policemen leading the way loudly dispersed the crowd on the road.

The convoy stopped, and the first one to walk down was William, one of the smiling representatives of Jardine Wong. He pressed his high-brimmed hat with his finger to greet his exchange officials. Then, the representatives of the great powers' "Global Opium Trade and Transport Guild" were representatives of the great powers, who were the "Emperors" of the opium export industry in Haisong.

They are different from small speculators like Nicholas. Everyone is a big businessman, all of whom are exchange members, and are on-site transactions.

In the exchange trading hall, Zhong Jialiang, who was full of rings, sat in a seat like a circus stand. As everyone was watching, he handed a box of cigars to William next to him, and the other party took it with a smile.

The opening bell rang, marking the beginning of the afternoon trading time of the Haisong Commodity Exchange.
To be continued...