38: Chapter 38: The Short Selling Game Shocks Chicago!
Lin Tian stopped talking at this point.
Foss was an old fox who had spent decades in the financial world, and the moment he heard this, a lightbulb went off in his mind.
Once the railroad stopped construction, hot money would withdraw, and the cash in circulation would become increasingly scarce.
Ordinary people, feeling that money was hard to come by, would surely keep their pockets shut and stop spending.
On the other hand, there was a bumper harvest of grain, with supply far exceeding demand.
Grain prices would inevitably plummet.
Farmers wouldn't even be able to recover their production costs, and to stop their losses, they might even dump fresh milk into the rivers.
A financial crisis sweeping the nation was about to erupt!
Thinking of this, the look in Foss's eyes when he looked at Lin Tian changed completely.
He never expected that the teenager in front of him could see through the national economic trend so clearly.
Even he, a tycoon who had been in the banking business his whole life, hadn't seen it clearly.
Knowing that a financial crisis was about to break out, Foss could make preparations in advance.
Although it couldn't stop the crisis, it would definitely help Wells Fargo Bank avoid a huge loss.
Based on this information alone, Foss owed Lin Tian a massive favor.
"Done! I will approve a low-interest loan of five million dollars for you, with a one-year term!" Foss agreed readily.
"Thank you very much, Mr. Foss!" Lin Tian's face lit up with joy.
"No, it is I who should be thanking you properly."
Foss shook his head with a smile, "If I hadn't heard the news in advance, Wells Fargo Bank would definitely have suffered a major loss."
"Pleasure doing business with you!"
Lin Tian stood up with a smile and extended his right hand.
"Pleasure doing business with you!"
Foss firmly shook Lin Tian's hand.
"I will have the lawyer prepare the mortgage contract immediately," Lin Tian said, turning to instruct Paul.
"No problem! Once the paperwork is reviewed, at most in three days, the five million will be deposited into your account at Wells Fargo Bank!" Foss guaranteed on the spot.
... A few days later, in the hall of the Chicago Futures Exchange.
A short, chubby man in a gray suit with a bulbous red nose was grinning and bragging to his companion:
"Wood, can you believe it? Someone ordered a thousand tons of wheat from me, and it's written in black and white that they will pay back an extra hundred tons in two months!"
The short, chubby man was named Bart. He shook his head while laughing, "To think someone actually dares to short the market now! Don't these idiots know how many refugees have come over from Europe this year?"
His companion was a gaunt old man wearing a cowboy hat. After hearing this, Wood also laughed:
"Bart, my territory isn't as large as yours. But these people also ordered five hundred tons of wheat from me, promising to pay back fifty tons of interest in two months. The guys shorting the market are complete lunatics; grain prices have been rising every day lately, even a blind man can see that!"
"Heh, just wait and see these idiots lose until they don't even have their pants left!" Bart said, looking smug.
Before long, the entire hall was abuzz with discussions about this strange deal.
"These people also ordered three hundred tons from me!"
"It's four hundred tons on my end, with an agreement to give an extra ten percent in two months!"
After a few exchanges, Bart and Wood were both taken aback.
The wheat from several major grain-producing states like Montana, Minnesota, and South Dakota... had almost all been cornered by this group.
They didn't even spare the corn and oats.
No one dared to calculate how many contracts this group had actually signed.
The scale was terrifyingly large!
"They're crazy, absolutely crazy! God bless, who exactly is throwing money behind this?" Bart exclaimed at the top of his lungs.
"Could it be Douglas? That old fox has pulled the stunt of shorting grain before!" Wood speculated.
"Impossible! No matter how crazy Douglas is, he wouldn't be able to come up with this much capital!" Bart insisted firmly.
Although the rules for short-selling in the nineteenth century differed slightly from later times, the core strategy was exactly the same.
Lin Tian borrowed a five-million-dollar low-interest loan from the bank, plus the one million dollars his father, Lin Shi, had scraped together from everywhere.
A full six million dollars was dumped into the market, fully shorting over a dozen types of grains including wheat, corn, and oats.
If the investment wasn't diversified, a single commodity couldn't absorb such a huge amount of capital as six million dollars.
Lin Tian directly used the six million dollars to leverage over twelve million dollars worth of massive contracts on the market.
Simply put, he paid half as a deposit, pre-ordered the grain from the farmers, and turned around and sold it all in the futures market at the current price.
Just like that, with one flip, twelve million dollars in cash was secured in his pocket.
As long as he could survive the two months until the delivery date arrived.
If grain prices skyrocketed, Lin Tian would definitely lose everything and go bankrupt.
But once grain prices plummeted, or even halved, he only needed to buy the grain back at the rock-bottom post-crash price to return to the farmers.
In one back-and-forth, two months of time would be enough for Lin Tian to rake in millions of dollars in net profit.
According to the future trend chart provided by the system, once July arrived, with the full bumper harvest of spring wheat in the USA and the collapse of international grain prices, the price of wheat would definitely suffer a heavy blow.
The price when it came time to acquire it would be, at most, only half of what it was now.
But these farmers were all kept in the dark, still treating Lin Tian like a big fool who was handing out money everywhere.
Just as everyone was unable to guess who the backer was, a farmer in the hall suddenly laughed out loud:
"Haha, no need to guess blindly, I know who did this big deal!"
Bart and Wood immediately turned to look over.
The speaker was a German-American farmer from near Chicago, whom everyone knew, named Vernon.
"Vernon, stop stalling, hurry up and tell us which sucker did this stupid thing!" Bart was so anxious he was puffing out rough breaths, his face flushed red.
Seeing a crowd gathering around, and even a few gentlemen in tailcoats, Vernon's vanity was greatly satisfied, and only then did he speak slowly:
"Actually, you all know this person! A month from now, our Chicago is going to host a competition that will shock the nation."
Those in the crowd with quick minds instantly realized:
"The National Rifle Shooting Competition!"
"Exactly right! Think about it carefully, who could have such immense financial power to sweep up goods so crazily?" Vernon said, looking smug.
In an instant, everyone in the hall caught on.
Associated with the shooting competition and having such astonishing financial power... a name popped into everyone's mind simultaneously.
"The Miracle Boy, the Chinese kid Bruce Lin!" Bart shouted out involuntarily.
Hearing this name, the gaunt Wood gasped:
"No way? How could it be him? This Chinese kid not only created the safety razor, but also developed the model 1882 lin rifle and Smokeless Powder... He is definitely not a fool."
"Could it be that he heard some inside information? Come to think of it, the weather has indeed been favorable this year. If there really is a bumper harvest, prices will definitely take a dive..."
"Stop scaring yourself, Wood!"
Bart interrupted directly, "Do you really think of him as a god? The newspapers already wrote it clearly; he is just a puppet pushed out by the Chinese! These inventions weren't made by him at all!"
"The only thing that is certain is that this kid got lucky, like a blind cat bumping into a dead mouse, that he managed to kill the wanted criminal Billy!"
"Bart, we had better be careful about this." Wood was still a bit uneasy.
"Believe me, you can't go wrong! Grain prices will definitely keep rising!"
"Although there is a harvest this year, don't forget the hundreds of thousands of mouths that have run over from Europe, all waiting to eat like hungry dogs!"
"As for this Chinese kid, he will definitely take a big fall this time, let's just wait and watch the show!" Bart said with a look of contempt.