Late Yuan Dynasty: I am the true emperor

Chapter 152: Secret Codex Adds Economics

The monetary system is not a simple issue and should not be decided hastily.

Lu Jin stood up and paced back and forth in the room, thinking carefully. In fact, the monetary environment in the late Yuan Dynasty had both good and bad aspects.

The advantage is that paper money has been popular throughout the Yuan Dynasty. If the paper money system continues to be used in the future, there is no need to worry about too much resistance. The people have generally become accustomed to the existence of paper money. Note that it is a habit, not a willingness to accept it.

As for over-issuance and the like, that is because there is no economic theory to support it.

The paper currency was originally invented by the Song Dynasty, namely Jiaozi. Later, the Jin Dynasty followed suit when seeing the Song Dynasty doing so. The Jin Dynasty also issued a lot of Jiaozi. When the Yuan Dynasty destroyed the Jin and Song Dynasties, it also inherited the systems of the Jin and Song Dynasties and learned from them to issue paper currency.

However, in addition to paper money, the Jin and Song dynasties also had metal currency. The Yuan Dynasty went a step further and did not officially abolish metal currency, saying that copper coins and iron coins could not be used. However, throughout the Yuan Dynasty, almost no metal currency was minted, either officially or privately.

Of course, this is not absolute. For example, in the current Zhizheng Dynasty, the government has minted iron coins, but the circulation was extremely small, basically equivalent to non-existent. Few people have seen this thing. Copper coins were also circulated in very small quantities and soon fell into the cellars of landlords and gentry.

Ordinary people rarely saw copper coins, let alone iron coins. Especially during the Han people's iron ban system during Bayan's reign, it would be a miracle if you could use iron coins in large quantities.

This led to the complete replacement of metal currency by paper money in the Yuan Dynasty and becoming the mainstream currency. In order to live and trade, ordinary people were forced to use paper money, so they gradually got used to it.

In this way, when the paper currency policy is promoted in the future, the people will be more accepting of it, which is a benefit.

Of course there are disadvantages. During the Song, Jin and Yuan dynasties, the credibility of paper money was basically destroyed. People did not trust it at all. Ordinary people preferred to use metal coins. Anyway, their demand for currency was not high. However, developed commerce would definitely give birth to paper money because it was convenient.

Before the fall of the Song Dynasty, there was a serious inflation outbreak, and the inflation in the Yuan Dynasty was even worse from beginning to end.

During the Yuan Dynasty, when Kublai Khan was in power, the first currency issued was the "Zhongtong Yuanbao Jiaochao". According to the official price, two strings of Zhongtong notes could be exchanged for one tael of silver. However, the number of coins issued was too large, and after only ten years, the Zhongtong notes had depreciated tenfold. The purchasing power of one string of Zhongtong notes was only equivalent to the original one hundred coins.

In order to solve the problem of inflation, the Yuan Dynasty later issued the "Zhiyuan Tongxing Baochao". The pricing of the new banknotes was that five strings of Zhongtong banknotes were exchanged for one string of Zhiyuan banknotes, and the pricing of Zhiyuan banknotes was still two strings of banknotes for one tael of silver.

However, it was totally useless and the banknotes were over-issued. By the time of King Seongjong's reign, the exchange rate of silver banknotes among the people had become 20 guan to one tael of silver in the Yuan Dynasty, which was a ten-fold depreciation.

From the founding of the country to the middle of the Yuan Dynasty, the price of Baochao directly depreciated by nearly a hundred times, which is also outrageous.

Later on, the government became even more shameless and directly issued an official order prohibiting the private use of gold and silver in transactions. This was the policy of the early Ming Dynasty that was criticized by many people in later generations. Gold and silver were not official currencies and could only be traded with paper money and copper and iron coins.

Therefore, if you don’t understand what Zhu Yuanzhang did in the early Ming Dynasty, just look at the Yuan Dynasty and you will definitely find the reason in the Yuan Dynasty.

Although Zhu Yuanzhang's Ming Dynasty eliminated foreign customs, restored the old system of the Tang and Song dynasties, and the dignity of Han officials, it also inherited many of the dregs of the Yuan Dynasty, especially the household registration system and banknotes.

The most outrageous thing is that the Baochao of the Ming Dynasty and the Baochao of the Yuan Dynasty were almost carved from the same mold.

To give an inappropriate example, during the Republic of China, a large number of ruffians and gang members poured into the police system, corrupting the name of the police. So after the establishment of the new dynasty, they knew to change the name of the police to the Public Security Bureau to distinguish them from those bastards.

The Ming Dynasty's treasure notes were different. They simply changed "Zhiyuan Tongxing Baochao" to "Daming Tongxing Baochao". The paper quality, size, format and the content were the same. The difference was almost negligible. Only two words were changed, from Zhiyuan to Daming.

The benefits of Baochao were not inherited at all, but the bankruptcy reputation of Yuan Dynasty Baochao was fully inherited by Ming Dynasty, which is also strange.
The Yuan Dynasty knew to change "Jiaozi" and "Jiaochao" to "Baochao" to indicate that it was different from the previous one. Did you change the name of the Ming Dynasty? Changing the size and format, there is no such thing. Just change two words and use it directly.
Of course, apart from this criticism, there are still differences between the monetary policy of the Ming Dynasty and that of the Yuan Dynasty.

First of all, at the beginning of the Ming Dynasty, gold and silver were banned as official currencies, and Baochao was forcibly promoted, which stabilized the chaotic financial order.

The second is that the Ming Dynasty had been minting a large number of metal coins. Zhu Yuanzhang established the Baoquan Bureau and the Baoyuan Bureau in Nanjing before the founding of the People's Republic of China. The two minting institutions minted coins continuously. During the Yongle period, the Yongle small flat coins were minted on a larger scale and circulated more widely.

This resulted in the fact that although the "Ming Baochao" had been depreciating wildly, there were still a large number of copper coins among the people to provide a backup, and finally a "soft landing of Baochao" was achieved, until the Baochao was completely abolished.

It's like your gold yuan coupons collapsed, but you still have silver dollars to use, and the people still recognize the value of silver dollars and "copper coins".

The reason why the Ming Dynasty was able to completely abolish Baochao was, firstly, that it had copper coins to back it up, and secondly, with the influx of silver in the mid-Ming Dynasty, it indirectly solved the money shortage. Otherwise, without the influx of silver, even if Baochao collapsed, new paper money would definitely be issued. This was determined by market demand. Using only copper coins would definitely lead to deflation and would not be enough to support commercial trade.

Once we understand these, monetary policy will be easier to determine.

First of all, one thing must be made sure: physical metal currency will definitely not be eliminated. Even in modern times, only China, with its developed infrastructure, can use electronic payments to replace cash and coins. However, those countries that claim to be developed cannot achieve full coverage of 5G networks and the use of smartphones by the entire population, and can only use cash and coins.

Therefore, metal currency will remain the mainstream in the foreseeable future.

As for whether or not to continue issuing paper money in the future, the answer is yes. The reason is very simple. Without the import of silver and copper mines, it will definitely not be enough to mint coins relying solely on domestic precious metal minerals, which will definitely cause deflation.

In addition, Lu Jin will inevitably vigorously develop industry and commerce, and there will definitely be more goods on the market, which will further aggravate the shortage of money in the market.

Therefore, there are only three ways to solve this situation.

First, issue paper money to solve deflation;

Second, they waited at home for the Europeans to discover the New World, dig up gold and silver mines in the New World, and then go to China to buy, and then the Europeans quickly became rich;
Third, they go to the New World to mine and colonize, and the colonies take the gold and silver to China to buy, and then China will step on the left foot and the right foot to rise economically, leaving the Europeans to continue to be poor.
Let’s not talk about mining in the New World. No matter who goes to mine, it won’t happen in the short term. Li Shanchang was asking about the current situation.

Of course, coins must be minted, but the problem is what to use. Lu Jin is definitely unwilling to use copper, as copper is an important industrial raw material and China is already short of copper.

Iron coins? Ordinary people don't like to use them, because in ancient times, only cast iron, that is, white cast iron, was available. White cast iron was relatively brittle, and when it was cast into thin square-hole coins, it would break when it was slapped hard on the table. How embarrassing.
Another reason is that iron coins are easy to rust and difficult to preserve. If they were made of stainless steel, they would definitely be popular, but Lu Jin cannot make them at present.

Copper is not enough, iron is not liked, and there is no other metal to cast coins in large quantities. What should we do? We can only think of ways to make iron coins.

If pig iron is afraid of breaking, then use wrought iron, or cast white iron first, and then heat treat it to make it malleable iron, that is, gray iron, so that it will not break easily. Then there is the problem of iron coins rusting, or bake it blue and black, which is the cheapest, but the finished product may not look good, after all, it is "black money".

Either you use a coating to prevent rust, such as copper plating on the iron core. You only need to soak it in a copper sulfate solution and then use a replacement reaction to chemically plate copper. No electricity is required. This is the most likely method to be achieved at present. Copper and iron are both readily available, and the Gunpowder Department also has sulfuric acid, so there is no shortage of materials.

The wet copper smelting method using replacement reaction has been around since the Song Dynasty and was not considered a high-tech technology for the ancients.

"Marshal? Do we want to mint coins?" Li Shanchang saw that Lu Jin had been thinking for a long time, so he asked.

Lu Jin had sorted out his thoughts and said immediately, "Of course we have to mint coins, but I don't want to mint copper coins. First, Lujiang doesn't produce much copper. It's better to do something else with that little output. It's a waste to mint coins. Second, Lujiang has a lot of iron. If we can use iron to mint coins, that would be the best."

Li Shanchang nodded after hearing this, and after thinking for a moment, he said, "Iron coins are also fine. China has always been short of copper. In the early Song Dynasty, the areas of Sichuan, Shu, and Hanzhong used to use iron coins. It was a helpless move, otherwise Jiaozi would not have been created.

"But iron coins are brittle and easy to break, and they are also prone to rust. People don't like to use them, so they can't be exchanged for copper coins. If the commander wants to use iron coins as the main currency, he will probably have to cast several times more than copper coins."

Lu Jin said, "Even if there are several times more, it's not a big deal. China at least doesn't lack iron. We can cast as much as we want. But without copper, you really can't do anything. Even if it's valuable, what's the use?

"And I have a way to cast exquisite iron coins that are not easy to break and will not rust. Although they are still made of iron, I think they will be more valuable."

Li Shanchang's eyes lit up when he heard this and he looked at Lu Jin. He knew Lu Jin's family tradition and it made sense. Gongshu Jia must have this ability.

"Does the Marshal really have such a wonderful method? How do you do it?"

Lu Jin said immediately, "Iron coins are fragile because they are made of pig iron, which is inherently brittle. If they are cast with wrought iron, or if they are cast with pig iron and then heat treated, they can be made tough and can be bent but not broken. This is why they cannot be broken.

"After the coins are cast, polished and cleaned, they are plated with copper. The surface is covered with multiple layers of copper. The inside is an iron core and the outside is a copper coat. This makes the coins beautiful and rust-proof, and can save dozens of times the copper.

"As for the exchange price with copper coins, we just need to increase the weight of the iron coins slightly."

Throughout the dynasties, most copper coins were generally around 3.3 grams, while the modern one-yuan stainless steel coin weighs more than 6 grams. Lu Jin only needs to make it 5 grams, which is slightly thicker than the copper coin. The extra gram of weight is enough to make up for the difference with the copper coin.

Li Shanchang nodded repeatedly. He knew that wrought iron was tough, but he had never heard of the copper plating mentioned by Lu Jin. He was immediately shocked and asked, "Can you coat the iron core with copper? Will it be wiped off after a long time of use, or scraped off by someone?"
"Also, if this money is made of copper wrapped in an iron core, should we use it as copper money or iron money? Will the people recognize it?"

Lu Jin smiled and waved his hands, "Why don't you admit it? Although this coin is covered with copper, iron is iron. It doesn't matter if we make it and tell the people directly that it is iron money. When the people see that it is exquisite and does not rust, they will definitely like to use it.

"As for whether it will wear out or be scraped off by the common people, there is no need to worry about it. The copper coating will naturally wear out after using the money for a long time, but it is almost useless to scrape it off. The copper coating is thinner than paper. If someone really scrapes it off, let him scrape it off. If he scrapes it off all day and can't collect a copper coin, isn't that a fool?"

"So that's how it is." Upon hearing this, Li Shanchang smiled and stroked his beard and asked again.

"If we can cast this exquisite iron coin, it will alleviate the current worries about money and grain. However, since the early Song Dynasty, copper and iron coins have been in short supply, so Jiaozi was issued. Marshal, should we also print banknotes in the future?"

"Banknotes are definitely used, but since the issuance of Jiaozi in the early Song Dynasty, banknotes have repeatedly collapsed. Why is this? It is because no one in the world studies Guanzi's teachings. Confucian scholars mostly despise merchants. If they don't study this, how can they understand the principles of banknote issuance?"

Lu Jin sighed and said, "Secondly, the current paper money production is still insufficient. First, mulberry paper is expensive and unusable. Second, the anti-counterfeiting technology is not good enough. There are many people who forge counterfeit banknotes. The upper level does not know how to issue banknotes, and there are people making counterfeit banknotes. Under the pressure from both sides, how can the paper money not collapse? We will talk about this later.

"Although paper money will not be issued, once Dingyuan produces salt, we can print some salt coupons, using salt as a credit guarantee, as a token, and use it on a small scale first."

Li Shanchang understood and asked immediately, "Are you talking about the salt permit?"

"Yes and no. Whether it is salt vouchers or paper money, they must have an anchor. Salt vouchers control the issuance volume, and they can be exchanged for produced salt. In this way, paper like salt vouchers will be valuable. However, paper money in the Song and Yuan dynasties had no anchor and was over-issued. Collapse was inevitable."

Lu Jin thought about writing a book on economics when he had time to add some depth to the Gongshu Secret Book. However, as an engineering student, he only had a vague understanding of economic principles, and knew nothing about formulas and models in the economic field. But even if he only taught the ancients the basics of inflation and deflation, it would be better than blindly printing money.

He couldn't write much about economics, but he knew a little about banknote printing, such as gravure printing and color-changing ink. Being able to develop these two technologies would at least help him build a printing technology barrier that would last for hundreds of years, so he wouldn't have to worry about being imitated.

For printing banknote paper, you can also try cotton and linen blended pulp. These two materials are easy to obtain and are better than peeling mulberry bark. Mulberry trees can also be used to raise silkworms, which are means of production.

Lu Jin thought about it, recalling those processes, and suddenly a few words emerged in his mind: photosensitive material, dichromate.

Celluloid = plastic = film = smokeless propellant.

Fulminate of mercury, silver halide = black and white film emulsifier = bullet primer.

Diazo metal salt = color film emulsifier = second generation bullet primer.

In fact, photography and bullets are on the same technology tree!

Some people only know that Europe's military technology is advanced, but this is actually derived from other industries.

In fact, the photosensitive materials of photography not only gave rise to a bullet technology tree, but also a printing technology tree. Even the later lithography machines were an extension of photography.

Specifically speaking of printing, in addition to silver halide, which will precipitate crystals and develop after being exposed to light, there is also a kind of dichromate, which will not develop after being exposed to light, but will harden. The exposed areas will harden and the unexposed areas will be washed away. Isn't this a ready-made "woodblock"?

In theory, by transferring this negative to other soft metal templates, such as lead or aluminum, photos can be printed in batches. Oh, by the way, newspapers are actually printed using this method.

Because it is a light-based plate-making process, it is also called plate-making. It can also be used to print banknotes. It is the most primitive photolithography technology.

(End of this chapter)