Late Yuan Dynasty: I am the true emperor

Chapter 336: Selection of Policy Essays (Part )

After hearing the three questions raised by Lu Jin, everyone looked at each other in bewilderment. They had just looked at Lu Jin's previous exam papers a few days ago, and they already knew that this commander did not value classics but only practical learning, and the questions he set were also quite sophisticated.

The earliest discussion on "What is the country" directly found a theoretical basis for his rebellion. This time, the policy paper was more practical. It started with questions about finance, people's hearts, and governance. Every question was to the point.

Especially for major national policy issues like "whether to continue using paper money", even if it is placed at the core of the Yuan Dynasty, it will take collective discussion among the prime ministers to come to a conclusion, and it is not certain that it can be done well. Don't you see that the Yuan Dynasty's finances have collapsed now?

If such questions were used to test ordinary scholars, it would indeed be a bit difficult, but who are these people sitting in the hall?

Wang Guangyang and Yang Xian are the two prime ministers who founded the Ming Dynasty. There are also several ministers of the six ministries. If even these people can't answer, what's the point of being a prime minister or a minister? Lu Jin has high expectations for these people.

Seeing that no one spoke, Lu Jin spoke again.

"You can speak freely. We are all gathered here today to help the country and save the nation. If you speak well, the policy you offer today can become the national policy. If you speak wrongly, it doesn't matter. People cannot be omniscient and omnipotent. It is a great talent to be proficient in one or two things. If there are omissions, please point them out and we can discuss them together to find out and fill in the gaps."

Everyone then stopped being reserved, but what Lu Jin didn't expect was that the first person to speak was neither Yang Xian nor Wang Guangyang, but an "unknown" Confucian scholar.

A 30-year-old scholar stood up and bowed to Lu Jin, then said, "My name is Zhou Zhen, courtesy name Wendian, and I am from Jiangning County, Jiankang. I would like to say something for you, the commander-in-chief."

The reason why he is unknown is that Lu Jin just doesn't know him. He only recognized a handful of civil servants in the early Ming Dynasty. But this Zhou Zhen is actually not simple either. He was the first Minister of Justice of the Ming Dynasty and participated in the compilation of the Ming Code!
Lu Jin waved his hand, "Sir, there is no need to be polite. Please sit down and talk."

"Thank you, Marshal." Zhou Zhen said as he sat down.

“I think that the currency system does not need to be abolished, but it needs to be replaced with a new one. New banknotes should be issued to replace the Yuan court’s abolished banknotes. At the same time, copper coins should not be abolished, but should be used together with the new banknotes.

"As the saying goes, everything has its cause. The reason why Jiaozi and Baochao were able to appear and be accepted by the people was because copper coins were scarce and insufficient. In the early Song Dynasty, the four routes of Sichuan and Xia had no choice but to cast iron coins for daily use. However, iron coins were heavy and perishable, and many merchants could not transport them. This is why Jiaozi appeared. Rich merchants guaranteed each other and could withdraw money in different places. The Song court saw its convenience and promoted it.

"The early Song Dynasty was short of money. First, the copper mines were increasingly scarce due to the mining of copper mines in successive dynasties. Second, the annual tribute to Liao and Jin was nearly one million yuan, which led to a large outflow of copper coins. The domestic copper coins were insufficient to cover the expenditure, so paper money was used as a last resort.

"As for the current Yuan Dynasty, since the founding of the Yuan Dynasty, Emperor Shizu has issued an order to ban the use of copper coins and only use treasure notes. Although the ban on copper coins was lifted after the death of Emperor Shizu, successive Yuan rulers have never minted more copper coins. In addition, wealthy households and corrupt officials have hoarded the remaining copper coins, making copper coins even more scarce today.

“Therefore, if the banknotes are abolished hastily, not only will the savings of many people be wiped out overnight, but there will also be insufficient copper coins to fill the gap left by the abolition of the treasure notes. I am afraid that bartering will occur, and the common people will certainly become even more difficult.

“So even though the currency system has many drawbacks, it must be used now, but at the same time, a large amount of new money must be minted to gradually fill the gap until the currency system is abolished.”

Lu Jin nodded and concluded, "What you mean is that paper money has many drawbacks and needs to be abolished, but it cannot be abolished all at once. We need to mint enough copper coins for the people to use, replace the treasure notes, and then abolish them. Is that what you mean?"

Zhou Zhen immediately clasped his fists and said, "That's right."

Lu Jin immediately asked back, "But what if the copper coins minted are never enough? Copper ore is stone, it is impossible to grow out of thin air. As you said just now, there are only so many copper mines in China. They have been mined in every dynasty and are becoming increasingly depleted. The newly minted copper coins of the Song Dynasty could not meet daily needs, so Jiaozi came into being. So where do you think I can find so many copper mines to mint coins?"

"If copper coins are never enough, then paper money can never be abolished, right?"

Zhou Zhen explained again, "I think that although copper mines are becoming increasingly scarce, China is a vast country with abundant resources. It is impossible that there is no copper material for minting daily copper coins. As long as the court can take the initiative to persist in minting coins, and not use tribute from foreign countries, and at the same time live within its means and save copper materials, for example, issue a decree prohibiting the use of copper objects as burial objects, prohibiting temples and Taoist temples from casting copper statues and copper bells, and instead casting iron bells in the future, then China's copper materials should be sufficient for minting copper coins."

Wow, the idea is to even target the bronze bell in the temple. I wonder what the monks would think when they heard it.

Lu Jin nodded when he heard this. "That's a good idea. What other gentlemen think?"

Yang Xian also said at this time, "I also think that we can use both money and banknotes, but when issuing new banknotes, we must first be careful to prevent the Yuan court or other powerful people from counterfeiting banknotes, and secondly, we must not issue too much. The Yuan court's opening of the river and changing the banknotes has already aroused public anger. If we do the same, I am afraid we will also lose the support of the people."

Lu Jin nodded. "That makes sense. We should be more cautious. Anything else?"

At this time, another person stood up and bowed, saying, "General, I also think that money and banknotes can be used together, but there is no need to abolish banknotes in the future."

"Oh? Why not abolish it?" Lu Jin finally became interested. Seeing that the man was about 20 or 30 years old, he asked, "Sir, please tell me your name and hometown."

The man continued, "Reporting to the commander, my name is Liu Zhang, courtesy name Ziyu, and I am from Danyang County."

"Mr. Liu, please tell me why paper money should not be abolished?"

Liu Zhang immediately explained, "Because in this world, neither copper coins nor Jiaochao should exist. The reason they exist is because it is inconvenient for ordinary people to barter with each other, so there are equivalents that everyone recognizes as intermediate media.

"Then there is a question. Mr. Zhou just said that we need to mint enough copper coins. How many copper coins are enough? I think that whether it is enough or not does not depend on the number of copper coins themselves, but on the amount of commercial goods. If the minted coins can just buy all the land, houses, grain, cloth, and commercial goods in the world, then this money is just enough. But is there really a fixed value for the value of goods in the world? I personally think that there is no fixed value.

“Because as long as the country is prosperous and all industries are thriving, the people and merchants will naturally produce more commercial goods. Once the commercial goods increase, the currency will inevitably be insufficient. Therefore, there will never be a day when copper coins are insufficient. In this case, why do we still need to abolish Jiaochao?
"To take a step back, even if there is enough copper coins one day, as long as there are merchants buying and selling goods, copper coins are heavy to transport for large-scale transactions and are far less convenient to use than Jiaochao. Therefore, even if there are enough copper coins, merchants still need Jiaochao to carry out large transactions. Even if the court forcibly abolishes paper money, merchants will still look for equivalents with higher value and more convenient transportation than copper coins to buy and sell goods, such as gold and silver.

"So it is impossible to ban it, just like controlling a flood, it is better to drain it than to block it. Although paper money has many disadvantages, it has its conveniences. When formulating national policies, we should not turn a blind eye to it. If paper money is really useless, then the former Song and Yuan courts were not without wise and capable people. Couldn't they see it?
"Therefore, I think that the banknote system should not be abolished, but it should also be used with great caution, especially the six most serious drawbacks at present. If new banknotes are issued, they must be changed. If not, the new banknotes will sooner or later become waste paper like the treasure notes of the Yuan court."

After listening to this, some people nodded repeatedly, while others frowned and thought. Zhou Zhen was magnanimous when he was refuted. This person's political views were similar to his, and he also agreed to use both money and banknotes. They just had differences on whether to completely abolish Jiaochao in the end.

What this person said did make sense. Even if copper coins were enough, as long as there were commercial activities and large transactions were required, there would definitely need to be intermediate products of higher value. Even if there were no Jiaochao, there would be gold and silver to replace them. So he also wanted to hear what other insights Liu Zhang had.

Lu Jin's eyes lit up after hearing what he said. Zhou Zhen's suggestion was a relatively practical plan and more suitable for the current situation. Yang Xian's speech could only be regarded as filling in the gaps, but what Liu Zhang said went straight to the essence of currency.

Especially what he said about "equivalent" and "intermediate medium", as well as the balanced relationship between the value of goods and the value of currency, he vaguely comprehended the concept of "deflation", but Liu Zhang was an ancient man after all, and had not learned these modern theories and terms, so he did not say it out loud, but this was enough to make Lu Jingao look at him with a higher eye.

So Lu Jin immediately asked, "What are the six drawbacks of paper money? Please explain in detail, sir."

Liu Zhang immediately bowed to Lu Jin and then to Zhou Zhen to express his apology, and then continued.

"The six symptoms of banknote-writing are my own opinion. If there is anything wrong with what I said, please correct me, General and other gentlemen.

"The first of the six problems is depreciation. The Yuan government could not exchange old banknotes for new ones in full. Not to mention the money plundered by the people during each major exchange, even if the same kind of treasure notes were exchanged for new ones, depreciation still had to be deducted. One old note could only be exchanged for eight or nine hundred new notes. The government called it the cost of production.

"When the imperial court prints new banknotes, it needs to make special paper and ink, which all cost money. In fact, it is understandable that the government charges a fee for this. This has been around since the era of gold, silver and copper coins, and was called huohao at that time.

“But paper money is different from gold, silver and copper coins. Copper coins do not decay, and the common people rarely need to exchange copper coins for new ones. Therefore, even if there is a fire consumption, the common people are completely unaware of it. The ones who really need to pay the fire consumption are the rich families who use copper coins to cast tools.

"But paper money is different. It is too fragile to use. After using it for a long time, it must be replaced with new bills. But every time you replace it with new bills, the money in your hand will be reduced by 10% or 20%. Therefore, people don't like to use paper money.

"Although Jiaozi and copper coins are both currencies, they are slightly different. Copper coins have their own value. Even if they are not used as coins, they can be used to cast other objects. But paper money is different. The reason why it can replace coins is entirely based on the word "credibility". The earliest Jiaozi was a guarantee between merchants, and later it was promoted to a guarantee by the court.

"But now the imperial court has issued its own treasure notes, but has not fully exchanged them for new notes. Isn't this destroying its own foundation? A man cannot stand without trust, so how can a country stand without trust?
"Therefore, I think that if the Marshal issues new banknotes, the cost of printing the new banknotes must be paid by the Marshal's office itself and cannot be passed on to the people. If this problem is not corrected, the Marshal's office will destroy its own reputation."

Everyone nodded when they heard this. This cost is indeed something that most people would not notice. Copper coins also have fire consumption, but copper coins are durable and ordinary people do not need to pay for fire consumption. However, paper money needs to be replaced frequently. Who would be willing to see their money depreciate by 10% or 20% for nothing? If they change it several times, wouldn't all their property be lost?
Lu Jin also nodded and praised, "Well said, what are the other five disadvantages?"

"This second point is derived from the depreciation fee in the first point. Nowadays, both the government and the people call the tattered old banknotes "dumb banknotes". Some corrupt officials, in the name of investigating counterfeit banknotes, insist that the dumb banknotes in the hands of the people are counterfeit banknotes, and directly confiscate them, robbing the people of their money. Some even simply refuse to exchange the dumb banknotes for new ones." In the end, the dumb banknotes in the hands of the people can only rot in their hands. They can neither exchange them for new ones nor dare to take them out for transactions easily, for fear that they will be snatched away by corrupt officials in the name of counterfeit banknotes. It is very pitiful.

"So if the Marshal issues new banknotes, he must make it clear that no matter how old or rotten the banknotes are, they must be exchanged for the full amount for the people, so that the people will be happy to use the new banknotes."

Lu Jin was surprised when he heard this, "Is there such a thing as robbing people's property in the name of checking counterfeit money? Is this true?"

"It's true." Liu Zhang nodded immediately in affirmation.

"You deserve to die!" Lu Jin clenched his fist and pounded the table, then said to Liu Zhang, "Sir, please continue."

Liu Zhang then said, "The third problem with paper money is fundamental.

“As I said just now, copper coins still have their value, but if banknotes cannot be exchanged for goods, they are just like a piece of waste paper. Even if they are used as toilet paper, the ink will fade. Therefore, if you want to give value to banknotes, you must have a physical object as the basis.

"The Yuan court initially used raw silk or silk as banknotes, but there was no way to count how much raw silk was produced each year, and ordinary people did not need to exchange silk. This led to the court not knowing how much capital there was. Once it was short of money, it began to print and issue excessively. The people had no way of knowing and could only bear the depreciation of the banknotes.

"If the Marshal wants to issue new banknotes now, he must have physical objects as capital, and they must be used by the people and have recognized their value. They must also be things that the government can easily control. Now that all industries are declining and the people are poor, and the Marshal has to support the army and fight wars everywhere, I think the Marshal's office does not have enough gold and silver to use as capital."

Lu Jin nodded immediately after hearing this. Liu Zhang said, "Mr. Baishi, the chief secretary of the Secretariat, told us a few days ago that the Marshal opened an iron smelter in Lujiang and dug a salt well in Dingyuan. Now the army has captured the 36 salt fields in Huaiyang. Why not use salt and iron as capital and bind the new banknotes to salt and iron? In this way, no matter how many new banknotes the Marshal issues, the people can at least exchange them for enough salt and iron.

"Now the Marshal is fighting wars everywhere and needs money everywhere. If new banknotes are issued, there will definitely be some over-issuance. If the new banknotes can be tied to salt, then even if the new banknotes in the hands of the people depreciate, they will at least be much stronger than the Baochao of the Baoyuan period, and the people will not have too many complaints."

This time, before Lu Jin could speak, Li Shanchang, who was sitting next to him, nodded repeatedly. "This is a good idea. As long as we set the exchange rate between salt and new banknotes, we can issue banknotes according to the salt production. However, it is easy to set the price. If the people want to buy salt, how can they exchange it? How big should a salt banknote office be set up?"

Liu Zhang said immediately, "Doesn't the commander have a town office in the county? We can set up a government-run store in each town to sell salt and iron, and stipulate that it can only be exchanged at the price. In this way, we can use salt and iron as capital to issue new banknotes, and prevent private salt sales from disrupting prices."

Lu Jin suddenly had an idea and blurted out, "Supply and Marketing Cooperative?"

"Well, it doesn't matter what it's called, but the supply and marketing cooperative that the Marshal mentioned is a very appropriate name." Liu Zhang flattered him a little.

Lu Jin nodded, "What are the other three disadvantages?"

Liu Zhang immediately added, "Fourth, we cannot over-issue. Although it is inevitable to over-issue new banknotes now, we should still exercise restraint. Mr. Baishi just said it well. We can first set a price for salt, ironware and new banknotes, and then issue new banknotes according to the salt production. A little more is also fine, but it can only be used for emergency. For example, if we over-issue one million guan, we have to wait until the salt production makes up for the vacant value of one million guan before we can continue to issue banknotes."

Lu Jin nodded and commented, "Help in times of emergency but not in poverty. As the gentleman said just now, copper coins and paper money are not of real value. If a country wants to be rich, it should produce more. Only when there are more goods for the people to buy and sell can it be truly rich."

Liu Zhang nodded repeatedly, "That's exactly what's going on."

"What about the fifth?"

"Fifth, the denomination. I personally think that since we need to use both money and banknotes, ordinary people still use copper coins of less than 50 wen for daily use, and rarely use large banknotes. Most of the people who need to trade with large denominations are merchants.

"Therefore, in order to minimize the impact on the common people and to save the expenses of printing money, the new banknotes should not be printed in small denominations. It is best to print from 50 wen or more. Copper coins can be used for less than 50 wen."

After these words were spoken, Zhou Zhen, who had never found a chance to refute, finally spoke again.

"I don't agree with the fifth point Zi Yu made."

Liu Zhang immediately bowed and said, "Please enlighten me, sir."

Zhou Zhen immediately said, "Nowadays, it is precisely because the people lack copper coins that they have to use paper money. If there are enough copper coins, then printing or not printing banknotes will not have much impact on ordinary people. It will just be inconvenient for those merchants.

"But Ziyu wants to print small coins when the people need them the most. If he doesn't, won't the people still have no money to spend?"

Liu Zhang frowned and thought for a while, then nodded and said, "Sir, you are right. I neglected this point."

Lu Jin also said, "Mr. Zhou is right about this. At this stage, we should mint coins and print banknotes at the same time. When a sufficient number of copper coins are minted, we can gradually reduce the printing of small-denomination banknotes to save money printing expenses. What about the sixth point?"

Liu Zhang immediately said, "This sixth article is the new banknote itself!

"Firstly, the credibility of Jiaozi or Baochao had been ruined by the Song and Yuan dynasties. People were terrified by them. Therefore, when issuing new banknotes, we had to change the name and style to distinguish them from Jiaozi and Baochao, and rebuild the credibility of the new banknotes."

Lu Jin thought for a moment and said, "How about using a voucher? The word "voucher" itself means a bill or a voucher. Since it is based on salt and iron, it can be called a salt and iron voucher. What do you think?"

Li Shanchang immediately asked, "Shouldn't it be called a pass, or something like that with the reign title or king's title added?"

Lu Jin shook his head. "Salt and Iron Coupons are only temporary banknotes to solve the current money shortage. If the country is officially established in the future, new banknotes will definitely be issued. Then we can change the name and make it more formal."

Yang Xian, who was standing beside him, also said, "The name Salt and Iron Certificate is good. It not only means banknote voucher, but also directly links it to salt and iron. When people hear it, they know that this new banknote can be used to exchange for salt and iron, and they will definitely have more trust in the new banknote. It can also be distinguished from the cash banknotes Jiaozi and Baochao."

Lu Jin nodded, "Then the name is decided. Besides the name and style, what else is there?"

Liu Zhang added, "This so-called new banknote itself, in addition to the name and style, the cost of ink, paper, and anti-counterfeiting techniques, all need to be updated.

"The Yuan court used mulberry bark paper to print banknotes. The original intention was that mulberry trees could be used to raise silkworms, and the people could not bear to cut them down. In this way, the materials used to produce banknotes were controlled to prevent scoundrels from making counterfeit banknotes. However, mulberry trees are still used to raise silkworms and are a material for production. The Yuan court was afraid that the people would cut down the trees for their bark, but they cut down mulberry trees on a large scale in order to make banknote paper.

“Cutting down mulberry trees to make paper is a waste of natural resources. With these mulberry trees, I wonder how many more silkworms we can raise and how much silk we can produce.

"So the paper used for the new banknotes should be made of other materials. It should be cheap, easy for the court to control, and not easy for traitors to copy. It should also be more durable, increase the time of use, and reduce the speed of exchanging new banknotes. If the life of the new paper can be twice that of the previous mulberry paper, the banknotes can be replaced less often, which can save a lot of money printing expenses.

"Finally, there are anti-counterfeiting techniques. The banknotes of the Song and Yuan dynasties were corrupted. In addition to over-issuance, counterfeiting was also a major cause. We need to improve more advanced anti-counterfeiting techniques, so that the people can easily distinguish the authenticity of the banknotes, and the bad guys can't easily copy and counterfeit. And the cost of production can't be too high, otherwise it will not be worth the loss."

Upon hearing this, Lu Jin immediately praised, "Zi Yu is truly a man of great talent. Among the many drawbacks of this paper currency system, what you said is the most meaningful. How did you discover these problems?"

Liu Zhang immediately bowed his hands and said modestly, "My father is a clerk in Danyang County. When the general's army attacked Danyang County, my father followed the county magistrate to surrender the city. My father usually deals with these precious banknotes and counterfeit banknotes in the government office. I heard a lot about it, so I wrote it down. I hope these few humble opinions can serve as a reference for the general's new policy."

Seeing this, Lu Jin immediately asked, "Would you like to print new banknotes for me?"

Liu Zhang immediately stood up and bowed deeply, "That is what I wish for, I dare not ask you, Zhang thanks you very much for your appreciation!"

"Hahaha, no need to be so polite, just sit down first." Lu Jin immediately raised his hand and gave him a light support.

This move immediately made some people present envious. He got a job to be in charge of printing new banknotes. This official position must be at least the third rank of the Ministry of Revenue.
(End of this chapter)