I am the prince of the Ming Dynasty, I don't give up

Chapter 150: The picture shows the dagger
Because Zhu Houxuan was also one of the people imprisoned behind the high walls of the vassal state, even though he was given a little freedom because of Zhu Houzhao's trust, the emperor's trust was limited, so the vassal kings thought that Zhu Houxuan was the same kind of person as them.

Zhu Houxuan also emphasized this point when he was persuading the princes, and the princes were very impressed by it.

Zhu Houxuan said that he wanted to influence the court's decision-making and relax some of the restrictions on the vassal states. Although he did not give a definite answer, the vassal kings believed that Zhu Houxuan had enough motivation to do this.

Because after this series of events, they all had to admit that Zhu Houxuan was the most powerful person in the royal family. If the princes didn't even support their own people, who else could they support?

Therefore, the princes were very happy to donate generously and lend money to Zhu Houxuan.

Of course, they were not like Xing Wang Zhu Youju, who spent all his family's wealth and lent out silver ranging from 100,000 to 300,000 taels.
The old royal palaces have more accumulated floating wealth so they borrow more, while the newly established royal palaces have less floating wealth so they borrow less. In any case, everyone gets a share.

What surprised Zhu Houxuan was that Prince of Ning Zhu Chenhao actually agreed to lend him 500,000 taels of silver with only one condition, which was that Zhu Houxuan help him restore the guards of Prince of Ning's Mansion.

Zhu Houxuan naturally agreed readily, but he would get the money first and talk about the matter later. As for the matter, he would definitely not do it.

After all this round, Zhu Houxuan received loan intentions totaling more than three million taels of silver.

This was a huge sum of money in the mid-Ming Dynasty.

Moreover, when discussing the loan, Zhu Houxuan also lowered the interest rate to a certain extent, and the final comprehensive interest rate was around 10%.

Being able to borrow so much money at this interest rate is simply a miracle in the financial environment of the Ming Dynasty. You should know that as of 2023, there are still local governments borrowing hidden debts with an interest rate of 16% or even higher.

Zhu Houxuan also reached a consensus with the princes, and announced to the public that the annual interest rate was 20%.

The reason for unifying the statement was that Zhu Houxuan was planning to open a Ming Royal Bank, and these loans to the princes were actually the first batch of deposits of this bank.

The 20% interest rate announced to the public is actually intended to attract private funds.

Because most of the wealth created by the Ming Dynasty during its more than 100 years of peace was lying dormant in the cellars of the gentry and landlords.

Zhu Houxuan had to find a way to get the gentry and landlords to take out this part of their wealth and invest it in the Industrial Revolution.

In the economic sense, if money does not flow, it will be difficult for the economy to develop.

That's why he was prepared to pay 20% interest.

Someone may say that under the financial conditions in ancient times, paying interest every year for two years is too low. The gentry and landlords lend money at high interest rates, but nine out of ten return the money. The total amount of money in and out is at least 40% interest. How could they deposit the money in your bank?

This is because people do not understand the financial environment in ancient times. Given the ancient financial and business environment, it was not easy to find a suitable lending target. After all, in ancient times, there were not as many loan platforms as there are today, where it is easy to find various loan targets, even 714 anti-aircraft guns could be used.

As for loans given to the common people, they could only absorb a small portion of the loans. The gentry and landlords could not lend out most of their assets, which were actually buried in cellars.

However, if you put money in the cellar, it will not increase in value, but if you put money in the bank, it will make money, so this interest still has a great new attraction for the gentry and landlords. Of course, it is not easy to attract the gentry and landlords to take out their wealth and deposit it in the bank. It is not enough to just have interest, but also to build the trust of the people in the bank.

This will be a long process, but it is something Zhu Houxuan has to do.

Because of the Ming Royal Bank, Zhu Houxuan was not planning to just make it a commercial bank. He also wanted to use its royal identity to steal the functions of the central bank. Anyway, no one in this era could realize the significance of a central bank.

If you were to ask what is the most profitable thing in the world, can anyone think of something more profitable than printing money?

This is also the reason why Zhu Houxuan did not want the Ming Royal Group to become an official institution at that time. It was because the Ming Baochao issued by the Ming government had a bad reputation, and he did not want the Ming Baochao to affect the currency he would issue in the future.

Although doing so may feel a bit like trying to cover up one's own faults, the royal name is still there, and many people will still regard the Ming Royal Bank as an official institution, but we should try to reduce the negative impact as much as possible.

In short, Zhu Houxuan's plan was to establish the credit of the currency issued by the Ming Royal Bank, and then establish the Ming's financial system.

Although finance does not create any wealth, it is an indispensable thing in allocating resources and can enable the industrial revolution to develop better.

The significance of establishing a central bank in the Ming Dynasty was enormous. Zhu Houxuan had been engaged in industry in Qizhou for four years and he hated the Ming Dynasty's monetary system.

The Ming Dynasty's monetary system was so complicated and inefficient that it involved copper coins with varying copper contents, silver ingots and broken silver with complex silver contents, and various types of silk and cloth that could be used as currency. It was really overwhelming.

Such a complex monetary system greatly increases the cost of economic activities.

The most important thing is that Zhu Houxuan evaluated the current economic situation of the Ming Dynasty and was surprised to find that the Ming Dynasty was in a state of deflation for a long time, that is, there was a serious shortage of currency circulating in the market.

Because there were not many copper and silver mines in the Ming Dynasty itself, and the bad money drove out the good money effect, the good copper coins and silver were hidden by the people, which led to a further deflation. As a result, many places in the Ming Dynasty were forced to barter due to currency shortages.

According to economic principles, a country's currency is more conducive to economic development if it maintains a certain level of inflation every year. The state of deflation is not conducive to the development of the Ming Dynasty's economy, so Zhu Houxuan must change the Ming Dynasty's deflationary state.

Moreover, Zhu Houxun worked hard to carry out the industrial revolution and produced a lot of industrial products to export overseas, not to exchange them for a lot of silver. Silver is of no use in developing industry.

If they really exchanged it for a lot of silver, it would mean that the Europeans were using the silver from America to reap the industrial products produced by America.

However, if the Ming Dynasty wanted to develop better, it needed sufficient currency, so it was imperative to create a new credit currency for the Ming Dynasty.

Of course, the creation of credit currency cannot be achieved overnight. It requires building credit step by step. This is a long-term thing, so Zhu Houxuan wants to start doing it now.

Moreover, once the Ming Dynasty creates its own credit currency with sufficient credibility, given the Ming Dynasty's influence on neighboring countries, this credit currency will definitely circulate in various vassal states.

At that time, Zhu Houxun could use the scissors gap between industry and agriculture to reap the vassal states first, and then use credit currency to reap another round. That would be a very beautiful picture.

Moreover, they can exercise economic control over vassal states, and use financial weapons if they disobey.
(End of this chapter)