Taichang Ming Dynasty

Chapter 735 Replacing Silver with Paper Money
After a moment of silence, Wang Yingjiao said, "Beans aside, there should still be enough rice, right?"

“If we have enough silver, we can get enough grain,” Wang Jihui said. “But transporting grain over long distances is never as good as buying it locally. No matter how the waterways change, the ironclad rule of ‘three shi to one shi’ will not change.”

The saying "Three shi of grain transported from Nanjing to Beijing, only one shi reaches Beijing" means that of three shi of grain transported from Nanjing, only one shi would successfully reach Beijing. The other two shi would be lost or damaged during transport. This extremely uneconomical taxation method was the fundamental motivation behind the Jiajing, Longqing, and Wanli reigns' continued push for the silver-based taxation. After all, one tael of silver was far less valuable than the grain it could buy.

“You’re right,” Wang Yingjiao said in a deep voice, “but I still think the Ministry of Revenue should make some preparations. Even if the journey from the capital to the capital takes two months, it will be very difficult. If our army has to raise its own food supplies due to insufficient military provisions, then the face of our Celestial Empire will be utterly disgraced.”

Wang Yingjiao's words were tactful, but Wang Ji immediately understood: Wang Yingjiao was worried that the army, due to food shortages, would plunder the Korean countryside. Wang Yingjiao's concerns were not unfounded. During the Imjin War, the first wave of troops under Zu Chengxun to enter Korea were forced to raid civilian homes for food supplies because the Korean court had lost Pyongyang and could not supply them in time. Although the overall impact was not significant, it still caused a considerable disturbance.

"Minister, please do not worry," Wang Ji reassured him. "The cabinet said that Shandong will find a way to prepare 50,000 shi of rice and grain for the army to carry out the expedition. With this batch of grain in reserve, even if the army does not receive any supplies after entering Korea, it will last for at least three months. Moreover, Tanggu has a daily reserve of more than 100,000 shi. We may send a letter to the Ministry of Revenue and ask them to prepare to provide relief to Korea."

“In that case, there’s nothing to worry about in the short term.” Despite saying this, Wang Yingjiao’s expression didn’t ease much. “Weili, I want to know, if we deduct the embezzled funds, how large is the military funding shortfall in Liaodong and Korea?”

"At least four and a half million, at most more than five million." Wang Ji gave this number almost without hesitation.

"Hiss!" Wang Yingjiao gasped. "How did you calculate that?"

Wang Ji got up and walked to the desk, leaned over and picked up a thick account book. As he flipped through it, he said, "From the 46th year of Wanli, the tax on each mu of land was increased by 3.5 li of silver. In the 47th year of Wanli, it was increased by another 3.5 li of silver per mu, and in the 48th year of Wanli, it was increased by another 2 li. That is to say, the tax on each mu of land was increased by a total of 9 li of silver."

"Last year, the total amount of Liaodong tax collected nationwide was 5,213,644 taels, 3 mace, 9 fen, 4 li, and 6 hao, which can be simply calculated as 5,213,644 taels. If halved, it would be 2,600,006,822 taels. Before the Liaodong conflict, the court allocated approximately 2,300,000 taels of regular tax to Liaodong annually. With the Liaodong tax halved and combined with the regular tax, the total is approximately 4,900,000 taels." Wang Ji returned to the adjacent guest seats, handed the opened account book to Wang Yingjiao, and continued:

"As mentioned before, the total annual expenditure in Liaodong is 8.3 million taels of silver. Adding the 1.4 million taels from Korea, that's 9.7 million taels. After offsetting the income and expenditure, that's 4.8 million taels. Taking a margin of error, it's between 4.5 million and 5 million taels."

"My God." Wang Yingjiao took the booklet, his voice trembling slightly. "The Ministry of Revenue... how was the Ministry of Revenue originally planning to fill this gap?"

"Sigh!" Wang Ji sighed deeply, slowly sat down and said, "What other methods are there? In the end, it's nothing more than the same old tricks of increasing revenue and reducing expenditure. It seems that the palace has come up with a new method."

"You mean opening a port in Tianjin and relying on maritime trade routes to open up new markets?" Wang Yingjiao asked.

“That is one way,” Wang Ji nodded, then shook his head. “But that’s not what I wanted to talk about just now.”

"What is that?" Wang Yingjiao was annoyed by what he saw, so he simply closed the booklet.

“Do you know about Sun and Moon Bank?” Wang Ji asked in return.

“Sun and Moon Bank.” Wang Yingjiao thought for a moment. “There seems to be a sign for it near Zhengyang Gate. It’s quite prominently displayed. What’s wrong with it?”

"Do you know what this bank does?" Wang Ji asked, keeping him in suspense.

"A bank." Wang Yingjiao had never heard of such a term before, so he could only guess based on his experience. "Is it a merchant shop that buys and sells silverware and jewelry?"

"No." Wang Ji, seeing that he had already gotten away with it, directly revealed the answer: "This bank is actually a draft bank run by the palace."

"A money exchange? Opened by the palace?" Wang Yingjiao was utterly baffled. "Which eunuch owns this property?"

“It’s not any eunuch’s property; it’s a newly established Inner Palace Office,” Wang Ji said, shaking his head. “It has official ranks. It’s directly managed by the Directorate of Ceremonial, and its head is the chief eunuch, Eunuch Wei Chao.”

"Ah? The Inner Palace Office. Eunuch Wei." Wang Yingjiao quickly recalled Wei Chao's silent, smiling face. "What's going on? Making money through business? How much can a bank make?"

The money exchange was indeed a profitable business, but for the vast Ming Dynasty court and the shortage of supplies in Liaodong, this income was merely a drop in the ocean. It certainly wasn't as good as the Liaodong military pay that had been reduced by half.

“A bank can’t make much money, but what if it also issues paper money?” Wang Ji said quietly, his eyes slightly narrowed.

"How did we get onto paper money again?" Wang Yingjiao was even more puzzled. "Isn't that the responsibility of the Bureau of Revenue and Currency?" The Bureau of Revenue and Currency was a subordinate department of the Ministry of Revenue, a government office of the eighth rank. It was established in the seventh year of the Hongwu reign and had subordinate agencies such as the Paper Bureau and the Printing Bureau, which were responsible for the printing, storage and circulation of the Ming Dynasty's paper money.

“This bank has come up with a new kind of ‘precious paper’ called ‘Da Ming Silver Note’.” Wang Ji chuckled, then untied the embroidered money pouch hanging from his waist, took out a one-tael silver note, and handed it to Wang Yingjiao. “This is it, please take a look.”

Wang Yingjiao put down the account book, took the so-called 'new banknote,' and found that it was a multi-colored, double-sided engraved paper banknote about the length and width of a palm. There were obvious signs of cutting along the edges.

The banknotes bore ten large, horizontally arranged characters in the official script of the Ming Dynasty: "Da Ming Ri Yue Bank Circulating Silver Notes".

The inscription also features four large, horizontally arranged characters in the official script: "Taichang Year 1".

The main body between the two lines of red characters is a column of official script printed in black ink: "Official Silver One Tael".

In addition to these basic characters, the front of the silver note also has some anti-counterfeiting patterns printed on it. These patterns make the silver note look very similar to a treasure note at first glance, but upon closer inspection, it is obviously not a treasure note.

Within the two lines of red characters, a large pattern enclosing the main black characters is a border made of nine-fold seal script. The left border contains the words "Tianxia Tongxing" written in nine-fold seal script, while the right border contains the words "Da Ming Yin Piao" written in the same nine-fold seal script.

Unlike the Ming Dynasty Treasure Note, the border does not feature dragon patterns or wave designs, but rather rice ears and silver ingots, as well as a pair of seventh-rank mandarin ducks facing each other.

Having examined the front, Wang Yingjiao turned it over to observe the back. The back of the banknote also had a border and text. The border also featured rice ears, silver ingots, and mandarin ducks, while in the center of the border was a format description printed vertically in the official script:
Promissory notes and official silver of equal value are accepted.

The promissory note is bearer and can be cashed on sight. Please keep it properly.

Promissory notes were printed and issued by the Sun and Moon Bank, which was subordinate to the Directorate of Ceremonial. Anyone who counterfeited a promissory note would be executed, and their entire family, including three generations, would be exterminated.

"What exactly does this mean?" Wang Yingjiao handed the silver note back to Wang Ji. "What exactly does the palace want to do?"

“Instead of silver, use banknotes.” Wang Ji took the banknotes, but instead of immediately putting them into his purse, he casually placed them on the coffee table beside him.

"Replacing silver with paper money?"

“Yes. Look at this sentence.” Wang Ji flipped the silver note over and pointed to the first sentence of the “Explanation” text: “‘This note is valid for use with an equivalent amount of official silver.’ In other words, this one-tael silver note is equivalent to one tael of official silver.”

"Look," Wang Ji said, opening the embroidered bag again. "This is a newly minted one-tael silver note from the Silver Workshop." He shook out a standard one-tael silver note, about the size of a thumb, and placed it on top of the silver note. "This one-tael silver note is completely equivalent to the silver note below. You can take this silver note to the bank and exchange it for one tael of silver. Conversely, you can also use this one-tael silver note to exchange for a silver note at the bank."

Wang Yingjiao picked up the silver ingot, weighed it lightly, and then looked at the inscription on it.

The front of the silver ingot has only four large characters arranged vertically: "Ming Dynasty Official Silver".

The reverse side is engraved with three rows of small characters: the place of casting, the weight, and the silversmith's name—"Jingzhu, one tael, Nie Rong."

"I still don't quite understand," Wang Yingjiao said, looking at the silver coinage and then at the banknotes. "How does doing this count as increasing revenue?"

“This silver ingot, and this silver note,” Wang Ji said, pointing to the silver note and the silver ingot on top of it, “are all my salary from last month.”

"Has the imperial court already started using these silver notes to pay officials' salaries?!" Wang Yingjiao was shocked, his cloudy old eyes widening once again.

“That’s right. Half silver, half paper money. It’s been going on for three months now.” Wang Ji held up three fingers. “And it’s not just salaries, there’s also military pay.”

"Military pay!" Wang Yingjiao was even more shocked and hurriedly asked, "To whom? To Liaodong!?"

"It should start in Liaodong." Wang Ji nodded.

"should?"

“Last month,” Wang Ji explained, “our Commander Xiong submitted a memorial to the court. The memorial was very long and contained a lot of information. It covered everything from the battle situation and military discipline to the enemy’s and our own situation, the consumption of weapons, provisions and pay, and even his own physical condition. Under the section on provisions and pay, one point was that he requested the court to use banknotes issued by the Sun and Moon Bank instead of cash to pay the Liao soldiers.”

"Xiong Tingbi volunteered? How could that be!" Wang Yingjiao was utterly stunned. "Using 'precious paper' to pay the soldiers at this time, wouldn't that undermine morale?"

"I believe," Wang Ji said in a low voice, "that this request may have been written at the behest of someone in the palace."

"Why would you think that?" Wang Yingjiao immediately recalled the emperor's composed and smiling face.

"In April, Li Changgeng was dismissed from his post and returned to the capital to await investigation. Bi Ziyan took over the Ministry of Finance, and the sea route was changed. The palace continued to allocate funds for the salaries as usual. However, this time, those who took the new route to Liaodong were not only carrying funds from the treasury, but also a branch of a bank in Shandong." Wang Ji's voice returned to normal.

"Shandong Branch?" Wang Yingjiao understood, but didn't quite get it.

“The Sun and Moon Bank is divided into three levels from top to bottom: the head office, branches, and sub-branches,” Wang Ji explained. “The head office is in Beijing, the branches are in the provinces, and the sub-branches are in the counties. Liaodong is a sub-branch of the Shandong branch, so it is called the Shandong branch. Under the Shandong branch, there are three sub-branches: Guangning, Haizhou, and Gaizhou. The people in charge are all eunuchs.”

Wang Yingjiao was all too familiar with this organizational structure of general, branch, and sub-branch. In other words, wasn't it just the same as the departments, bureaus, and divisions under the household registration system?
"And then?" Wang Yingjiao asked quickly.

"Then he submitted this memorial," Wang Ji said.

“No,” Wang Yingjiao said. “What I mean is, what happened after Xiong Tingbi submitted this memorial?”

"The memorial was submitted to the Grand Secretariat, and the decree was sent to the Cabinet." Wang Ji said slowly, "To put it more precisely, the Emperor requested the Grand Secretariat to discuss the matters in the memorial with the Six Ministries, and to select the feasible ones for implementation."

"What do you mean?" Wang Yingjiao asked immediately.

“Most of the matters in that memorial have been agreed upon,” Wang Ji said. “But the matter of changing military pay to paper money has not yet been resolved.”

"You objected?" Wang Yingjiao reacted quickly.

Wang Ji nodded, but said, "It's not that I'm against it. I just think that military pay is different from official salaries and must be handled with utmost care. Besides, the court is not short of cash these days, so why do this when things are so troublesome in Liaodong?"

Wang Yingjiao remained silent for a moment, then looked at the silver notes under the silver ingots on the coffee table and asked, "Can these notes really be exchanged for silver?"

“Yes. At least for now,” Wang Ji nodded. “The official salaries in silver notes have been paid for three months now. The vast majority of officials who rely on their salaries cashed them at the bank as soon as they received them. The banks were well-prepared, cashing out as many as they came in, and there was never a situation where the counters were empty and cashing was temporarily suspended. From morning till night, as long as it’s not closing time, as long as someone comes, they can cash them.”

"So," Wang Yingjiao said thoughtfully, "half of my salary for the past three months came from the palace?"

"The salaries are still paid by my department. However, the money comes from the palace." Wang Ji smiled helplessly. "There's nothing we can do about it. We've had the Liaodong campaign for the past three years and the mining tax for the past twenty years. The Taicang treasury is so empty that mice can run through it. If the Emperor hadn't confiscated Zheng Guotai's property and used the confiscated money to pay the arrears, the Ministry of Revenue probably wouldn't have been able to pay the first salary in almost a year until this year's summer tax came to the capital."

"In other words," Wang Yingjiao nodded, his eyes filled with even more contemplation, "the palace first gave the Ministry of Revenue silver notes, which the Ministry then used to pay the salaries of officials in the capital. After the Ministry of Revenue paid the salaries, the officials in the capital took these silver notes to the banks to cash them, and the banks actually cashed them all out?"

(End of this chapter)