Tang Dynasty Xie Lu Lang

Chapter 429 Luxurious Assets, Coveted by All

"You don't need to be modest. Since I've summoned you here to discuss matters, I naturally know a few things about you. Don't forget, before entering the court, I also lived and worked in Bianzhou. The things you did in Bianzhou were not something a person of low talent and knowledge could accomplish."

With a confident smile on his face, Yuwen Rong looked at Zhang Dai and said, "If you truly have something to do to benefit me, you will naturally be able to do it. Just like this morning at the Zhongshu Gate, when the two Zhongshu officials were arguing, it was I who set aside their differing opinions and strongly advocated for you to be appointed as a supervising inspector."

Upon hearing this, Zhang Dai's heart skipped a beat. He had done so much in Bianzhou, and Yuwen Rong's words immediately filled him with all sorts of thoughts and speculations.

After hearing Yuwen Rong's words, he realized that there was such an inside story behind his appointment as an Inspector. If what Yuwen Rong said was true, then his own boss seemed incompetent, unable to even handle a mere Inspector position. What a pointless position as Prime Minister!
Although he knew in his heart that this disadvantageous situation was only temporary, he couldn't help but feel happy when he thought that Pei Guangting was being suppressed in terms of output.

However, Yuwen Rong's smug expression made him quite uneasy, so he quickly added, "It's not just Bianzhou. In my early years, I was ordered by Consort Hui to go east to build weaving workshops and provide relief to women and children. Both north and south of the Yellow River, we received a lot of help from Prime Minister Yuwen, which enabled the construction to proceed smoothly and saved many lives..."

"You don't need to hide it too much. I'm not talking about the Yizao Textile Workshop, but about your collusion with Bianzhou merchants to crack down on the flying money business! Back then, you used Pei Zhouxian's power to coerce a group of Bianzhou merchants into investing in you and creating the flying money business. Although you had to share huge profits with those merchants every year, you yourself must have been able to rake in tens of thousands of strings of cash, right?"

Seeing that Zhang Dai was still dodging the issue, Yuwen Rong lost patience and immediately sneered, "If it were just a few trivial matters, it wouldn't be worth my special treatment. But the business of making money through illegal means, which you created, is indeed an amazing business."

In previous years, when you only traveled to the two capitals, you were small and weak, and your business was quickly seized by powerful figures; it hardly qualifies as a fine enterprise. Now, with connections to other prefectures, capital from those prefectures is flowing into the capital region, benefiting both of us. Your strategy is ingenious and truly deserves praise!

When Zhang Dai heard that Yuwen Rong had set his sights on his flying money business, he naturally became nervous. Although his business was not small, it was all based on the fact that flying money could stably provide considerable profits.

If Feiqian is affected, other businesses will inevitably be greatly impacted, especially other plans that require long-term investment, which will become difficult to sustain.

Yuwen Rong had grasped his Achilles' heel. Although Zhang Dai was greatly wary, he still spoke respectfully on the surface: "Lord Yuwen is not only discerning but also skilled in financial matters. How could I dare to conceal this matter?"

However, I felt that running a business with merchants from other states was hardly a respectable affair, and that I was merely using it to earn some money for entertainment. How could I dare boast of this before Prime Minister Yuwen, who was in charge of the nation's finances, and lest I become a laughingstock among experts!

"No, your plan is brilliant. It can not only bring private benefits to a few families, but if it is corrected and reformed, it can even greatly benefit the country!"

As Yuwen Rong recounted this, his eyes gleamed, and he made no attempt to hide his admiration when he looked at Zhang Dai: "When I first heard about this in the prefecture, I inquired about it extensively. Leaving aside the convenience of transporting goods across the passes, simply using this to entice people to entrust you with huge sums of money is a clever scheme. Especially in a place like Bianzhou, where goods converge, with your substantial capital, if you were to trade and profit from it, it would truly be a highly profitable venture!"
"I have many disciples, among whom are many capable individuals, but none possess such ingenious thinking. If Zhang Dai could place his impartiality above this, given time, he should attain this position!"

As he spoke, Yuwen Rong pointed back to his seat, the meaning of which was self-evident, showing great praise for Zhang Dai.

Zhang Dai remained unmoved. Even if you were to step down now, let alone wait for the right time, I still needed to use the money to nurture and expand other businesses. I couldn't just hand over this business to the court directly.

"Lord Yuwen, you flatter me. How could I, a mere individual, possibly undertake such a task? This matter was carefully considered and approved by General Gao, the Duke of Bohai. The wealthy families of Bianzhou are powerful and influential; how could ordinary people easily coerce them? I am merely borrowing their power and offering them enormous profits to barely manage this. If I am not careful, the merchants will cause an uproar in the state, and high-ranking officials will question me in the palace. I am trembling with fear."

Zhang Dai did not take all the credit for himself, but emphasized the significant role played by eunuchs such as Gao Lishi in the matter. Moreover, the biggest beneficiary of this affair was actually the imperial palace, as the final recipient of the funds provided by Feiqian was the current emperor.

If Yuwen Rong wanted to use his power as prime minister to interfere, he would be competing with the emperor for profit. Moreover, many people were involved in the process, and once things got out of hand, it would be very difficult to clean up the mess.

"You don't need to be so wary. You've built this business, so I won't take it away easily. Besides, the annual income of tens of thousands of strings of cash is certainly a fortune for your family, but it's insignificant for the country. I'm asking you this now because there's another matter that requires your cooperation."

Yuwen Rong, naturally, looked down on the mere tens of thousands of strings of cash. He then said, "In Bianzhou, you must have a large amount of money stored in money shops to handle payments and also to resell for profit. Lending money to private individuals is cumbersome, and a slight mistake can result in the loss of both principal and interest. Lending to the government would be more advantageous. Do you remember the proposal you submitted last year regarding the reform of the grain transport system? The court is now planning to implement this on a large scale, especially requiring the renovation of the Bian Canal and the hiring of laborers. If it is purely laborers, the people will inevitably suffer, but if laborers are hired, the people will have food, and the officials will have work."

However, there is a shortage of money and goods, making it difficult for the government to operate. If there were sufficient funds to buy goods and hire workers, everything would be fine! You don't need to worry about the government cheating you. I will guarantee to pay off this debt for you with the rent cloth from Jiangnan, and I will also give you half of the official interest. What do you think?"

Upon hearing this, Zhang Dai understood what Yuwen Rong meant.

This guy planned to first use the money in his shop to hire able-bodied men to dredge the waterways and reform the canal transport. Compared to simply conscripting soldiers, this method of replacing labor with work could ensure that the people could earn money through their labor and maintain basic purchasing power. Then, through methods such as alteration and distribution, he could recover the money from the people's hands, thus achieving a certain cycle.

Indeed, if the government could guarantee timely and full repayment, even if it was only half the official profit, Zhang Dai could still gain a considerable income. The only difference was that he gave out money but received cloth in return.

This means that his money exchange was actually acting as a substitute for the government in releasing funds to the people, solving a series of deflationary problems caused by the money shortage, and at the same time extending the government's labor cycle.

At first glance, this seems like a collaborative and mutually beneficial plan. But the question is, if everything is really that good, why would Yuwen Rong let himself incur extra interest for no reason?
The economic situation in the Tang Dynasty differed greatly from that of later dynasties. In terms of currency alone, there were various problems. If we add to this the gap in productivity and the relative lag in the commodity economy, many financial theories from later generations are difficult to apply today.

The physical attributes of currency inevitably give rise to a gap in purchasing power caused by variations in quality. To put it simply, ten dollars cannot be regarded as ten dollars; it may be eight dollars, seven dollars, or even eleven or twelve dollars. Just as cloth varies in quality, money also has its flaws.

Zhang Dai noticed this problem when he created flying money, so he introduced the concept of estimation error into flying money, that is, a 10% error is allowed in the deposit and exchange of flying money.

In ancient times, this actually had a specific name: "qianmo," which means that although the actual value was less than one hundred coins, it was used as if it were one hundred coins, and both parties in the transaction tacitly agreed that the difference did not exist. This was both a compromise solution when the supply of physical currency was insufficient and a form of commodity transaction tax.

Yuwen Rong wanted to bring Zhang Dai's Feiqian store into the business so that Zhang Dai's Feiqian would bear the losses caused by frequent currency circulation, such as depreciation or currency exchange differences. This was a risk transfer in the context of a currency shortage and rampant bad money.

This model, simply put, involves bundling all the gains and losses from the circulation of money and silk to Zhang Dai at half the official profit price. If the losses generated by this series of economic actions are less than half of the official profit, then Zhang Dai makes a profit. If they exceed half, then he has to absorb the excess himself.

Of course, this is all contingent on Yuwen Rong being able to pay the promised Jiangnan cloth rental amount on time and in full.

From an official perspective, Zhang Dai had to admit that this method was effective. The "flying money" system was essentially a form of social dividend built upon the overall stability of Tang Dynasty society and the rapid development of its commodity economy; moreover, it was extremely profitable. Having enjoyed such exorbitant profits, it was natural to bear greater social responsibility.

The problem is, Zhang Dai is the one running the flying money business. If it weren't his business, he'd help Yuwen Rong push this policy through, and he'd punish anyone who disagreed! But since it's his own business, that's out of the question!
Zhang Dai's reluctance was not because he didn't want to take on more social responsibility; in fact, he already had a lot to take on now, and he would have even more in the future.

Rather than handing over the profits of Feiqian to Yuwen Rong for distribution, he would much rather manage and distribute these profits himself, and he was certain that he could do a better job than Yuwen Rong.

Yuwen Rong may have had some public-spirited intention in using embezzlement to cover the costs of governance and state expenditures, but those who followed in his footsteps were merely keen on exploiting the people to amass wealth for the emperor's enjoyment. The burdens and livelihoods of the common people were never a concern for them.

But now that Yuwen Rong had brought this up, he feared that if he didn't give the other party a satisfactory answer, he wouldn't be able to leave the Menxia Province smoothly. Seeing that he was only pondering and remaining silent, Yuwen Rong's eyes gradually sharpened.

After thinking for a moment, Zhang Dai stepped forward and asked Yuwen Rong with a mysterious expression, "May I ask, Lord Yuwen, have you ever heard of the Kaizhong Method?"

(End of this chapter)