I am Emperor Shizu of Song

Chapter 111 Hangzhou Futures Exchange
"Master Wang, this way please. Don't worry, today will definitely be a good day, so don't be shy."

Li Jun, who is currently serving as the temporary commander of a naval battalion in Hangzhou, led a merchant to Prefect Zhao's villa.

This merchant was named Wang Chengxun, a native of Hangzhou, but he originally worked as a merchant in Mingzhou (Ningbo) for many years. During the Northern Song Dynasty, both Hangzhou and Mingzhou had maritime trade offices, but Hangzhou was not directly on the sea, so ships coming to Hangzhou had to sail a little further in from the mouth of the Qiantang River.

In addition, the presence of the Qiantang River tidal bore makes it more convenient for ocean-going ships to use Mingzhou Port than Hangzhou Port.

Wang Chengxun had previously made several voyages from Mingzhou to Japan for maritime trade, selling silk and porcelain and bringing back gold, silver, Japanese swords, lacquerware, folding fans, and other goods; his business was very large. However, his family remained in Hangzhou, and when Fang La captured the city last year, his parents and most of his relatives were killed.

Only the youngest sister survived. Because of her young age and extremely thin build, she managed to hide in the chimney of her house, thus escaping the chaotic soldiers' search and killing. Two days later, Prefect Zhao led his troops in a desperate battle against Fang La, saving Hangzhou once again. Wang Chengxun's sister was also discovered by the soldiers, registered, and later sold into servitude as Prefect Zhao's maid.

Wang Chengxun was in Mingzhou at the time. When he heard that the city of Hangzhou had been captured and then rescued by Prefect Zhao with his troops, he rushed back to Hangzhou, only to find that his entire family had been murdered and his younger sister had been bought by an official family. He went to their house to ask for an audience, explaining that his sister was not without relatives and requesting that he be allowed to redeem her, as he had no shortage of money.

Prefect Zhao met with him once. After hearing that he was a maritime merchant, he asked him to do something for him. If he did it well, he would let his younger sister go home and would not charge her a ransom.

Wang Chengxun dared not refuse and immediately accepted the post of Prefect Zhao.

What Zhao Zicheng asked him to do was, of course, to help convert the large quantity of silk seized from Fang La into cash.

Such a large quantity of goods is generally too much for anyone to handle, but if a group of maritime merchants could be organized to deposit money and stockpile the goods, it could be digested more quickly.

Wang Chengxun estimated that if he had a few more months, after completing his successful voyage to Japan this spring and summer, he could sell the Japanese goods he brought back, and then raise enough money by mortgaging and guaranteeing them to help the prefect with his inventory.

However, Prefect Zhao didn't give him that much time. A few days ago, he was suddenly summoned again, and he rushed over in a hurry.

……

Wang Chengxun was led by Li Jun to "Wansong Villa". After entering the two courtyards, Li Jun waited outside while another maid led Wang Chengxun inside.

"Wansong Manor" was Zhao Zicheng's estate. Because it was built on Wansong Ridge, a spur of Phoenix Mountain, Zhao Zicheng simply named it Wansong Manor, and it had nothing to do with the "Crescent Moon Saber." After all, the academy built here in later generations was also called Wansong Academy, so this naming convention is quite reasonable.

Wang Chengxun lowered his head and carefully approached Zhao Zicheng, bowing respectfully without daring to show the slightest negligence.

He was the prefect of this prefecture, a member of the imperial clan, and skilled in both literature and martial arts. He defeated Fang La single-handedly, avenging the entire Wang family. Wang Chengxun could only prostrate himself in admiration.

Zhao Zicheng also received him alone, with only Wang Chengxun's sister, Wang Shi, serving him, and no other outsiders present.

Wang Chengxun respectfully reported, "I hope Your Excellency will be informed that the task of underwriting silk and exchanging it for gold and silver, which I previously instructed you to do, will still take several months. I have done my best to invite all the merchants I know from Hangzhou and Mingzhou."

This shipment is simply too large; it would take at least a year to process and consume it all. Even if all the gold and silver of all the merchants in both provinces were put together, it would be impossible to buy 500,000 bolts of silk in one go.

Zhao Zicheng raised his hand to indicate that he didn't need to rush: "There's no need to rush this matter. I don't have time to waste words with you. Let me be frank. The court has already made another appointment. I will be taking up my post in Dengzhou and Laizhou within three months. The affairs in Hangzhou will soon be handed over to my successor."

However, a matter I petitioned the court before leaving office has made progress, and the court has approved it, intending to reorganize the Hangzhou Maritime Trade Office. The new Director of the Maritime Trade Office will be Wei Xian, the former Prefect of Huzhou.

Wei, the Prefect, is an upright and incorruptible official, but he only knows how to eradicate illegal activities and doesn't understand trade. The court has allowed me to recommend a capable official in charge of daily trade management to assist Wei in his work and pilot reforms. If he is truly diligent, he may be granted an official position without being bound by convention. I think you've done a pretty good job serving me these past few months..."

Zhao Zicheng paused slightly at this point. After all, this was an immense favor, and he didn't need to be too explicit; the other party would naturally understand.

As expected, Wang Chengxun, a wealthy merchant who had been in the maritime trade for many years and had helped Zhao Zicheng sell so many spoils of war, was naturally extremely adept at navigating social situations. How could he not understand Zhao Zicheng's meaning? He immediately knelt down and kowtowed repeatedly.

"Thank you so much, Lord! You are truly like my second parents! Not only did you defeat Fang La and avenge my parents, but you also helped me so much. Our Wang family can never repay your kindness in three lifetimes!"

Zhao Zicheng raised his hand and said, "Get up. After I leave, you need to keep an eye on the shipments here for me. If there are any large amounts of spoils to be cashed out in the future, you also need to help me handle them."

After I went to Dengzhou and Laizhou, the court ordered me to open up sea routes to Liaodong and Goryeo, and to eliminate bandits along the sea routes. Since you have traveled to Japan so many times, you must have also been to Goryeo, which is even closer.”

Wang Chengxun readily agreed: "Don't worry, Your Excellency! I will do whatever Your Excellency asks me to do. Our Wang family's ships are also at Your Excellency's disposal without question."

Zhao Zicheng nodded, then pointed to the beautiful maid beside him: "By the way, I took your sister in as a maid only because I pitied her and mistakenly thought she had no relatives left. Now that you are working for me, I will not force her to stay. If you want to redeem her, just take her away. There is no need to go through all that trouble."

Zhao Zicheng was unaware that the Wang family had produced concubines in history. Wang Chengxun's daughter, more than ten years later, during the Shaoxing Peace Treaty, was taken into the palace by Zhao Gou because of her outstanding beauty and was given the title of Cairen.

According to the History of Song, it is true that one of Zhao Gou's concubines, Lady Wang, came from a wealthy local merchant family. However, Lady Wang's father was also a disappointment; after his daughter entered the palace, he used various tricks and schemes to seize wealth and colluded with officials and merchants, eventually leading to his punishment. As a result, Zhao Gou punished Lady Wang by sending her to a Taoist temple, which was tantamount to banishing her to the cold palace.

Of course, this was still more than a decade before the Shaoxing era. So the Wang woman Zhao Zicheng encountered was not the Wang woman who later became Zhao Gou's favored concubine, but rather his aunt. She was indeed quite beautiful, though far less so than the Murong sisters; at least she was someone he could keep as a maid.

Zhao Zicheng was not a lecherous man; he had never touched this woman. He only kept her around to build up his own faction. Previously, he had only recruited military men, and he lacked civil officials and money-makers. Relying solely on his own family and the Murong family was not feasible, as they were not professional enough. Therefore, he needed to bring in professional maritime merchants.

Upon hearing this, Wang Chengxun was no longer willing to take her in. He quickly said that he was unaware of the situation at the time and mistakenly believed that his younger sister was in a miserable state after the whole family was killed. If he had known that she had been bought by the prefect, he would never have had the idea of ​​redeeming her.

Seeing that he was sensible, Zhao Zicheng tossed him a document containing his previous proposal to the court to reform the Maritime Trade Office, telling him to figure it out and follow it when the time came.

Wang Chengxun took it with trepidation. After reading it for only a short while, he was amazed by the ingenious design of its contents. He never expected that Lord Zhao would be so familiar with the matter of returning to Yi, and that his insights were exceptionally profound.

"None of the previous directors of the Maritime Trade Office have had such insightful views. If this law is implemented, the tricks that maritime merchants used to play the victim to lower prices and evade taxes will probably not work anymore... But it doesn't matter. After this law is implemented, small maritime merchants will not be able to withstand the risks and will inevitably withdraw one after another. In the future, maritime merchants will become stronger and their numbers will become fewer and fewer."

He quickly made this judgment in his mind.

……

In the two weeks that followed, Zhao Zicheng spent his last days before leaving Hangzhou dealing with the reform of the Maritime Trade Office, which he had advised on, and the rest of the time preparing for the handover with the new prefect.

A few days later, Wei Xian, an old acquaintance who had previously served as the prefect of Huzhou, arrived in Hangzhou. This time, Emperor Huizong had appointed him to oversee the Maritime Trade Office.

The change from a powerful prefect to the director of the Maritime Trade Office was not considered a promotion. For an official like Wei Xian, who had previously stood up to Zhu Mian and later made some contributions during the pacification of Fang La, this appointment was not a particularly generous one.

Although the Maritime Trade Office was of low rank, it wielded immense financial power. Emperor Huizong (Zhao Ji) was aware of the importance of money. Considering Wei Xian's upright and incorruptible character, and his previous willingness to confront Zhu Mian and directly criticize his corruption, he believed that appointing Wei Xian to head the Maritime Trade Office, which was undergoing reform, would minimize the problem of collusion and greed. This is why he made such an extraordinary transfer.

Wei Xian knew the emperor's expectations, and he himself hoped to clean up the shady dealings of the Maritime Trade Office and do something for the country and the people, so he came.

As soon as Wei Xian arrived in Hangzhou, Zhao Zicheng personally went to greet him: "Brother Wei, how have you been? It's been almost half a year since we last met after the Battle of Wuxing last year."

Wei Xian smiled wryly: "My dear brother is truly... In just over a year, you have been promoted from county magistrate to prefect of a major prefecture, and now you have been given another important post. I am truly ashamed. However, this is all well-deserved. In these turbulent times, the country should give more opportunities to capable ministers. Based on your repeated victories against Fang La with fewer troops, what is wrong with you even being in charge of a region?"

Zhao Zicheng said, “Brother Wei, you flatter me. The court must have valued your integrity and ability to reform corrupt practices. I have already drafted a plan on how to do it, and it has been approved by the Secretariat. If you have any questions, you can ask me. I have also left a few capable officials to assist you.”

Wei Xian didn't stand on ceremony and asked Zhao Zicheng for advice in person, learning about his plan.

Zhao Zicheng's plan mainly involved establishing a centralized trading exchange under the Maritime Trade Office. This exchange would compile statistics on the average import and export prices of common bulk maritime commodities, preventing significant fluctuations in prices based on temporary quotes when merchants entered and left the port, which would hinder tax collection. After the new law was implemented, all import and export goods in Hangzhou Port would be traded centrally at the exchange with publicly quoted prices, prohibiting private transactions and preventing dual contracts. If a transaction price was clearly unreasonable, the government could hold an auction, with the highest bidder winning, preventing insider trading. If someone still wanted to use dual contracts—offering a low price on the surface while actually getting the buyer to pay extra privately—the auction system would prevent such insider trading from being intercepted by a third party.

With long-term market fluctuation data, if the government experiences short-term, sharp price fluctuations, such as a sharp drop in selling prices, it can stockpile goods, similar to Wang Anshi's "equalization and distribution" policy, buying low and selling high. Once the prices of specific goods rise, the government can then sell them, earning a small profit from the price difference and also achieving the effect of peak shaving and valley filling to reduce price volatility.

After the Maritime Trade Office installed so many supporting facilities to help regulate peak and valley storage and facilitate open and centralized trading, any private transactions discovered would be considered smuggling and would be severely punished by the Maritime Trade Office.

With a benchmark pricing system in place, the Maritime Trade Office could collect all taxes in monetary form, instead of directly levying taxes in kind as a percentage of the goods. This also facilitated long-term management.

Previously, the Maritime Trade Office's tax collection was very chaotic, involving both in-kind and monetary taxes. Only when the price of goods was reasonable, and the government and merchants had a relatively consistent valuation, could monetary taxes be collected smoothly. However, if a merchant believed the government's valuation was problematic, they would simply shrug and claim their goods were not worth that much, unable to pay in cash, and demanding a certain percentage in kind according to the imperial law—which was indeed how the previous imperial law stated it, so merchants paying in kind wasn't considered wrong.

However, the storage and shipment of physical goods were very troublesome. For example, many spices could be shipped slowly if they had a long shelf life, but some goods had a short shelf life and ended up as a pile of rotten ruins after being piled up in the warehouse of the Maritime Trade Office for many years.

Some officials from the Maritime Trade Office even stole unspoiled goods in advance to sell them privately, while storing a bunch of rotten goods in the warehouse, and finally reporting the loss as "damage".

After a comprehensive collection of monetary taxes, these illicit schemes can be largely stopped. Although the Maritime Trade Office will still be highly profitable, and some will certainly try to make a fortune, it will still be much better than the current situation.

Upon seeing this, Wei Xian suddenly thought of some practical issues and asked directly: "According to the new law you suggested, we will need to strictly investigate whether merchants entering and leaving the sea are trading at the exchange. However, the Maritime Trade Office originally only had patrols for those entering and leaving the port and lacked a navy. How can we manage this after the law enforcement is expanded?"

Zhao Zicheng, however, had a plan in mind and immediately reassured Wei Xian: "Brother Wei, you can rest assured. The court recently transferred Yang Zhi, the commander under General Wang Bing, and ordered Hangzhou and Mingzhou to raise coastal naval forces. The original intention was to guard against Taizhou, Wenzhou, and the remnants of Lü Shinang and Chen Shisi."

However, the remnants of Lü Shinang and Chen Shisi will certainly not be able to cause trouble for long. In less than a year or two, after the coastal areas are at peace, Brother Wei can submit a memorial to the court requesting that the idle naval forces be used to patrol the maritime trade offices in Suzhou, Hangzhou, and Mingzhou, and to be dedicated to combating smuggling.

This matter won't only benefit our Hangzhou Maritime Trade Office. If the pilot program in Hangzhou proves successful, the court will certainly extend this beneficial policy to Mingzhou and Suzhou. Brother Wei, if you join forces with the heads of the Maritime Trade Offices of the other two prefectures to jointly advise us, and present the achievements of the Maritime Trade Offices in increasing commercial taxes after the pilot reform, the court will naturally agree.”

Wei Xian was not knowledgeable about military affairs, but he was completely relieved when he heard Zhao Zicheng say that he had even thought of the issue of armed naval vessels for combating smuggling.

"So you've already made so many arrangements, my brother. I'm relieved. Go and take up your post in Dengzhou and Laizhou with peace of mind. Although I don't know much about trade, I will do my best to clean up corruption and boost customs revenue for the court."

Zhao Zicheng then explained the policy details to Wei Xian in more detail, and introduced Wang Chengxun, whom he had just promoted and who came from a maritime business background, to Wei Xian. The group then discussed and worked things out together.

A few days later, the first centralized trade fair after the reform of the Hangzhou Maritime Trade Office was held in the newly established "Hangzhou Exchange".

The Huiyi Exchange was what later became a large-scale commodity exchange, an agency under the newly established Maritime Trade Office. Because it was newly established, the imperial court granted Wei Xian prior authorization to appoint its director. Thus, Wang Chengxun, acting as Zhao Zicheng's agent for maritime merchants, smoothly became the first director of the Huiyi Exchange.

This position has no official rank, only actual authority to perform official duties, and does not receive a salary or stipend from the imperial court. Therefore, it does not require academic achievements and is considered a technical official position.

When anything new is first introduced, its management is bound to be quite unique. You can't expect someone with a scholar background to manage it; they simply don't know how. The only option is to have civil officials supervise it while those with maritime merchant backgrounds handle the actual work.

Under Wei Xian's supervision, Wang Chengxun worked hard, and the first "Spring Trade Fair" went quite smoothly.

The pricing of exported goods such as silk, porcelain, and tea, as well as the pricing of bulk imported goods such as spices, lacquerware, Japanese swords, folding fans, and medicinal herbs, were all much more stable than in previous years when trade was free. The imperial court did indeed collect a considerable amount more in monetary taxes.

This first Spring Trade Fair also saw the discussion and development of an officially recognized standard for assessing the quality of goods through the bargaining among merchants from various countries. Previously, the Maritime Trade Office did not have a standard for assessing the quality of goods such as spices and medicinal materials, nor could it accurately determine their quality.

In the era of taxation in kind, this problem was not considered serious, because regardless of the quality of the goods, a fixed percentage or quantity of goods was levied. Good goods received higher taxes, and poor goods received lower taxes.

Even so, there were still loopholes to exploit in previous years. For example, some maritime merchants knew that the Maritime Trade Office would collect taxes in kind, so they would deliberately buy mostly good goods and leave a small portion of slightly inferior quality goods to evade taxes, since the government couldn't accurately judge the quality of the goods anyway.

Even if some minor officials could see through it, the merchants could still give them extra gold and silver bribes to make them turn a blind eye and report to their superiors that "the whole ship is carrying third-class goods." Then they could pay taxes on the third-class goods and keep the more expensive first and second-class goods for themselves to sell.

Now that the imperial court has implemented centralized transactions and is collecting monetary taxes, the importance of assessing the quality and grade of goods has greatly increased.

With the arrival of Wang Chengxun, a "traitor among maritime merchants," who defected to the government and became Zhao Zicheng's agent, he became well aware of the quality assessment of various import and export goods by the Hangzhou Maritime Trade Office. Through fierce competition between the two sides, the first set of explicit quality standards for maritime trade goods in the Song Dynasty was thus created.

The entire process of its release was accompanied by the exposure of a large number of small and medium-sized maritime merchants' attempts to evade the process. Many merchants were forced to pay much more taxes this year, and many officials who could have privately received benefits had fewer opportunities to amass wealth.

Immediately, complaints arose from all levels of society.

After the first trade fair, many small-scale maritime merchants expressed their dissatisfaction through various informal channels. They also subtly criticized the court for tightening its management, saying that it would inevitably lead to the bankruptcy of a large number of small maritime merchants. In that case, maritime trade would be further concentrated in the hands of a few leading large maritime merchants, and they would eventually become too powerful to control. The court would eventually breed a treacherous villain that it could not control!

Such words cannot be said publicly; at the very least, in public settings, the wording should be more moderate.

However, such remarks reached the ears of Zhao Zicheng and Wei Xian in large numbers, which made Wei Xian quite worried, so he came to ask for advice.

Zhao Zicheng wasn't too worried about this.

He knew that the maritime trade industry would inevitably become more and more concentrated with the development of the times, because large chambers of commerce would certainly be more resilient to risks than small businessmen who went it alone.

The Western corporate system originated precisely to address the problem of small maritime merchants being unable to withstand risks. In "The Merchant of Venice," when Antonio's ship sank in a storm, he was about to be stabbed by the moneylender Shylock.

So, in response to Wei Xian's concerns, Zhao Zicheng directly advised him: "Brother Wei, rest assured, we must not throw the baby out with the bathwater. Small maritime merchants have meager profits and cannot withstand strict investigation. That is not the court's problem, but their own poor risk tolerance."

The government could find other ways to enable them to compete with the major maritime merchants. The easiest way to do this was to allow small maritime merchants to form joint ventures, contributing capital proportionally and sharing risks and profits in the same way. The government only needed to slightly refine the existing laws to make such joint ventures smoother.

Another solution is for the government to take the lead in establishing a 'maritime insurance' program, requiring all maritime merchants within the jurisdiction of the Maritime Trade Office to pay an additional premium. This premium could be collected together with commercial taxes, but the management of this money must be transparent and it must be used exclusively for compensation in the event of a maritime accident for each insured maritime merchant.

However, this matter certainly needs to be handled with more caution than the previous reform, because we need to guard against officials embezzling funds. Now that you, Brother Wei, are in charge of the Maritime Trade Office, I am not afraid that you will misappropriate the insurance premiums, but if other unscrupulous and corrupt officials are replaced in the future, then it is hard to say.

On the other hand, it's also necessary to guard against insured maritime merchants fabricating maritime accidents to defraud insurance companies. Currently, if this were to be implemented, it would be better to collect less money initially, but with strict limitations on the scope of insurance. Only cases with corroborating evidence confirming a maritime accident and the insured person being deceased will be compensated; the bodies must be found, and the money will be paid to their families as compensation. If the entire fleet perished and no survivors return to report, then no compensation will be paid.

Zhao Zicheng knew that the insurance measures he proposed were too stringent, but when a new thing is just emerging, it's better to be stricter and have a narrower scope of application. Otherwise, if someone were to exploit loopholes to commit insurance fraud, it would definitely make the subsequent promotion of maritime insurance increasingly difficult.

He didn't think he could just recite a very rigorous set of management rules and regulations on a whim. He could only give Wei Xian some inspiration first and let him figure it out on his own. After Zhao Zicheng left, he could also keep in touch with him through letters and gradually pilot the system and plug the loopholes.

Wei Xian also felt that Zhao Zicheng's method seemed quite promising. Although it was certainly full of flaws at the moment, it would never be perfected if it was not implemented.

"In that case, the problem of small maritime merchants' survival difficulties after the rectification of the Maritime Trade Office's tax system can be solved, it just takes some time. Well, I will try my best to find a way to implement this gradually. In the future, we will keep in touch by letter and go to Dengzhou and Laizhou to consult with you, my worthy brother."

Zhao Zicheng readily agreed and then helped Wei Xian review the government affairs one last time.

A few days later, his successor, who was to take over as the prefect of Hangzhou, also arrived.

Zhao Zicheng's petition to the court, requesting the Palace Marshal's Office to transfer Hu Yanzhuo, the military commander of Caizhou, and Xu Ning, the commander of a battalion of the Imperial Guard in Tokyo, was approved, and the Palace Marshal's Office officially issued the transfer order.

After a brief handover with his successor, Zhao Zicheng left Hangzhou, preparing to travel north by sea to Dengzhou.

(End of this chapter)