My Portable Ming Dynasty

Chapter 346 Japanese Silver Trading Company
Li Wenquan said:
"The amount of silver in the area is astonishing."

“Li once witnessed a Portuguese merchant trading with a Japanese merchant. After they agreed on a price, the Japanese merchant ordered his assistant to bring out silver ingots from the treasury, and then had a samurai use a knife to split the silver open to weigh it and complete the transaction.”

Goodness, Little Fatty Jun's eyes widened when he heard this.

Li Wenquan then said:

"The two hundred obsolete arquebuses I brought with me were also bought by Japanese merchants at a high price, ten times the market price of arquebuses in the Ming Dynasty. The saltpeter on the ship was also bought up by a wealthy merchant after several rounds of bidding."

Su Ze thought for a moment and said, "So the good business that the young master is talking about is trading silver and minting coins?"

Little Fatty Jun immediately deflated and said to Li Wenquan:
“Uncle, I knew it. Nothing in this world can be hidden from Master Su. Master Su immediately figured out your way of making money.”

Li Wenquan said:
"Exactly! Japanese silver coins are the same as those in our Great Ming Dynasty, where one silver coin can be exchanged for one tael of silver. So, if we transport Japanese silver back to the Great Ming Dynasty, one tael of silver can be minted into two silver coins, which is double the profit!"

Silver coinage was an easy way to make money, so it's not surprising that Li Wenquan could think of this.

But Su Ze had an even better way to make money.

He asked rhetorically:

"Your Highness, have you ever seen the Golden Ban in Japan?"

Li Wenquan immediately took out a money bag from his pocket and poured out a gold coin.

However, these gold coins were not the gleaming gold coins from the novel, but rather oval-shaped coins with a hazy golden sheen.

Su Ze said:

"Japan produces both silver and gold. Your Highness, do you remember how much silver one tael of gold could be exchanged for in Japan?"

Li Wenquan recalled for a moment and said:
Five taels of silver can be exchanged for one tael of gold.

Su Ze said:

"In our Great Ming Dynasty, ten taels of silver can only be exchanged for one tael of gold."

Upon hearing this, Li Wenquan's breathing became even more rapid.

According to Su Ze's method, if the money is exchanged for gold and brought back to China, the profit will double from one time to two times.

Su Ze continued:

"Not only that, Your Highness may not know that besides Japan, silver is also produced in the Southern Continent, which is run by the Spanish."

"But the Spanish valued gold more than silver. The silver they mined would be transported to Southeast Asia and exchanged for goods from the Ming Dynasty to return home."

“At the Spanish trading houses in Manila, one tael of gold can be exchanged for fifteen taels of silver.”

"Exchange gold in Japan, then exchange it for silver in Manila, then mint silver coins and exchange them for gold in Japan."

"Your Highness, you can calculate how many times the profit this is."

Li Wenquan's mouth dropped open. Although he had never been to Manila, he still believed Su Ze's statement.

The exchange rate for gold and silver varies from place to place. There is an interest rate differential between Japan and Manila, which naturally creates room for profit.

However, such exorbitant profits left Li Wenquan dumbfounded.

Is there really such a business in the world? You can earn so much money without selling any goods?

Li Wenquan was unaware that there were many ways to make money in later generations, and arbitrage using exchange rate differences was not a rare operation.

Moreover, this method was also used by Spanish merchants in Japan in the original timeline.

Li Wenquan then said:

"But conducting such trade requires a lot of capital, right? And it also requires the cooperation of the mint, and the imperial court?"

Little Fatty Jun immediately said:
"I have money! Uncle, I can give you all the capital of the Eastern Palace shops!"

Su Ze, supporting his face, said:
"Your Highness, the capital the Crown Prince is referring to is not just the surplus silver dollars in the Crown Prince's account."

Su Ze is certainly right; the only capital in finance is money, and a massive amount of money at that.

The prince then asked:
"Master Su, how about we follow the example of the railway and issue stocks to raise funds?"

Su Ze glanced at his good disciple, Xiao Pangjun, whose financial acumen was indeed extraordinary; he had actually come up with the idea of ​​stocks.

However, Li Wenquan said:

"Your Highness, the trade that Hanlin Su just mentioned can be done by merchants themselves, so why raise capital through shareholding?"

Su Ze looked at the emperor's brother-in-law, Li Wenquan, who was even more business-savvy than he had imagined.

The railway was able to successfully raise funds because it has a monopoly.

Since the railway raised its shares, private joint-stock commercial organizations have also emerged, but without exception, none of them have been able to reach the scale of the railway company.

Li Wenquan then said:

"Moreover, to obtain substantial profits, the cooperation of the mint is also required, but trade with Japan is not something that can be openly discussed, making it difficult to raise funds and issue shares."

Su Ze remembered that the Shandong Provincial Department of Revenue had approached him about a shortage of silver at the mint, and he had a sudden inspiration:
"Your Highness, Your Highness, I do have a solution."

"Please speak, Master!"

After Su Ze finished explaining his plan, both Xiao Pang Jun and Li Wenquan's eyes lit up. Xiao Pang Jun even said:
"Master Su! Please get up early and submit your memorial so I can co-sign it with you!"

Su Ze looked at Li Wenquan and said:

"Your Highness, this memorial should be submitted by the Crown Prince. You and I can sign it together."

Li Wenquan couldn't believe that Su Ze would hand over such a brilliant method to him so easily.

Su Ze said, "If we want to raise funds from the public, it would be better if it were proposed by a royal merchant like the Crown Prince."

Li Wenquan seemed to understand but not quite, while Xiao Pangjun had already had someone bring over writing brush, ink, paper, and inkstone, watching Su Ze draft the memorial.
-
Su Ze's memorial was not complicated; it requested the establishment of a franchised Japanese trading company and that this company, like the railway company, be allowed to issue public shares to raise funds.

In order to make the trading company competitive, Su Ze requested to grant the trading company a franchise, which would allow the franchised trading company to exchange silver dollars from the Dengzhou-Laizhou Mint at a rate of nine mace of silver to one silver dollar.

This is Su Ze's solution.

The silver trade was crucial to the finances of the Ming Dynasty and had to be controlled by the government.

However, having the government organize a fleet for silver trade was problematic. Firstly, it was inappropriate for the Ming government to trade directly with Japan. Secondly, official trade organized by the government would also suffer from corruption and inefficiency.

Furthermore, silver trading requires a large amount of capital, and given the current financial situation of the Ming Dynasty, it would be difficult to come up with such a large sum of silver.

That's why there's the method of establishing licensed trading companies to raise funds from the public.

Su Ze wrote in his memorial:
"In order to raise military funds and alleviate the shortage of money, we earnestly request the establishment of a licensed trading company to exclusively engage in trade with Japan."

"I have heard that the Dengzhou-Laizhou Mint has been suffering from a shortage of silver, resulting in a sharp decrease in the amount of coins minted for several months, which has damaged the annual revenue of the imperial treasury."

"Silver dollars continue to flow out of the market, and signs of a cash shortage are appearing in ports in the southeast."

Su Ze wrote from Li Wenquan's perspective:
"I personally went to Sakai Port in Japan to investigate and found that the market traded silver ingots by splitting them for weight, which is sufficient proof that the silver production was abundant."

"I request that a trading company be established for a period of ten years, exclusively engaged in the purchase of Japanese silver and the trade of precious metals."

"The company is permitted to exchange nine mace of silver for one silver dollar when purchasing Japanese silver." "Following the precedent set by the railway company, the company is also permitted to issue public shares in the Beijing bulk trading market to raise funds from the public for operating purposes."

Su Ze completed the entire memorial in one go, and finally wrote its title:
"A petition requesting the establishment of a company specializing in the trading of Japanese silver."

Su Ze handed the memorial to Li Wenquan, the heir apparent of the Marquis of Wuqing, and said:

"Please have the Crown Prince make a copy, and then have the Heir Apparent sign it."
-
On June 25, Li Wenquan, the heir of the Earl of Wuqing, submitted a memorial to the Office of Transmission requesting the establishment of a special trading company for Japanese silver.

Meanwhile, Su Ze, inside the Court of Imperial Sacrifices, stuffed a copy of the memorial into the "Portable Ming Dynasty Court" device.

——[Simulation Start]——

The memorial entitled "Request to Establish a Special Trading Company for Japanese Silver" was submitted by Li Wenquan, co-signed by the Crown Prince and the Crown Prince, and sent to the Cabinet.

Cabinet ministers held differing opinions on the establishment of the Japanese Silver Charter Trading Company.

The second-ranking official Zhang Juzheng supported the memorial, believing it could solve the money shortage problem.

Zhao Zhenji of the Three Auxiliary Regions opposed large-scale trade with Japan, fearing that the circulation of Japanese silver would cause the resurgence of Japanese pirates.

The emperor issued the memorial to his ministers for discussion, which once again sparked a debate in the court.

Southern officials had long been dissatisfied with silver dollars. The imperial court's minting of coins deprived them of pricing power over commodities such as raw silk and tea, while industrial products from the north also encroached on the export profits of southern products.

Rumors circulated among the people that "the so-called Japanese silver company is actually a way for the prince to amass wealth."

There are also rumors that the Japanese silver company's share offering excludes the south, ostensibly for monopoly purposes, but in reality, it is a means for northern elites to profit from arbitrage.

——[Simulation End]——

[Remaining Prestige: 1370.]

[To approve your memorial, you need to pay 1000 prestige points. Do you wish to pay?]

Good heavens, Su Ze knew there would be a lot of resistance, but he didn't expect the resistance to be this great this time.

Even though Li Wenquan, the heir of the Marquis of Wuqing, submitted a memorial together with the Crown Prince, it still required 1000 points of prestige to be implemented.

If you were to submit a petition individually, the required prestige points would be enormous.

Su Ze decisively chose "yes".

[Prestige points have been deducted, leaving 370 prestige points. The memorial has been submitted in real life; please wait for it to take effect.]

Now it's up to the system to perform.
-
June 26th.

Consort Li, holding a rattan cane, looked at Crown Prince Zhu Yijun kneeling on the ground. Her knuckles bulged, and her whole body trembled as she said, "You unfilial son!"

Li Wenquan, the heir of the Marquis of Wuqing, was also kneeling beside him, while Li Wei, the Marquis of Wuqing, was the one carrying out the family discipline.

"As the Crown Prince, you are not careful with your words and actions, and you are even thinking about such a small profit as Japanese silver!"

Zhu Yijun was summoned to the palace by his mother for punishment, and he was already resentful. He muttered:

"Mother, this is no small profit; it's a profit of one million taels of silver a year!"

"How dare you talk back!"

Consort Li was furious, but the Earl of Wuqing, who was standing nearby, said to Li Wenquan:

"You unfilial son, the Crown Prince speaks of a profit of one million silver dollars?"

Li Wenquan was also unlucky. After his memorial was submitted, it sparked a debate in the court, and his father detained him at home without explanation to enforce family law.

Today I was brought into the palace again to be punished along with my fat nephew.

Li Wanquan briefly explained the process of silver arbitrage, and Wuqing Earl Li Wei's eyes widened in surprise.

Unlike his daughter, Wuqingbo Li Wei had endured a long period of hardship and knew that "even a hero can be brought down by a penny."

A million silver dollars, what does that even mean!
Wuqing Earl Li Wei grows potatoes, sweet potatoes and other crops on his farm outside the city. With the money he earns from breeding and seedling cultivation, he earns no more than a thousand silver dollars a year.

This is the result of Wuqing Earl Li Wei spending the whole year at the farm and even personally engaging in farming.

But now, just organizing a fleet to go to sea can generate a profit of millions of silver dollars!

Li Wenquan rarely communicated with his father, and Li Wei only knew that he farmed in Penghu. He had no idea that maritime trade was so profitable.

Li Wenquan immediately said, "Father, sister, there really is a million silver dollars!"

"I set up a colonization and expansion merchant group in Penghu and raised 50,000 silver dollars. As soon as this Japanese silver company is established, I will immediately subscribe to all of them as shares!"

Li Wei thought of the most famous railway stocks recently. Many nobles had bought the stocks, and it was said that they could make several times the profit by selling them directly. However, the people who held the stocks were determined not to sell them.

Li Wei also regretted missing the opportunity to invest, as the Japanese silver company's stock was more valuable than the railway company's stock.

Li Wei stopped Consort Li and said:

“My daughter, the Crown Prince is doing this for the sake of the Ming Dynasty. If there is a profit of one million silver dollars, His Majesty will be happy.”

Consort Li softened her stance somewhat upon hearing her father's words, but she still said:
"But the rumors circulating in the outer court are so nasty. I'm angry that this brat insisted on sticking his neck out and causing trouble for His Majesty!"

Knowing his daughter's personality, Li Wei comforted her, saying:
"Your Majesty is a wise and sage ruler. What wise and sage ruler is afraid of trouble?"

After Li Wei said this, Consort Li put down the rattan cane.

After asking his son in detail, Li Wei finally understood the arbitrage method used by the Japanese silver company.

After listening, Li Wei murmured:
"There really is a way to make silver beget silver in this world?"

Just then, a eunuch's voice came from outside the door, announcing that the Longqing Emperor had arrived.

Upon hearing this, Consort Li immediately ordered a palace maid to help with her makeup, while Li Wei helped the Crown Prince and his son to their feet.

When Emperor Longqing entered Yikun Palace and saw the entire Li family inside, and also noticed the rattan that hadn't been put away in the rush, he guessed most of the cause and effect.

After Wu Qingbo led his son to pay respects to the emperor, and Xiao Pangjun also respectfully bowed to his father, the Longqing Emperor said to Li Wenquan:
"The discussions in the outer court all stem from Minister Li's memorial. I would like to hear your opinion."

All eyes fell on Li Wenquan, who then recounted all his experiences in Japan.

The Longqing Emperor listened with great interest, and after finishing, he remarked:

"How can such a small country as Japan possess such wealth in gold and silver? How unjust is Heaven?"

At this moment, Little Fatty Jun stepped forward and said:
"Father, what you said is wrong!"

The Longqing Emperor smiled and looked at his son, asking, "Oh?"

Although Little Fatty Jun had just been scolded by his mother, he had been studying with Su Ze for several years and was already immune to Consort Li's reprimands. He looked at his father and said:
"Japan is small and poor, and cannot even produce its own saltpeter. For them, mountains of gold and silver are like a child carrying gold through the market, which is actually a path to disaster."

“If our Great Ming does not take it today, the Western barbarians will also profit from Japan. Does Father Emperor intend to hand over such great benefits to them?”

Emperor Longqing smiled upon hearing this, pleased with Xiao Pangjun's growth.

The emperor, in a very good mood, said to Consort Li:
“The Marquis of Wuqing’s heir plotted for money, and Jun’er co-signed a petition, both for the sake of the country and for loyalty! There’s no need to punish them further.”

Marquis Wuqing and Consort Li immediately accepted the order.
The Longqing Emperor dismissed the Li family again, then asked Little Fatty Jun:
"Jun'er, the outer court opposes the Japanese silver company, and even goes so far as to spread rumors about you, the crown prince. Have you figured out why?"

(End of this chapter)