Top Scholar

Chapter 514 Is there a faster way to make money?

Fuxinglou Restaurant, Room No. 1 (Tianzi No. 1).

Zhu Shou pondered for a long time after hearing this, and then asked in confusion, "Such a useful method, why didn't Emperor Taizu use it? Why didn't Emperor Taizong use it? Why didn't any emperors in previous dynasties use it?"

"First of all, our ancestors never neglected this; our Great Ming Dynasty has always had commercial and industrial taxes," Su Lu replied calmly, having already done his homework.
"Even when the founding emperor was still a prince, he had already levied taxes on wine and vinegar and collected money from government shops; after ascending the throne as the King of Wu, he established a special tax collection office—the Xuanke Office in the capital and the Tongke Office in the prefectures and counties. This is a system clearly recorded in the 'Responsibilities of Various Offices,' which Your Majesty can easily find out by checking."

"Emperor Taizong moved the capital to Beijing, but the salt tax and tribute collection continued uninterrupted; these were all commercial and industrial taxes. Successive emperors followed this system, but they never put in the same effort as they did with land taxes, so the revenue was low and the effect was minimal. Commercial and industrial taxes have always accounted for less than half of the national tax revenue." Zhu Shou listened to him explain clearly and logically:
"There are three reasons for this. First, at the beginning of the founding of the dynasty by Emperor Taizu, the country had just been ravaged by war, and there was no one to be seen for miles around. Even the great city of Yangzhou had only thirteen households left. At that time, the most important task in the country was to 'encourage farmers to return to the fields.' If there weren't enough people to farm, how could there be anyone to do business? Industry and commerce must be built on the foundation of agricultural development. We didn't have the conditions, you know?"

As he spoke, he glanced at Zhu Shou and asked, "Under these circumstances, where do we collect business taxes?"

"Mhm." Zhu Shou nodded. Su Lu always explained things in such a logical and well-founded way, making them easy for him to understand and believe.

"Secondly, the tax rate is too low. At the beginning of the dynasty, the industrial and commercial tax followed the Yuan system, which was originally one-fifteenth of the tax. Emperor Taizu specially reduced it to one-thirtieth of the tax in order to allow the people to recuperate. At that time, industry and commerce were not thriving and the tax base was too small. No matter how high or low the tax rate was, it would not be able to collect much silver. So it was better to lower it and restore people's livelihood as soon as possible."

"Actually, the whole country was recovering at that time. As long as people returned to farming, they were given seeds and oxen, and were also exempt from taxes for five years. So, comparatively speaking, Emperor Taizu did not give preferential treatment to industry and commerce," Su Lu continued.
“But land tax is the foundation of the country, accounting for 70-80% of fiscal revenue. Once the five-year tax exemption period is over, it is collected in full. As for industrial and commercial tax, which is only a pittance, no one pays attention to it, and no one thinks about adjusting the tax rate. Others have raised their taxes but they haven’t, resulting in the ridiculous situation where merchants earn the most but pay the least.”

"Then let's raise it," Zhu Shou said.

"This is the third reason—obstruction from interest groups," Su Lu said. "With peace prevailing throughout the land and extremely low tax rates, since the Xuande era, industry and commerce in Jiangnan have gradually flourished. Salt, textiles, porcelain, tea... all industries are thriving, and wealthy merchants are richer than entire countries. Of course, without official protection, no matter how rich you are, you're just a child holding gold in the marketplace—this is an age-old truth!"

"So when the merchants made their fortunes, they devoted themselves to sending their children to school to take the imperial examinations—and studying is an expensive business, especially since Jiangnan is a place where culture and education flourish. After a hundred years, guess what happened?" Su Lu shrugged.

"What else can we do?!" Zhu Shou rolled his eyes and said, "It's just like this now."

“That’s right.” Su Lu nodded. “Nowadays, most of the civil officials in the court come from Jiangnan, and more than 70% of the cabinet ministers are from the south. Their families are the owners of those salt fields, weaving workshops, porcelain kilns, and tea mountains... Of course, they want to study and become officials, so they won’t get involved in business.”

“In fact, large families have formed a perfect division of labor—some people do business to make money, while others study to pursue official positions. Those who do business support the scholars first, and once the scholars enter officialdom, they become the merchants’ ironclad protector,” Su Lu said with certainty.

He was not exaggerating, because his family had followed that path.

Take, for example, his mentor, the beloved but impoverished Grand Secretary, whose residence in the capital was only frequented by three bleating sheep. But Zhu Zhishan, that big mouth, said that the Wang family had already built a garden for him and even named it 'Yilao Garden'.

So when Grand Secretary Wang said he wanted to resign and retire to his hometown, it was definitely not just a polite remark...

However, Wang Ao himself was an absolutely honest official, and during his many years in office, he never abused his power for personal gain. Yet, the Wang family was still able to grow stronger and achieve even greater success thanks to him.

This demonstrates just how sophisticated this division of labor has become.

"By the time the court realized what was happening, the other side was already united as one. Every extra cent in commercial and industrial taxes meant a smaller share of their wealth. Whenever an emperor in any dynasty had the slightest thought of raising commercial and industrial taxes, the civil officials would bring up the big 'ancestral rules cannot be violated' to slap on the emperor's head. If the emperor was firm, they would jointly remonstrate to the death or threaten to resign en masse. The emperor would not see any benefit but would only get himself into trouble and would have no choice but to give up."

Hearing Su Lu say this, Zhu Shou nodded in empathy and said, "I'm familiar with their tactics."

“What’s even more infuriating is that even with a tax rate of one-thirtieth, they don’t pay it properly! They’re always finding ways to evade taxes! Otherwise, besides the regular commercial taxes and salt tax, there are also taxes on market stalls, tea, tea and horse, mining, wine and vinegar, rent for official shops, rent for dilapidated houses, taxes on foreign goods, taxes on bamboo and timber… dozens of kinds in total, how could the court only collect one million taels?!” Su Lu then counted on his fingers:

"Local officials can't collect the taxes, and the eunuchs sent by the emperor to collect taxes in various places often face collective resistance. They are criticized in the court for bringing disaster to the country and the people, and they cause trouble and resist taxes in the local areas. So it's not that the emperor doesn't want to collect the industrial and commercial taxes, but that someone is obstructing the collection!" Su Lu said in a deep voice.

"This is outrageous!" Zhu Shou was so angry he wanted to overturn the table, but luckily it had been replaced with a sandalwood one and couldn't be lifted. "That's all the Emperor's money! The Emperor only has eight hundred taels, yet they can afford to build a garden!"

Fortunately, he had been well-bred by the late emperor and had a very stable personality. He wouldn't be completely blinded by anger, and even in his anger, he didn't forget to ask Su Lu:
"Wait, didn't you just say that business tax is easy to collect? Isn't that a contradiction?" "Please, taxes are about getting people to hand over their wealth for free. Unless you control the distribution process yourself, not a single penny is easy to collect." Su Lu said calmly, "Of course, it's much easier than collecting land tax."

He paused for a moment, then lowered his voice and said, "Especially now."

"Now?" Zhu Shou paused for a moment, then suddenly realized, "You mean the civil officials are all being held back by Liu Jin now?"

“That’s right, they’ve tried everything – crying, making a scene, threatening suicide – but nothing works against a weapon like Eunuch Liu.” Su Lu nodded. He whispered, “At least this way there won’t be any resistance in the court. The difficulty has been halved, okay?”

"Then why can't the eunuchs sent out by Liu Daban still collect the goods?" Zhu Shou asked, puzzled.

"This is what I've told you repeatedly: they're good at causing trouble, but not good enough. Letting them intimidate civil officials is enough, but if they're tasked with actually carrying out orders, they'll most likely botch it," Su Lu said seriously.
"It is relatively easy to collect industrial and commercial taxes. To be precise, it is not difficult for those who know how. It requires a professional team of tax officials to verify, register, supervise and collect taxes. It is certainly not difficult, but it is much, much easier than surveying all the land in the country and compiling accurate Yellow Registers and Fish Scale Registers."

As he spoke, he cupped his hands in the direction of the palace and said respectfully, "In my policy essay, I advised Your Majesty to follow the ancestral laws, which is to 'follow the original intentions of our ancestors,' rather than to be bound by old systems. Your Majesty did not consider my argument absurd and promoted me to the top scholar, which clearly shows that Your Majesty also agrees with my statement—the founding emperor set a light tax on commerce to allow the people to rest, and Your Majesty's imposition of additional taxes on commerce and industry is also for the sake of the country and the people. This is the true meaning of following the ancestors and remembering our ancestors."

"Hmm." Zhu Shou nodded slowly.

Su Lu then changed the subject, emphasizing, "However, this path will undoubtedly be fraught with thorns and difficulties. Your Majesty must act decisively, appointing capable ministers and establishing a special department for tax collection. You must also leverage Eunuch Liu's power to deter those who oppose you—only in this way can commercial and industrial taxes become a major source of revenue for the national treasury, and only then can the Ming Dynasty escape its financial predicament!"

"Hmm..." Zhu Shou nodded again, slowly got up and walked to the window, gazing at the streetlights. After pondering for a long time, he asked:

"If tax system reforms begin now, how long will it take to see results?"

"Methods that can be effective in the short term, such as reforming the salt permits and customs, have already been used by the eunuchs," Su Lu said thoughtfully.
"The rest is not something that can be accomplished overnight. But as long as the Emperor is determined and patient, and his strategies are correct and his people are capable, starting from now, we can achieve minor success in three years, major success in five years, and stabilize the world in eight to ten years."

"So long?" Zhu Shou's face immediately fell.

"Please, this is practically a reform, if not a change. The Emperor is currently powerless and without influence; I'm already boasting." Su Lu paused, then emphasized:
"For such a large country, ten years to accomplish one thing is not a long time, especially since it is a major event that has implications for everything and can revitalize the nation. You can taste the benefits in three years. What more could you ask for?"

"Oh, oh." Zhu Shou had no choice but to nod and mutter, "I know you're right, but the Emperor really needs the money urgently—three years is too long. By then, the country might be lost."

As he spoke, he grabbed Su Lu's arms with both hands and pleaded, "Please help me, is there any way to make money this year?"

"..." Su Lu remained silent for a moment, but ultimately couldn't resist Zhu Shou's pitiful little eyes, and nodded with a sigh:
"Then we'll just have to slaughter a fat sheep... If you slaughter Eunuch Liu, we can eat for at least a year."

"Wow, Da Ban'er is so rich?" Zhu Shou exclaimed in surprise.

"Of course, Eunuch Liu is now all-powerful. All officials have to give him gifts, starting at least a thousand taels of silver, and some even give him tens of thousands of taels," Su Lu said calmly.

"Huh?!" Zhu Shou's defenses crumbled upon hearing this. "The Emperor's treasury holds only eight hundred taels, and they just gave him a thousand taels in one go?!"

"That's precisely why it's done this way," Su Lu said leisurely. "However, confiscating Eunuch Liu's property would probably be a losing proposition. Who would then stand up for the Emperor, deter the officials, and remove obstacles?"

"Uh..." Zhu Shou said, feeling frustrated, "You've got to say both the truth and the sarcasm all by yourself."

“I was just telling the truth,” Su Lu said frankly. “It was all for the sake of the Ming Dynasty and the Emperor.”

(End of this chapter)