Top Scholar

Chapter 580 Zhengde Silver Dollars
"Hahaha!" Zhu Houzhao was so amused he almost fell over. This was the reason why he had recently preferred to use his true form when meeting Su Lu—

Su Lu flatters the emperor, but not Zhu Shou!
The six people behind Su Lu were dumbfounded and felt very sorry for their top scholar. Was it easy to achieve anything? He had to risk his reputation as the top scholar to get this done.

Indeed, we can't just see the thief eating meat without seeing the thief getting beaten. Every bit of the top scholar's favor was not obtained by chance!
Zhu Houzhao finally became interested and pressed on, "After minting the gold and silver coins, what happened next?"

"Then, under the Imperial Assets Committee, establish a Royal Bank as a channel to release these nine million taels of gold and silver dollars into society," Su Lu replied.

"His Majesty has issued another imperial edict, declaring that this batch of gold and silver coins is of uniform purity and weight, and can be used for tax payment and merchant transactions. Let the whole world know that this is hard currency supervised by the royal family, of high purity and without adulteration, and can be used with confidence. Coupled with the superiority of silver coins, I believe that in less than a year or two, this batch of Zhengde silver coins will be able to quickly circulate in the market."

"How can it circulate? Explain in detail." Zhu Houzhao was extremely concerned about his silver coins.

“There are many ways,” Su Lu replied. “For example, the Royal Bank offers exchange services, where merchants and ordinary people can exchange loose silver for silver dollars.”

"For example, His Majesty could also open an account at our bank and deposit your four and a half million taels of silver there. All future expenses would then be covered by the bank..." Su Lu continued calmly.
"Furthermore, regulations stipulate that in areas with banks, all industrial and commercial taxes will not accept broken silver ingots, only silver dollars. So Your Majesty has nothing to worry about."

"Hmm. But you said the silver dollars are pure silver, so even if we exchange all nine million taels, we won't get any more silver. How can we perform the magic trick you mentioned?" Zhu Houzhao asked anxiously.

"Your Majesty, please do not be hasty. This stage is all about laying the foundation and establishing the people's trust in silver dollars and banks," Su Lu said calmly.

"Once the silver dollar has gained a foothold in the market, and the people and merchants are used to using silver dollars for transactions and trust the Royal Bank, then the moment of witnessing a miracle will arrive."

As he spoke, he pointed with a wooden stick to the fourth step on the mind map—'Issuing fully redeemed banknotes'—and raised his voice:
"A bank note is actually a kind of certificate that can be cashed at a bank. A bank note with a face value of one yuan can be cashed for one silver dollar, and a bank note with a face value of one hundred yuan can be cashed for one hundred silver dollars! It is somewhat similar to the bank notes of private money shops, but it is cashed on demand and payable based on the note, not the person. It is much more convenient than the latter."

"Merchants and commoners only need to deposit their silver dollars into the Royal Bank to receive silver notes of equal value, and they can exchange these notes for the full amount of silver dollars at any bank at any time," Su Lu continued. "Moreover, these silver notes are as light and easy to carry as paper money, making them much more convenient than carrying heavy silver dollars for large transactions or payments in different locations..."

"It is indeed very convenient." Zhu Houzhao said, seemingly understanding but not quite. "But silver notes and silver dollars are also issued on a one-to-one basis. How much silver is deposited and how many notes are issued? Isn't it still nine million taels? How can it become eighteen million taels?"

“Your Majesty is wise indeed,” Su Lu explained with a smile, “but there’s a key point here—not everyone will come to the bank to exchange their silver at the same time. As long as our scale is large enough, there will always be a considerable number of people holding silver notes at the same time.”

“After all, the portability of silver notes is unparalleled, and many people choose them for convenience. As long as people believe that they can exchange silver notes for full amounts of silver coins at any time, more and more people will choose to hold silver notes rather than silver coins,” Su Lu continued.
"We have calculated that as long as we retain 50% of our silver reserves, it will be sufficient to meet our daily redemption needs."

"In this way, with a principal of nine million taels, we can issue eighteen million taels of silver notes!" he declared boldly.

"In the common people's world, silver notes are the same as silver coins. So, eighteen million taels of silver notes are eighteen million taels of silver coins—this is the trick of a traitor!"

The group of six secretly worried for Su Lu; even they had taken a long time to understand his thinking. Looking at the Emperor's seemingly sagacious demeanor, could he really comprehend it?

However, they underestimated Zhu Houzhao. This emperor possessed an unimaginable level of insight when it came to things that interested him.

Before Su Lu could finish speaking, Zhu Houzhao clapped his hands and laughed loudly, "Brilliant! Absolutely brilliant! I understand! As long as the people believe that banknotes can be exchanged for silver dollars, then banknotes are money! Your magic trick is just like printing a piece of paper that can be used as money!"

"Your Majesty is wise; this is exactly what you intend," Su Lu nodded.

"Isn't this just like the Ming Dynasty paper money issued by Emperor Taizu back then?" Zhu Houzhao asked.

"It's still different. Treasure notes can't be exchanged for silver coins, but our silver notes can be exchanged in full." Su Lu said with a wry smile, "In fact, the original treasure notes were the final form of silver notes. In the first few years after Emperor Taizu issued treasure notes, thanks to his unprecedented achievements, the people trusted Emperor Taizu immensely and naturally trusted the treasure notes he issued. One string of treasure notes could really be used as one string of copper coins!"

"The paper money also made great contributions to the economic recovery at the beginning of the dynasty," Su Lu said, trying to be considerate of Emperor Zhengde's feelings and not mentioning that the biggest problem was that Emperor Zhu did not understand finance.

"But this kind of pure credit currency is really risk-free and highly profitable... You can meet all the country's expenses by just printing money! If the expenses are too high, then just increase the amount of money printed!"

"Therefore, no one can resist the urge to over-issue paper money. It wasn't just during the Hongwu era; in fact, Emperor Yongle's unparalleled achievements in both civil and military affairs were also due to the excessive issuance of paper money." Su Lu sighed, "But the result of excessive issuance was severe devaluation. By the end of Yongle's reign, the paper money was worthless, and the imperial family's credit was completely bankrupt..."

“Indeed, if people still recognized the paper money, the court could just print more coins, and we wouldn’t be in such dire straits,” Zhu Houzhao nodded dejectedly. “This is truly a case of our ancestors’ sins bringing misfortune upon their descendants.” “Therefore, we must now rebuild trust little by little and make the Ming Dynasty great again!” Su Lu said solemnly.

"Yes, we must make the Ming Dynasty great again!" Zhu Houzhao's passion was stirred up by Su Lu again. He stood up, paced back and forth with his hands behind his back, and after a while asked:
"Of course, everything will be fine once confidence is restored. But in the beginning, when the people lack confidence, can you guarantee that you can handle two times the face value of the banknotes with nine million taels of silver?"

"Your Majesty has hit the nail on the head." Su Lu praised first, then answered:
“At first, the people certainly lacked confidence, and some might even have maliciously attempted to withdraw their money, but we were not afraid of a run on the bank—because in addition to the bank’s principal, we also had 17 million taels of reserve silver. Even if all the banknotes were redeemed, we could still afford it!”

"Therefore, we are not afraid of being squeezed out of our bank accounts; in fact, we welcome it, as this will further solidify the people's trust in our credibility!" Su Lu stated firmly.

"The better our credit, the less silver reserves we need, and the more silver notes we can issue, potentially reaching as high as 30 million or even 50 million in the future! Furthermore, with good credit, we can also issue bonds, attract deposits... and so on. There are plenty of ways to make money. Not only the Emperor, but also his children and grandchildren will no longer have to worry about money!"

"Good! We'll do it your way!" Zhu Houzhao was overjoyed and said repeatedly, "Take my gold token and have all the government offices cooperate with you. Also, have Erban assist you. I'm waiting for you to turn nine million taels into eighteen million taels!"

"Your subject obeys the decree." Su Lu replied respectfully, having successfully completed the most important part of today's report.

~~
At this point, Zhu Houzhao's attention reached its limit, and he began to get restless.

Su Lu noticed something amiss and quickly arranged a tea break, inviting the Emperor to rest and recharge before continuing.

Zhu Houzhao ate a few exquisite pastries and sprinkled some dragon liquor, then, unable to stay still, wandered around the Donggui Hall... oh no, he began to inspect it.

Only then did they realize that the place allocated to the Court of Imperial Sacrifices was such a tiny place, not even a third the size of the Zhiyi Hall where pandas were kept.

This is the office of fifty of the emperor's disciples, and judging from the looks of it, a large number of people will be brought in later. I'm afraid there won't even be enough room to put the tables.

He then instructed Zhang Yongdao:
"Such an important government office is too small. Give them this entire surrounding area! And renovate it properly according to Secretary Su's request. I'll be counting on them from now on!"

Su Lu hurriedly declined, saying, "Your Majesty's kindness is deeply appreciated, but you only need to allocate one more courtyard for us; there is no need for such a large place."

Zhu Houzhao waved his hand and said magnanimously, "Don't worry, I will pay for it for you. You don't need to bother!"

"Isn't it the same? It's all the Emperor's money," Su Lu said with a wry smile.

"Hahaha, that's right." Zhu Houzhao laughed loudly, "But those who have rendered meritorious service should naturally be rewarded! Otherwise, who would be willing to risk their lives for me? I was even planning to reward Eunuch Liu with a large golden Buddha statue. What's a little improvement in your conditions?"

Su Lu then said, "Wouldn't this encroach on the Emperor's living space?"

Zhu Houzhao laughed even louder, patting Su Lu on the shoulder: "Hahaha, don't worry! I've long wanted to expand the Leopard House tenfold, to include the entire Taiye Pond! The blueprints were finished last year, but we've been short of funds this year, so it's been sitting there. Now that I have the money, of course we have to get started!"

He rubbed his hands together, his enthusiasm growing, and said, "No, just expanding isn't enough. We need to add all the necessary features! We need to add a stage, an archery range, a lion and tiger mountain... and bring the number of rooms up to two hundred. That'll make it more comfortable to live here!"

"Your Majesty, we have no lions in our Great Ming!" Su Lu was sweating bullets.

"Now that I have money, it's time to start building a fleet for voyages to the Western Ocean!" Zhu Houzhao exclaimed excitedly. "Then I'll have my husband go to the grasslands to capture them for me!"

Su Lu thought to himself, "Well, I thought that if His Majesty used the 4.5 million taels sparingly, it would be enough to last for five years... Don't forget, every year there is also a fixed amount of one million taels of gold and silver deposited into the inner treasury for the palace's expenses."

Judging from the current situation, even Yi Kunnian might not be able to make it...

He dared not dampen the emperor's spirits, otherwise how would he report later? He could only force a smile and console himself, thinking, "Just consider it government spending to stimulate the economy..."

(End of this chapter)