The Ming Dynasty: Starting with the border troops, it was overthrown and the Qing Dynasty was destro

Chapter 324 Commencing Economic Reforms

Issuing paper money?

"Han King's Treasury Notes?"

Upon hearing this bold suggestion, Jiang Han immediately shook his head and resolutely refused:
"No, this is taking too big a step!"

He glanced at Zhao Sheng and Li Xinghuai, and solemnly warned them:
"Don't you know how the Ming Dynasty banknotes issued by the Zhu family went from being highly reputable to being worthless?"

“The paper money, which was once touted as being universally accepted and circulating alongside copper coins, began to depreciate within a few years, and was eventually abolished after the Zhengtong era.”

"This incident serves as a stark warning, and the people today are probably trying to avoid paper money at all costs."

Jiang Han was unusually cautious about issuing banknotes.

The Ming Dynasty Treasure Notes were first printed and issued in the eighth year of the Hongwu reign (1389) by order of the Taizu Emperor in order to make up for the damage caused by war and alleviate financial pressure.

In the early stages, thanks to the national credit and coercive orders established by the newly established Ming Dynasty, the paper money circulated widely and indeed solved many problems.

However, having tasted the benefits, the Ming emperors and ministers began to issue paper money indiscriminately, causing large-scale devaluation until it was eventually abolished.

The Ming Dynasty had three major institutional flaws in the issuance of paper money.

First of all, it only sends funds and doesn't receive them back; there's no mechanism for returning the funds.

The Ming court almost never used paper money for revenue collection other than fiscal expenditures, nor did it accept paper money for tax payments, resulting in paper money only going out and not coming in, leading to a flood of paper money in the market.

Secondly, there is no reserve fund, and the issuance is unlimited.

When the treasury was in dire need, the imperial court would start printing money, using paper money as a means to make up for the deficit. The amount issued far exceeded the actual market demand, causing hyperinflation.

Thirdly, they are easy to counterfeit, leading to a proliferation of counterfeit banknotes.

Although the Ming Dynasty banknotes used many anti-counterfeiting technologies, they were still able to prevent unscrupulous individuals from buying discarded master plates and printing counterfeit banknotes.

The widespread appearance of counterfeit money has further damaged the already crumbling credibility of currency.

By the mid-to-late Ming Dynasty, paper money had become almost worthless, and private transactions had to revert to a silver and copper standard.

Jiang Han looked at the two people present and concluded:
"Issuing paper money is by no means something that can be done on a whim."

"It requires an extremely complex financial system to support it, which we do not currently possess."

He counted on his fingers, analyzing each point one by one.
"First of all, there must be strict preparations for the issuance of paper money."

“Every piece of paper we issue must be backed by something tangible, such as sufficient gold and silver reserves or equivalent physical collateral.”

"Only in this way can people believe that scraps of paper can be exchanged for real things."

"Secondly, it requires precise calculations and strict total quantity control."

"The amount of paper money issued must roughly match the total amount of goods circulating in the market."

"There are only so many goods on the market. If too many paper bills are printed, they will naturally become worthless."

Jiang Han emphasized,

"Most importantly, we must establish smooth recycling channels!"

"We must find a way to get back the banknotes that have been issued."

"Alternatively, regulations could be established allowing citizens to pay taxes and levies in paper money, thus enabling the paper money to naturally flow back into the national treasury through the tax system."

"Or, the government could promise that the paper money could be exchanged for gold, silver, or goods at face value at any time, and that it would be redeemed immediately upon presentation of the paper money."

"Only in this way, with both inflows and outflows forming a virtuous cycle, can we maintain currency stability and build trust."

"And we don't have these conditions right now."

"How can it be like the Zhu family, who only care about killing but not burying, just issuing paper money and then washing their hands of it?"

"Our foundation is still shallow, and our reputation is hard-earned. We must not repeat the same mistakes."

“You… do not have a deep understanding of such economic matters, and now is definitely not the time to issue paper money.”

"Let's be practical first and get the metal currency sorted out first."

After listening to Jiang Han's insightful analysis, Zhao Sheng and Li Xinghuai looked at each other in bewilderment.

They then realized that they had oversimplified the problem.

But to be honest, you can't really blame them.

Scholars like Zhao Sheng and Li Xinghuai, who received traditional education in the Four Books and Five Classics from a young age, generally lacked a deep understanding of economic and financial affairs.

Their views are mostly still stuck in the old path of "emphasizing agriculture and suppressing commerce," believing that agriculture is fundamental and industry and commerce are secondary, and that as long as agricultural production is well managed, the country will naturally be stable.

Some complex concepts such as monetary credit and market circulation are outside their knowledge.

Even looking at the whole of Sichuan, it's estimated that you can't find anyone who truly understands economics and finance.

Perhaps there are a few such figures in the commercially developed coastal areas of Jiangsu and Zhejiang.

But distant water cannot quench immediate thirst, so Jiang Han had to take matters into his own hands, developing strategies step by step and embarking on economic reforms.

He handed the booklet back to Zhao Sheng and instructed him:
"Alright, I know what I'm doing regarding currency."

"You two should get on with the things I've assigned you first."

"Director Li, your Ministry of Agriculture must do its utmost to organize drought relief and dig public ponds; Director Zhao, your Ministry of Revenue must ensure that granaries are full and that resettlement affairs proceed in an orderly manner."

"As I said before, food is the key!"

"In the event of a major disaster, even a warehouse full of gold and silver treasures would not be enough to fill the people's stomachs; only real grain can stabilize the situation!"

Zhao Sheng and Li Xinghuai's expressions tightened, and they responded in unison:

"Sir, you understand!"

After saying this, the two bowed and hurriedly left the tent.

Upon returning to the Ministry of Revenue, Zhao Sheng immediately summoned the heads of various departments and conveyed Jiang Han's concerns about the drought.

He ordered a re-verification of the actual grain reserves in each prefecture and dispatched capable officials to various places to conduct secret inspections and strictly prevent grain officials from committing fraud and grain reserves from being depleted.

Meanwhile, Zhao Sheng himself was in charge of the Ministry of Revenue, carefully planning the routes, resettlement, and loan arrangements for the immigrants to Guizhou.

Li Xinghuai, on the other hand, was even busier.

Upon returning, he immediately sent documents to all prefectures and counties, conveying the order to excavate large public ponds, and dispatched officials from the Ministry of Agriculture to various places to supervise the work.

For a time, villages in eastern and southern Sichuan were bustling with activity.

Farmers worked in groups of twenty or thirty, digging deep and wide public ponds to store water, in accordance with the regulations set by the Ministry of Agriculture.

During this time, Jiang Han also began to immerse himself in his studies, meticulously researching the economic policies and monetary systems of past dynasties.

To this end, he even ordered people to go to the Prince's Palace library and find some classic books on economics for him to study carefully.

He perused the chapters on lightness and heaviness in the Guanzi, which indeed mentioned the method by which the state increases revenue by regulating prices, emphasizing the importance of state intervention in the economy.

Then came the "Treatise on Price Stabilization" in the Records of the Grand Historian and the "Treatise on Food and Commodities" in the Book of Han, which provided an understanding of the "price stabilization" policy of the Han Dynasty in managing industry and commerce and stabilizing prices.
There is also the "Discourses on Salt and Iron," which records the great debate in the Han Dynasty about economic policies such as state monopoly on salt and iron and the monopoly on alcohol.

But no matter how many times he read it, Jiang Han was still not satisfied.

These ancient economic ideas certainly have their merits, such as recognizing the importance of state regulation and focusing on people's livelihood and finance.

However, its core limitations are also very obvious:

First of all, the fundamental purpose of these economic reforms was to consolidate the monarchical autocracy, rather than to develop the economy and improve people's lives.

Secondly, many books emphasize "prioritizing agriculture and suppressing commerce," viewing commerce as something that needs to be suppressed and guarded against, lacking a deep understanding of the value of commercial circulation.

Furthermore, these theories are mostly empirical and policy-based summaries, lacking rigorous mathematical tools and systematic economic theoretical support.

There is a very vague understanding of key issues such as the nature of money, credit creation, and inflation, and there are even many errors.

Relying on these classic texts, it is difficult to construct an economic system suitable for the new era and capable of promoting the development of a commodity economy.

Seeing that he could not find the ideal answer in the old documents, Jiang Han changed his approach and summoned some businessmen from Chengdu and the surrounding areas.

He wanted to understand the business logic of this era from a practical perspective and explore the possibilities of economic development.

Unfortunately, the merchants who came to pay homage were mostly small vendors, and their businesses were mostly traditional trades such as cloth and sundries.

Due to previous wars and the purge of the old powerful families, most of the wealthy merchants in Sichuan have disappeared.

When Jiang Han asked these small and medium-sized businessmen how to promote trade, stabilize prices, and build credit, most of them were vague in their answers.

The implication of their words is nothing more than the old clichés of wanting to obtain a monopoly on a certain product and reduce customs duties.

Jiang Han was also helpless about this.

In this power-dominated society, businessmen who want to make a fortune often have no choice but to seek monopolies and privileges.

True market innovation and business acumen are hard to cultivate in such an environment, and their insights are hardly considered brilliant.

Left with no other choice, Jiang Han had to take matters into his own hands and, by incorporating some perspectives from later generations, design the most basic and fundamental framework for economic reform.

Under the new framework, prioritizing agriculture is definitely the right thing to do and must be upheld.

In this era of relatively scarce productivity, agriculture was the absolute foundation. The first problem to be solved was the issue of food; without agriculture, there was no stability.

However, the traditional policy of suppressing commerce is debatable.

We must find ways to make officials and scholars realize the irreplaceable role of commerce in promoting the circulation of goods, stimulating the economy, and increasing tax revenue.

In Jiang Han's design, the ideal state should be:

Agriculture is the foundation of a nation, and commerce is its source of wealth. Both must be developed in tandem, and neither can be neglected.

Without the stability of agriculture, commerce is like a tree without roots; and without the prosperity of commerce, agriculture can hardly achieve higher value and surplus transformation.

Jiang Han even specifically sought out Xue Zhiheng, the head of the Ministry of Justice, to discuss this matter with him.

Although Xue Zhiheng is now the head of the Ministry of Justice, back in Long'an Prefecture, his Xue family was a prominent business family that traveled all over Songpan and Weizang.

Upon hearing Jiang Han's thoughts, Xue Zhiheng keenly realized that his king was likely about to make a big move.

To be honest, Xue Zhiheng felt somewhat resentful about his current position as the head of the Ministry of Justice.

Although nominally, the Chief Clerk of the Ministry of Justice can be considered one of the Nine Ministers, a first-class official.

But while the position sounds good, the actual power it entails is minimal.

The reason is simple: the Ministry of Justice doesn't have many major cases to handle, so it's essentially a sinecure.

When Sichuan was pacified, the people and soldiers in various places had already killed those who deserved to be killed, so there was no need for him to be killed.

Under the gleaming steel blade, who would dare to commit crimes again?
Some trivial matters were already resolved by local officials themselves, so why would he, the head of the Ministry of Justice in the central government, have to take care of them?

Xue Zhiheng has been living a very leisurely life lately, spending his days in the yamen (government office) drinking tea and chatting.

Looking at himself, and then at the busy scenes in the Ministry of Education, the Ministry of Agriculture, and the Ministry of Revenue, he couldn't have been more envious.

Therefore, after listening to Jiang Han's ideas on economic reform, Xue Zhiheng keenly realized that his chance to turn his life around had come.

He racked his brains, and then cautiously offered his opinion:
"Your Majesty is wise. Although the business of merchants may seem simple, there are many intricacies involved." "In my humble opinion, if Your Majesty wishes to reform the economic framework, the first step should be to unify the currency system."

"However, if a unified currency is established, we need to be wary of the phenomenon that counterfeit currency will proliferate while legitimate currency will disappear."

Upon hearing this, Jiang Han, who was seated at the head of the table, had a brightening eye:
"Oh?"

"Explain in detail what you mean by 'illegitimate money proliferates daily, while legitimate money perishes daily'?"

Seeing this, Xue Zhiheng quickly added:
"Your Majesty is wise; allow me to give an example to illustrate this."

"Your Majesty, please consider this: what if the Han King's Palace issued two kinds of coins, both with a face value of ten cash?"

"One type is cast from refined copper, and each piece is worth ten coins; while the other type is made from inferior copper mixed with lead and tin, and its value is only five or six coins."

"What would ordinary people do if they got their hands on these two types of currency?"

Before Jiang Han, who was seated at the head of the table, could answer, he asked and answered himself:
“If I had these two kinds of money, I would definitely keep the fine copper coins at home and then take out the inferior coins to trade or buy things.”

"If I were even more ruthless, I could melt down the fine copper coins and recast them into inferior, worthless coins, thereby doubling their value!"

"Imagine if this continues, all the money circulating in the market will be bad money, and good money will disappear."

"After that, prices soared, the people complained bitterly, and the government's credibility was ruined."

This phenomenon is known as "the proliferation of illicit money and the decline of legitimate money."

Xue Zhiheng spoke at length for a long time, while Jiang Han looked at him with a look of astonishment.

Unexpectedly, Xue Zhiheng actually understands the principle of "bad money drives out good money".

Jiang Han was somewhat surprised:
"Did you come up with this conclusion yourself?"

After hearing this, Xue Zhiheng shook his head:

"No."

"This is a view that our predecessors have held long ago, and it is not something that I, your subject, have summarized."

"only"

Jiang Han pressed on, asking:

"Just what?"

Xue Zhiheng scratched his head, somewhat embarrassed to speak:

"It's just that my Xue family has always done this."

"Back then, under the rule of the Ming Dynasty, my Xue family frequently melted down official coins to privately mint inferior ones."

Fearing that Jiang Han might misunderstand, he quickly added:
"Your Majesty, rest assured, all of this was done beforehand."

“Your subject has reformed and the Xue family has moved to Chengdu. There are no workshops in the manor that can privately mint copper coins anymore.”

Upon hearing this, Jiang Han nearly spat out his tea.

Goodness, so this guy used to do this kind of business before. Practice really does make perfect; no wonder he's so familiar with it.

However, he didn't delve any further into it, and simply waved his hand:

"Alright, I didn't come here today to dredge up old grievances."

“I see that you have some insights into economic affairs, so I will give you more responsibilities.”

Upon hearing this, Xue Zhiheng immediately straightened his back; this was exactly what Jiang Han had been waiting for.

Why did he go to such lengths to expose his own secrets and explain the matter clearly? Wasn't it because he wanted the king to see his abilities?

Now it seems that my wish has finally come true.

Jiang Han ignored his little scheme and directly gave the order:

"I plan to establish a new department called Quantong Division."

"This department will be separated and you will take on the role concurrently, primarily responsible for monetary and economic affairs for the time being."

Upon hearing this, Xue Zhiheng nodded repeatedly in assurance:
"Your Majesty, rest assured, I will immediately study how to prevent counterfeit coins from replacing legitimate ones upon my return."

"I guarantee a detailed plan within ten days—no, five days!"

But Jiang Han waved his hand.

"No need, I already have an idea, you just need to carry it out."

"This department has a bright future. If you work hard, you will definitely shine in the future."

Jiang Han already had a preliminary plan in mind regarding the question raised by Xue Zhiheng.

Money is the lifeblood of the economy, and a stable and credible monetary system must be established.

One of the most pressing issues at present is to prevent the phenomenon of "bad money driving out good money".

Jiang Han's approach to solving this problem is as follows:
First, we must strictly enforce laws and punishments to prohibit private minting.

Anyone who illegally mints official coins will be executed immediately, along with the mastermind and the craftsmen, and their family property will be confiscated. A generous reward will be given to anyone who reports such a secret.

Secondly, establish standards and allow for free exchange.

He planned to have the Quan Tong Si (a local authority) set up money shops in various prefectures and counties, clearly informing them of the purity, weight, and anti-counterfeiting features of official coins.

People could bring their broken silver and old coins here and exchange them for new coins at a certain ratio, thereby recycling inferior currency and gradually establishing the credibility of official currency.

Finally, there is taxation as a means of guiding and compelling circulation.

Once there is a sufficient amount of new money, it should be mandated that the government must only accept new money when collecting taxes and making purchases.

By using administrative power to endorse it, it is forced to enter and dominate the distribution sector.

Xue Zhiheng naturally wholeheartedly supported Jiang Han's plan.

From just a few words, he could foresee how important the Izumi Tsushima would become in the future.

Xue Zhiheng dared not slack off; he hadn't expected the burden to be so heavy.

Realizing the gravity of the matter, he bid farewell to Jiang Han and immediately returned to his residence to focus on studying the basic structure of the Quantong Division.

Although the king did not give instructions, Xue Zhiheng understood very well that departments related to currency circulation and exchange must have a strict internal supervision system.

Otherwise, the king certainly wouldn't let him pass so easily.

For this reason, Xue Zhiheng even stopped going to the Ministry of Justice and shut himself in to study the matter.

Meanwhile, Jiang Han spent his days traveling back and forth to the Ironworks, discussing coinage matters with the craftsmen.

The person who took over this task was also an old acquaintance of Jiang Han's, Chai Yu, the foreman of the Iron and Steel Department of the Ministry of Works.

He was the skilled craftsman who successfully fired the "Buddha's bone relic".

The Iron and Steel Company has expanded considerably, adding several new workshops specifically for metal smelting and finishing.

Led by Chai Yu, Jiang Han visited the newly established "trial casting workshop," where the furnace was burning brightly and various metal ingots, molds, and tools were arranged in an orderly manner.

Jiang Han didn't waste any time with pleasantries and went straight to the point:
"Chai Yu, I have come here with an important task entrusted to me."

"I now need to mint new coins and redefine the monetary system."

As he spoke, he handed over a document and explained,
"I need you to try minting two kinds of currency first, copper coins and silver coins."

"Among them, the copper coins will tentatively be issued in two denominations: the smallest being one coin, and the more convenient ten-coin denomination."

"Silver coins were issued in three denominations: five mace, one tael, and ten taels, to accommodate large transactions."

"In terms of design, I prefer a round shape with a square hole, which makes it easy to thread a rope and carry."

"But you can also take inspiration from the style of Western silver dollars and mint round coins without holes, which would look more exquisite."

Jiang Han looked at Chai Yu and emphasized,

"For all currencies, anti-counterfeiting is the top priority!"

"It is essential to make the currency difficult for ordinary people to counterfeit in order to ensure currency stability and maintain the credibility of the government."

Chai Yu listened attentively, nodding occasionally, and only offered his own opinion after Jiang Han finished speaking:
"Your Majesty is right. The issue of anti-counterfeiting measures for new coins is indeed the key."

In my humble opinion, we can start from the following aspects:

"The first point is to strictly control the metal ratio and keep it confidential."

"Whether it's copper or silver coins, they certainly can't be made from pure metal."

"When minting copper coins, a certain amount of tin and lead can be added to create specific colors, hardness, and sounds, which can be used to distinguish counterfeits."

"Silver coins, on the other hand, can be made by casting silver and copper of a certain purity, which not only ensures a bright white color, but also increases hardness and wear resistance."

"As long as the proportions of various metals are kept strictly confidential, counterfeiters will find it difficult to replicate them."

"The color, sound, and quality of counterfeit money will definitely be different, and a discerning person can tell at a glance."

"In addition, it is necessary to print intricate and precise patterns and text."

"The obverse of the coin can be printed with the words 'Hanwang Tongbao' or 'Hanwang Shanggong,' while the reverse can be printed with intricate patterns and decorated with elaborate borders, such as cloud patterns."

Jiang Han was very pleased after listening to Chai Yu's analysis:
"Yes, these two methods are feasible."

But he quickly changed the subject and added,
"In addition, I have some other ideas, you can listen to them."

“I remember that throughout history, the casting of coins has basically used the sand casting method, but this method still has many inconveniences and disadvantages.”

"Could you try using the stamping method?"

"If a sufficiently hard mold can be made, and then a water-powered stamping press can be used, the coins can be stamped into shape in one go."

"Coins minted using this method have clear and deep images and text, and a strong three-dimensional effect."

"Furthermore, we can also press continuous, fine, and uniform serrations onto the edge of the coin."

"In this way, counterfeiters cannot accurately replicate the tooth pattern, and cutting the edge will damage the edge pattern, making it easy to distinguish between genuine and counterfeit at a glance."

As Chai Yu listened, he took out paper and pen and wrote down in detail what Jiang Han said.

"Your Majesty's insight is excellent, but this stamping equipment sounds like it takes up quite a lot of space."

"Should we designate a specific area for it?"

Jiang Han nodded after listening and gave some instructions:

"That's how it should be. You go and choose a location first, and build all the necessary equipment."

"Your priority now is to create the master copy of the new coin."

"Remember this, this matter must be kept strictly confidential. If anyone is not careful and leaks the news, I will exterminate their entire family!"

(End of this chapter)