The imperial cause at the end of the Han Dynasty was not one of partial peace.

Chapter 89 The Flourishing Commerce of Changsha in the Han Dynasty and Liu Bei's Schemes

With Mi Zhu's formal promulgation of the Changsha Industrial and Commercial Tax Law throughout the prefecture, Linxiang City quickly became a gathering place for merchants from southern Jingzhou.

In the past, the prefectures and counties had numerous checkpoints and levies, which prevented many merchant ships and caravans from passing through the prefectures and disrupted commerce.

Now the entire prefecture has a unified tax system, with taxes not exceeding two-hundredths of the total. Officials who embezzle from merchants are severely punished, which has quickly revitalized the entire Jingnan region.

Like a stone breaking the spring waters of Dongting Lake, the ripples quickly spread to Lingling, Guiyang, Wuling, and even the southern part of Jiangbei.

By April, merchant ships on the Xiang River were coming and going in droves, with no fewer than a hundred ships entering and leaving the Linxiang Wharf every day.

On the Yangtze and Xiangjiang Rivers, thousands of sails compete and vie for position.

Fish from Dongting Lake, tangerines from Lingling, iron ore from Guiyang, and rice and bamboo from Changsha travel down the river, reaching Jiangling in the north and Wuhui in the east.

Salt, iron, and silk from the Central Plains, Shu brocade and well salt from Sichuan and Chongqing, and lacquerware and bronze mirrors from Jiangdong traveled up the river and directly into the heart of Jingnan.

The dockworkers worked from morning till night without rest, the residences in the East and West markets were full every day, and the shops along the streets were lined up one after another, with the cries of vendors never ceasing.

In this era, there was a prevailing trend of valuing the profits of business. Just one month after the new tax law was implemented, Mi Zhu walked into the main hall of the prefectural government with a thick stack of account books and a face full of excitement.

"My lord!" Mi Zhu presented the account books to Liu Bing with both hands, his voice filled with barely suppressed excitement. "The Ministry of Finance has completed the summary of this quarter's commercial taxes. Since the new law was promulgated in March, the taxes collected from merchants in Linxiang alone, along with the East and West Markets and the Xiangjiang River Wharf, have exceeded 300,000 coins!"

"The tax on merchants who stayed at home was collected from more than 1,200 registered workshops, shops and residences throughout the county, with a market rent of more than two million coins."

"The tax levied on carriages and merchant ships amounted to over 200,000 coins. The market rent was 200,000 coins, resulting in a tax of over 1 million coins."

"The combined business tax for this quarter has exceeded three million!"

"If we extrapolate from this, the annual commercial tax revenue should be no less than 20 million coins."

Upon hearing this, Liu Bei put down the bamboo slips in his hand, took the account book, flipped through a few pages, and couldn't help but smile.

When we were in Mount Tai, the total annual tax revenue was only around 60 million coins, which included all taxes, from farmland tax to poll tax, from commercial tax to customs duty.

Now that Changsha has implemented the new law, commercial tax revenue has reached three million coins in less than a month!

Changsha is indeed a great city! It is the foundation of the royal enterprise and is extremely wealthy.

However, Liu Bei was still not satisfied with this, because a simple calculation would show that most of the three million coins were taxes levied on workshops and shops.

This tax is only levied once a year. Starting next month, it will only be levied based on the transaction amount. This is what is known as market rent.

The market rent was 20%, which was very lenient. The monthly income in Changsha was one million coins, which means that the total monthly transaction volume of all the shops, merchants, and powerful families in Changsha was only fifty million coins.

Clearly, this transaction volume is insufficient, or rather, there are too few market officials to keep track of it.

According to calculations, this refers to the taxes levied on vehicles and ships. With thousands of boats racing in Changsha, each boat could not possibly carry only tens of thousands of coins worth of goods.

Moreover, based on the market rent, with a monthly transaction volume of fifty million coins, how much could those wealthy merchants and powerful figures earn, even if they were busy running around? A few thousand or tens of thousands of coins per ship? It wouldn't even be fair to their hundreds of guests traveling between several counties.

However, Liu Bei was very forgiving. He put down the account books and gently comforted them, saying, "When the new law is first implemented, most of the officials in the Jin Cao Bureau are handling tax collection in the market for the first time, so some oversights are inevitable. As the officials become more proficient and the tax collection method becomes more perfect, those hidden and unreported transactions will naturally be gradually included in the tax register."

Ju Shou, being reasonable, chimed in, "What you say is absolutely right, Your Excellency. The officials in charge of tax collection have been working day and night, exhausting their energy and efforts. However, each county's tax collection office has only a dozen or so people, and the prefecture's tax collection office has only a dozen or so people, yet they are responsible for managing more than ten market offices and wharves throughout the prefecture, as well as verifying the value of goods and issuing tax certificates one by one. It is simply beyond their capacity."

Ultimately, this is still a limitation of the current official system. The officials of the Jin Cao (金曹) are the private subordinates of the prefect. For example, the Jin Cao Yuan (金曹掊) and Jin Cao Shi (金曹史) still address Liu Bei as "Prefect," because Liu Bei is funding their employment.

As a close associate of the prefect, Liu Bei couldn't be too biased. If there were more than two hundred officials in the Jin Cao department of the prefecture, while the other departments only had a few, then the other departments would definitely feel resentful.

So, Liu Bei thought for a moment, then got up from behind his desk and said, "In that case, Gongyu, Xianhe, and Zizhong, accompany me. It is both to inspect the tax collection situation at the market office and to express our appreciation for the hard work of the clerks in the Ministry of Finance."

The group left the prefectural government office and headed north along the main street of Linxiang City.

It was afternoon, and the streets were bustling with carriages and pedestrians.

Linxiang City has two gates, north and south. The south gate is located at the Xiangjiang River wharf, where merchant ships gather every day.

The north gate connects to the official land road, where caravans and merchants come and go in an endless stream.

Mi Zhu led Liu Bei to the South Gate, where they saw a row of notices posted on the inside of the gate, which were the newly promulgated tax laws and regulations.

On both sides are several newly built brick and tile houses, with a plaque above the door reading "Linxiang Municipal Government". More than ten clerks are busy inside.

Mi Zhu pointed to several oxcarts lined up at the city gate and introduced them to Liu Bei, saying, "My lord, please look, this is the South Gate Market Office. All merchants entering the city through the South Gate must register the value of their goods and pay their merchant taxes here."

"After the market officials inspected the goods, they issued tax permits, which merchants could then use to enter the East and West markets to sell their goods. The city gates and market offices were the first checkpoints for merchants transporting their goods into the city."

"Whether they come from the docks or by land, as long as they bring goods into the city for sale, they must pay taxes here before entering the market. If they evade taxes here, they will not be able to obtain city registration in the East or West markets, and their goods will not be able to be sold legally."

Liu Bei nodded slightly, as this was exactly the same as the "tax collection at the city gates" method recorded in "Dongjing Menghualu".

In the Han Dynasty, the market office was located between the city gate and the market gate. Merchants had to pay taxes before entering the market, which facilitated management and prevented them from escaping.

He walked up to an oxcart that was being inspected. The cart was loaded with bundles of bamboo and timber, which had obviously just been transported from Lingling.

The merchant was a middle-aged man in his forties. Seeing the extraordinary bearing of Liu Bei and his entourage, he quickly bowed and paid his respects.

Mi Zhu asked, "What is the value of this cartload of bamboo and timber? How much tax did you pay?"

The merchant quickly replied, "Reporting to Your Excellency, this cartload of bamboo and timber was transported from Lingling. The cost was three thousand coins, and it can be sold in Linxiang for around five thousand coins. The market official just inspected the goods and paid the market tax of sixty coins."

He then presented the tax certificate in his hand.

The market official recognized Liu Bei and his party and quickly stood up to pay his respects.

Mi Zhu picked up the register and flipped through a few pages. He saw that it was filled with detailed records of the value of goods, tax amount and tax certificate number for each transaction. The entries were clear and meticulous.

He nodded, put the booklet back on the table, and said to the market officials, "You have worked hard. The new law is newly implemented, so you must verify everything fairly. You must not make things difficult for merchants, nor should you show favoritism or indulgence."

After leaving the South Gate City Hall, the group headed north, passed through the main street of the city, and arrived at the most prosperous East Market in Linxiang.

In the Han Dynasty, markets were always surrounded by walls with gates on all four sides, which were opened and closed at set times each day.

The Kaogongji records that "craftsmen build the city, facing the market behind them." The market was set up with a market office, headed by the market magistrate and the market assistant, who were responsible for collecting market rent, managing market registration, and stabilizing prices.

The walls of the East Market were built of rammed earth, about ten feet high, with a gate on each of the four sides, each guarded by a market official. Entering the East Market, one sees crisscrossing streets and alleys, lined with shops on both sides, and colorful flags fluttering in the wind.

The ironware shop hung a black flag with the character "寇" (Kou) in white characters on a black background, the brocade shop hung a red flag with the character "吴" (Wu) in gold characters on a red background, and the lacquerware shop hung a blue flag with the character "黄" (Huang) in white characters on a blue background. There were also vendors selling pottery, bamboo products, fresh fish, and rice. Their cries of vendors rose and fell, creating a lively and bustling atmosphere.

Mi Zhu pointed to a three-story pavilion in the center of the city and said to Liu Bei, "My lord, that is the Flag Pavilion. The Flag Pavilion is a tall building in the city where the city magistrate and the city's assistant magistrate climb up daily to oversee all transactions."

"There is a flag upstairs. The flag is raised every morning when the market opens and lowered every evening when the market closes. If there are disputes in the market, the market official will adjudicate the case at the flag stand. The market price is also posted by the market official in front of the flag stand every day. Merchants are not allowed to raise or lower the price at will, so as to prevent hoarding and speculation."

Liu Bei looked up and saw that the flag pavilion was about three zhang tall, with upturned eaves, vermilion pillars and green tiles, much taller than the shops in the city. A large red flag hung on the pavilion, fluttering in the wind.

A wooden sign stood in front of the pavilion, displaying today's prices: eighty coins per bushel of millet, ninety coins per bushel of rice, ten coins per dou of salt, and one hundred coins per iron hoe. The items were clear and easy to understand.

Liu Bei sighed inwardly, thinking that this was the "market" of the Han Dynasty. It had walls and gates, offices and pavilions, orders and officials, market registers and tax permits. Everything was governed by laws and regulations.

As Liu Bei paused to observe, a sudden commotion arose. He looked in the direction of the sound and saw a market official blocking a handcart loaded with goods. In front of the cart stood a man dressed in a short brown robe, arguing indignantly.

The market official was about thirty years old, with a dignified appearance and a bronze seal hanging from his waist. He was the market clerk on duty at the East Market flag stand.

He pressed down on the shaft of the handcart with one hand, pointed at the goods on it with the other, and sternly rebuked, "You have neither market registration nor tax permit, yet you have entered the East Market to sell goods without authorization. You shall be punished according to the law. This cart of straw sandals will be temporarily impounded at the flag stand, pending investigation of its origin before further action is taken."

The man's face flushed red as he argued, "I merely wove a few pairs of straw sandals to exchange for some salt and rice. How have I become a cunning person? I'm not the only one selling straw sandals in this market; why are you only stopping me?"

The city official remained unperturbed. He took out a scroll of silk from his sleeve, unfolded it, and showed it to the man, saying loudly, "According to Han dynasty regulations, anyone entering the market to trade must first register the value of their goods at the market office, be included in the market register, pay taxes according to the rate, and obtain a tax permit before they can sell their goods in the market. You have neither a market register nor a tax permit, yet you have privately brought goods into the market to trade, which constitutes tax evasion. According to the law, the goods will be confiscated, and you will be fined ten days of corvée labor. Considering this is your first offense, the goods will be temporarily detained. Go to the market office immediately to register and pay the taxes, and you can retrieve them."

When the market clerk brought out the laws and the surrounding merchants nodded in agreement, the man knew that further arguing would be useless, so he could only dejectedly follow a market official toward the flag pavilion.

The city official put away the silk scroll and was about to continue his inspection when a well-dressed old farmer hurriedly approached, followed by a young man leading a sturdy yellow ox. The old farmer bowed to the city official and said, "Sir, I wish to sell this ox to this young man. May I ask how much it is worth and how much tax should be paid?"

The city official walked to the ox, pressed his hands on its back and belly, then pried open its mouth to examine its teeth. After a moment's thought, he said to the old farmer, "This ox is four years old, in its prime, plump and strong, and over five feet tall at the shoulder. According to the market price posted today, such a robust ox is worth between seven and eight thousand coins. What price have you two agreed on?"

The old farmer quickly replied, "It is exactly seven thousand five hundred coins."

The city magistrate nodded, took out a wooden tablet from his bosom, and quickly wrote down the names, origins, types of goods, and agreed prices of both parties in the transaction. He also noted at the end, "According to the law, two out of every hundred will be collected, and the tax payable is one hundred and fifty coins."

Then he handed the wooden slip to the two men and said solemnly, "You two sign here, each keeping a copy as proof. The old man is the seller and pays a tax of 150 cash; the young man is the buyer and pays an additional 50 cash in deed tax. After payment, this ox belongs to the young man. If there are any disputes in the future, you can use this deed to seek redress at the flag stand."

The old farmer and the young man signed the agreement and each took out their money bags to pay the tax. The market magistrate collected the tax money, carefully registered it in the register, and then took out a small wooden plaque from his pocket, tied it to the ox's horn. The plaque was inscribed with the words "East Market Contract No. 173" in ink, and the copper seal of the flag shop was affixed to it.

He patted the ox's head and smiled at the two men, saying, "The deed tax has been paid, the transaction is complete. This ox belongs to the younger man, and the old man can save money on fodder."

Seeing this, Liu Bei didn't know how to comment, so he could only smile and sigh.

That's right, this is the classic scenario of buying and selling in today's world; there is no such thing as free trade.

It is no exaggeration to say that in ancient times, 80% of the energy spent on business dealings was spent dealing with government officials.

The common perception of cash on delivery and free trade only emerged after the Song and Ming dynasties.

Even in the Northern Song Dynasty, many transactions were like this. It wasn't until the Ming Dynasty, when the city walls were completely demolished, that free buying and selling became the norm.

Currently, merchants cannot set prices themselves, nor can they arbitrarily raise or lower them. If they want to sell a sheep, they must first find government officials to conduct a market appraisal and collect taxes before the transaction can take place.

This is what the "Golden Cloth Law" says: "There is buying and selling, and each has its own market."

This situation was expected to continue until at least the Tang and Song dynasties, and Liu Bei was not in a hurry to change it. Since it was still functioning and effective, there was no need to suddenly change everything.

If a single government decree changes too much without sufficient industrial and commercial prosperity, it will only lead to the wealthy and powerful profiting, prices skyrocketing, ordinary people suffering, and ultimately chaos.

He should wait at least a few years or decades until industry and commerce have developed and become prosperous before considering whether to abolish market valuation and allow free market transactions.

Sometimes, overly advanced ideas may not be suitable for an era with a low level of industrial and commercial development.

As Liu Bei pondered, the city official continued his inspection. He carried a thick booklet in his hands, and at each shop, he would stop in front of the door to check whether the shop's flag and sign matched the city registration number in the booklet.

After entering the store, I checked the ledger item by item—how much stock was received in the first ten days, how many items were sold in the middle of the month, and what the balance was in the last ten days.

Each item must be compared with the number registered last month. If there is a significant discrepancy, the reason must be investigated.

The city clerk was skilled; with a few questions and answers, he turned several pages of the account book, clearly used to this job.

As the mayor stepped into a brocade shop, the shopkeeper hurriedly greeted him with a broad smile and presented him with a thick account book.

The city magistrate took the ledger and checked each entry meticulously, his fingers moving slowly across the pages as he muttered to himself. When he reached a particular page, he suddenly stopped, his brow furrowing slightly: "Last month you brought in twenty bolts of Shu brocade, but the ledger only records sixteen sold. Where are the remaining forty-four?"

The shopkeeper hurriedly replied, "Please forgive me, sir. Those four bolts of brocade were not sold. They were exchanged for two bolts of dyed red brocade from the Wu family's dyeing and weaving workshop next door. It was my oversight not to record the exchange in the ledger. I hope you will forgive me."

The city magistrate remained unperturbed. He simply took out a pen and ink from his robes, added a line to the account book, calculated for a moment, and said, "For barter trade, the value of the goods must still be assessed, and taxes should be paid accordingly. Four bolts of Shu brocade, at today's average price, are worth three thousand coins each, totaling twelve thousand coins. The tax payable is two hundred and forty coins. Once this amount is paid, there will be no need to pay next month."

The shopkeeper breathed a sigh of relief, quickly counted out two hundred and forty coins from the cash register, and presented them with both hands. The magistrate accepted the money, registered it in the register, and then reminded him, "Don't forget to record it again next month," before turning around and leaving the shop to go to the next store.

They went from shop to shop like this—in the ironware shop, they checked the number of plowshares and sickles; in the lacquerware shop, they counted the inventory of cups, plates, and boxes; in the pottery shop, they inspected the firing of earthenware pots and bottles; and in the seafood shop, they weighed the dried and fresh fish.

Wherever he went, the city magistrate repeated the same actions: checking the city's registers, examining the accounts, calculating the tax amount, collecting the tax, and registering it.

He kept walking and writing, and had already turned more than half of the wooden booklet, which was filled with the details of today's tax revenue.

Liu Bei watched with great interest and suddenly understood why corrupt officials would come to collect taxes from ancient shops and inns in movies and TV shows every day.

In this era, to run a business, one truly had to deal with the government every single day.

And it is precisely because of this that once official corruption occurs, rampant corruption will inevitably lead to widespread suffering among the people.

Seeing the sigh on Liu Bei's face, Mi Zhu quickly explained, "My lord, these shops are all registered merchants. The tax for merchants is divided into two categories: one is market rent, which is levied annually according to the size of the shop and has already been paid at the beginning of the year."

"The second is the monthly transaction tax, which is 2% of the actual transaction amount each month. Market officials are required to inspect each household daily to prevent underreporting."

Liu Bei nodded, his gaze falling on the back of the market official, and sighed, "Only after visiting the East Market today do I realize the hard work of the officials in charge of the finance department. This market alone has hundreds of shops, with no less than a thousand transactions every day, yet there are only a dozen or so officials in charge of the market. The new laws have just been implemented, and they are already overwhelmed with work."

"When merchants from all directions hear of this, the trade will increase several times over. How can we possibly cope? It is imperative to increase the number of officials."

In this regard, Liu Bei felt that the Song Dynasty could be a good reference.

The Song and Ming dynasties were basically the pinnacle of Han Chinese feudal dynasties. The fact that the Ming dynasty only emphasized agricultural taxes and not commercial taxes highlighted the particularly developed industry and commerce of the Song dynasty.

He then said, “Since Emperor Wu of Han established the Equalization of Transport and Standardization, the Han Dynasty’s commercial tax system has gradually become systematic. However, in the prefectures and kingdoms, the collection of commercial taxes is mostly handled by the market magistrate and the market assistant, and there is no dedicated department.”

"Changsha wants to greatly develop industry and commerce, but it cannot follow the old system. I propose to set up a special office for commercial taxes outside the prefecture government to coordinate the collection of commercial taxes throughout the prefecture."

Liu Bei was intentionally creating a tax system independent of local officials. This would ensure that when he established his own court, tax collection would be free from interference by local officials.

Upon hearing this, Ju Shou asked, "Does Your Excellency intend to emulate Emperor Wu's system of 'intermediary officials'?"

Liu Bei nodded slightly. The "official in charge" that Ju Shou mentioned was the official in charge of salt and iron monopoly and commercial tax collection established in the prefectures and kingdoms during the reign of Emperor Wu of Han. He was under the Grand Minister of Agriculture and was in charge of commercial tax collection and salt and iron management.

Changsha's commerce and industry were just beginning to flourish, and it needed such specialized agencies.

"Not just the Salt Commissioner," Liu Bei said slowly. "I intend to establish two offices. First, I will establish the Salt and Iron Commissioner, who will be in charge of the salt and wine monopoly—the boiling and drying of salt fields, the brewing and sale of wine, and the collection of salt and iron taxes will all fall under his jurisdiction."

It's likely that both the former and present-day Liu Bei had a particular fondness for alcohol.

Although Liu Bei has not banned alcohol, he still intends to make it a monopoly. Now that the world is nearing chaos, drinking less alcohol is more advantageous than gaining anything. Therefore, he doesn't plan to discuss it with the powerful clans and will simply establish this system directly.

"Secondly, a Commercial Tax Supervisor was established to be in charge of commercial tax collection—all taxes on itinerant merchants, stationary merchants, vehicles and ships, and market rents were under his jurisdiction, and the county and city offices were subject to his control. The two offices operated in parallel, one in charge of the monopoly and the other in charge of commercial taxes, each with its own responsibilities and not mixed up."

Mi Zhu, listening nearby, nodded repeatedly and added, "Your Excellency's plan is perfectly timely. In addition to the Salt Commissioner, a new Wine Monopoly Commissioner should indeed be established to oversee the sale of alcohol. Changsha has abundant rice, and the brewing industry is booming. If the profits from wine can be brought under government control, it will not only increase the government's revenue but also prevent illegal brewing and the waste of grain."

Thus, an agreement was reached, and Liu Bei immediately ordered Mi Zhu and Ju Shou to draft the regulations.

The two spent several days drafting a preliminary proposal: a Salt and Wine Commissioner, with one official position and a salary of 600 shi (a unit of grain), to oversee the salt and iron monopolies and the wine monopoly, with one Salt Supervisor and one Wine Monopoly Supervisor, each with a salary of 300 shi, stationed in the counties producing salt and wine respectively.

The Commercial Tax Supervisor, headed by one Assistant Supervisor with a salary of 600 shi (a unit of grain), was in charge of collecting commercial taxes throughout the prefecture. He was in charge of the municipal and county offices under his jurisdiction, and was responsible for collecting taxes on traveling merchants and taxes on stationary merchants. The tax rate was still 2% of the total tax, while luxury goods such as Shu brocade, pearls, rhinoceros horn, and ivory were subject to an additional 5% tax.

Ju Shou further suggested that, in order to prevent the problem of redundant officials in the future, the total number of officials in the two departments should be temporarily set at no more than one hundred.

If commercial taxes increase in the future, additional taxes may be added as appropriate.

Once the regulations were established, Liu Bei issued a special edict to the entire prefecture: "The establishment of the Salt and Wine Commissioner and the Commercial Tax Supervisor is not for the purpose of profiting and accumulating wealth, but rather to facilitate commerce and promote trade, so that the people can live in peace and their livelihoods can be maintained, the treasury can be replenished, and the armor and weapons can be repaired."

"The salaries of newly appointed officials shall be paid by the prefectural government, and they shall not receive a single penny in addition to their salaries. If any official is found to be exploiting merchants or harassing the market, he/she shall be severely punished according to the law without leniency. All of you shall strictly abide by this rule and not say that we did not warn you."