Chapter 38: Increase Revenue? Cut Expenses?

At this moment, Li Pan spoke up to support him: "My student is still young; if there are any oversights, please, Excellency, offer more guidance."

"It is no matter." Zhang Fangping waved his hand.

Lu Beigu sat upright and said: "Although the current dynasty is wealthy, burdened by the 'Three Redundancies', it is truly difficult to take large strides forward. Though I dwell far from the court, I have given this some thought, and thus have an idea."

"You are speaking euphemistically."

"How could it be merely 'difficult to take large strides'? Tax revenue is limited while expenditures are nearly infinite; the situation has long been as precarious as a pile of eggs. Currently, we are merely struggling to maintain the status quo."

Zhang Fangping was not being polite; having served as Director of the Three Offices, he knew exactly what the financial situation of the Great Song was.

Without two brushes of a "top-tier wall patcher," one simply could not do this job.

Precisely because he understood, Zhang Fangping held an instinctive wariness toward any suggestions regarding economic policy from anyone.

In fact, even now, Zhang Fangping did not believe that a county school student like Lu Beigu could propose any good suggestions, but he was naturally fond of mentoring juniors and enjoyed conversation, so for now, he merely adopted an attitude of "listening to all sides to gain clarity" and took the time to listen.

After all, for Zhang Fangping, if it were feasible, that would be good; if not, it was of no consequence.

Lu Beigu nodded and continued: "And I believe that for the dynasty's finances, the priority lies in the salt regulations."

"What? Do you mean to increase revenue through the salt regulations?"

These words seemed to be asked lightly, yet they concealed a test.

Who in this world does not know that increasing revenue brings money faster than cutting expenses?

But to use a family as an analogy: if all members of a family work diligently to earn money, why do the vast majority choose to live frugally rather than go into business?

Naturally, because recklessly going into business not only has a low success rate and risks losing the principal, but could also cause the family finances to fail to circulate positively, thereby falling into an even more passive situation.

The state is the same; currently, the Great Song's finances rely on annual deficits to barely maintain themselves. If revenue is increased recklessly, it might directly cause the finances to collapse.

This era is not lacking in smart people, nor are these smart people unaware of the principle that increasing revenue brings money faster than cutting expenses.

Rather, on one hand, there is no room for trial and error; on the other, with the Great Song's grassroots governance capabilities, no matter what good method for increasing revenue you have, spreading it nationwide will only twist it out of shape.

Therefore, if one truly intends to increase revenue through the salt regulations, one might gain temporary benefits, but in the end, it would certainly be worse than making no changes.

Li Pan secretly clenched a fist of sweat on the side, only hoping Lu Beigu would not answer recklessly.

"Increasing revenue through the salt regulations must not be done."

Lu Beigu shook his head: "The burden on the common people regarding salt taxes is already extremely heavy. Adding more recklessly will not only fail to collect much money but will only make things worse."

Zhang Fangping nodded slightly; as long as it was not a suggestion to increase revenue, he could listen.

"My idea is to partially modify the Salt Certificate Method, using commercial laws to allow regions to exchange surpluses for shortages, thereby improving efficiency and reducing losses."

Hearing this, Zhang Fangping, whose attitude had just softened, furrowed his brows tightly.

"Do you know how the Salt Certificate Method came about?"

"I do."

Lu Beigu recalled slightly, organizing his thoughts.

"In the third year of Yongxi of Emperor Taizong, to solve the difficulty of supplying grain and fodder in the northwest, the 'Compromise Method' was promulgated, requiring merchants to transport grain and fodder to the northwest border in exchange for salt certificates, and upon presenting the certificate at designated salt fields to collect salt, sell it within designated areas."

"However, because the northwest was harsh and poor, grain prices in the border regions were high, and grain and fodder were supplied only to border armies and not to the common people, so the common people often made a living by selling private salt. Merchants transporting grain over a thousand li incurred great expenses; even after obtaining salt certificates and exchanging them for official salt, there was no profit. Over time, the 'Compromise Method' fell into disuse."

"The Compromise Method was simply unworkable." Zhang Fangping's brows remained tightly furrowed. "Therefore, when Duke Fan Zhongyan of the Fan family, who was in charge of the green and white salt along the Shaanxi border, reformed the salt regulations, he changed the physical exchange of the Compromise Method to paying money to buy salt certificates. Salt merchants directly paid copper coins in the capital to obtain salt certificates and then collected salt at the salt fields, while grain and fodder for the northwest were transported directly via the southeast canal transport. The 'Compromise Method' was completely abolished."

Duke Fan Zhongyan referred to Fan Xiang, a friend of Zhang Fangping.

After Fan Xiang passed the imperial examinations, he was promoted from Judge of Qianzhou to Assistant Prefect of Zhenrong Army. He personally led troops to resist the siege by Li Yuanhao. He was a person who, like Zhang Fangping, understood border affairs and was well-versed in economics. He had once overseen the construction of Liu Fan Fort and Dingchuan Stockade, and made significant contributions in his duties overseeing the silver and copper mines and minting in Shaanxi, as well as overseeing the green and white salt along the Shaanxi border. He currently serves as Department Magistrate of Huazhou in Guanzhong.

And if nothing unexpected happens, as Zhang Fangping resumes his post as Director of the Three Offices to manage national finances next year, he will soon jointly memorialize Bao Zheng to reinstate Fan Xiang as Commissioner for Regulating Salt, allowing him to regain control of northwest salt administration, and promote him to Deputy Transport Commissioner to assist Zhang Fangping.

As for Fan Xiang and the Salt Certificate Method he formulated, Lu Beigu was familiar with them.

This person was quite famous in ancient Chinese economic history, especially in Song dynasty economic history.

The 'Song Shi · Treatise on Food and Money' explicitly records that the Salt Certificate Method formulated by Fan Xiang was quite complete; later civil officials in charge of salt regulations dared not change it arbitrarily, merely making slight additions or subtractions based on it.

What Zhang Fangping said next was also very direct, leaving Lu Beigu little face.

"Then since you know the Salt Certificate Method, on what basis do you think your design can do better than Duke Fan Zhongyan?"

On the foundation of a Salt Certificate Method that was already so complete, Lu Beigu proposing modifications to the Salt Certificate Method formulated by Zhang Fangping's friend Fan Xiang before Zhang Fangping, made the other party's attitude unsurprising.

But Lu Beigu did not retreat; he said:

"The disadvantage of the lack of copper coins in Sichuan, I imagine Excellency is even more clear about. And when my group passed through Luzhou, I saw ships transporting well salt from several prefectures in Chuannan coming and going without interruption."

"Do you mean transporting salt from Sichuan to Guanzhong? And then exchanging it for copper coins?"

At this moment, Zhao Bian interjected with a question. He was originally the Transport Commissioner of Yizhou Circuit and understood economic matters.

"It is not so." Lu Beigu shook his head and said, "The Sichuan roads are difficult to travel; if salt is transported by land, the price is completely different from well salt floating down the river. The people of Guanzhong cannot afford it, and it is impossible to obtain copper coins. I think we can allow merchants from the southeast to bring copper coins to Sichuan to buy salt, thereby solving the shortage of copper coins in Sichuan."

"Isn't that how it is done now?"

Zhao Bian frowned, completely failing to understand: "The problem is that the court limits the annual sales volume of well salt. When merchants from the southeast purchase well salt, they cannot pay entirely with copper coins; most of it is iron coins, Jiaozi, or even cloth and silk... Moreover, what does this have to do with the northwest?"

Yizhou Circuit was different from other circuits; because the Sichuan region produced abundant tea and well salt, the Transport Commissioner here also undertook special tasks, namely being responsible for supervising the monopoly revenue from tea and salt.

Therefore, regarding the issue of Sichuan well salt, Zhao Bian had a very strong voice.

"Precisely because it is done this way now, there is practical feasibility."

Lu Beigu's words were awkward, but he did not explain them too much; instead, he returned to the main topic and said: "I have been pondering that currently, Sichuan has abundant well salt but lacks copper coins; the northwest lacks grain; the southeast has abundant copper coins; and the Central Plains have abundant grain. The four could form a self-sustaining cycle."

"Oh?"

Zhang Fangping's tightly furrowed brows relaxed slightly.

He keenly sensed something, but before his eyes, it was still hazy, as if separated by a layer of window paper, making it impossible to see through.

Subsequently, Lu Beigu laid out his entire plan.

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① Deficit is not a modern term; it originated from 'red out, black in' stipulated by Su Chuo of the Western Wei in the accounting system. The Sui and Tang dynasties commonly used 'deficit' to indicate that state financial expenditures exceeded revenue.

② A voucher for exchanging salt. According to the 'Song Shi · Treatise on Currency', at that time 'each salt certificate could claim 116.5 jin of salt, priced at 6 guan'.

(End of Chapter)