Chapter 289: Using the Profits of Frontier Trade to Blunt the Edge of the Jianzhou Barbarians' Blades

As they spoke, the two Bureau Secretaries of the Nan'ao Tax Office and Finance Office, who had been busy at the trading post, also walked over and exchanged greetings with Jin Renyi.

The two explained to Jin Renyi that this frontier trade market post was a joint venture between officials and merchants, funded by Nan'ao, which centrally purchased Joseon's ginseng, furs, timber, paper, cotton cloth, and other goods.

Nan'ao merchants transported Ming silk, tea, porcelain, and other goods to sell to Joseon merchants, then purchased ginseng and furs from the Jiaodao warehouse to ship back to Nan'ao. "Wait..." Jin Renyi looked utterly bewildered. "Since both Joseon merchants and Nan'ao merchants can freely land on the island, why go to all this trouble of having ginseng and furs pass through the post's hands? Just let the traders buy and sell freely."

The Finance Bureau Secretary said: "Ginseng, furs, and the like are the most important goods at the Jiaodao frontier trade market, and they are also specialties of Liaodong.

When our government makes large-scale purchases, it reduces the supply available on the market. Even if traders bypass Jiaodao and try to buy elsewhere in Joseon, there will be nothing to purchase—and even if they do manage to buy, the quality will be poor and the quantity small.

This is a means of curbing smuggling and controlling imports and exports."

Jin Renyi sneered: "When you've already opened a frontier trade market, what's the point of talking about curbing smuggling and controlling exports? Isn't that laughable?"

Ji Bai shook his head: "Not at all. Though Nan'ao trades with Joseon, there are things we will do and things we will not do.

Iron implements, saltpeter, sulfur, grain, military treatises, and geographic maps are all prohibited from export.

Every Nan'ao merchant ship carries a ship permit. When departing from ports in Fujian and Guangdong, and when entering port at Jiaodao, customs officials from the Tax Office are responsible for inspections." The Tax Bureau Secretary nodded and added: "This set of rules about what can be sold and what cannot be sold, the Tax Office calls it the 'Black and White List' system." He gestured, and a subordinate handed over a booklet, which was given to Jin Renyi.

Jin Renyi took it and looked, slightly surprised, for the booklet contained several thousand characters, written in extreme detail.

The controlled goods were divided into several major categories, further split into imports and exports.

It was one thing to list various weapons, armor, and firearms by category—but they had even put water buffalo horn on the black list. This was the main material for making great bows. The fact that they'd thought of this showed the list had been compiled with real care.

Reading further down, Jin Renyi's expression gradually soured: "Why are iron woks, iron plows, scissors, and sickles also on the black list?

And rhubarb, licorice, notopterygium, ephedra... how can even ordinary medicinal herbs be banned from sale?"

The Finance Bureau Secretary said with a smile: "Those are no ordinary medicinal herbs. They are the major bulk medicines for emergency treatment, epidemic prevention, and wound care. Without these things, when the Jianzhou barbarians are wounded in battle, they'll have nothing to treat themselves with.

Iron woks and iron plows are the same—though they are civilian implements, they are still iron goods, easily bought up by the Jianzhou barbarians and melted down and recast into weapons, so they are also on the black list."

Jin Renyi was so angry smoke seemed to pour from his seven orifices. He fumed: "Then what are the common people of my Joseon supposed to do?"

From now on, the entire trade chain of the Northeast region would be: the Jianzhou barbarians trade with Joseon, and Joseon trades with Jiaodao.

Jiaodao's refusal to sell these goods was intended to restrict the Jianzhou barbarians, but the first to be restricted was Joseon, caught in the middle.

The Jianzhou barbarians at least still had Guihua City (present-day Hohhot) as a trade node, obtaining Ming goods through the Jianzhou-Mongol trade and the Mongol-Shanxi merchant trade.

Joseon had only the single line of trade with the Ming. Things like iron woks and iron plows looked low-tech, but in reality Joseon's self-sufficiency rate was extremely low—five to seven tenths of its supply depended on the Ming.

In the past, when Joseon envoys arrived in the Ming, they would always purchase large quantities of these iron goods.

And Chinese medicinal herbs like rhubarb and licorice were even more absurd—Joseon produced none at all, one hundred percent came from the Ming.

Now that the inflow had been cut off, within one year Joseon's epidemic prevention system would collapse, and within three years its population would plummet and national strength would decline. Ji Bai took over the conversation: "Beyond the black and white lists, there is also a gray list. If these medicinal herbs and iron goods can be effectively supervised, then our side will add them to the gray list, allowing small quantities to be sold under supervision.

That is why this envoy has visited your noble country, hoping your country will cooperate with our side. Unfortunately, your sovereign and ministers only know how to spout empty talk of righteousness and morality, dog-shit—"

"Ahem, ahem!" The two Bureau Secretaries coughed in unison, making Ji Bai swallow the rest of his sentence.

Jin Renyi thought to himself: "Joseon's coastline winds and twists, with no shortage of smuggling ports. Even if Nan'ao imposes an embargo, there will always be people willing to take the risk." With this thought, he felt somewhat reassured. Picking up the black and white list, he said in a mocking tone: "I see your side has put silk on the white list. Do you think that when the Jianzhou barbarians get silk, they can't turn it into fighting power and can only wear it to show off?"

"Exactly so."

"Hmph, shallow!" Jin Renyi snorted disdainfully. "You don't actually think the Jianzhou barbarians buy silk in bulk just to flaunt their status and wealth, do you?

On the grasslands, silk is more precious than silver or gold.

The vast majority of that silk is bestowed upon Mongol nobles, in exchange for Mongol alliance and support!

The Jianzhou barbarians have been blockaded and embargoed by the Ming for over a decade. They've long since been forced to produce their own iron—what they cannot produce themselves is silk.

At the frontier trade markets of Guihua City, Zhongjiang, and elsewhere, silk has always been the biggest purchase, with grain ranking behind silk."

Contrary to Jin Renyi's expectations, the Nan'ao Bureau Secretaries' expressions showed not the slightest fluctuation.

"We know." Ji Bai said flatly.

"Then why do you still stubbornly persist in your course?"

Ji Bai said: "The Helmsman once said, banning everything is the same as banning nothing. The Ming strictly prohibited the Mongols from reselling goods to the Jianzhou barbarians—does Your Excellency see that it stopped them?"

The Tax Bureau Secretary casually picked up a ginseng root and toyed with it in his hand: "The Nan'ao customs specializes in investigating smuggling—this is what we know best.

Before the Jiaodao frontier trade market was established, the Helmsman said at the Customs Headquarters that Joseon's coastline is long, and completely eliminating smuggling is impossible. To speak of the near at hand, Mao Wenlong of Pidao participates in smuggling.

Kill Mao Wenlong, destroy Pidao, and the Denglai navy can take over the smuggling.

Destroy the Denglai navy, and the merchants of Jiaodong can continue smuggling. It simply never ends.

Rather than expending great effort on forced prohibition, it is better to use economic means to control it. To put it plainly, that means the frontier trade market.

But once you have a trade market, only buying and not selling won't work either, because silver flows into the Jianzhou barbarians' hands, and they can use that silver at Guihua City to buy needed goods from the Shanxi merchants. So on the 'black list,' it's not that the more goods the better—on the contrary, the goods strictly prohibited from trafficking should be as few as possible.

The Helmsman said: the more administrative measures you use, the worse the actual results; the more economic measures you use, the more you achieve twice the result with half the effort..." Jin Renyi sneered: "Helmsman said this, Helmsman said that—are you all just megaphones for your Helmsman?"

The Tax Bureau Secretary smiled and cupped his hands in salute: "Aiyo, you flatter us!"

Jin Renyi momentarily suspected this Bureau Secretary had something wrong with his head, unable to tell praise from insult.

The Tax Bureau Secretary put the ginseng back in its place and invited Jin Renyi to sit at a tea stall nearby to continue the conversation.

He took a sip of tea, moistened his throat, and continued: "The Helmsman said that even if the Jiaodao trade market were managed to perfection, it still couldn't stop the Jianzhou barbarians from going to do business with the Shanxi merchants.

The stricter Jiaodao's control over iron goods, medicinal herbs, and gunpowder, the more expensive these goods become in the Guihua City and Zhangjiakou areas, and the more the Shanxi merchants will risk everything for large-scale exports. This is market adjustment.

So at Jiaodao, we must maintain a trade surplus.

Since we must maintain a surplus, we cannot ban too harshly. Especially silk—a necessity for the Jianzhou barbarians that cannot directly form combat power and is a high-value-added commodity—we must sell plenty of it.

The more business the Jianzhou barbarians do at Jiaodao, the less silver they have in hand, the harder it becomes for them to purchase from the Shanxi merchants—forming a virtuous cycle.

At the same time, Jiaodao purchases ginseng and furs in large volume, making it difficult for the Jianzhou barbarians to barter with the Shanxi merchants as well.

Moreover, silk is mostly produced in Jiangnan. Shipping it by sea to Jiaodao is far cheaper than transporting it overland to Zhangjiakou. In terms of price, Jiaodao also has the advantage, stripping the Shanxi merchants' silk of any competitive edge and strengthening Jiaodao's trade surplus.

Besides silk, Jiaodao also has rock sugar, white sugar, brown sugar, honey wine, as well as rhinoceros horn, ivory, spices, and other rare treasures of the South Seas.

Broadly speaking, these are luxury goods for commoners and nobles alike—the vast majority being rare items the Jianzhou barbarians have never seen or heard of. The Helmsman said that the fighting power of the Jianzhou iron cavalry comes from their harsh survival environment, from the survival crisis where if they don't fight, they'll starve and freeze to death. We use these luxury goods to corrupt the Jianzhou barbarians, erode their will to fight, while further securing our trade surplus."

"This... this, ah?" Jin Renyi was already somewhat dazed from listening.

The Tax Bureau Secretary had his subordinate fetch paper and brush, and completely diagrammed the flow of goods and silver, then explained the entire system once more. "Pata." A gleaming silver coin landed on the table.

Jin Renyi looked and saw it was an exquisitely crafted silver coin, its surface smooth, its patterns intricate. One side was stamped with a three-masted Fujian junk, shimmering with a lustrous, jewel-like gleam under the sunlight.

The Bureau Secretary of the Finance Department said: "Settling the Jiaodao frontier trade market in Nan'ao silver dollars is a way to keep bleeding the Jianzhou barbarians through financial warfare, on top of the trade war."

Jin Renyi had heard too many bizarre theories and already felt his head throbbing. Pressing his temples, he said: "What does this mean again?"

So the Bureau Secretary of the Finance Department took up the brush and paper once more, and explained again the matters of transaction costs, currency hegemony, good money driving out bad, and seigniorage. This whole set of theories was currently playing out for real in Jiangxi.

Jin Renyi took the two sheets of paper and studied them carefully for a long time. He prided himself on his intelligence—before he was even ten, he had memorized the Four Books and the Five Classics backwards and forwards—yet now his head ached in waves. After a long while, he finally saw a glimmer of the logic.

"This isn't right! How is this so-called 'trade surplus' method still targeting our Joseon?"

"Exactly so. After all, your country is the middleman between Nan'ao and the Jianzhou barbarians. Any trade between the two sides is bound to affect your country first—there's no helping that." "You! You people go too far!" Jin Renyi slammed the table and shot to his feet. "I, I…"

He racked his brains, searching for a long while, but simply could not think of how to respond.

The only thing he could think of was to have the court issue a strict decree forbidding the people from trading with Jiaodao.

But after the Yichou Disturbance, the strength of the two northern provinces of Joseon had plummeted. The remaining troops could barely defend their own territory, let alone catch smugglers.

And the Joseon navy had nearly been wiped out entirely—at sea, too, there was no way to deal with smuggling.

And yet Joseon's main trade goods—ginseng and furs—were precisely produced in those two northern provinces. Or to put it more bluntly, most of them were sold by the Eight Banners' official merchants of the Jianzhou barbarians.

Ji Bai said leisurely: "I wager the Envoy is thinking that since you cannot win against Nan'ao at sea, you will forbid trade from the land side."

His thoughts laid bare, Jin Renyi could only let out a cold snort to mask his embarrassment.

Ji Bai used the teacup lid to skim the tea leaves, and said calmly: "The Helmsman hates nothing more than others sealing their borders. If Joseon refuses to see reason, we will use our strong ships and sharp cannons to pry open your country's gates."

Jin Renyi's face flushed red with rage—then he burst into loud laughter.

The three Nan'ao men exchanged bewildered glances, utterly baffled. One Bureau Secretary said: "Why does the Envoy laugh?"

"I laugh because you have schemed to the last detail, yet missed one thing. Under Jianzhou rule, Liaodong has no private merchants at all—only one official merchant per banner, called the 'Eight Banners' official merchants.'

What these people buy and don't buy is all decided by the Beile banner masters.

To think you could lure them into your trap with such petty profits—how naive! Hahahahaha…"

"The Helmsman knew this all along."

Jin Renyi's laughter stopped abruptly, his face full of astonishment. He said, in shock and doubt: "Nonsense! If you knew all along, why still use such a rotten scheme?" The Bureau Secretary of the Finance Department said: "The Eight Banners' official merchants trade with Joseon, not with our Nan'ao. Would they cut off the frontier trade markets at Hoeryong and Chunggang with Joseon?"

Jin Renyi's expression darkened a shade. In his heart, he knew this could not be cut off—one of Hong Taiji's purposes in attacking Joseon was precisely to open these two frontier trade markets. If the markets were closed, wouldn't the Yichou Disturbance have been fought for nothing?

The Jianzhou barbarians suffered acute shortages of daily goods among their people—they still relied on the frontier trade markets to supplement their needs.

In the marketplace, silk, porcelain, medicine, white sugar, and fine wine were all displayed side by side. Could the Eight Banners' official merchants tell which goods were smuggled and which were produced in Nan'ao?

Even though the Great Ming hates the Jianzhou barbarians to the bone, and knows full well that Guihua City is transfusing blood to them, haven't they still not closed their trade with the Mongols?

Ji Bai took a sip of tea and said: "If the Jianzhou barbarians truly closed the Joseon frontier trade markets, what loss would that be to us? We were trading with Joseon anyway—we haven't even filled up Joseon's local market yet. Moreover, if Joseon cuts its ties with the Jianzhou barbarians, our controls become simpler, the blacklist categories shrink, and we earn more." Jin Renyi's expression darkened further. He suddenly recalled something—Nan'ao was a power that wielded both sea power and maritime trade. If they couldn't win a trade war, they could fight a real war!

What was Nan'ao occupying Simi Island for? Clearly to go looking for trouble with the Jianzhou barbarians.

Would Nan'ao be afraid of the Jianzhou barbarians not buying their goods? As if silk and rare treasures had no market!

Jin Renyi momentarily wondered how he could have asked such a stupid question. He truly wanted to slap himself twice across the face.

The Bureau Secretary of the Tax Department added: "The Helmsman's only worry is that the Jianzhou barbarians sell ginseng and furs at Jiaodao for silver, then take that silver to Zhangjiakou to exchange for ironware and gunpowder.

How to deal with this move was already explained in that trade surplus section just now.

Joseon's perennial trade deficit would cause silver to become dear and goods to become cheap. By market laws, the Later Jin's silver would naturally flow toward Joseon, reducing their purchases from the Shanxi merchants—even if the Later Jin gritted their teeth and scattered the silver toward the northwest instead.

Then for the Later Jin, that would be basically the same trade pattern as before Jiaodao's involvement—no major change.

For the Shanxi merchants, they would only get silver, not ginseng or furs—their entire return-leg profit would be cut off directly.

If we treat the Jianzhou barbarians and the Shanxi merchants as one whole, then we still achieve the goal of weakening the enemy.

If we treat the Shanxi merchants as pure suppliers to the Jianzhou barbarians, then we weaken our competitor, shrink their operating capacity, reduce their market share—and over time, we can continuously strengthen Jiaodao's trade influence, and ultimately weaken the Jianzhou barbarians."

"Ah… er…" Jin Renyi's expression had already turned extremely ugly. He was now in a superposition of not understanding and feeling that it was correct. Having sat too long, the Bureau Secretary of the Finance Department stood up and twisted his waist, saying: "I wager the Envoy might be thinking—if the Jianzhou barbarians sell goods to Joseon and are also forced to settle in yuan-yang silver, thereby obtaining yuan-yang, and then use the yuan-yang's stronger purchasing power to trade with the Shanxi merchants—wouldn't they be able to buy more supplies?"

"Ah? Mm!" Jin Renyi strove to keep his face calm, while inwardly roaring: "What does this question mean? Are they even still speaking Chinese?" The Bureau Secretary of the Finance Department, face full of pride, answered his own question: "I asked the Helmsman this very question back then, and the Helmsman even praised me for asking well! The Helmsman said: 'Refer to the situation in Jiangxi. If Joseon experiences deflation, then the exchange ratio of silver coins to loose silver will inevitably keep rising, while prices keep falling.

In such a situation, if the Jianzhou barbarians dump ginseng and furs into the Joseon market while hoarding silver in their fists, stubbornly defying objective economic laws, they'll lose their very breeches!'

Hahahaha… Those are the Helmsman's exact words! I remember them word for word!"

Ji Bai and the Bureau Secretary of the Tax Department nodded repeatedly, smiles on their faces, quite approving.

Seeing this, Jin Renyi cursed inwardly: "A bunch of madmen!"

The Bureau Secretary of the Finance Department trotted a few steps, fetched a bundle of ginseng from a shelf nearby, and after unwrapping it, said: "For example, this bundle of ginseng—its current purchase price is about ten taels of silver.

Once deflation hits, the Joseon merchants have no money in hand, no spare silver to buy goods—so the goods naturally drop in price, perhaps worth only two taels. Converted to yuan-yang, it might be worth one ship-fare coin.

The Jianzhou barbarians sell this bundle of ginseng to Joseon, get one ship-fare coin in exchange, trade it at Guihua City, then bring it through the pass at Zhangjiakou—and by the time it reaches North Zhili, where deflation isn't as severe, it might be worth only one tael and three mace.

All told, a net loss of seven mace of silver. Compared to selling the ginseng directly to the Shanxi merchants, the total loss is eight taels and seven mace!

Of course, you might want to object that Guihua City in Mongolia is also a place with severe deflation—so severe it's nearly back to barter.

The Jianzhou barbarians trade at Guihua City, not in North Zhili. At Guihua City, the Jianzhou barbarians can still buy goods corresponding to two taels of purchasing power." Jin Renyi had actually stopped understanding at "net loss of seven mace of silver." To avoid looking too stupid, he could only nod along, pretending to understand what he didn't.

The Bureau Secretary of the Finance Department said with animated delight: "This is a problem that must be viewed as a whole. If the Jianzhou barbarians don't bear the loss from the silver coin's discount, then the loss falls on the Shanxi merchants.

Because the goods are transported by the Shanxi merchants from inside the pass—Guihua City is not the place of production, only the place of transaction. The cost of the goods must be priced in silver from inside the pass. Over time, as the Shanxi merchants' power withers, this can then be folded back into the earlier argument about the balance of strength between enemy and us!

The Helmsman said: brute force and steel blades can kill people and destroy nations, can bend the spines of scholars—but to change objective economic laws, no amount of coercive means will work.

This whole scheme of economically strangling the Jianzhou barbarians was devised by the Helmsman. From start to finish, it used only three administrative measures: the black-and-white lists, the Jiaodao frontier trade market, and yuan-yang settlement.

Strictly speaking, yuan-yang settlement and the Jiaodao frontier trade market also count as half-market behavior.

Precisely because few administrative measures were used and economic laws were relied upon heavily, it could take effect."

The three had explained it only in rough terms—many details were still unclear. Even if it were spread abroad, others wouldn't understand it.

Moreover, the method sounded complex, and the more complex a plan, the more prone it is to going wrong—so even those who understood it weren't convinced.

On top of that, the method used only open schemes, no covert ones—so there was no fear of it being spoken of.

"Er…" Jin Renyi stood as dumb as a wooden chicken.

"Is the Envoy wondering why yuan-yang settlement and the Jiaodao frontier trade market also count as half-market behavior?"

"No, no, no…" Jin Renyi hastily denied it. Then he rose and clasped his hands in salute: "I am thoroughly convinced. I only wish to ask—does this method have a name?"

Now it was the three Nan'ao Bureau Secretaries' turn to stare blankly. These were all the helmsman's strategies; among the Finance Department and Tax Department staff, those who could understand were busy taking notes, while those who couldn't let their minds wander off. No one had actually asked what this theory was called.

Ji Bai had a quick mind and took it upon himself to give it a name: "This tactic is called the 'Frontier Trade Blunting the Edge Strategy.'"

"Using the profits of frontier trade to blunt the Jianzhou barbarians' military edge. A fine name." Jin Renyi praised it, then tucked the lecture drafts one by one into his robes. "Though the Frontier Trade Blunting the Edge Strategy can restrain the Jianzhou barbarians, it ultimately requires occupying our Jiao Island and harms the Yi Dynasty as well. The court may not agree. I will bring these manuscripts back for His Highness and my colleagues to review."

The three Bureau Secretaries nodded in assent.

An hour later, Jin Renyi boarded his ship and set out on his return journey.

On a mountainside on Jiao Island, Bailangzai watched the distant ship of the Yi Dynasty envoy and asked, "Sis, do you think the Yi Dynasty people will cooperate with us?" Bai Qing said, "I don't know, but the helmsman definitely thinks the Yi Dynasty people won't."

"Why?"

Bai Qing took out an official document: "Just received word from the eagle ship. The helmsman has sent the four warships from Zhang, Chao, Quan, and Hui, and a whale ship has transported a thousand army soldiers, now stationed on Jeju Island."

"Are they going to attack Ganghwa Island?"

Bai Qing said, "Exactly, Ganghwa Island. If the Yi Dynasty people remain stubborn and unrepentant, we'll beat them until it hurts in one go!"

Bai Qing rose and walked toward the harbor.

Bailangzai asked in surprise, "We're sending troops now?"

Bai Qing laughed: "Where's your head at? We have to give the Yi Dynasty some time to negotiate. The fleet is going to occupy Simi Island, and pay a visit to an old friend along the way." Two days later, an eagle ship docked steadily at the Pidao pier, and Ji Bai stepped onto the gangplank.

Greeting him were two Ming soldiers who looked like savages. The two wore tattered uniforms full of patches and held wooden poles with a lump of iron on the head, shaped like something between a spear and a hoe.

Looking further at the island, the common folk were dressed even worse — those whose clothes had no holes were already respectable people, and many children ran around stark naked.

The dwellings on the island were also extremely dilapidated, all low earthen huts that one could tell at a glance leaked wind from all sides — even worse than the temporary shacks on Jiao Island.

Ji Bai had prepared a bellyful of grand rhetoric, but seeing this scene, he couldn't utter a single word. He murmured, "This... how can you live in such misery?"

One of the Ming soldiers laughed: "Idiot, death is at your door and you still mock us?"

With that, he raised his wooden staff and stepped forward.

The other Ming soldier stopped him: "Hold on. Look at this man's dress and bearing — he might be an envoy from the Supreme Commander. Let's ask first."

With that, the Ming soldier said, "Who are you?"

Ji Bai announced his identity, saying he wished to see Mao Wenlong.

Seeing that he spoke with extraordinary bearing and dared to address Regional Commander Mao by his full name directly, the two Ming soldiers figured that even if he wasn't sent by the court, he was still an important person. Not daring to act on their own authority, they hurriedly led him into Mao Wenlong's central army tent.

When Ji Bai entered, he saw Mao Wenlong eating lunch — just a bowl of plain noodle soup, with a head of garlic and a small dish of pickled vegetables.

Such fare was already considered extravagant on the island, but compared to Regional Commanders of the same rank, it was spartan to an extreme degree.

Mao Wenlong buried his head in his noodle bowl, slurping noisily, and squeezed out a sentence between mouthfuls: "What's the matter?"

Ji Bai said, "Regional Commander Mao, I have come specifically for cooperation between Pidao and Nan'ao."

Then he briefly explained the "Frontier Trade Blunting the Edge Strategy" once more.

Mao Wenlong held up his noodle bowl and gulped down the soup, not lifting his head, and ordered: "Throw him out."

Yahei

Fenyuan

Pen