Chapter 258: 256 Coinage Plan

The village chief's salary was set at two dou of rice per month — about thirty-plus jin, enough for one able-bodied rural laborer to eat his fill.

It could only feed himself; it could not support a family.

Because the village chief spent most of his time farming his own land.

Urging tax grain delivery and organizing road-building — these activities all took place during the agricultural slack season, when there was nothing else to do anyway.

As for mediating disputes, he could just take his bowl over at mealtime and settle the quarrel while shoveling rice into his mouth. The more easygoing ones might even let the villagers fight it out first and finish their meal before saying anything.

A salary at this level was equivalent to each village supporting one extra teacher.

Right — the salaries of village teachers are now pooled in grain by the villagers of each village, mainly to ease fiscal pressure. You might question whether this counts as compulsory education, but New China went through the same stage; the peasants were willing to support their own village teacher and treated the teacher with particular respect.

Even so, the fiscal outlay was still far too great, because this year they had to relieve the disaster-stricken people of Huguang and Guangdong, and also to resettle large numbers of migrants into regions ravaged by war.

"The Baoquan Mint is already built, several coin molds are finished, and we can begin casting coins this month."

Fei Chun and Song Yingxing had come to see Zhao Han to discuss matters, and they had also brought Li Banghua and Huang Shunfu along.

Fei Chun said, "The Finance Bureau and the Government Affairs Bureau disagree on which coin to cast more of. To be honest, there's no way to settle this by argument — each side just has its own pros and cons."

"We must not cast too many zhe-shi coins, or the common people will suffer," said Huang Shunfu, who headed the Government Affairs Bureau.

Fei Chun argued back, "Even if we don't cast zhe-shi coins, we ought to cast more zhe-wu coins. Otherwise, with flat coins and zhe-er coins, we'll lose money on every single one we cast!"

Li Banghua suggested, "Zhe-shi coins exploit the people too harshly, while flat coins and zhe-er coins are certain to run at a loss. In my view, we should cast only zhe-wu coins, and announce that all grain exchanges will refuse zhe-shi coins."

"If the grain exchanges announce they won't accept zhe-shi coins, who among the people will still use them? Won't the zhe-shi coins in the common people's hands be left worthless in their hands?" Huang Shunfu's concern was for the people's livelihood.

Fei Chun said angrily, "If we accept them, Chongzhen will just keep casting them. Why should we indulge Chongzhen?"

The two chief officials of finance and civil affairs began quarreling right in front of Zhao Han, and each had a point.

The root cause was that the Ming court was in dire fiscal straits, and so its coin-printing had grown more and more outrageous, divided into four types: flat coins, zhe-er, zhe-wu, and zhe-shi. Not only were the face values of the copper coins being cast larger and larger, but the quality was also getting worse and worse, sending the purchasing power of copper coinage into a mad plunge.

Coupled with silver deflation, the copper-silver exchange rate in certain places was now absurd: one tael of silver could even buy four thousand wen of copper cash!

If Zhao Han's Baoquan Mint dared to cast large quantities of flat coins and zhe-er coins, it would certainly lose money on every coin cast. The better the quality and the smaller the denomination, the more the merchants would like them, and they would surely sweep the market clean, hoarding all the good coins and leaving Chongzhen's rotten coins circulating in the marketplace.

This was the classic case of bad money driving out good!

And there was no solution, because the circulation volume of Chongzhen's rotten coins was simply too enormous. First, Zhao Han's coin output was too small to withstand Chongzhen tongbao; second, he could not directly ban the circulation of Chongzhen tongbao, or the territory under Zhao Han's control would plunge into economic chaos.

Once they had all finished arguing, Zhao Han made the final decision: "For the Baoquan Mint's coinage, I am setting three requirements. First, cast large quantities of zhe-wu coins and small quantities of zhe-er coins, with coin quality equivalent to that of Nanjing in the fourth year of Chongzhen. Second, use the current coin molds for now, but immediately begin manufacturing new molds — still call them Chongzhen tongbao, but add the four characters 'Great Unity under Heaven.' Third, once the new coins appear, the grain exchanges are to refuse Chongzhen zhe-shi coins at once."

The Nanjing copper coins of the fourth year of Chongzhen were of even worse quality than the Beijing coins of the same period, but far better than what came later — a sort of middling-denomination copper coin.

As for continuing to cast Chongzhen tongbao, that was mainly to facilitate circulation in other provinces.

Adding the four characters "Great Unity under Heaven" would not hinder the coins' use.

In the late Chongzhen period there was also a type of copper coin of extremely poor quality, stamped with a galloping horse design and popularly called "galloping-horse Chongzhen." This was a private coinage; some believe it was cast by Li Zicheng — "Dashing King," after all, so a man on horseback made sense. A horse entering a gate forms the character "dash"; the horse dashes into the Forbidden City — the one who destroys the realm is Li Zicheng.

Huang Shunfu offered a reminder: "Commander, if the grain exchanges refuse zhe-shi coins, I fear that in Jiangxi the people's zhe-shi coins will take six thousand to eight thousand wen to exchange for one tael of silver."

"Even so, we must refuse them," Fei Chun shot back at once. "Better short pain than long pain. We can't keep letting Chongzhen cast coins to bleed us dry. This is bleeding the people of Jiangxi dry too. If we let them keep circulating, Chongzhen might even cast big coins worth a hundred wen!"

Zhao Han cut them off: "Enough, say no more. It is settled thus. As for the common people holding zhe-shi coins, they can only count themselves unlucky. There is nothing we can do to help them."

There truly was no way; Zhao Han could not possibly redeem them.

The moment Zhao Han redeemed them, merchants would see a profit, deliberately go to Nanjing to buy zhe-shi coins, and then ship them over boatload by boatload to exchange at the grain exchanges.

Now that Zhao Han had made the final decision, the others raised no further objections and immediately went off to attend to their respective tasks.

Song Yingxing was asked to stay behind by Zhao Han.

Zhao Han asked, "How is Fei Ruyi?"

"Quite talented, but his reputation is poor," Song Yingxing answered.

Back when Fei Ruyi was at Hanzhu Academy, he had already been studying the Dream Pool Essays, and he had also gone to Suzhou to learn strange and ingenious crafts from the artisans there.

His direction had gone off track, however: his main focus was fabric dyeing — researching how to dye brilliantly colored cloth at low cost. At the same time, he liked designing his own clothing styles, his own jewelry and hats, which fit his nickname "Clothes Demon" perfectly.

At the end of last year, Fei Ruyi had come to see Zhao Han. After Zhao Han got a clear picture of his recent activities, he tossed him over to Song Yingxing as an assistant.

Zhao Han said, "The affairs of the Works Bureau have been handled by Tian Younian all along in an acting capacity. I have decided to promote him to bureau chief."

"Commander, you need not ask me — I won't mind," Song Yingxing said with a laugh. He was living a very full life now, spending all his days leading craftsmen in research and development, and had even handed over the daily affairs of the arms institute to trusted subordinates.

Though Song Yingxing did not take it to heart, Zhao Han still had to reassure him: "You also remain a bureau chief, but in charge of different matters. This is a special case; there will be no more such cases in the future."

Song Yingxing cupped his hands. "Many thanks for the Commander's concern."

"Take a look at this." Zhao Han tossed over a silver coin.

It was a Spanish eight-real silver coin. On the face side was an "8," and on the other face side a "P" — together they actually meant "8 pesos."

Silver coins of this kind existed in great numbers in Zhejiang, Fujian, and Guangdong. Merchants were especially fond of using them, because they had a fixed face value and there was no need to weigh the silver when making a transaction.

Why did the Ming court not mint silver coins?

Because Zhu Yuanzhang had decreed that gold and silver were not to be used for casting coins!

Silver ingots were not money — at least, not on the legal level.

Yet precisely after Zhang Juzheng's reforms, the Ming court, when collecting taxes, accepted only silver and not copper cash.

Song Yingxing asked, "Does the Commander intend to mint silver coins?"

"I have that intention," Zhao Han nodded.

Song Yingxing toyed with the Spanish silver coin and remarked, "This coin's appearance is crude. If we are to mint silver coins, we ought to make them more finely crafted."

Spanish silver dollars were indeed crude in appearance — one must not picture the kind from the late Qing.

The Spanish silver dollars of this period had very high silver content and very little filler impurity. This was for ease of minting: the purer the silver, the softer it was, and even very crude machinery could press it.

But the pressed coins could not be guaranteed to be perfectly round, and there were even various gaps and cracks that had not been pressed flat.

After long use, the soft silver coins got battered even further out of shape.

The coin in Song Yingxing's hand had already become an irregular oval.

Zhao Han said to Song Yingxing, "These silver coins are not cast, but pressed out by machinery. I hope we can produce a kind of machine that can hammer-press harder silver coins."

Song Yingxing said, "To make silver harder, you have to add a lot of impurities. Will the common people accept that?"

"They'll recognize it," Zhao Han said. "Adding impurities to the silver coin has three advantages. First, it makes the coin more refined and less prone to deformation even after long use. Second, it lets us earn more revenue from minting — the profit is precisely the price spread on the impurities. Third, it stops people from shaving the silver rim. That coin in your hand — the outer ring has been completely shaved away."

Never underestimate the common people's passion for money. It's not just silver dollars they shave the rims off — they even shave copper cash.

Several issues of Jiajing tongbao were of excellent quality, and their rims were frequently shaved off. It was mainly done by illegal merchants; after shaving, they would melt down the copper and use it for other things.

Adding more impurities to the silver coin can effectively prevent shaving damage: first, the harder texture makes it difficult to shave. Second, with so many impurities, what you shave off would still need re-smelting. This drastically reduces the illicit profit.

Song Yingxing nodded. "I will go back and organize men to develop a coin press at once."

Zhao Han said, "Jiangxi is crisscrossed with waterways — it would be best if we could build a water-powered coin press. In the future, I don't just want to press silver coins; I also want to press copper coins. The copper cash of the Great Ming is far too chaotic. We'll have to control at least half the realm before we can begin reforming the currency values, and when that time comes, the coin press will be of immense use. I intend to gradually replace copper cash with copper coins!"

Song Yingxing sensed the weight of the undertaking and immediately rose to his feet, clasping his hands in salute. "I will exert every effort to the utmost."

Zhao Han let out a sigh. In his heart, he was hoping they could take Guangdong soon.

The significance Guangdong would bring was not only the ability to reach into maritime trade, but also the possibility of easing the silver famine.

From the mid-Ming period onward, vast quantities of silver had flowed into China.

Whether this actually caused inflation is hard to say, because the Great Ming's economy was also developing rapidly at the time — rising prices were a certainty. Especially in the prefectures of Jiangnan, where the social economy was growing continuously, it would have been a problem if prices had not risen.

Much of this silver flowed into the cellars of wealthy merchants, and it also spurred the upgrading of industry and commerce in the Jiangnan prefectures.

Yet after Zhang Juzheng's reforms, silver, far from causing inflation, began to show shortages all across the country — because the government was now collecting taxes exclusively in silver.

By the late Ming, the Spanish Empire was in decline, the inflow of silver diminished, and now a silver famine is widespread.

On one hand, silver is scarce; on the other, copper cash is recklessly overproduced — causing the exchange ratio between silver and copper cash to grow more and more absurd.

Later generations have compiled statistics showing that in the fourth year of Chongzhen alone, the silver imported from the Philippines into Macao reached as high as fourteen million taels. Whether that figure is accurate or not, one thing is certain: Macao was the Great Ming's primary point of silver import.

As long as we occupy Guangzhou, the silver famine in Zhao Han's territory can be eased, and the impact of Chongzhen's reckless issuance of copper cash can also be somewhat offset.

(End of chapter)