Chapter 1003: The Silver Empire

"Your Majesty, you said you want to give England, France, Holland, and Portugal all a taste of the sweet stuff? But where is there so much sweetness to go around?"

The speaker was the richest man in the Great Ming, Zheng Zhilong — though he said it not at court, but at the dinner table. After court adjourned, Zheng Zhilong and Luo Dagong had both "stayed behind," and the Zhu Emperor invited them to lunch.

"Your Majesty," Luo Dagong spoke up as well, "is this sweetness Luzon Island? Are we going to let England, France, Holland, and Portugal jointly administer Manila?"

Zhu Cilang laughed at this and said to Luo Dagong, "Dagong, you as Minister of Foreign Affairs still don't understand foreign affairs well enough! Could England, France, Holland, and Portugal jointly administer Manila? Wouldn't they start fighting? And Manila is still in Spanish hands!

The profit We mean is this!"

As he spoke, Zhu Cilang produced a "one-tael silver" coin minted by the Maritime Merchant Bank and laid it on the dining table.

The "one-tael silver" was a struck silver coin weighing one tael, with a silver content of about ninety percent. It was not issued by the Great Ming's Ministry of Revenue, but by the two great banks — the Maritime Merchant Bank and the Salt Merchant Bank — under commission from the Ministry of Revenue. Besides the "one-tael silver," there was also a "half-tael silver," likewise a hand-struck silver coin issued by the two banks.

In addition, the two banks were also commissioned by the Ministry of Revenue to mint copper cash. One side of the cash bore the inscription "Hongxing Tongbao," and the other side bore the name of the minting bank.

Of course, the Ministry of Revenue's commissioning of merchant firms to mint silver coins and copper cash did not mean private minting was permitted. Rather, it let the Great Ming's two most powerful, most advanced, and most efficient "imperially owned banks" share a little of the profit from minting, while at the same time bearing a great heap of the troubles that minting brought. Minting was certainly troublesome — not machine-struck, but hand-struck — and minting silver coins was especially troublesome!

All manner of counterfeiting, all manner of private minting, all manner of damage — scraping off a bit of silver — appeared in endless succession, and there was simply no way to prohibit it!

Therefore, the copper cash minted by the two banks was legal tender recognized by the Ministry of Revenue, but the "one-tael silver" and "half-tael silver" were not legal tender. The legal currency was the "bank tael."

That is, silver of over ninety percent purity, calculated in units of the "tael."

However, these "bank taels" were not cast into large silver ingots and sent to the Ministry of Revenue's treasury to be stored away. Rather, they were silver held in the Ministry of Revenue's accounts at the two banks.

And the exchange rate between bank taels and one-tael silver coins was determined by the silver content of the one-tael silver, currently fixed at one to one.

Such an arrangement might seem somewhat superfluous — wouldn't it be more convenient for the Ministry of Revenue to issue silver coins directly? But the Zhu Emperor knew very well the integrity and efficiency of the Great Ming's bureaucrats. If the job of minting silver coins were handed to them, who knew — perhaps as they minted and minted, the silver would simply vanish!

Moreover, if the Ministry of Revenue's silver coins were adulterated, few would dare question it. And the financial system centered on the two great banks would have no incentive to eliminate private minting and adulterated currency — they might even join the ranks of private silver-coin minters themselves.

So Zhu Cilang simply contracted out the minting rights, collected a minting tax based on the volume minted, and at the same time pushed the responsibility for maintaining the silver-coin market onto the two banks and the small banks, money shops, pawnshops, and other financial institutions connected to them.

In the Great Ming's financial system, the two banks were the master sluice gates, controlling the capital flow and interest rates of the host of small and medium financial institutions below them. Thus the two banks could easily use their monopoly position to isolate privately minted, counterfeit, and damaged silver coins outside the financial system — such coins could only be bought back by the two banks at a discount based on weight and purity, and could not be deposited in banks or money shops to become base currency.

These "one-tael silver" and "half-tael silver" coins served merely as large-denomination cash in the Great Ming's commercial and industrial activities. But truly large transactions still required "bills of exchange," and all "bills of exchange" were denominated in "bank taels."

In addition, the cash portion of the taxes and land rents collected by the Great Ming government was also calculated in "bank taels." Therefore, taxpayers had to deposit the corresponding silver coins, silver, and copper cash into banks and money shops, exchange them for bills, and then hand those to the tax officials.

In the entire tax-paying process, the tax official — the Military Land Office — never saw any silver or copper cash.

And another advantage of using the "bank tael" as the monetary unit was that it made it easy to establish an internationally accepted monetary system.

Even Spain, that Western imperialist power currently at war with the Great Ming Celestial Dynasty, could not possibly refuse to recognize the "silver tael"!

As long as everyone recognized the silver tael, then the Great Ming Celestial Dynasty could use its advantage in economic scale and the efficiency and sophistication of its financial system to gradually build a global financial system with itself at the core!

"Your Majesty," Zheng Zhilong said, looking at that silver coin, already understanding the Zhu Emperor's intent, "you wish to lend money to England, France, Holland, Portugal, and the rest?"

"Heh heh," Zhu Cilang laughed. "England, France, and Portugal — those three paupers are all craning their necks waiting to borrow silver! Without this benefit dangling before them, could we take such great advantage in the Americas?"

The Zhu Emperor continued, "As for Holland, they have money! Though they cannot compare with our Great Ming, given Holland's size, their money is certainly not little. But having much money also brings its own difficulties. The hardest thing for the Dutch is probably transporting all that money to us! During the Anglo-Dutch War a few years ago, who knows how many silver-laden ships were sunk or seized by the English — terrible losses! If there were a bank that could handle flying-money remittances between Europe and the Celestial Dynasty, the Dutch would surely be delighted, wouldn't they? How much trouble it would save them?"

In the present trade between East and West, the East ran a continuous surplus, while the West ran a continuous deficit.

Holland, which held the largest share of East-West trade, had to ship a considerable amount of silver to the East every year — work that was time-consuming, laborious, and extremely dangerous. Even without English privateers, there were storms at sea, and sometimes ships struck reefs or lost their way!

If there were a bank trusted by all of Europe that could handle remittance and exchange business across continents, it would certainly be very advantageous to Dutch merchants.

And this bank could, through business dealings with the Great Ming's two great banks and with local European banks, turn itself into an international settlement bank.

Moreover, long-distance remittance in this day and age could not be completed by sending an electronic signal — someone had to carry the bills across the ocean. So the time needed to complete a remittance was rather long. And during this process, the bank would not pay interest to the customer. Not only would it pay no interest, it would also charge a remittance fee — and if currency exchange was involved, it would collect yet another fee.

The size of the profit margin therein goes without saying!

And Europe now had so many rebel factions — almost every country had them!

France had the stone-throwing party, Spain had the Catalan rebel party, England had the Royalist party — after the Royalists took power, the Cromwell family would in turn have to flee — Holland had the House of Orange, and as for the Holy Roman Empire, say no more: rebel factions by the basketful!

So wouldn't all manner of rebel factions need to stash some money in foreign banks?

And those in power — who knew whether they might turn into rebel factions in exile the moment they turned around? Stashing some money in a foreign bank couldn't hurt, could it?

For Europe's various rebel factions and would-be rebel factions, depositing money in a bank backed by the Great Ming Dynasty, the Silver Empire of the East, should be absolutely reassuring, shouldn't it?

So the Zhu Emperor had no need at all to take money from the Ministry of Revenue's accounts to lend to the foreigners — lending out the money they themselves had deposited would be quite enough.

"Old Father-in-Law," Zhu Cilang said to Zheng Zhilong, "you are on good terms with the Dutch. Go and speak with Brus van Diemen. This bank can give the Dutch East India Company a twenty percent stake. Profits guaranteed — they just wait for the dividends."

The Dutch East India Company had to be tied down — they were a major client of the international remittance business!

"This old subject will make the trip to Nanjing at once."

The Zhu Emperor then said to Luo Dagong, "Dagong, have the Ministry of Foreign Affairs send someone clever to Japan. The Marquis of Xiamen's memorial says the Tokugawa house wishes to send Us a princess — apparently quite a beauty. But We are not fond of feminine charms, so We cannot accept — unless this marriage alliance can benefit the union of our two houses!"

(End of Chapter)