Chapter 223: Let's Open a Salt Merchants' Bank!

"Six million taels." Zhu Cilang sighed, his face full of reluctance. "All of it the fat of the people! We intend to practice benevolent governance, and will soon issue an edict abolishing the three surtaxes — yet now We have first collected several million taels more in salt tax. Is that not most improper?"

Zheng Sen, whom Zhu Cilang had brought in to play the straight man, said solemnly, "It is precisely because Your Highness, my younger fellow-disciple, is going to abolish the three surtaxes that a little more salt tax should be collected. Only the salt tax can make up the yearly shortfall of several million taels after the three surtaxes are abolished!"

"That is true." Zhu Cilang nodded with a straight face. "It seems this salt tax must be collected after all. But will the common people be unable to afford salt because of these several million taels of salt tax?"

"They should not be," Zheng Sen said, glancing at the several great salt merchants. "You will not raise the price of salt, will you?"

"No, absolutely not!"

"The price of salt on the market will not rise by a single cash!"

"The salt price can even fall a little."

Zhu Cilang nodded and said, "In that case, We shall reluctantly accept this salt tax of six million taels a year.

As for the various offices of the Lianghuai salt administration, including the Salt Censor, they are all to be abolished. All matters of salt administration, the salt trade, and salt-smuggling enforcement shall be placed under the jurisdiction of the Salt Guild, and the Salt Guild shall be jointly managed by you four Chief Merchants and one Chief Merchant appointed by Us. All five Chief Salt Merchants shall be granted imperial merchant status and conferred official rank of the senior fourth grade, placed under the direct jurisdiction of the Marshal's Office of the Army of Pacification, with the right to request an audience with Us and to submit memorials.

The clerks and salt guards of the various Lianghuai salt administration offices shall likewise be dismissed or retained as appropriate by the Salt Guild. This must be handled with care; do your utmost to avoid causing disturbances.

In addition, We specially grant the Salt Guild permission to recruit five thousand salt guards, who may be equipped with armor, weapons, and firearms, the same as government troops, for the purpose of investigating and seizing illicit salt. However, captured salt smugglers may not be punished by the Salt Guild through private justice; they must be escorted to the prefectures of Huai'an and Yangzhou for trial and disposition."

"We thank His Highness the Thousand Years for his great kindness!"

"We thank the Crown Prince for his grace!"

"This commoner kowtows in gratitude for the imperial favor."

Wonderful — the tax has risen tenfold, and the four salt chiefs still kowtow in gratitude for the imperial favor!

If Chongzhen saw this scene, he would surely believe his son really had been possessed by the Exalted Founder Emperor.

But these four salt chiefs were not putting on an act; they were sincerely grateful to Zhu Cilang. Because Zhu Cilang had not only graciously collected the tax, he had also contracted the entire Lianghuai salt administration out to them.

This truly was a great favor, an imperial favor!

Because the Lianghuai salt administration yamen itself was a bottomless pit — which official from top to bottom was not a gold-devouring beast? Who among those who served in the salt administration for a few years did not rake in a full basin and overflowing bowl? With so many officials and clerks throughout the salt administration, everyone dipped in together, everyone was corrupt together, accumulating small graft into great graft — in which year did they not embezzle five or six hundred thousand?

If the Salt Merchants' Guild took over the salt administration, an annual expenditure of one million taels would be the absolute ceiling. And that one million taels spent would produce one million taels' worth of results.

The original salt administration offices, in fact, were simply the court paying people to help with embezzlement and salt smuggling — who among those who smuggled salt in the Lianghuai region had not paid money into the salt administration yamen?

"Rise, all of you rise. Grant them seats." Zhu Cilang smiled as he granted seats to the four salt merchants who had now become imperial merchants, then ordered his attendants, "Summon Su Laomi."

Su Laomi was the fifth Chief Merchant whom Zhu Cilang intended to place in the Huaiyang Salt Merchants' Guild!

Over the past few months, he had managed the gold and silver Zhu Cilang had brought out of Beijing together with Soy Sauce Huang, Huang Dabao, Wu Sanmei, and the others. He had managed it rather well — not only were the income and expenditure accounts clear, but the amount of gold and silver lost during the flight was also very small.

"This is Su Sheng, courtesy name Shengzhi; Su Laomi is his nickname."

Su Laomi was quickly summoned before Zhu Cilang. After performing the rites, he was introduced by Zhu Cilang to the four salt chiefs of the Huizhou clique.

"He is a hardship imperial merchant who has followed Us since Beijing, and has been managing money for Us in the traveling court all along. He is Our trusted confidant."

A trusted confidant — we must look after him well from now on.

All four salt chiefs cast ingratiating looks his way.

"From now on he will manage the Lianghuai salt trade together with you on Our behalf!" Zhu Cilang continued. "However, he is not Our imperial commissioner. Within the Salt Merchants' Guild, the five of you are all equal — he has no ability to look after you. If you have any requests, submit memorials directly to Us, or you may request an audience. Understood?"

"We your subjects understand."

Zhu Cilang nodded. "There is one more matter to tell you: from now on, the contracted tax of the Lianghuai salt trade need not be delivered to the treasury."

"Delivered to the treasury" meant delivered to the storehouses of the Ministry of Revenue.

"Not delivered to the treasury?" Wang Wanchun was startled. "Where should it be sent?"

Zhu Cilang smiled. "You salt chiefs all deal in remittance notes and moneylending on the side, do you not?"

"Remittance notes" were the predecessors of banknotes, and their function was money transfer. But there were no specialized money houses or exchange shops; they were usually operated as a sideline by wealthy merchants of means.

As for moneylending, that was an even more common means of amassing wealth among rich households, though it too was mostly a sideline, and there were basically no merchant firms that specialized in lending.

"In reply to His Highness the Thousand Years, we do indeed deal in remittance notes and also lend money, but we do not lend at usurious daily interest."

"Heh heh," Zhu Cilang laughed. "We know you are all good merchants with consciences, so We wish to open another road to wealth for you."

He paused. "You shall manage money for Us, for the court, and for all the officials and merchants under heaven who trust you. The specific operations include deposits, loans, remittances, exchange, and the minting of coinage under court commission!

To conduct these businesses properly, a Salt Merchants' Bank should be established under the Salt Guild! You four families and Su Laomi shall each hold twenty percent of the shares. The capital of the Salt Merchants' Bank shall be set at three million taels, each family contributing six hundred thousand taels.

Henceforth, all Lianghuai salt tax revenue shall be deposited in the Salt Merchants' Bank. When the court needs money, it will draw against it with remittance notes. For silver deposited in the Salt Merchants' Bank, We will accept only five percent annual interest; so long as you can meet withdrawals, you may lend it out to earn interest.

To this end, the Salt Merchants' Bank shall also establish its head-office treasury in Nanjing, storing sufficient silver for deployment. You four salt chiefs — what do you think of Our proposal? Can this Salt Merchants' Bank business be done?"

All four Chief Salt Merchants were stunned, and for a moment none of them could speak!

The Crown Prince really knew how to do business! Not only had he seized the great profits of the salt trade, he also wanted to reach into the moneylending business of the Huaiyang salt merchants — and that was another huge business! All the salt merchants of Lianghuai were engaged in moneylending, with total lending capital of fully twenty or thirty million taels. Yet no single firm monopolized deposits, loans, remittances, exchange, and court-commissioned coin minting as a "bank" — this "bank" business seemed to have great prospects!

As a financial professional in his previous life, the Crown Prince naturally knew the importance of banking to the development of a commodity economy!

However, for the moment he had no intention of opening a Ministry of Revenue bank, because what banking sells is credit, and the Ming court was famously poor! In the Chongzhen era it was even more unable to make ends meet; any random corrupt official was richer than the court — who would dare deposit money in a Ministry of Revenue bank?

And after opening a Ministry of Revenue bank, who would manage it? Send corrupt officials or upright gentlemen? Neither type seemed capable of running a bank well.

Although in theory banking was the lifeline of the state and should be firmly controlled by the court, in practice it simply could not be implemented. Forcing the establishment of a Ministry of Revenue bank would merely add one more money-burning yamen and accelerate the depletion of the Ming court's quite limited financial resources.

Yet if Zhu Cilang wanted to accomplish anything in the southeast, he had to develop a financial system.

So after much deliberation, Zhu Cilang decided to promote privately run banks first! The Salt Merchants' Bank was only one of them. After meeting Zheng Zhilong, Zhu Cilang would also push for the establishment of a Sea Merchants' Bank.

Of course, Zhu Cilang was not entirely hands-off in the operation of these two banks. Su Sheng was in fact his white glove in the Salt Merchants' Bank — the two hundred thousand taels Su Sheng invested in the Salt Merchants' Bank actually came from Zhu Cilang. And his position as a Chief Salt Merchant was also held on Zhu Cilang's behalf.

The reason for using a "white glove" was that Zhu Cilang did not want the Salt Guild and the Salt Merchants' Bank to evolve into two yamens.

And Zhu Cilang's other imperial merchant, Soy Sauce Huang — Huang Jiang — would become his white glove in the Sea Merchants' Bank.

In addition, the head-office treasuries of both the Salt Merchants' Bank and the Sea Merchants' Bank were to be established in Nanjing, right under Zhu Cilang's nose. And Nanjing would in the future develop into the financial center of the Great Ming.

After gaining control of Nanjing as this financial center, Zhu Cilang also planned to open several treaty ports or special zones along the Yangtze River, gradually developing them into centers of industry, commerce, and foreign trade — and of course keeping them firmly in hand.

With a financial center, industrial and commercial centers, and foreign trade centers in hand, Zhu Cilang's court would no longer lack money.

(End of Chapter)