Chapter 1309: Year-End Assembly (Part 6)

The Ministry of War's business was thus concluded, and then the time was about right, so the noon break began.

Yulong and Changle rushed to Baifeng's side at the first opportunity, asking their old father in a tone of utter disbelief: "Father, what is this about building two new cities? Why was this never mentioned to us before? Not a single hint was leaked!"

Baifeng said helplessly: "This, well, it's something I only figured out in the last few days. You both know that whenever I think of something, it's a spur-of-the-moment decision. Isn't today just the perfect opportunity? Is there anything you're still not used to?"

The two fine sons were also a bit speechless; it was true that their father was just like this. Many pieces of first-hand, important intelligence could not be obtained by them at the first opportunity, and finding out on such an occasion gave them quite a shock.

Baifeng did not let the two of them off; he directly called for someone to send meals to his small office, and then took both sons along with him.

As for Ayuduo and Zhi, because they could not get involved in what was to follow, Baifeng did not bother with them. Now, Zhi's focus was also on the riding tiger, so even if she could attend this meeting, her mind was not deeply invested in it.

Once the meeting stopped, she went to stay with Ayuduo. Women still have more common topics with other women, not to mention that the two of them could be considered women of the same household.

Through observing his father's expressions, Yulong felt that his father must still have very important things to tell them. Sure enough, Baifeng threw the notes he had just scribbled down to the two of them to read, without saying a word, letting them find the key points themselves.

However, there really wasn't much content on this page, and the records were very chaotic. Excluding the things that had already been discussed, what Baifeng wanted to talk about was probably just this "Grain Firm" and "Gold Bank"—it was just unclear if they were the same thing.

Yulong pointed at the two terms and said: "Father, what you want to talk about, it wouldn't be this, would it?"

"Yes, that's it. Based on these terms, have you two guessed what it relates to?"

The two brothers said in unison: "Grain!"

They had guessed correctly, but they didn't know what it was for. Seeing his father nod, Yulong fell into recollection, trying to think if his father had ever told him about such things before, but after thinking it over, he could only think of one similar concept: "Father, is this related to currency? A department that manages currency?"

Baifeng told the two to sit down and listen to the lesson: "Yes, but it is not entirely so yet. Originally, I hadn't planned for this department to appear so early, at least not until after Grain Coupons and such instruments had been implemented in Huaxia for a few more years.

I have also decided on the name Gold Bank. Grain is certainly important, but in the future, grain cannot be used as currency; it must be metal that serves as currency, hence the name Gold Bank.

In the future, one of the very important tasks of the Gold Bank will be the production and issuance of currency, but for now, its function is to handle the problems the Ministry of Revenue encounters regarding grain storage."

Baifeng tossed the question to Yulong: "Yulong, do you think we should let ordinary people deposit grain into our warehouses? Let the state help them store their grain?"

Yulong said without the slightest hesitation: "Father, I believe we should do this. Only by doing this can we truly promote the circulation of Grain Coupons. And according to the way of currency operation you taught me before, it is essential to have the grain deposited into the Gold Bank.

For one, it allows the currency to circulate, and for another, it allows currency—things like metal or paper money that cannot be eaten or drunk and have no actual value—to replace grain in circulation.

As long as our reputation does not collapse, everyone will accept the currency and can rest assured in handing their grain over to us. We wouldn't just leave that grain sitting there; it can be used.

The amount of that grain would be greater than the reserves in our National Treasury, so we wouldn't have to worry about having no grain to do big things. We would only need to ensure that a portion remains in the National Treasury to guarantee that everyone has enough grain to fill their stomachs.

Moreover, if grain is issued as wages, they will turn around and exchange the grain for paper to deposit into the Gold Bank. The grain goes around in a circle and returns to our hands.

One portion of grain can accomplish many tasks; one only needs to use some paper and metal to exchange for it, and it keeps circulating like this...

Father, I suddenly understand! So currency has such great utility!"

Yulong's eyes grew brighter and brighter, feeling that he had touched upon the essence of currency, but Changle felt more and more panicked the more he listened: "Big Brother, although that is true, what if? We are just using paper to exchange for everyone's grain. What if someone feels something is wrong and wants to use the paper to exchange their grain back?

Although the grain went around in a circle and came back, we can exchange what they deposited out, but what about the grain issued as wages in the second circle? Perhaps there is a third circle, a fourth circle?

What if they all want it back at once? Do we use the National Treasury to cover it? Will it be enough? If they discover that the paper in their hands can no longer be exchanged for grain, what then?

Will they go and seize the grain that belongs to them? Will that currency never be trusted by everyone again? Will everyone no longer trust our family's rule? What should be done at that time?"

Yulong had just felt he saw everything clearly, but now he was deflated by Changle's words, staring fixedly at Baifeng, hoping Baifeng could give him an answer.

Baifeng then began to explain the operation of this department, which would be the economic lifeline of Huaxia in the future: "What Changle just mentioned is called a bank run, mainly because everyone has lost trust in the silver... the Gold Bank, and in the currency, believing that holding grain in their hands is what matters most.

Then we must accomplish two things. First, we must always, forever, keep everyone maintaining trust in the Gold Bank and the currency, believing that that piece of paper can indeed be exchanged for grain. As long as this point can be guaranteed, the problem will not be too serious.

In this regard, you need to ensure the value of the currency. Even if there is more grain year after year, the rate of currency devaluation cannot be too fast; it must be slow, following the wealth of the entire nation, and devalue gradually.

So-called devaluation means how much grain a single unit of currency can buy. Currency has a denomination, but it is not in weight; there will be a new unit. Let's call it a 'portion' for now.

As of now, one portion of currency can buy one jin of grain, but when next year's grain comes in and this year's grain hasn't been eaten up, the entire nation's grain has increased, yet the currency remains the same amount. Can one portion of currency buy more grain then?

Yulong, you tell me, at this time, how should we solve the problem?"