Chapter 307: Section Fifty-Eight: Collusion (Part 2)

June 25, the second year of Chongzhen, Xiapu.

Now Funing Garrison faced increasing economic pressure. Originally, the price of a dan of top-grade rice in Jiangnan was about three qian of silver, a dan of coarse rice about two qian, and a dan of mixed grain could be bought for one qian. So the target Huang Shi originally set was a monthly subsidy of one qian of silver for every relocated fisherman, including infants in the family. That way, if they picked up a little odd work inland, their livelihood would not be a major problem.

But after Fujian took out several large loans, grain prices kept rising and had now nearly doubled. Besides that, with the prolonged ban on maritime trade, the unemployment problem was growing more and more severe. The subsidies Huang Shi provided had to be raised repeatedly and now exceeded two qian per person per month. Therefore, Huang Shi had no choice but to go discuss it with Zhu Yifeng, and the two of them borrowed another five hundred thousand taels of silver. They now owed a debt of five million taels of silver.

Seeing that the repayment work for the Grand Pacification Loan was basically proceeding smoothly, Liu Qingyang was transferred by Huang Shi to Funing, with full authority over dealings with the Fujian merchants. Ever since the Funing Army announced it was rebuilding the navy once more, the Fujian merchant group had also grown far more enthusiastic about Funing Garrison. In Huang Shi's view, their motives were different from those of the common folk.

The simple, honest commoners merely believed that Zhu Yifeng was an incorruptible official who stood up for the people, so they wanted to answer the call of a good official who would champion their cause. But the Fujian merchants saw through it completely. As long as the government troops did not wipe out Zheng Yiguan, they would never be able to engage in maritime trade again.

Everyone could see that after two naval defeats, the imperial court was still supporting the Fujian Provincial Administration and Funing Garrison. Everyone also understood that, for the imperial court, offering amnesty was merely a way to save a sum of military funds and prevent the unrest from spreading. So as long as Huang Shi still firmly controlled the mainland, and as long as Zhu Yifeng could still solve the military funding problem on his own, the court's support for Fujian's civil and military authorities would not change.

And as long as the imperial court kept backing Zhu Yifeng and Huang Shi to the death, the two of them could borrow military funds again and again to rebuild the navy. Huang Shi's claim of rebuilding a hundred times was indeed a bit of an exaggeration, but rebuilding several dozen times would be no problem. And if this momentum continued, the entire livelihood and economy of Fujian Province would inevitably be lashed to the war chariot of Zhu Yifeng and Huang Shi. These two brothers had nothing left to lose and would certainly follow this road to its bitter end. In that case, if Huang Shi were actually dismissed, the economy of Fujian Province would instantly collapse.

Once the Fujian merchants saw this clearly, they completely abandoned their illusions. They absolutely could not allow a situation where Huang Shi was dismissed. They had to fully support Huang Shi in defeating the sea bandits, and the sooner the better. So after the third rebuilding of the navy began, quite a few Fujian merchants came to purchase Pacify-the-Sea Bonds. Once Huang Shi formally started rebuilding the navy, even more Fujian merchants came asking to contribute military funds to Funing Garrison. They unanimously expressed their willingness to fully support the government troops in wiping out the sea bandits as soon as possible and restoring a bright and clear world to the elders of Fujian.

Today Liu Qingyang convened a large meeting and invited all the merchants who had come to contribute funds to attend. He first led the merchants on a tour of the warships under construction. Then he took them to visit the cannon factory, the steelworks, the ironworks, and a large number of subsidiary factories, such as those making iron nails, hammers, and saw blades.

Liu Qingyang's first purpose in leading them to tour the Funing Garrison Military Industry Directorate was to strengthen the Fujian merchant group's confidence in Huang Shi, making them realize the might of Funing Garrison and the Funing Army's uncompromising will to fight. This goal was perfectly achieved. The visiting Fujian merchants were full of praise for Funing Garrison's armaments. Some even wanted to buy a few craftsmen to take away.

This request, of course, could not be granted. Huang Shi was straining every sinew to break the personal dependency of craftsmen, but the merchants raising this topic pleased Liu Qingyang greatly, because it could lead to the primary objective he wanted to achieve today.

Fattened by several million taels of silver, the Funing Garrison Military Industry Directorate had swollen into a fearsome monster. The total number of craftsmen now exceeded twenty thousand and was charging toward thirty thousand. They cost Huang Shi tens of thousands of taels in wages every month, which was truly becoming an unbearable burden. Therefore, Huang Shi was desperate to find someone to help him carry this huge load.

Liu Qingyang once again stated that Funing Garrison would not accept donations in any form. Because the merchants who came to help Funing Garrison were all "righteous merchants." Helping "righteous merchants" profit was the duty of Funing Garrison, so Funing Garrison would never take their money for nothing. Of course, Funing Garrison truly needed help right now, so Liu Qingyang brought out something called the "Lend-Lease Act."

"Simply put, we wish to invite all you righteous merchants to lease the craftsmen of our Funing Garrison, pay them their monthly wages, and then produce the goods we need. Whether it is hull planks, sails, or steel, glass, and telescopes, we need them all."

Liu Qingyang patiently explained Funing Garrison's intent. It took the merchants great effort to understand. Huang Shi required them to give priority to hiring Funing Garrison's craftsmen, to establish factories that met Funing Garrison's standards, and then to produce the goods Funing Garrison needed. Funing Garrison would, in turn, pay for their products.

Huang Shi did not mind if the merchants factored the wages of the Funing Garrison craftsmen into the cost of goods. At this point, Huang Shi wanted to play the role of a guild, thereby preventing feudal barriers from penning the craftsmen in again. These craftsmen were all on the military rolls of Funing Garrison, so they could circulate among these enterprises.

Besides this, Huang Shi also planned to take the opportunity to collect personal income tax, having the leased-out craftsmen turn over a portion of their wages to serve as military funds for Funing Garrison. Wouldn't that be another source of revenue? These merchants could not possibly produce goods only for Funing Garrison. As long as the workers they hired were all trained by Funing Garrison, then Huang Shi would have opened up a new source of tax revenue.

The most brilliant part was that collecting this tax could easily circumvent the Great Ming Code. Theoretically, the military households of Funing Garrison were originally the property of Funing Garrison. The income Huang Shi gained from leasing them out naturally belonged to the military garrison. According to the regulations Huang Shi designed, the workers' income tax would average out to around forty percent. But who wouldn't praise him with a line like, "Marshal Huang is so generous, bestowing sixty percent of the lease fees upon the craftsmen."

"What our Funing Garrison needs most urgently is definitely ships. Not only do we need them now, but we will also need large numbers of seagoing vessels in the future." Liu Qingyang then laid out Funing Garrison's requirements. Shipbuilding would drive other industries, such as hull planks, sails, and nails, which in turn would drive timber, saw blades, and so on. In short, all the work done by Funing Garrison's current twenty-thousand-plus craftsmen was useful. Liu Qingyang hoped the Fujian merchants could establish various factories and lease away all these craftsmen.

The Fujian merchants whispered among themselves. In their view, aside from being troublesome, there was nothing else particularly objectionable about these terms. Funing Garrison also offered a very enticing condition: free technology transfer. When leasing the craftsmen, Funing Garrison would give all the results of its years of research to the merchants for free. Moreover, Funing Garrison also proposed a concept of "patents" to protect the interests of each merchant.

"From now on, all orders from Funing Garrison will only be placed with proprietors who lease the garrison's craftsmen. Even if it's just a table or a bench, as long as a proprietor sells it, we will absolutely not buy from outside." After Liu Qingyang threw out this guarantee, the merchants began to be tempted. Since ancient times, doing business with the government had always been the most profitable, not to mention that Huang Shi's credit had always been excellent, and his expenses seemed to be very large.

But Liu Qingyang had not yet revealed all his tricks. Huang Shi's order to him was to bind the Fujian merchants completely onto the ship of the Dark Council as well. So Liu Qingyang began to promote the Council.

"Anyone who joins this Council must let the Council take fifty percent of the shares for free." The moment Liu Qingyang said this, the merchants present were shocked into trembling. Wasn't this share taken for nothing a bit too much? Still, they all politely waited for Liu Qingyang to finish stating all the conditions.

"If the annual net profit exceeds one million taels of silver, the Council will take five hundred thousand taels. If the annual profit does not reach one million taels, then the Council will not take fifty percent of the shares."

After Liu Qingyang finished, everyone's expressions relaxed. A plump, fair-skinned merchant even laughed and said, "General Liu jests. Never mind earning a million a year, even if it were five hundred thousand a year — no, as long as you have a way for me to earn three hundred thousand taels of silver a year, I would be willing to split it evenly with General Liu."

"Oh, I misspoke earlier. The Council's share-taking is on a tiered system..." Liu Qingyang explained the meaning of the tiered system: if the profit exceeded one million, the Council would take half of the portion above one million; forty percent of the portion between five hundred thousand and one million; thirty percent of the portion between three hundred thousand and five hundred thousand; twenty percent of the portion between one hundred thousand and three hundred thousand; and for the portion below one hundred thousand, the Council would take only ten percent.

Most of the merchants present had an annual net profit of around ten thousand taels of silver. As for one million taels of silver, that was simply an astronomical figure to them. They felt that giving Huang Shi ten percent as a silent partnership share was not too much. Of course, this still depended on what further benefits Huang Shi would offer in exchange. So everyone began to ask questions one after another.

"Please wait a moment. I will discuss that later. First, let me explain the Council's requirements." Seeing that Liu Qingyang had more to say, the merchants politely shut their mouths and listened quietly. "Merchants who join this Council must observe two obligations. First, they must give priority to purchasing goods from within this Council. In principle, as long as a type of good is sold by a merchant within the Council, it must not be purchased from outside. Second, internal competition is also restricted. One must not maliciously lower the price of goods to squeeze out a companion who is also within the Council."

These two clauses had many detailed regulations, but those were for later. Liu Qingyang then brought out a list of names of some Shandong merchants, giving the Fujian merchants a glimpse of the organization's current scale. Although these merchants still had no clear concept of such an organization, they vaguely sensed something. A strange, nameless excitement stirred in the hearts of many merchants, which secretly surprised even themselves.

Huang Shi had been in this era for too many years now, and he had mostly forgotten his middle school politics textbooks. But he vaguely remembered that so-called imperialism was the union of financial oligarchs and state military force, and that financial oligarchs seemed to need to be created through a "monopoly group possessing enormous privileges."

Now the monopoly group had taken embryonic form. Liu Qingyang's next task was to endow it with "enormous privileges." Liu Qingyang first brought out a detailed tax regulation: "Gentlemen, this is the Pacify-the-Sea tax fee standard personally drafted by Marshal Huang. Please take a look."

The Wanli Emperor's maritime tax standard was the measurement method: for a ship with a beam of one zhang six chi, the tax was five taels of silver per chi, and for every additional chi of beam, an extra five qian of silver was levied. Under this standard, a one-zhang-six-chi ship would pay eighty taels of silver; a one-zhang-seven-chi ship, ninety-three taels and five qian; a one-zhang-eight-chi ship, one hundred and eight taels of silver... The largest two-zhang-six-chi ships were taxed at ten taels per chi, so each such ship would be levied exactly two hundred and sixty taels of silver.

However, Huang Shi did not plan to collect taxes according to this standard. The thing he admired most about the Wanli Emperor was his shamelessness in pursuit of money, so Huang Shi was determined to carry this trait forward. As Liu Qingyang distributed the fee standard to the merchants, he read aloud: "A one-zhang-six-chi ship: Pacify-the-Sea tax silver, one thousand taels. A one-zhang-seven-chi ship: Pacify-the-Sea tax silver, one thousand two hundred taels... A two-zhang-six-chi ship: Pacify-the-Sea tax silver, six thousand two hundred taels."

The several merchants among those seated who primarily engaged in maritime trade all looked ashen-faced. Huang Shi and Liu Qingyang had long since calculated carefully. Even with such high taxes, maritime trade would probably still be profitable, but roughly half the profit would be taken away by Funing Garrison. In any case, the amount of the Pacify-the-Sea tax was entirely up to Funing Garrison. When the time came, they would blockade the Taiwan Strait, and any ship caught evading taxes would have its vessel and cargo confiscated.

"General Liu, this Pacify-the-Sea tax is far too high. There will be large numbers of scoundrels willing to take desperate risks. Once they succeed in evading taxes, legitimate merchants will be utterly unable to compete with them."

Liu Qingyang knew that what these few merchants said was very reasonable. Such crazily high taxation would certainly drive many people to risk their lives in smuggling. Although such smuggling groups would also face enormous dangers, the profit margins for law-abiding merchants were simply too low. Coupled with the risks of maritime disasters that sea trade might face, roughly sixty to seventy percent of the profits would be siphoned off by Funing Garrison. They would be completely unable to compete with smuggling groups.

If this continued, legitimate merchants would gradually dwindle while smugglers kept increasing. Eventually, the profits of maritime trade would still flow into the hands of the smugglers, and Funing Garrison would be unable to benefit from it. Funing Garrison needed to rely on maritime taxes to develop its navy, while smugglers would use their profits to build private armed forces, which would sooner or later develop into violent tax resistance. If there were too few legitimate merchants and the smuggling forces became too rampant, it would breed a new major sea bandit gang — one that could enjoy the support of countless merchants behind the scenes.

"The silent partnership shares the Council receives will all be allocated as military funds. Therefore, all who join the Council are righteous merchants. Marshal Huang will absolutely never forget you righteous merchants." As he spoke, Liu Qingyang brought out a second tax bill. The merchants saw that the tax fees on this bill were only about one-third of the first one. The smallest one-zhang-six-chi ship would pay three hundred and sixty taels of silver, while a two-zhang-six-chi ship would pay two thousand taels of silver.

Although this price was still very high, it was far better than risking having one's ship and cargo confiscated by Funing Garrison. The several merchants engaged in maritime trade exchanged glances and all nodded gently. As long as the Funing Garrison navy was strong enough, they estimated that over ninety percent of merchants would choose to pay the tax to pass through.

"May I ask General Liu, why is there such a large gap between this tax bill and the previous one?"

"This tax bill is a benefit for righteous merchants, that is, for members of the Council. Marshal Huang believes that all merchants who purchase ships from righteous merchants are also righteous merchants. Therefore, our Funing Garrison has designed these two types of tax bills. Those who purchase ships made by Council members will be subject to the second tax bill. Those who use ships made by businesses outside the Council will be subject to the first tax bill."

This policy was also something Huang Shi had painstakingly devised. As soon as Liu Qingyang heard it, he repeatedly praised it. Now, most of the merchants below had not yet reacted immediately; many were still frowning and pondering its implications. Liu Qingyang loudly explained it to them: "Gentlemen, once we have wiped out the sea bandits and begin collecting the Pacify-the-Sea tax, where do you think the merchants of the entire Great Ming will come to buy their ships?"

After these words were spoken, expressions of sudden realization finally began to appear on some faces below. Very quickly, this awakening differentiated into a multitude of expressions: wild joy, excitement, and shock. Liu Qingyang added with a smile, "Gentlemen, when that time comes, not to mention the merchants of the entire Great Ming, even the red barbarians from the four seas will come to buy ships from you gentlemen."

After letting everyone digest the enormous information contained in these words, Liu Qingyang further explained: "Marshal Huang also said that since you proprietors are willing to hire Funing Garrison's craftsmen, we have an obligation to help them find buyers. Everyone, please think about it. When the merchants of the entire Great Ming and the red barbarians from the four seas all come to buy ships from you gentlemen, will the proprietors who make sails and iron nails still worry about not being able to sell their goods?"

Immediately, another uproar erupted below. Many people had originally only thought of doing business with Funing Garrison. But if everything was truly as Liu Qingyang said, then once Huang Shi began collecting the Pacify-the-Sea tax, the business they did would no longer be limited to just the Great Ming realm. As for Huang Shi, he naturally hoped that these merchants' businesses would grow larger and larger. Besides the Pacify-the-Sea tax, Huang Shi was also waiting to collect the personal income tax from the merchants and workers.

"Gentlemen, gentlemen, please pay attention." Liu Qingyang extended a finger and wagged it continuously to draw everyone's attention. Everyone was so captivated that they leaned forward, holding their breath to listen to him. Liu Qingyang declared loudly, "You must never forget: once you join the Council, in principle, you can only purchase goods from within the Council, and you must not maliciously lower prices. Therefore, you proprietors' sales channels and prices will both be guaranteed."

The merchants nodded their heads again. The more impatient among them had already begun asking Liu Qingyang for the detailed regulations of the Dark Council. The others could no longer contain themselves either and began discussing in low voices with familiar friends. Liu Qingyang did not wish to disturb them and was about to leave this boiling room to let them first deliberate among themselves. But before stepping out, he added one more provocative line: "Gentlemen, the reason our Council formulated the clause about annual profits exceeding one million taels of silver was not just for amusement."

By the time Liu Qingyang returned with Shi Ce, the merchants had more or less finished their discussions. Liu Qingyang first introduced Shi Ce to everyone: "This is General Shi Ce, the current Coastal Defense Mobile Corps Commander of Funing Garrison, and also the deputy to the venerable General Yu Zigao. In the future, he will command one-third of Funing Garrison's navy. General Shi will be directly responsible for collecting the Pacify-the-Sea tax and for clearing out the pirates of northern Fujian."

The merchants immediately erupted in a chorus of flattery. Shi Ce first exchanged a few polite words with everyone in the Fujian dialect, then confidently and gracefully introduced himself: "I, your brother, am originally from northern Fujian. My uncles and elders were originally sea bandits of northern Fujian as well. Ten years ago, we were wiped out by the venerable General Yu's Penghu naval force. Because I was young, I was conscripted and sent to Liaodong, where I served under Marshal Huang's command. This time can be considered a return to my hometown. Now, by the Marshal's order, I am working with the venerable General Yu to encircle and suppress the sea bandits. When we talk about the situation from ten years ago, we are both very emotional."

Upon hearing this tortuous experience, the merchants also sighed with emotion at the friendship between Shi Ce and Yu Zigao. Then they began asking about some detailed clauses in the Dark Council regulations. For instance, many were puzzled by the term "most favored," yet these two characters frequently appeared in the Dark Council's regulations.

"The so-called 'most favored' means automatically enjoying all preferential conditions. For example, all Council members are most-favored merchants of Funing Garrison. That means, if Funing Garrison grants any preferential condition to any merchant, then all Council members will automatically enjoy that preference." At this point, Liu Qingyang glanced at Shi Ce and added, "The Pacify-the-Sea tax also has a most-favored issue. I will ask General Shi to explain that."

Shi Ce stepped forward, puffed out his chest, and said, "Gentlemen, seagoing ships manufactured by Council members automatically receive 'most favored' Pacify-the-Sea tax status. In addition to existing and future tax exemption benefits that may be enacted, this 'most favored status' also comes with a tax reduction ratio. That is, the Pacify-the-Sea tax payable by ships manufactured by the Council shall be one-third of that for ships outside the Council. In other words, no matter how much the specific tax for most-favored ships is raised, the tax payable by other ships will forever be three times that of most-favored ships. And no matter how much the specific tax is lowered, the tax payable by most-favored ships will forever be the lowest!"

After Shi Ce finished speaking, he stepped back and stood at attention. Liu Qingyang nodded with satisfaction, then turned back to ask the merchants, "Gentlemen, do you have any further questions?"

An old merchant, stroking his long beard, coughed and said slowly, "General Liu, this old man worries that within ten years — at most, no more than twenty years — shipyards everywhere else will close down one after another. Those under the rule of the Great Ming might be manageable, but if the red barbarians also propose similar regulations, maritime merchants will face a dilemma. They will either pay more tax here or pay more tax in Manila. No matter whose ships they buy, they'll have to smuggle on one end."

Liu Qingyang smiled, then turned his head to Shi Ce and said, "General Shi, please explain this as well."

Shi Ce clasped his hands behind his back and strode forward another bold step, declaring in a voice full of vigor, "Gentlemen, our Funing Garrison believes that all merchants under heaven are equal. Of course, this portion of merchants within the Council are righteous merchants, and therefore they are more equal than other merchants!"

"In short, Funing Garrison opposes all forms of unfair competition. Should any barbarians attempt to impose unfair competition or unreasonable fees upon the righteous merchants of the Great Ming..." Shi Ce kept both hands clasped behind his back, his spine still ramrod straight. He slowly turned his body and spoke in a tone of calm, unquestionable authority:

"On behalf of Marshal Huang and Funing Garrison, I guarantee you all: we will certainly carry out armed punitive expeditions to ensure that the equal rights of the Great Ming's righteous merchants are not infringed upon!"

"Exterminate the sea bandits and restore a bright and clear world to Min Province!"

The merchants of the Great Ming had always been timid, refined, and courteous, but today, as they left Funing Garrison, they burst out one after another with cries of righteous indignation.