Chapter 420: The Purpose and Function of the Money Shop's Banknotes

The banknote was something Zhu Youjian had deliberated over for a long time before deciding to introduce, and he had confined its function to its original purpose, with no intention for now of expanding the definition of what a banknote could be; the main goal was to reduce the trouble and inconvenience caused to traveling merchants by the need to carry large quantities of silver and copper coin in their business dealings.

As for the monetary value of banknotes, he, with his relatively scant understanding of financial knowledge, did not yet dare to venture into that territory.

The reckless overissue of the Song Dynasty's jiaozi and the rapid depreciation of the Great Ming's precious notes had caused social upheaval — a warning not far behind us. The situation in the Ming was only just stabilizing, and there was still much to be done in settling and comforting the people; there was no need to introduce innovations at such a time.

Stability was the paramount duty that overrode everything else, and any reckless advance without experience was inadvisable.

Wait until several years later, when the Great Ming enjoyed a flourishing era of good governance and harmony among the people — then, based on actual circumstances, a decision could be made on whether to monetize it.

Now the Four Seas Trading Company had established money shops in all the prosperous major prefectures of north and south, and the business they conducted was purely to provide services for exchanging banknotes into silver — this could be counted as laying the groundwork ahead of time; besides, such a measure providing convenience to traveling merchants ought to receive widespread welcome.

Once the banknote business was stable, Zhu Youjian planned to launch interest-paying deposit solicitation, and then lend money out at lower profit margins to collect interest, using proper operations and low interest rates to thoroughly eradicate private usury.

He estimated the banknote business would develop quickly — at most within half a year, the deposit-taking and lending operations could begin.

Only with the flourishing of financial business could manufacturing and commerce be driven to prosperity and growth. Usury was like killing the goose that laid the golden egg — it brought fat profits to the lender, but its blow and harm to all kinds of commercial activity was fundamental.

And after the money shops had developed stably for a period, Zhu Youjian planned to launch a special interest-free loan for aiding farmers, to help common folk who had been forced to sell their fields to get through hard times caused by disaster or illness.

Because such loans could very easily become dead accounts when the borrowers ultimately proved unable to repay, they could only be launched after the money shops had accumulated a certain amount of wealth.

At Zhu Youjian's direction, the Four Seas Trading Company had now been separated from the Four Seas Money Shop, with the two each conducting their own financial accounting.

That is to say, if the money shop's operations incurred enormous losses, the trading company would not subsidize them out of its own profits just to make the money shop's books look better.

What Zhu Youjian wanted to see was a more truthful picture of the money shop's operating conditions.

Losses at the start were inevitable.

After all, there were shopfronts to purchase or lease, renovations to make, and staff to hire — these were all normal expenditures, losses that could be written off.

The most important thing was the deposit-soliciting and lending business to be launched in the future — that was the main source of the money shop's profits, and only then would there be concrete figures on how many bad debts the interest-free agricultural loans produced.

As long as the money shop operated normally, it would absolutely never lose money.

On the contrary, this was an industry that could generate a steady stream of high profits.

Taking a portion of this easily obtained wealth to give back to his own people — Zhu Youjian considered this a perfectly normal act.

Loving the people as one's own children had to become a genuine action, not just empty talk.

Plucking a single hair to benefit the world was, in fact, a small matter that could refresh body and mind.

This special agricultural loan was most importantly meant to prevent the spread and occurrence of land annexation.

Ordinary farming households could not accumulate much surplus wealth, which meant that once natural or man-made calamities struck, they had no choice but to sell off their family property to survive — and that so-called family property was their own farmland.

It was precisely at such moments that the many local gentry and great households seized the opportunity to purchase the fields of disaster-stricken farmers at extremely low prices, turning these self-cultivating farmers into tenant farmers and thereby acquiring even more wealth.

For example, suppose a farming family, because someone in the household had fallen ill and their family wealth was exhausted, had to sell their ten mu of irrigated prime fields at market price to save a relative's life.

When a local magnate of wealth learned of this, he naturally wanted to take the fine fields for himself, but had no intention of buying at the market price of five taels of silver per mu — so while sending people to the door to pressure the price down, he also spread word around and issued notices, informing the other capable local buyers: these ten mu are mine.

The other gentry and great households naturally understood the hint, because such things happened often and they had long-standing tacit agreements among themselves — this time it was the Li family buying, next time the Wang family, and the third time it would be the Zhang family's turn.

Under the tacit cooperation among the great households, the disaster-stricken farmers, urgently needing money, would endure a bitter stretch of days and ultimately, with their hearts bleeding, sell their fine fields at prices far below market value.

And natural disasters produced even more of these situations — especially now, under the circumstances of drought gradually spreading across the provinces of the Great Ming.

Severe drought and flood could not be prevented; all the government could provide now was help for the victims to get through their difficulties.

And after the disaster passed, many farming households found themselves on the brink of bankruptcy — which was simultaneously the best opportunity for the so-called gentry and great households to expand their assets.

Taking advantage of others' distress was their most practiced trick.

The thousands upon thousands of mu of fields in every great household's possession were mostly accumulated through this method.

Such things happened every day throughout the Great Ming, and this was also the most common means of land annexation.

Although measures benefiting the people such as tax exemption for reclaimed wasteland had been promulgated, the greed for land meant the magnates simply could not stop their pace of annexation.

To suppress this behavior that harmed farmers, injured the people, damaged the public good, and enriched private interests, the interest-free loans of the Four Seas Money Shop would play an important role.

Zhu Youjian had also considered implementing, at an appropriate time, the Qing Dynasty's policy of merging the head tax into the land tax, making the currently tax-exempt class into taxpayers, thereby reducing the heavy burden borne by ordinary farming households.

But as things stood, such a drastic measure would provoke collective resistance from the entire class of officials and gentry.

Wait until things were thoroughly stabilized before speaking of it.

Right now there were too few things in the Great Ming that could bring profits to people.

The relatively stable output of family fields had become the main source of income for the vested interest class — this was their lifeline, and if anyone dared lay a hand on it, they would be risking the enormous danger of the dynasty being overthrown.

Only when returns from other avenues far exceeded the output of fields would the resistance of the interest class to this matter diminish.

By then, as long as one won the support of a portion of enlightened gentry before implementing the measures of surveying fields and merging the head tax into the land tax, the resistance and pressure suffered would be much smaller.

This kind of transformation, which concerned the overall situation, could not be rushed.

Haste makes waste.

One could not get hot-headed and assume everything could be accomplished in a single stroke.

Transformation required time and process.

Sometimes that process was quite lengthy.

Formulating the next step of strategy according to the development of circumstances was the wisest course.

For now, he could only make a rough plan, and this plan could only be known to himself.

At times like this, Zhu Youjian felt exceptionally oppressed and restless inside, and only through constant self-consolation and self-suggestion could he gradually dissolve these negative emotions.

Because these thoughts and plans could not be communicated or exchanged with anyone else — not even Wang Cheng'en.

After all, the Emperor was by nature a solitary man, and his own thoughts and consciousness were far ahead of this era; much of it could never be understood or accepted by the world.

Many transformations could only advance in small steps, never in great strides.

Things and measures too epoch-making would meet resistance from the overwhelming majority.

Cement and banknotes, along with the improvement of gunpowder and the birth of the Heaven-Shaking Thunder — these things could only be said to be improvements on the foundations laid by predecessors, and so they had not aroused anyone's astonishment.

This was because he understood too little of black technology, and so he had not produced many more new things.

Better to let things develop naturally.

What he was best at and most wanted to do was not any of these.

Getting the top-level design right—changing the Great Ming from its very ideology and institutions, breaking and destroying those stale and rotten things that severely impact and obstruct the Great Ming's progress—that was what mattered most.

Just as He Junming was making large-scale purchases of supplies in the capital, Zhuang Yuanzhou, the newly appointed County Magistrate of Qufu, also traveled light with only a few servants, boarding a boat at Tongzhou dock to begin his journey along the official career path.