Chapter 684: The Concept of a Bank

Liu Zheng laughed heartily.

I have expended so much effort! Finally, I have reached this point!

It hasn't been easy!

From the initial humiliation and mockery to the current heartfelt submission, Liu Zheng truly spent a great deal of effort to make the Feudatory King of Jin listen to his plan.

But.

It is worth it!

It is absolutely worth it!

Looking at the Feudatory King of Jin's current attitude toward him, treating him as a master, wouldn't that mean whatever he says goes?

Of course.

Liu Zheng is not that irresponsible.

Regarding the coal development in Jinzhou, he has his own set of methods.

He took advantage of the momentum to quickly bring out the plan he had prepared, along with a large stack of files.

This gave the Feudatory King of Jin quite a start.

Master Liu!

Master Liu has actually done so much painstaking work for the development of Jinzhou!

Moved!

Deeply moved to tears!

He held these files solemnly with his hands, treating them like precious treasures, his eyes slightly reddened.

"The Feudatory King of Jin may listen to Liu Zheng's introduction while reading."

Liu Zheng took a sip of tea.

The Feudatory King of Jin nodded repeatedly, carefully spreading out the files and picking them up one by one, looking just like a primary school student attending a lecture. Although comical, it also made one feel that he truly wanted Jinzhou to have sustainable development. His heart for the people is admirable.

The plan.

It was written by Liu Zheng with painstaking effort, so he naturally knew its contents. At this moment, he began to speak eloquently: "Liu Zheng believes that Jinzhou's current positioning is vague and its industrial structure is deformed. This is a problem we urgently need to solve. For a feudatory state, the lack of industry and manufacturing will become the greatest hidden danger in the future. Therefore, resource utilization, capital circulation, external and internal demand, and trade surplus must all be subject to macro-control by the Feudatory King of Jin!"

"The content of the control shall be as follows:..."

First, lower taxes and attract investment to bring those cloth workshops from Jiangnan into Jinzhou. Of course, some small workshops cannot be overlooked either. On one hand, introduce resources; on the other, export products. Furthermore, strengthen the branding of Jinzhou and use heavy rewards to encourage civilian invention and creation, as well as the modification of certain machinery. In traditional manufacturing, carve out a bloody path. Regarding this point, Liu Zheng is following the development strategy of the Wa nation from his past life. The Wa nation similarly lacked many resources. But through resource input and product output, they once became the world's third most developed country in terms of technology, especially during that era when copyrights were protected globally.

Second, develop local resources, focusing on coal, gold mines, silver mines, bauxite mines, iron mines, and so on... But while developing, one must also pay attention to environmental protection. Regarding the imperial court's "Coal Restriction Order," Liu Zheng will find a way. Frankly speaking, Jinzhou does not lack these resources, so moderate development will naturally attract more people to come to Jinzhou to invest and build factories; this is what Liu Zheng wants.

Third, promote sports competitions; this goes without saying.

Fourth, and also the most important point! Establish a Bank!

"A Bank?"

The Feudatory King of Jin and the others looked completely bewildered.

"Does this 'Bank' mean a bill shop?"

The Feudatory King of Jin knew about this.

Liu Zheng laughed and said: "It is not a simple bill shop!"

In fact, in ancient Huaxia, there were already many prototypes of banks. For example, bill shops and money shops. But their business mainly consisted of deposit services, currency exchange, and remittance services.

Speaking of which, why did Liu Zheng have this idea?

It is very simple.

Because with the current prosperity of the Jin merchants, the silver shop in Jinzhou is the largest bill shop in the current Longyan Dynasty! Even the Liangzhou bill shop cannot compare to it. The Jinzhou bill shop, also known as a remittance house or bill house, is a financial credit institution. Initially, it mainly handled remittance services, and later it also conducted deposit and loan services.

But at the current stage, they have not yet started lending! Why?

Because the system of the Longyan Dynasty has greatly restricted the development of the Jinzhou bill house.

In his past life, the Jinzhou bill shop was created due to a series of historical reasons.

First, the development of the social commodity economy put forward new requirements for currency and finance.

After the middle of the Ming Dynasty, due to the improvement of social productive forces and the stimulus of foreign silver inflows, the commodity-money economy in Huaxia's feudal society saw relatively obvious development. This development continued into the early Qing Dynasty, especially during the Kangxi and Qianlong periods, when domestic politics were stable, agricultural production developed, and the commodity-money economy was more active than before.

The domestic market expanded; not only did numerous local markets emerge, but a national large market was also gradually forming. Liu Xianting of the Qing Dynasty said: "There are four gathering places in the world: in the north is Jingshi, in the south is Foshan, in the east is Suzhou, and in the west is Hankou. However, on the coast of the East Sea, besides Suzhou, there are also Wuhu, Yangzhou, Jiangning, and Hangzhou to divide its power, while in the west, there is only Hankou."

The development of the commodity economy opened up a broad circulation scope for the transition of commodities, naturally putting forward new requirements for currency and finance, prompting feudal financial institutions to begin breaking through the scope of simple exchange and gradually transitioning to the credit stage. On the other hand, the development of inter-port trade expanded the scope of commodity circulation, leading to new problems such as debt settlement and cash balance between different regions, thus requiring specialized remittance services.

Second, the social commodity-money economy had already developed to a certain extent, providing certain conditions for the development of the financial industry. The widespread use of Silver Coins roughly began with the conversion of land taxes into silver during the Zhengtong period of Emperor Yingzong of Ming (1436--1449). During the Wanli period (1573--1620), the Single Whip Reform was implemented, stipulating that land taxes, corvée labor, local tributes, and miscellaneous duties paid to the government were all merged into land taxes based on a certain proportion of the population and land, and collected in silver.

This tax reform was a major step forward in the transition from a feudal labor economy to a monetary economy in Huaxia's history. However, later, due to the deepening of social crises and the constraints of objective conditions on the popularization of currency use, the Single Whip Reform could not be fully implemented. In the early Qing Dynasty, it was stipulated that taxes and duties be collected in both silver and grain. Later, except for a portion of grain, almost everything was collected in silver taels and coins. After the 17th century, the Qing Dynasty collected taxes and paid salaries entirely in silver. Moreover, there were new developments in monetary land rent.

We know that the transformation from product land rent to monetary land rent requires the significant development of commerce, urban industry, general commodity production, and currency circulation as a prerequisite. This transformation also assumes that products have a market price and are sold at a price more or less close to their value. Furthermore, without a certain degree of development in social labor productivity, this transformation cannot be realized.

The emergence of the above-mentioned monetary land rent fully reflects that the social monetary economy had already developed on the basis of the past. In addition, because commodity-money exchange became increasingly frequent, for the convenience of exchange, besides using silver, the phenomenon of using coins and paper money appeared in some places.

Transportation methods were lagging, causing inconvenience for transporting gold and silver, and in recent years, thieves have been rampant throughout the Longyan Dynasty.

Under these various circumstances and historical reasons.

The Jinzhou bill shop, holding heavy wealth, emerged as the times required.

But...

There is a "but" here.

Because this world has not experienced other dynasties. The systemic problems of the Longyan Dynasty greatly restricted the development of bill shops. With Feudatory Kings standing like trees, there was a lack of trust between bill shops and money shops. Therefore, even though the sprouts of capitalism had already begun to appear within the Jinzhou territory, the entire Longyan was still crawling while carrying that ancient feudal heritage.

This situation led to the following.

No matter how the bill shop developed, the bill shop only had exchange functions and did not possess monetary functions!

Different profit models are also the biggest difference between a bill shop and a bank!

Banks absorb deposits and issue loans, with profits coming from interest rate spreads.

The early profits of bill shops mainly came from handling fees in remittances and the differences in exchange.

In terms of deposits, the funds on the bill shop's books came from forward exchange and the Qing government's military pay, as well as the illegal income of officials.

The Bank's capital primarily comes from idle funds among the populace. Regarding deposits, the Bank's control is far stronger than that of the draft banks. Historically, the decline of the draft banks began with a single administrative decree from the Ministry of Revenue. Once it was decided that military pay would no longer go through private draft banks, the cash flow of those draft banks was severed. As a result, many draft banks took desperate risks, engaged in speculation, and ultimately met their ruin.

In terms of loans, draft banks relied on credit to provide high-interest loans to money shops for relief, which essentially belonged to short-term interbank lending. The Bank follows the path of collateralized loans. The nature, scale, and risk-resistance capabilities of the two are completely different.

From an organizational structure perspective, although draft banks had many rules, they relied on the feudal system; the owner and the Chief Manager were basically in the relationship of an emperor and a Prime Minister, representing the imperial court. Yet, in essence, they truly belonged to the private sector...

The Bank is a commercial system, relying on contracts for mutual checks and balances; although its development is slow, it is more stable, functioning as an enterprise. Yet, in essence, it relies on the national government and belongs to the state-run sector!

Regarding the proposal for the Bank's creation, it was a very, very long dossier.

Liu Zheng was not in a hurry, waiting for the few people to read it slowly.

The Prince of Yong and the Prince of Wei were both curious and watched together.

Time.

Just like that, it passed bit by bit.

The more they read.

The more astonished these people became.

Especially the Prince of Jin, who looked up at Liu Zheng with a stunned expression: "Does Master Liu mean... that we help people keep their money, and we still have to give them... interest?"

The Prince of Wei and the Prince of Yong were also bewildered.

Who plays like this!

Wouldn't this mean losing money!