Chapter 1454: For Gold and Silver

"Indeed, with the new coinage, the matter of the bank becomes much easier to handle," the Emperor said, looking at Chen Hong with considerable approval. "Once the bank is established and local fiscal taxes are unified, the realm will be far easier to govern. Chen Hong, you must redouble your efforts!"

The issuance of the gold and silver coinage this time was also his personal decision. In the parlance of the era he came from before transmigrating, this should be called a "gold-silver bimetallic currency system." Under this system, the imperial government could simultaneously use gold and silver to mint circulating currency. Both gold and silver coins would possess the functions of circulation and transaction, be freely exchangeable, and be minted, circulated, exported, and imported solely by the National Bank.

Such a currency system could not only nationalize the power of coinage and promote economic development, but the silver coins could also compensate for the problem of domestic gold production being insufficient to meet market demand.

The bank was a nationwide financial institution that the Emperor and his key ministers decided to establish after many discussions, responsible for overseeing all matters of coinage and currency circulation throughout the empire.

After securing dominion over the realm, it seemed somewhat unfitting and unnecessary for the Emperor himself to continue engaging in commerce. Thus, after repeated discussions with his key ministers, the Yunshan Firm, which had operated a multitude of industries and whose warehouses spanned the entire nation, finally fulfilled its historical mission. The majority of its industries and land assets were incorporated into state-run enterprises, providing the government with substantial revenue to sustain its fiscal operations. Its money houses, however, were separately carved out and placed under the jurisdiction of the Ministry of Finance, becoming the foundational institution of the future National Bank. Because he felt that continuing to call them "money houses" sounded vulgar, the Emperor personally chose the term "bank" to designate this newly established institution.

Henceforth, the Emperor would only hold a large number of shares in the National Bank and would no longer participate in the operation of any enterprise.

Furthermore, under the Emperor's direction, ennobled nobles such as the Duke of Yong, the Duke of Cai, and the Marquis of Pingyuan, and even lower-ranking aristocrats granted the titles of Baron or Viscount for military merit or other achievements, would also possess a certain amount of equity in the National Bank, from which they could draw fixed returns.

This was done, of course, to satisfy their financial needs while further integrating this noble group into the imperial family's control. The Emperor knew that since ancient times, mere words could never make people follow wholeheartedly for a lifetime. Everyone has a profit-seeking heart; after gaining power and influence, they desire their due rewards. This inclination cannot be blocked by suppression alone. Even if he could forcibly restrain it in his generation, the policies would end with his death, a lesson learned from the former Ming dynasty.

Therefore, to change this situation, he had to find ways to channel their profit-seeking desires into areas other than corruption. To this end, he encouraged territorial expansion and the establishment of meritorious deeds, and also allowed them to draw fixed annual interest from the National Bank to slightly pacify their ambition for fame and achievement. At the same time, he encouraged industry and commerce, allowing them to invest their income into industries with relatively high returns.

It was precisely because of his various measures that the Prime Minister and the Finance Minister were so deeply invested in the matter of the National Bank; after all, their interests were closely tied to this institution.

"Your servant will exhaust all his efforts and not betray Your Majesty's expectations." Under the Emperor's gaze, full of expectation, Chen Hong lowered his head. "However, although the preparations for the bank are progressing smoothly, as Your Majesty has previously said, nothing can be accomplished overnight, and we do currently face some problems..."

"Oh? Speak. Since everyone is here today, go ahead." The Emperor did not take offense at his reply and continued to smile.

Since ancient times, when officials reported, they always spoke of achievements first and problems later; he was naturally accustomed to this.

"It is actually an old problem. Although the court now commands vast resources, its major expenditures are also numerous, so for years, expenditures have exceeded revenues. The accumulated national debt grows larger by the year. Although we can still borrow money, the annual interest payments are no small sum." Due to some nervousness, the Marquis of Pingyuan's expression became serious, and even his sitting posture straightened considerably. "Especially... with successive military campaigns in recent years, the fiscal gap remains very large. Although Chancellor Shang and his colleagues have been expanding overseas trade, the taxes collected are still somewhat insufficient. Therefore, your servant believes it would be best to refrain from military action for the time being and first reduce the national debt somewhat..."

The Emperor's smile deepened.

In truth, the accumulation of national debt was a result he had deliberately engineered. Although Chen Hong was a clever man and a veteran of financial management, he was, after all, a man of this era, with its inherent limitations. He viewed state finances somewhat like personal finances, fixated on balancing income and expenditure, fearing that borrowing would burden the state.

Yet, as a transmigrator, though not a finance or economics major, he possessed some common knowledge of national economics. He knew that for a nation, borrowing was not a bad thing. On the contrary, through national debt, he could form a massive financial system, turning the creditors into supporters of the state (no one holding national debt wishes for the issuing regime to collapse). At the same time, it could absorb the abundant funds hoarded by the populace and channel them into societal investment — as is well known, for a national economy, money only has meaning when it circulates.

Of course, he knew that excessive debt was also very harmful to a nation, potentially causing a collapse of state finances. But a nation needed a stable and appropriately sized pool of national debt; this was one of the foundations of modern finance, and one of the crucial steps he was personally initiating to guide this ancient country and its people toward modernization.

These were words he had no need to explain to the Finance Minister and the others. He only needed to subtly guide them. Over time, through years of practical operation, these financial and fiscal leaders would naturally develop modern thinking and establish correct fiscal concepts — what the developed nations of Europe had achieved in modern times, there was no reason his ministers could not.

At the same time, deliberately having the new dynasty not mint copper coins was also his intentional doing.

In this era, wealthy landlords and magnates across the land, besides annexing land, loved nothing more than hoarding money. They generally stored vast quantities of copper coins and bronze vessels in their cellars, amassing immense wealth. But the dynasty's declaration to use only gold and silver coins was tantamount to plundering wealth from their hands in a disguised form, forcing them to adopt the new dynasty's currency. Thus, the nation's financial system would quickly fall into the hands of the Great Han Bank — the central bank — accelerating the state's finances into a centralized, modern system. The former Ming dynasty's implementation of the Single Whip Law in the early Wanli era, requiring local taxes to be converted into silver for submission, had, frankly, laid a foundation for promoting this policy, allowing them to achieve twice the result with half the effort.

And, to be honest, using copper for currency was too wasteful. Nowadays, casting cannons and warships required vast amounts of copper; it could not be squandered on this purpose.

By that time, the Great Han Bank, controlled by the Emperor and the noble group he had fostered, would inevitably become the nation's central bank, the sole financial institution with the right to mint coinage, the very apex of the nation's financial system.

However, to avoid excessive disruption and allow the people a gradual adaptation process, the new dynasty did not plan to immediately abolish the monetary function of copper coins. It would merely cease the active minting of large quantities of new copper coins. In this way, the small supply of new copper coins, along with the copper coins circulating from the old era, would serve as extremely small-denomination auxiliary currency in the market, and then orderly exit the market in the future, ultimately achieving a complete gold-silver bimetallic standard.

In the Emperor's ideal vision, it would be best, as the national financial system matured, to slowly transition to a later stage of credit currency (that is, abandoning precious metal currency and issuing paper money), which could greatly expand national credit. However, in this current social era, it was far too early to speak of that. That was a problem for his descendants to busy themselves with; he need not overly concern himself with it now.

"I understand the problem you raise. The state indeed cannot spend recklessly; it must be moderate and bearable for the realm. I will heed this point." The Emperor first nodded in encouragement, then shifted his tone. "But illness comes like a mountain collapsing and leaves like silk being unraveled. We cannot stop important matters just because we lack funds; that is putting the cart before the horse. Once we stabilize the situation and the realm is at peace, the taxes the court collects will increase. Won't it be much easier to slowly repay the debts then?"

"Your servant understands," Chen Hong quickly responded.

"Are there any other problems?" the Emperor asked again.

"There is one more matter, the issue of coin minting." Chen Hong steadied himself and continued, "Your Majesty has high expectations for the coinage, wishing for the new currency to circulate throughout the realm within a few years. However... although the court has collected a fair amount of gold and silver in recent years, it still feels somewhat insufficient. Therefore, we need to deliberate on how to resolve this..."

"The reason I summoned you all here today is precisely to resolve this problem," the Emperor answered immediately.

The council chamber instantly fell back into silence.

Besides Chen Hong, Prime Minister Wang Zhaojing was also very curious about this. To be honest, he was rather puzzled by today's proceedings, because he and Chen Hong were members of the Cabinet and, in principle, should not inquire too much into military affairs. He did not understand why the Emperor had summoned them specifically today along with Shi Manqiang, and so he and Chen Hong had been privately speculating about the Emperor's intentions.

Under the gaze of the three key ministers, the Emperor unhurriedly picked up the teacup from the table and drank a few sips of weak tea. Then, smiling, he swept his eyes over the ministers.

"I have heard that the country of Japan is rich in gold, silver, and copper. Next year, we will dispatch troops to Japan. If we can obtain gold and silver from them, wouldn't that solve the problem?"

Invade Japan!?

The key ministers finally understood the Emperor's purpose in summoning them today. For a moment, they did not speak, but exchanged glances with one another.

"Launch a campaign to seize Japan's gold and silver?" The Prime Minister was slightly taken aback, but not greatly shocked. Instead, he quickly regained his composure.