prosperous age

"The best approach is to regulate the behavior of money lenders in the market through the Ming Dynasty's money exchange system and lower the interest rates they charge."

Blindly banning it will not be effective.

Ultimately, if there's a need, it can't be stopped; the only right approach is to find ways to lower lending rates.

After explaining his thoughts, Wei Guangde emphasized that Zeng Shengwu's idea of ​​banning private lending was wishful thinking, and that reasonable guidance was the right way.

"This matter is too important; let me think about it before I answer."

Zeng Shengwu did not immediately express his opinion, but he did not forget the purpose of his visit, so he said, "Shandai, the imperial court should take action to regulate the rampant usury in the private sector."

Wei Guangde glanced at Zeng Shengwu. In fact, he didn't know what Zeng meant at that time. He must have realized that the loan shark was not someone to be trifled with.

In the Ming Dynasty, some of the money lenders were genuinely wealthy, using their own surplus funds to engage in the lending business. However, there were also many frontmen who helped high-ranking officials and nobles with this business.

Just like Wei Guangde, he used to lend money directly to outsiders.

Now, the loan agreement certainly wouldn't bear his signature or fingerprint; instead, the lending business would be conducted through his chamber of commerce.

They still have some self-respect.

Although Wei Guangde never concealed this matter.

However, Wei Guangde did not immediately respond to Zeng Shengwu's words, but was still deep in thought.

In the past, I had never really considered the impact of the lending business on national affairs.

When I first started thinking about this, I was at home, in my study, mainly thinking about how to make this business bigger and stronger.

Now, thanks to Zeng Shengwu's reminder, Wei Guangde suddenly realized that in the present Ming Dynasty, the mortgage business seems to have penetrated every corner of the country.

This is definitely not a good thing, especially with rampant usury.

Loan sharks are definitely not a good thing.

"Good Loan, say something!"

Seeing that Wei Guangde did not answer for a long time, Zeng Shengwu was getting a little anxious.

The public deeply resents usury, saying it's a business that will lead to the extinction of one's lineage.

This shows how great the public resentment was.

Wei Guangde was still pondering such a simple thing.

Could it be that Wei Guangde was involved in usury while openly lending money?

A thought popped into Zeng Shengwu's mind.

Previously, he would never have doubted Wei Guangde; he believed Wei Guangde possessed this much virtue.

But now, he has some doubts.

Wei Guangde was clearly unaware of these things and was still pondering Zeng Shenwu's words.

Directly rejecting all private lending is definitely not feasible; guidance is necessary.

Establishing the Daming Money Shop was one such method of guidance, and it was more reliable than the direct lending by the Northern Song government.

Ultimately, the government absolutely cannot get directly involved in this business, otherwise things will fall apart.

Operating under the model of a private chamber of commerce makes it easier for the government to intervene and salvage the situation if problems arise.

This method is absolutely correct.

The development pattern of usury in China is largely consistent with the pattern of commercial development.

When commercial activities are more active and social wealth increases, usury activities also increase accordingly.

The Spring and Autumn and Warring States periods marked the first peak of commercial development in China, and also saw the emergence of the earliest usurers.

The phenomena of "double lending" and "double weighing" described in Guanzi should be the earliest examples of usurious loans in kind targeting ordinary producers.

Some usurers even borrowed money from kings and emperors. King Nan of Zhou, who was the emperor himself, was so pressured by his creditors that he had to build a "debt-escape platform" to hide from them.

The phrase "heavily indebted" originated from this incident.

It is not uncommon for ordinary people to be driven to despair by usurious loans.

After the Han Dynasty, with the development of mineral resources and the increase of currency, a large number of "money lenders" emerged who made a living by lending money.

They lend money and take a minimum interest rate of 30% of the loan amount, and sometimes even 10 times the amount.

Even when the Han Dynasty government quelled the Rebellion of the Seven States, it borrowed money from these usurers to raise funds for its army.

During the Tang and Song dynasties, the state had already established an absolute political and economic advantage over merchants.

Usury during this period mainly occurred among the general public and caused many social problems.

Therefore, the court at that time formulated the rule that "profits should not exceed the principal," and the Ming Dynasty was merely borrowing the old law of the previous dynasty.

The Tang Dynasty's "Supplement to the Imperial Decrees" stipulated that even if the accumulated days were numerous, the amount could not exceed one time, meaning that overdue debts could only be forcibly settled with 100% interest.

The Song Dynasty issued a special edict stipulating that any accumulated interest exceeding 100% would be calculated as double the interest, with any excess interest disregarded.

Especially during the Song Dynasty, in addition to merchants and landlords, temples, officials, and even the imperial court participated in the usury business to varying degrees.

In the mid-to-late Ming Dynasty, as the commodity economy gradually eroded the natural economy and as there was extensive contact with international trade, an unprecedentedly large industrial and commercial class emerged.

What followed was naturally a large amount of usurious funds and a group of rentiers who made a living from it.

Wei Guangde himself did not notice that since the opening of the sea during the Longqing era, the Ming Dynasty's foreign trade had continued to expand without any policy reversals, which accelerated the flow of large amounts of silver into the Ming Dynasty.

As a result, the amount of lending funds in this era was much larger than in the previous era.

The most widespread form of lending in the Ming Dynasty was rural life loans. The reasons for these loans were nothing more than the lack of agricultural production and natural disasters, which led to people being destitute and thus incurring debt.

Or it could be a loan incurred due to heavy taxes and corvée labor, or a loan incurred for handling some affairs, such as weddings, funerals, building houses, etc.

Regardless of the cause, the interest rates for rural usury are relatively high.

Grain loans generated during the lean season have an annual interest rate of 100%.

In fact, Wei Guangde also noticed something else, which he deliberately made known so that others would notice.

That is, a large number of rice merchants colluded with loan sharks to take advantage of the opportunity of low rice prices during bumper years to buy up large quantities of grain.

In years of famine, they would lend their stored grain to farmers to help them survive or pay taxes, earning more than double the profit.

Although merchants have not yet discovered the practice of suppressing grain prices and buying up farmers' grain at low prices during the harvest season, Wei Guangde believes that this is not far off.

Perhaps the biggest change of this era was that when Zhang Juzheng proposed the system of converting taxes into silver, which meant that the silver standard was established in the Ming Dynasty, Wei Guangde took the lead in using the silver stored in the Changying Treasury of the Imperial Stud to issue silver coins and formulated the "Money Law".

By fixing the exchange rate between copper coins and silver coins through legal means, the exploitation of the people by fluctuations in the exchange rate between silver and copper coins was fundamentally eliminated.

Of course, it also eliminated the largest source of miscellaneous taxes during the Ming and Qing dynasties, namely "fire loss".

Although some places are still trying to circumvent the law, once the Huizhou Prefecture incident in the south is investigated, in addition to severe punishment, it will definitely be emphasized that this tax must be banned.

However, usury in the private sector remains a major problem and the biggest obstacle to improving the "happiness" of the people of the Ming Dynasty.

The exorbitant interest rates not only destroyed general production and life in rural areas of the Ming Dynasty and accelerated the bankruptcy process of small producers, but also deprived merchants of the capital generated from doing business and operating handicrafts, preventing them from integrating into the expansion of handicrafts and commerce.

At this time, several major merchant groups had emerged in the Ming Dynasty. Most of these areas were barren lands with little arable land, where farming was insufficient to make a living. Therefore, many people turned to handicrafts and commerce.

However, after making money, they habitually invest their savings in their hometown land, both to buy farmland and to lend it out and collect interest, thus returning to the traditional landlord-creditor model. To be fair, before the government provided strong support for agriculture, these loans were an indispensable part of rural life.

However, while high interest rates deprived farmers of their property, they also drove up land prices, leading to an increase in taxes levied on the government.

Under the dual influence of these factors, these regions gradually degenerated from a rural self-sufficient peasant economy to a farm and serf economy.

As for businesses, the withdrawal of capital has made it difficult for them to achieve greater development.

In fact, this was the root cause of the suppression of the nascent capitalism in ancient China.

In the West, however, businessmen did not choose to withdraw and become landlords and creditors; instead, they devoted more energy to expanding their markets.

This brings us to the financing model in Europe at that time. In the Ming Dynasty, funds were mostly raised based on regional divisions and heavily relied on clan and local ties.

Even in the late Qing Dynasty, more than 300 years later, the Shanxi merchants, who were known as "connectors of the world," raised only about 300,000 to 500,000 taels of silver.

In contrast, decades later, the Dutch East India Company publicly raised 650 million guilders, which was widely subscribed by the public.

The difference between the two is more than tenfold.

European businessmen, once their businesses have reached their limits in their home countries or even neighboring countries, will choose to borrow money from the state in order to seize monopolistic profits.

In Britain, for example, not only merchants and ordinary people borrow money, but even the king sometimes needs to borrow money.

Since the King of England needs parliamentary approval to levy taxes, but wars or construction often require temporary funds, he can only turn to the large merchant class in London for help.

The money the king borrowed was certainly not usurious, but the king's direct income was not much either, so he was not considered a creditworthy borrower by the creditors.

In order to secure loans, the King of England sometimes even used regional trade monopolies as collateral.

Many regional trading companies that enjoyed substantial returns, such as the East India Company, the Levant Company, and the West Africa Company, were mostly creditors of the British Crown, thereby obtaining monopolistic privileges in regional trade.

Wei Guangde wanted to establish the Daming Money Shop, and this was actually his purpose.

They lent money to foreign entities at the highest interest rates permitted by the imperial court, seeking to seize a monopoly on the lending business.

This is absolutely a highly profitable opportunity. As long as you invest, you can guarantee the Wei family's wealth for thousands of years.

At least, while the Ming Dynasty still existed, there was no need to worry about money.

"The three provinces have indeed reached a point where they cannot afford to ignore this matter."

Finally, Wei Guangde spoke.

"However, with the imperial examinations approaching, it is not advisable for the court to launch a major offensive at this time."

If a candidate is harassed by a creditor, the Ministry of Justice can directly arrest the creditor first, and punish them after the imperial examination is over.

Wei Guangde glanced at Zeng Shengwu at this point and continued slowly, "However, this matter will not simply be left unresolved."

The Ministry of Justice can immediately contact the Censorate and the Court of Judicial Review to investigate the situation of usurious lenders in the capital and other regions.

"If the Embroidered Uniform Guard were involved in this matter, the results might be even better, especially in the capital."

Zeng Shengwu suddenly suggested.

"Involve the Embroidered Uniform Guard?"

Wei Guangde frowned slightly. He could mobilize the Embroidered Uniform Guard, but that power was granted by the emperor.

"The matter of the Embroidered Uniform Guard will not be considered for the time being."

When I see His Majesty again, I will mention it.

If His Majesty permits, the Embroidered Uniform Guard will then assist in the investigation.

Wei Guangde thought for a moment before answering.

"Okay, I'll contact the Censorate and the Court of Judicial Review as soon as I get off here."

Zeng Shengwu had already stood up impatiently, ready to go out and find someone immediately.

"Brother Sansheng, this matter must not be leaked. We should only discuss it with Vice Minister Chen and his entourage, and then each government office should directly assign personnel to handle it."

Wei Guangde knew the nature of the various departments of the Ming Dynasty well; if he were to carry out this matter in a grand manner, it would definitely fail.

Ultimately, the evidence is often hidden, making it impossible to take action due to a lack of proof.

"Well, I see."

Zeng Shengwu did not sit down, but remained standing, as if he was about to leave at any moment.

"Furthermore, I'll give you three months for this matter. While I won't arrest all those who lend money beyond the court's regulations, I must thoroughly investigate the largest individuals among them."

If members of the imperial family or meritorious officials are involved, they should also be investigated.

Although at most they would receive a reprimand from His Majesty, it would be better than simply letting things slide without a word.

At this point, Wei Guangde stood up, walked to Zeng Shengwu's side, and whispered a reminder: "In addition, the three provinces should also give more consideration to what I said earlier about the joint venture between the royal family, the court, meritorious officials, and wealthy households to open the Daming Bank."

Ordinary people and merchants all have times when they are short of funds. In fact, the monthly interest rate of three percent set by the imperial court is not expensive and is what they need.

The focus this time was on catching those who were taking out huge profits, basically those with annual interest rates not exceeding 50%, so we overlooked them.

Those exceeding a certain threshold, especially those with large sums of money, are the primary targets.

“What Shandai said is absolutely right. It’s just right. Now we should deal with all these usurers.”

Later, when the Daming Money Shop was established, it was able to fill this gap.

My family is also in business, so I know that merchants sometimes do need money to keep their finances running.

Zeng Shengwu said in a low voice.

In fact, at this level, even if a family has been engaged in farming and scholarship for generations, they will more or less participate in some commercial activities.

In a local area, it's perfectly normal to open a pawnshop, a teahouse, or an inn.

After watching Zeng Shengwu leave, Wei Guangde suddenly realized that the matter of establishing the Daming Bank needed to be accelerated.

The imperial court has already wiped out all private lenders, but we weren't prepared for this ourselves.

After returning to his desk, Wei Guangde took out a piece of paper and began to write again.

This time, he listed out the things that Daming Money Shop needed to pay attention to one by one.

The Ming Dynasty's money houses were largely intended to assume the functions of a future central bank, with direct control over market lending rates being their fundamental goal.

The service, on the other hand, was to solve the problem of merchants having to transport money over long distances.

Lending and remittance were the main sources of income for money shops.

In addition, Wei Guangde was also considering whether to have merchants set up money shops in prosperous areas such as the capital, Songjiang Prefecture, and Guangzhou Prefecture.

These money shops can introduce a deposit model, allowing ordinary people to also benefit from this new policy.

Banks in later generations have always had the responsibility to accumulate small amounts of money into large sums to help the development of the real economy, and interest rate spreads are also an important source of income for these financial institutions.

From the very beginning, Wei Guangde had no intention of introducing deposit business into the Daming Money Shop, mainly because he was worried that the royal family and meritorious officials would have ulterior motives and try to take advantage of the people's money.

Letting businessmen do this seems like a solution.

With him in charge, the capital of the Ming Dynasty Money Shop can be expanded significantly, and in the short term, there's no need to worry about the people's money. (End of Chapter)