prosperous age

The imperial examinations were in full swing, dispelling the chill that had enveloped the capital.

In the past few days, Wei Guangde has been handling extra official business in the cabinet every day, while also pushing forward the various policies and decrees that were previously drafted.

Across the Ming Dynasty, the gates of academies that had been closed earlier were reopened, and the academy heads, along with the professors and students who had spontaneously returned, began cleaning the academy buildings.

Among scholars, Wei Guangde's reputation steadily rose from north to south.

That night, in the study of the Wei residence, a group of Wei Guangde's most important friends were once again invited to the mansion.

The group chatted for a while about the interesting things that had happened in official circles in recent days. Then Wei Guangde took out the articles of association of the Daming Bank that he had drafted.

This charter was compiled by him over the past few days after he had thoroughly studied the existing operating rules of private money shops and consulted with his subordinates in charge of mortgages to understand the current situation of the lending market in various parts of the Ming Dynasty.

Wei Guangde did his best to improve everything he could think of before presenting it today.

Naturally, the plan was to have someone on their side review it before it was submitted to the Qianqing Palace to see if there were any loopholes.

These things cannot be known to those below.

Only those people in the imperial court can help with the discussion.

In the past two days, Wei Guangde has learned that these people have been borrowing money to raise funds.

Well, this matter can't be delayed any longer.

The longer they delay, the higher their financial costs will be.

Although they also began to quietly dispose of some of their businesses, these were businesses with low returns and unstable operations.

Jiang Zhi held a high position among this group.

In any case, he was a seasoned and experienced minister.

After reading the regulations written by Wei Guangde, he frowned and asked, "As far as I know, most of the money shops that operate in this field are pawnshops and gold shops."

Look, our Ming Dynasty Money Shop, besides lending and remittance, does it also do these other businesses?

Especially pawnshops; essentially, pawnbroking is also lending, just on a smaller scale.

The real money shops only appeared in the Qing Dynasty; there were no real money shops in the Ming Dynasty.

However, pawnshops and gold shops also engaged in money exchange business, especially exchanging copper coins for silver. After Zhang Juzheng reformed the tax system by converting taxes into silver, this business was greatly expanded, becoming a major turning point in the ancient Chinese financial industry.

The money exchange business, due to the establishment of the silver standard, was not only amplified, but also became an important means for the gentry class to exploit the common people.

Of course, these businesses no longer exist.

After the imperial court established the monetary law, clearly defining the status of copper and silver coins and fixing their exchange rate, the money exchange business effectively had no place to exist.

"In the private sector, shops that also act as money shops are not limited to pawnshops and gold shops. Various stores opened by wealthy local people are actually engaged in lending business."

If everyone imitates the same things, then the money exchange will become a hodgepodge, neither fish nor fowl.

The money exchange I want to run is a shop that lends money purely on equity.

Wei Guangde didn't want to turn a perfectly good bank into a pawnshop or a general store, doing all sorts of business.

"Initially, the clients of the money exchange could only be wealthy merchants with businesses."

The money lent out was prioritized for their expansion of workshops.

I've thought about this from the perspective of ordinary people for a long time, but I won't get involved for now.

However, if one owns land, it can be used as collateral for loans.

Wei Guangde began, “Actually, the most basic purpose of this money shop is to stabilize the soaring interest rates in the market and bring them down.”

The dangers of usury are well-known and need no further explanation.

As long as the Ming Dynasty Money House exists, those small money lenders in the market will not be able to raise interest rates so recklessly.

People who are short of money now have more options.

As for those loans without collateral, the risk is inherently high.

Even if it's borrowing money from loan sharks, to be honest, I think it's acceptable.

After all, lending money to them is risky and without high returns, no one would lend money.

There's nothing more to say; no one can save someone like that.

Wei Guangde opened the money shop not only to curb the high interest rates in the market, but also to make money for himself, so naturally he would not lend money to the unemployed.

This isn't about interest rates; it's about the choices business people make.

All the money he lent out was secured by collateral.

Because lending is safe, he doesn't ask for high interest rates.

Honestly, if there were no collateral, the risk would be extremely high. If he were to actually lend money, he would definitely not calculate the monthly interest rate of three percent as stipulated by the imperial court.

That's a huge loss.

In later times, banks also differentiated lending rates based on the different customer classes, with varying interest rates for each class.

Furthermore, the interest rates for deposits vary depending on the amount of money involved, which is what is known as large-amount fixed deposits.

"What do you mean by mentioning that once the lending process is streamlined, we can try accepting people's deposits and paying them a small amount of interest?"
As far as I know, nowadays both pawnshops and gold shops charge a storage fee for keeping customers' money safe.

Zhang Xueyan then spoke up and asked.

He was still thinking about the problem according to the usual practices of ordinary people. These days, not only does saving money not earn interest, but you also have to pay a discount, which is called a storage fee.

This usually involves large deposits, such as hundreds of taels of silver.

When merchants traveled abroad to do business, they would collect money after selling goods. For security reasons, they would often deposit the money in the shops of local gentry and wealthy families.

They are also willing to pay a fee for this.

At least you're safe and sound, and don't have to worry about being targeted by thieves.

In particular, if powerful gentry families had enough influence to operate businesses in multiple locations, they would issue similar warrants, which merchants could use to withdraw money from shops in other places.

This was the method by which Wei Guangde received the silver sent from his hometown of Jiujiang.

However, it has great limitations, and this business is considered the core business of the Ming Dynasty's money exchange.

However, Zhang Xueyan couldn't understand why there was no interest on savings in the past.

"Outside, depositing or withdrawing cash usually incurs a 0.5% fee."

Wei Guangde looked at Zhang Xueyan and smiled, "I've calculated that if deposits and withdrawals are free, and we also give him a year and a half of interest, depositing silver in my Daming Money Shop is equivalent to earning one cent of interest."

"So, wouldn't families with surplus money deposit it in money shops?"

At this point, Wei Guangde looked around at everyone and, without waiting for them to speak, continued, "Everyone knows that the silver they saved was taken by those gentry and wealthy families to lend out, earning them even more silver."

Our Daming Bank lends out silver that is secured by collateral, so it is at least safe and secure.

We can use their money to make loans.

With a monthly interest rate of 3%, lending out a single loan can earn the equivalent of six years' worth of interest.

At this point, Wei Guangde smiled and said, "Of course, if they also have lending channels, they can lend money themselves. There's no need for them to deposit their money with us."

However, for the vast majority of people, they probably don't have such channels.

Therefore, we still have a chance to earn this money.

We earn the difference between the distribution channels and the interest rates.

However, I didn't include accepting private deposits at first, mainly because lending was my main business.

Without a clear focus on its core business, it's difficult to attract external deposits.

In reality, since there were no similar businesses in the private sector, Wei Guangde was unsure what the effect would be if they opened this channel to accept deposits.

If the lending business fails and there are too many depositors, wouldn't that encroach on their profits?

Although the Ming Dynasty Money Shop has a prestigious reputation, it will take time for merchants to accept it. The first step is to establish a strong lending business to gain their acceptance. Then, when merchants need money, they will choose the money shop first rather than borrowing from private lenders.

With the business established, Wei Guangde felt it would be more prudent to expand into deposit-taking.

Especially regarding interest rates, they cannot remain unchanged.

There are also differences between fixed-term and open-term deposits, and the interest rates vary. These are things that need to be figured out gradually, and cannot be decided on a whim.

In the banking business, earning interest is simply a source of profit.

This was especially true in ancient times.

Although Wei Guangde also valued intermediary business, namely foreign exchange business, he would never let go of this lucrative opportunity.

The delay was mainly to allow the "shareholders" to see the returns on the loan first.

Only when money shops start accepting deposits and further expand their lending business will they not harbor any improper thoughts.

The deposits attracted by money shops were mainly small, scattered amounts of money, which were then pooled together to form a certain amount before being lent out.

With the interest rate set by Wei Guangde, even if only half of the deposits were used for lending, a stable return could be guaranteed.

In later generations, the leverage of deposits and loans was greatly increased. The deposit margin was only about ten percent, meaning that nearly 80% of deposits were used for lending.

Of course, as mentioned before, Wei Guangde needs to stabilize the core of his mortgage lending business before doing this.

Now that Zhang Xueyan has asked the question, Wei Guangde has explained it clearly, especially regarding the interest rate he mentioned. Many things don't need to be explained in too much detail; everyone present can understand them.

Having collateral ensures the safety of the loan.

As for the interest rate, the difference between 1.5% per year and 3% per month is so huge that it's hard not to be tempted.

What Wei Guangde didn't mention was that for customers with fixed-term deposits, a monthly interest rate of one percent would actually be acceptable.

"What percentage of profit do you think you can make in a year with this 'Good Loan' business?"

Perhaps it was the enormous profits Wei Guangde had made in those businesses that attracted him that made Lao Kan ask with concern.

Lao Kan had a hand in many of Wei Guangde's businesses, to varying degrees.

Since his family was a merchant family, they didn't have much money, but they could still get involved in a small amount.

To some extent, they've been spoiled.

Initially, the profit margin was 20%.

Subsequently, as the scale of lending increases, profits will be even higher.

However, the most significant constraint is the prosperity of private commerce; the more prosperous it is, the more money we can make.

Therefore, how to make businesses more prosperous is an issue we must pay attention to.

In the past, some local gentry used their connections to bully and monopolize markets to obtain substantial profits, which actually affected the normal development of commerce.

What are the consequences of exploiting business people like this?
That is, many businessmen will leave the market due to the poor business environment, choose to take their money home, buy land and become rich.

If this continues, business will fail.

Their withdrawal will affect the profits of our money exchange.

Wei Guangde suddenly mentioned a common problem among the people: many merchants from other places were often bullied by local bullies.

These local bullies were mostly from the background of local gentry and could also get in touch with the government, so merchants often had no choice but to swallow their anger.

Wei Guangde brought this up now, actually intending to take advantage of the rise of money shops to improve the business environment of the Ming Dynasty.

These days, everything you do has far-reaching consequences.

If the powerful and influential figures he gathered in the Ming Dynasty could understand this point and begin to uphold the fairness of commerce and improve the business environment, then perhaps the Ming Dynasty would truly have a chance to smoothly transition to capitalism, rather than just being in its infancy.

Of course, if it doesn't have any practical effect, then Wei Guangde will have to consider legislation to grant the Censorate and local judicial commissioners greater power, allowing them to participate in maintaining the fairness of transactions.

Even when necessary, Wei Guangde would adjust the established tax allocation method.

Regarding commercial taxes, Wei Guangde had long been considering allocating half of the increased commercial tax revenue in the current year to the local treasury, based on the average amount of commercial tax collected in the past three years.

This money is essentially a form of welfare for local officials.

It should be understood that local officials would usually try every means to find ways to monetize this kind of money, and would absolutely not leave it in the treasury for the next administration.

It's somewhat similar to the reward and punishment system of local finance in later generations: the greater the contribution to GDP, the more fiscal subsidies are given.

To increase commercial tax revenue, the first priority is to maintain market stability and attract more merchants to do business in the area.

Money has always been an unavoidable problem for the Grand Secretary of the Ming Dynasty.

How to increase national treasury revenue and how to stabilize local areas are the issues that those in power in the imperial court need to consider.

Previous prime ministers mostly focused on maintaining stability and taking a laissez-faire approach.

When Wei Guangde came to power, he not only wanted to maintain stability, but also hoped to develop the economy and increase fiscal revenue, that is, to enrich the country.

As the discussion about money shops progressed, although some opinions arose, most of them were accepted.

Finally, Wei Guangde took out his revised newspaper and several booklets and distributed them to the group one by one.

"The Beijing Daily, what is this?"

Chen Zi asked with a puzzled look.

He had already opened the booklet and was looking at its contents.

"Similar to the official gazette, however..."

He quickly stopped talking and began flipping through the remaining content.

"This is the newspaper you were talking about?"

Lao Kan looked at Wei Guangde and asked.

"Well, after a few revisions, I think this is good enough, and I plan to have them printed and sold."

Today, I'd like to ask you all to take a look and see if there's anything inappropriate.

Wei Guangde laughed.

"Books for peddlers and laborers?"

After quickly flipping through the documents, Zhang Ke had already formed a general judgment.

"No, in fact, it is fine for scholars to flip through it in their spare time."

After all, some of the pages contained the latest government decrees.

Even for the imperial examinations, these things still needed to be understood.

Wei Guangde explained with a smile, "Moreover, the last one is a serialized storybook, which scholars read regularly."

I had it sent to the school beforehand, and the older students there could understand it.

In the newspapers, Wei Guangde instructed them to avoid using rare characters and use more common characters, so that even students who had been learning to read for several years could recognize them.

Once they leave school and enter society, they will become the main consumer group of newspapers.

Wei Guangde didn't expect illiterate people to buy his newspapers; only literate people would.

"Aside from storybooks, they are utterly useless."

Zhang Ke joked.

"hehe."

Wei Guangde simply chuckled.

This thing, if it gains influence over public opinion in the future, won't be entirely useless. (End of Chapter)