My life is like walking on thin ice

Chapter 378: Differences between Salt, Iron and Grain

After all, as a professional born in the Shaofu, Liu She has an instinctive and extremely keen sense of smell for anything related to economy and public consultation.

Just like what Liu Rong said just now, he only mentioned it briefly, and Liu She already roughly understood what Liu Rong's thinking was on this matter.

——Grain, salt and iron have similarities, but also differences.

The similarity lies in the social attributes of these two bulk commodities. Both are daily necessities and important foundations for social stability.

Any entity under any civilization - whether farming or nomadic, whether slavery or feudalism, as long as daily consumables maintain a reasonable and stable price, there will often be no major problems.

On the contrary, even in the advanced modern times of later times, once the prices of daily necessities such as food and salt are guaranteed, so that the lower-class people cannot get basic living security, even airplanes and cannons cannot protect a "pseudo-modern" regime that is rotten to the core.

The African continent in later generations became the gathering place of such "pseudo-modern regimes".

However, as necessities of daily life, there is a fundamental difference between grain and salt and iron.

——Food is crops.

Food production is a natural responsibility of the majority of farmers under the value system assigned by society.

Especially in an agricultural civilization like the Han Dynasty, which is in the middle stage of feudal society, it can be said that the production of grain is the responsibility of more than 99% of the people in the country.

To put it more bluntly: in the grain business itself, there is no "production" link.

There has never been a grain merchant who would grow grain himself and sell the grain he produces to others.

Except for a very small number of small businessmen who are too small to make money and will hire people to cultivate their own land while reselling, the vast majority of grain merchants are actually engaged in the business of purchase-warehousing-sale.

After autumn, they bought grain from the people, stored it in the granaries they built, and then sold it the following year to make a profit from the difference. This was the business model adopted by the vast majority of grain merchants of that era, and even by the Shaofu Treasury, which now provides "official grain and rice."

It is not difficult to find from this model that the grain business is actually a business of reselling and making a profit from the price difference.

The only role, or the only competitive advantage, that the merchant group can play in this process is to build granaries that ordinary people cannot afford to maintain, and to be able to accept the risk of some grain spoiling due to improper storage to a certain extent.

——You are a farmer in Guanzhong, owning a hundred acres of land. You have worked hard for most of the year and finally harvested more than 300 dan of grain. After deducting the agricultural tax and the head tax, you have exactly 300 dan of millet left.

There are four wives and children in your family, a total of five people including you. The annual food ration must be at least 100 dan to ensure that you don't starve to death.

It looked very affluent—there were 300 dan of grain in stock, but the minimum living standard was only 100 dan;

Even if they ate as much as they wanted, a family of five could consume a full 150 dan, and there would still be another 150 dan left to improve their lives or save for building a family business in the future.

But if you really calculate it this way, then at least three of your family of five will probably starve to death next year.

The reason is very simple: these 300 dan of grain are equivalent to 36,000 jin (Han jin), which is equivalent to 9 tons in later times!
There is so much food, not to mention the only two mud houses in your house. If you really pile it up, your entire yard won’t be able to accommodate it!

There is no way to put it away, let alone store it properly. It has to be kept until the spring, summer and autumn of next year, and then taken out and eaten bit by bit.

Of course, if you don't believe it, you can definitely give it a try.

But do you dare to bet?
Do you dare to gamble the lives and property of your entire family of five on your "granary" which has neither experience nor technology to support it, nor sufficient investment to ensure quality, and that it can guarantee you an extra hundred or so stones of grain and keep the grain in your hands instead of being taken away by grain merchants?
Obviously, you don't dare.

The economic situation is hovering on the dangerous edge, leaving you with no ability to resist risks at all.

Your only choice is to sell these 300 dan of grain to the grain merchant, and then use the money from the sale to buy back less than 200 dan of grain to eat next year.

Of course, it’s not enough for your family to just have food.

In life, the only thing that doesn't cost money is breathing air.

So in the end, your family will probably only use half of the money to buy about 100 shi of food to eat, and the remaining half will be used for other miscellaneous expenses.

From this perspective, this question is very simple for you.
- If you do not sell to grain merchants and choose to store grain yourself, you have a slim chance (less than half) of success and will not be exploited by grain merchants during this year, but there is a great possibility (more than 90%) that your family will be ruined.

If you sell it to grain merchants, your entire year's labor will be exploited by them by at least 30%, but your family will most likely not starve to death.

Therefore, in order to be on the safe side, you can only choose the option that seems to be more unprofitable but is actually more secure: sell grain to grain merchants and voluntarily bear the loss...

This is the most true portrayal of the vast majority of farmers in the feudal era every autumn.

No matter how unwilling or reluctant they are, they have no choice but to bear this huge loss in order to ensure their survival.

In comparison - compared to the farmers who dare not gamble and cannot afford to gamble, the businessmen with capital are obviously much more at ease.

They invested a considerable amount of money to build a granary that would most likely ensure that the food would not deteriorate in the short term;

Then, they purchase grain at a low price in the autumn and store it in granaries.

Then, it is time and manpower costs to ensure that there are no problems with the grain stored in the granary.

In the second year, it will be distributed and sold back to the people in batches little by little.

In this process, businessmen have sufficient ability to resist risks.

Food spoiled?

It doesn't matter, the granary is still there, just come back next year;
If you are really suffering from heavy losses and have no money to collect grain, that's fine - at worst you can rent out the granary for a few years, and after you get some money back, you can collect grain again.

Food prices falling?

It doesn’t matter at all - it’s just the difference between earning more or less, as long as you can earn some.

As a result, an extremely distorted market model was formed.

Farmers are responsible for the entire production process, shoulder all production costs, and ultimately produce the finished product: food;
All risks in production are borne by the farmers alone. No one helps the farmers share even a little bit of the risk, whether it is wind, rain, natural disasters or man-made disasters.

After working hard for a whole year, I finally produced the finished product, but I still don’t have the pricing power.
The merchants said the price was the price at which the goods were sold, and there was no room for bargaining.

You can’t even not sell it — the product has a fucking shelf life!

Only businessmen have the power to extend the shelf life of products;

Farmers, as producers, simply cannot store the food they produce for a long time after working hard, investing countless efforts, and bearing countless costs and risks. This means that the production cost and risk are borne entirely by farmers, but corresponding to the high investment and high risk is a pitifully low return.

On the other hand, merchants buy grain at a low price, store it properly, and then sell it at a high price - the cost is also high, but the risk is low, and the final reward is a considerable high return.

In Liu Rong's words, this is an extremely typical exploitation model in the feudal era.

By mastering a key link - such as production tools, production technology, or sales channels, they can achieve unlimited exploitation of the upstream production links.

This model still exists even in the business world of the new era;

But it is obvious that the "power" of this model in the feudal era cannot be compared with those "entrepreneurs" in later generations who are timid, hesitant, dare not eat or take what they want, and have the violent machines staring at them over their heads.

——In the feudal era, people practiced cannibalism.

In the feudal era, the ways and means of cannibalism were almost unlimited, except for the physical level, where they would not chop up your flesh, cook it, and chew it in their mouths...

Therefore, Liu Rong took action to government-manage the rice, allowing the Shaofu Neiku, a "prehistoric state-owned enterprise" unique to the Han Dynasty, to initiate macro-control of the grain market.

And the method used is the simplest and most brutal state-owned enterprise monopoly model.

Regarding grain, the reason why Liu Rong chose to do this and was able to do it was because of what was mentioned above: the producers of this "commodity" of grain are not the grain merchants who control this business, but the vast majority of grassroots farmers in the Han Dynasty today.

There is absolutely no problem in eliminating the group of grain merchants who only have the function of "warehousing" from the entire grain market's industrial chain and directly banning them with the Shaofu's treasury.

——The goods are still the goods. They will remain the same as they were before.

The upstream producers are still farmers, and the downstream consumers are still farmers.

The only difference is that the middlemen who pick up the "goods" have been replaced by the Shaofu Neibao, who are more conscientious and care more about the grassroots people.

The difference between salt and iron and grain - to be more precise, the difference between the state-run salt and iron and the state-run rice - lies precisely in this.

——Grain merchants are not responsible for production, but only for distribution, while salt and iron merchants are responsible for the entire process from production to sales.

Liu Rong's official grain business directly caused the grain merchants in Guanzhong to disappear, and the Shaofu established a monopoly, which only banned the middle end of the industrial chain and had no impact on the upstream producers and downstream consumers.

But salt and iron are not grown by farmers in the fields.

Salt is made by brine according to the common process used by the Han Dynasty.

This is an unquestionable production technology.

As for iron, it was called the "blood of industry" even in later generations, and it is inseparable from production technology.

Therefore, if Liu Rong still follows the old routine in this state-run salt and iron business - first exterminate the salt and iron merchants, and then let the Shaofu take over and monopolize the business, there will be big problems.

First of all, although the Shaofu was large enough, its powers were also complicated enough.

Although the Shaofu had hundreds of thousands of official slaves serving as free labor, there were also hundreds of thousands of infrastructure projects that required hundreds of thousands of free labor to support.

From the imperial mausoleum and mausoleum town of Liu Rong, to the excavation and construction of water conservancy projects, to the construction and maintenance of city roads;
From small things like manpower requirements in daily production of Shaofu - such as moving things around.

In other words: It is impossible for the Shaofu to concentrate all resources on salt and iron.

However, the salt and iron industries are so huge that even if the Shaofu really puts all his efforts into it, he may not be able to shoulder all the burdens.

Perhaps after a long period of operation and adaptation, the Shaofu would be able to set up an extremely large department to be responsible for and successfully take on all the salt and iron industries of the Han family.

But it takes time.

It took an extremely long time from the time when the salt and iron merchants were eliminated by Liu Rong to the time when the Shaofu finally took on the responsibility of all the salt and iron in the world.

What should the Han family do during this period?
People don’t eat salt anymore?

The army no longer needs iron?

Obviously neither is realistic.

——Humans cannot live without salt, just as the West in later generations cannot lose Jerusalem.

Therefore, compared with first eliminating the salt and iron merchants and then brutally monopolizing the market, the plan proposed by Liu Rong is obviously more gentle, safer, and more appropriate.

The merchants of salt and iron will remain the same as they were in the past;
What should be produced should be produced, and what should be sold should be sold.

The only difference is that the salt and iron that could be sold everywhere in the past can now only be sold to the Shaofu, and then approved by the Shaofu before being distributed.

Without Liu Rong even having to mention it, Liu She had already thought of the basis for doing so - for any regulated goods, the Shaofu could conduct legal supervision based on the "Han Law·Equalization Law"!
These include but are not limited to: food, salt, iron, copper, tea, books and all other items that may cause social unrest or may bring benefits to foreign races.

With a fixed buyer, especially a large client who could purchase in unlimited quantities that was unrealistic, the salt and iron merchants might not even show much resistance.

In this way, the supply of salt and iron will not be interrupted, and the market will not be too turbulent.

At the same time, the Shaofu would purchase salt and iron from merchants, and also produce high-quality salt and iron on its own as a basis for "monopolizing the market."

As time went on, the high-quality salt and iron from the Shaofu gradually replaced the inferior salt and iron in the hands of merchants, gradually eroding and eventually completely monopolizing the market.

At that time, Liu Rong could have pointed his finger at the salt and iron merchants and said angrily: You are useless even if I give you the chance!

What the hell is this?
You deserve to be eliminated by the market!
Thinking of this, Liu She raised his head as if his mouth was dry and swallowed subconsciously.

The look he gave Liu Rong was also filled with an instinctive burning heat.

——In Liu Rong’s plan, the only point that cannot be achieved is that the Shaofu produces obviously higher-quality products to achieve the goal of good money driving out bad money.

A better product can be cheaper at the same quality, or more exquisite at the same price.
However, based on Liu She's understanding of the current person, since this plan has been proposed and put on the table, this problem has probably been perfectly solved.

——The future Shaofu may well be able to produce salt and iron products that are both exquisite and cheap, dealing a devastating blow to the privately produced salt and iron on the market!

Even though Liu She was no longer the Shaofu, he still felt jealous of such "technology"...

(End of this chapter)