History of the Five Dynasties and Ten Kingdoms

Chapter 384 Economic Genius - Gao Yu 2
The second step is direct sales from the manufacturer, eliminating the middleman and eliminating the middleman to make a profit from the price difference!

Hunan's climate, soil, and topography are also suitable for growing tea, but its quality is slightly inferior to Huainan tea and Sichuan tea. It has also been grown on a small scale among the people before.

After tasting the huge profits from the tea trade, Gao Yu suggested that Ma Yin take a bold step: lift the ban on tea.

Tea, like salt and iron, is an important strategic resource of the country and is strictly controlled by the government. In layman's terms, it is a state monopoly. Smuggling tea, like smuggling salt, is a serious crime punishable by death.

At Gao Yu's suggestion, Ma Yin lifted the tea ban in Hunan, allowing people to grow and buy tea freely, and they only had to pay a portion of the tea tax to the government.

With the support of policies, the people of Hunan planted tea on a large scale. The output of Hunan tea increased explosively, quickly occupying the vast majority of the national market share. Hunan tea was sold all over the country, and tea merchants from all over the country flocked to Hunan to buy Hunan tea.

After Yang Xingmi's death, Yang Wo succeeded to the throne, and the "Huai-Chu dispute" broke out (see Chapter 218 "Huainan Yang Wo 1" at the end for details). Previously, we only analyzed it from a political perspective. Now, we will stand in another dimension and examine this war from an economic and financial perspective:
Simply put, Ma Yin created tensions and led to a sharp confrontation between Huainan and Chu, thereby squeezing Huainan tea out of the national tea market dominated by Hunan. He used political contradictions and military conflicts to cover up the trade war.

The Ma Yin Group achieved great success in both politics and economy.

This is the charm of the trade war, which is invisible and yet often affects the overall situation and often becomes the mastermind behind some major historical events.

Hunan tea successfully replaced Huainan tea. Ma Yin quietly built a tea empire. How much profit did he make? The answer is: N small goals every year!

Historical records show: "The annual income is in the tens of millions." Hundreds of millions are earned every year!

However, Gao Yu's ambition is more than just a few hundred million. This is just an important step in his financial strategy. Next is Gao Yu's cheating and highlight moment:
The third step is to cast lead and iron coins.

Hunan is rich in lead and iron, but lacks copper. Gao Yu therefore suggested that Ma Yin restrict the circulation of copper coins and mint lead and iron coins as legal tender.

Whoever controls the right to issue currency controls the world.

The reason is easy to understand. Imagine that your family legally owns and can use a money printing machine...

However, it is not easy to make good use of the right to mint coins and collect minting taxes from the people. Many people in power put their fantasies of printing money into practice, printing money crazily, which eventually led to currency flooding, the collapse of government credibility, and the complete collapse of the economy, and ultimately reaped the consequences.

In order to make good use of this money printing machine, a basic problem must be solved: the collateral behind the currency. For example, is it a gold standard or a silver standard with precious metals as collateral? Or is it a national debt or foreign exchange as collateral?

If Gao Yu wanted to replace copper coins with lead and iron coins, he had to solve this fundamental problem first. In fact, this problem had already been perfectly solved in the previous step: "tea standard" and silk standard.

After almost monopolizing the tea trade in China, Gao Yu suggested that Ma Yin revise the tax law and require people to pay taxes with silk instead of money. Hunan was not a major silk producing area before. Encouraged by the policy, people in Hunan planted tea while growing mulberry trees, raising silkworms and spinning silk. In ancient times, cloth was currency, just like copper coins. Ma Yin encouraged people to raise silkworms and spin silk, which was equivalent to printing money for the whole nation.

Tea and silk are international hard currencies, just like gold and silver. They are not only freely circulated in China, but are also recognized as valuable commodities in neighboring countries and nomadic tribes.

With sufficient hard currency (tea and silk) as collateral and a vast market, theoretically, no matter what form of currency Ma Yin issued, whether it was lead coins, iron coins, or even paper money, it would be successful without worrying about the adverse consequences of excessive currency issuance, inflation, etc.

Merchants from all over the country dumped their goods in Hunan and received a lot of lead and iron money. However, this currency could only be circulated in Hunan and was not recognized in other regions. Merchants could only buy goods from Hunan and sell them in other places. In this way, the Hunan economy was greatly boosted. Not only did the tea trade develop, but other commodities also became extremely popular.

Hunan became the most prosperous commercial region during the Five Dynasties, with rich people and a strong country. Until the Song Dynasty, Hunan's tea production ranked first in the country, especially Tanzhou and Yuezhou, which occupied the first and second places. Throughout the Song Dynasty, Hunan's economy was among the best, all of which were the solid foundations laid by Gao Yu in the late Tang Dynasty and the Five Dynasties.

Historians of later generations could not help but sigh and say that the reason why Ma Yin was able to rise in a very short period of time, stand tall among the vassal states, and be awarded a title by the central court while competing for hegemony with the vassal states was that "mostly due to his own strategies."

It was precisely because of Gao Yu's outstanding contributions to Southern Chu that he became a thorn in the eyes of other forces, who were deliberately trying to get rid of him.

After Li Cunxu destroyed the Later Liang Dynasty, Ma Yin sent his son Ma Xifan to Luoyang to pay homage. Li Cunxu asked Ma Xifan, "How big is Dongting Lake?"

This statement is clearly a threat and test from the central government to the local separatist regimes.

Ma Xifan humbly replied: "Only when the emperor is on a tour in the south can the horses be watered." It was not much, just enough to quench the thirst of the king's war horses. This conversation was quoted by the Qing Dynasty poet Cao Zhenji:

"How deep is Dongting Lake? Only the spring water is good enough for horses to drink." - "He Xinliang"

Li Cunxu was very happy, so he took advantage of the situation, caressed Ma Xifan's back and praised him, "I often hear people say that Hunan will be taken by Gao Yu sooner or later. But Ma Yin gave birth to such a smart and clever son, how can Gao Yu succeed?" He used such a clumsy method to alienate Gao Yu.

People love to hear compliments. Ma Xifan believed it and reported it to his father Ma Yin after he came back, saying that Gao Yu's intentions were known to everyone, even to women and children in Luoyang. He suggested that Gao Yu be executed.

After hearing this, Ma Yin laughed out loud and said, "This is Li Cunxu's deliberate plan to set a trap for us! He has the ambition to unify the world, and he is afraid that Gao Yu will help me achieve my hegemony and become his rival, so he uses the strategy of sowing discord to make me repeat the stupid thing that Later Liang did when Wang Yanzhang was dismissed from his military power. You must remember that if you kill Gao Yu, you will fall into the enemy's trap. Don't say such things again!"

Li Cunxu's sphere of influence was not directly adjacent to that of Southern Chu, and the strength of both sides was not even on the same order of magnitude. Even so, Li Cunxu prepared for the worst and plotted to get rid of Gao Yu in order to eliminate future hidden dangers. Naturally, Gao Jichang of Jingnan, which was adjacent to Southern Chu, would not turn a blind eye to this genius strategist from his neighbor.

In fact, Gao Jichang of Jingnan spared no effort to alienate the relationship between Ma Yin and Gao Yu, the monarch and his subject.

(End of this chapter)