My father, Li Shimin, please call me Crown Prince

Chapter 434 Currency Reform and the Maritime Silk Road

The Yellow River floods in Henan Province should have resulted in huge expenditures from the imperial treasury, but as the confiscation of property proceeded, the funds were instead diverted.

The national treasury not only suffered no losses, but actually had a surplus.

This is the foundation of a noble family.

As the new policies gradually stabilized, Li Chengqian also needed to consider open source.

The new policies put considerable pressure on public finances. Even with the reserves accumulated during the Zhenguan era, the economy could only be maintained for two or three years, assuming no natural disasters or man-made calamities.

It's definitely not a good idea to just sit around and do nothing, especially since Li Chengqian plans to extensively construct and widen the official roads next.

The Tang Dynasty repaired waterways and roads throughout the country.

This is important, and it's also very expensive.

Therefore, the next step is to reform the currency.

In the late autumn of the twenty-first year of the Zhenguan era, just as the paulownia leaves in Chang'an had fallen all over Zhuque Street, the Eastern Palace unveiled a new policy that was enough to shake the entire business world of the Tang Dynasty. A thick "Regulations for Currency and Credit Reform" brought Li Chengqian's long-held reform of the "purse bag" to the forefront.

The opening lines of this charter exude a sharpness unlike anything seen before: "Currency is the lifeblood of a nation. When the lifeblood is stagnant, the people suffer; when the lifeblood flows smoothly, the world prospers."

It directly points to the crux of the existing monetary system of the Tang Dynasty: insufficient copper coin minting, inconvenient circulation, and large transactions relying entirely on "hard currencies" such as silk, gold, and silver, which severely restricts trade between the north and south and post-disaster reconstruction.

During the court assembly, when Li Chengqian had the eunuch Wen Zhong read out the phrase "multi-currency system," the breaths in the court almost stopped.

"Expand the minting of Kaiyuan Tongbao coins, and set up ten more mints in Raozhou and Ezhou. The annual minting volume will double compared to previous years. The purity of copper coins will be specially inspected by officials dispatched by the Ministry of Revenue, and lead and iron must not be mixed in."

This was still within the understanding of the court officials, after all, there was a tradition of minting coins during the Zhenguan era, but the scale had never been so large.

But what he said next struck the entire court like a thunderbolt.

"In addition, the Ministry of Revenue will take the lead in issuing 'Tang Notes'—printed on mulberry bark paper, with denominations of one string, ten strings, and one hundred strings. They will be secured by two hundred thousand bolts of silk and five hundred thousand shi of grain from the national treasury reserves. The first phase will circulate in the three cities of Chang'an, Yangzhou, and Luoyang, with the total amount not exceeding one million strings."

Li Chengqian's voice was calm and even: "Those who hold Tang notes can exchange them for copper coins or silk of equal value at the Ministry of Revenue offices in the three locations, or they can be used directly to pay taxes and trade bulk commodities."

All officials were in an uproar.

“Paper…paper can be used as money?” An elderly minister with white hair and beard almost jumped up, nearly dropping his court tablet. “Your Highness, please think it over! At the end of the Sui Dynasty, Emperor Yang minted inferior coins, causing chaos throughout the land. Now, using paper as money is even worse than inferior coins! How can the people believe in this piece of paper!”

Another official from a Shandong gentry family chimed in: "Silk and grain are the real hard currencies. A piece of paper with words printed on it can be destroyed at will. Isn't this treating the wealth of the people as a joke?"

Li Chengqian coldly swept his gaze over the opponents: "The Tang Dynasty banknotes have seven anti-counterfeiting marks, specially made by the Ministry of Works, printed by designated personnel, and anyone who forges them will be executed. The silk and grain in the national treasury are there, and can be redeemed at any time."

"This paper represents the imperial court's credit, and is more reliable than any privately minted copper coin."

After a pause, Li Chengqian emphasized, "As for whether the people believe it or not, the court will make them believe it."

The imposing tone of those words immediately silenced any dissenting voices.

Everyone remembers that the blood of the Henan Province had not yet dried when the Crown Prince said "let them believe," and this was by no means just empty talk.

The eunuch Wenzhong explained the detailed regulations.

"Upgrade the flying money system and establish the 'Huitongsi' (Exchange Office), which will be jointly managed by the Ministry of Commerce and twelve major merchants in Chang'an. Merchants deposit copper coins in Chang'an, and the Huitongsi will issue 'bill of exchange'. With the bill of exchange, they can exchange it for the equivalent amount of currency at ten 'Huitongsi' branches in Yangzhou, Guangzhou, etc., and a handling fee of one percent will be charged."

This hits the nail on the head for traveling merchants!

In the past, carrying copper coins for long-distance trade was not only cumbersome, but also risky due to robbery. Although flying money existed, it only circulated among a few wealthy merchants and officials. Now, with the court's backing and low handling fees, it is like opening a golden channel for merchants all over the world.

“Establish the ‘Great Tang Bank’ with its headquarters in Chang’an and branches in various prefectures.”

"Wealthy merchants can deposit copper coins in money shops with a monthly interest rate of one percent; if merchants need to expand their businesses, they can borrow from money shops, using shops and goods as collateral, with an annual interest rate not exceeding ten percent. Anyone who lends money with an interest rate exceeding twenty percent shall be punished for treason."

As soon as the eunuch Wen Zhong finished speaking, the faces of the loan sharks in the court, who were mostly collateral branches of the Five Clans and Seven Noble Families, as well as the Guanzhong and Longxi noble families, turned ashen.

In the past, they used to lend money at exorbitant interest rates, often as high as 30% or 50% per annum, or even "rolling interest," which was an important means for the gentry to amass wealth.

Now the Crown Prince has directly fixed the interest rate at ten percent and even dared to say that "anyone who exceeds twenty percent will be punished for treason." This is simply cutting off their source of income!
"Your Highness!" an official from the Wang clan of Taiyuan exclaimed urgently, "Loans to merchants are fraught with unpredictable risks, and the interest rates are too low. Who would dare to lend money? This is forcing the rich to stop helping the poor!"

Li Chengqian sneered upon hearing this, thinking that these aristocratic families were simply deceiving emperors who had never understood business before.

"Help? Last year, Luoyang suffered a severe drought, and the Wang family distributed grain, repaying three bushels for every bushel borrowed. Is that called helping? Or is it called taking advantage of someone's misfortune?"

Li Chengqian's gaze was like a knife, sweeping over all the officials, making them dare not meet his eyes.

"The loans from the Tang Dynasty Bank are meant to help merchants expand production and to provide more people with jobs and food, not to allow you to use the principal to exploit the people. Anyone who dares to disobey will be punished, and the Wang family will be the example."

The Wang family of Taiyuan fell silent instantly. Everyone knew that during the suppression in Henan, the Wang family had three estates confiscated for secretly funding the rebellion of displaced people, and the clan head was still imprisoned in the imperial jail.

The monetary reform plan was thus implemented despite opposition from officials and Li Chengqian's strong leadership.

No one dares to play the "die-hard remonstrance" trick in front of the current crown prince. In this regard, Li Chengqian doesn't even bother to pretend anymore. Anyone who dares to oppose him will be dismissed from their post, imprisoned, exiled, or even beheaded.

If you want to object, go ahead and rebel.

Let's see if my artillery is sharp enough.

Artillery and muskets are too powerful; that's what any opposition force fears most.

Most importantly, unlike previous large-scale wars, Li Chengqian only needed to send a small number of soldiers, and with the advantage of artillery, he could easily quell the rebellion.

This significantly reduced the financial burden of military warfare.

Even a rebellion in one or several cities could be quelled with just a few thousand cavalrymen, wagons towing cannons, in a few rounds.

A few thousand cavalrymen could manage without even needing civilian laborers, relying solely on the food supplies from the cities along the way.

The musket was an even more powerful weapon for reaping kills.

Without armor, cavalrymen armed with muskets render any peasant rebellions utterly meaningless.

The bill for currency reform was published in the Chang'an Gazette, but the resistance to its implementation was stronger than expected.

The gentry and usurers openly and covertly resisted it.

As soon as the "Huitong Company" opened, several wealthy merchants in Chang'an were beaten with sticks and their shops were burned.

When the first batch of loans issued by "Datang Qianzhuang" were issued, some merchants received threatening letters saying, "If you dare to borrow money from the imperial court, you can expect your family to be ruined and your life destroyed."

The public's acceptance of "Tang Dynasty banknotes" is also extremely low.

When vendors in Chang'an's West Market saw customers paying with Tang Dynasty banknotes, they would either wave their hands and say "we don't accept them," or directly raise the price: "Using a piece of paper as money? You'll have to add another 20%!"

The people were even more afraid that one day the Tang Dynasty banknotes would become worthless.

Li Chengqian's response remained the same: iron-fisted suppression.

First, he ordered the Dali Temple to thoroughly investigate the attack on the "Huitongsi" (a government agency). Within three days, the mastermind was apprehended—the head of a branch of the Wang family of Taiyuan. He was executed by being cut in half at the waist in the West Market, and all his property was confiscated. The Imperial Guards, dressed in civilian clothes, then "spent" in the West Market of Chang'an.

Anyone who refuses to accept Tang tickets will be treated as "disrespecting the imperial court," and will be fined or even have their shop shut down.

At the same time, the Ministry of Revenue posted a notice announcing that taxes could be paid using Tang Dynasty paper money, and that "paying with paper money would result in a 50% higher rate than paying with copper coins."

This move hit the nail on the head instantly, and in order to pay less tax, people began to use Tang tickets.

As for the Tang Dynasty Bank, he had Changsun Wuji take the lead in forcing the Guanzhong nobles to "invest".

"Don't you have plenty of money? Deposit it in a money shop, you can earn interest and help the court stabilize trade routes, why not?"

Faced with the Crown Prince's nonchalant tone, which nobleman would dare to rebel?

Even Changsun Wuji could only obediently comply, as he did not believe that his status as the crown prince's uncle could shake the crown prince's resolve.

With a large amount of copper coins deposited into the money shop, there was sufficient capital to lend money out.

The pressure on the imperial court's finances was immediately relieved.

No matter the era, whether it's today or in the future, what is more profitable than finance?

Not to mention that the imperial court also had a monopoly on trade, as well as the right to print and issue currency.

In less than a month, the situation was completely reversed.

The drafts issued by the "Huitongsi" became a talisman for merchants. From Chang'an to Yangzhou, a draft allowed them to travel freely without worrying about bandits on the road. Although the handling fees were low, they accumulated and became a new source of revenue for the imperial court.

The loans from "Datang Qianzhuang" saved many merchants from bankruptcy.

Silk merchants in Luoyang borrowed money to expand their workshops, grain merchants in Suzhou took out loans to build new granaries, and even the Li people in Lingnan used spices as collateral to borrow money to start mining operations.

Although the annual interest rate of 10% is low, it is a hundred times more secure than borrowing from loan sharks. Moreover, it has the backing of the imperial court, which is more reliable than borrowing from aristocratic families.

Merchants gradually began to reap the benefits.

"Tang Dynasty tickets" circulated in major cities such as Chang'an and Yangzhou.

Tang Dynasty banknotes could be used to pay for government taxes, shop transactions, and even banquets at restaurants.

The people discovered that this piece of paper could not only be exchanged for copper coins, but was also lighter than copper coins, and gradually they began to believe it.

Some people even hid Tang Dynasty banknotes, saying, "This is the credit of the imperial court, more reliable than silver."

Not only the five prominent families and seven noble clans, but all the powerful families in the world watched all this with gritted teeth, yet dared not openly oppose it again.

Their loan sharking business plummeted, and the copper coins they hoarded either had to be deposited in money shops to earn low interest or they had to watch their value depreciate.

Because the Kaiyuan Tongbao coins were minted in such large quantities that there were more and more copper coins on the market, the days of making money by exploiting "coin shortages" are gone forever.

Inside the Ganlu Hall, Li Shimin listened to Zhang Anan's account and remained silent for a long time.

On the table lay a Tang Dynasty note with a face value of one hundred strings of cash, printed with a vermilion bird pattern and stamped with the vermilion seal of the Ministry of Revenue; it was indeed exquisite.

Zhang Anan whispered, "The people all say that His Highness the Crown Prince has made money come alive. Before, money was buried in the cellars of the gentry, but now it can generate more money, buy grain, and build houses..."

“It can make money, but it can also cause trouble.” Li Shimin sighed and put down the Tang note: “This piece of paper looks light, but behind it are the silk and grain of the national treasury, and the swords and spears of the court. Once the national treasury is empty, or if some people no longer believe, this piece of paper will become a death warrant.”

But he had to admit that Li Chengqian's move was both extremely risky and extremely brilliant.

It was a path he had never considered before.

In the past, Li Shimin had tried many methods to make money, but none of them were very effective.

The most lucrative source of income was robbing the Crown Prince's coal mine, which enriched his private treasury.

I thought the Crown Prince would still try to find a solution in this area, but I didn't expect him to come up with a currency reform instead.

By revitalizing the economy through monetary reform and binding businesses with a credit system, the government not only solved the fiscal problems of implementing the new policies but also subtly weakened the foundation of the aristocratic class.

Compared to the bloody suppression in Henan Province, this was a far more ruthless and fundamental attack.

More importantly, the pressure on the imperial court's finances was immediately relieved.

With the support of Datang Bank, no matter what problems arise, sufficient funds can be mobilized.
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Western Regions.

The war between the Arab Empire and the Tang Dynasty never ended. After Li Chengqian ordered the transport of thirty cannons to the Protectorate of the Western Regions, the Arab Empire was constantly attacked and never won again.

But the war ultimately impacted commerce along the Silk Road.

On the Arab side, the forced severing of the Silk Road, while having a significant impact on the Arab Empire itself, also caused considerable losses to the Tang Dynasty's commercial trade, with the mindset of "hurting the enemy a thousand while losing eight hundred of your own."

Under such circumstances, Li Chengqian naturally turned his attention to ocean trade and opened up the Maritime Silk Road.

In fact, Li Chengqian had already established a large shipyard in Liaodong many years ago.

The Tang Dynasty was also under construction and encouraged private capital to enter the market, promoting long-distance trade.

However, the effect was not very significant.

If the government alone promotes it, the returns will not be very substantial unless a large amount of capital is invested.

To truly launch long-distance trade and the Maritime Silk Road, we need to involve more merchants.

"Tell me, why are they unwilling? It's clearly a very profitable business."

In the Eastern Palace, Li Chengqian spoke to Crown Princess Su Yu'er with some distress.

Su Yu'er thought for a moment and said, "They're probably worried about losses. Although it's profitable, it's too far away, and the sea is very risky. If there's even a slight accident, the ship could be destroyed and everyone could die."

Upon hearing Su Yu'er's words, Li Chengqian's eyes lit up.

"If someone could vouch for them and reduce their losses, wouldn't everyone be more proactive?"

Su Yu'er frowned and said, "Who would be willing to vouch for something like this?"

Li Chengqian laughed heartily: "Me!"

"The imperial court guarantees that as long as they are willing to go, if any accidents occur, I will cover 70% of their losses. Is that enough?"

Su Yu'er asked worriedly, "But won't this result in a huge loss?"

"If the losses are too great, the national treasury will have to pay out."

Li Chengqian smiled mysteriously: "No, not only will we not lose money, the national treasury will also make a profit."

(End of this chapter)