Late Han Zhao Tang

While Cao Cao was actively preparing for war, the Tang Empire enjoyed a bountiful harvest in the autumn.

"I have heard that this autumn's harvest is bountiful. I wonder what the price of grain is in Guanzhong?"

Standing atop the palace wall, Zhang Yu gazed out over the farmland and, seeing the local people coming and going in the marketplace, asked a question.

Yu Yi smiled and said, "Your Majesty, the harvest in Sili is bountiful, and the price of grain has dropped significantly. I asked my servants, and one shi of grain costs about thirty small coins, which is equivalent to fifteen large coins!"

Thirty coins!

Zhang Yu smiled and said to his attendants, "Back in the late Han Dynasty, when I was the magistrate of Zheng County in Guanzhong, a shi (a unit of dry measure) of grain cost thirty coins. At the beginning of the chaos, a shi cost as much as a hundred coins, and during the locust plague, the price of grain was ten thousand coins. This year, the price of grain is only thirty coins, which is a sign of a prosperous era!"

Judging solely from grain prices, the reign of Emperor Xuan of the Western Han Dynasty can be considered the peak of the two Han dynasties. At that time, one shi (a unit of dry measure) of grain cost five qian (another unit of dry measure), which was six times cheaper than it is today.

Of course, judging the prosperity of the Han Dynasty by grain prices is not very intuitive, because it is related to the number of Wuzhu coins issued. For example, the Han Dynasty only started issuing Wuzhu coins during the reign of Emperor Wu of Han, and by the time of Emperor Xuan of Han, Wuzhu coins had not yet circulated on a large scale in the market, so they were relatively more likely to retain their value.

However, by the Eastern Han Dynasty, the number of Wuzhu coins in circulation nationwide reached as high as 50 to 60 billion, averaging at least a thousand coins per person, not even counting privately minted coins. The quantity of coins circulating in the market was linked to the value of commodities. The more abundant the coins in the market, the more developed the commodity economy.

Or perhaps it was the Tang Dynasty, which was a golden age before the An Lushan Rebellion. However, because Li Yuan abolished the Wuzhu coin and issued the Tongbao coin during the founding period, the Tang Dynasty was in a state of currency shortage before the middle and late period. The commodity economy was greatly affected, and prices were greatly affected by the currency shortage.

For example, in the eleventh year of the Zhenguan era, Emperor Taizong of Tang (Li Shimin) was forced to issue an edict due to a shortage of funds in the court: "From now on, all official allowances, both inside and outside the capital, should be discontinued, with only stipends in rice."

The money shortage in the Tang Dynasty not only affected the distribution of government salaries but also the operation of the social economy. In order to have enough currency in circulation, the court and the people tacitly agreed to use silk for tax payment, and silk gradually became one of the circulating currencies. Therefore, during the Tang Dynasty, silk fabrics and miscellaneous goods were used in combination with money.

Zhang Yu was unaware of the severe financial difficulties that plagued the Li Tang dynasty!

However, Zhang Yu possessed economic knowledge from later generations and knew that new coins could not directly replace old coins. This was not only because the production of Tang Tongbao coins was insufficient, but also because Wuzhu coins had been circulating in society for hundreds of years and needed a replacement phase. In the next few decades, new and old coins would generally continue to coexist.

One of the effects of the coexistence of new and old coins today is that Zhang Tang naturally possessed a large amount of circulating currency, and could use the value of Wuzhu coins to measure the current price situation. The value of grain coins compared to the Eastern Han Dynasty directly reflects Zhang Tang's governance.

The more crucial impact is that commodity economic activities will not be affected by the shortage of coins, allowing people to stop bartering and instead regard large and small coins as circulating currency.

"Yes!"

Yu Yi smiled and said, "Since the turmoil at the end of the Han Dynasty, more than ten years have passed. Soldiers, officials and government officials have all been worried about the shortage of grain. If the weather is favorable in the future, we will not suffer from the problem of grain shortage.

"Low grain prices hurt farmers!"

Zhong Yao said, "The common people make a living by farming and weaving, and do not produce money. Therefore, the lower the price of grain, the less money the common people earn from selling in the market. This is a case of low grain prices harming the people!"

"What Prime Minister Zhong said makes sense!"

Yu Yi pondered for a moment and said, "I have heard that the Pingzhun and Junshu laws were implemented during the Han Dynasty, and the Former Han Dynasty was able to replenish its national treasury through this law. Emperor Zhang of the Later Han Dynasty wanted to reinstate the Pingzhun and Junshu laws, but was opposed by his ministers and was therefore not reinstated. Your Majesty has established a new dynasty, and in order to replenish the national treasury, it would be better to reinstate the Pingzhun and Junshu laws!"

The equalization and distribution method is not a single method, but rather consists of two methods: equalization and distribution, which include a series of government intervention measures in the market.

The stabilization policy, for example, mainly aimed to maintain price control by purchasing or selling goods to balance market supply and demand and maintain economic stability in the capital and local counties. In essence, it was about "selling when prices are high and buying when prices are low".

The most typical operation of the price stabilization method was to cooperate with the Taicang magistrate to purchase grain when prices were low and sell it when prices were high, thereby balancing market grain prices. This was the price stabilization method, which limited the manipulation of the market by wealthy merchants. In addition to the price stabilization method, it was also used in conjunction with the Junshu magistrate.

What is equal distribution?

The main function was government involvement in economic activities, purchasing low-priced products from one side and selling them at higher prices to the other, thus replacing the role of large merchants in trade and aiming to increase fiscal revenue.

For example, Ba County produced oranges, which were inexpensive, so the government appointed an official to purchase them. Downstream Nan County, however, did not produce oranges, and their prices were higher. Therefore, the Ba County official would purchase oranges and sell them in Nan County, thus balancing prices between the two areas and profiting from the price difference.

While the system of equal distribution of goods, which prevented merchants from making exorbitant profits, had its merits, it also had significant drawbacks. For example, it forced the people to buy goods at rock-bottom prices to meet the profit requirements of the equal distribution system, or the officials in charge of equal distribution of goods could falsify records during the buying and selling process to profit from the difference. Despite these flaws, the enormous profits generated by the equal distribution system were undeniable, which enabled Emperor Wu of Han to launch his wars against the Xiongnu.

Later, during the Salt and Iron Debate, scholars and commoners attacked the Equalization of Transport Law for competing with the people for profits, which ultimately led to the abolition of the Equalization of Transport Law and the state monopoly on salt and iron, leaving only the Price Stabilization Law.

During the Eastern Han Dynasty, Emperor Zhang of Han was worried that land taxes would not be enough to keep the government running, and attempted to reinstate the Equal Transportation Law and the state monopoly on salt and iron to replenish the government treasury. Ultimately, due to opposition from the privileged classes, the matter was shelved.

Although the Pingzhun Law was retained in the Western Han Dynasty, it became nominal in the Eastern Han Dynasty. The Pingzhun Order, which was responsible for regulating prices, could only "know the prices" and could not directly engage in commercial activities.

While commerce flourished during the Eastern Han Dynasty without government intervention, it was heavily influenced by the aristocratic families. Almost every prominent clan participated in trade and even collaborated to manipulate prices.

During the Qiang Rebellion, the price of grain in Guanzhong once reached 10,000 coins. It is hard to say that powerful clans did not manipulate prices and make huge profits from them.

Yu Yi's proposal of the Pingzhun and Junshu laws was not a sudden idea, but rather a plan that had been discussed internally within the Accounting Department for a long time. After all, as the Zhang Tang Dynasty's agency for intervening in the operation of the private economy, the officials of the Accounting Department naturally hoped to expand their power in order to gain merit.

If the Pingzhun Junshu Law could be implemented, the resulting fiscal revenue would be no less than that of the state-run salt and iron monopolies, and the number of officials and institutions in the Accounting Department would further expand.

Zhong Yao glanced at Yu Yi and said, "It is feasible to stabilize grain prices across the country, but the Equal Transportation Law competes with the people for profits, which I believe is not feasible. Moreover, the Equal Transportation Law implemented in the former Han Dynasty led to widespread corruption among officials, and such a corrupt administration cannot be tolerated!"

Yu Yi did not back down and said, "Your Majesty, the Equalization of Transport Law competes with powerful clans and merchants for profit, not with ordinary people in the marketplace. After the Qiang rebellion, the Later Han Dynasty suffered from a depleted treasury. However, when the Former Han Dynasty fought against the Xiongnu, it implemented the Equalization of Transport Law, which greatly enriched the treasury. The people did not have to pay more taxes, yet the country was prosperous. Was this not a policy that benefited the country?"

In recent years, the expansion of the accounting department and its subordinate officials, as well as the outward spread of their power, have greatly affected Zhong Yao's ability to exercise the power of the prime minister.

Previously, Zhong Yao had accepted the state monopoly on salt and iron and the auditing of expenditures because he saw them as beneficial to the country. However, the Accounting Department led by Yu Yi was constantly encroaching on local administrative power and deeply interfering in the local economy, which Zhong Yao could no longer stand idly by.

The Equalization of Transportation Law had both significant advantages and disadvantages. Beyond the alleged corruption of officials, it also caused market price volatility. Since the market was state-run, officials were free to set prices arbitrarily. The prices they set often exceeded those during periods of free market competition, severely dampening private trade and ultimately impacting commercial tax revenue.

"The Equalization of Transport Law is a policy that benefits the country and officials, but it is by no means a policy that benefits the people!"

Zhong Yao said calmly, “Merchants travel around, buying low and selling high, thus equalizing prices. Your Majesty has already benefited from equalizing prices by collecting taxes from merchants. If we follow the Prime Minister’s idea, I fear this is a short-sighted strategy that kills the goose that lays the golden eggs and should not be implemented in the long run; it can only bring temporary profits.”

"Your Majesty has just established your empire, and this is the perfect time to win back the hearts of the people. You must not engage in any business that seeks profit at the expense of the people!"

Seeing that Yu Yi was about to retort, Zhang Yu raised his hand to stop the two from arguing and said, "The Equal Transport Law has both advantages and disadvantages. We should first set up stabilization granaries to regulate grain prices throughout the country and prevent low grain prices from harming farmers."

As he spoke, Zhang Yu looked at Yu Yi and said, "The Pingzhun Granary is the responsibility of the Grand Minister of Agriculture, but because of the audit of expenditures, the Accounting Department sent officials to be stationed there and to run the Pingzhun Order concurrently."

"Yes, sir!" (End of Chapter)