A Good Landlord in the Tang Dynasty: Starting from the Village Chief

Chapter 481 Monetization of Power
Bonds.

Something very new.

But it's nothing new for the government to borrow money from wealthy households, except that it's not the same as Li Yi's bonds.

In later generations, government borrowing would be commonplace.

In 2004, the total national debt of the Great Ugly Kingdom reached a staggering 36 trillion dollars, while the federal annual budget deficit reached 1.8 trillion dollars, annual revenue was 4.92 trillion dollars, and fiscal expenditure was 6.75 trillion dollars.

Interest on national debt alone has exceeded one trillion yuan, which is significantly higher than the military expenditure of 890 billion yuan, making it the third largest item in fiscal expenditure.

But the people of this ugly country still live quite carefree lives.

It's not just them; almost every country is taking on debt, and even companies are issuing corporate bonds.

In later generations, government borrowing has been recognized as a major driver of development.

But in this era,

The imperial court was generally unwilling to borrow money and preferred to increase taxes. Even when it borrowed money from the rich in times of war or natural disasters, it was mostly a nominal loan in name only.

Although Zhang He now holds the official rank of the third-grade governor of Xiangzhou and comes from the prestigious Zhang family of Fanyang, he has always been poor. He lost his father at the age of fourteen and stayed home to farm and study. During the Daye era, he only served as a censor for a short time. Later, he joined the rebellion of the emperor and rose to the rank of one of the Nine Ministers and Duke of a Prefecture, but he remained frugal, refused gifts, and used his salary to help relatives, friends, and neighbors, leaving him with no surplus wealth.

His first impression of Li Yi's plan to issue bonds was not good.

His view was that governing a country and managing a family should both be done with frugality, and borrowing should be avoided as much as possible; one should do as little as one has the capital to spare.

Hebei has been pacified.

Although life is tough for ordinary people, they can endure it and things will get better eventually.

Ordinary people, once they take out a loan, often find it difficult to recover their losses, and may end up with ruined families or even reduced to slavery.

"If a contract is drawn up to issue bonds, what will the interest rate be, what will the term be, and how will it be guaranteed?"

The imperial court provided each government office with a sum of public capital, and instructed each office to assign clerks to collect the money and lend it out at a monthly interest rate of eight percent, which doubled the annual interest rate.

Private lending interest rates are also very high.

If Li Yi were to issue bonds with such high interest rates, it would be impossible to pay them. And if the bonds couldn't be repaid on time, what would become of the government's credibility?
Even if they can afford to repay it, such high interest rates come from the hard-earned money of the people.

How about 2% annual interest?

"It's too low, who would be willing to lend it? Powerful and wealthy families are always lending money, and the annual interest rate is almost double the normal rate."

"We can increase the interest rate a bit more, for example, 4% annual interest for a two-year term, and 5% annual interest for a three-year term..."

Zhang He still felt that Li Yi's idea was unreliable.

With monthly interest rates below 5%, practically no one is willing to lend money to the government, let alone with an annual interest rate of 5%. But even with an interest rate of 5%, the annual interest rate is 60%. How will they repay such a heavy interest rate?

In the eyes of traditional officials and literati like Zhang He,
The imperial government is acting as the emperor's shepherd, living within its means. The government should not compete with the people for profit or engage in any business operations. It should simply manage the people well, collect grain taxes, and plan and arrange expenditures according to its income.

When the imperial treasury is abundant, it can allocate funds appropriately for projects such as water conservancy, bridge and road construction. When the treasury is empty, it is necessary to increase revenue and reduce expenditure as much as possible.

Hebei has now recovered from the war.

Then everyone should tighten their belts and endure a few years of hardship together, instead of thinking about borrowing money to make ends meet.

Isn't this essentially living beyond one's means?

Zhang He also knew that when the imperial court borrowed money from wealthy families, it often did so without interest, and sometimes the money was never repaid.

He strongly opposed this kind of looting and did not want Li Yi to use the guise of issuing bonds to commit robbery.

Li Yi stopped talking to his uncle Zhang He because they couldn't see eye to eye, their views differed, and they couldn't connect.

Times have changed, and so have ideas. But most people in this era still share the same views as Zhang He.

It's like how many people think everything is a zero-sum game, where one side's win is the other side's loss, and the result is zero.

But Li Yi believes that many times it is possible to achieve a win-win situation, and it is not necessary for someone to lose.

The next four hundred miles

Take the Xiaohangu Pass to Luoyang, then after passing Shanzhou, take the South Xiao Pass, which is the road opened up by Cao Cao. It's a little easier to travel.

The journey was incredibly bumpy.
Fortunately, it was late autumn.
The weather is fine and mild at this time of year, making it the best season for long-distance travel, as it reduces a lot of hardship and trouble.

I only walk a few dozen miles each day.
Li Yi wasn't in a hurry.

He also brought his concubines with him this time. They all traveled by carriage. The journey from Chang'an to Tongguan by boat was quite comfortable, allowing them to enjoy the scenery along the way. But now, they were all dizzy and listless.

Li Yi would also talk with his officials in the royal palace every day.

Although most of the people the emperor selected for him were from Hebei, they were indeed quite renowned.

Even though Qi Shanxing, Dou Jiande's brother-in-law, was just a village official before, he was still quite literate and knew a lot about the situation in Hebei.

He had mentioned the idea of ​​issuing bonds to them.
But the one who truly understood Li Yi was Yun Dingxing.

No wonder he was once a businessman.
Yun Dingxing thought that using bond issuance to drive the recovery and reconstruction of Hebei was a good idea. As for the burden of bond interest, he didn't think it was a big deal.

“We can set the interest rate lower. We’re not loan sharks; we’re government officials. We wield real power and can use other means to make up for the difference in interest rates.”

"Be more specific," Li Yi said with a smile.

"For example, bond issuance can be divided into different amounts or different maturities, and then corresponding preferential privileges can be granted."
For example, purchasing 1,000 strings of cash in bonds would grant a place as a student in the county's official school. Purchasing 2,000 strings would grant a place as a student in the prefecture. 3,000 strings would grant a place as a student in the Imperial Academy... Alternatively, purchasing bonds could increase one's land holdings.

For example, a commoner without official rank or honors could only own 100 mu of land. If he could purchase a certain amount of bonds, he could increase his land ownership or be granted the right to take a concubine.

Other powerful figures, such as those holding honorary titles or meritorious officials, could also increase their land holdings by purchasing bonds.

Li Yi nodded.

The Tang Dynasty inherited the Sui Dynasty's system and implemented the equal-field system. Under this system, there was actually a land quota system, where people of different statuses had an upper limit on the amount of land they could own.

An ordinary citizen can own a maximum of 100 acres of land. Once that limit is reached, no more land can be purchased. Of course, if the land is inherited from ancestors, it is generally not strictly controlled.

However, once the quota is exceeded, further land purchases will be restricted.

Officials and nobles also had corresponding upper limits on the amount of land they could own.

This is all in order to curb mergers and acquisitions.

At the beginning of the Tang Dynasty, the rules were not so strict, especially for nobles and relatives. For example, Li Yi already had more than a thousand hectares of land, which was already beyond the limit. However, most of his land was granted by the emperor, and given his status, no one would pay attention to it.

However, for ordinary powerful families in the local area, it is also a means of controlling them if the chief steward or governor wants to manage them strictly.

Similarly, it's not bad to treat this land quota as a perk included with bond purchases.

Yun Dingxing had more than just these ideas in mind.

He also proposed a ruthless idea: by subscribing to the bonds, one could also obtain quotas for other resources, such as salt, tea, cattle, horses, spices, and sugar—essential commodities in high demand.

Many goods, especially those not produced in the Central Plains or in short supply, are highly profitable if you have connections to get them.

Take salt for example. Although the imperial court did not prohibit you from producing, boiling, or selling salt, in reality, the share of salt production and sales had already been divided up long ago, so ordinary people had no chance to make money from it.

The imperial court held a large portion of the shares.

If you buy bonds from my Mingzhou Grand General Administration, I will allocate a portion of the Mingzhou Grand General Administration's salt sales area to you, or I will give you a permit so that you can obtain salt. Isn't that a business opportunity and benefit?

As for the Mingzhou Grand General's Office, some things only require a single approval document, without costing any money or incurring any losses.

Once the idea is opened,

Suddenly, the road ahead was filled with light.

According to Yun Dingxing's method, there is no need to worry about issuing bonds, and the interest rate does not need to be set too high.

"Even if we set the annual interest rate at 5%, we won't have to worry about finding buyers."

Compared to the high annual interest rates offered by private lenders, a five percent annual interest rate is indeed too low, but the additional benefits are the key.

The key question is what conditions the Grand General's Office of Mingzhou can offer to wealthy families.

A five percent annual interest rate is something even a dog would refuse, but if you add quotas for selling salt, mining, or scarce commodities like spices, cattle, and horses, then it's a different story.

Many businesses can be extremely profitable.

Lending is a one-off transaction, but some businesses, once you can get in, can be a never-ending stream.

Yun Dingxing said something very apt.
Even though the Mingzhou Grand General's Office was empty-handed and penniless, it was still a second-rank government office, governing three prefectures and more than twenty counties. Even without money, it still wielded considerable power.

These powers are actually very valuable.

Selling it directly for money is not an option, but as an added benefit of borrowing, it's perfectly fine.

In the minds of officials like Zhang He, the government should govern by doing nothing, the less trouble the better, like letting sheep graze freely.

Li Yi, however, felt that the government should not only be aloof and superior, but could also be actively managed and operated.

The concept of urban management has long been deeply rooted in people's hearts. Hebei is now extremely poor. Although so many people have not experienced war, they still cannot make ends meet.

The aristocratic clans and powerful families didn't need much management; they controlled a lot of resources, and without war, life immediately became much better.

However, many ordinary people, even after the war ends, are still unable to climb out of the mire. If they are not given a helping hand, they will be stuck in the mire and unable to extricate themselves.

Those who have stable property have stable minds.
When ordinary people go bankrupt, those who have nothing to lose have no more scruples. At best, they wander aimlessly, causing fields to lie fallow, taxes to decrease, and the labor force to leave. At worst, these displaced people turn to theft and banditry, or even rise up in rebellion.

Without a stable environment, how can development even begin?

Therefore, Li Yi believed that if he wanted to achieve something during his tenure in Mingzhou, the most important thing was not to make friends and build relationships with the powerful clans and aristocratic families, but to pay attention to the people at the very bottom.

Water can carry a boat and it can overturn it.

Only when those at the bottom are secure can the upper structure be stable; otherwise, it's just a castle in the air.

These ordinary people don't actually have many needs; they just need enough to eat.

What Li Yi needs now is to obtain a large sum of money to exchange for a lot of supplies in order to appease and settle these people.

They were given land and opportunities to settle down and live.
Provide them with seeds and farming tools for land reclamation and planting, and offer them a low-interest or even interest-free loan so that they can settle down first.

Yun Dingxing understood Li Yi best.

Li Yi couldn't help but sigh. Zhang He was a moral exemplar and a good official praised by the people. Yun Dingxing was criticized for being immoral, but even his own uncle Zhang He couldn't understand Li Yi or support him. On the contrary, Yun Dingxing could understand his thoughts, not only support him but also provide so much help.

Hey,
Which is more important for an official: talent or character?
From Li Yi's perspective, he believes that subordinates should prioritize ability.

(End of this chapter)