Taichang Ming Dynasty

Chapter 245: Weak Central Finances

Given the emperor's rehabilitation of Zhang Juzheng and his proposal for comprehensive reform of state corruption, Wang An's question was difficult to answer. If the emperor intended to stir up a political storm centered on the Ministry of Revenue, this question would serve as a good starting point.

Li Ruhua glanced sideways at Zhou Jiamo, then turned to face Wang An calmly and said, "Master Wang, you're correct. The Ministry of Revenue directly disregarded the results of Zhang Wenzhong's land survey. The Ministry of Revenue..." Li Ruhua clenched his fist and raised his thumb towards himself. "Or, to be more precise, it was me. The basis for this adjustment is the Ministry of Revenue records from the fifth year of the Longqing reign."

In the fifth year of the Longqing reign, Zhang Juzheng was still only a cabinet member and had no power in government.

Wang An smiled back, approving of Li Ruhua's honesty. His tone remained steady, as before, without any ups and downs. "Minister Li, can you explain why this is happening?"

"Although I wasn't an eyewitness to the Wanli land survey, nor am I from Huguang, but Zhou Ming..." Li Ruhua had originally wanted to address Zhou Jiamo by his courtesy name, Mingqing. But after hearing Wang An continue to refer to him as the yamen, Li Ruhua changed his tune. "But I do know what Zhou Libu said, at least on the books. Not only that, the Ministry of Revenue also knew that the results of the Wanli land survey were not entirely accurate."

In reality, except for the period between the sixth and ninth years of the Wanli reign, when the number of registered acres of land experienced drastic changes, there were only minor fluctuations from year to year, whether before or after the sixth year. Without directives from above or promotional quotas, local officials rarely bothered to investigate the exact amount of land under their jurisdiction. They simply instructed the clerks in charge of taxes and levies to perform crude additions and subtractions based on previous years' figures.

The figures were sent to Beijing, but the Ministry of Revenue had no authority to investigate them, and was unable to do so. Even during the ten years of Jiang Ling's rule, the central government struggled to determine the true extent of farmland across the country. Local officials simply levied taxes and grain on registered farmers based on the records in the registers. As for who would be levied upon after these taxes were adjusted at various levels, and whether they would force certain households into poverty, becoming refugees, or even starving to death, central officials at all levels were often oblivious, let alone privatized.

"What do you mean by inaccurate?" Wang An asked.

"During the Wanli reign, provincial governors, inspectors, provincial governors, and provincial magistrates all used exceeding the quotas in their land surveys as a way to report their achievements and seek promotions, claiming that they were restoring the original land quotas of the Hongwu and Yongle periods. But in reality, local officials often sought to exceed the quotas. Consequently, they increased the quotas layer by layer, regardless of whether the land had been abandoned hundreds of years ago due to natural disasters such as drought or floods, war, or man-made disasters. In short, all the land surveyed was reported. It was common to find land listed in the registers but uncultivated. Such reports are archived in both the Ministry of Revenue's case files and the Wenyuan Pavilion. If the Imperial Household Department doesn't believe them, they can send someone to investigate." Li Ruhua rubbed his Adam's apple, drank the water in his glass, and then continued:
"In the final analysis, this is nothing more than 'what the superiors like, the subordinates do more'. This is perfectly normal. I'm not criticizing the Wanli Emperor's land measurement, or even saying it was unnecessary. Of course..." Li Ruhua suddenly came to his senses and abruptly cut off the topic of land measurement, returning the speech to its original track:
"The Ministry of Revenue used the figures from the fifth year of the Longqing reign as the basis for adjustments before issuing the national order for additional levies. This is because these three Liaoxi payments were levies, not regular taxes. Previously, the state had deployed heavy troops in the northwest, northeast, and southwest, while also having eunuchs collecting mining taxes extorting money from the locals. The Taicang granary was constantly overspent, forcing the Ministry of Revenue to seek funds from other sources to make up for the shortfall. If we were to continue levying additional levies on heavily taxed areas like Southern Zhili based on the figures from the Wanli land survey, I wonder how many people would starve to death, how many would be driven to rebellion, and how much unrest would ensue. If the country erupted in flames over the additional levies, I, Li Ruhua, would probably just find a rope to hang myself."

Objectively speaking, the three-year levy of 9 cents per mu of land from the 46th to the 48th year of the Wanli reign, totaling over 5.2 million taels, was not excessive. The severely understaffed Ministry of Revenue, led by Li Ruhua, carefully tailored its allocations to each province's actual conditions before issuing the additional levy to the thirteen provinces, striving to achieve maximum equality. However, with official warehouses depleted of silver across the country, these three additional levies still brought him widespread criticism.

Court officials criticized him for his inability to enforce tax increases, leading to widespread waste and internal and external strife. Local officials blamed him for all the people's grievances. And that damned barbarian from Liaodong, who also failed to understand the Ministry of Revenue's difficulties, repeatedly demanded money from him every three days and then again every five days. When he didn't get it, he resorted to swearing, his words becoming increasingly harsh.

He once considered following Zhao Shiqing's example and simply submitting a petition to resign under the pretext of impeachment. If the emperor refused to issue his resignation, he would simply flee. Anyone who wanted to take the unwelcome and unpopular position of Minister of Revenue could do it. But in the end, he still managed to get the job done despite the pressure.

At this thought, the simmering anger in his heart surged up again. A nagging itch rose in his throat, but Li Ruhua gritted his teeth and refused to cough. He stared at Wang An and asked, "Are there any other questions from the Imperial Household Department?"

"That's all." Wang An glanced at Cao Huachun, looking past the people in the middle. "Go on."

Cao Huachun understood and gave Li Ruhua another glass of water.

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Li Ruhua wasn't sure if his answer would be acceptable to the Imperial Household Department, but he no longer cared. He wanted to tell the emperor what he knew truthfully. "Next is the tax grain quota. In the 48th year of the Wanli reign, the national tax grain quota was 26,948,152 dan. Of this, Southern Zhili received 6,118,254 dan, and Northern Zhili received 597,421 dan."

The uncompensated tax grain between southern and northern Zhili differed by an entire order of magnitude, but the registered land in southern Zhili was less than double that of northern Zhili. This meant that the regular tax rate apportioned to the land in northern Zhili was shockingly low.

Northern Zhili's low tax rates were due to the fact that the capital region often received tax exemptions. However, the price of these exemptions was that the people of the prefectures, counties, and districts of Northern Zhili were frequently conscripted to perform various duties by local government officials and even by government offices in the capital. Furthermore, these prefectures, counties, and districts of Northern Zhili were also required to provide free services to transiting armies, essentially assuming the responsibility of providing military supplies.

For example, the Zhejiang troops and the local troops from Sichuan and Guizhou who were heading north to aid Liao were stationed in Tongzhou before their departure. Tongzhou would provide rations for this sudden surge of people until their departure. The government granaries didn't just create food; the burden ultimately fell on the people under the Tongzhou government's jurisdiction. Had the emperor not promptly allocated funds from the imperial treasury to the Ministry of Revenue, allowing it to use them for "rewarding the troops," the Tongzhou government granaries would have been completely emptied by these influxes of foreign troops.

Generally speaking, when local authorities were unable to provide for the transiting troops, they would first petition the Ministry of Revenue for help. If the Ministry of Revenue was unable to provide assistance, the local authorities would then petition the Ministry of War, requesting that the troops be transferred elsewhere for food. However, the Ministry of War usually ignored these requests. No local government wanted to allow the troops to enter their jurisdiction, as such an arrangement offered no benefit to the local authorities. At most, they could obtain additional tax exemptions the following year as compensation. The Ministry of War would generally not approve the local authorities' requests, risking further offending a group of people.

The Ministry of War would either resort to various tactics to prevaricate the garrisoned authorities or petition the emperor for a ruling. As long as an imperial decree was granted, there would be no dispute. If the garrisoned authorities received no assistance, then, either underfunded or fearing being underfunded, they would be forced to cut supplies to the army. This would result in the army either turning its back on the garrisoned authorities or the various foreign armies vying for limited resources, leading to internal strife or armed conflict.

In reality, after receiving the silver, the Ministry of Revenue didn't distribute it all to the army. Instead, it allocated 50,000 taels of the 200,000 taels to the Tongzhou government to purchase food for the army and replenish the depleted government granaries. The Ministry of Revenue then distributed the remaining 150,000 taels of silver, either as grain, cloth, or directly in silver, according to the needs of officers at various levels. Of course, Li Ruhua had already submitted a memorial explaining this practice before the distribution, which received the cabinet's support and ultimately the emperor's approval.

Seeing that neither the Emperor nor the Imperial Household Department asked any questions, Li Ruhua continued, "Grain taxes are converted into silver. Last year, the Ministry of Revenue received 57,921 taels of silver in tax from Northern Zhili, and the Taicang warehouse received 4,927,356 taels of silver."

"Expenditures totaled 6,549,721 taels of silver. Of this, official salaries and supplementary salaries totaled 684,912 taels." Li Ruhua then added meaningfully, "The deficit was 1,622,365 taels. This is the 29th year of deficit since the 19th year of the Wanli reign."

Li Ruhua followed the "land first, grain second, and silver" format for his report because ideally, all government offices, including the central government, would first determine a tax rate based on land output. The basic principle was to levy high taxes on fertile land and low taxes on poor land. After formulating a plan, they would have their officials collect taxes according to this rate.

After the Single Whip System was fully implemented, 80% of the tax grain remitted to the central government from across the country was converted to tax silver. This change was not based on a fixed, nationwide standard. Instead, the central government gave local governments considerable autonomy, allowing them to convert the tax based on the local silver-grain exchange rate of the year.

Only the four million dan of grain delivered to the Internal Transport Treasury was exchanged at a fixed rate of two and a half cents per dan. This rate of exchange for gold and silver was quite low. In most areas of the south, the silver-grain exchange rate ranged from five to seven cents per dan. In the north, however, the normal exchange rate was between eight cents and one tael of silver per dan.

In total, using the silver taels converted from tax grain as the standard, the state collected approximately 21 million taels of silver in taxes from farmers each year. The 4 to 5 million taels of silver collected from Taicang was only the portion of the regular taxes that went to the Ministry of Revenue in Beijing.

Therefore, the fact that Taicang was always in deficit was not a serious matter. When Taicang was empty, the Ministry of Revenue’s solution was nothing more than to stop paying the already meager salaries of Beijing officials. If that was not enough, then they would think of other ways. The usual practice was that the Ministry of Revenue in Beijing would ask for permission to transfer silver from local government warehouses and even Nanjing government warehouses to the north. If the Northern Zhili was not enough, then the four northern provinces would be transferred. If the entire north was not enough, then the Southern Zhili would be transferred. If the Southern Zhili was still not enough, then the southern part would be transferred. If there was no money anywhere else, then they would have to send more.

During those years, when Emperor Wanli asked the Ministry of Revenue for money in the name of "Three National Ceremonies", "Princess's Wedding", "Establishment of Prince's Mansion", "Reconstruction of Qianqing Palace", "Reconstruction of Three Main Halls", etc., Taicang could not pay the money, so this method was used to make up the difference.

The emperor's unbridled indulgence in wine, women, money, and violence was undoubtedly a major factor in the nation's crisis. However, the fact that the capital's central government revenue consistently accounted for less than 30% of the nation's total was a significant problem in itself. And this didn't even include the corvée taxes, which were included in the land tax under the Single Whip Law. These taxes were at the discretion of local governments, and if these taxes were included, the capital's fiscal revenue accounted for less than 20% of national revenue.

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After reporting last year's income and expenses, it's time to report the budget.

But in fact, the estimated income that the Beijing Ministry of Household Affairs can report is basically equal to last year's total income, and this is an approximate number that cannot be verified.

"This year's estimated revenue for Taicang is five million taels of silver." Li Ruhua even gave a round number. "Is there something wrong with the Imperial Household Department?"

"No problem." Wang An gestured for permission. "Please continue with your budget."

Due to limited revenue, the amount of silver directly distributed by the Ministry of Revenue was minimal. This included the rice stipends for nobles and nobles, the salaries of civil and military officials in the capital, the silver equivalent of rice that should have been given to military artisans, the salaries of Jinyiwei soldiers, the salaries of soldiers under the Wucheng Bingmasi (Five Cities Military Commission), the purchase of cloth and cotton for soldiers' uniforms, the purchase of horses for the Imperial Horse Administration, the silver equivalent of fodder for all horses in the capital, and the salaries of officials in various departments.

"Taking all the above into account, the Ministry of Revenue estimates that this year's expenditures will be 1,249,352 taels of silver." This is the expenditure that the Beijing Ministry of Revenue is most confident in, or perhaps the easiest to verify. But just because the Ministry of Revenue can verify it doesn't mean it will or dares to. If a member of the Imperial Guard were to collect unpaid wages, the Ministry of Revenue would be completely helpless. Only the emperor could intervene in such matters.

(End of this chapter)