Taichang Ming Dynasty

Chapter 542 Policy Loopholes

"Twenty times." Lu Wenzhao's expression shifted. "So, the amount involved in this smuggling case is huge?"

"Quite the contrary," Yang Lian shook his head. "Although the profit from a single piece of ironware is incredibly high, the overall scale of the smuggling case is very small. If we calculate directly based on the physical goods exported, the scale of Guangning smuggling is simply too small to be a high-ranking imperial case. According to our investigation, from February of the 48th year of the Wanli reign to the present, less than 500 iron pots of various sizes have been transported from Guangning City to the Chahan tribe. Most of these are the small, ten-inch-long Guang pots I just mentioned."

"Even if we add in the other smuggling activities and convert the kickbacks Wan Youfu and his colleagues received into cash at the black market price of smuggling, the total amount involved in the entire case would still be less than half of the Shi Ma corruption case three years ago. Furthermore, a large portion of the profits were taken away by merchants smuggling contraband. Wan Youfu and other Guangning officials merely benefited from bribes. All in all, Wan Youfu himself only received 1,341 taels and 6 qian of silver. According to Wan Youfu's steward, this amount barely accounts for 20% of the total stolen money Wan Youfu has amassed since assisting with the Liao affairs."

"Why is this happening?" Lu Wenzhao asked in confusion.

"I suspect," Yang Lian pondered, "that this is likely because the Chahan tribe simply didn't have much silver to spend. The first time the Ming dynasty distributed silver rewards to the Chahan tribe in Han territory was in October of the 47th year of the Wanli reign. Before that, the only transactions between the Ming dynasty and the Chahan tribe were barter. Even if the court had granted them silver rewards, the sum would have been only 40,000 per year. Based on the black market price of smuggling, even if the Chahan tribe had exchanged all their silver for iron pots, they would only have 4,000. And as far as I know, the majority of the silver rewards the Chahan tribe received went into buying food for the winter."

"What Yang Zhongcheng means," Lu Wenzhao paused for a moment, "is that smuggling relies solely on silver, and even if the Chahan tribe is willing to pay a high price for the iron pots, there isn't much silver available, so the scale is small?"

"That's exactly what I mean." Yang Lian nodded.

The Ming and the Chahar tribe officially ceased hostilities and resumed trade only after the Chahars voluntarily returned their captives in May of the 45th year of the Wanli reign. Furthermore, the Chahar Khan, Ligdan Batur, had not yet accepted the Ming's enthronement as a so-and-so king. Consequently, Ming trust in the Chahars remained low. Even after relations eased and trade began, the transaction model remained the most complex and primitive form of barter, based on reports. Essentially, the Chahars, under the unified management of the Ming court, traded livestock such as cattle, sheep, and horses for grain, tea, salt, and various expensive manufactured goods.

More specifically, the Chahan tribe would first dispatch envoys to the Liaodong governor, or even the Ji-Liao governor-general, to extend a trade offer, informing the officials of their needs and the price they were willing to pay. The officials would then, after some bargaining, report the agreement reached between the two parties to the imperial court. Upon approval by the court as per customary procedures, the Liaodong authorities would then organize personnel to gather supplies and ultimately engage in a barter exchange with the Chahar tribe at the agreed time and location. After the exchange, both parties would depart until the Chahar tribe issued its next trade offer.

This kind of barter trade lasted for a long time until Nurhaci rebelled and threatened Liaodong. The imperial court decided to "ally with the barbarians to attack the slaves". Only then did the Ming Dynasty relax trade restrictions and allow the Chahar tribe to trade with nearby countries after receiving the reward silver, and exchange the silver issued by the imperial court for the goods they needed.

"Didn't you discover the smuggling of iron horses?" Lu Wenzhao asked immediately.

"What do you mean by smuggling on iron horses?" Yang Lian said, not quite understanding. "Could the land envoy please explain it more clearly?"

"That is, smugglers directly use ironware to exchange for horses from the Chahan tribe, and then sell the horses to other places for silver. In this way, the Chahan tribe can exchange horses for iron, expand the scale of transactions, and those smugglers can also obtain greater profits." Lu Wenzhao said.

"Your Excellency's concerns are correct. This is not impossible," Yang Lian confirmed, then continued, "But so far, we haven't received any confessions regarding the smuggling of iron horses. Furthermore, I believe that even if such smuggling does exist, it would likely be sporadic, small-scale transactions, and would never occur on a large scale."

"Why do you think so?" Lu Wenzhao asked.

Yang Lian pondered this while saying, "To exchange ironware for silver, all we need to do is trade the silver for the iron at market opening, and the money and goods will be cleared. Hiding it is also easy. Like I said before, just stuff the small Guang pot into the grain bag. But if we want to do what the official said, first trade the iron pot for a horse, and then trade the horse for silver, even if the Guangning Dao Yamen is willing to help, we will inevitably encounter the problem of hiding and moving the horse."

"Can't we sell the stolen goods on the spot?" Lu Wenzhao asked.

"It's difficult. Carrying out a large-scale exchange of horses might be easy, but exchanging horses for money is incredibly difficult. To put it bluntly, if you want to exchange horses for silver on a large scale, simply bribing Guangning Military Assistant Commissioner Wan Youfu is definitely not enough." Yang Lian further explained, "Although Guangning Dao also oversees Guangning's local horse administration, Wan Youfu has not yet been authorized to purchase Han and Yi horses. Wan Youfu can't directly use the court's funds to purchase Yi horses from smugglers, as he did three years ago, to help them reap horrific profits. He can't even openly transfer horses in the name of the Guangning Dao government."

"In other words, even if smugglers did obtain horses from the Chahan tribe through the Iron Horse Exchange, they could only find a way to get them out. However, horses are not silver or iron pots, so it's impossible to transfer them on a large scale outside of Guangning Road without being discovered."

"After obtaining horses through the Iron Horse Exchange, smugglers had only two options. Either they could return the same way and bring the horses back to the interior to sell for silver. Or they could continue east to Haizhou and sell the horses to the only official horse market in Liaodong."

"If it's the former, smugglers would have to pass through the Ningqian Military Preparations Circuit before crossing the Yongping Military Preparations Circuit. Especially Yongping Circuit. If they can't bribe the officials there, they can't even hope of getting their horses out of Shanhaiguan. Before Governor Zhou left office in mourning, the Yongping Military Preparations Circuit was the current Governor Yuan. After Governor Yuan moved to Liaoyang, Du Shi was appointed Yongping Circuit. Both of them are honest and upright officials, both domestically and internationally. Those treacherous dukes and nobles would never have been able to bribe them. As for Jin Fuhai and Gai Bingbei Circuit, if they could have bribed Zhang Bingxian, the situation at the Ministry of Finance wouldn't have become what it is today."

Lu Wenzhao nodded. "So, according to Yang Zhongcheng, this smuggling case only involves local officials in Guangning Dao, and it's not a large-scale operation?"

Hearing this, Li Guangrong became nervous again.

Yang Lian also subconsciously glanced at Li Guangrong. "Based solely on what we've discovered so far, that's the case."

Lu Wenzhao didn't bring up Li Guangrong, but instead seized on a loophole in Yang Lian's words and continued, "Since no previous Guangning Dao officials were involved in smuggling, how did the smuggling caravans manage to get the iron pots into Guangning City? When Yuan Bingxian and I passed through Shanhaiguan, we witnessed the customs inspecting the caravan's goods and collecting taxes. Ironware is expressly prohibited from export. Merchants trading with the Western Tartars couldn't possibly have taken the iron pots out of the customs without reporting to the court."

Yang Lian's eyes flashed. "The smuggling caravans didn't bring any ironware from the interior. All the ironware smuggled to the Chahan tribe was purchased directly from Guangning." "Purchased locally?" Lu Wenzhao was surprised.

"Yes," Yang Lian nodded. "The smugglers directly purchased the ironware needed by the Western Tartars from the blacksmiths in Guangning Dao's jurisdiction, and then resold it for a profit of twenty times the original amount."

Lu Wenzhao continued to ask, "Although it wasn't much, several hundred pots were smuggled out. How did Wan Youfu make up for the shortage of raw materials for making these ironware? It's been a year, and the provincial and prefectural governments didn't notice anything beforehand?"

Yang Lian sensed a subtle edge in his words. With a bitter smile, he said, "It's not surprising that Guangning had hundreds of extra iron pots. The accounts match perfectly, and there wouldn't be a shortage. Simply checking the registers and inspecting the warehouses wouldn't reveal anything. Of course, the failure to identify any issues during the inspection is the fault of the Inspectorate, and my fault. If the Emperor holds me accountable and imposes a penalty, I'm willing to go to jail."

Lu Wenzhao asked in confusion, "How come there's no gap? Could it be that they can conjure up raw materials out of thin air?"

"Someone on the mainland may not be aware of this," Yang Lian explained. "In order to encourage blacksmiths to work actively and to partially offset the grain and labor costs that should have been allocated to them, the current policy in Liao is to allocate an excessive amount of raw materials."

"What do you mean?" Lu Wenzhao was still asking, but Yuan Keli, who had been listening silently for a long time, had already figured it out.

"Let me give you an example, and you'll understand," Yang Lian said, gesturing. "If it takes ten kilograms of crude iron to make a suitable bird gun, the governor's office will allocate eleven or twelve kilograms. Each replenishment of raw materials is calculated based on the number of weapons submitted. In other words, for every qualified bird gun a craftsman makes, he or she will receive an extra kilogram or two of crude iron when the iron is replenished. The craftsman can use this extra crude iron to make farm tools, cooking utensils, and even weapons, and the profits from these finished products belong to the craftsman. That's why I said there are no problems with the accounts, and there will be no shortages in the weapons depots throughout Guangning."

"In other words, the Governor's Office left an unregulated surplus in its plan?" Lu Wenzhao understood.

Yang Lian hesitated. "That's true. The provincial and prefectural governments certainly didn't monitor the final destination of surplus iron. When this policy was first agreed upon, the Liaodong authorities simply wanted to encourage blacksmiths to work harder to quickly replenish the urgently needed military equipment. They didn't anticipate that the Guangning Dao would exploit this loophole to circumvent the provincial and prefectural governments' oversight."

"Does the imperial court know about this policy in Liao?"

"Of course. Before the policy was implemented, the Governor's Office submitted a written report on the policy to the Ministry of Revenue and the Ministry of War. The Governor's Office only officially began to implement this policy after receiving a reply from the Ministry of Revenue." Yang Lian said.

"Okay," Lu Wenzhao nodded, "Did Yang Zhongcheng catch those blacksmiths?"

"We found them, but didn't catch any of them," said Yang Lian.

"Why is this?"

"Because I don't intend to punish those craftsmen." Yang Lian said.

"They don't know?" Lu Wenzhao guessed.

Yang Lian shook his head. "In reality, many artisans have long known that the ironware they forge will eventually find its way into the hands of the Chahan tribe through smugglers. This is especially true of the few artisans who have long supplied Yang Wuhou's caravans with small Guang pots. Even knowing their iron pots would end up outside the Great Wall, they continue to supply them and profit from it."

"Since those craftsmen were intentionally involved and profited from it, why did Minister Yang let them go?" Lu Wenzhao frowned. "The law cannot punish the masses?"

"The number of artisans involved isn't so great that the law doesn't allow them to be held accountable. I chose to be lenient because they couldn't possibly resist the pressure from the Guangning Dao Yamen," Yang Lian sighed and slowly explained, "Except for the two cities of Liao and Shen, which are directly under the Yamen's jurisdiction, the distribution of crude iron and the collection of finished military equipment throughout Liaozhen are all under the control of the Bingbei Yamen."

"Even if Wan Youfu does not directly threaten the artisans, he can easily force an artisan to ruin by reducing the distribution of raw iron or classifying the finished weapons made by the artisans as inferior products. On the contrary, if the artisans accept the hints of the Guangning Dao Yamen and continue to provide finished products to the smugglers who come to buy ironware, they can obtain relatively considerable profits from it. Although this profit is far less than that from direct smuggling, it is slightly more lucrative than direct trading in various cities within the Great Wall, and there is no worry about sales. Compared with the two, the targeted artisans have almost no choice but to be coerced." As he said this, Yang Lian sighed again.

"Ultimately, the smuggling case occurred primarily due to the greed of Wan Youfu and those powerful merchants, and secondly due to the inadequate supervision of the provincial and prefectural governments. Even if the blacksmiths who provided the ironware benefited, it can be seen as a kind of helplessness. If I ask for leniency for the accomplices involved in the case while at the same time imposing heavy penalties on the ironsmiths who produced the ironware, then what is the difference between me and people like Wan Youfu?"

"Furthermore, I believe that severely punishing the artisans will have no deterrent effect. The court will sooner or later dispatch a new Guangning Circuit Inspector. If that Circuit Inspector is another Wan Youfu-like figure, will the other artisans, intimidated by the harsh punishments, be able to resist the pressure from the Guangning Circuit Inspectorate?" Yang Lian asked himself, answering, "They can't resist the government. If the Circuit Inspectorate remains as incompetent as I am, or simply colluded with the Military Preparations Office, they will have no choice but to cooperate with the new Wan Youfu, or face certain death. If the court wants to punish them, it should first punish me, the Circuit Inspector of Liaodong."

(End of this chapter)