Huangming

Chapter 487 Clearing the Silt and Strengthening the Foundation, I Will Take Responsibility

Zhu Youjian frowned slightly.

The report from the manager of the Daming Bank that the purchase and storage of silver and grain had not met expectations sent a shadow of melancholy through Prince Xin's heart.

The steward clearly noticed that Zhu Youjian was in a bad mood and quickly stepped forward to say:

"Your Highness, although the stockpiling has not met expectations, the new businesses we are leading are progressing steadily and the results are better than anticipated."

The steward bowed and stood before the desk, taking out a thick book of details.

Zhu Youjian suddenly looked up, his eyes instantly brightening with a light. He leaned forward slightly and asked urgently:

"Oh? Tell me more specifically, what progress has been made?"

The steward cleared his throat, opened the ledger, and began to report methodically:
"Let's start with the money exchange business."

We have set up 'exclusive exchange windows' at each branch counter, with the words 'Silver Money Exchange' written in gold powder on red lacquered wooden signs, which are particularly eye-catching.

The exchange rates for the day were displayed next to the window, with the exchange rates of silver to copper coins and copper coins to paper money updated daily and clearly shown.

"Each window was staffed with two experienced silversmiths, one holding a magnifying glass to examine the purity of the silver ingots, and the other tapping them lightly with a small hammer to listen to the sound. No amount of adulteration could be hidden from them."

When exchanging currency, a precision scale is used to weigh the currency, and every penny is calculated clearly. A handling fee of one to three cents of the exchange amount is charged.

For salt and grain merchants exchanging large sums, a one-cent discount on the handling fee could be offered, attracting customers and ensuring a steady profit.

“When we encounter loose silver that is not pure enough, we convert it according to its actual purity. For example, if it is labeled as ‘pure silver’ but is mixed with lead, we convert it to 90% purity. We can earn several thousand taels every day from the price difference.”

"Now, people are flocking to exchange these items every day; the Beijing branch alone sees daily turnover exceeding ten thousand taels."

Upon hearing this, Zhu Youjian became even more interested.

But the person in charge continued talking.

"Let's talk about deposits. Currently, our branches across the country have collected a total of three million taels of deposits, but we haven't hoarded the silver directly. Instead, we've converted it all into Tianqi Treasure Notes and paid them out to depositors."

"The paper money is backed by the imperial court, so depositors can rest assured, and we can also free up silver for working capital."

We divided this three million taels of "liquid cash" into two groups:
They lent money to grain and salt merchants along the way for temporary loans.

Last month, a Shandong salt merchant needed to raise enough money for salt permits and was in a hurry to make ends meet. We used his three salt fields as collateral to lend him 100,000 taels of silver at a monthly interest rate of 1.5%, and he could get back nearly 4,000 taels of interest in three months.

The other group invested in the properties of the Academy of Sciences and the Ministry of the Interior.

The Academy of Sciences' glass workshop needs money to expand production. We invested 100,000 taels and will receive dividends annually. We expect to earn 20,000 taels a year.

The Imperial Household Department's No. 1 Building is opening a branch in Suzhou. We've invested 200,000 taels and will take 30% of the profits. This is a sure-fire way to make money.

It seems this is a way to make money from money.

"You go on."

Zhu Youjian forgot to drink from his teacup, clearly astonished to hear that the bank could make so much money.

The manager continued to talk incessantly:

"Our most profitable business is still lending; it's now our core source of income."

The manager raised his voice a few decibels, his eyes gleaming with smugness.

We categorized our lending into three groups based on the recipients:

For large merchants such as silk merchants, salt merchants, and grain merchants, the loans were for working capital, requiring them to use their shops, goods, or land as collateral, with a term of 1 to 3 years and an annual interest rate of 15% to 25%.

For ordinary people, small loans are provided for weddings, funerals, and spring planting. Farm tools and houses are used as collateral, with terms of 1 to 6 months and interest rates that are slightly higher, ranging from 20% to 30% per annum.

Although the amount of each transaction is small, the volume is large. This month alone, more than 2,000 transactions were made in Beizhili, totaling 50,000 taels, which will earn nearly 1,000 taels of interest upon maturity.

For local governments, this mainly refers to short-term loans when government taxes have not yet been deposited into the treasury or when military supplies are in urgent need. Future tax revenue is used as collateral, and the interest rate is relatively low, around 10% per annum, but approval from the imperial court or the governor's office is required.

Last month, Ma Shilong, the general of Xuanfu, needed to rush to make winter clothes and urgently requested 100,000 taels of military pay. We borrowed it and will be able to get back the principal and 2,500 taels of interest in three months.

"Roughly calculated, this loan alone could earn at least a million taels of silver in interest per year!"

"One million taels?"

Zhu Youjian was so startled that he stood up abruptly, causing the teacups on the table to tremble. He stared at the steward, his eyes filled with disbelief.

"So many? But... what if these people borrow and don't pay back? Merchants go bankrupt, people evade their debts, and the government delays repayment—wouldn't we suffer huge losses?"

Upon hearing this, the manager scoffed, his tone brimming with confidence:
"Your Highness, rest assured! Our bank has a royal merchant background, and His Majesty stands behind us!"

How dare they not repay the money they borrowed from His Majesty? If a merchant dares to default on their debts, we will directly seize their shop and goods, and report them to the authorities for confiscation of their property.

If ordinary people dare to evade their debts, the government will help us recover them, and we can bring them back no matter where they flee.

The government dared not delay payment. With the imperial decree in hand, if anyone dared to default, we would report it directly to the Ministry of Revenue. At best, the governor would be punished; at worst, he would be dismissed and investigated.

These people borrowed money and are now so eager to pay it back on time, they're even afraid we won't renew the loan!

Zhu Youjian was stunned, and it took him a long time to recover: "There's actually such a trick to it..."

"This is just a pilot program!"

The manager smiled and turned to the last page of the detailed list, his tone becoming increasingly impassioned.

"His Majesty has long planned to expand the Great Ming Bank to all the prefectures and cities across the country once the pilot program in the capital is successful! At that time, several new businesses can be added:"

For intercity remittances, merchants could deposit silver in the capital and withdraw it in Suzhou with a receipt, paying only a small handling fee. This was safer and more convenient than carrying the silver on the road.

We provide credit guarantees for businesses to conduct transactions between each other, charging a guarantee fee.

Currency authentication and casting: helping people determine the authenticity of silver, and also melting loose silver into standard silver ingots for a casting fee.

We handle the deposit and redemption of official silver. Local government tax silver can be deposited with us, and the imperial court can directly redeem it when it needs to allocate funds.

Bill discounting: Merchants who have outstanding IOUs and need money urgently can come to us for discounting. We'll deduct a small amount of interest and give them the money first…

The steward spoke eloquently, and every new business he introduced made Zhu Youjian's heart tremble.

He stood there, gazing at the withered leaves falling outside the window, his mind filled with images of the Ming Dynasty's banks that were spread throughout the country and money that circulated like flowing water.

This is no ordinary business; it is clearly a powerful tool capable of influencing the entire Ming Dynasty's finances!

"So, does this bank... really have the potential to stay in business for a long time?"

The steward did not reply immediately, his expression becoming more cautious than before. After a moment, he finally answered:
“Your Highness, this old servant dares not guarantee that it will be ‘absolutely foolproof,’ but given the current momentum, it would be prudent to test the waters in Shuntian Prefecture for a year first.”

He looked up at Zhu Youjian, his tone calm and steady.

"If the income and expenditure are stable after one year and the bad debts do not exceed 10%, then it will be gradually extended to all prefectures in Beizhili."

Once the situation in Beizhili is stable and the talent pool in other regions has been largely cultivated, then we can expand our influence to Jiangnan and the Northwest. This way, we can avoid any unrest.

"A one-year pilot program?"

Zhu Youjian sat up abruptly, his eyes filled with confusion.

"You just said that in Shuntian Prefecture alone, one can earn a million taels of silver a year just from loans. If this were extended to the whole country, wouldn't it be like making a fortune every day? Why take it slow?"

Seeing his appearance, the manager quickly bowed and explained.

"Your Highness, you only see the glamour of the bank making money, but you don't know the risks hidden behind it. You can't be careless in the slightest."

He held up one finger and began by explaining the ins and outs of lending:
“Take lending business for example. We now require merchants to have collateral value that exceeds 30% of the loan amount, and require ordinary people to have neighborhood joint guarantee + physical collateral. Even so, the details still need to be refined.”

Last month, a grain merchant from Tongzhou wanted to borrow 100,000 taels of silver to stockpile grain, using two grain warehouses as collateral. It seemed like a sufficient amount, but when we checked, we found that the old grain in the warehouses had long been moldy and was actually worth less than 50,000 taels.

If we had given in back then, we probably wouldn't have been able to get the money back.

If we rush to roll it out nationwide now, local conditions vary. In some places, land isn't valuable, and in others, merchants are prone to shady practices. If the detailed rules aren't in place, either we won't be able to lend money and make a profit, or the loans will become bad debts, and the losses will be substantial.

Then he held up a second finger, his tone becoming more serious:

"Let's talk about savings services. Depositors put their money here because they want to be able to withdraw it anytime."

If one day there are rumors that 'the banks are going to collapse,' and everyone rushes to redeem their silver, what will we have to redeem since we've already lent out all the silver we have?

Our bank has a royal merchant background. If there's a run on the bank, it would be a disgrace to the imperial court.

Currently, there are only 30,000 depositors in Shuntian Prefecture. We have reserved 1.5 million taels of "emergency silver," which is enough to cope with the situation.

If this were rolled out nationwide, with millions of depositors, how much emergency cash would need to be reserved? These are all things that need to be calculated gradually.

The Great Ming Bank is, after all, His Majesty's property. If it were to become short of working capital due to excessive spending on war or other reasons, it would be disastrous. The right thing to do is to refine the system during this pilot period.

Finally, he pointed to the "Personnel Directory" page in the ledger:
"The most crucial thing is people. If we train an expert now, we have to teach him to distinguish the purity of silver, calculate interest, and keep double-entry books, which will take at least half a year."

The Shuntianfu branch currently has twelve skilled workers, which is just enough to handle the situation.

Beizhili has seven prefectures, each of which needs at least five people, and another thirty-five people need to be trained.

If we were to expand this to all thirteen provinces across the country, we would need at least two hundred skilled workers, but we can't even gather one-tenth of them right now.

"We can't let a novice do the job, can we? If they misidentify the silver's purity or miscalculate the interest, they'll either lose the bank's silver or anger the depositors, which would cause even bigger trouble."

As Zhu Youjian listened to these words, his tense body gradually relaxed. He frowned, and the urgency in his eyes slowly faded, replaced by a sense of sudden realization.

"I see……"

He murmured to himself, realizing that he had previously thought that the bank was a "money-making business," but now he understood that the intricacies involved were far more complex than those in the imperial court.

"I thought that as long as His Majesty endorsed me, everything would go smoothly. I didn't expect there to be so many things to consider."

"I don't know how His Majesty came up with this bank system. It's about currency exchange, lending, and even 'inter-city remittance.' These things are simply unheard of."

Upon hearing this, the steward immediately lowered his head, his tone almost pious:
"His Majesty is a wise ruler descended from heaven, and his thoughts and ideas are beyond the comprehension of us ordinary mortals."

Just consider this method of exchanging 'Heavenly Revelation Treasure Notes' for deposits: it reassures depositors while freeing up funds for other uses. We couldn't come up with such a brilliant idea even if we racked our brains.”

As the two sighed with admiration, no one knew that Zhu Youxiao's intention in establishing the Daming Bank was far more than just "making money".

In his knowledge, derived from a later-generation liberal arts doctorate, this bank was merely the first step in "controlling financial power."

Once bank branches are established nationwide, and the Tianqi Treasure Notes are fully accepted by the people because they can be deposited, lent, and exchanged, he will be able to quietly reclaim the right to mint coins, allowing the imperial court to truly control the "purse strings."

Of course, the intricacies of this "money printing" process must be carefully considered.

If paper money is printed recklessly to raise military funds and fill deficits, the more paper money is printed, the less valuable it becomes. In the end, people will prefer to use silver or grain as currency, and paper money will become worthless. All the previous efforts will be in vain.

Therefore, he had long ago set a rule: for every million taels of paper money printed, there must be a corresponding 500,000 taels of silver or equivalent grain and cloth as a "reserve fund" to ensure that the paper money would not depreciate too quickly.

Zhu Youxiao did not explain these methods of "reserve" and "monetary credit" to anyone in detail.

In this era where even "double-entry bookkeeping" is considered novel, talking about it too much might just cause unnecessary trouble.

He only needs to watch as the Daming Bank, like a sapling, first takes root in Shuntian Prefecture, then slowly grows to Beizhili, and finally spreads throughout the country. Once the tree is strong enough, he can use it to quietly reshape the finances and banking system of the Ming Dynasty, giving this impoverished and weak dynasty more confidence to turn things around.

And the other side.

Emperor Zhu Youxiao of the Ming Dynasty, who came up with such a brilliant idea as a bank, frowned deeply in the East Warm Pavilion of the Qianqing Palace.

He leaned back on the soft couch, holding an open memorial in his hand, the vermilion brush hovering in mid-air, hesitant to bring it down.

On the desk were piles of memorials, half a foot high, with the words "impeachment" written in ink on the vermilion covers, their sharp edges gleaming in the warm light.

This is the thirty-seventh memorial impeaching Yuan Keli received today.

"Your Majesty, please take a look at the memorial submitted by Zhou Yingqiu, the Governor of Southern Zhili."

Wang Tiqian, the personal eunuch, tiptoed in, placed a new memorial on the table, and spoke in a very low voice.

"Three other censors jointly submitted a memorial, saying that Yuan Keli 'possesses 100,000 soldiers, yet allowed bandits to capture Jiaxing, plunging the people of Jiangnan into misery,' and requested His Majesty to immediately summon Lord Yuan back to the capital to be punished."

Zhu Youxiao glanced at the memorial.

Zhou Yingqiu.
This man was from Southern Zhili. When his hometown was ravaged by war, he naturally couldn't sit still.

Zhu Youxiao reached out and picked it up, quickly scanned a few lines, and a cold smile curled at the corner of his mouth:
"Zhou Yingqiu certainly knows how to talk a good game. What did he do during his tenure in Southern Zhili, besides speaking well of the gentry?"

After saying this, he threw the memorial back onto the table, piling it up with other impeachment memorials.

Wang Tiqian stood aside, not daring to respond.

He had followed Zhu Youxiao for a long time and knew that this emperor was more cunning than anyone else.

Yuan Keli's inaction in Jiangnan was not due to "ineffective suppression of the rebellion," but rather had a deeper purpose.

Zhu Youxiao leaned back on the soft couch, his gaze drifting out the window.

The snow outside the palace had not yet melted, and the glazed tile roof was covered with a thick layer of white, as if the Forbidden City was wrapped in a layer of silver armor.

These officials impeached Yuan Keli because they were dissatisfied with his policies.

but.
The so-called "sitting idly by and watching the bandits grow stronger" was nothing more than something he asked Yuan Keli to do.

The problems in Jiangnan are deeply rooted.

From the Jiajing to the Wanli reigns, gentry took advantage of the privilege of "tax exemption" to annex land and conceal the population.

Grain merchants on the Grand Canal colluded with officials, embezzling 30% of the grain from each boat, leaving the common people with only scraps.

The pirates of Taihu Lake even colluded with the gentry, dividing half of their loot and using the other half to bribe the government.

If these malignant tumors are not eradicated by taking advantage of the war, and the army is only sent to quell Wang Haoxian, Jiangnan will still be in chaos in a few years.

Another issue is population.

By the end of the Wanli era, the population of the Ming Dynasty had exceeded 100 million, but there were only 700 to 800 million mu of arable land, less than 7 mu per person. The number of refugees was increasing, and in Henan and Shaanxi, disaster victims even resorted to cannibalism.

Although Wang Haoxian's rebel army was brutal, it was also subtly reducing the surplus population.

Half of the refugees in Songjiang and Jiaxing were taken hostage by the rebel army, and many died in battle or starved to death. Once the war was over, the remaining people were able to receive unclaimed land, and the conflict between people and land would naturally ease.

But he couldn't say these words to his ministers.

Most of the officials in the imperial court had connections with the gentry in Jiangnan, either because they had accepted bribes or because their families owned land in Jiangnan. Their impeachment of Yuan Keli was simply because they were afraid that if the rebel army continued to cause trouble, it would burn their own interests.

If he were to reveal his intention to "use the chaos of war to clear silt and reduce the population," he would likely be condemned as a "tyrant," and it might even lead to a mass resignation of officials.

"A decree was issued to the cabinet to draft a reprimand for Yuan Keli."

Zhu Youxiao suddenly spoke, his voice tinged with weariness.

“They said he was ‘delaying his advance, allowing the bandits to spread,’ and ordered him to ‘annihilate Wang Haoxian within three months, or else be dismissed and investigated.’”

Wang Tiqian was taken aback for a moment, then bowed and replied, "This servant obeys the decree."

This decree, though seemingly stern, was in fact an explanation to the imperial court.

The "three-month deadline" is enough for Yuan Keli to complete the dredging. The "dismissal and investigation" is just empty talk. After all, Yuan Keli holds military power in Jiangnan. If he is really punished, Jiangnan will be even more chaotic.

Zhu Youxiao watched Wang Tiqian's departing figure and sighed softly.

This emperor, though seemingly possessing the entire realm, was constantly hampered by various constraints.

To reform Jiangnan, one must contend with impeachments from the entire court.

If you want to implement new policies, you have to take into account the backlash from the gentry.

Even when borrowing money from banks to accumulate wealth, people have to take it slowly to avoid triggering a bank run.

The three censors jointly resigned, saying that "His Majesty favors Yuan Keli and disregards the lives of the people in Jiangnan."

Yesterday, the Minister of Revenue submitted another memorial, saying, "The military pay is insufficient. I request Your Majesty to suspend the Academy of Sciences and its workshops to save expenses."

These people are either genuinely confused or pretending to be confused; they only care about protecting their own interests and don't care about the fate of the Ming Dynasty.

I'm afraid these people will try some tricks on him behind the scenes.

after all.

Faced with the loss of their own interests, these officials were capable of doing things that were detrimental to the interests of the Ming Dynasty.

but
No matter what these people are thinking, they can't change his mind.

Once Yuan Keli has cleansed up the cancerous growths in Jiangnan, once the Daming Bank has successfully piloted its program in Shuntian Prefecture, once the newly appointed scholars have grown up, and once his new policies are gradually implemented, everything will get better.

However, this process is destined to cause hardship for the people of Jiangnan.

He, as the emperor, also had to bear all the pressure and criticism.

But he was the emperor, responsible for two capitals and thirteen provinces. If something really happened...
As the emperor, he must also be able to bear the responsibility!
PS:

1 point of interest = 1%, 1 cent of interest = 0.1%.
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(End of this chapter)