Back to the end of Ming Dynasty to be a warlord

Chapter 499 Low Coupon Bonds
New book for collection: "The Rise of Great Powers 1900"

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Keynes, a famous economist in later generations, believed that: when there is enough labor and raw materials to increase productivity, the issuance of money will not push up prices, but will only increase goods and services.Supply and demand are linked, and prices are not affected.

In the later generations of Germany, the economy contracted after World War I, and all gold reserves were used for bad debts. Inflation reached the point where buying bread required a car to pull money, and the economy completely collapsed!
After Hitler came to power, he adopted currency reform and issued a large number of currencies without gold backing, which changed the German economy in an instant.It is because of the use of productivity to support the currency.A large amount of currency issuance will never cause inflation as long as there is corresponding production.

And did the Ming Dynasty lack raw materials?In the era of agricultural economy, raw materials basically come from agriculture, and the agriculture in the south of the Yangtze River seems to be sufficient to provide sufficient raw materials for handicrafts.Lack of productivity?The productivity in the agricultural era was mainly labor, and labor never seemed to be a problem in China.

In the absence of raw materials and productivity, the issuance of corresponding currency will not only prevent inflation, but stimulate production.

Of course, the civil servants of the Ming Dynasty could not reach the realm of the famous economists of the later generations. In fact, Yang Chao also had only a half-knowledge. It was only then that the Jiangnan Bank was established, and through the issuance of bonds, in the name of silver, the government's credit was turned into currency.

From the point of view of future accounting, currency is actually not mysterious, it is just a tool used for monetary statistics, just like the ruler in the hand of a craftsman, it is just used to measure the accounting data of production and consumption.

However, in an economy like Daming, which is extremely short of heavy metals, the shortage of precious metals is equivalent to a shortage of accounting tools, resulting in the inability to naturally expand production to her due level due to the inability to record and liquidate.

Of course, Yang Chao is also worried about the inflation caused by the excess money supply, which may even lead to the collapse of the paper currency system he created, so he has always been concerned about the price level.

Let Nassau organize bank accountants to conduct continuous statistics on the prices of [-] kinds of consumer goods and basic raw materials, such as grain, cotton cloth, silk, porcelain and even wood, which are the most common in the market, as a kind of price index.

The result of this price index shows that since the issuance of banknotes, the price level has only increased by 5.00%.

Nassau also believes that the currency system designed by Yang Chao is effective.

But he remained strongly opposed to printing an excess supply of paper money without silver as a reserve, even if these were secured by government bonds, that is, Nassau refused to print paper money in exchange for government bonds.

Jiangnan Bank has collected 2000 million taels of silver since its establishment three years ago, but has issued 5000 million taels of silver bills, of which 3000 million taels are used to buy bonds issued by the government, and more than half of the banknotes have no corresponding silver as a guarantee , Nassau thought it had reached its limit.

You must know that in order to maintain stability, the Bank of Amsterdam in the Netherlands has never provided loans to individual customers. It only conducts the most conservative deposits and exchange businesses. These two businesses have almost no risk. Basically, how many bank notes are printed? There is as much gold and silver in it.

It is precisely because of this ultra-stable credit that Amsterdam has become the clearing center of Europe.

Based on the experience of the Dutch, Nassau believed that Jiangnan Bank had excess cash. Even private banks in Europe did not dare to issue bank notes that exceeded twice their reserves, otherwise they would go bankrupt at any time because they could not cope with the run.

Yang Chao wanted to use orders to suppress Nassau, but Nassau threatened to resign. He would rather give up the high-ranking official and rich salary and even the interests of the Dutch than let his reputation be damaged. On the premise that he insisted that Yang Chao was wrong, he Resolutely refuse to compromise.

Yang Chao didn't really want to let Nassau go. In just over a year since he worked in Jiangnan Bank, he has standardized the bank's accounting operations and trained hundreds of qualified accountants who understand Western banking operations.

At the same time, the Songjiang Exchange was opened, and all kinds of goods and bond transactions were very active, faintly surpassing Nanjing.

Nassau also helped to train a group of port customs officers, such as appraisers, bell hands, etc., and fully adopted the advanced port management model of the Dutch to start trial operation of Susong Port.

Before Nassau's remaining value has been completely squeezed out, Yang Chao is really reluctant to let Nassau go away just because he issued a batch of bonds.

But it is really difficult to continue without issuing bonds. This is a time of war, and the consequence of not borrowing money to fight the war is like that of Emperor Chongzhen, relying on taxes to fight the war?This is too earthy.

Obviously, you can borrow money and borrow wealth a few years later, or even more than ten years later, to fight the war, why should you collect taxes for several years at a time?Even if the common people are squeezed dry, they can collect taxes for the sum of three to five years at most, and by borrowing money, Yang Chao can borrow ten years of taxes at a time. The safe operation is to slowly repay the debt with taxes after peace. A little operation, or even never repay the debt, just repay the interest.

And Yang Chao only issued 3000 million taels of bonds last year, which was basically equivalent to the tax revenue of that year, not much more than that.

This year's tax revenue has reached 3000 million taels. Yang Chao intends to borrow 5000 million taels in debt. Spending it slowly can not only stimulate the market, but also obtain sufficient military and administrative expenses, but Nassau refuses to print money to buy debts.

But if the bond is not issued, Yang Chao will really have no money.

Last year, more than 2000 million taels of taxes plus 3000 million taels of bonds made a total of more than 5000 million taels of silver, which seemed a lot, but when the army expanded to 80 people, the most ordinary soldiers paid more than ten taels of silver for a year. , 80 soldiers are more than 800 million taels, and the salaries of officers at all levels are more, not less than 800 million taels, which means more than 600 million taels of silver.

There is also the consumption of military supplies. The cost of a soldier’s iron armor is ten taels, as well as boots, socks and other clothes, as well as weapons such as long guns and bird guns. If you don’t have 30 taels, you can’t take it down, so another 30 million taels will go out.

The depreciation and loss of weapons during training, the loss of gunpowder and lead bullets, are even greater than the cost of building bird guns and cannons, which is another 1000 million annual expenditure.

The next step is to build naval warships. The Longjiang Shipyard has equipped Yang Chao with ten large ships and more than 800 two-masted river ships. A river ship costs 5000 taels of silver, and a sea ship costs ten thousand taels. In addition to the calculations, a large number of cannons must be equipped with it, which will cost more than 500 million taels of silver. In addition to the salary of the navy, the maintenance of the warship, etc., the money spent on the navy will not be less than 1000 million taels.

Military expenditures alone amounted to 800 million taels of silver. Yang Chao also increased the salaries of officials and adopted a policy of high salaries to support honesty. Even though the proportion of officials in the Ming Dynasty was far smaller than that of later generations, 1000 million taels of silver was still indispensable. .

So almost all the money obtained last year was spent, and this year I had to buy bonds again, otherwise, not to mention that there would be no military pay, even the interest on the previous bonds would not be paid.

You must know that in order to promote bonds and let the common people accept this method of lending money to the government, Yang Chao has always adopted a high interest policy, with a monthly interest rate of 3000%, and a yearly interest rate of 1000%. The [-] million two-year bonds he owes, The annual interest is [-] million.

The debt burden is quite heavy, but it still needs to be borrowed. However, this year Yang Chao does not intend to pay high interest rates, but to launch low-interest bonds.

Where is there any country that borrows usurious loans? Naturally, the interest on national debt is much lower than that on loans. The interest on national debt that is common in later generations generally does not exceed ten percent a year, and is often around seven percent, or even Below 5.00%.

The level of national debt interest is often related to the creditworthiness of the country. Countries such as the United States with high credit ratings have low interest rates on national debt. Countries like Greece have to borrow more than [-]% interest, and of course they will default on their debts.

Yang Chao would not renege on his debts, and Jiangnan Metropolitan Governor's Mansion seems unlikely to go bankrupt at present, so Yang Chao felt that he should be able to borrow a large amount of debt with three percent of the annual interest.

As for the situation that Jiangnan Bank does not support, he intends to push it directly to the people.

There are basically three types of subscribers for the high-interest bonds issued by Yang Chao before, and about 3000 million taels are still held by ordinary people.

The first type is ordinary people, small and medium-sized businessmen with surplus money. They subscribed about 1000 million taels through the bank.

Of the remaining 2000 million taels, half of them were directly reserved for Jiangnan Bank, and the other half were contracted by various underwriters.

The reason for leaving 1000 million taels for Jiangnan Bank is not that 3000 million taels cannot be sold, but because Yang Chao wants to inject 1000 million taels of currency into the market through Jiangnan Bank. , which is unwise when inflation is low.

The other 1000 million was left behind by large and small pawnshops and banks. You must know that the pawnshop with the lowest interest rate in Huizhou has a monthly interest rate of about three cents, while the monthly interest rate on bonds is as high as three cents. As underwriters, they can still With a commission of one cent, you can buy ten taels of bonds with only nine taels of silver, which is obviously more profitable than their loans, so holding bonds is naturally a good investment.

Now that Jiangnan Bank is unwilling to buy it, and Yang Chao doesn't want to take away the circulating currency from the common people, the best targets for sale are naturally these pawnshops and banks.

But soon Yang Chao discovered the problem. These pawnshops and money houses reluctantly recognized the low-interest bonds, but they didn't hold them themselves, but fooled their customers, asking those customers who had money to go to exchange the bank notes for bonds. Banks and pawnshops get the underwriting fees directly.

(End of this chapter)