The Ming Dynasty: The opening scene features Zhu Di angrily accusing him of illegitimate succession.

Chapter 100: Solving the problem of the precious paper money still requires fighting the Japanese pirates.

Lin Yue thought for a moment and said, "I recommend Tang Zong, the former prefect of Suzhou."

Tang Zong was a man of great talent. In the past, Suzhou suffered from floods for several years, causing people to lose their homes and the tax revenue to exceed one million shi (a unit of dry measure). He ordered wealthy people to contribute rice to pay the tax, which shows that he cared about the people.

"Regarding the previous floods in Jiangnan, although his disaster relief efforts were somewhat insufficient, it was not that he did nothing; he simply made a mistake at the moment. While not without fault, his crime does not warrant this."

Lin Yue was at a loss; it was quite difficult to select the best from among the shortest of the feudal bureaucrats in the Ming Dynasty.

At least during his tenure in Suzhou, although Tang Zong did not completely eradicate the floods, he genuinely cared for the people and did not embezzle funds. Compared to those officials who concealed disasters and caused problems, he was still quite moral, at least he tried to provide disaster relief.

Upon hearing this, Zhu Di did not reply immediately. Instead, he said to the eunuch Hou Xian beside him, "Go to the back hall and check the screens of the officials. Report back on Tang Zong's recent condition."

Hou Xian bowed and accepted the order, then quickly retreated into the rear hall.

A moment later, he quickly returned to the hall, bowed and reported: "Your Majesty, Tang Zong is from Pingyang, Zhejiang. He was a Jinshi in the thirty-fourth year of Hongwu. He was initially appointed as the Assistant Surveillance Commissioner of Henan. During his tenure, he investigated wrongful convictions and rectified official corruption, earning a good reputation. Emperor Taizu once praised him as capable of handling affairs."

Later, he was transferred to Suzhou as the prefect. At that time, Suzhou suffered from floods for several years, and many people fled. Tang Zongfeng was transferred to assist in the management of the Suzhou-Songjiang River. Due to continuous heavy rain and excessive siltation of the river, the progress of flood control was slow and the spread of the disaster could not be contained in time.

"Officials impeached him for his incompetent management and ineffective flood control, which resulted in the flooding of farmland and the displacement of people." He is currently imprisoned in the Dali Temple jail awaiting judgment.

Zhu Di nodded and said in a deep voice, "Tang Zong is indeed a good candidate."

He had both disaster relief experience and empathy for the people, and had served as the Henan Provincial Surveillance Commissioner, so he was familiar with the local situation.

He was then appointed as the Vice Minister of the Court of Judicial Review and sent to Henan to oversee the famine relief efforts. An additional 100,000 shi of grain and 50,000 taels of silver from the imperial granary were also dispatched to accompany him. The mission was to rigorously investigate officials who concealed the disaster and to ensure the well-being of the affected people.

With the locust plague in Henan resolved, the atmosphere inside the palace eased somewhat.

Zhu Di glanced at the cabinet ministers on his left and right, then changed the subject and said, "Minister Lin, now that the candidates for disaster relief in Henan have been selected, I have another matter to ask you."

"I have ordered the Ministry of Revenue to prepare 300,000 taels of gold and silver and 200,000 shi of grain as reserves. How should the newly minted paper money be issued? When should it be implemented to win back public support and ensure smooth circulation in the market?"

When the topic turned to state affairs, Lin Yue became slightly more serious: "Your Majesty, the matter of the precious paper money cannot be rushed."

Since the minting of the Great Ming Treasure Notes began in the eighth year of the Hongwu reign (1368), nearly thirty years have passed. Initially, the trading of gold and silver was prohibited, but the excessive issuance and lack of any anchor have led to the current situation where one string of notes is only worth a dozen or so copper coins. Merchants refuse to accept it, and the people have abandoned it, resulting in a complete collapse of its credibility.

Forcibly promoting the new banknotes at this time, without a solid foundation, would only be repeating the same mistakes.

Moreover, with only 300,000 taels of gold and silver and 200,000 shi of grain, they are hardly capable of undertaking a great task.

In the first year of the Yongle reign, the Ming Dynasty had just experienced the Jingnan Campaign. In the north, "north of the Huai River was overgrown with weeds," the population had plummeted, productivity was devastated, and the economy was in decline.

The annual income from grain was approximately 30 million shi (a unit of dry measure), which was equivalent to 5 million shi in silver (cloth, paper money, and silver). Commercial taxes amounted to only 300,000 taels of silver, and the annual output of silver mines was less than 2 million taels. The national treasury could immediately allocate less than 1 million taels of silver.

Simply put, the Ming Dynasty currently has a very abundant supply of grain. Two hundred thousand shi of grain is less than 1% of the national reserves, but the national treasury is empty, with less than one million taels of silver in reserve. Being able to come up with three hundred thousand taels is a huge investment.

Hearing this, Zhu Di was somewhat disappointed, but he didn't interrupt and continued to listen to Lin Yue speak.

Lin Yue: "If you want to introduce new currency, you need to establish two things first."

Firstly, sufficient reserves were prepared to anchor the new banknotes, so that the people would believe they could be exchanged for real goods.

Secondly, it was necessary to establish clear laws governing currency circulation, ensuring the circulation of new banknotes through legal means, strictly prohibiting counterfeiting and refusal of acceptance, and regulating the exchange system. For example, the currency exchange law established in the ninth year of the Hongwu reign (1380) needed to be strictly enforced, and excessive and cumbersome processing fees should be prohibited to prevent a repeat of the devaluation of old banknotes.

"As for the anchoring of the paper money," Lin Yue's gaze swept over the ministers in the hall, "I think we can temporarily set up several types: silver paper money, anchored to official silver; grain paper money, which can be exchanged for rice, wheat, millet and beans; and salt paper money, which is tied to salt certificates."

All three are daily necessities for ordinary people and are easily accepted.

Ultimately, silver notes were the easiest to circulate because silver had a stable value and could be used for both commercial trade and government tax collection.

If the time is right later, the remaining paper money can be abolished, and silver paper money can be widely implemented.

This method is similar to the early food ration system in later times. Food rations are anchored to grain, and can be exchanged for food rations. The various types of paper money proposed by Lin Yue are essentially "food rations" based on essential commodities such as silver, grain, and salt. People can exchange paper money for practical goods, which is why they will believe in and use it now that paper money has lost its credibility. It is a transitional solution.

Upon hearing this, Zhu Di frowned slightly and pressed further, "If that's the case, why not simply use silver as the sole anchor? Why create so many other categories?"

"Your Majesty is wise," Lin Yue replied, bowing. "It is not that I am unwilling, but that our Great Ming Dynasty's silver production is insufficient."

Currently, the government's silver reserves largely rely on imports from Yunnan silver mines and overseas trade, with an annual total output of approximately 76 taels and tax revenue of approximately 23 taels. This is far from sufficient to cover the total value of banknotes needed for the circulation of goods and government expenditures throughout the country.

If the currency is solely anchored to silver, the issuance of new banknotes will be constrained, making it difficult to meet market demand and creating stagnation.

"Your Majesty, I believe that Scholar Lin is absolutely right!" Yang Shiqi stepped forward and bowed as he spoke.

"Since there are limitations to anchoring solely to silver, why not implement multiple anchors such as gold, silver, grain, and salt, and use these to create a new type of paper money?"

The new banknotes could be exchanged for silver and gold, as well as for grain from official granaries and salt certificates from salt fields. This made the underlying asset more stable and also compensated for the inadequacy of reserves in a single commodity.

Upon hearing this, Lin Yue's eyes flashed with surprise, and he pondered to himself.

The person who could rise to the position of Grand Secretary in the Ming Dynasty was indeed no ordinary person. Yang Shiqi was so perceptive that he could instantly come up with the method of compound anchoring. It seems that the cabinet ministers of the Ming Dynasty were indeed quite capable.

However, this method also has obvious drawbacks.

Lin Ding composed himself and nodded in approval, saying, "Lord Yang's suggestion is excellent."

The new banknotes with a composite anchor essentially link their value to the world's physical reserves. Theoretically, this can balance stability and circulation, solving the silver shortage problem and allowing people to see the banknotes as if they were physical goods, thus restoring trust.

Changing the subject, Lin Yue said in a deep voice: "However, this is also its drawback. With this currency system, the upper limit of issuance depends entirely on the total physical reserves of the world."

Grain reserves fluctuate, silver mines experience periods of prosperity and decline, and salt permits are subject to quotas. If the issuance of new banknotes fails to effectively assess local conditions and exceeds actual reserves, goods will become scarce while banknotes become worthless, repeating the devaluation of old banknotes. Conversely, if the issuance is insufficient, trade will be difficult, leading to a sluggish market.

He raised his eyes and looked directly at Zhu Di, saying loudly, "Your Majesty, the key is not what to anchor it to, but the extent of its issuance."

Your Majesty, since the establishment of our Ming Dynasty in the seventh year of Hongwu's reign, when has our Ming Dynasty ever had a case of accurately controlling the amount of currency issued?

The excessive issuance of old banknotes in the past, which resulted in banknotes being worth less than a single coin, is clear evidence of this.

Even if we switch to a composite anchoring system now, without precise calculations and strict control, will we still repeat the same mistakes in the future?

Even if it were a newly established Bureau of Currency Issuance, could it guarantee the perpetual issuance of a reasonable quantity of new banknotes, not a penny more, not a cent less?

Zhu Di sat upright on his throne, his face solemn, and remained silent for a long time.

The answer is self-evident.

If the Ming Dynasty had been able to issue paper money steadily, the old paper money would not have collapsed to this extent, and the Ming court would not have needed to establish the Paper Money Administration Office, nor would it have needed to go through the trouble of reforming the paper money system today.

Lin Yue's question hit the nail on the head. Throughout history, those who governed the world were mostly well-versed in classics and history and were skilled in political maneuvering, but few were proficient in mathematics and understood economic laws.

Even if some talented individuals from the common people occasionally grasped the key points, they would either sink into obscurity or, even if they entered officialdom, would find it difficult to rise to a high position and wield the power of currency.

With him in charge of the Treasury, perhaps the desire of the emperor and ministers to over-issue banknotes could be resisted. However, if someone else were appointed, the amount of banknotes issued and how they circulated would likely depend on the emperor's and powerful ministers' whims rather than economic principles.

Under such circumstances, no matter how sophisticated the composite anchoring method is, it is difficult to overcome systemic flaws and human intervention.

Furthermore, the use of banknotes tied to multiple goods has significant limitations. If this method is implemented, the imperial court will lose its initiative in currency control and there will be a natural paradox of bank runs and arbitrage.

Currently, most countries use fiat currencies.

Seeing this, Lin Yue continued, "Your Majesty, given the current situation of the Ming Dynasty, if the new banknotes do not have a promise of being exchanged for goods, the people will find it difficult to believe and their promotion will inevitably encounter obstacles. If they are anchored to multiple goods, it will be difficult to regulate and reform them."

In my opinion, we should have used silver, salt, and grain as anchors, so that the people could use the new banknotes to exchange for silver at the government treasury or to withdraw salt permits, thus establishing a foundation of trust.

Once the new banknotes circulate throughout the land and public sentiment is stable, other banknotes will be gradually phased out, transitioning to a system based primarily on the imperial court's credit. At that time, there will be no need for a strong anchor, and the banknote system will circulate naturally.

"Absurd! Utterly absurd!"

Xie Jin suddenly stepped out of the line, pointed at Lin Yue, and glared at him angrily, shouting insults.

"Erlin used his clever words and flattering manner, but after talking for a long time, he finally revealed his treacherous nature!"

How can the imperial court rely on such illusory credibility to issue paper money? The credibility of paper money is already collapsing. Paper money has always been issued indiscriminately, and the people's savings have all turned into worthless paper!

Now you want the court to do this again, which is clearly an attempt to seize wealth and plunder the people's money and grain.

Lin Yue, you are truly a treacherous, wicked, and treacherous minister who brings disaster to the country and its people!

According to Xie Jin, the credibility of the Ming Dynasty was basically negative; from Zhu Yuanzhang down to officials at all levels, very few people kept their word.

The trust of the people had long been exhausted by the repeated over-issuance of paper money, and the so-called credibility of the imperial court was nothing but a fart.

Once people have been tricked, why would they fall into the same trap again? After all, nobody is a fool; how could anyone believe that a piece of paper without any physical basis could be used as money?

At least he, Jie Jin, didn't believe it.

"Jie Jin, stop talking nonsense!" Lin Yue retorted sharply. "You are just a pedantic scholar who has only a rudimentary understanding of literature and knows nothing about economics, yet you dare to spout such nonsense here."

Gold and silver have no inherent value (at least not in ancient times). The people believed in and used them, which was essentially a matter of trust, just a physical object in disguise!

Besides, what if we can't use currency? Does physical anchoring guarantee stability?

With silver mines in Yunnan experiencing declining production year by year, wealthy merchants are hoarding silver, causing silver prices to rise daily. In years of abundant grain harvests, storage facilities are vulnerable to embezzlement, and salt permits are subject to quotas. Are these physical goods truly foolproof?

Moreover, even if everything goes perfectly smoothly, how can these goods possibly fill the Ming Dynasty's financial crisis?

Lin Yue stepped forward, his gaze sweeping over the assembled officials, and said loudly, "The root cause of the financial crisis in our Great Ming Dynasty lies in the shortage of gold and silver and the difficulty in transporting grain."

With local silver and copper mines scarce and of low quality, over 90% of the silver circulating in the country relied on imports from overseas. How could this possibly cover the needs of the nation's trade and government expenditures?

"Even if the new banknotes are solely pegged to silver, the issuance volume will still be constrained, and trade will still be hampered by a lack of silver, making the money shortage difficult to resolve!" Lin Yue changed the subject and said slowly.

"Unless... our Great Ming can find a land rich in gold and silver reserves, conquer it and seize it for ourselves, thus controlling the source of mineral resources, we can completely get rid of the gold and silver shortage problem, and only then will the reform of the currency system have a real foundation!"

Upon hearing this, Zhu Di's eyebrows shot up sharply, and he quickly guessed what Lin Yue was talking about: "You mean, attack Japan?"

"Exactly!" Lin Yue nodded repeatedly, his expression excited and his tone impassioned.

"Your Majesty is wise! The Japanese archipelago is rich in gold and silver mines, especially the Iwami Silver Mine and the Sado Gold Mine, which produce hundreds of thousands of taels of silver annually and are an important source of overseas silver flows!"

"If our Great Ming were to send troops to conquer and pacify Japan, and seize control of its gold and silver mines, we could obtain a continuous supply of silver. This would not only meet the needs of anchoring new banknotes, but also replenish the national treasury and alleviate the currency shortage. At that time, whether it is a composite anchor or a fiat currency, we could implement it with ease, and the nation's fiscal problems would naturally be solved!"

Upon hearing this, all the officials in the hall showed expressions of surprise.

What do you mean, Lord Lin? Aren't we all supposed to be high-minded civil officials of the Ming Dynasty? How can you keep talking about attacking other countries?

This doesn't align with the fundamental stance of civil servants.

No one expected that Lin Yue would suddenly propose the idea of ​​conquering Japan.

Yang Rong, Yang Shiqi, and the others looked at each other in bewilderment, while Xie Jin looked furious, almost ready to unleash a torrent of abuse on the spot.

Seeing that the topic had veered off course again towards foreign conquests, a hint of helplessness flashed in Zhu Di's eyes.

All he ever wanted in his life was to lead his iron cavalry to conquer the northern deserts, eradicate the remnants of the Yuan dynasty, and restore the prestige of the Ming dynasty's northern border.

But Lin Yue was different. Whenever he heard of any place with potential profits or hidden dangers, he couldn't wait to send troops to fight, as if all the nations of the world should be incorporated into the Ming Dynasty's territory before he would be satisfied.

Shaking his head, Zhu Di forcefully steered the conversation back to specific matters that could be implemented as soon as possible.

"Conquest is not something that can be accomplished in a day, so let's leave that aside for now. As for the reform of paper money, what I need are concrete methods that can be implemented right now."

Zhu Di continued, "Previously, I ordered the Ministry of Revenue and the Salt Transport Bureau to rectify the salt law, following the system of the twenty-fourth year of Hongwu, clarify the taxation of salt producers, strictly investigate private salt, and divide salt into regular shares and stockpiled salt. Merchants who purchase salt must first pay grain or paper money and then use a permit to purchase salt."

According to reports from the salt transport offices of Lianghuai and Liangzhe, the flow of salt permits is now smoother than before, and the practice of smuggling salt has also subsided considerably.

"Salt is the lifeblood of the people, and the government's salt monopoly is a vital source of national profit." Zhu Di leaned forward slightly.

"If the salt law reform is successful, I will order all merchants in the country who wish to apply for salt permits to exchange them for the newly made paper money. Each salt permit in Lianghuai will cost 200 strings of paper money, and each salt permit in Liangzhe will cost 180 strings of paper money. The number of salt households in the local area will be adjusted slightly according to the salt paper money system."

Merchants who wanted to trade salt needed to exchange their paper money for permits. In this way, with salt as their anchor, the circulation of these paper money was naturally not a problem, and credit would gradually recover.

After saying that, Zhu Di raised his eyes and looked at Lin Yue.

Upon hearing this, Lin Yue, unusually, did not refute it. After pondering for a moment, he slowly nodded.

The method of paying salt in paper money was an effective supplement to the paper money system during the Hongwu era. Salt certificates were tied to official salt, which merchants had no choice but to accept, thus paving the way for the new paper money.

The practice of paying taxes on salt is good, but its success or failure depends entirely on the stability of the salt law reform. If salt producers do not rebel, private salt production does not flourish, and salt permits are not issued indiscriminately, it can be sustained. Once salt permits are over-issued, the salt law will collapse as quickly as paper money.

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