The Heroic Age of the Late Qing Dynasty

Many comrades in the liberated areas knew almost nothing about finance. Fortunately, however, the comrades in the commerce department had all received relevant training, and some were even international students, so they were naturally not completely new to finance.

After Lin Chengdong understood the situation, he couldn't help but admire the Germans' cleverness. There wasn't even any cash involved. The operation was simple: it was like a bank buying bonds from the liberated areas, using the money to buy German machinery. In fact, it was essentially helping Germany eliminate outdated production capacity. Selling an old factory meant building a new one. Why not?

The banks were originally going to lend money to these factories to replace machinery and equipment for industrial upgrading. Now there are liberated areas willing to be suckers. Although the banks are still lending money to these factories, it is equivalent to the liberated areas spending money to help German factories replace machinery. Where can you find such a good thing?

As for how much money the bank would receive from the Liberated Areas in the future, it would basically be a net profit. Perhaps, for the German bank, there was no better deal in the world than this; it was a double profit. As for the possibility of the Liberated Areas not paying back, the German bank hadn't considered it at all. Germany was strong, China was weak, would China dare to default on its debts to Germany? Furthermore, Zhang Yinghao had never considered the issue of defaulting on his debts. He would never default on a transaction involving real money. Of course, if he took shortcuts in the future, he couldn't blame anyone else.

Chapter 591:

This is just because someone is sending money, what a great opportunity. This is also the reason why Zhang Yinghao received the telegram requesting instructions. In fact, Zhang Yinghao has wanted to issue bonds for a long time. Now that there is such a demand in Germany and someone is willing to buy the bonds and pay for them, Zhang Yinghao will naturally not be polite.

Zhang Yinghao, who came from later generations, knew very well that the Chinese tradition was to live within one's means and spend as much as one earns. One could even borrow money from others and then quickly pay it back. This idea is not wrong, but it is very inappropriate in the industrial age. Because industrial development requires a lot of capital, it is necessary to borrow money. Therefore, the situation was completely reversed later, and the debtor became the boss. However, if you really want to develop industry, it is not like speculating in real estate. What's the big deal about owing money? You can just pay it back slowly. Can you still send troops to attack?

Therefore, Zhang Yinghao knew that for the liberated areas, it was a good thing for someone to lend money, or it would be beneficial to both parties. The Forward Party used the Germans' money to buy German machinery and equipment, and the money was still in Germany, while those who betrayed

The risk here is the debt repayment ability of the Progressive Party. But even if the Progressive Party has no debt repayment ability, Germany will not lose anything, because the industrial upgrading itself is

In the future, these backward production capacities will be eliminated, and Germany's national strength will be strong.

Therefore, Zhang Yinghao's telegram was simple. It first affirmed the comrades' achievements and then instructed: "As long as the interest rate is low and the discount is not too large, and Germany can take as much as we allow, we can issue as many bonds as we want. We can even use various materials in the liberated areas as collateral, and all the funds raised will be used to purchase German factory machinery and equipment. However, the repayment period should be extended as much as possible, preferably paying the interest first or starting the repayment in installments after a few years..."

Zhang Yinghao thought very clearly. Since he was going to owe money, it didn't really make any difference whether he owed 100 million or 1 billion. Since he was going to owe money, it would be better to owe more. Owing a little would have no meaning. At this time, Zhang Yinghao suddenly understood why Zuo Zongtang was willing to borrow money at high interest rates when he was recovering Xinjiang, and even borrowed from whoever offered the highest interest. At least, these capitalists supported Zuo Zongtang in recovering Xinjiang and hoped that Zuo Zongtang would win. Without interests, who would support Zuo Zongtang? Without a source of funds and the support of the great powers, even if Zuo Zongtang had great ability, he would not be able to recover Xinjiang!

Many things seem difficult, seemingly impossible, but are actually easier to succeed with. Take, for example, the Jiefang District's issuance of bonds in Germany. It was initially practically impossible, but once it was truly pushed forward, it proved to be quite straightforward. For Germany, finding an outlet for its capital was a boon, and if it could have taken advantage of the opportunity to enter the Chinese financial system, even better. The Jiefang District also needed German capital, and the two sides hit it off, like a tortoise gravitating towards a mung bean, and the deal was done.

After Lin Chengdong and his team received the telegram from Zhang Yinghao, they immediately understood what was going on. At the same time, they also knew that with the money from issuing bonds, the previous plans were basically scrapped and they had to start all over again. The busy days had arrived.

When Lin Chengdong arrived at his workplace, he saw Lao Fu, Li Shengnan, and other international students working, and even saw Liu Dehai working there. Lin Chengdong nodded inwardly. Regardless of any ideological differences between Liu Dehai and himself, they were all Chinese, having left their homes. As long as they were willing to work for the liberated areas, it would be fine. Liu Dehai seemed to have forgotten the unpleasantness they had had in the cafe a few days ago. Seeing Lin Chengdong, he immediately nodded and continued to work.

Lin Chengdong gathered all the comrades and international students and said, "Our previous plan was too conservative. This procurement will not only complete our industrial system, but also expand it. We need to re-plan which ones are the latest technologies, which emerging industries can complement our Liberated Areas, and which ones can upgrade the Liberated Areas' equipment."

Lin Chengdong glanced around and asked, "Where's Xiaoyu?"

"Oh, he's with his mentor now, hoping his mentor can help him collect the latest information on metallurgy in Germany."

"Well, thank you for your hard work."

"Captain Lin, are we buying back as many of the latest technologies and emerging industries as possible?"

"Yes, these are the trends of the times, like communications and chemicals. Advanced technology is certainly good, but we also have to see if Germany is willing to sell it. We must first achieve our minimum goal and complete the entire industrial system of our Liberated Area before we discuss other things. Furthermore, not everything that is advanced is suitable for our Liberated Area. If it's not compatible, or if it's too advanced and no one can operate it, then buying it will just be a pile of scrap railways, a waste of money."

"That's right. Let's complete a system first. Outdated machinery and equipment are not bad. The right one is the best. It must suit the actual conditions of our liberated areas."

Liu Dehai couldn't help but speak up, "Mr. Lin, building an industrial system is no simple matter. It can't be done without billions of gold marks, at least tens of billions of marks, right? Does your Progressive Party have such a large sum of money? I don't know where your money comes from, but to get such a large sum of money, you won't be selling out national sovereignty and interests in exchange, right? Moreover, if we can't raise this money, won't all our efforts be in vain?"

Lin Chengdong listened, but he wasn't angry. Instead, he smiled and said, "How could it be all in vain? Those who plant trees will enjoy the shade! If we know about Germany's industrial strength and production capacity, it will be very valuable. If we investigate the situation thoroughly, even if we don't have the money to buy it this time, or can't buy it, it will be easy to buy it again in the future. As for selling out national sovereignty and interests, we in the Progressive Party will never do that."

After hearing Lin Chengdong's words, many of the overseas students looked disappointed. No one knew how much money the Liberated Area had, but no one believed it had enough to complete this project. Billions of Reichsmarks? China was so poor, how could it possibly have that much money?

Lin Chengdong didn't bother to explain, but instead asked, "Shengnan, you studied chemistry, so you should know the importance of three acids and two bases. We need ammonia synthesis technology, and we need a high-temperature and high-pressure reactor. Do you know where we can get it?"

"These are the latest things. I don't know if I can get them."

"If we don't have a finished product, finding the information would save us a lot of searching. These things are emerging industries right now, and Germany doesn't attach much importance to them yet. The level of confidentiality isn't particularly high, so we need to get it as soon as possible."

"What if the Germans refuse to export to us?"

"Haha, then let's find someone from another country to do the purchasing for us and see if it works. Countries like Italy and Austria-Hungary have good relations with Germany, so having them do the purchasing shouldn't be a problem. There are also plenty of people in these countries who want to get rich. If you don't take advantage of money, you're a jerk. Three-legged frogs are hard to find, but people who want to get rich are everywhere. But the most important thing is the information. With the information, even if we slowly design and manufacture it ourselves, we'll eventually be able to make it. Where there's a will, there's a way!"

Lin Chengdong saw the expressions on everyone's faces and knew what they were thinking. He smiled again and said, "You haven't given up hope yet, have you? Our Chairman once said that as long as we don't despair and think about dying, as long as we are alive and can still work, there is hope. We have already achieved our minimum goal, and we haven't encountered the terrible situation of Germany being unwilling to do business with us. Isn't that great? We are only the first batch. When the Germans truly understand the needs of the liberated areas and realize that China is a super market that can absorb Germany's excess products, they will take the initiative to find us to do business, and it will be easier to do business with us in the future."

"How did this become a business deal? Letting Germany make money from our country? That would be a huge disadvantage for us."

"We in the Forward Party welcome equal trade. Even if there's a huge price difference between industrial products and raw materials and agricultural products, we must bear this difference and let Germany make money. At least the trade isn't about robbery, but rather a voluntary transaction between both parties. There's no such thing as taking advantage or losing out. We don't have that, so we have to endure this price difference. There's nothing we can do about it. It's a matter of willingness..."

Lin Chengdong found it much easier to negotiate business with factory owners. He didn't need to discuss concepts, only money. Furthermore, a businessman didn't need to worry about establishing an industrial system or overly consider political issues; it was simply a simple transaction.

Germany is now planning to do large-scale business with the liberated areas, and Lin Chengdong is naturally very happy. Anyway, no matter who comes to negotiate, I just need to keep my promise.

However, this deal ultimately involved dealing with the German government, so it was necessary to deal with them. Talking to a government official required careful consideration. During training, Lin Chengdong and his colleagues had asked about how to interact with people from powerful countries. He still remembered Chairman Zhang Yinghao's words: "A dialectical materialist, when negotiating with imperialists, simply tells them to abide by their rules, not to undermine or challenge them, and to benefit them. Imperialists always seek to maintain their advantage, seeing only the benefits and not the harm, unaware of the ever-changing nature of things, so they simply follow their advice and try to deceive us..."

"Mr. Lin, as a government official, I need to consider the political consequences of a transaction like ours. Issuing bonds and purchasing machinery to develop industry back home will inevitably strengthen the military. Do you deny this?"

"You are right, how could we deny it? If we want to contain Britain, Russia and France in the Far East and attract their attention in order to reduce the pressure on Germany, we must have a certain level of strength. His Majesty the German Emperor and I also said so. Our army is still a peasant army. It can be said that it is no match for the armies of Britain, France, Russia and other countries, so we need the help of the German Empire. You sell us these backward machines and equipment, which is actually helping Germany eliminate backward production capacity, which will make Germany's overall strength stronger. As both of us become stronger, the threat from countries like Britain, France and Russia will be reduced. Moreover, do you think that we Chinese can threaten your country with these backward machines that your country has eliminated?"

Hearing the threats against Germany, the German Ministry of Economics official in charge of the bond issue unconsciously revealed a hint of sarcasm at the corner of his mouth. The official himself may not have been aware of the change in expression, but Lin Chengdong saw it clearly.

"It's still unknown how much of Britain, France, and Russia's forces you can tie down. However, these machines may be backward in the German Empire, but in other countries, they are very advanced. This is something we must take into consideration."

"The stronger we are, the better it will be for Germany, isn't it? Our country is a peace-loving country, but if necessary, we are willing to go to war against Britain, France, and Russia. Then Germany might not feel as much pressure. Our two countries are thousands of miles apart. China and Germany are natural friends. Don't you think so?"

"You're absolutely right. China and Germany do have natural advantages due to their geographical location. However, that doesn't mean we're willing to cultivate a competitor."

"Haha, how many years do you think it will take for us to be qualified to become Germany's competitors? You know that today's industry is no longer just about building a few factories. It requires a lot of money and resources, so industry is actually extremely exclusive. Since Germany transferred its eliminated obsolete production capacity to China, it means that China's industrialization must always lag behind Germany. Because China will no longer be able to accept products from other countries, its industrial upgrading must also rely on Germany, and it must import new equipment and purchase technology from Germany. Therefore, this time Germany eliminated obsolete production capacity, not only did not cultivate a competitor, but instead cultivated a huge market that will always need Germany. Moreover, does the great Germany still worry that the currently backward China will one day surpass Germany? This is absolutely unimaginable!"

"Of course, that's impossible... Well, you seem to have convinced me." "No, it's not me who convinced you, but wise people see the benefits of this. From now on, Germany will no longer have a younger brother who will always follow Germany's heels. Why would Germany need to go to war and sign treaties like Britain and France to open up the Chinese market? China will naturally need a large amount of German goods and technology, and will naturally come to Germany to buy them. China will naturally become a market for Germany. Moreover, this transaction is completely risk-free. If small and medium-sized enterprises need to replace obsolete equipment, they will inevitably need loans to upgrade, and they will naturally seek help from banks. If Germany as a whole replaces outdated equipment with new equipment, Germany's productivity will become even more developed, and its national strength will increase by at least ten percent. Moreover, the temporary losses on the banks' bonds can be fully recovered from the loans to these companies that eliminate outdated equipment. Most importantly, China is weak, and Germany is strong. Since ancient times, strong countries have always defaulted on their debts to weak countries. How can a weak country default on its debts to a strong country? Therefore, Germany has nothing to lose and no risks at all!"

"Oh, hahahaha, alright, since the bigwigs above have agreed, I have no reason to stop you. So, happy cooperation."

Seeing the hand extended by the German opposite, Lin Chengdong breathed a sigh of relief. Damn, it's really easy to see the King of Hell, but it's hard to deal with the little devil. If he can't convince these people who actually do the work and keeps dragging his feet, everything may be in vain.

Lin Chengdong immediately extended his hand and said sincerely with a slight tremor in his voice: "It's a pleasure to work with you!"

"Okay, then let's discuss the specific details of the bond issuance. Our bank..."

Chapter 592:

Germany wasn't the only country to extend a warm welcome to the liberated areas. The United States did the same, and the Ottoman Empire also welcomed the arrival of the troops sent from the liberated areas. As a commercial empire with an open door policy, the United States was a natural place for welcome. But why did the Ottoman Empire welcome the comrades from the liberated areas so much? A look at the ten Russo-Turkish Wars reveals this.

The Ottoman Empire, utterly bullied by Tsarist Russia and known as the "Sick Man of West Asia," was burdened by the same territorial cessions and indemnities as the Qing Dynasty, and the pressure was immense. Now, a country from the East offered to help contain Tsarist Russia in the Far East. This was a shared interest, so how could they not welcome it? Furthermore, since it involved the exchange of political prisoners, a matter of immense concern to the Ottoman Empire, they welcomed it with open arms.

Abdul Hamid II, Sultan of the Ottoman Empire, even personally received the delegation from the liberated areas, and the negotiations between the two sides went very smoothly. For the sake of political stability, Abdul Hamid II was eager to pack up all the political prisoners who troubled him and send them to the liberated areas, which would save them a lot of trouble. Although Abdul Hamid II knew that many of these political prisoners were talented people he had painstakingly trained, those who caused trouble proved that the more knowledge one has, the more reactionary one is. These people were the gravediggers of his empire, and naturally he hated them deeply. These political prisoners were a heavy burden on the empire, and Abdul Hamid II was simply sending a plague.

Of course, in order to obtain these political prisoners, the liberated areas also made a promise to Abdul Hamid II: these political prisoners must voluntarily sign employment contracts and were not allowed to leave China for at least 30 years. To this end, these political prisoners were even allowed to bring five or six immediate family members with them across the ocean to China. The Ottoman Empire readily agreed to this.

For these political prisoners, going to faraway China was a good option. After all, they had been severely persecuted and even imprisoned in the Ottoman Empire. Life was not easy, and many died in prison every year. Their lives were truly dark and gloomy. Even if it was a backward country in the East, even if they were forced to leave their homeland, it was better than staying in prison, right?

Of course, not everyone was welcome in the liberated areas. They had to have a skill. Monks, dedicated rebels, and those who only knew how to talk were not wanted. Scientists, engineers, teachers, and technicians were naturally welcome. As for whether these people wanted to continue living in China or leave after 30 years, that was up to them, as China by then would have no shortage of such replaceable talent.

Zhang Yinghao was delighted to receive telegrams of good news from various quarters. The Liberated Area had already taken its first step toward the world. Zhang Yinghao believed that the Liberated Area's steps would become faster and bigger, and its influence in the world would grow even greater!

Returning to China, the Liberated Areas were undergoing rapid transformation. The Progressive Party government, through a system of supply and marketing cooperatives, assumed responsibility for the basic supply of grain and oil throughout the country, controlling prices for grain and salt. Countless disaster victims and a low-cost labor force worked tirelessly in the Liberated Areas to build railways and ports, increasing investment in infrastructure. Following the implementation of these fundamental policies, particularly after the land distribution, the entire Liberated Areas immediately came to life, achieving remarkable results.

But in fact, all of this is just a flourishing scene on the surface, and there are countless problems inside.

"Chairman, we have huge financial problems right now. Our fiscal and taxation system hasn't been fully established, our fiscal revenue and expenditure are completely unbalanced, and our entire economic structure is completely unbalanced."

Finance Minister Fan Side and Central Bank Governor Bao Shilin came together. As soon as they entered the office, Fan Side spoke impatiently.

Zhang Yinghao knew all about these issues. He just didn't know what specific aspect Fan Side had noticed, so Zhang Yinghao smiled and said, "Tell me more about it."

This is a standard question from the Forward Party. Please elaborate on this question. I still don't understand it, so please analyze it in detail. The Forward Party emphasizes seeking truth from facts. If you don't understand something, ask. If you know something, you know it. If you don't know something, you know it. Those who pretend to know something and cause losses to the liberated areas, and who don't study hard themselves, will naturally be dealt with within the Party and sent to the Party School for training and education.

"Chairman, we've issued far too much banknotes. Even if we used all the paper money we've issued to buy up all the salt and grain in the Liberated Areas, it wouldn't even be enough. The Liberated Areas are completely living beyond their means. The currency is over-issued. If problems arise anywhere, our entire monetary and fiscal system could collapse. The Ming Dynasty's Baochao incident cannot be repeated."

Zhang Yinghao certainly knew that the Ming Dynasty had issued treasure notes, but he didn't know the specific development process. Of course, he also wanted to test Fan Side and Bao Shilin, so he asked: "What is this Ming Dynasty treasure note? Can you explain it in detail?"

"Mr. Chairman, the Ming Dynasty initially used copper coins. However, as you know, China has historically lacked copper mines. The booming commodity economy of the Song and Yuan dynasties meant that copper coins were no longer sufficient for market circulation. The Yuan government was initially very forceful, directly suppressing any resistance without reflecting on its policy mistakes, ultimately leading to its demise."

The Ming Dynasty inherited the reality of a shortage of copper coins. Therefore, in 1375, the seventh year after the establishment of the Ming Dynasty, Emperor Zhu issued the "Banknote Law," established the Baochao Supervisory Office, and issued paper money under the name of the Secretariat. The following year, it was issued to the public under the name of the Secretariat, becoming the only official currency of the Ming Dynasty.

Bao Shilin also said: "It is like this. Emperor Zhu believed that as long as the standards were set and then strict laws were used to force the people to implement them, the problem of commercial circulation could be solved and the people would gradually accept it. So he issued a decree prohibiting the people from trading with gold and silver, let alone bartering, and only using treasure notes. Twenty years later, he even banned the use of copper coins..."

Hey, that's interesting. What's the basis for Comrade Zhu to issue treasure notes? What's the basis for issuing currency?

"Haha, no. Chairman, you know that paper money cannot be issued arbitrarily. It must be linked to reserves, that is, physical gold, silver, or other valuables, and freely convertible on this basis. The treasure notes issued by the Ming Dynasty are fundamentally different from those of the Song and Yuan Dynasties, as well as our own paper money. That is, there is no reserve. Moreover, in the early days of the Ming Dynasty, the treasure notes were only printed and not redeemed. This means that the Ming Dynasty treasure notes became a naked tool for the government to exploit the people's wealth!

For example, if a Ming Dynasty citizen took one tael of silver to exchange for treasure notes, he could do so at the official exchange rate. However, if he wanted to exchange paper money for silver, the Ming government would not allow it. Another example is that the Ming Dynasty issued unlimited paper money, especially in the early Ming Dynasty when the war was still ongoing. Emperor Taizong Zhu Di first launched a coup and then sent troops to the northern desert. Most of the money he spent was the unlimited issuance of paper money, so inflation was inevitable. During Emperor Zhu's 30 years on the throne, the treasure notes depreciated to one-tenth of their original value. In other words, the original one string of money was only worth 100 wen. During Zhu Di's 22 years on the throne, one string of money had depreciated to only 12 wen. For another example, Emperor Zhu did not allow the people to pay taxes entirely in paper money: 70% could be paid in paper money, and 30% had to be paid in hard currency. Emperor Zhu himself did not understand finance, and he knew that paper money was worthless. However, this practice directly undermined the people's confidence in treasure notes.

"The market has its own rules. If the government cannot maintain the equivalent status of Baochao, it will naturally be eliminated by the market."

"The Chairman is correct. Emperor Renzong of the Ming Dynasty began to lift the ban on silver transactions, and Emperor Yingzong of the Ming Dynasty announced the abolition of the ban. Silver became an officially recognized currency and began to be used in national fiscal revenue and expenditure, such as land tax, commercial taxes, salt notes, and official salaries. Although the "Baochao" issued by Emperor Zhu during this period was still circulated as the legal tender of the Ming Dynasty, everyone had already been using silver privately. At this point, silver regained its legal status, and the constantly depreciating Baochao finally withdrew from the stage of history during the Zhengde period.

Later, Zhang Juzheng implemented the Single Whip Reform, which converted all state taxes into silver. This completely freed silver from its shackles, placing it at the center of all currencies. As a result, the Ming Dynasty became a world leader in product manufacturing. Furthermore, the use of silver as currency in the market brought in silver from around the world, transforming it into a veritable "Silver Empire."

"I see. So what's our situation specifically? The paper money we issue is backed by salt and grain! And we also recycle it. It's just a symbol of value. It shouldn't have the same problems as treasure notes, right? Is it because we've issued too much currency?"

Zhang Yinghao knew that Fan Side's talk of repeating the Ming Dynasty's treasure notes was actually a fear of people looting supplies. Zhang Yinghao couldn't deny this. If someone maliciously incited the masses and spread the news of a significant price increase, most people would choose to spend their money on goods. Not only in this era, but also in future generations, once the public rushed to buy something, it would be a common occurrence. Therefore, if the public panic-buying occurred, the Forward Party's reserves would be consumed in an instant by the influx of people, and even a situation where even money could not buy anything would occur. This would really cause a huge problem, which was a very terrible thing.

"Yes, Chairman. Our revenue and expenditure are completely unbalanced right now, resulting in an excessive amount of currency being issued. If someone hoards the currency or spreads malicious rumors, the supplies we have will simply not be enough to handle the amount of money being issued."

The concept of balance of income and expenditure is very easy to understand. You should spend as much money as you earn. Treat the country as a specific person and spend within your means. Zhang Yinghao has even talked about this concept specifically. You don't even need Zhang Yinghao to talk about it. Just think about it a little and you will know what it means.

However, for Zhang Yinghao, the so-called balance of payments is actually a false proposition. While balance may be important to those without the power to issue currency, Zhang Yinghao, possessing the power to issue currency, can easily fake a balance even if there is an imbalance. Achieving a so-called balance of payments is merely a means to an end, a mere necessity for operating the tool of the state.

Of course, there is a so-called fiscal deficit, but Zhang Yinghao knows that when currency is over-issued in the future, it will be trillions and trillions. So in Zhang Yinghao's view, over-issuance of currency is not a problem; all that is needed is to digest and absorb this over-issued currency as much as possible.

"While the great powers now have precious metals as reserves and collateral, they generally issue several times more paper money, so this isn't a big problem. Hmm! Okay, tell me! What's your solution?"

“Chairman, we should suspend the issuance of currency now. It is best to focus on digesting this additional currency.”

The additional currency must be absorbed and reclaimed as much as possible without causing drastic price fluctuations. Otherwise, the credibility of the paper currency will be severely impacted. Once the paper currency in people's hands can no longer buy goods, gold and silver will reappear on the market, and the credibility of the paper currency will be questioned or even abandoned by the people.

Zhang Yinghao did not comment on the question of stopping the issuance of currency, but instead said: "Let me ask you a few questions. What exactly is the money we print?"

“Money is the universal equivalent!”

"If everyone in the world were rich, would there be enough wealth to go around?" "This... Chairman, you said that a communist society would have abundant material wealth. Even if it wasn't distributed equally, everyone should have enough food and clothing, right?"

"Then what do you think about everyone's labor creating wealth?"

"Everyone's labor capacity is different, so the wealth they create is naturally different. This is a very obvious thing."

“What about the primary, secondary, and tertiary industries? Are they equally important?”

"Of course not. The primary and secondary industries are the foundation of wealth creation, and the tertiary industry is responsible for the redistribution of wealth! Uh, I'm not sure if that's correct. What do you think, Chairman?"

Zhang Yinghao didn't answer. Instead, he smiled and said, "In a communist society, while material wealth is indeed extremely abundant, it's not equally distributed. Everyone still enjoys different means of living. Therefore, the gap between the rich and the poor will always exist and cannot be completely eliminated. There is no such thing as absolute fairness. Do you agree with this?"

"agree!"

"So what exactly is money? Money is a general equivalent, designed to facilitate circulation. Ultimately, the law of survival and development for individuals, societies, and nations is the consumption of resources. To achieve their grand goals, humanity will gradually deplete all available resources. The more development there is, the more resources are needed. Therefore, possessing money means possessing resources, especially scarce resources. Money is not a resource; it is a resource equivalent, serving the purpose of possessing resources."

"Chairman, if you're right, if someone is very good at making money, wouldn't that mean they can make a lot of money and control all of society's resources?"

"Yes, we are now issuing banknotes, which actually controls the lifeline of the country. However, once the money is issued, we have to acknowledge the resources it represents. Think about it, if our country has many wealthy people, they take their earnings abroad, and then come back to buy up large quantities of our resources. If we continue to lose money like this, can the country still become prosperous?"

"Of course not. If labor creates a million in wealth, and these rich people take two million abroad, the country will only become poorer and poorer, and will never be able to become rich again."

"Yes, then, did the wealth carried by these people actually disappear?"

"Well! Probably not. The wealth is still there, but the country has suffered losses, and the people..."

Zhang Yinghao waved his hand, interrupting Fan Side, and said with a smile, "You also need to understand one thing: wealth gradually increases through people's labor. For example, we spent a huge amount of money to build the Chengdu-Chongqing Railway. We had to pay wages to designers and workers, and we also had to spend money to buy materials. Did our money just disappear? In fact, it just went into the hands of the people. Moreover, after the railway was completed, the large amount of land occupied along the railway and the surrounding land will appreciate in value. Commodities along the route that were originally unsaleable due to traffic problems will now become valuable commodities and can be sold... You must remember that wealth has no limit and will continue to grow."

"But if the amount of money we issue exceeds the rate of wealth creation, the currency will inevitably depreciate and lead to inflation!"

"Haha, according to the economics we learned, whether it is a capitalist country or our current state, as long as we want to develop industry, as long as the industry

If a party is a political group, then its economy must be a credit economy. European and American countries have accumulated vast quantities of precious metals through centuries of plundering the world, and they use these precious metals as the credit support for their currencies. The British pound is the global currency today because of Britain's vast fleet and its ability to project military power.

To develop industry, we need vast quantities of machinery and equipment. We banned the circulation of precious metals, and a large amount of gold and silver from our liberated areas flowed out to Europe and the United States, where it was exchanged for machinery and equipment. From this perspective, our paper currency is purely credit-based. The people use our paper currency because they trust us. Without their trust and support, our paper currency is just a piece of colorful paper, too small to even use for toilet purposes.

You don't have to worry too much. As long as the currency we issue truly reaches the hands of the people, rather than a select few, our economy won't face major problems for the time being. However, there's a prerequisite: per capita wealth in our liberated areas must continue to increase. As long as total wealth continues to rise, it won't take long to absorb this increased currency..."

Chapter 593:

In his previous life, Zhang Yinghao had foolishly believed that the Qin Dynasty fell due to the construction of the Great Wall, and the Sui Dynasty fell due to the construction of the Grand Canal. To Zhang Yinghao now, this was all nonsense, the product of unscrupulous intellectual propaganda. Even in his previous life, some argued that without the Great Wall, China might have shifted from passive defense to an active offensive northward, significantly expanding its territory.

In reality, these were just random conclusions. The south was more suitable for farming, so the southward shift of China's economic center was inevitable. Without the Great Wall as a defensive barrier, the northern territories would be a complete burden for an agricultural nation. No one could safely engage in production against nomadic peoples, and without much income, the rulers would simply disdain the northern territories. Historically, northern expeditions were always aimed at the Great Wall, keeping the enemy at bay.

This shows that if the Great Wall had not existed, the migration of people from the north to the south would have been much faster and more comprehensive. Perhaps the Han people would have completely lost the land on which they depended for survival, just like the Jewish people, and even become extinct.

Moreover, in fact, the purpose of Qin Shihuang building the Great Wall was not defensive as later generations said. On the contrary, the Great Wall was completely offensive in nature.

An attack requires a starting point, and the Great Wall was the perfect one. In ancient times, with complete geographical unfamiliarity and no idea of ​​what lay beyond the north, the Great Wall served as a convenient return point after the offensive. The army would depart from the Great Wall, carrying a sufficient supply of food, and return to it before the food ran out. If this strategy had been effective, it would have only taken a dozen years of sustained offensive activity to completely defeat the northern nomads. However, the Qin Dynasty collapsed in a short period of time, while the Han Dynasty completed the Qin Dynasty's great achievements.

"Chairman, if the total amount of national wealth increases, is it okay if the average wealth increases?" "Yes, the truth of history is that average wealth increases. Unless a country is overthrown by force like the Southern Song Dynasty, there will basically be no major problems. For example, when Qin Shihuang built the Great Wall, did the average wealth of the people in the country increase or decrease? In fact, it increased. The construction of the Great Wall provided a solid line of defense in the north. The vast majority of people in the north were no longer harassed by nomadic peoples and no longer worried about nomadic peoples raiding their crops. Then the enthusiasm for production naturally increased, and the per capita wealth of the people in the country naturally increased. Therefore, the demise of the Qin Dynasty had nothing to do with the construction of the Great Wall. The demise of the Qin Dynasty was actually a big fight within the ruling class, and it was just their own destruction.

The same principle applies to the construction of the Grand Canal during the Sui Dynasty. The country's overall wealth increased, otherwise there wouldn't have been enough food when the Tang Dynasty was established. Therefore, the construction of the Grand Canal definitely did not lead to the country's demise. The Sui Dynasty's demise was actually caused by the three expeditions to Korea. The same principle applies to Russia today. When building the Trans-Siberian Railway, Tsarist Russia truly poured all its national resources into it. The national finances were on the verge of bankruptcy, relying entirely on loans for support. Yet, Russia managed to survive. Why? Because the construction of this railway increased the wealth of the entire country. As national wealth increases, even if some problems arise, they are generally minor and can be resolved over time.

Therefore, there's no rush to stop issuing currency. In fact, the amount of currency we're issuing is still quite small. It's just that our ongoing wars have consumed some of our wealth, resulting in our current material wealth being completely unable to redeem the additional currency we're issuing. However, the additional currency we've issued hasn't fallen into the hands of a few, but has almost entirely reached the people, so our economy is actually healthy..."

"Chairman, issuing more money does not create wealth."

"Haha, I know that, so this depends on the central bank under the control of Comrade Bao Shilin. However, since you think there is too much currency now, let's take some of it back. Our debt issuance method in Germany is quite good, so let's also issue bonds in China, so that the cash in the hands of ordinary people will be reduced."

Issuing bonds domestically was something Zhang Yinghao had long wanted to do. The economy in the liberated areas was growing rapidly, but the interest earned from issuing bonds was far less than this rate of economic growth. This effectively meant taking the money from ordinary people and making a quick buck. Overall, however, those who bought bonds still made a profit. In this era of limited channels, if they didn't buy bonds, their money would either end up in the bank, earning only a meager interest rate, or be spent or even stashed away at home to rot. Buying bonds still yielded a good amount of interest, and while it didn't protect against inflation, it did preserve its value to a certain extent.

Paper money is meant to be circulated; otherwise, it will slowly depreciate. It's not a precious metal, has no storage value, and cannot maintain its value. Moreover, moderate inflation is far better for the economy than deflation. Issuing bonds is also part of socialist common prosperity and a concrete manifestation of concentrating resources on major tasks.

"Chairman, this is a good idea. How much should we issue? How high should the interest rate be?"