On April 12, the twelfth year of Chongzhen, Li Xiao, who had just finished arranging the matter of immigrating to Ezo Island and Sakhalin Island, received a letter from Taiwan. Pen & Fun & Pavilion www.biquge.info

The letter was written by Ding You, the head of Taiwan's colonization group, who told Li Xiao that two large open-pit copper mines had been discovered near the Taichung Mountains, which are now known to the local natives as Chimei and Porphyry, and the estimated output was huge.

In an area like Taiwan, where there are many volcanoes and earthquakes, the discovery of copper ore is not a big deal, but Li Xiao immediately feels keenly that this is a great opportunity to change the existing financial order.

In Li Xiao's view, if these two copper mines can be successfully developed, then an unprecedented new thing in the late Ming Dynasty can be officially born.

This new thing is the bank.

Li Xiao is sure that now that he has tens of millions of gold and silver assets, after getting enough copper mines, he should be able to open a bank just like later generations.

This bank was named Bank of China by Li Xiao, who was full of confidence.

In modern society, a bank is a financial institution established in accordance with the law to operate money and credit business. In Adam Smith's view, banks are the inevitable product of the development of the commodity-money economy to a certain stage.

The word bank, derived from the Italian Banca, originally meant bench, chair, and was the business utensils of the earliest money changers in the market. Subsequently, the word was introduced to the United Kingdom, where it was translated into English as Bank, meaning a chest for storing money.

In China, from the Ming and Qing dynasties, silver began to replace copper coins as the most important monetary material. "Silver" often represents currency, while "bank" is the name given to large commercial institutions. The change of the name of a large financial institution related to silver and money to a bank was first seen in the "New Chapter of Capital Administration" written by Hong Renji of the Taiping Heavenly Kingdom.

In addition to the money-making business such as depositing and lending, exchanging foreign exchange, and issuing silver bills, the bank that Li Xiao wants to set up is owned by a traditional bank, and there is another thing that he particularly values and is ready to start vigorously operating, that is, using the bank to start minting coins on his own.

Because in this late Ming era, the silver minted by the government was the legal tender of the Ming Empire, and it was used in large quantities throughout the country, and the Ming Dynasty was established for hundreds of years, although it has been trading with overseas, but it has never minted gold, silver, copper and other coins of national standards.

As a result, the government's silver, when used in ordinary times, not only has a variety of different fineness, but also has to be weighed, cut and other follow-up means every time it is used before it can be used for daily transactions.

This method brings a lot of trouble to the user, especially in identifying the authenticity of silver, which is a nerve-wracking thing.

As a result, Li Xiao now plans to mint three types of currencies such as gold, silver, and copper in the Bank of China, which he opens, mainly using the silver dollar as the core currency.

The specific design standards are gold dollars (weighing 5 grams, containing 45% gold), silver dollars (weighing 5 grams, containing 72% silver), copper dollars (weighing 5 grams, containing 63% copper), and the exchange ratio is 1 tael of silver = 1 gold dollar = 10 silver dollars = 1000 copper dollars, these coins are all standard round non-perforated coins.

In this new coin design, Li Xiao defined that 1 silver dollar is equivalent to the original 1 yuan of silver, and 1 gold dollar is equivalent to one tael of silver. If you look at its precious metal content, you can see that the value of this set of currencies is slightly higher than its metal value. For example, a coin of silver is 3.75 grams, but a silver dollar contains only 3.6 grams of silver, and the same is true for gold and copper coins.

In Li Xiao's monetary system, the bigger difference lies in the gold yuan.

If according to the definition of the Ming Dynasty government at this time, the gold and silver ratio of 1:10, since a gold dollar is exchanged for 10 silver dollars, the gold content should also be 72%. However, the gold content of the finished gold dollar minted by Li Xiao at the Bank of China is only 48%, about 2.25 grams. When it comes to the price of precious metals, one gold dollar can only be exchanged for 6.25 silver dollars. However, according to the exchange rate, one gold dollar can be exchanged for 10 silver dollars.

Therefore, the ratio of gold dollars to silver dollars has been artificially raised, and the price of gold has been artificially increased from the official ratio of 1:10 to 1:16 by Li Xiao, that is, the real market value of gold has been artificially inflated by Li Xiao.

The fundamental reason for this design is that Li Xiao, who had taken Western economics and classical economics in his previous life in college, made necessary changes according to his own trade characteristics and the current situation of national conditions.

Since the past two hundred years, the Ming Dynasty has been trading with Western countries, due to China's huge structural industrial advantages, under the frequent trade between the East and the West, a large amount of silver from the Americas and Japan and other places, unilaterally flowing into the Ming Dynasty, so that the price of silver continues to depreciate, the gold and silver ratio in China from 1:4 in the Hongwu period, appreciated to 1:6 in the Wanli period, and then to 1:8 in the Apocalypse period, and to the Chongzhen period, so far it has exceeded 1:10.

In addition, with the growth of the share of trade, silver from the United States and Japan and other places is still flowing in, and there is no sign of slowing down at all.

In real history, with the continuous inflow of silver, it finally bore bad fruit in the middle of the Qing Dynasty. This led to a sharp depreciation of silver and inflation, bankrupting farmers and craftsmen throughout the Qing Dynasty. It also led to the Jiaqing Emperor ascending the throne, in the northwest region, there was a large-scale White Lotus uprising composed of bankrupt peasants, the so-called Celestial Empire, finally gone, and the Qing Dynasty went to the middle and continued to decline.

Now, all kinds of industries under Li Xiao's rule, such as salt, silk, raw silk, ironware, woolen wool, cigarettes and other products, with overseas and domestic trade, flourished day by day, and the structural industrial advantages were among the best in the entire Ming Dynasty, especially since the great development of Taiwan, gold and silver in his coastal cities and counties, rapid flow and concentration, so that in this small area, the market price of silver depreciated sharply.

If it were not for the fact that the bulk of the maritime trade and the control of commercial taxes were always controlled by officials appointed by Li Xiao, and he vigorously emigrated from the interior to expand the domestic demand market in Taiwan and the coastal areas, and especially for the adoption of the grain-based economic policy of stockpiling a large amount of grain and building a large number of grain warehouses, the economy of these areas was unable to suffer serious inflation because of the sharp drop in the market value of silver.

Li Xiao, who has the memory of later generations, is very clear about the key point in Western economics, that is, the core of the economic cycle is money, and the core of money is the country's creditworthiness.

This kind of credibility has nothing to do with gold, silver or paper money. In an extreme sense, even if you use all gold and silver as a means of payment, if users lose confidence in it, the gold and silver system will collapse.

The reason why countries around the world are at the heart of their economies is that gold production has always been small, and silver production has exploded over the centuries, so confidence in silver has collapsed much faster and easier than gold, and that's it.

So, the question now is, how should Li Xiao establish, maintain, and even promote this confidence?

Of course, Li Xiao is not an economist, and it is difficult to use the economic views he has learned to explain this important financial topic that is still a matter of different opinions in modern society. However, Li Xiao still knows one thing, the most basic and simple fundamental economic principle.

That is, as long as the people have the currency in their hands, whether it is gold, silver, copper or paper money, as long as they can buy things, and buy enough things, then the people can still have confidence in the currency in their hands.

But this is for the end user of the currency, or the buyer. If you look at it differently and have confidence in the currency, the seller will naturally sell, and the buyer will buy. If there is no confidence, the seller will not sell, and the buyer will not be able to buy. That is to say, from the seller's point of view, he must first have faith in the currency before he is willing to sell the goods in the currency.

It's kind of falling into the circle of circular argumentation. But if you think about it, you can find the real roots.

In fact, the answer is obvious, that is, in the competition for currency, the seller who holds the goods is the real key. Because goods are what people really need. Food satisfies hunger, but gold cannot be eaten. Those who have food but no money will never starve to death, and those who have gold and no food must be able to buy food so that they will not starve to death, and if they cannot buy it, they will still starve to death with gold.

So in the final analysis, the root of the maintenance of an economic system lies in the sellers, or rather, in the producers.

Under Li Xiao's rule, in this relatively independent economic system, Li Xiao himself was the largest seller and producer.

Now Li Xiao controls a large number of factories, minerals and farm products, and also collects a large amount of grain from farmers, which can be described as rich in money and grain, and is proud of the country. Moreover, in the hands of Li Xiao, he also controls the political system dominated by him, as well as the elite army loyal to him. Therefore, whether it is at home or abroad, Li Xiao is an absolute advantage seller, who can easily manipulate prices and control the entire financial order.

And this economic advantage, over time, continues to increase. Because Li Xiao's production technology and means far surpass similar workshops in the Ming Dynasty, his products have advantages in price, quality and output at the same time. With the gradual maturity and upgrading of various product production lines and product lines, Li Xiao has even gradually formed a monopoly advantage in some regions.

To sum up, Li Xiao at this time, whether politically or economically, is a giant like a giant, and he is a giant who can determine the value and price of market products. Therefore, if he can dominate the market, he will naturally become a person who can define the value of money in the financial field.

It is precisely based on the above considerations that Li Xiao directly defined the exchange value of the currency that is higher than the actual silver content. And with his abundant stockpiles and his mighty force as a guarantee, it is only natural that the people under his rule will be accustomed to the use of all kinds of currency for years to come, and that they will be accustomed to relying on the credit of the government rather than the weight of the metal itself, as a bargaining chip.

If Li Xiao's foundation can be consolidated, then his creditworthiness will continue to increase, and correspondingly, the amount of gold and silver that is really used to mint currency will only be less. With the development of the times, in the years to come, paper money will completely replace precious metals and truly become the protagonist of the currency market.

Of course, the arrival of this day cannot be done in a hurry, and a step-by-step process will take a long time. Perhaps, it will take decades or even hundreds of years to finally complete the replacement of paper money with metal money. Therefore, the current Li Xiao, the top priority at the moment, is to first promote the three types of currencies of gold dollars, silver dollars, and copper dollars on a large scale.

Therefore, the reason why Li Xiao artificially changed the difference between gold and silver is that if the original 1:10 official price comparison is maintained, then due to Li Xiao's current scale of sea trade, there will continue to be a large inflow of Western silver, and the currency under his rule will only continue to accelerate the rate of inflation when it has not completely detached itself from metal prices.

Now Li Xiao has artificially set the price of gold coins and gold at 1:16, the purpose is to stimulate foreign merchants to use more gold instead of silver, slow down the inflow of silver, but accelerate the inflow of gold to the Ming Dynasty, so as to balance the inflow of gold and silver. Because the amount of gold is much smaller than that of silver, it will theoretically be more creditable when the monetary structure is not yet stable.

Now in the new coins designed by Li Xiao, because 1 silver dollar = 100 copper dollars, it is not a complete decimal system, so after careful consideration, Li Xiao added a large copper dollar worth 10 copper dollars (weighing 30 grams, containing 90% copper), and a large gold dollar worth 10 taels of silver (37.5 grams, that is, one tael, containing 99% gold) was added above the gold dollar, which was mainly used for foreign trade settlement. This is considering the relationship between the price of metal materials, and it also means that the value of this set of currencies is not completely detached from the precious metal standard.

The proportions and molds of these coins are designed, with intricate patterns, year and value numbers on the front and back, and suppressed security serrations on the edges. In addition, these coins were made by Li Xiao's mint, using a hydraulic stamping machine, in a standard operation method, rather than the traditional mold casting method, so the coins minted have extremely clear patterns and words, and it is extremely difficult for criminals to imitate.

In fact, the metal ratio set by Li Xiao is also the key to the principle of the design of this set of coins.

Because, if the copper content of the copper coin is higher than the face value of the coin, then it is very likely that there will be outlaws and profiteers who melt the copper coin to privately mint copper. This situation, in the early years of Yongzheng in the Qing Dynasty, appeared on a large scale, fortunately Yongzheng vigorously rectified, timely change the ratio of copper and lead, so that the whole country did not because of this, and there was a large-scale shortage of copper money.

A set of anti-counterfeiting mechanisms has been designed, and in comparison, the threshold for counterfeiting coins is much higher than that of melted copper coins. There is a saying that the lesser of two evils is the lesser of two evils, so Li Xiao chose without hesitation to make the actual value of copper coins slightly lower than their face value.

Next, after the bank officially issues this new currency, whether this monetary system can be maintained for a long time depends on Li Xiao's government creditworthiness.

The credibility of various government institutions under Li Xiao's rule is very good, and such a currency system is indeed very convenient, and there is no longer any need to worry about the division of gold and silver, fineness and weighing when trading, so Li Xiao believes that these new currencies will soon be accepted by the people under his rule.

Li Xiao decided to let this kind of new currency be circulated in Taiwan, Jeju, Dengju, Satsuma, Ezo, Sakhalin and other places first. If the trial effect is good, it will gradually penetrate and use in the Ming Dynasty.

At the beginning of May of the twelfth year of Chongzhen, after careful preparation, the head office of the Bank of China was officially established in Kaohsiung Prefecture, Taiwan. At the same time, branches of the Bank of China were also established in various states and counties. Li Xiao officially ordered that from now on, all the prefectures and counties under his rule began to implement a new monetary system, and the original gold, silver and copper coins were gradually exchanged and replaced.

A new financial system modeled after the modern model was born.