New Book Collection: The Rise of Great Powers 1900

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Keynes, a famous economist of later generations, believed that when there is sufficient labor and raw materials to increase productivity, the additional 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.

Later, Germany's economy contracted after World War I, all the gold reserves were used for bad debts, inflation reached the point where you needed to use cars to pull money to buy bread, and the economy completely collapsed!

After Hitler came to power, he adopted currency reform and issued a large number of currencies that were not backed by gold, but they changed the German economy in an instant. It's because of the use of productivity to support money. A large amount of additional money will not 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 came from agriculture, and agriculture in Jiangnan seemed to be sufficient to provide sufficient raw materials for the handicraft industry. Lack of productivity? Productivity in the agricultural era was primarily labor, and labor never seemed to be a problem in China.

When there is no shortage of raw materials and productivity, the issuance of corresponding money will not only not inflation, but stimulate production.

Of course, the civil officials of the Ming Dynasty could not reach the realm of famous economists in later generations, in fact, Yang Chao also knew half-understood, he only knew that later generations were paper money this kind of credit currency, so he did not want to let the currency be subject to silver, a scarce metal in China, so he established the Jiangnan Bank, and through the issuance of bonds, in the name of silver, the official credit became currency.

From the point of view of accounting in later generations, money is actually not mysterious, but only a tool used to conduct monetary statistics, just like a ruler in the hand of a craftsman, just used to measure the accounting data of production and consumption.

And in an economy like Daming, which is desperately short of heavy metals, the shortage of precious metals is equivalent to a shortage of accounting tools. As a result, production could not be naturally expanded to the extent that it should have been due to the inability to be accounted for and liquidated.

Of course, Yang Chao is also worried about inflation caused by excessive money supply, and even the collapse of the paper money system he has built, so he has always been very concerned about the price level.

Let Nassau organize bank accountants to keep a constant count of the prices of a hundred most common consumer goods and basic raw materials, such as grain, cotton, silk, porcelain, and even lumber, as a price index.

The results of this price index show that the price level has increased by only 5 percent since the issuance of paper money. This is a very low inflation indicator, and people hardly feel the extent of price increases.

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

But he was still vehemently opposed to printing an excess supply of paper money without silver as a reserve, even if it was guaranteed by government bonds, which meant that Nassau refused to print paper money in exchange for government bonds.

In the three years since its establishment, the Jiangnan Bank has collected and deposited 20 million taels of silver, but has already printed and distributed 50 million taels of silver bills, of which 30 million taels are used to purchase bonds issued by the government. More than half of the banknotes were not guaranteed by the corresponding silver, and Nassau believed that the limit had been reached.

You must know that the Bank of Amsterdam in the Netherlands, in order to maintain stability, has not been like lending to individual customers, only carrying out the most conservative deposit and exchange business, these two businesses, there is almost no risk, basically how many bank notes are printed. There is just as much gold and silver in Amsterdam's vaults.

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

Nassau with Dutch experience. It was determined that Jiangnan Bank had over-issuance, and even European private banks would not dare to issue bank bills that exceeded more than twice the reserves, otherwise they would go bankrupt at any time because they could not cope with the run.

Yang Chao wanted to suppress Nassau with orders, but Nassau threatened to resign, preferring to give up the interests of high-ranking officials and even the Dutch. He was also unwilling to let his reputation be damaged, and he resolutely refused to compromise on the premise of insisting that Yang Chao was wrong.

Yang Chao doesn't really want to let Nassau get out, and in just over a year at Jiangnan Bank, he has standardized the bank's accounting operations. Hundreds of qualified accountants have been trained who understand the operations of the banking industry in the West.

At the same time, the Songjiang exchange was opened, and the trading of various goods and bonds was very active, and there was a faint posture beyond Nanjing.

Nassau also helped train a group of customs personnel at the port, such as estimators, bell pullers, etc., and began to test the port of Susong using the advanced port management model of the Dutch.

Before the surplus value of Nassau was completely squeezed out, Yang Chao was really reluctant to let Nassau get out of the way because of 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 a war is the kind of Emperor Chongzhen, who relies on taxes to fight a war? It's also too earthy.

Obviously, you can borrow money, borrow the wealth of a few years later, or even a dozen years later, to fight a war, why should you collect taxes for a few years at once. Even if the people are squeezed dry, they will collect taxes at most the sum of three or five years, and by borrowing money, Yang Chao can borrow ten years of taxes at one time, and the safe operation is to use the taxes to repay the debts slowly after peace, and take a risky operation, or even never repay the debt, only repay the interest.

Yang Chao only issued 30 million taels of bonds last year, which is basically the same as the tax revenue of that year, and it does not exceed much.

This year's tax revenue has reached 30 million taels, and Yang Chao plans to borrow 50 million taels of debt, and slowly spend it to stimulate the market and obtain sufficient military and administrative expenses, but Nassau refuses to print money to buy debts.

But if the bonds are not issued, Yang Chao will really have no money.

Last year, more than 20 million taels of taxes plus 30 million taels of bonds, totaling more than 50 million taels of silver, seems like a lot, but when the army has expanded to 800,000 people, the most ordinary soldiers will have to pay more than 10 taels of silver for a year alone, and 800,000 soldiers will have more than 8 million taels, and the salaries of officers at all levels will be even more, which is not less than 8 million taels, which will give more than 16 million taels of silver.

There is also the consumption of military materials, the cost of a soldier's iron armor is ten taels, as well as boots, socks and other changes of clothes, in addition to spears, bird guns and other weapons, although only 300,000 recruits need to build a full set, but a soldier can not take it down without 30 taels, which is another 10 million taels out.

The depreciation and loss of weapons in training, the loss of gunpowder and lead bullets, and even more than the cost of building bird guns and cannons, which is another 10 million yuan a year.

Next, there is the construction of naval warships, Longjiang Shipyard has equipped Yang Chao with ten large sea ships, as well as more than 800 brig river ships, a river ship has 5,000 taels of silver, a sea ship is calculated in 10,000 taels, and a large number of artillery guns must be equipped on it, which will cost more than 5 million silver, plus the salary of the navy, the maintenance of the warship, etc., and the silver spent on the navy is also 10 million taels.

The military expenditure alone was 48 million taels of silver, and Yang Chao increased the income of officials and adopted a policy of high salaries and incorruptible salaries, even if the proportion of officials in the Ming Dynasty was far smaller than that of later generations, 10 million taels of silver was still indispensable.

Therefore, almost all the money I got last year was spent, and I must buy bonds again this year, otherwise I will not be able to pay the interest on the previous bonds, not to mention that there will be no military expenses.

You must know that in order to promote bonds and make the people accept this way of lending money to the government, Yang Chao has always adopted a high-interest policy, with a monthly interest rate of three cents, and a year's interest of 30 percent, and the annual interest of the 30 million two-year bonds owed is 10 million a year.

The debt burden is quite heavy, but he still has to borrow, but this year Yang Chao does not plan to pay high interest rates, but to launch low-interest bonds.

Wherever there is a state borrowing usury, the interest on treasury bonds is naturally much lower than the interest on loans, and the interest on treasury bonds that prevailed in later generations generally does not exceed 10 percent a year, but often around 7 percent, or even less than 5 percent.

The interest rate on government bonds is often related to the country's creditworthiness, and countries such as the United States, which have a high credit rating, have low interest rates on government bonds, while countries like Greece have to borrow at more than 10 percent interest, and of course they will repay their debts.

Yang Chao will not default on his debts, and it seems unlikely that the Jiangnan Metropolitan Governor's Mansion will go bankrupt at present, so Yang Chao feels that he should be able to borrow a large amount of debt with an annual interest of three cents.

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

The high-interest bonds issued by Yang Chao in the past are basically divided into three types of subscribers, and there are about 30 million taels still held by the people.

The first type is the ordinary people, the small and medium-sized merchant class with surplus wealth, who subscribed about 10 million taels through the bank.

Of the remaining 20 million taels, half of them were directly left to Jiangnan Bank, and the other half was contracted by various underwriters and merchants.

The reason why 10 million taels of shares were reserved for Jiangnan Bank was not that 30 million taels could not be sold, but because Yang Chao wanted to inject 10 million taels of currency into the market through Jiangnan Bank, and if it was sold to the people, it would be tantamount to withdrawing the currency in circulation from the market, which would be very unwise under the condition of low inflation.

The other 10 million is left by large and small pawnshops and money villages, you must know that the pawnshop with the lowest interest rate in Huizhou has a monthly interest rate of about three points, but the monthly interest rate of bonds is as high as three points, and they can also get a commission as an underwriter, and they only need to use nine taels of silver to buy ten taels of bonds, which is obviously more profitable than their loans, so holding bonds is naturally a good investment.

Now when Jiangnan Bank refuses to buy it, and Yang Chao doesn't want to take out the currency in circulation from the hands of the people, the best objects to sell are naturally these pawnshops and money houses.

But Yang Chao soon discovered the problem, these pawnshops and money banks reluctantly approved low-interest bonds, but instead of holding them themselves, they fooled their customers, allowing those who had money to spare and had nowhere to go to exchange the silver bills for bonds and store them, while the money banks and pawnshops directly received underwriting fees. (To be continued......)