Chapter 207: Circulation

And so the transmigrator regime's first currency system came into being. The moment the new notes entered circulation, every other ticket, voucher, and scrip became obsolete. The work-point coupons that had proliferated throughout the Commune were recalled and converted at their established grain-exchange ratios.

"Should we establish a bank to handle all this?"

"Eventually, yes," Cheng Dong replied. "But for now, we won't call it a 'bank' or a 'money house' or anything of that sort."

The Finance and Banking Committee's strategy was elegantly simple: they would establish a grain shop to manage the issuance, collection, and exchange of currency. Since their money was backed by grain, a grain shop would be far more comprehensible to ordinary people than some abstract financial institution—while also providing the convenient fiction of "merchant-issued tokens."

The establishment was christened "Delong Grain Shop" at Wen Desi's suggestion. Its headquarters would occupy a prime location in East Gate Market. To project the gravitas of a major, creditworthy institution, the Executive Committee approved the construction of a new two-story building to serve as its business premises.

The new banknotes would be printed by the printing plant under Zhou Dongtian's Propaganda Department. As the transmigrators' inaugural currency, these notes could not be as crude as the makeshift work-point vouchers, rice tickets, and salt tickets that had come before. They needed to be attractive, durable, and fitted with specific anti-counterfeiting measures.

Zhou Dongtian brought in Bai Duoluo and Tan Ming to tackle the problem. One had worked in commercial printing, the other had operated three-color presses—both were professionals whose expertise far exceeded that of the generalist Zhou Dongtian.

Specialized banknote paper was, naturally, unavailable. The transmigrators' modest paper workshop could currently mass-produce only rough straw paper—fashioned from local rice straw and fit only for use in the latrine. The small quantities of writing paper they produced fell well short of banknote requirements. However, Cheng Dong noted that their inventory included some heavy-weight colored cardstock with a satisfyingly stiff texture. Both its quality and its hues were beyond the capability of any papermaking workshop in this era to replicate.

The Lingao Food Circulation Vouchers would come in three denominations: ten yuan, five yuan, and one yuan. The ten-yuan note would be printed on yellow paper, the five-yuan on red, and the one-yuan on green. Subsidiary coins would also be issued—fifty fen, twenty fen, five fen, and one fen—all on blue paper and differentiated by size.

The banknote designs featured pastoral agricultural themes: oxen, farmers at work, sheaves of wheat, flooded rice paddies, and the like. The issuer was listed as "Delong Grain Shop," with an official seal in seal script below, accompanied by Cheng Dong's signature. The reverse of each note bore a line in regular script: "Each yuan redeemable for one catty of rice."

Bai Duoluo lithographed all these designs in color. Zhou Dongtian had initially wanted to employ the four-color press in the printing plant, but ink supplies were running dangerously low and couldn't be replenished for the time being. When the sample notes were presented, everyone agreed they looked rather ugly—the designs possessed no three-dimensional depth whatsoever.

"It'll have to do." Cheng Dong examined the samples with a resigned expression, knowing full well this was the printing plant's limit. Asking them to produce something comparable to modern banknotes was a fantasy. Even these humble notes already exceeded the capability of any local counterfeiter.

The largest consumer of circulation vouchers was Wu De. Monthly work-point settlements alone represented an enormous expense. According to his plan, Baireng Commune would completely abolish the supply system and transition to a monetized wage system. Each commune member would receive circulation vouchers based on the work-points they had earned. The commune canteen's food provision would likewise shift to members purchasing their meals with vouchers.

For outside laborers belonging to the Labor Corps—those without Baireng Commune household registration—free meals would continue to be provided according to their labor intensity standards, but their wages would now be paid in circulation vouchers. In practice, the transmigrators had already been paying these workers with rice tickets and salt tickets for some time, and the system had been accepted without complaint.

Local people recruited by transmigrator enterprises and departments—the so-called "employees"—were registered in Baireng Commune but had their wages paid by their respective departments rather than the Commune itself. Their meals would likewise transition to self-funded, just like regular commune members.

Finally, there was the military. Soldiers' pay had always been in silver, and the officers were firmly opposed to rashly replacing it with paper money. Such a move would leave the troops feeling cheated. Watching shiny white silver transmute into paper slips would make no one happy.

So it was decided: the military's basic compensation would remain unchanged. Free meals would continue, and pay would still be disbursed in silver.

To encourage soldiers to embrace paper currency, Cheng Dong proposed implementing a "military preference" policy at all transmigrator-owned shops in East Gate Market. Military personnel purchasing goods with circulation vouchers would enjoy a five percent discount. To give them access to this benefit, the grain shop established exchange offices within the military camps to collect and convert their silver—a privilege exclusive to New Army soldiers.

"Just open an office right in the garrison compound," Xi Yazhou suggested to Cheng Dong. "For the past two months, the soldiers have been hiding their silver all over the barracks. Recently there have even been losses and thefts. These men are far from home with nowhere safe to store their money. Set up a deposit service—even without interest, they'll be grateful."

Soon, Delong Grain Shop offices were established in both the Baireng and Bopu garrison areas. These so-called offices were simply repurposed rooms within the compounds, each containing a wooden counter and some paper, brushes, and ledgers. The Finance and Banking Committee certainly lacked the personnel to provide daily service to the military, so the offices operated only on Mondays and paydays. Services offered included silver-to-voucher exchange, savings deposits, and valuables storage. The current savings service, however, paid no interest whatsoever—Delong Grain Shop's savings service was less a bank account than a coin locker.

After the service launched, it was enthusiastically welcomed by the soldiers. Yet few came to exchange their pay for circulation vouchers. Most deposited their wages at the Delong office immediately upon receiving them, obtaining a bankbook to carry on their person. Only soldiers with family in the area would exchange some vouchers on leave days to purchase goods to bring home.

When the first batch of circulation vouchers was distributed, the market's reaction was remarkably muted. After all, merchants doing business at East Gate Market had grown accustomed to transmigrator vouchers over the preceding months. Though the vouchers came in various types, one thing remained constant: every transmigrator voucher could actually be exchanged for real goods, and the amounts were always precisely as stated—never shortchanged. Dongmen Chuiyu also posted numerous notices throughout East Gate Market, requiring all merchants to accept circulation vouchers without exception while guaranteeing they could exchange vouchers for grain at Delong Grain Shop at any time.

To build confidence in the new currency, every evening before market closing, Dongmen Chuiyu and the Delong staff would push handcarts laden with rice through the market, going shop to shop to redeem circulation vouchers. In the first few days, nearly every merchant exchanged their collected vouchers. But after a fortnight, very few bothered anymore.

Traveling merchants, receiving circulation vouchers but finding it inconvenient to haul grain along their journeys, chose to spend the vouchers directly at East Gate Market, using them to purchase various goods. Sedentary merchants initially exchanged their vouchers for grain or used them to buy other goods as a precaution, but over time, as they discovered Delong Grain Shop continued to honor vouchers freely and without restrictions, many began keeping some paper currency on hand. After all, it was far more convenient to carry and use than heavy copper coins or the silver that varied endlessly in purity and required constant weighing. The jumbled copper coins and the perpetual nuisance of assaying silver had long been sources of complaint among traders.

However, the circulation vouchers' reach remained essentially limited to transmigrator-controlled areas. Even in County Gate Market, merely a stone's throw away, they weren't readily accepted—shopkeepers there generally maintained a wait-and-see attitude toward this paper money.

But Cheng Dong considered this perfectly normal. Paper currency was largely supported by government credit. Most paper currencies in the modern era were issued without backing—in that respect, they were actually less secure than Lingao circulation vouchers backed by grain. The vouchers would only be recognized as valuable wherever transmigrator influence extended. Without sufficient political and economic power, people beyond their territory naturally wouldn't accept them.

The final matter requiring resolution was the transmigrators' own internal currency: the point vouchers prescribed in the Transmigration Covenant as the unit for distributing benefits among themselves.

Though during the operation of the Women's Cooperative enterprise point vouchers had entered circulation as a form of capital and been used for consumption, they remained an essentially virtual currency. Transmigrators making purchases at the welfare cooperative paid with point vouchers through a signature-and-bill system, with receipts noting the date and amount. During financial settlement days, accountants from the Finance Department would manually deduct the points from personal accounts in the computer system. Not only was the procedure cumbersome, but it was also prone to error.

Now Cheng Dong proposed making a portion of point vouchers physical—no longer merely entries in a computer ledger. Transmigrator salaries, hazard pay, and bonuses could all be disbursed in physical point vouchers. These vouchers were restricted to purchasing special goods and services, with external circulation strictly forbidden. Currently, point vouchers could only be used at the transmigrator canteen, the Women's Cooperative, and the South Sea Demonstration Farm. Point vouchers bore no lateral relationship to any other currency and possessed no exchange rate. They were issued and collected solely by the Finance and Banking Committee.

Some suggested that since point vouchers were now physical, the supply system could be abolished for transmigrators in favor of a pure salary system. But after considerable discussion, the Executive Committee decided to maintain the supply system for all transmigrators. The Executive Committee would continue to provide every transmigrator with free housing, medicine, food, basic weapons and ammunition, and clothing. However, transmigrators were permitted to use point vouchers at the three designated establishments to purchase additional consumer goods, including alcohol, tobacco, and other non-essential items. If the canteen had sufficient supplies, they could also purchase extra chicken, duck, fish, and meat.

Point vouchers remained the only currency transmigrators could legally hold. Apart from expense funds issued for specific mission requirements, individual transmigrators were forbidden from possessing Lingao circulation vouchers or precious metals.

(End of Chapter)