Chapter 1377 - Grain and Silver

In studying the logistical history of the Guan-Ning Army, Zhao Yingong had discovered a peculiar phenomenon: the army's obsession with silver over grain.

As a military force comprising over a hundred thousand soldiers and civilians, grain was naturally the backbone of supply. Yet time and again, the practice of transporting cash equivalents instead of actual grain prevailed—a strange preference for currency over sustenance.

The logic seemed sound enough. Transporting silver cost a fraction of what it took to move grain of equal value. And once the silver arrived, the local purchase of grain would—from a modern economist's perspective—enliven regional markets and stimulate development.

Applied to the Guan-Ning Army, however, this approach proved disastrous.

The Guan-Ning Army was stationed in bitter, frozen Liaodong. After the Ming lost Shenyang, their holdings had shrunk to a mere corridor of fortresses stretching from Jinzhou to Shanhai Pass. Though military households continued to farm, the brutal climate—with its frost-free period of less than two months—meant pitifully low grain self-sufficiency. They depended entirely on supplies from inside the pass.

Under these conditions, flooding the region with silver while expecting local procurement was tantamount to engineering inflation. Liaodong simply could not produce enough grain. What little reached the region came from merchants willing to haul it across thousands of li, over mountains and rivers, paying bribes and tolls at every checkpoint. The punishing transport costs and accumulated losses were all baked into the final price.

Thus, the Guan-Ning Garrison found itself trapped in a vicious cycle. With too much silver chasing too little grain, prices spiraled to absurd heights—ten taels per shi, sometimes exceeding twenty.

Such exorbitant costs crushed the common soldiers, military households, and ordinary civilians. Though regular soldiers nominally received three or four taels of silver monthly, in reality—except for elite household guards—few ever saw their pay in full or on time. Even if they spent every copper on grain, it was barely enough to survive.

But for the military commanders who controlled resource distribution, this same inflation proved a bonanza. Through embezzlement and grain speculation, the generals of Guan-Ning accumulated wealth on a scale their predecessors could never have imagined.

Zhao Yingong's conclusion was straightforward: the solution lay in grain itself.

"In my view, we must transport rice directly," he said. "Grain prices in Liaodong are astronomical. If we ship fifty thousand shi, buying at three taels per shi here, we can sell it for double that—at minimum. After deducting expenses, the margin will be more than sufficient."

Shen Tingyang's eyes lit up, then dimmed as he shook his head. "Where's the leisure for such an undertaking? Setting aside that raising fifty thousand shi would require enormous effort—even if we managed it, finding someone in Liaodong willing and able to purchase such a massive quantity isn't exactly straightforward."

At six taels per shi, the total price would approach three hundred thousand taels. Shen Tingyang simply could not imagine any single buyer capable of producing such a sum.

Selling piecemeal was no better. Any delay in the shipping schedule would spell disaster. Though this trial run enjoyed a generous deadline, if things dragged on, the Guan-Ning generals might seize on any excuse to obstruct and extort additional benefits.

"This won't be difficult," Zhao Yingong said with quiet certainty. "I guarantee there's someone who can afford it."

Shen Tingyang regarded him with skeptical eyes. Everyone knew Zhao Yingong carried a mysterious background—not only the strong whiff of "banditry" but also, presumably, powerful patrons somewhere in Guangdong. Yet his confidence regarding Liaodong's commercial situation—a market that terrified most merchants—seemed almost suspicious.

Still, Zhao Yingong was not a man given to empty boasts. After their successful trade with Japan, his credit in Jiangnan's business circles had become as solid as the Nine Tripods. He would not deceive him with mere talk.

After a moment's thought, Shen Tingyang nodded. "Very well, worthy brother. I shall trouble you with this. As for the transport, my intention is to have the Merchants Bureau handle it."

Zhao Yingong immediately understood. The Shen family possessed plenty of large ships of their own. A voyage to Liaodong required few sand boats, so there was no real need to involve the joint-venture Merchants Bureau. This was a test: if Zhao Yingong were speaking empty words, he would never dare risk his "beloved daughter," the Bureau itself. If he accepted, it meant he possessed genuine confidence.

Zhao Yingong affected an expression of surprise and hurriedly demurred.

"That's entirely improper," he said, shaking his head repeatedly. "This is Brother Shen's enterprise."

"What do you mean? The Merchants Bureau has this elder brother's shares as well."

"Since you put it that way, I shall obey." Zhao Yingong declined no further. He had intended to insert himself into this transaction from the start.

Seeing him accept without hesitation, Shen Tingyang felt half his worries dissolve. "The difficulty remains raising fifty thousand shi on short notice."

The key was finding a large grain merchant capable of supplying such volume. Quality mattered little—they were converting grain directly to silver for resale. In present-day Liaodong, anything edible would sell.

But locating such a merchant was no simple matter. Grain circulation in this era operated within narrow confines. Though certain distribution markets had emerged, their reach remained limited.

Moreover, last year's disasters across Southern Zhili had significantly reduced harvests. After paying tribute grain, local reserves were stretched thin. Raising fifty thousand shi would require dealings with numerous grain merchants.

Bulk purchasing on this scale would inevitably drive prices higher—already climbing as it was. And gathering grain from scattered sources would require prolonged transshipment. Shen Tingyang estimated that even if he leveraged his entire commercial network across Southern Zhili, the average cost per shi delivered to Shanghai would probably exceed three taels.

"No need to rush on that account," Zhao Yingong said calmly. "I'll work on the grain supply as well. But we must secure the cash-equivalent silver as quickly as possible. That, Brother Jiming, will require your efforts."

Cash-equivalent silver was far from easy to obtain. Where procedures existed, costs followed. Zhao Yingong understood this intimately—even in the democratic, rule-of-law society of his old timeline, settling accounts between contractors required sweeteners. How much more so in an era where customary fees were openly acknowledged.

"Leave it to me," Shen Tingyang agreed.

Zhao Yingong threw himself into the preparations. For a wholesale buyer in Liaodong, he already had someone in mind: Li Luoyou's Liaohai Trading House had both the capital and the distribution network. Purchasing fifty thousand shi of grain would pose no difficulty for his operation.

True, the price he could charge Li Luoyou wouldn't be excessive—but six taels per shi remained achievable. Nor would Li need to pay the full three hundred thousand taels in silver. A hundred thousand would suffice for the handover to Guan-Ning Garrison. According to intelligence from the External Intelligence Bureau, Liaohai Trading House maintained working capital of three to four hundred thousand taels in Liaodong. A hundred thousand in cash was manageable. The remainder could be offset through bank drafts, redeemable at various branches inside the pass, or through direct commodity purchases per their existing remittance agreement.

In Liaodong, grain was the most coveted commodity—and the most profitable. Whether sold to the Guan-Ning Army, the Dongjiang Army, or even the Manchus, it commanded high prices. Where it ultimately went was Liaohai Hong's affair, not Zhao Yingong's concern.

But using Liaohai Hong as the wholesale intermediary served another purpose. Neither the Council of Elders nor Shen Tingyang possessed real connections in Liaodong. If they transported fifty thousand shi directly and attempted to sell it rashly, even setting aside how few local merchants had the means to buy, the entire shipment risked seizure by soldiers—leaving them with nothing. Merchants from the Dengzhou-Laizhou region who had gone bankrupt this way were not few.

Li Luoyou, by contrast, had operated in Liaodong for years. His roots ran deep; his ties to local military families and officials were thoroughly entangled. With Liaohai Hong handling the transaction, such concerns evaporated. Frankly, only a figure of his power dared do business in that lawless territory and still turn a profit.

The remaining question was critical: where would the husked rice come from?

Jiangnan was in the grip of a supply crunch. Wealthy households hoarding grain would certainly wait for peak prices. Rates would only fall after the summer harvest hit the market—and Shen Tingyang obviously could not wait.

Zhao Yingong's confidence was not quite as ironclad as the assurances he had given Shen Tingyang. His original plan was to transport Siamese husked rice from Lingao. The price advantage was overwhelming; even delivered to Shanghai, the cost per shi would not exceed one tael. But Siamese rice imports remained constrained by transport capacity, and the flood of immigrants had tightened things further. For now, grain in Lingao remained a Tier 1 controlled material, with import, export, and distribution directly managed by the Planning Commission. Transferring fifty thousand shi in one shipment—even if it promised several times the profit—would almost certainly be denied. He had already submitted a request, but privately held little hope.

As for Taiwan and Jeju, agriculture had developed to a degree, but both regions bore the burden of receiving massive refugee transfers. Jeju Island was barely self-sufficient; Taiwan's grain still had to come from Lingao. Counting on either to export was impossible. Besides, grain reserves in those locations consisted largely of relief rations and potatoes—hardly commodities that could be converted to silver in Liaodong.

It seemed he would have to look elsewhere. Zhao Yingong considered several possibilities. The Joseon Kingdom was destitute; extracting even a few thousand shi would reduce the Joseon court to endless complaints. Buying from them was unrealistic. Japan produced grain in considerable volumes by contemporary standards, but surplus for export was virtually nonexistent—grain had never been among their trade goods.

Zhao Yingong turned the problem over in his mind but could devise no brilliant solution.

(End of this chapter)