Chapter 1765 - Stabilizing Grain Prices
Liu Xiang listened carefully. The Finance and Economic Ministry's plan was quite thorough—covering every angle, point by point, and reasonably executable. It wasn't pure theory divorced from reality, which had been his main worry.
After hearing the plan overview, Liu Xiang cleared his throat. "I think Finance's and the Central Reserve Bank's scheme is workable. But implementing it will require a great deal of groundwork."
Issuing a new currency required a vast network of support, and their "relevant departments" in Guangzhou were all understaffed. Apart from the police apparatus, which was beginning to take shape, everything else was essentially blank.
Of the agencies and enterprises called for in the plan, only Delong Bank had begun laying groundwork six months earlier, adding new branch offices that roughly covered the commercial streets of the urban districts, the various toll-gate suburbs, and the major market towns on the outskirts. The rest either had no framework at all or were too small to serve any purpose. They would have to be built and staffed one by one. The personnel gap was significant as well.
"...My idea is that the state-controlled Wanyou Trading and the Women's Cooperative should open Guangzhou branches as soon as possible. Location is up to them, but the more outlets the better—to attract citizens to use the new currency," Zheng Shangjie said. "Clerks and shop-hands can be recruited locally. We just need to dispatch a core of experienced managers to lead."
Zhang Yikun chimed in: "We have plenty of space. Da Shijie was designed precisely to attract the Senatorial Council's commercial enterprises. Not just these firms—I think the Commerce Bureau could open additional new businesses: catering, for example. More channels for currency reflux."
Lin Baiguang said, "Should Dachang, like Delong, set up a network of outlets in the urban area and the larger commercial towns nearby? Its importance is now on par with the bank's. These outlets could do both wholesale and retail, serving as a barometer for rice prices."
Chen Ce jotted a few notes. "That will require coordination, but I don't foresee any major obstacles."
Liu Xiang said, "There's another thing I'm worried about: our fractional currency. Fractional coins are all paper—no metal coinage. Will ordinary people really be willing to trade their copper cash for paper? For commoners, silver dollars are rarely needed; what they mainly require is a means of small-denomination payment. And right now the smallest silver coin is worth about two qian of silver—that's fairly substantial."
Chen Ce smiled faintly. "Old Liu, have you ever heard of qian chou?"
"Not really. Chips?"
"They're a kind of token—privately issued by merchants, made of bamboo. In nature, they're the same as banknotes: a form of credit currency. They were quite popular in the Jiangnan region during the mid-to-late Qing." Chen Ce explained, "Do you know why they appeared?"
"Because of a shortage of small change?"
"Because the market was flooded with debased coins." Chen Ce went on, "Exactly the same situation as today's Ming. Merchants and commoners suffered terribly, yet small-denomination payment was indispensable. So these tokens, made of material with zero intrinsic value, emerged. Their credit was maintained by the issuing shop alone. And they could circulate throughout an entire township—sometimes across a dozen townships."
"You're saying the people will accept our small-denomination fractional currency because there's so much bad copper around?"
"Exactly—and more." Chen Ce glanced at Meng Xian. "Xiao Meng's financial reports have repeatedly noted the severe shortage of small-denomination coinage in Guangzhou and throughout Guangdong."
"That's right," Meng Xian said. "Some merchants privately cast silver pellets to serve as fractional currency."
The Ming was an era that paid little attention to minting coins. Currency from every dynasty circulated together. After the collapse of the paper-money system, private coining had been permitted to address the shortage of circulating money, resulting in coins of abysmal quality—some that flowed into Southeast Asia were dismissed by Europeans as "lead disks." And during the Chongzhen reign, massive coin-minting to meet fiscal emergencies had produced money that was both profuse and poor. Small-denomination coinage on the market was chaotic in value.
"...So we believe paper fractional currency can work," Chen Ce concluded.
The argument hadn't fully convinced Liu Xiang, but he couldn't propose anything better.
To further reduce the outflow of silver and copper from current administrative expenditures, the meeting decided that until the new currency was issued, all cadres who had traveled north would receive only supplies—no cash—and that locally recruited or retained personnel would be paid only in rice and cloth at set valuations, not in silver or copper. Except for necessary project payments and on-the-spot procurement, all silver and copper disbursements were strictly prohibited.
Liu Xiang said, "Before we issue the new currency, our other priority is stabilizing grain prices."
According to the daily price reports from the Comprehensive Governance Office's market monitors, the average rice price in Guangzhou stood at about 1.3 taels per shi—roughly one qian higher than when they had entered the city. This was clearly a "panic surge": the turmoil of the times had sent residents scrambling to stockpile rice, driving prices up. Half a month had passed since then; the city was calm again, and in theory prices should have eased. Yet rice kept rising steadily. That indicated grain merchants weren't optimistic about future supplies. Still, it remained within normal range: every year at this season, rice trended upward, only to fall after the summer harvest when local and imported grain came to market.
No precise population count for Greater Guangzhou was available yet, but based on existing data and estimates, the permanent residents of Panyu and Nanhai counties within Guangzhou City numbered roughly three hundred thousand. Even at a conservative fourteen kilograms per person per month, monthly consumption exceeded four thousand metric tons—an astonishing figure.
Liu Xiang didn't know how much grain private households had stockpiled, but the Senators all knew one thing: Guangdong was traditionally a grain-deficit region. Even in good harvest years under the late Ming, local production met only half the year's needs. Though Jiangxi and Huguang were major granaries, the Five Ridges blocked easy transport, so they couldn't effectively supply Guangdong. Bulk grain came mainly from Guangxi. Thus, urban reserves would not be large. With Guangxi shipments now suspended, the grain supply for this mega-consuming city fell squarely on the new government's shoulders.
It was now March—precisely the lean season in the countryside when last year's stores ran low and the new crop wasn't yet in. The rural areas couldn't spare food for the city. Traditional external grain trade had been cut off; captured stores were limited. If they couldn't stabilize prices effectively, never mind issuing new currency—a "rice riot" would leave the Senatorial Council's reputation in ruins!
Quiet panic was already spreading. Some rice-shop owners who did business with Dachang were fretting over this year's outside-grain arrivals. Guangxi rice was obviously not coming, and within Guangdong itself, only the three prefectures of Lei, Lian, and Gao produced significant grain surpluses. A supply crunch in the second half of the year was a foregone conclusion.
The meeting decided that after the ya brokers were suppressed, Dachang would take over as Guangzhou's general grain wholesaler, distributing grain to the rice shops at a "guidance price" to stabilize the market.
"The Enterprise Institute has promised to ship five thousand metric tons of brown rice this month, and another twenty thousand next month. All of this grain is earmarked for Guangzhou, with the goal of ensuring four to five months' reserves," Chen Ce said.
Liu Xiang was startled. "The Enterprise Institute has that much grain on hand?"
He recalled that grain had always been one of the Senatorial Council's tightly controlled "regulated commodities." Given their agricultural capacity, feeding the vast industrial workforce, administrative staff, military, police, and students was already a heavy burden. Without grain imports, the Senatorial Council simply couldn't support such a high proportion of non-agricultural population.
Under the Senatorial Council, there was no unified-purchase-and-sale system, but grain remained a first-tier controlled commodity.
"Of course it does," Chen Ce said. "I can also give you the inside story. This is the result of an all-out coordination by the State Council. Starting this month, every public canteen on Hainan, Taiwan, Jeju, and elsewhere will switch its staple to rice noodles. At the same time, the Enterprise Institute has increased its import quota for rice—so in Guangzhou, we can only succeed; failure is not an option."
The Senators present understood the weight of these words. Rice noodles were made with 25 percent sweet-potato powder. And if rice imports went up, imports of other raw materials would have to go down. In effect, the masses were sacrificing their own interests to support this monetary reform in Guangdong.
Liu Xiang said gravely, "This is the strength of the whole nation being poured into supporting us."
"Exactly. As long as you appreciate that." Chen Ce's tone was heavy too. "We've just liberated Guangzhou; public sentiment is still unsettled, and now we're pushing monetary reform—prime conditions for speculators and profiteers to stir up trouble. This won't be smooth sailing."
The Dachang Guangzhou Branch had originally been just a small storefront near the East Gate, close to the Pearl River waterway. The front was modest and unremarkable, but the warehouse compound and wharf behind it were surprisingly large. Every summer and autumn, the place bustled; the rear wharf would be jammed with grain boats.
Dachang had almost nothing to do with Guangzhou's grain trade—it neither bought nor sold. It only received grain delivered from the surrounding townships and villages, and sometimes silver or miscellaneous local products. What it collected was loaded straight onto ships bound for Hong Kong.
March was normally Dachang's quietest season, yet now the wharf was packed with vessels. Barges towed by steam tugs from Hong Kong Island rode low in the water, their decks tightly covered with rush matting.
Porters worked day and night hauling straw sacks into the warehouses—no question what was inside: rice.
Not far away, at Da Shijie's private dock, more Hong Kong barges were moored. Steam cranes chugged and puffed, hoisting cargo onto iron-wheeled carts that rolled in trains toward the storage area.
Lin Baiguang stood on the observation deck atop Da Shijie, gazing at the scene. Since the liberation of Guangzhou, the tugboat schedule from Hong Kong had multiplied several times over. Huge quantities of grain, cloth, salt, and sundries flowed in from Hong Kong Island. The once-empty warehouses were now more than half full—and more arrived in an endless stream.
(End of Chapter)