Chapter 1798 - The Merchants' Thoughts

"Whether we exchange or accept, it doesn't matter—high or low fineness, it's still silver. If the common people recognize it, we may consider it a good deed benefiting the country and the people. If they don't recognize it, that can't be blamed on us." Gao Ju spoke with measured finality.

"But this fineness..."

"Fineness is easily discussed. Our silver isn't full fine either. As for the common people's silver, that has never been sufficient in color. Only this money that cannot enter the crucible requires consideration." As Gao Ju spoke, he patted the wooden box beside his hand. It was an exquisite raw-wood joinery box, flat and level—the case the Australians had issued to hold the "money samples."

Everyone naturally understood what Master Gao meant: the Australian Precious Notes.

Precious notes, money tickets, money posts—these were not unfamiliar to Chinese merchants. The Song, Jin, and Yuan dynasties had all possessed fairly mature paper currency systems passed down in continuous lineage. Especially the Southern Song Dynasty's paper currency issuance and circulation could be called a miracle in Chinese financial history—the Southern Song had supported tribute payments and war expenses for over a century using only half the country, demonstrating consummate mastery of fiscal and financial means. By the Yuan Dynasty, paper currency served simply as the basic circulating medium.

At the end of the Yuan Dynasty, currency laws collapsed and paper money was extremely devalued and ruined, but its influence and residual credit among the people still lingered. After Zhu Yuanzhang took the throne, he banned copper coin circulation and fully restored paper currency without encountering much resistance. In the final analysis, common people were not unfamiliar with paper money. Zhu Yuanzhang's decision to use paper currency naturally related to his own experience as a commoner of the Yuan era. In his view, this was perfectly normal.

The Great Ming Treasure Notes had no reserve fund—this wasn't necessarily a fatal problem. Paper currency was guaranteed by government authority, as long as the state could ensure the paper was accepted by the market and circulated. Keeping the speed and magnitude of devaluation within certain limits was not unacceptable. Throughout the Republic of China era, over a hundred types of paper currency circulated across China. Most couldn't claim reserve funds, nor was their value particularly stable, yet they circulated for quite some years.

However, in the era when the Great Ming Treasure Notes were born, the Ming government possessed neither effective grassroots administrative capability nor direct exposure to the comprehensive market economy penetration of rural areas seen in the late Qing and Republic. Furthermore, Zhu Yuanzhang's incorrect understanding of treasure notes led the government to view paper currency as a means of accumulating wealth "out of nothing." His one-time reward of 300,000 guan in ultra-large denomination notes to Zhu Di demonstrated profound ignorance of currency policy. Beyond printing massive amounts of banknotes and causing extreme inflation, the government adopted discriminatory policies toward its own "legal tender." Except for a few limited tax collection points across the entire country, these notes couldn't be used to pay taxes anywhere. This strange policy amounted to the issuer declaring no confidence in the value of its own notes—probably unique in the history of currency issuance.

Self-discrimination coupled with unrestrained printing caused the Great Ming Treasure Notes to continuously devalue and shrink in the market, finally forcing their withdrawal from circulation. Aside from leaving a notorious reputation of "inventing clever names to compete for profit with the people," they left nothing positive. Although some literati accounts claimed that merchants had "struck" the notes down within a short time out of distrust for paper currency, in reality, the notes barely managed to circulate until the Zhengde era—though by then their value and scope of circulation were negligible.

Most merchants gathered in this shop hall had never seen treasure notes circulate, but they had heard their ancestors speak of them. Now hearing Gao Ju mention "Australian Circulation Notes," everyone's hearts involuntarily tightened—their concern for this paper money exceeded their concern for the Australian silver dollars.

After treasure notes withdrew from the market, similar instruments appeared—money posts, silver tickets, bills of exchange used by foreign merchants, even money chips in the Jiangnan area. These men had seen most of them. However, such instruments were mostly autonomous in nature, functioning as checks and drafts.

They had all seen the new circulation notes. Compared to old circulation notes they had encountered previously, these were slightly larger, yet much smaller than money posts and silver tickets on the market. The old circulation notes were already quite exquisite, but the new ones surpassed them. The paper was crisp and substantial, giving an indescribable pleasure when pressed between the fingers.

Compared to silver dollars, which came in only three denominations, paper money had more varieties. Not only were there silver dollar redemption notes in three equal values, but also several kinds of small-denomination subsidiary coin notes. Each bore intricate patterns and was extremely exquisite.

Conversion had already been explained at the meeting, and detailed illustrated instruction manuals came in the coin sample boxes. Anyone literate could understand. Moreover, the Australian currency conversion was very simple—a decimal system.

"This banknote is extremely strong and solid. What paper is it made from?"

"Probably mulberry bark paper," someone suggested.

"How can mulberry bark paper be made so smooth and flat?"

...

"Don't argue—only the Australians can make this paper. It's their secret technique," whispered Old Huo, head of the paper guild. The paper trade had been the industry hit earliest by Australian goods and subsequently controlled most strictly. In early years, massive quantities of Australian paper from Lingao had been dumped in Guangzhou, from high-end to low-end, forcing every paper workshop in Guangzhou Prefecture to close. Only distribution channels for selling paper had been preserved—because the Australians needed distribution. Now, apart from selling some specialty paper from other regions, most of the paper guild's goods were imported from the Hong Kong Cooperative branch.

Beyond the paper itself, the patterns and designs were a hundred times more complex than old circulation notes. The merchants present understood the key point: the best woodblock carvers in all of Guangdong couldn't produce such plates—even Ministry of Works artisans in the capital who carved and printed various official documents and titles for the Six Ministries lacked this skill.

"So these circulation notes cannot be forged," someone concluded.

"Precisely so," agreed Liang Chenlong, head of the Money Industry Guild, speaking slowly. The Money Industry Guild was first to bear the brunt of this currency reform. Before coming to Jufeng Bank, the thirteen large and small peers in the money industry had already held a closed-door meeting to discuss countermeasures. Many discussions had occurred at that meeting, but no countermeasure was ever agreed upon, so they had to "wait and see the wind direction first." In fact, their industry peers recognized the benefits of the Australians issuing new money at a glance.

"We're all businessmen here, dealing with silver and copper coins all day. For the money received daily, we inevitably must check silver fineness and identify good and bad coins. Even so, we often receive damp silver and debased coins."

Everyone nodded. The energy shops spent on identifying silver and money was indeed substantial. Silver had to be checked for color and weighed; copper coins also required checks for copper quality and weight. This inevitably involved arguments with customers. Difficult customers meant disputes. Villains and rascals even specialized in using rotten silver, inferior coins, and private coins to "crash shops" and buy things. If one missed it and accepted them, so be it—but pointing it out brought immediate scenes at the shop entrance, inevitably requiring money to avoid further disaster.

Even with such caution, inventory always revealed lead ingots, rotten damp silver, and crab-eye sand-shell small coins. When sending broken silver to smelting shops for recasting, one had to argue about fineness all over again. In short, it was indescribably troublesome.

"Now that the Australians' silver dollars are out, regardless of fineness, one dollar is one dollar, half a dollar is half a dollar. As long as it's not lacking or short, everyone must recognize it. This is the benefit. If it can be promoted, it will be a tremendous benefit to common people and merchants alike," Liang Chenlong said. "However, the Australians also have precious notes—this is worrying."

"Let's not discuss the small-denomination subsidiary coin notes," Liang Chenlong continued. "Nowadays copper coins are insufficient, and most of what circulates are inferior coins privately or officially minted, which aren't much better than these paper tickets. Using paper tickets is actually more convenient. It's these silver dollar circulation notes that trouble me..."

As he spoke, worry shadowed his face. His hesitant attitude immediately hooked everyone's concerns.

Banknotes and silver dollars circulating at equal value was not rare to Ming merchants. Ever since paper currency had circulated in China, paper had theoretically equaled copper coins in value. Whether the jiaozi of the Song Dynasty or the baochao of the Great Ming, face values were denominated in "wen" and "guan." But in actual use, the "wen" and "guan" of paper notes never matched up with copper coins. Buying a few bowls of muddy wine with treasure notes of dozens or hundreds of guan face value was commonplace in the Ming Dynasty.

But now circulation notes corresponded not to copper coins but to genuine silver. And they were required to circulate and exchange at equal value. The merchants naturally harbored concerns. First, did the Australians possess enough silver dollars for equal exchange? Anyone with slight financial understanding would inevitably consider this issue. Though Ming merchants didn't understand financial science, they knew the concept of over-issuance. Take the various "shop tickets"—essentially modern shopping vouchers—issued by shops; these were often over-issued. If someone collected them all for redemption, many shops would immediately be bankrupted by the run.

This was secondary. What the merchants worried about more was that the Australians had no intention of guaranteeing currency value at all: would they dump massive quantities of circulation notes to purchase all the silver in the market, leaving behind piles of depreciating paper? Though they hadn't personally experienced this routine, old legends preserved the memory. The Yuan Dynasty had gathered up the gold and silver of the Central Plains precisely this way.

In the final analysis, no matter how beautifully printed, a circulation note was just paper—how could it be as reliable as real gold and silver? Even yellow, shiny good copper coins felt more reliable in hand than these beautifully patterned sheets.

"If only silver dollars were circulated without silver dollar notes, this would be a great benevolent government. Our peers, large and small, would inevitably work together to handle the task," Liang Chenlong stroked his beard. "As for these subsidiary coin notes, small coins are scarce in the market, so using them alongside copper coins does no harm."

Everyone understood his meaning. This sentence from the Money Industry Guild set the tone for the meeting. All eyes turned to Gao Ju.

End of Chapter