Chapter 27: Idea of Qianzhuang(bank)
Many people have doubts about establishing a money exchange. Let me explain: the money exchange, which originated in the mid-Ming Dynasty, was the embryonic form of a bank. It went through the chaotic periods of the late Ming and late Qing Dynasty and gradually transformed into modern banks. Since money exchanges survived in the late Ming and late Qing periods, why couldn't they exist in the late Eastern Han Dynasty? Moreover, when Lu Bu established a money exchange, it was primarily to gather the surplus wealth of his military officers. He would also establish it within Lu Bu's sphere of influence, with lending initially prioritized to military officers, merchants, and scholars, gradually transitioning to ordinary people. In the future, Lu Bu would wield imperial authority, making this money exchange a state-owned institution. Once it became a national asset, combined with Lu Bu's increasingly powerful military, who would doubt the money exchange? Some people only see the difficulties of establishing a money exchange but fail to see the tremendous prospects. I truly hope dear readers won't focus solely on the challenges without actively seeking solutions. Please be patient and read through this chapter. I believe that establishing a money exchange in the late Eastern Han Dynasty is not an insurmountable obstacle.
Lu Bu suddenly thought of the banks during the prosperous years of harmony in later times. At that time, the common people worked hard, seemingly earning a lot of money, but they were essentially working for the banks. The banks, relying solely on mortgage loans under high property prices, firmly controlled the finances of millions of people. Lu Bu wanted to gather wealth from all over the world for his military expenses. Only a banking system had the capability to reassemble the scattered wealth for his use. When considering the benefits of the bank, Lu Bu, unable to resist his fascination with wealth, made a decision then and there to establish his own bank.
Lu Bu knew that the precursor to the bank was called a money exchange, also known as a silver shop, and it emerged in the mid-Ming Dynasty, originating from the exchange of silver coins. It gradually developed into handling deposits and remittances. Exchange transactions had appeared as early as the Western Han Dynasty, developed during the Tang and Song Dynasties, initially operated by gold and silver shops and booths. During the reign of Emperor Yingzong of the Ming Dynasty, the devaluation of Ming treasure notes, relaxation of the silver prohibition by the government, and the open circulation of silver coins led to the proliferation of private coins. This complexity in private coins, with varying weights and quality, along with the differences in value between minted coins, private coins, and white coins, led to the development of exchange businesses. Several financial organizations specializing in the exchange of copper coins emerged, known as money shops or money exchanges. By the end of the Ming Dynasty, money exchanges had become independent financial organizations, not only engaging in exchanges but also providing loans and offering the convenience of issuing notes for withdrawals.
Lu Bu was well aware that establishing a money exchange in the turbulent times of the late Eastern Han Dynasty would undoubtedly face many challenges.
Firstly, the money exchange could be plundered by other forces. To address this, Lu Bu would initially establish it only in locations completely under his control, such as Ye City, and gradually expand to other places once his influence grew, always setting up in heavily guarded cities.
Secondly, there were risks in the exchange business of the money exchange. Lu Bu's gold, silver, and high-quality coins could be swallowed up by counterfeit coins from enemy forces. To counter this, Lu Bu would only allow the official five-zhu coins minted by the former Han court, as well as genuine gold and silver, to circulate within his territory. He strictly prohibited the circulation of coins privately minted by other forces. Each money exchange would have samples of genuine coins for verification based on color, inscriptions, weight, and other factors. If counterfeit coins were discovered, they would be treated as fake, and all of them would be confiscated.
Furthermore, ordinary people might initially be skeptical of the money exchange. Lu Bu would first open deposit and loan services to his military officers, officials, and merchants. Once his influence was solidified, he would then extend services to ordinary people, building trust over time.
The pace of establishing money exchanges would be complementary to the expansion of Lu Bu's influence, developing steadily and orderly.
The early introduction of this new institution, the money exchange, would undoubtedly face various difficulties, but good things often require overcoming obstacles. Many people only see the challenges but fail to recognize that overcoming each difficulty presents an opportunity for development. Lu Bu was different; he embraced challenges and saw the immense benefits and bright future in establishing an official money exchange in the late Eastern Han Dynasty. Regardless of the difficulties, he was determined to overcome them one by one for the substantial gains.
As Lu Bu's courtesy name was Fengxian, he chose a name with a meaningful resonance for his money exchange: Fengxian Money Exchange. Later, when Lu Bu gained control of the central government, the name of the money exchange would be changed to Central Money Exchange and later Central Bank. But that's a story for another time.
Lu Bu himself didn't have the energy to create and operate this money exchange, so he thought of an excellent candidate. He sent Li He and several Red Guard members to invite that person to discuss matters at Xiaopingjing military camp.
When that person entered Lu Bu's central military tent, Lu Bu stepped forward and paid a great salute, saying, "Fengxian pays respects to Father-in-law."
The person was Lu Bu's father-in-law, Yan Mu, a prominent merchant from Bing Province. He had a dignified face, handsome features, and a majestic beard, surprisingly a handsome middle-aged man. With a clear complexion and a slender figure, he didn't exude the typical aura of a merchant.
Originally, Lu Bu didn't have much respect for this father-in-law who was a merchant. Still, after experiencing the commercial era of later times, he now held great respect for this father-in-law. Many of Lu Bu's business ideas had to go through this father-in-law to be realized, and this father-in-law had some means in business operations that Lu Bu admired.
After listening to Lu Bu's plans for the money exchange, Yan Mu was delighted. He patted Lu Bu's shoulder and said with a smile, "Son-in-law, you are undoubtedly a descendant of Lv Buwei, the Prime Minister of Qin. Otherwise, how could you have such a business acumen? Why didn't I think of such a good business?"
After deliberating with Yan Mu for an hour, they finally worked out a complete plan.
Lu Bu checked the time; it was already the fourth watch. They would have to attend the early court assembly at the Chongde Hall soon.
Lu Bu quickly ordered someone to call all the generals to the central military tent to discuss the matter of the money exchange.
It was a night of turmoil, and everyone had hardly slept after receiving substantial rewards. Each person was excited, unable to sleep any longer. When Lu Bu called them, they quickly arrived at the central military tent.
Originally, that Lu Bu detested the kneeling etiquette of the literati in this era. Because he lived in Jiuyuan County, where there were many nomadic people such as the Xiongnu and Xianbei, a folding chair known as "Hu bed" or "Jiaoyi" became popular. The Jiaoyi could be folded and conveniently carried, not only for indoor use but also for outdoor activities, especially during marches when it could be used to rest. In later times, during the prosperous years of the Eastern Han Dynasty, the royal nobility and wealthy officials, when going on tours or hunting, would bring this type of chair with them. This allowed the owner to sit and rest anytime, anywhere, turning the Jiaoyi into a symbol of status. Hence, there is a saying in China, "the first Jiaoyi" representing a leader.
Originally, Lu Bu had the craftsmen among the nomadic people make dozens of Jiaoyi chairs for himself. He placed them in his tent, and whenever the generals came for discussions, he had them sit on the Jiaoyi chairs instead of kneeling.
A table was set in the middle, and Yan Mu, with a pen on a sheet of paper, depicted a very beautiful vision: Establishing the Dedication Bank, with Lu Bu and the reputation of the Bingzhou Army, along with hundreds of thousands of catties of gold, as guarantees. People from all walks of society could deposit money into the Dedication Bank. For one month, there would be one-thousandth of interest, for one year, one hundredth of interest, and the interest would increase year by year. If deposited for five years, there would be ten percent interest.
During the Eastern Han era, except for the wealthy aristocrats and merchants, ordinary people had no concept of financial management. Everyone kept their money in hand, with one unit of money being just that, and there was no concept that money could generate more money. After Lu Bu explained concepts like deposits and interest, people were willing to deposit their money into the Dedication Bank.
Gao Shun thought for a moment and found something amiss. He questioned, "If everyone deposits a limited amount of money, and in the future, everyone can withdraw more, wouldn't the money in the bank be depleted? I want to know how the bank itself generates money, or else our wealth won't last."
Yan Mu, following Lu Bu's plan, calmly explained, "The Dedication Bank lends money to all levels of society, ranging from one hundred coins to one million coins, but there must be corresponding collateral. Those above the status of literati enjoy some credit exemptions. For loans, there is a two-thousandth interest for one month, and for one year, a two-hundredth interest, increasing annually. If borrowed for five years, there would be twenty percent interest."
Lu Bu, on the side, further explained concepts like borrowing, lending, collateral, and credit. Yan Mu, increasingly impressed with Lu Bu's intellect, swiftly recorded all these valuable insights.
Wei Xu, who was interested in finance, understood that the Dedication Bank not only ensured no losses but also generated profits. However, he couldn't understand one thing and asked Yan Mu, "Uncle, I want to ask, if everyone doesn't borrow from your bank, and you can't issue loans, what will you do?"
Yan Mu was momentarily puzzled but quickly sought help from Lu Bu. Lu Bu smiled and explained, "Our loans are issued to everyone under the rule of the Great Han, including merchants, soldiers, literati, landlords, wealthy farmers, and even poor farmers, tenants, and servants, though the amounts may vary. If a merchant wants to expand his business and needs funds, the bank welcomes him to borrow. If his business thrives, he uses the profits to repay the loan and interest. If it fails, the original collateral is confiscated, and the bank suffers no losses. Soldiers needing money for household expenses can borrow, and if they win a battle, they repay the loan and interest with rewards and military pay. If they lose or die in battle, there is compensation and pledged items, so the bank incurs no losses. As for those without land who want to engage in small trade, our bank opens its doors wide for them."
Gao Shun raised his hand again and asked, "From what I know, most major aristocratic families and wealthy merchants lend money, and the offspring of middle-class families serve them, sharing the profits like servants. Hearing what the Lord says, I suddenly think that lending is just like borrowing. The only difference is that the interest on the Lord's loans is much lower than those fellows." Lu Bu, upon hearing this, felt a blow, thinking that his innovation was groundbreaking, only to realize that similar commercial activities existed in the early Eastern Han Dynasty.
Yan Mu, seeing Lu Bu a bit embarrassed, spoke up to ease the situation, "I won't hide it from everyone. My original business included lending, but the interest was lower than other merchants, so many people in Bingzhou borrowed from me. However, I used my own money for lending, and the profits were limited. The Lord's Dedication Bank is a grand idea, using the wealth of the world for our benefit. With money for deposits and low-interest loans, it's likely that people all over the world will use the bank, and they won't pay attention to those aristocratic families and merchants lending at high interest rates. I'm just worried that those aristocratic families will oppose the Lord's initiative."
Lu Bu also worried that those hypocritical aristocratic families, who spoke of benevolence and righteousness while engaging in greedy and profit-seeking activities, would unite against this move. However, since he had decided to establish the bank to pool wealth from all corners of the world, he wasn't afraid of those scoundrels who deserved to die. He boldly declared, "Everyone, rest assured. I will seek an edict from the Empress Dowager to establish the Dedication Bank as a state-owned bank. Other high-interest lending activities will be strictly prohibited. If anyone openly opposes the Dedication Bank, they will be dealt with according to the laws of the state."
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