Chapter Forty-Eight: The Solution to the Currency Shortage!
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“For nearly a month, the Chang’an region has been gripped by a severe currency shortage, causing difficulties in trade and shortages of goods; farmers, merchants, and artisans alike are suffering greatly. His Majesty has decreed that I take charge of resolving this currency crisis. However, my knowledge is limited, and despite trying several methods in succession, the results have been minimal. Today, I have gathered all of you here to pool our wisdom and devise effective solutions to quell the currency shortage as soon as possible. Such an outcome would be a blessing for the empire and its people!”
Li Shizhi spoke first, seeking advice from the assembly on how to address the shortage. Yet, after several inquiries, no one responded; the room fell into an awkward silence.
Was the problem too difficult, or were strangers present, making everyone hesitant to speak freely?
After all, this issue concerned matters of state; sometimes a single misplaced word could invite trouble.
...
“Gentlemen need not hold back; you may speak frankly and candidly. Young Master Li is of royal descent, my junior relative, and a close friend of Prefect Cui—he is absolutely trustworthy.”
Though Li Zhao had only met him once, Li Shizhi deeply recognized the youth’s extraordinary talent. The solutions he proposed in previous papers had greatly benefited him.
Hence, he had asked Cui Zongzhi to bring Li Zhao to this gathering, hoping he could help solve the thorny currency shortage.
Having invited him with great effort, the awkward silence was all the more embarrassing. As the host, Li Shizhi naturally felt compelled to speak on Li Zhao’s behalf.
“Thank you, senior, for your trust. I am deeply grateful!” Li Zhao smiled, downing the fine wine before him, though his heart was heavy with complex thoughts. Li Shizhi’s frankness, generosity, and straightforward nature marked him as a friend worth keeping.
Yet, politics and intrigue were battles of cunning, strategy, and guile; too much candor often led to exploitation.
In contrast, Li Linfu was far more formidable—crafty, ruthless, and inscrutable. This was a key reason why the faction of the Right Chancellor always held the upper hand in political struggles.
Enough digression—back to the matter at hand!
With the Left Chancellor Li Shizhi vouching for him, the awkward atmosphere finally eased. After some courteous exchanges, the renowned strategist Jiao Sui spoke first:
“In my humble opinion, while the currency shortage seems as fierce as a tiger, it is not insurmountable. The key lies in two areas: first, issuing a strict decree banning the destruction of currency for copper smelting, and urging local officials to intensify inspections. Any unscrupulous merchants caught secretly melting coins should be arrested and severely punished.
Otherwise, the government could mine and mint all the copper it wanted, but it would never be enough to compensate for the damage caused by these profiteers.
Second, raise commodity prices. Currently, market prices, especially for grain and raw silk, are less than half of what they usually are. Even if farmers sell their entire harvest, the proceeds are insufficient to pay autumn taxes, let alone support their families.
Prices this low discourage merchants from trading, leading to severe shortages of goods within Chang’an and great suffering for its residents.
Therefore, we must find ways to raise prices, especially for grain and raw silk, so farmers can afford taxes and support their households. This will stabilize public morale.
Higher prices will also incentivize merchants, who will then bring a steady flow of goods into Chang’an, thereby resolving the supply shortage and allowing the city’s million residents to live in peace and prosperity.”
Jiao Sui, a true sage, swiftly grasped the crux of the matter and proposed two sound measures.
The problem was, though good in theory, these measures were difficult to implement!
Coin melting was rampant among the populace. The court had repeatedly forbidden it and arrested some petty offenders, but the real masterminds remained free.
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For example, Guo Wanjin, one of the Four Great Wealth Gods, was notorious for orchestrating the largest amount of coin destruction for copper smelting. Everyone knew this, but what could be done?
Guo Wanjin was not only a corrupt merchant but also the “treasury” of the Right Chancellor’s faction. Arresting him would surely provoke fierce retaliation from that faction. Who could withstand such a blow?
Even Left Chancellor Li Shizhi likely lacked the courage to do so.
As for raising prices, it was even more challenging. The government could not simply issue a decree and expect prices to rise. Prices were determined by market supply and demand. The only way to raise them was to purchase commodities on a large scale at high prices—but where would the funds come from?
All eyes in the room turned to Minister of Revenue Yang Bo. The Tang Empire was at its peak, its treasury abundant. Surely, setting aside funds to buy goods should be feasible?
“Gentlemen, to be candid, there is indeed money in the treasury. In normal times, releasing tens of millions of strings of cash would pose no problem. But now, I dare not touch a single coin. The treasury funds are all allocated for military expenses. Even future tax revenues are being stored, aside from necessary expenditures, to serve as military funds. The reasons for this, alas...” Yang Bo smiled bitterly as he explained. Though unspoken, everyone present understood well.
The Tang Empire appeared peaceful, but danger lurked beneath. Only months ago, the Tibetan forces had assembled 100,000 troops at Shibao City, threatening to invade the Hexi Corridor.
Fortunately, the court responded appropriately—mobilizing forces and maintaining readiness, while sowing discord among the Tibetans. This averted a major battle.
But the Tibetans were not deterred; they could return at any time. Meanwhile, the northern Turks also sharpened their blades, eyeing the prosperous Tang territories. A great war between these powers was inevitable.
War required vast sums of money—lots and lots of money!
Thus, the emperor decreed that all gold, silver, and silk in the treasury be used to recruit soldiers and strengthen the military. Other matters must wait.
For instance, the renovations and expansions of the Daming Palace and Taiji Palace in northern Chang’an were suspended to save funds.
Even the grand celebrations planned for the emperor’s birthday this year were scaled back.
The common people were unaware of these details, but officials knew well. To prepare for a decisive war that could determine the fate of the nation, even the emperor himself tightened his belt. Who dared touch the treasury funds now?
...
“Military affairs determine the fate of the nation and outweigh all else. Therefore, treasury funds must not be spent. In my opinion, we should petition His Majesty to issue an edict abolishing Buddhism, seizing all gold, silver, and copper temple vessels for coin casting. This would solve the currency shortage.”
“No, absolutely not... What a sin! Amitabha Buddha!” Perhaps harboring a grudge against Buddhism, Cui Zongzhi again proposed the destruction of Buddhist establishments.
But this suggestion was immediately opposed, especially by the Minister of Personnel, Su Jin, who nearly drew his sword to duel Cui Zongzhi—he was not a devout Buddhist himself!
(From “The Eight Immortals of the Wine Cup”: Su Jin fasts before embroidered Buddhas, but often escapes meditation when drunk.)
The abolition of Buddhism would have enormous repercussions!
If a lukewarm Buddhist so vehemently opposed it, how much more would devout believers resist?
A campaign to eradicate Buddhism would surely plunge the realm into chaos—external threats unresolved, internal rebellion ignited. Caught between attacks, the Tang Empire would suffer far worse than from a currency shortage.
Thus, abolishing Buddhism was absolutely impossible—at least for now.
The assembly then considered several other proposals, but all were impractical or too slow to resolve the immediate crisis.
With no solution in sight, all eyes turned to Li Zhao. From the meeting’s start until now, the young man had said nothing, only drinking steadily—three large jars—and yet showed no sign of intoxication.
His drinking prowess was impressive, but could it solve the problem?
Cui Zongzhi reached out and snatched the wine cup from Li Zhao’s hand. “Young Master, stop drinking for now. You have the most clever ideas. Do you have any good solutions?”
“Heh heh, actually, Senior Jiao’s suggestions are quite good. If we can prohibit coin melting and raise prices, the currency shortage will be quelled.”
“Easier said than done. How do you propose to forbid coin melting and raise prices? Do you have a plan?”
“Yes!”
As he spoke, Li Zhao produced a Kaiyuan Tongbao coin—the Tang Empire’s official currency. Round on the outside, square in the center, eight fen in diameter, made of high-quality brass, finely crafted and beautiful in appearance.
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“You are all aware that a Kaiyuan Tongbao weighs about 1.4 qian, composed of 80% copper and 20% lead. Such coins are golden in color, attractive, and resistant to wear.
This is why many merchants melt coins to recast exquisite copperware, seeking huge profits.
My proposal is to alter the alloy composition: 70% copper, 20% lead, 5% black lead, and 5% tin. Coins cast from this alloy will have a yellowish-green hue and remain aesthetically pleasing, but the material will be more brittle.
Bronze coins melted down are then difficult to recast into fine copperware. Even if forcibly made, the resulting products will crack, break, and wear easily, making them poor quality and hard to sell.
Without a market for copperware, merchants will have no incentive to destroy coins.”
After speaking, Li Zhao requested brush, ink, paper, and inkstone from the red-clad attendant. He carefully documented the alloy formula and key casting notes.
When finished, the others passed the document around, praising the plan highly, especially Minister Yang Bo, who trembled with excitement, clutching the formula tightly, eager to experiment and produce sample bronze coins.
Left Chancellor Li Shizhi nodded repeatedly. Compared to brass coins, the bronze coins would match in weight and size; only the color would differ slightly, not affecting public circulation. Yet this change would eradicate a major defect in the currency system.
Such an excellent strategy, once submitted to the emperor, would surely be approved with great commendation.
Li Shizhi looked Li Zhao over once more, liking him more with each glance. Indeed, inviting this young man had been the right choice—he truly was a prodigy!
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