Outside the Guanjia Palace, the emperor and his ministers of the Song Dynasty were so frightened by what Zhao Jun said.
Although Zhao Jun explained it in a relatively simple way, there were still many financial terms and concepts that they did not understand, so they were still confused.
But this did not prevent them from feeling that what Zhao Jun said was profound and seemed to be able to solve the current dilemma.
Therefore, everyone stretched their necks to continue listening.
Seeing that Zhao Jun was getting a little carried away, Yan Shu quickly returned to the main topic and said, "Jiaozi sounds like a good thing that benefits both the country and the people. Why not allow ordinary people to use Jiaozi? If everyone deposits money in a bank, wouldn't the country have plenty of money to use?"
"Because of the poor execution and corrupt officials at the middle and lower levels of the Song Dynasty, if the banks were fully opened to the public and people were allowed to deposit their money, there would surely be countless cases of corruption and excessive issuance of money."
Zhao Jun said: "By then, Jiaozi will not only fail to benefit the Song Dynasty's financial system, but will also likely directly cause serious consequences, just like during the reign of Emperor Huizong of Song, accelerating the demise of the Northern Song Dynasty."
"I don't quite understand. Can Teacher Zhao explain it in detail?"
"It's simple. Corruption was rampant among the lower classes in the Song Dynasty. When ordinary people went to the bank to deposit money, they suddenly had such a large sum of money in their hands. Those officials were likely to embezzle the bank's money or use it for usury to exploit the people at the bottom."
"What if the Song Dynasty court had strictly supervised it?"
"Strict supervision and enforcement may not be enough. Moreover, even if corruption can be prevented, can the Song Dynasty government solve the management problems caused by millions of people depositing money at the same time?"
"Management issues? Is there any management problem with this money being stored in the warehouse?"
"Management issues extend beyond simply storing the money in the warehouse. There are also issues like anti-counterfeiting, forgery, and statistics. These aren't easy to resolve. Uncle Lari, think about it. If people all over the country were counterfeiting Jiaozi and withdrawing money from banks, the Song Dynasty would be devastated."
"All right."
Yan Shu scratched his head. There were still some things he didn't understand. After all, finance was not a specialized discipline in ancient times, and there was no systematic organization and classification. Even the smartest people could not understand it all at once.
"Also, if we promote this nationwide, the scale will be huge, and all kinds of problems will be exposed one by one. We have a saying that any small matter will become a big thing when it is placed on 1.4 billion people, and the same principle applies to Jiaozi.
Zhao Jun continued, "If Jiaozi were simply rolled out in the Song Dynasty's major commercial and economic cities, primarily targeting large merchants and helping them solve their problems, it would be like a pilot program. The impact and exposure of problems would be much smaller, and regulation would be easier. For example, issues like anti-counterfeiting and counterfeiting could be largely resolved."
"How to solve it?"
Yan Shu asked again.
Zhao Jun explained, "A wealthy merchant wouldn't deposit just a few guan (string of silver) on his banknotes. A single silver note could be worth tens, hundreds, or even thousands or tens of thousands of guan (string of silver). Real silver notes made from such large sums of money weren't just kept by merchants; Jiaozi shops across the country also had to keep stubs. For example, during the Song Dynasty, Jiaozi shops were opened in ten cities, so stubs would have to be kept in all ten cities plus the national treasury. Where wealthy merchants withdrew money had to be reported to the national treasury, and the money would be destroyed upon withdrawal."
"That's not right."
Sheng Du, who had reformed the salt law and made significant contributions to the economy, was keenly aware of a problem and immediately said, "If all ten cities have ticket stubs, what will happen if merchants withdraw money everywhere?"
"This problem is easy to solve. First, if a merchant wants to withdraw money, he must report it to the government a certain amount of time in advance and tell the government what he wants the money for. For example, if a merchant wants to go to another place to buy goods and ship them back, he must report to the government before leaving. He can withdraw the money when he arrives at his destination. This gives the government ample time to verify and destroy all the silver notes, and also to prepare enough coins for him in time."
Zhao Jun said, "Secondly, the merchants we choose must be wealthy, top-tier merchants with substantial assets under their names or whose families own them. If such merchants try to exploit loopholes and are caught by the Song Dynasty court, there will be ample reason to confiscate their property and exterminate their clans, and use their wealth directly to fill the national treasury."
It is not easy to ensure safety when running a Jiaozi shop. The method Zhao Jun mentioned does have loopholes.
Because doing business in ancient times was actually quite difficult, mainly due to transportation problems.
When merchants travel around, they essentially transport local specialties to other places and then bring them back to their hometowns, thereby earning the difference in price.
If it is a large transaction, merchants have to carry huge amounts of copper coins and cash and travel across the country by water through the canal, which requires a lot of manpower and material costs such as fleets, guards, and porters.
Sometimes the weight of the goods purchased, such as silk, gold and silver utensils and other expensive luxury goods, is not even as heavy as the copper coins and cash you carry.
The emergence of Jiaozi shops solved the problem of merchants needing to carry large amounts of copper coins and cash.
In the future, when merchants do business, they can deposit money in place A and withdraw money in place B, saving the cost of carrying copper coins and cash when traveling and the cost of transportation.
However, information flow was not well developed in ancient times. Was it possible for merchants to deposit money in place A and withdraw the money multiple times in places B, C, D, etc.?
It works in theory.
But advance reporting and selecting preferred merchants solved this problem.
Merchants who want to withdraw money must report in advance, tell the government where they are going to do business and how much money they want to withdraw, and then they can set off to the other place.
The time it takes for him to travel from place A to place B is the time when the government receives the report and then sends people to notify the Jiaozi shops in various places to start destroying all the ticket stubs except the one in place B.
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