My Portable Ming Dynasty

Chapter 494 There's still a cicada lurking behind.
The final results from the three judicial departments have been released.

Lin Maocai was sentenced to death with reprieve, all the top executives of Rishengchang were imprisoned, and all assets were frozen.

The Southeast gentry families who had invested in the company were ordered to return all dividends and liquidate all their shares.

As for the officials associated with Rishengchang, including the thirty-seven people impeached by Hai Rui, all of them were dismissed from their posts by the emperor and imprisoned to await trial.

As for the local officials and maritime officials who were punished for protecting Rishengchang, there were countless others, almost completely reshuffling the port officials in the southeast region.
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However, in the days that followed, the five departments of the Secretariat-Chancellery became very busy.

The Ministry of Revenue was to establish a new Ticketing and Clearing Office, which involved a lot of personnel work and required coordination from the five departments of the Secretariat and Chancellery.

Furthermore, Su Ze, as the initiator, must also take responsibility for the newly established department, including its authority and how it should operate.

Zhang Juzheng simply ordered Su Ze to lead the five departments of the Secretariat and the Chancellery to draft the "Regulations on Guarantee Deposits for Banks" to design the framework of the entire Bank Affairs Bureau.

In addition, the Ministry of Justice was also formally commissioned to draft laws concerning financial regulation.

Since Mao Kai, the Minister of Justice, was not in charge of affairs, and Li Yiyuan, who was previously in charge of revising laws in the Ministry of Justice, was transferred to the position of Commissioner of the Court of Judicial Review, no outstanding officials have emerged in the Ministry of Justice.

There was no other way, so the cabinet once again assigned this matter to the five departments of the Secretariat and the Chancellery. Shen Yiguan, the chief of the Department of Justice, and Lin Bingzheng, the deputy chief, spent their days shuttling between the cabinet and the Ministry of Justice to coordinate the drafting work.

These tasks fell to the five departments of the Secretariat and the Chancellery, and Su Ze had to set an example. These days, he was busy coming and going all day long.

"Prosecutor Su, His Highness requests your presence at the East Palace."

Zhang Hong, the eunuch responsible for conveying the Crown Prince's decree, carefully approached Su Ze's office after observing the busy staff of the five departments of the Secretariat.

Zhang Hong sensed that Su Ze was different now than when he was in the Imperial Household Department.

At that time, Su Ze was very famous and approved all his requests in his monthly memorials, but because he did not hold an important position, he was only regarded as a future important minister.

The ministers were wary of him because of his own abilities and his relationship with the crown prince; no one wanted to offend a future Grand Secretary.

However, Su Ze now serves as the Inspector of the Fifth Office of the Secretariat-Chancellery. This rapidly rising department is also becoming increasingly powerful in the court as the cabinet expands its authority.

Su Ze has now solidified his status as the "shadow Grand Secretary." On many specific issues, the five offices of the Secretariat-Chancellery, as the executive body, even possess more specific power than the Grand Secretaries.

For example, in the newly established Ticketing and Censorship Office, Zhang Juzheng focused on the selection of the chief and deputy chief officials. The remaining lower-level officials were selected by the Personnel Office and the Ministry of Personnel, which were among the five departments of the Secretariat and the Chancellery, and then submitted to the Cabinet for decision.

The appointment of a minor official of the seventh rank would naturally not be of concern to the Grand Secretaries.

This is the specific use of power.

Su Ze looked at Zhang Hong. The Crown Prince had summoned him?

After Su Ze was appointed as a lecturer, he frequently entered the palace to teach the Crown Prince. However, since he now held a real position, he could no longer be responsible for the Crown Prince's daily studies as before.

Su Ze then recommended Luo Wanhua, Shen Yiguan, and Zhang Wei, all born in the same year, to teach the Crown Prince, and the Longqing Emperor approved all of them.

Luo Wanhua and Shen Yiguan had both previously held positions in the Imperial Household Department and had taught the Crown Prince. Now, they take turns lecturing the Crown Prince, and Su Ze rarely inquires about the specific courses anymore.

This happened so suddenly, it definitely can't be related to academics.

Since it was a private matter, Su Ze stood up and stuffed a brocade pouch containing silver coins into Zhang Hong's arms before saying:

"Please lead the way, Eunuch Zhang."

Zhang Hong and Su Ze had already reached an understanding, so they didn't refuse any longer. The two left the official residence and headed towards the Crown Prince's palace. As they walked, Zhang Hong said:
"Chief Prosecutor Su, the Crown Prince has returned."

The only heir Zhang Hong mentioned was Li Wenquan, the heir of the Earl of Wuqing and the emperor's maternal uncle.

Upon Li Wenquan's return to Beijing, Su Ze roughly knew what had happened. He cupped his hands again and said:

"Thank you, Eunuch Zhang."

Zhang Hong quickly said:

"Prosecutor Su, please don't reveal this! His Highness is going to give Prosecutor Su a surprise."

Su Ze nodded, and Zhang Hong continued:
"Prosecutor Su, I have another personal matter to discuss."

"Father-in-law, please tell me."

"Several of my colleagues entered the palace around the same time and have gained some experience. Recently, there have been adjustments to the maritime trade offices in various regions?"

Su Ze understood what Zhang Hong meant.

The Maritime Trade Office was already a very large department.

The Ming Dynasty had already opened many ports to the sea, and each place had a Maritime Trade Office. The eunuch in charge of the Maritime Trade Office held multiple positions, including customs chief, tax bureau chief, and the emperor's eyes and ears. In the ever-growing maritime trade, it was easy for him to achieve success.

In recent years, the fastest-growing tax revenue in the Ming Dynasty has been the maritime tax collected by the Maritime Trade Office.

Moreover, this money went directly into the imperial treasury, which meant it helped the emperor make money. Therefore, the position of the Maritime Trade Office was considered by the palace to be second only to the Directorate of Ceremonial and the Crown Prince's Palace.

Su Ze understood Zhang Hong's meaning, and he said:
“Eunuch Zhang can send the list to Zhang Bingbi of the Directorate of Ceremonial. If they are capable, Eunuch Zhang will not hesitate to promote them.”

Zhang Hong immediately exclaimed with delight:

"These classmates are all ambitious, and several of them graduated from the Society for Research in Chinese Architecture."

Su Ze nodded and said:

"That's no problem."

Zhang Hong was also somewhat grateful to Su Ze. When the Society for Research in Chinese Architecture was established, Zhang Hong responded to Su Ze's call and promoted it among the eunuchs he was on good terms with, and many people joined the society to study.

Nowadays, the inner court is placing increasing importance on diplomas from the Academy of Chinese Architecture, and many positions now require academic qualifications from the Academy.

Zhang Hong was surrounded by eunuchs with academic qualifications from the Society for Research in Chinese Architecture.

Will the Department of Architecture and Architecture become a core and crucial department like the Directorate of Ceremonial in the future?

Zhang Hong pondered this possibility. He was already of age to be a godfather. He didn't have the authority to recommend someone to study at the Directorate of Ceremonial, but he could surely recommend someone to the Academy of Architecture, right?

The two of them thus arrived at the East Palace.

After greeting Xiaopangjun, Xiaopangjun said proudly:
"Master Su, I really put in a lot of effort to get your memorial approved this time!"

Su Ze said quickly:

"Thank you, Your Highness, for your advice before His Majesty!"

Little Fatty Jun shook his head and said:

"This time, I did not speak in front of Father Emperor!"

Su Ze pretended not to understand, while Little Fatty Jun laughed and said:

"Please have Uncle speak to Master Su about it!"

Li Wenquan immediately cooperated by cupping his hands in greeting and saying with a beaming smile:

"Prosecutor Su, this run on Rishengchang by the Japanese bank was entirely orchestrated by His Highness!"

Su Ze looked at his disciple in surprise. He hadn't expected Li Wenquan to be carrying out his good disciple's plan. Little Fatty Jun, having received confirmation, became even more radiant. He turned to Su Ze, gesturing with his chubby hands, imitating Su Ze's usual teaching style:

“Master Su, look, you taught me that ‘credit’ is the lifeblood of a bank, just like a house made of paper. It looks good, but it will break if you poke it! You also taught me about the ‘herd mentality,’ saying that when there are too many people, people tend to panic and push and shove without thinking. I’ve kept all of that in mind!”

He stood up, paced a couple of steps in the warm chamber, trying to project a mature and composed demeanor, but his tone betrayed his excitement:
"The biggest flaw in Rishengchang's over-issuance of banknotes is that! My uncle found out that they over-issued the most banknotes in Sakai Port, Fuzhou, and Songjiang. I thought that to break their 'credit,' we had to target their weakest point and make their own people panic first!"

"Maritime trade is risky, and the sinking of the silver ship is not the end of the world, but it happened to coincide with Master Su's memorial, which had a fatal effect!"

"This is the military strategy of 'attacking their weak points'!"

"Master Su, I've used all the methods you taught me. This is much more interesting than petitioning my father to arrest people directly!"

Su Ze looked at his disciple and realized that his childhood business knowledge had indeed taken effect. Even if he didn't become emperor, Xiao Pangjun's business acumen surpassed that of the average person.

Su Ze said with great satisfaction:
"Your Highness is exceptionally intelligent, able to apply what you've learned, and surpass your teachers in understanding new situations. Your strategic planning and decisive victory in this campaign are truly a blessing to the nation!"

Little Fatty Jun laughed triumphantly, and Li Wenquan, standing beside him, quickly smiled in return, filling the entire East Palace with a joyful atmosphere.

However, Su Ze changed the subject and said:
"But has Your Highness considered how to handle this?"

Little Fatty Jun paused for a moment, then asked:

"Isn't the money confiscated from Rishengchang enough to make up for it?"

Su Ze shook his head and said:

"The reports from the local governments have been compiled and submitted to the Ministry of Revenue. Rishengchang is far more greedy than we thought."

"The amount of silver notes over-issued in the Ming Dynasty alone far exceeded its assets, not to mention the overseas banks of Rishengchang, where the over-issuance was even more serious."

Xiao Pangjun's face was rather grim. He hadn't expected Rishengchang's disaster to be so devastating that even if the entire Rishengchang were swallowed up, the damage wouldn't be enough to make up for it.

Li Wenquan was also getting anxious. He had originally wanted to rely on the silver notes in Rishengchang's possession to win a lawsuit in the capital and gain control of Rishengchang. Now it seemed that Rishengchang was a hot potato, and he didn't know if he could even redeem his silver notes.

What's the point of acquiring Rishengchang? Isn't it just a pure liability?

If I spend so many silver dollars and still end up losing money, how can I explain this to the shareholders of the Japanese silver company?
But seeing Su Ze's composed demeanor, Li Wenquan quickly asked:
"Prosecutor Su, stop keeping me in suspense and tell me your plan quickly."

Su Ze said:

"Your Highness, do you know why the quality assurance deposit is 30%?"

Li Wenquan paused for a moment before saying:

"Does Prosecutor Su mean to encourage money changers to over-issue currency?"

Su Ze shook his head and said:

"It's not about encouraging over-issuance, but rather about allowing the issuance of bank drafts while ensuring a 30% guarantee deposit and maintaining liquidity."

"The new policy of the imperial court stipulates that all silver notes without a guarantee deposit must be uniformly exchanged for silver notes with a guarantee deposit."

"Although Rishengchang Bank collapsed, not everyone actually wanted to withdraw their banknotes. Many joined the run on the bank out of panic."

"If the Japanese Silver Company acquires Rishengchang and then shows the courage to rescue the market, and with the credit of the imperial court backing it up, the exchange of old and new banknotes can be completed, and the market can be stabilized."

Li Wenquan thought for a moment and said:
"Unified issuance? Silver notes with a quality guarantee deposit, isn't that a precious paper money?"

Su Ze shook his head and said:
"The paper money cannot be freely exchanged for silver dollars."

Su Ze has always wanted to promote credit-based paper money.

However, because the Ming Dynasty's paper money had a bad reputation and the system was too outdated to be freely exchanged, Su Ze still used silver dollars to collect the minting tax.

The incident involving Rishengchang demonstrates, on the one hand, that the financial regulation of the Ming Dynasty lags behind the market, but on the other hand, it also shows that the acceptance of banknotes is already quite high.

If it weren't for this, Rishengchang wouldn't have caused such a huge problem.

The silver notes printed by the imperial court, with a 30% quality guarantee deposit, were essentially credit-based paper money.

Moreover, these banknotes were not forced upon merchants by the government; they were exchanged by the merchants themselves for their savings.

Now that Rishengchang is insolvent, the government is stepping in to exchange your old banknotes for official banknotes with a 30% guarantee deposit.

It's obvious what choice most businessmen would make.

Su Ze said to Li Wenquan:
"Your Highness, the 30% guarantee deposit is a red line set by the imperial court and the Ministry of Revenue. The Ministry of Revenue will supervise all future issuances of banknotes."

"But this time, the Ministry of Revenue still gave the arbitrage opportunity to the Japanese Silver Company, as long as the Japanese Silver Company was willing to take over Rishengchang's business."

Li Wenquan began to think.

The arbitrage opportunity Su Ze mentioned refers to the seigniorage tax earned from exchanging silver dollars.

Rishengchang's silver notes were priced in silver. Under the new policy, they would need to be exchanged for an equivalent amount of silver dollars and silver notes.

However, given the Woyin Company's monopoly, it could exchange nine mace of silver for one silver dollar, which was the arbitrage opportunity for the Woyin Company.

Su Ze said again:
"The specific details will take another two weeks to come."

Upon hearing this, Li Wenquan's eyes lit up even more.

Today, with the collapse of Shengchang's credit for its banknotes, many people are panicking and selling them off, making it possible to acquire banknotes at prices far below face value.

If the imperial court's policy is finalized, the Japanese silver company can take advantage of this information gap to buy up Rishengchang silver notes on the market at a low price.

Once the new banknotes are issued, the Japanese silver company will be able to make huge profits.

The price was that the Japanese silver company had to contribute a large amount of silver dollars to help the court stabilize the credit of the silver notes, assist the court in promoting the reform of the new silver notes, and take the lead in depositing a large amount of guarantee money.

After weighing the options, Li Wenquan decided to act decisively. Since Su Ze was in charge of the reform, he would not let the Japanese Silver Company suffer any losses.

Li Wenquan immediately said:
"The Japanese Silver Company is not entirely profit-driven; ensuring the stability of the Ming Dynasty's monetary system is also its duty. Please rest assured, Prosecutor Su, on this matter!"

Su Ze nodded. Actually, these were things that the Ministry of Revenue was supposed to discuss with the Japanese Silver Company, but it was better for Li Wenquan to accept them willingly than unwillingly.

Moreover, looking at the entire Ming Dynasty, the only semi-private institution that could provide a large amount of silver dollars to save the market was the Japanese Silver Company.

Surely we can't expect the emperor to use his own funds to save Rishengchang?

Moreover, the Woyin Company also benefited. After acquiring Rishengchang, the Woyin Company's banking business was able to occupy half of the entire industry.

Once this matter is resolved, we still need to find a way to separate the money exchange business of the Japanese bank. Otherwise, it would be too dangerous for a bank responsible for issuing currency to be controlled by a private individual.

Of course, that's a matter for the future.

Officials and gentry in the southeast wanted to seize the right to mint coins, but by a twist of fate they helped the imperial court establish the credibility of paper money.

Su Ze even had to thank Rishengchang.

(End of this chapter)