1905: Beer Hall Speaker

Page 75

Wang Chongshan didn't stand on ceremony; he grabbed his bowl and chopsticks and began wolfing down the dishes on the table.

With the national treasury in deficit and the government bankrupt, all benefits for all officials in Beijing's central government have been cancelled this year, office expenses have been cut in half, and all kinds of government expenditures in the Forbidden City have been reduced to the extreme.

The government canteen only provides a menu of three dishes and one soup per day, with a meat dish only served at noon; the rest of the time it is just plain soup.

As Zhao Yan looked at the documents, his heart sank deeper and deeper. His brows furrowed, his lips pressed tightly together, and his eyes were filled with shock.

After reading the document, Zhao Yan sighed deeply: "I will find a way to handle this matter slowly. In short, we will not mistreat these fallen soldiers. Your approval is very good. Leave the rest to me."

Wang Chongshan was getting restless and started thinking of a solution, but there was nothing he could do right now.

But this matter cannot be delayed, because when the higher-ups made the decision to use land to compensate for pensions and military pay, everyone agreed. Now that a problem has arisen, it is everyone's responsibility.

The land compensation system is not being implemented smoothly, mainly because people are reluctant to leave their hometowns.

Surviving soldiers could easily obtain land for their families to take over, but many of the fallen soldiers were the breadwinners of their families. With their pillars gone, how could the elderly, women, and children be willing to travel thousands of miles to the land promised by the government? In those days, immigration was no small matter; it was a matter of life and death for an entire family.

But if it were to be paid in cash, the treasury would already be out of money, and it wouldn't even be able to pay the salaries of officials, let alone the compensation for fallen soldiers.

Seeing Zhao Yan's troubled expression, Wang Chongshan didn't put too much pressure on him, after all, Zhao Yan was in a more difficult situation than him.

After sighing, Wang Chongshan left the Imperial Study with the documents in his hands.

After Wang Chongshan left, Zhao Yan lost his appetite and was filled with worry. He had made a promise to the soldiers, but now he could not keep it. However, the soldiers who fell on the battlefield had kept their promise of loyalty to the death.

After this great battle, Zhao Yan fought across the north and south, east and west, and in his several consecutive battles alone, he lost tens of thousands of soldiers.

During the entire Far East War, the National Defense Army suffered more than 89,500 deaths, 240,000 wounded, and more than 14,000 missing or captured.

The land needed for postwar compensation alone amounted to more than 20 million mu, and there was also land for the remaining soldiers to claim for their war merits, which together amounted to about 130 million mu.

The land originally seized from the Manchu imperial family and the bannermen in various regions was only over 80 million mu, all of which was distributed away. It was not even enough, and land had to be allocated from newly occupied territories and undeveloped areas in Northeast China as compensation.

After much deliberation, Zhao Yan could only modify the policy slightly: the families of fallen soldiers would be given priority in land selection, since they were reluctant to leave their homeland, so the only option was to allow them to live as close to their hometown as possible.

Zhao Yan summoned Yu Jingqian, the Minister of Finance of the Prime Minister's Office, and the two met in the Imperial Study to discuss matters.

Before that, Yu Jingqian was just a salt merchant and the chairman of the Songhu Huaiyang Chamber of Commerce. However, he was the first businessman to support the revolution and spend a lot of money on it.

In 1907, Zhao Yan was unable to repay his debts, so he directly used his power to promote Yu Jingqian to the central government as Minister of Finance. In other words, the Huaiyang Chamber of Commerce had spent four or five million taels of silver, going bankrupt to support the revolution, and finally got the position of Minister of Finance.

Yu Jingqian himself and the business association behind him felt that this deal was too good to pass up. In the Qing Dynasty, you might not be able to buy the position of Minister of Revenue for four or five million taels of silver. Even if you had connections to the highest levels, you would not be able to get it. You would have to climb up step by step. In fact, merchants did not even have the qualifications to enter the officialdom.

Yu Jingqian, who has risen to the top in one step, is also conscientious and diligent, daring not to overstep any boundaries, abiding by the rules and regulations, and striving to do his best to be impeccable. He understands how he got his official position.

Reaching the top in one step seems like a good thing, but the price is that you have no foundation and can be easily dragged down by others at the slightest sign of trouble.

Furthermore, the current Minister of Finance of the Republic is not a lucrative position, but rather a scapegoat. He has no money, no life, only a mountain of debt and bad debts.

To put it bluntly, this is a position that's extremely risky. Otherwise, why do you think anyone else would give up this seemingly lucrative position and let a mere salt merchant become the central finance minister?

"Minister Yu, the reason I called you here today is to discuss the issue of compensation for fallen soldiers." Zhao Yan didn't mince words or probe; he went straight to the point.

"According to the prior arrangement, the expenditure of the pension should not have required much cash. However, plans can't keep up with changes. Giving land without giving money is not a solution either."

"Let's see if the Ministry of Finance can spare some money to tide us over!"

Yu Jingqian looked troubled and spread his hands, saying, "Your Majesty, it's not that the Ministry of Finance is disobeying your orders, but we can't cook without rice! The national treasury is empty, with only a pile of bad debts, and this year's tax revenue hasn't been submitted yet."

Even if I agreed, I wouldn't have the money. Officials in the capital have been owed their salaries for over three months.

"This month, provinces in the Central Plains applied for disaster relief funds again, and the Northwest region also applied for military funding. Resettlement expenditures in the Northeast region have also been delayed again and again."

Zhao Yan said, "Think of a way. Go and reason with those officials and local people. The country is in trouble, but we should give priority to the fallen soldiers."

Yu Jingqian said helplessly, "There's only ever a way of setting up a pot to cook white rice, not a way of cooking rice!"

"The finances are in complete disarray right now, all because of a lack of money. The war was too fierce, and the fiscal deficit is too large. Even if the war is stopped now, the country will still be short of money."

"You've come to me asking for money, but I'm actually looking to get some money from you too. I have over 70 million yuan in interest on government bonds to settle next month!"

Zhao Yan looked worried after hearing this. He could think of ways to deal with a deficit of a few million, but now the country had a debt deficit of over a billion. Even if the King of Heaven himself came, he couldn't come up with a solution.

Zhao Yan's eyes darted around, and he suddenly asked, "How are the government bonds circulating in the market?"

Yu Jingqian was taken aback, and after thinking for a moment, he replied, "The circulation situation is very good. Many places have started to use small-denomination treasury bonds for transactions."

Previously, the national bonds issued by the republican government were all bearer bonds that could be freely traded, with face values ​​ranging from one tael to one thousand taels. These bonds were guaranteed by the national credit and were backed by the prestige brought by Zhao Yan's continuous victories on the front lines.

Government bonds have effectively functioned as currency and are circulating in the market.

After listening, Zhao Yan said, "Let's issue paper money. Since government bonds can circulate, paper money certainly can too."

Yu Jingqian was not a complete novice in finance. After taking office as Minister of Finance, he intensively studied various financial and economic knowledge and learned about the economic policies and fiscal measures of other countries.

Issuing paper money is indeed a good idea, but Yu Jingqian still had a problem: "Your Majesty, issuing paper money is no problem, but what about the anchor?"

These days, paper money isn't issued without an anchor; it has to be anchored to something, such as the silver standard or gold standard. Paper money has to be genuinely linked to precious metals and be freely convertible for people to accept it.

There is no such thing as paper money based solely on national credit; it must be linked to something, and that something of value.

While later international currencies may appear to be issued without an anchor, they are all actually anchored to something. The US dollar's anchors are: US Treasury bonds, oil, and the US military!

The anchor for the RMB is even simpler: land! Otherwise, what do you think supports the trillions of RMB in circulation? Why are land prices so sky-high? Why can't the real estate market have problems?

Zhao Yan also chose to copy someone else's homework here: "The anchor is definitely not gold or silver. If I could produce that much gold and silver, I would have done so long ago."

"Using national credit and land as collateral for the issuance of paper money, the first phase will issue 200 million yuan worth of paper money as a trial, with the face value calculated at one tael of silver for every two yuan of paper money."

The new currency was named Han Yuan, and the Ministry of Finance quickly got to work on it, printing money to meet the emergency needs.

"For domestic fiscal expenditures and foreign debt repayments, we must use Han Yuan paper money to deal with everything first. In short, we must give money and maintain the country's credit."

"But what money to give and how to give it is up to us. They can take it or leave it. The cash that is squeezed out will be allocated to the Ministry of National Defense to compensate the fallen soldiers."

Yu Jingqian was also somewhat dumbfounded after hearing this. Could it really be done like this? Paper money not linked to gold or silver, but directly guaranteed by the nation's credit and land—what kind of operation is this? He had never seen other countries do this before!

The best choice for a currency anchor is gold, as it has the most stable value and is the least likely to cause problems. However, the Republic's national treasury reserves only amount to a mere 102 tons of gold, which is far from sufficient to support the Republic's market size.

Choosing silver as an anchor is the last resort, as the value of silver fluctuates too much. It's more stable to use national credit and land as anchors.

Fortunately, Zhao Yan still had some sense of propriety and didn't go too far by issuing billions of new coins at once, or by directly abolishing the trading and circulation of precious metals.

First, issue 200 million new coins, equivalent to about 100 million taels of silver, and let them slowly flow into the market. Then, allow precious metal currencies to continue circulating, gradually testing and improving the system while simultaneously responding to emergencies and implementing reforms.

As the Minister of Finance, Yu Jingqian was able to accept this plan, since a Ministry of Finance without money is no better than a government office with no money.

If pushed to the limit, Yu Jingqian would dare to leave his fingerprints on anything, not just paper money, but even ghost money, since Zhao Yan had spoken up and the blame couldn't be shifted onto him.

After Yu Jingqian accepted the order, he was very efficient and brought over the plan and samples the next afternoon.

The new currency issuance plan is simple and straightforward. Currently, the Republic's printing industry does not have the technology to support the printing of high-standard anti-counterfeiting currency, so the French have been commissioned to help with the printing and manufacturing.

新版货币面值分为1、2、5分；1、2、5角；1、2、5、10元这十个面值，按照国际惯例于景乾建议货币上印刷赵炎的头像。

After hearing this, Zhao Yan decisively refused. He didn't want to be known as "Big-Headed Zhao," and besides, this round of banknote circulation was just a trial run, and whether it would succeed was still unknown.

If the issuance fails, these banknotes bearing his own portrait will become irrefutable evidence of Zhao Yan's tyrannical rule, since they bear his head on them.

Zhao Yan suggested that the new currency should be printed with portraits of ancient sages, such as Mozi, Laozi, Confucius, Mencius, and Xunzi. If anything goes wrong, these ancestors can help take the blame.

The wealthiest groups are mostly well-educated, and I've printed your most revered patriarchs on my money. How can you refuse to accept it without giving me face? You have to acknowledge it to some extent.

When currency is fully rolled out in the future, Zhao Yan can issue 100-yuan notes and then print his own portrait on the highest denomination banknote.

Being called "Grandpa Zhao" is much better than being called "Big Head Zhao." When you're out in the world, who doesn't care about their reputation?

Chapter 133 Finance and Politics

After the war ended, the first major national policy introduced by the Republican government was fiscal reform, which was no surprise to anyone.

A man with money is a hero; a man without money is nothing! This principle applies everywhere.

The Ministry of Finance took the lead in establishing a central bank, granting it the right to mint coins, and entrusting the French to print the first batch of Han Yuan coins with a face value of 200 million yuan.

In response to the emergency, the Ministry of Finance temporarily issued a batch of national bonds with a face value of approximately 30 million taels and an annual interest rate of 3%. These national bonds were all for emergency purposes and were mainly in one-tael face value.

The newly issued national debt will be mainly used to pay fiscal expenditures and war relief expenditures, and to make up for some of the arrears in officials' salaries and military pensions.

At the same time, the Ministry of Taxation also took over and reorganized many taxes, such as customs duties, salt taxes, and mining taxes, and jointly promulgated a new tax and fiscal reform for the Republic with the Ministry of Finance.

Based on international standards, significant adjustments were made to domestic taxes such as customs duties, agricultural taxes, commercial taxes, and land taxes. The original likin system was abolished nationwide, internal barriers in the domestic market were eliminated, and a unified national economic development plan was implemented.

The reforms, in particular, were very radical. The central government held several meetings, but in the end, Zhao Yan made the final decision, while Zhang Mingqi reserved his opinion. The new tax-sharing system was passed at the Supreme Council.

Going forward, a three-tiered fiscal system will be implemented for tax collection in various regions. Only the central government, provincial governments, and municipal governments will have access to tax revenue. The central government will receive 70%, the provincial government will receive 20%, and the municipal government will receive 10%.

In the past, during the Qing Dynasty, the central government heavily levied taxes on local areas. To prevent local separatism or rebellion, the Manchus generally handed over all taxes to the central government, which eventually forced local governments to set up checkpoints and collect transit fees arbitrarily.

At its peak, during the suppression of the Taiping Rebellion, local militias and the Qing army relied almost entirely on the likin system to maintain their military expenses, which made it impossible for the local economy to develop.

This time, the central government didn't take all the profits from the tax-sharing system. Instead, it split the profits 30/70, with everyone getting a share. This means that local governments won't have to rely on the central government for everything anymore, and they'll at least have some pocket money.

As for the tax-sharing system, it's impossible to say that Zhao Yan was 100% voluntary. Who would complain about having too much money?

Zhang Mingqi also strongly opposed the tax-sharing system, but he couldn't withstand the uproar at the local level, with each province demanding that it keep a portion of its tax revenue for itself.

All the ministerial-level officials in the central government were promoted from local positions, and each one of them represented the interests of a particular region.

In the past two years, the central government has been draining the provinces of their resources. Not only has it not left any, but it has also emptied the last bit of reserves. Local provinces have even been burdened with debt, all because of the war.

Therefore, after this war, the local areas also started to make a fuss over this fiscal reform. After the Ministry of Finance issued 30 million in new national bonds, it used the money to supplement the salaries of officials in the capital and to provide pensions for the officers and soldiers who died in battle.

Local governments have not seen a single penny of tax revenue, and they have become fed up with it. All provinces are strongly demanding tax sharing, and the central government should no longer be allowed to monopolize the tax money.

Besides, now that the war has ended, it's not right for you to keep hoarding all the fiscal revenue.

Currently, the republic of China is somewhat similar to the United States in general, but the independence of its provinces is not as strong as that of the United States. It is still a centralized system and has nothing to do with democracy.

The slight independence of each province also stemmed from their support for the Changsha Uprising. Many of the southern provinces that first supported the uprising now wield considerable power and influence in the current political landscape.

With these provinces taking the lead in demanding a share of the money, the other provinces naturally followed suit, leaving Zhao Yan with no choice but to comply, as he couldn't defy the public's anger.

Furthermore, this request wasn't excessive; it was within the reasonable range. It didn't ask for military power, just some financial control, so it was given.

After the new currency was issued, the first batch of funds was allocated to the provincial finance departments. This money was distributed reasonably according to the wealth gap between the provinces, with the poor receiving more and the rich receiving less.

When everyone benefits from the policy, fiscal reform can proceed.

In the politics of a true great power, dictatorship is a false proposition. Even an emperor cannot truly be a dictator, especially in areas concerning the overall national situation.

Leaders must consider the interests of all parties before making any decision. Any resolution must benefit the majority of people. Only in this way can the decision be truly implemented.

Zhao Yan held meetings for several days. First, he convened a meeting at the Prime Minister's Office with the heads of various ministerial-level departments to discuss the situation. The heads of these departments then intensified their communication with the provinces they represented. Once the forces in each province reached a consensus, they converged at the central government.

Following the Prime Minister's Office meeting was the final decision-making meeting of the Supreme Ruling Council. Several members gathered to consider the interests of various parties, and under the impetus of Zhao Yan's will, they completed the final vote, which represented the will of the state.

Between the two meetings, time is left for all parties to make demands and compromises. First, they communicate, then conduct "public opinion gathering," combine the demands of all parties to find a balance, unite the majority, and finally hold a formal decision-making meeting. At this point, it's just a formality to finalize the results of the previous discussions and make a concrete decision.

Zhao Yan can decide whether or not to carry out fiscal reforms because he is the boss, but how to implement the reforms specifically must be discussed with his subordinates, as they are the ones who will actually carry them out.

The fiscal reforms passed by the Supreme Ruling Council have been finalized after being approved by the nine members.

Zhao Yan went to great lengths to say many kind words and offer a lot of benefits in order to push forward this reform.

The Supreme Governing Council currently has ten members: the Political Affairs Committee, the National Defense Committee, the Economic Committee, the Industrial Committee, the Agricultural Committee, the Education Committee, the Southern Committee, the Immigration Committee, the Reform Committee, and the Oversight Committee.

Wu Zifu, a member from the Southern Committee, was still in Myanmar and did not attend the meeting, while the other nine members all attended.

The number of members of the Supreme Governing Council is not fixed, but there are at least five members, namely the five major committees of political affairs, national defense, economy, industry and agriculture. The remaining members are determined according to the actual situation. For example, if a large-scale immigration program is currently underway to populate the Northeast and the northern desert, then an immigration committee will be set up.

Furthermore, the country is undergoing post-war reforms and development, which also requires the establishment of a reform commission. Wu Zifu's appointment as a Southern Commissioner was granted under special circumstances.

In addition to the permanent members and special members, the Supreme Council also distinguishes between the appointed and elected members. The appointed members are simple: the Political Affairs Members and the Defense Members. Both of these members are concurrently held by officials, representing both the military and the government. There are no term limits; as long as you are the Prime Minister or the Minister of Defense, you can automatically hold these positions.

The other committee members are elected. The economic committee represents commerce and finance, the industrial committee represents industry and manufacturing, and the agricultural committee represents the interests of farmers. They serve five-year terms and are all elected from among the people, going directly to the central government.

Zhao Yan disliked the Western-style electoral politics, but he wouldn't completely ignore public opinion. Keeping a bunch of voting machines in the capital wouldn't be very useful, so he compromised and created a system of members of the Supreme Governing Council.

The committee member is second only to the head of state. They hold a high position but do not wield much real power. They can represent the interests of their class and speak out in the central government.

For example, in this fiscal reform, the core issues of currency issuance and tax adjustments were discussed and opinions were exchanged through the committee, which avoided a great deal of trouble and aftereffects.

The Reform Committee and the Immigration Committee, representing local power brokers, proposed a tax-sharing system, demanding that local areas could also share taxes to achieve self-sufficiency.

The Agriculture Committee proposed revising the previous outrageous progressive tax system on fixed assets. Landlords are also human beings and part of this country. During the war, they contributed money and effort, and even sent their own children to the battlefield. They should not be exploited to the point of death. Moreover, farmers must also have their taxes reduced, otherwise people will starve to death.

The Agriculture Committee strongly condemned those within the Revival Party who instigated internal conflicts in the agricultural sector, almost naming Wu Zifu. It's one thing to export revolution abroad, but to still be stirring up conflict between peasants and landlords domestically is truly harmful and pointless!

To alleviate the conflict between people and land and to resolve the problem of landlords exploiting farmers, the government should step in and use reasonable and legal means to solve the problem, rather than resorting to violence and plunder.

The agricultural committee member talked for most of the day, and Zhao Yan looked embarrassed. It was all his apprentice's fault, so he could only listen with a forced smile.

The Industrial Committee represented China's nascent industrial power and proposed to create certain barriers in tariffs to provide a foundation for the development of national industries, so as not to allow the post-war market opening to completely dump national industries.

The economic committee members, representing the wealthy gentry of Jiangnan, proposed abolishing the likin system at checkpoints in inland provinces, unifying the national market, and implementing a unified national tax rate, among other suggestions.

Previously, the same type of goods had different tax rates in different places, and each place had to collect the tax. Some provinces even deliberately discriminated against goods from other places and prohibited them from entering the market.