Chapter 52: Depreciation of the Ming Dynasty’s Banknotes

During the Ming Dynasty, there were two departments in the palace: the Palace Condiments Service and the Imperial Winery.

The Palace Condiment Service was responsible for managing the supply of wine, vinegar, soybean paste, and other food items for the palace, including the consumption of wine by the palaces. The Imperial Winery, on the other hand, produced liquor specifically for the emperor and his family. The focus was on nourishing and health-preserving drinks such as Bamboo Leaf Green, Five-Flavor Soup, Pearl Red, Changchun Liquor, and Man Dian Xiang.

Zhu Yunwen had plans to produce alcohol, but he couldn’t use the health-preserving liquor for distillation. There had to be a limit to wastage. He couldn’t bear to use the limited supply of wine from the Palace Condiment Service, so he entrusted Zhu Zhi and Zhu Geng to purchase wine from outside the palace.

Since it was still a period of rest, Zhu Zhi and Zhu Geng went directly to the inner palace to pay respects to Empress Dowager before proceeding to the Kunning Palace to report to Zhu Yunwen about the Autumn Dew White wine. They brought a small jar of the wine for Zhu Yunwen to taste.

Zhu Yunwen took a sip and estimated that the alcohol content should be around 25 degrees. Autumn Dew White was already close to Chinese white liquor, although the “white” here only referred to its transparent appearance with a slight yellowish tint.

In ancient times, people often didn’t say drink wine, they say eat wine.

Prior to the Tang and Song dynasties, most alcoholic beverages were simple fermented wines or wine lees, with low alcohol content, insufficient refinement, and often containing sediments that needed to be consumed along with the drink.

Hence, the term “eating” wine.

The poet Lu You’s line, “Don’t laugh at the muddy farmhouse liquor, during the good harvest, guests are satisfied with chicken and pork,” indicated that guests should not mock the turbidity of the liquor but focus on the abundance of food accompanying it.

During the Song and Yuan dynasties, alcohol mainly consisted of low-alcohol rice wine.

In the Yuan and Ming dynasties, distillation and the production of distilled liquor gradually developed. By the Ming Dynasty, the production of distilled liquor had become more established, and the alcohol content had increased to some extent. However, during the reign of Emperor Jianwen, the alcohol content of distilled liquor was still relatively low.

To obtain alcohol with a 70-degree proof from a beverage with an alcohol content of just over 20 degrees required some effort.

Zhu Yunwen valued the Autumn Dew White wine. Since it was available outside the palace at an acceptable cost, he approved of it.

With the task completed, Zhu Zhi relaxed and reported, “Your Majesty, there is another matter that I’m not sure if I should bring up or not.”

Zhu Yunwen smiled and said, “Uncle, you and Uncle Geng have worked hard. Whatever matter it is, feel free to speak.”

Zhu Zhi took out two guan banknotes and one tael of silver, placing them together, and said, “Your Majesty, I have investigated and found that currently, merchants exchange two guan banknotes for one tael of silver, while some merchants only accept one guan banknote in exchange for three hundred wen. This matter should not be overlooked.”

Zhu Yunwen lowered his head and looked at the Ming Dynasty banknotes, his lips showing a hint of bitterness.

Paper currency was not an invention of Zhu Yuanzhang.

The earliest attempt at paper money can be traced back to the Western Han Dynasty with the issuance of White Deer Skin Currency.

In the late Tang Dynasty, there were flying money that functioned like bills of exchange.

However, true paper currency emerged during the Northern Song Dynasty with the introduction of “jiaozhi”, which later changed its name to “qianyin” and “xingzai huizi” during the Southern Song Dynasty.

In the first year of the Zhongtong era in the Yuan Dynasty, the Zhongtong Yuanbao notes was issued. The government’s income and expenditures, as well as commercial transactions, were conducted using the Zhongtong notes as the standard. At this time, money was “based on silver” and functioned as a form of credit exchange.

Later on, the Yuan Dynasty implemented a pure paper currency circulation system, prohibiting the circulation of gold, silver, and copper coins. Credit currency became non-convertible paper money.

From the perspective of studying historical currency, the Yuan Dynasty is undoubtedly a dynasty worthy of high attention and was the earliest country in the world to fully use paper money.

In Marco Polo’s “The Travels of Marco Polo,” it is recorded: “Wherever the merchants go in the Great Khan’s country, they pay expenses, purchase goods, and obtain prices for their goods with this paper money. And indeed, this is as good as if it were pure gold.” To some extent, this provided support for the development of the Western capitalist market.

The paper currency policy of the Yuan Dynasty can be considered quite successful, but it couldn’t withstand the greed of the court. By the end of the Yuan Dynasty, when the court saw that there was no money, they simply decided to print more.

They engaged in reckless issuance, which led to rapid devaluation of the paper currency. As the paper money became useless, people turned back to using gold, silver, and copper coins. However, the merchants who were accustomed to using paper money were not accustomed to using these stupid bulky copper coins. Coupled with the poor quality of copper coins produced at the end of the Yuan Dynasty, after a couple of bumps, ah, it broke…

In the end, the market regressed to the ancient practice of barter.

Zhu Yuanzhang expelled the Mongols to the north, he himself established the Coinage service in Nanjing, intending to mint coins. However, in the process, he discovered a shortage of copper. He had no choice but to confiscate household utensils from the people and melt them down to make money, which led to public resentment.

Old Zhu observed the situation and realized something was not right. After careful consideration, he realized that paper currency had worked well before the Yuan Dynasty. “Existence is reasonable,” it must be possible if he can use it for himself. Therefore, he decided to change the currency system from coinage to paper money. The Supervisorate of Paper Money was established, and thus the circulation of paper money was born in the Ming Dynasty.

The material used for the Ming Dynasty’s Banknotes was mulberry bark, which was easily preserved and resulted in a bluish-gray colored paper.

The paper money was “one foot tall and six inches wide.” If you’re unfamiliar with this measurement, you can take a look at an A4 paper. Yes, the Ming Dynasty’s banknotes were that size. If Zhu Yuanzhang were still around, he could have applied for the Guinness World Record for the largest banknote, and it would have undoubtedly been in first place.

The banknote features intricate patterns on its surface, with dragon motifs printed around the edges. At the top, it reads “Da Ming Tong Xing Bao Chao(大明通行宝钞)”, while in the center, the denomination “Yi Guan(壹贯)”(one guan) is written. Below that, there is an official declaration from the Ministry of Revenue, stating: “Those who counterfeit will be executed, and those who report and capture them will be rewarded with 250 taels of silver.”

It’s worth mentioning that the Ming Dynasty’s banknotes had only six denominations: 100 wen, 200 wen, 300 wen, 400 wen, 500 wen, and one guan. One guan was the highest denomination.

If anyone frequently presented banknotes of several thousand or tens of thousands of taels, they would be caught and handed over to the authorities, and the captor would receive the reward.

Throughout the Ming Dynasty, there were no banknotes exceeding one guan. The use of large denominations of banknotes only occurred during the later Qing Dynasty and would never have appeared in the Ming Dynasty.

Zhu Yunwen understood the importance of currency and the irrationality old Zhu paper currency policy. At present, the value of one guan had depreciated by one-third to one-half. If no reforms were made, the value of one guan banknotes would continue to decline. Eventually, the original value of one guan, equivalent to one thousand wen, would only be worth one wen or even one-tenth of a wen!

“The issue of banknotes will be set aside for now. To address this problem, we need a substantial amount of funds as support. Your current task is to study the knowledge of business. Merchants pursue profit, but they should not act rashly. Take today’s matter, for example. The shopkeepers have already given you two maces per jar. Why would you add it to three maces yourselves?”

“Do you know that because of your vanity, for ten thousand jars of wine, it would require an additional one thousand taels of silver? And for one hundred thousand jars, it would be ten thousand taels of silver. Moreover, this silver is not only have your share in it but also the empress’s share. Even if you are wealthy, you should not harm the empress’s interests.”

Zhu Yunwen looked at Zhu Zhi and Zhu Geng with a frustrated expression.

Zhu Zhi opened his mouth but didn’t know how to explain. He nudged Zhu Geng with his elbow, and Zhu Geng, with a pained expression, said something that made Zhu Zhi furious, “Then let’s make up for the ten thousand taels ourselves…”

Zhu Zhi really wanted to beat Zhu Geng. How could you be so clueless? In business, there is no concept of bearing the cost yourself.

Moreover, it was ten thousand taels!

Even the salary of a prince was only ten thousand stone, and at the highest conversion, it was still ten thousand taels. If we calculate it conservatively, it would be only five to six thousand taels. If you give away so much at once, my whole family will be left with nothing!

Zhu Yunwen laughed and said, “Let’s consider the first batch of ten thousand jars as three maces per jar. But for the subsequent batches, you need to renegotiate with the merchants. Additionally, inform the merchants that half of the wine jars will be returned, which can be offset against part of the money. Then, discuss a new price and sign a contract. Remember, you must not use your advantage to deceive others. Conduct business according to the principles of commerce.”

Zhu Zhi and Zhu Geng were somewhat embarrassed. After leaving the palace, they were still uncertain about what to do. If they were to negotiate the price with the merchants, wouldn’t it be embarrassing?

“Smack!”

“What are you doing?”

“Fifteenth brother, my face hurts…”

Zhu Geng felt like crying without tears. Doing business was not an easy task.

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