Chapter 58: The Art of Debt

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"Your servant submits that a court without debt is an unhealthy court!"

Clang, crash, clatter...

Whether a cup or a dish had been dropped, a great commotion rang out as if something was breaking.

Fubi first glanced anxiously toward the other side, then seized a moment to turn back and glare fiercely at Li Chang'an.

Once the disturbance over there had settled down, a youthful voice asked, "Unheard of through the ages, how can such a thing be reasonable?"

An older female voice uttered a soft "Hmph," seemingly chastising the young man for lacking composure.

Li Chang'an smiled inwardly. After the Spring and Autumn period, China had long abandoned city-states; how could they possibly understand the benefits of deficits? The intricacies involved were vast and numerous.

Things like seigniorage, inflation, increasing liquidity, stimulating domestic demand, stabilizing economic cycles...

Most importantly, debt is a hidden tax, and a very high one at that, sometimes extracting over 20%.

For a feudal autocracy, there was yet another advantage: it strengthened the allegiance of the nobility, elites, and wealthy tycoons toward the central government.

It was a mutual hostage-taking mechanism. If you were to betray the emperor, where would you go to cash in your bonds?

Of course, should a figure akin to Zhao Kuangyin emerge, it wasn't entirely out of the question to make a "Louis XVI" perform as a headless horseman.

"Answering Your Majesty, an ancient saying goes: 'Store wealth among the people, and the state shall be rich while the people are strong.' Eighty percent of the realm's wealth is gathered in the hands of the nobility, the imperial clan, elite officials, powerful magnates, and wealthy merchants—accumulated to the point where strings of cash rot and grain spoils. Might Your Majesty know what the consequence of this is?"

"Ahem..."

Fubi frowned and coughed, signaling Li Chang'an to mind his manners. This was speaking to the Emperor, not chatting with a friend, yet he dared to quiz the sovereign in return.

Li Chang'an had not expected the nineteen-year-old Emperor to answer.

"Stagnation, paralysis, the empire will rot into a stinking corpse! The rich grow richer while the poor lack food for the morrow, and then Chen Sheng and Wu Guang arise across the land, with everyone in rebellion.

"Your servant discussed the successes and failures of Qin statecraft with Su Zizhan; its core flaw lay in the failure of Qin's finances, which led to the exhaustion of the realm's vitality."

Fubi could bear it no longer. He had brought Li Chang'an into the palace to claim credit, not to accompany him to the execution ground.

"Cease your alarming rhetoric and answer properly!"

Li Chang'an gave the old man a wink, scaring the Chancellor's liver into trembling.

"If the value of goods in the realm totals one hundred thousand, there should be one hundred thousand units of currency. If money accumulates at the top and ceases to circulate, a shortage of currency occurs, making goods cheap and money expensive. Consequently, the upper class grows ever richer while the foundation of farmers and merchants grows ever poorer. By then, the wealthy possess endless riches, while the impoverished are left only with battered bodies and blazing wrath.

"To resolve this plight, the only method is to issue debt, matching money with goods and granting the lower classes a secure livelihood.

"Therefore, borrowing from the upper class, increasing market liquidity, and running a proper deficit are the true signs of a nation's financial health."

Heretical nonsense, absolute heretical nonsense!

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Fubi was a contemporary of Fan Zhongyan; when had they not borrowed money from the wealthy and powerful? Yet how had that stimulated the economy? The imperial court had almost collapsed because of it.

However, lacking further permission, he could not bypass the Grand Empress Dowager to question the Emperor directly, and could only hope the sovereign would swiftly refute the nonsense.

Fubi's anxious expression finally caught the attention of the Grand Empress Dowager.

The old man took half a step forward, hesitated, and ultimately decided to remain in his place.

"Utter drivel! During the Qingli era, the court incurred over thirty million guan in debt, followed by another ten million in loans, plunging the realm into poverty and suppressing commerce and industry. Where is this health of which you speak?"

"May I ask my Lord Chancellor, these funds were all used in the Northwest, were they not? How were the requisite supplies procured?

"Were the common people able to sell their goods at fair prices and earn a profit?"

Fubi thought to himself, *Isn't that stating the obvious?* The court had always adopted a "forced purchase" policy; not robbing them outright was already considered showing courtesy.

At this thought, he suddenly understood.

Money ought to flow downward, yet the ultimate outcome of the Qingli wars was still the plundering of the poor to fatten the elite.

No wonder beacons of war had blazed continually over the past few decades, with people standing on tiptoe clamoring for battles—it turned out all the profits were going into their pockets.

"There is another matter: if we borrow the wealth of the rich to purchase the goods of the poor, how do we ensure that the court nobility and officials do not manipulate power for profit and oppress the common people?"

Li Chang'an was full of confidence. "The new-style public procurement—which I call bidding! The specific method will be explained to my Lord Chancellor by specialists from the Chamber of Commerce when the time comes. The court need only invite public bids from the common people based on set prices, compare three competing offers, and select the best. Among them are dozens of measures specifically designed to counter the manipulative tricks of officials and elites."

At this moment, the Emperor behind the screen came online once again.

"Since ancient times, people have stressed opening sources of revenue and reducing expenditures. Living beyond one's means is ultimately unsustainable. Borrowing to ease the currency shortage—when will the court ever free itself from this?"

"Answering Your Majesty, since we borrowed the money by our own capability, why should we pay it back?" Li Chang'an instinctively provided the answer.

With a loud clang, this time it sounded like tables and chairs overturning, accompanied by someone letting out a startled cry.

Fubi could no longer maintain his composure. *Was I brought into the palace to risk my neck with you? Why are you spouting such reckless nonsense?*

"Absurd! For a century, the court of our Great Song has never broken its word to anyone!"

Fubi was terrified of another Emperor Wu of Han emerging, for if that happened, he, the Prime Minister, would surely go down in history books.

Li Chang'an thought to himself, *You may not have it here, but in a few years when Emperor Huizong takes the throne, it will be all unorthodox maneuvers.*

After swindling the Liao, they swindled the Jin; after swindling the Jin, they swindled Hebei, only to be dragged off to the northern frontier to herd sheep. Still, that wasn't what he meant—credit was naturally going to be maintained.

"Lord Chancellor, calm your anger. I wonder if my Lord has ever heard of the concept of servicing debt with debt. Borrowing new debt to repay old debt, or even paying only the interest while leaving the principal untouched?"

Fubi certainly had never heard of it. The laws of the Great Song stood firm; if any bank or merchant dared to be so unprincipled, the executioner's blade in Kaifeng Prefecture would still sever heads.

Seeing that Fubi did not understand, Li Chang'an realized that trying to instill modern financial tools into the contemporary elite in just a few words was no less difficult than turning the Yellow River clear.

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Fine, let us plan this for the long term.

"Your servant is currently running a school dedicated to training a new breed of talent. In three to five years, there should be two to three thousand individuals versed in finance available for the court to select from. I know that Lü Jifu has already issued twenty million in bonds, which should alleviate the immediate crisis. I beg Your Majesty to grant me three to five years, and I will surely eradicate this financial plight for the Emperor and the court.

"Furthermore, Your servant has also established a gazette, firstly to propagate and explain economic principles, and secondly to assist in the implementation of the New Policies.

"The two are mutually reinforcing and indispensable. I earnestly hope Your Majesty and the Lord Chancellor will grant me some time."

A thousand words are worth less than a day of practical action. If you are incompetent, then drag your feet honestly until I rally the revolutionary ranks.

After all, as college students untainted by the beatings of society, they always envisioned operating according to the most theoretically perfect scenarios.

Yet the fire was already burning at their eyebrows; who wanted to wait several more years? Lord Chancellor Fubi almost stretched his aged limbs and joints to step forward and beat the man.

*Wait? I'll twist your head off and see if you can wait.*

Fortunately, the Emperor promptly prevented tragedy from striking. Among the superiors present, he was the only one who could afford to wait.

The Wang Anshi affair had already made him realize that acting with undue haste would inevitably lead to numerous oversights, and the one who would suffer in the end would be none other than himself, the Zhao Emperor.

Let them wait. After all, with so many appointed regents and entrusted ministers, surely they wouldn't let the second year of Xining pass in vain.

In three years he would be twenty-two, and would surely hold absolute mastery over statecraft.

By then, eliminating abuses and reviving the Great Song, the credit would be entirely his own. Perhaps he could genuinely strive to become an enlightened monarch, a sage among emperors.

"Mmm...既然如此, I grant it!"

The Emperor's reply greatly startled Fubi. Having served through three reigns, this was the first time he had ever witnessed such an easygoing sovereign; could Emperor Renzong have been reincarnated?

Did this Li Chang'an possess some sort of sorcery, that he could sweet-talk anyone?

"Regarding the school and the gazette, I shall entrust their oversight to Lord Chancellor Ouyang and Lord Chancellor Sima respectively. However, as for you—you have rashly offended the current Chancellor, and punishment is unavoidable. Lord Chancellor Fubi, in your view, how should Academician Li be dealt with?"

Hmm?

Fubi was an old fox among old foxes. Hearing this, he understood the subtext; the Emperor suddenly used the title "Academician Li," which clearly meant he intended to let him off lightly.

However, since the Emperor was playing the good guy, he could only play the villain.

"In my opinion, it would be better to reduce him to a slave, castrate him, and send him into the palace to attend constantly upon the imperial presence!"

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