“Under bright heaven and in this glorious prosperous age, even beggars can eat three meals without worry, feasting all day long. Why would you merchants have no way to live? This is greed at work! Where is the Censorate Imperial Secretary? Remove this person from the court hall lest his foul and filthy words defile Wanmin Palace!”
Zhangsun Wuji flew into a rage. A sharp rebuke interrupted He Shao’s tearful complaint. As the supervisor of the Eastern and Western Pavilions, he had the right to order the Censorate Imperial Secretary to escort officials who had lost court decorum out of Wanmin Palace.
Just as He Shao was about to be dragged out by warriors, Li Er spoke: “Let him return and speak clearly. This is Wanmin Palace—a place for all people to speak freely. One or two sentences cannot defile this pure land.”
The Emperor had spoken, so naturally He Shao was brought back by the warriors. This time, thirteen more people knelt on the ground together.
Li Er laughed heartily: “This is strange indeed. The court has awarded thirteen distinguished titles to merchants with meritorious service these years. Who would have thought they would all appear in the court hall today? As for you, He Shao—you’re famous for your smooth dealings. I’ve always wanted to strip you of your noble title but could never find the right opportunity. You always manage to achieve appropriate merit at the appropriate time and appropriate place. So be it! This is also your capability.”
“I remember last year Yun Ye memorialized saying you had monopolized the fire oil trade in the sixteen kings’ territories in the Western Regions. Instead of making money for yourself, why have you run to Wanmin Palace to cry injustice? Shouldn’t Yun Ye be the one crying injustice?”
He Shao stopped kowtowing and raised his already bleeding head, saying: “Your Majesty shows mercy. This humble subject can be considered the Great Tang’s greatest wealthy merchant. Marquis Yun said only a prosperous age would produce merchants like this humble subject who don’t rely on trickery and plunder to build their fortunes. This humble subject has often taken pride in this.”
“But now, the environment in which we survive grows increasingly harsh. Our profit margins are repeatedly compressed. In a few more years, the Great Tang will have no so-called wealthy merchants. I beg Your Majesty to investigate clearly.”
Li Er made a strange sound of surprise: “Natural disaster? Or man-made calamity?”
He Shao smiled bitterly: “Your Majesty, since ancient times, we merchants have been fattened pigs raised for slaughter. Now we are plump and robust—it’s time for slaughter. This humble subject only begs Your Majesty to show mercy and leave a mouthful of food for merchants’ descendants. Don’t exterminate us completely. Even in the nine springs of the underworld, we will not forget Your Majesty’s great kindness.”
Li Er thought for a moment and said: “Such things did indeed happen, but that was in previous dynasties before. You merchants don’t cultivate benevolence and virtue. You’re arrogant, extravagant, and licentious. You hoard goods and corner markets, buying low and selling high, reaping all the world’s profits. With iron mouths and copper teeth, you split fine meat from egret legs and extract fat from mosquito bellies, calculating every scheme under heaven. With the huge character for ‘profit’ atop your heads and the character for ‘money’ under your feet, you rope in officials and corrupt the court. Not to mention how Lu Buwei and Shi Chong even treated emperors as commodities for sale. That the court maintains some vigilance toward you is natural. But our Great Tang has yet to confiscate any wealthy merchant’s family property. Even if a wealthy merchant himself commits crimes, it only targets him personally—there have been no cases of confiscating entire households and exterminating clans. He Shao, where does your sorrow come from?”
“The ‘Commercial Laws,’ Your Majesty—it’s the ‘Commercial Laws.’ Since the fifth year of Zhenguan, the Great Tang’s tax rate increased from one-thirtieth to one-fifteenth. Commercial taxes have already doubled. In earlier years, our Great Tang was plagued by constant warfare. One-thirtieth tax was a national policy the Late Emperor established to encourage commerce. At the founding of every dynasty throughout history, it has been thus—to rapidly prosper the marketplace—which is why such favorable tax rates for merchants were established. After the national situation stabilized, raising commercial taxes was proper. We merchants dare not have any complaints.”
“In the eighth year of Zhenguan, after Your Majesty pacified the four seas and defeated external enemies, you once again raised commercial taxes to one-twelfth—already a very reasonable tax rate. But in the sixteenth year of Zhenguan, the Ministry of Finance once again raised commercial taxes to a shocking one-eighth. This increase was to implement Your Majesty’s unprecedented benevolent policy of no agricultural taxes. We merchants also have properties—agricultural tax exemption is also good for us. Moreover, agricultural tax exemption is a tremendously benevolent policy. We merchants also gritted our teeth and endured it. The consequence was soaring prices. Small merchants closed their doors one after another. Large merchants contracted their industries. Our Great Tang’s commercial tax revenue fell from its peak of sixty-three million four hundred sixty thousand silver coins to the current forty-eight million—a full reduction of fifteen million silver coins. This is already a very dangerous signal. It should have caused unrest among the four classes and depleted the national treasury.”
“However, our Great Tang warriors fought bravely, expanded territories, captured kings and slew generals with countless spoils of war. These large quantities of war booty flowing in injected new vitality into the Great Tang’s already depleted treasury. Thus all the problems that should have appeared were covered up. The Great Tang remained singing and dancing in peace. Agricultural taxes continuously decreased. The people also had large savings in hand. National fortune prosperity was nothing greater than this.”
“No one cares about the hardships we merchants face. From a commodity’s production to transportation, then packaging and sale—isn’t the toil and sweat in this also labor?”
“To barely survive, this humble subject traveled far to the frontier. Where the Grand Marshal Yun’s great army had passed, the beacon smoke had not yet dispersed when this humble subject followed the path the army had traveled to trade in the desert. Climbing ice and sleeping in snow was commonplace. Not only did I have to collect goods, but also clash with scattered remnant soldiers. The bitterness within is beyond words.”
“Your Majesty says this humble subject monopolized the fire oil in the sixteen kings’ territories and that vast wealth would flow into my pocket. You don’t know this humble subject’s suffering. The fire oil was indeed monopolized by this humble subject, but this is only appearance. The oil springs are in the sixteen kings’ territories, so the sixteen kings occupy thirty percent of shares. Because fire oil is military material, the Ministry of War must occupy thirty percent of shares here. This is the reason Your Majesty mentioned that Marquis Yun was deceived by this humble subject. But sixty percent of shares are occupied either by vassal kings or by the Ministry of War—this sixty percent is all real profit! The sixteen kings and the Ministry of War don’t need to spend a single copper coin yet can share the most delicious fruits. While this humble subject must not only organize production, transportation, and sales, but also bear the heavy tax of one-eighth—only then can the oil springs in the desert be made into fire oil and sold to the people for lighting. The profit in between has become pitifully small.”
“Our Great Tang’s grain is abundant. Grain prices as an indicator of tax rates are very accurate. Silk has also had large surpluses these years due to increased grain production. Your Majesty, these two industries can no longer bear the heavy burden of one-eighth taxation in our Great Tang. These years, Chang’an has almost no privately-operated grain shops or private cloth stores. The people all buy grain and cloth from official warehouses. This is because Your Majesty allows the people to pay low taxes with grain and cloth.”
“This is abnormal, my Emperor. An industry can only have added value through continuous deep processing and fine processing. And this deep processing and fine processing requires merchant participation—making grain into various pastries, making cloth into various ready-made clothing. Such practices not only extend the industrial chain but also provide opportunities for the Great Tang’s idle laborers to earn money.”
“Your Majesty, ultimately, you must feed all the people under heaven. But now your great army has nowhere left to conquer, or if you can conquer, the losses will outweigh the gains. So at this time, our Great Tang needs merchants to create blood for this great empire. Only by continuously creating fresh blood can the Great Tang giant stand firm and unyielding.”
“My Emperor, it’s not that the higher the commercial tax is set, the more commercial tax our Great Tang receives. Everything has patterns. Breaking these patterns will only be counterproductive. This humble subject begs Your Majesty to give merchants a bit of breathing space. If this continues, the Great Tang will have no merchants. This humble subject will also have to dissolve my shops and return home to farm. The Great Tang will no longer have merchants to help Your Majesty feed all the clamoring mouths under heaven.”
“I beg Your Majesty to show mercy!” After He Shao finished speaking, the thirteen merchants below knocked their heads on the smooth floor in unison. Some merchants, thinking of sad matters, actually wailed and cried.
Li Er was stunned. He Shao’s words had stirred up tremendous waves in his heart. How could there be such reasoning? The higher the commercial tax is set, the more the court’s revenue actually decreases? The people don’t lack money or grain! So Li Er’s gaze fixed on Minister of Finance Chu Suiliang, wanting to hear what Chu Suiliang would say.
Before Chu Suiliang could step forward to memorialize, Xu Jingzong rushed to step forward first: “Your Majesty, this humble subject has detailed accounts here. Our dynasty’s commercial tax was highest in the fifteenth year of Zhenguan—indeed as He Shao said, totaling sixty-three million four hundred sixty thousand silver coins. It was precisely because of this that the Ministry of Finance re-established commercial taxes in the sixteenth year of Zhenguan, setting commercial tax at one-eighth. There was also reason for this—mainly because our Great Tang had already begun comprehensive construction at that time. Canals, Shu roads, and the Three Capitals project all started simultaneously. To obtain more money and grain, the Ministry of Finance raised the tax rate.”
“The results were not as desired. The seventeenth year of Zhenguan’s commercial tax was already three million silver coins less than the fifteenth year. Afterward it decreased year by year. By this year, commercial tax has fallen to a frightening level. The first three quarters’ settlement was only twenty-eight million silver coins. Although the year-end fourth quarter is the main portion, this humble subject believes the total cannot possibly exceed forty million silver coins. And most commercial tax comes from Guangzhou, Quanzhou, Mingzhou, Dengzhou, Hangzhou, Yongzhou, and Yuezhou. For the first time, Chang’an’s tax total is lower than Yuezhou’s. As for Yizhou and Yangzhou, they can’t even rank on the Ministry of Finance’s tax payment roster.”
“Foreign trade commercial tax has already exceeded domestic trade—not because foreign trade’s scale is enormous, but because foreign trade’s profits are abundant. It’s indeed as He Shao said—domestic trade has become tasteless. Your Majesty’s magnificent plan these years to enrich the people will likely be devoured by increasingly rising commodity prices. Once commercial tax is insufficient to support national expenses, agricultural tax exemption will become a joke! The ruler and subjects of our Great Tang will also become the greatest joke under heaven.”
The great hall was frighteningly quiet. After a long while, Zhangsun Wuji slowly spoke: “Absurd nonsense. Merchants don’t engage in production—collecting more taxes from them is appropriate. These years you’ve relied on the Great Tang’s illustrious prestige to squeeze marrow from the bones of defeated nations. Are these also this old man’s fabrications? In this year’s legal revision, this old minister believes the Commercial Laws should be refined. Until now, this old minister still believes agriculture and sericulture are the foundation of the nation.”