Chapter 445 Pool Water
The so-called silver note, as everyone present could understand, was the voucher given by the bank to customers who deposited large amounts of money.

However, in this era, if you deposit money in a large money house, you will not only not earn any interest, but you will also have to pay a storage fee. Therefore, most money houses are a supplementary structure of large chambers of commerce.

Money houses such as the Southeast Chamber of Commerce set up trading venues in various chamber of commerce bases to facilitate transactions among members of the Southeast Chamber of Commerce.

The Great Xia Emperor glanced at Dong Xingshu, who said, "The so-called central bank is a large money house run by the state?"

Zhou Tieyi shook his head slightly. "The central bank is not just a large money house. To be precise, the central bank undertakes management and credit granting functions."

"Now the management of money houses in various places is in disarray, and many chambers of commerce will issue false silver bills. When the world is peaceful, this kind of false silver bills will not affect the economy, but now the world is about to be in chaos. If we don't investigate the issue of false silver bills by local money houses, I'm afraid there will be another big chaos next year."

"So we need to establish a central bank, first integrate the banks under the large chambers of commerce, unify the management of banknotes, and use the national credit as the guarantee. On the one hand, it will help alleviate the current financial pressure, and on the other hand, it can also prevent the run on local banks in advance."

Zhou Tieyi's words contained sufficient information, and it took everyone a few breaths to understand. The Great Xia Emperor turned to look at Shi Changsheng.

Shi Changsheng said bitterly, "If Marquis Zhou hadn't mentioned it today, I would have been responsible for failing to observe it!"

Among everyone, he had the deepest understanding of economic issues, but if Zhou Tieyi had not brought up the matter, he would not have considered the problem of bank runs on local banks, because in the past, if local banks collapsed, they collapsed. This was a problem between the people and the banks, and had nothing to do with the court.

But now everywhere is short of money. Once a large number of local banks go bankrupt, Shi Changsheng can imagine how big a mess that will be next year.

Then Shi Changsheng asked seriously, "But since you know that the local money houses have falsely issued bills, why did Lord Zhou still bring up the issue of using the national credit to bear the responsibility? If there is a problem of non-exchange at that time, it may bring huge problems to the court."

Zhou Tieyi said confidently, "Because if I manage the central bank, not only can I solve the problem of false banknotes, but I can also increase the fiscal revenue of the court by at least 100 million taels every year in three years!"

One hundred million taels!

Everyone present had seen a lot, but they still held their breath when they heard this number.

If the court could earn an extra 100 million taels of income from this central bank every year, it would be able to deal with the Yuan-Mongol war, industrial reform, or the Western crisis with ease.

Zhou Tieyi was not afraid to reveal the functions of the central bank, even if people present wanted to reap the benefits. However, even the three officials did not have the courage to make 100 million taels of silver from a matter that they had never been involved in before.

In addition, if there were no courageous people like Zhou Tieyi who had an outstanding record in reform, they would not be entrusted with important tasks by those present.

Although there were various conflicts between the people present and Zhou Tieyi, the fact that Zhou Tieyi was able to enter the country's core decision-making circle within a year fully demonstrated his ability.

"You mean to issue fictitious bills through stocks and bonds?"

Dong Xingshu said with a frown.

As a Confucian minister, he instinctively hates this kind of thing of spending money that he doesn't have before.

"Mr. Dong and Minister Shi are planning to increase taxes this year?"

Zhou Tieyi asked back.

According to Confucianism, the best solution to such a huge fiscal deficit is to impose additional taxes.

After all, there's nothing wrong in making the people suffer.

However, Daxia has enjoyed peace for a long time and has not levied any tax increases in previous years. A substantial tax increase this year will certainly cause complaints. On the surface, this will affect the reputation of Confucianism and the Emperor of Daxia, but essentially it will affect the momentum of economic development and put the entire social development into a vicious cycle.

Dong Xingshu nodded and said, "That is indeed the plan, because the increase in taxes has been explained to the people, and it is better to implement it in a practical way than to issue false bills."

Zhou Tieyi waved his hand and said, "Mr. Dong is wrong."

"What's wrong?"

"Mr. Dong's words are meant for gentlemen, but are there more villains or gentlemen in the world?"

The two Confucian officials, Dong Xingshu and Shi Changsheng, did not answer.

Qingkong Gui sighed, "Of course there are many villains."

Zhou Tieyi continued, "You are a villain, you should lure him with benefits. Besides, I am not offering you benefits in vain. Otherwise, why would I let the Railway Chamber of Commerce spend so much money to build the first railway?"

"The term national credit is still too far away for ordinary people and difficult to understand. However, the railway from Tianjing to Kaiping County is obvious to all, and Kaiping County is the coal and iron production area in the Tianjing area. After the construction begins, coal and iron will be transported to Tianjing by carloads every day, which will bring a lot of profits. With these profits as collateral, we will naturally be able to issue railway bonds."

This was also what Zhou Tieyi had thought of from the beginning. Government bonds can be issued, but in order to attract a large number of people, the place and project of issuance are very important.

People of this era generally do not accept the so-called national credit bond issuance. Because they have never encountered it before, everyone is very cautious.

Therefore, there needs to be a physical object to back up the bonds.

The railway from Tianjing to Kaiping County is the best example.

First of all, Tianjing was rich, and the money was hidden among the people, so they could afford to buy the national debt. Secondly, after the railway was built, it was impossible to make a loss under the current wave of industrialization, and there was a lot of profit to afford the interest on the national debt. According to Zhou Tieyi's estimate, the original Beijing-Hankou Railway was more than 1,000 kilometers long, and it could make a profit of 3 million taels per year, excluding interest. This was only the net operating income, not counting the income from surrounding commercial development.

But what about the Jinghan Railway? It was poor and weak in the late Qing Dynasty, and there was no clear commercial development plan around the railway. But today's Daxia is far more powerful than the late Qing Dynasty. Under his own planning, Zhou Tieyi is confident that he can make a profit of more than one million taels from the 100-mile-long railway!
Third, everyone knows that it takes a long time to build a railway, so railway bonds are issued in one, two, or three years respectively, and built along the line from Tianjing to Kaiping, first connecting Tianjing with the richest areas in the southeast. This can not only guarantee profits, but also make the people understand why it takes one, two, or three years to redeem the bonds.

In addition to the Tianjing-Southeast railway line, the Shantongfu-Tangzhoufu railway has also been started, and the initial construction can be completed within these two months. This is also a benefit that can be seen by the people, at least small and medium-sized businesses, so bonds can also be issued.

Once people get used to this kind of investment, the next two projects will naturally be accepted by the people, that is, the ship and steam airship projects, which can actually bring stable profits.

Everyone present followed Zhou Tieyi's train of thought and their expressions became more and more solemn. They couldn't help but sigh in their hearts, what a monster! One thing leads to another. I'm afraid he had already anticipated the current situation when he established the Railway Chamber of Commerce. It's a pity that they and others are still thinking about how to split Zhou Tieyi's power in the Railway Chamber of Commerce.

Now that the Railway Chamber of Commerce has become the core asset of the national bonds, at this critical juncture, no one dares to touch Zhou Tieyi's Railway Chamber of Commerce easily. They can only follow his baton, otherwise they will have to take out more than 100 million taels of silver every year to subsidize the national treasury. This is the true sharing of peace and prosperity with the country.

If they want to exclude Zhou Tieyi and marginalize him, the most optimistic estimate is that it will take more than five years. On the one hand, Zhou Tieyi needs to build a good framework, and on the other hand, his subordinates need to truly understand what Zhou Tieyi is doing.

"What about stocks?"

After understanding bonds, Dong Xingshu no longer had any major questions about issuing government bonds.

Zhou Tieyi replied, "Have you ever heard of the shareholding reform of the Railway Chamber of Commerce, the Pingjin Ferry Shipyard, the Iron Works, the Baizhishan Coal Mine, and the Iron Works?"

Everyone immediately connected the two things and thought about them together.

When he first took over the Railway Chamber of Commerce, Zhou Tieyi let large chambers of commerce, military honors, and royal relatives invest in it. In the beginning, everyone thought that Zhou Tieyi was relying on his position as the president of the Inspectorate to collect protection fees, but as the Railway Chamber of Commerce developed, everyone realized the huge potential of the Railway Chamber of Commerce. Thus, there was a monster-level interest group consisting of the entire Military Honor Group, the Legalist Group, and the Four Princes.

It is foreseeable that at the right time, the Railway Chamber of Commerce will become another ministry of the imperial court, even on par with the Ministry of Industry, the Ministry of Revenue, etc., because if it is just a department-level administrative unit, it will not be able to accommodate the current size of the Railway Chamber of Commerce.

In the subsequent shareholding reform of factories such as Pingjindu, Zhou Tieyi introduced the local people and workers whose land was occupied, and allowed them to hold part of the shares together with the local government. From the perspective of Confucianism, this is a benevolent policy that benefits the people and is beyond reproach.

But today, when Zhou Tieyi mentioned stocks and helping the country generate a fiscal surplus, everyone immediately knew what was going on!

Zhou Tieyi's share reform is actually to expand the number of participants step by step. Since ordinary local people can hold stocks, can ordinary people who are not local people also hold stocks?
Considering the newspapers' unremitting publicity of the Railway Chamber of Commerce's profits and equity structure, everyone in the world has known in the past few months that the Railway Chamber of Commerce is the goose that lays golden eggs. Now Zhou Tieyi gives everyone in the world a chance to buy stocks together with the above-mentioned dignitaries, so there is no need to worry about selling the Railway Chamber of Commerce's stocks.

Up to this point, everyone has few doubts about setting up a central bank. This is indeed imperative and the best way to solve financial problems. Zhou Tieyi is the only one in the world who can coordinate all the twists and turns involved.

Shi Changsheng raised the last question, "If the national debt is collateralized by the railroad tracks and their profits, and the stocks are collateralized by the profits of the railway chamber of commerce, are we selling the same thing twice?"

Zhou Tieyi laughed and said, "Why? Didn't Minister Shi sell the item twice?"

Shi Changsheng understood that Zhou Tieyi was mocking him for not thinking through the tricks involved.

His Majesty the Great Xia said, "If you have something to say, just say it."

Zhou Tieyi stood up and said, "Your Majesty, the purpose is to sell the things twice. Only in this way can we accumulate the silver bills we issued in the market and prevent prices from rising. This is like a reservoir. What we need is to store the extra 'money' we issued. On the contrary, the country does not need to pay attention to the profits from stocks and treasury bonds, because as long as the money can be stored in the pool we set, no matter how many silver bills we want to issue, it is just the four words 'national credit'."

The Queen suddenly asked, "What if there is too much 'water' in the pool?"

Zhou Tieyi replied, "That's simple. There are three ways: build a new pool, make the pool bigger, and evaporate the water in the pool. Stocks and government bonds can do more than just make money in the process of trading."

"But these are all issues to be considered later. The most important thing now is to ask His Majesty to grant me the power to establish a central bank to supervise the silver bills, stocks, and government bonds of the world!"

Zhou Tieyi answered the Queen's first question with the purpose of telling everyone that there is a problem here, but it will only be revealed in the second stage. After I build the central bank in the first stage, don't think of reaping the benefits easily.

The Emperor of Daxia remained silent. He could imagine how terrifying the power would be after the establishment of a central bank. With Zhou Tieyi's methods, it was possible for him to sideline the people and become the uncrowned saint in the court.

But in the current situation, even if Zhou Tieyi has explained the whole thing clearly, he dare not easily hand this matter over to others. This is also an open conspiracy.

The Great Xia Emperor said first, "You have a mission from the God-Slaying Division..."

Zhou Tieyi smiled but said nothing.

Everyone also heard Zhou Tieyi's hidden meaning. At that time, the Emperor of Daxia and the Fa family alienated Zhou Tieyi and his master, and promoted Mei Juncang to the position of acting director of the Inspection Institute. They wanted to wait for Zhou Tieyi to return to Beijing and see how Mei Juncang would deal with it. By then, they would not only be able to restrain Zhou Tieyi, but also find out whether Zhou Tieyi and Mei Juncang were setting up a trap.

But now it seems that even if there was a trap set up, Zhou Tieyi's was still the most brilliant one.

Since you want the authority of the God-Slaying Division, I will give it to you. Whether it is in the hands of Mei Juncang or anyone else, you can take it, but I am giving it to you because you must take the initiative to hand over greater authority to me.

The Great Xia Emperor waved his hand and said, "I have a few words to say to Mr. Zhou alone."

Everyone stood up, including the Queen Mother and the servant Su Xibi, and left the imperial study.

After everyone left, the door of the imperial study closed, as if isolating the inner and outer worlds. The Great Xia Emperor looked at Zhou Tieyi seriously and asked the last question, "The most loyal seems like a traitor, and the most traitor seems like a loyal person. What you have done is already "loyal" in the eyes of the world. So no matter how I think, I can only regard you as a loyal minister. But I still want to ask, who are you loyal to?"

Zhou Tieyi straightened his clothes, stood up, and bowed, saying, "Your Majesty, I am a loyal subject to whoever the emperor is."

(End of this chapter)