Chapter 600 - Land and Sea Routes
Whether under the Ming or the Qing, both dynasties fully understood that the Zheng clan's power derived from the enormous revenues of maritime trade. One of their primary measures for attacking the Zheng clan was to impose blockades on mainland goods exports. Especially after Zheng Zhilong surrendered to the Qing and was subsequently executed, the Manchu Qing implemented powerful maritime prohibition measures, imposing a trade blockade on Zheng Chenggong. They enforced the maritime ban with "not a single plank permitted on the sea," prohibiting the export of goods. Yet Zheng Chenggong, relying on Taiwan and the Jin-Xia region, was still able to continuously obtain large quantities of goods from the mainland for overseas trade. This was all thanks to the commercial-intelligence network the Zheng clan had established on the mainland—the so-called "Two Routes of Land and Sea, Five Merchants and Five Guilds" system.
This system operated with remarkable success. Not only did it continuously supply the Zheng clan with various mainland goods, but it also provided intelligence and logistical support for Zheng Chenggong's military operations on the mainland. In 1659, when the Zheng army attacked Zhenjiang, Zheng clan merchants had purchased large quantities of rice beforehand and stored it at Jinshan Temple at the river mouth. As soon as the Zheng ships arrived, military provisions could be supplied on the spot. When Zheng Chenggong's subordinate Huang Wu defected to the Manchu Qing, he revealed this system. But throughout the entire Shunzhi reign, only twelve so-called Zheng spy cases were uncovered, and most details remained unclear, involving only five or six people. Clearly, the system had suffered little damage.
Zheng Chenggong's system had the Mountain Route handling commerce and the Sea Route handling logistics and material distribution. Each route had five trading houses responsible for their respective areas, without mutual contact.
What Jiang Shan, Si Kaide, and the others were now establishing was essentially an imitation of this operational method.
The Mountain Route was responsible for the transmigrator collective's mainland trade and procurement of materials. The Five Merchants used "Gold, Wood, Water, Fire, Earth" as their codenames. Wanyou took the "Gold-Character Firm;" the "Wood-Character Firm" was reserved for the Runshitang pharmacy system; the rest awaited assignment.
As for the several Purple-Character enterprises in Guangzhou and Huanan Sugar in Leizhou, both the Intelligence Bureau and the Colonial Trade Department felt these were too important to the transmigrator collective. For now, it was best to maintain their current arrangements.
The Sea Route would establish Five Guilds, managing cargo and personnel transport, inns, warehouses, and also operating in finance—essentially a logistics-financial services industry. They would use "Benevolence, Righteousness, Propriety, Wisdom, Faith" as codenames. The "Benevolence-Character" would be the Qiwei Escort Bureau system; the "Righteousness-Character" would be the Delong Bank system.
Both the Land and Sea Routes' Five Merchants and Five Guilds would employ vertical management, with only commercial connections between them—no intelligence connections. Their operations would be kept secret from each other. Except for a few key personnel, most of the clerks and managers employed in the shops would remain unaware of their secret mission.
The Five Merchants and Five Guilds would focus on collecting local public intelligence while also providing logistical, transportation, and communication support.
Beyond the Land and Sea Routes stood the "Black Dragon Society" system, directly under the Foreign Intelligence Bureau. This system was composed entirely of intelligence personnel who would deploy reconnaissance networks for intelligence gathering in key locations. These personnel would use various identities as cover: landlords, peddlers, small merchants, clerks, Buddhist monks, Daoist priests, and the like. When necessary, they could also occupy a mountain stronghold or organize local militia to run small-scale armed forces as future mainland armed work teams.
The Black Dragon Society had no horizontal connections with the Land and Sea Routes. It mainly engaged in activities of higher risk, performing undercover, infiltration, and defection work. Black Dragon Society members couldn't hold positions in Land and Sea Route shops to avoid implicating others if caught or exposed. When cooperation or support from the other side was needed, they had to present a special token or have instructions in coded correspondence.
Establishing a large-scale commercial network on the mainland was a major investment project. This project required not only significant capital but also considerable personnel. When it passed its third reading in the Transmigrator Parliament, it triggered considerable controversy, leading to a hearing.
At the meeting, personnel from the finance, trade, and industrial departments each presented the current situation and the challenges they faced.
Currently, investment in Lingao's industry, civil administration, and infrastructure was constantly expanding. The behavior of expanding production capacity and increasing population was greatly stimulating imports. Meanwhile, Lingao's self-sufficiency rate for raw materials remained very low. The result was that Lingao's dependence on foreign trade was constantly deepening. Lingao's Finance Division was finally encountering a difficult problem: foreign exchange shortage.
The so-called foreign exchange was, of course, the most widely used hard currency of this era: silver.
Constantly expanding industrial and mining enterprises, administrative organs, and military and police forces employed a vast number of people. Enormous administrative expenses plus industrial investments meant that the Finance Commission's physical silver reserves had dropped close to the warning level by April 1630.
On paper, Lingao's trade had always been in surplus, and its silver reserves seemed more than adequate. But most of the reserves were merely accounts receivable in the Guangzhou Station's books. Similarly, the debt figures in the Guangzhou Station's accounts payable column for imported materials were also considerable. If it weren't for the approach of the first settlement day after May's Dragon Boat Festival, the transmigrator collective's silver reserve situation by summer's end would look quite ugly.
Meanwhile, Leizhou, the transmigrator collective's largest source of silver, not only couldn't contribute revenue but actually required massive financial investment. Huanan Sugar Company, leveraging the Leizhou Sugar Guild, was organizing "sugar cooperatives" locally—similar to Japan's "agricultural cooperatives." They adopted a model of unified supply of seeds, fertilizers, and pesticides; unified planting guidance; and unified purchasing. The most critical element of this system was providing farmers with substantial small, low-interest loans to free them from local rural loan sharks' control. This system was currently operating only in Xuwen, but the capital investment needed amounted to at least fifty thousand taels. Adding the two to three hundred thousand taels needed by autumn for purchasing funds to satisfy procurement demands, the second-half financial situation was becoming quite severe.
"Given this severe financial situation, why increase investment on the mainland?" asked Qian Shuixie, a standing committee member of the Transmigrator Parliament. "The funds invested now can't possibly return principal within the year, let alone generate sufficient profit."
"First, this system will be built gradually, not all at once." Sitting in the solitary chair at the center of the horseshoe-shaped table was Si Kaide—while this system served both commerce and intelligence, it primarily served commerce. According to the principle that whoever benefited most should answer questions, he had to take the floor.
"This system mainly uses existing mature commercial enterprises, which we lead and guide in expansionary investment," Si Kaide pointed out. Whether the about-to-be-established Wanyou or the "Ming Dynasty Watsons" that Runshitang Pharmacy planned to create, both were private shareholding enterprises. The expansion funds would be primarily borne by them.
"But we also have investment, don't we? And this investment isn't a small sum."
"Certainly. While our nominal investment figure is large, the actual silver investment is limited..."
"Are you saying that our investment is merely an accounting transaction?"
Si Kaide hesitated for several seconds before answering: "If you're referring to how the funds are transferred, then yes, that's correct." He immediately added, "But we still need to commit some real silver. Just a limited amount."
"Regardless, for Wanyou and Runshitang, the total investment won't be less than fifty thousand taels, correct? Even at half your contract investment amount. Once this money is invested, how long before we recover the cost—I'm not even asking about profit?"
"I don't think even Buffett could say when profits would definitely come," Si Kaide said. "But the time to recover principal is quite fast. For example, Wanyou's northern and southern goods business."
According to historical records, naval calculations, and commercial department estimates: using traditional sand boats to transport northern and southern goods from Shanghai to Tianjin, approximately two months would complete one round-trip transaction. With fifty thousand taels of principal, after deducting expenses, the net profit would be between three thousand and six thousand taels—very considerable profit.
"The profit can't be returned to Lingao for immediate use, correct? Since the business needs to expand, capital must accumulate."
"Yes, that's true," Si Kaide said. "But while the initial investment is large, later stages won't require additional investment—or even if they do, it will be limited. The enterprise can sustain its operations and development through its own earnings. For our investment level, it's still quite worthwhile."
The standing committee stirred with murmurs, apparently not entirely satisfied with this answer.
Si Kaide continued: "Regarding capital, there's another channel for supplementation. Everyone knows where the deposits at Delong Bank in Guangzhou come from, right? Mainly from deposits absorbed from local wealthy people through Purple-Character enterprises. After our mainland commercial network is established, we can use the same method to absorb funds."
"Additionally, the Colonial and Trade Superintendent Department requests that the Grand Library's Historical Data Research Section's first-class historical researcher Yu Eshui be summoned as our witness."
"Approved."
Yu Eshui submitted testimony. According to historical records, next year—the fourth year of the Chongzhen reign—the Ming army would blockade Guangzhou Bay, prohibiting the Portuguese from entering and trading. This would abolish the long-standing convention that the Portuguese could come to Guangzhou city twice a year to purchase goods.
"If the Portuguese can no longer purchase Chinese goods directly, they'll certainly seek Chinese agent merchants to buy goods. The Guangzhou Station can use this opportunity to sell large quantities of Chinese goods directly to the Portuguese. We can obtain huge silver foreign exchange reserves. If we can establish the mainland commercial network before next year, we can use this network to cheaply procure goods, then export them—whether selling directly to the Portuguese in Macau or shipping to Southeast Asia."
The Portuguese's favorite commodity—raw silk—was mainly produced in Jiangnan. The first-grade export silk variety "Lankijn" (Nanjing) was produced in Jiangnan.
The proposal to establish a mainland commercial network finally passed its third reading in the Transmigrator Parliament, though the standing committee added an attached condition: any additional appropriations for these enterprises must be approved by Parliament.
Additionally, Parliament also approved the Colonial and Trade Superintendent Department to conduct one or two exploratory trade-investigation expeditions each to Southeast Asia and Liaodong, to determine whether there were possibilities for establishing trading posts or agency offices in those regions.
At the same time, Parliament also tasked the Manufacturing Superintendent Department to develop more export products as quickly as possible, ensuring a trade surplus in foreign trade to increase foreign exchange reserves and guarantee continued imports of production raw materials and population.
The Colonial and Trade Department obtained all the authorizations they wanted. But the Manufacturing Superintendent Department was quite displeased—this hearing hadn't gained them any benefits, and they'd been given more pressure instead. Developing new export goods was easier said than done.
Most products of the departments and enterprises under the Manufacturing Superintendent Department couldn't be exported—even if they wanted to export, Lingao itself didn't have enough. Orders for machinery and equipment, which consumed most of Manufacturing's production capacity, were booked out to 1633, all to be supplied for various industrial, mining, and agricultural uses in Lingao and the future Sanya region. The clothing factory's capacity had reached a figure indigenous people found unbelievable: five thousand sets of various garments per month. Yet it still couldn't keep up with the ever-growing population. Sometimes purified immigrants couldn't even receive the standard two sets of clothing per person and had to be issued clothing vouchers to redeem later. As for shoes, their demands had never truly been met. The army could only manage by making their own mixed rag-strip "premium straw sandals" to keep soldiers from training barefoot—proper leather-soled cloth boots were only worn during inspections, exercises, and outings.
Even much of the light industrial products' capacity was being consumed internally—take soap, for example. Capacity was limited by insufficient oil supply, and the high internal demand meant most soap was directly consumed in Lingao. Only a small amount of premium soap bars and transparent soap was exported as luxury goods.
"Mo Xiao'an, this is your problem to consider," Zhan Wuya said. "As everyone knows, the only possibility for the heavy industry sector to export is arms and machinery. Since the Executive Committee doesn't agree to any of that, the heavy responsibility of exporting industrial products falls on your Light Industry Department."
He sighed. "I know you're in a difficult spot. Many products' raw materials are 'controlled' substances, so even if they'd sell well on the market, you can't mass-produce them. But please try your best."
"I'll figure something out," Mo Xiao'an said with a long face. "Could we submit a report to the Executive Committee? Allow some grain exports? Then I could at least develop a lot of sweet potato products."
"That's basically impossible, but I'll try again. You'd better pray for an extra-large sweet potato harvest this year—so abundant they're rotting. Maybe then it'll be possible."
Mo Xiao'an's problem was that the food factory's comprehensive utilization of sweet potatoes was too thorough—there was almost no possibility of waste.
Back in his own office, he racked his brains for half a day but still couldn't think of anything that could expand exports. There were quite a few export products available to him now: from side dishes and snacks to medicine, cosmetics, sanitary ceramics, and paper goods... all sorts of things. After excluding varieties with capacity too low for anything but local consumption and the varieties on the Executive Committee's export control list, he was left with about forty varieties.
Among those, the highest sales volume was MSG produced by Tianchu, pickled vegetables, and then needles and paper products. These four accounted for half of Lingao's bulk export commodity value.
The export growth rate for Runshitang's traditional Chinese medicine formulas was very fast, but hand-manufactured capacity was low. Adding in Lingao's large internal consumption, export value remained relatively low. This wouldn't change until the new mechanized pharmaceutical factory went into production.
MSG production was limited because it required sweet potatoes as raw material. Pickled vegetables and such could expand production—vegetable yields were always considerable, especially in Lingao's climate where all vegetables could grow year-round.
Unfortunately, his rice noodle plan couldn't succeed—rice noodles heavily mixed with dried sweet potato powder had been on sale in Lingao for a long time, and both transmigrators and indigenous people had eaten plenty of it. He'd always hoped to sell this stuff on the mainland, but the Executive Committee still wouldn't approve the export.
Mo Xiao'an thought and thought but couldn't come up with new products. He had plenty of new product ideas, and trial sales in Guangzhou had produced reasonable results. But what he needed were new products that could be shipped in large batches. Finally, he summoned Xun Suji and Zhou Dongtian.
Xun Suji hadn't been very focused on work lately. Liu Youren had lost hope of Xun voluntarily proposing marriage and had sent Liu Guang to make a direct proposal: they were willing to marry their "grandniece" Liu Meilan to him. Not only was the Liu family willing to give their daughter, but they'd also provide Liu Meilan with a substantial dowry. As for the "room girl" Jin ShannĂĽ currently at Chief Xun's side, Liu Guang indicated that Miss Meilan was definitely not a woman who couldn't tolerate others.
This windfall left Xun Suji dizzy. He'd actually had some interest in this tall girl, but it had been only vague interest—he'd never thought about how to act on it.
But marrying an indigenous woman—the Executive Committee had never given a definite answer about that. Now that he already had a female servant and secretary, would they agree if he suddenly proposed to take a wife?
Xun Suji consulted Wu Nanhai, who declared his enthusiastic approval:
"We should be integrating into the local indigenous population as soon as possible. If you marry Liu Youren's clan grandniece, the Liu family will essentially be on our ship. From then on, they'll be core supporters—is this girl pretty?"
"Not bad. Good figure," Xun Suji said.
"Then seize the opportunity," Wu Nanhai said. "I'll arrange more agricultural extension activities at the Liu household for you."
But Mo Xiao'an had a different opinion:
"Suji, it's no big deal if you get an indigenous woman as a maid or servant. But making a daughter of the Liu family your wife—isn't that going a bit too far?" Mo Xiao'an said. "Quite a few people in Parliament are very wary of private collusion between indigenous people and transmigrators. If you marry into the Liu family, a lot of things will be hard to explain later."
Mo Xiao'an wasn't being alarmist. This was indeed one view held by some transmigrators—forming marriage ties with local indigenous power holders would inevitably create a new privileged class dependent on transmigrators. If this privileged class exploited these marriage connections to run roughshod, dealing with them would become far more troublesome than before for the transmigrator collective. Everyone harbored some selfish desire to look after their own relatives; sometimes it was purely about face.
(End of Chapter)