Chapter 195: Shandong Business

Even if the goods arrived safely, the Ming’s chaotic supply system and finances meant that many merchants, full of dreams of wealth, ended up bankrupt, with only a few pieces of paper—or not even that—to show for their efforts. There were many who committed suicide or were reduced to beggars, starving on the streets.

Doing the court’s business in Dengzhou required not only capital and business acumen but also a deep official background. In the same Dengzhou, some merchants not only got rich by transporting military supplies for the court but also used the ships for large-scale smuggling, transporting urgently needed goods and local specialties between the Ming, Joseon, and the Later Jin, making a fortune.

Sun Yuanhua was well aware of this in Dengzhou, but being a skilled official, he did not dwell on it. The reason was self-evident: the merchants involved in this smuggling all had backers. Some officials were too powerful for him to offend; others he needed for their services and couldn’t afford to alienate. Some were his patrons, friends, or fellow graduates. If he made a fuss, they would all part ways, and not only would his reforms fail, but his own position as the Governor of Dengzhou and Laizhou would be in jeopardy.

Therefore, Sun Yuanhua himself, apart from trying to control the export of grain and pig iron to the Later Jin, turned a blind eye to other matters. He also needed the smugglers to import much-needed horses from the Later Jin’s territory. Dengzhou was in Shandong, and unlike the Ming generals on the Shanhai Pass and Jinzhou front lines who could buy horses from the Mongols nearby, the main source of warhorses for the new army in Dengzhou was through roundabout purchases from the Later Jin. Moreover, the smugglers often brought back a lot of information about the Later Jin, which was much better than the intelligence gathered by the court’s own spies.

This young man before him might have similar plans. Sun Yuanhua sized up Zhao Yingong. His visit was clearly to “claim kinship” and “find a patron.” To do business in the Dengzhou area, there was no one more suitable as a patron than Sun Yuanhua himself.

Sun Yuanhua was not averse to this. In the Ming Dynasty, this was a perfectly natural thing to do. And Sun Yuanhua was no pedantic scholar—otherwise, he wouldn’t have become a high-ranking official in his early fifties.

This Zhao Yingong not only did business with the Australians but was also willing to travel thousands of li to the unfamiliar land of Shandong to make money, unafraid of risks. He was a bold and daring person. He also had deep trade relations with the Australians, which could be useful. Finally, directly controlling a few merchants was beneficial to him.

However, whether this person was usable remained to be seen. He asked:

“Since you plan to do business here, what kind of business do you intend to engage in?”

This topic was a bit sensitive. The business Zhao Yingong wanted to do was actually human trafficking, which of course he couldn’t say. But making up a random story required it to be plausible. Zhao Yingong had thought about this repeatedly and now said cautiously:

“Your Excellency is training troops here, so the most needed thing is naturally grain…”

Sun Yuanhua stroked his beard and nodded. “Indeed, it is grain.” He sighed, “It is difficult.”

Zhao Yingong asked, “May I ask Your Excellency for the reason?”

“The court has grain, but the word ‘transport’ is the problem,” he said.

A large number of troops were concentrated in Dengzhou and Laizhou, consuming a massive amount of grain themselves. They also had to supply grain to the tens of thousands of troops of the Dongjiang Garrison stationed in Liaodong. The grain transport was extremely heavy. However, the land transportation in the Dengzhou and Laizhou region was extremely inconvenient. In the Ming Dynasty, the Shandong Provincial Administration governed six prefectures. The three eastern coastal prefectures of Qingzhou, Laizhou, and Dengzhou were known as the “Eastern Three Prefectures,” while the three western prefectures along the Grand Canal—Jinan, Yanzhou, and Dongchang—were the “Western Three Prefectures.” Comparatively, the Eastern Three Prefectures lagged far behind the Western Three Prefectures in both transportation and trade.

The Eastern Three Prefectures, located on the eastern coast, were mostly hilly and mountainous, making land transportation extremely difficult. Dengzhou Prefecture, at the easternmost tip, was surrounded by the sea on three sides and was the most isolated by land. “Although its western border connects to Laizhou and Qingzhou, it is blocked by mountains and ridges, with winding paths like a bird’s trail or a sheep’s gut, too narrow for carts to pass side by side or for men to ride abreast.” It was said to have “not a single passable road.” Such transportation conditions undoubtedly greatly hindered its trade with other regions, leading to a situation where it was “secluded in the eastern corner, blocked by mountains and surrounded by the sea, with barren land and a sparse population, no trade, and few merchants.”

After large quantities of grain from the south were transported up the Grand Canal to Shandong, they needed to be transferred overland to reach places like Dengzhou and Laizhou. The geographical conditions of the Western Three Prefectures made this land transfer very difficult. Because the roads were difficult, the transportation costs were also very high.

The grain allocated by the court for the Dengzhou and Laizhou garrisons and the Dongjiang troops often could not be quickly transported to Dengzhou and would pile up in places like Linqing. This not only greatly increased losses but also involved many official dealings. To transport the grain to Dengzhou, laborers had to be conscripted, carts had to be hired, and food and lodging had to be provided along the way. Sometimes, bridges and roads had to be repaired. All of this required the cooperation of local officials. Sun Yuanhua was, after all, only the Governor of Dengzhou and Laizhou, not the governor of the entire Shandong province. Outside his jurisdiction, things did not go so smoothly. For this reason, he had to do a lot of work with the provincial government and the prefectures and counties along the route to ensure the smooth transportation of grain.

Not only grain but other supplies also had similar problems. From a modern perspective, the Eastern Three Prefectures were all coastal counties, typical areas suitable for an “export-oriented economy,” and their maritime transport conditions were excellent. The coastline of the entire Eastern Three Prefectures stretched for nearly three thousand kilometers, and nearly 60% of its 29 prefectures and counties were coastal. As early as the Sui, Tang, and Northern Song dynasties, Dengzhou, Laizhou, and Jiaozhou had already developed into important ports for foreign trade with China.

However, due to the strict sea ban in the early Ming Dynasty, maritime trade along the Shandong coast declined. Although the sea ban was relaxed after the Jiajing era and private maritime transport recovered somewhat, the scale remained small. Each ship had a capacity of only a few hundred shi, and only two or three hundred ships arrived at the ports each year. Dengzhou, Laizhou, and other places remained in a state of inconvenient transportation and difficult circulation of goods. Sun Yuanhua was often troubled by this.

In comparison, other goods could still be transported by sea, but grain, as long as it was allocated from the south, had to go through the Grand Canal. This was a systemic issue, and changing it to sea transport was not something he could decide alone. The grain transport via the canal was a “major policy” of the court, and even Xu Guangqi, who was already in the Grand Secretariat, could not influence it.

Zhao Yingong said, “Since that is the case, why not try to procure it locally? Even if it can’t solve the whole problem, it can at least solve a part of it, and the people would also benefit.”

Sun Yuanhua said, “You have just arrived and do not know the intricacies here. As for the local grain, the land in Dengzhou and Laizhou has always been barren, with limited production. Yet it is a place where ‘if there is a surplus of grain, it cannot be sold to other prefectures for profit. If there is a shortage, it cannot be bought from other prefectures, and they can only be self-sufficient. Therefore, a small harvest leads to sudden abundance, and a small famine leads to immediate hardship!’ Not only do people flee during famines, but they also flee during good harvests!”

“Why flee during a good harvest?”

“The grain here simply can’t be sold. If it can’t be sold, how can they pay the poll tax in silver?” Sun Yuanhua looked at him in surprise, as if wondering why he didn’t understand such a simple matter.

“Oh, yes, yes,” Zhao Yingong nodded quickly, thinking to himself that he had made a fool of himself again. For the people of the Ming Dynasty, this was basic common sense, but it was very unfamiliar to him.

“Although the court adds two qian of silver per shi for grain collected locally as a favor, the people still suffer greatly.” He sighed and said, “Therefore, the people of Dengzhou have a saying: ‘Dengzhou is like a large urn, and the common people are at the bottom of the pot. When grain is expensive, a dou costs a gold piece; when grain is cheap, it’s fed to dogs and pigs. In a great harvest, they flee from the grain tax; in a great famine, they starve to death.’”

Zhao Yingong of course knew the reason: it was simply that inconvenient transportation caused difficulties in circulation. When there was a local bumper harvest, the grain couldn’t be transported out and couldn’t be sold at a good price. When there was a famine, grain from outside couldn’t be transported in. He had already studied this issue before coming to Dengzhou, and he brought it up now to lead to the next topic.

“Since the difficulty lies in the word ‘transport,’ I am willing to lend Your Excellency a hand in this matter,” Zhao Yingong said. “I intend to open a shipping company here.”

Sun Yuanhua nodded and smiled, but remained noncommittal. Zhao Yingong was not anxious. Sun Yuanhua certainly understood the value of a shipping company. The fact that he did not express an opinion showed that he took this matter very seriously and wanted to think it over carefully before discussing it with him. So he did not pursue the topic further.

The conversation then turned to local agriculture. If local grain production was good, the reliance on canal transport could be greatly reduced. Therefore, Sun Yuanhua was very interested in improving local agricultural production. Like Xu Guangqi, he had a good deal of knowledge about agricultural issues. Xu Guangqi had once established a military farm in Tianjin using “Western water methods,” “putting knowledge into practice” with good results. Sun Yuanhua said that he too had once had such an idea.

“Since Your Excellency has this intention, why not recruit refugees and reclaim wasteland for farming here?” Zhao Yingong probed. “I have seen a lot of wasteland here. On my way, the roads were full of starving people, crying out for food. If Your Excellency has this intention, it would not only supplement the army’s food supply but also be a great… act of charity.” Zhao Yingong had originally wanted to say “meritorious deed,” but remembering he was a Catholic, he immediately changed it to “act of charity.”

Sun Yuanhua shook his head. “Land and people are easy to find, but money is the problem.”

Taking in refugees required providing food, clothing, and shelter. Although the land itself didn’t cost much, reclaiming it required seeds, livestock, and fertilizer. All of this needed a large upfront investment. Although Sun Yuanhua was the Governor of Dengzhou and Laizhou, his jurisdiction only covered the three prefectures of Dengzhou, Laizhou, and Qingzhou, as well as the islands along the Shandong coast and in the Bohai Bay. It was a typical area of poor people and barren land. The resources at his disposal were limited. Even with the military pay and grain allocated by the court, he could only barely maintain the army and the defense system. He had no capacity for further construction and development.

“Furthermore, this area is mostly coastal, and the inland is mostly hilly and mountainous. Therefore, much of the land is saline and barren. It cannot be done without great effort and great spirit,” Sun Yuanhua said. “I am already exhausted from handling military affairs here and have no energy left for that.”