Chapter 166: Grain and Silver

In the history of the Guanning Army’s logistical supply, a phenomenon had once caught Zhao Yigong’s attention: the Guanning Army’s obsession with cash.

As an armed group with over a hundred thousand soldiers and civilians, grain was the main focus of supply. However, in the actual transport and supply, the phenomenon of converting grain to silver for transport was not uncommon, and there was a tendency to value silver more than grain.

Shipping less grain and more silver had the greatest advantage of reducing transportation costs. Transporting silver was much cheaper than transporting grain of equivalent value. After the silver arrived, it could be used to purchase grain locally. From a modern perspective, this would invigorate the local market and stimulate local economic development.

However, for the Guanning Army, this was a terrible idea.

The Guanning Army was located in the cold and barren land of Liaodong. After the Ming Dynasty lost Shenyang, what they actually held was just a corridor of fortified settlements from Jinzhou to Shanhaiguan. Although the military households continued to farm, in the harsh climate of Liaodong with a frost-free period of less than two months, their own grain self-sufficiency rate was very low. They relied on grain supplies from within the pass.

Under these circumstances, shipping a large amount of silver for local procurement was tantamount to artificially creating inflation. Since Liaodong could not supply enough grain at all, it had to rely on grain transported from within the pass by merchants as a supplement. The grain from within the pass had to travel thousands of miles, over mountains and rivers, and was exploited at every level. The high transportation costs and losses were all added to the price of grain.

Originally, the local money supply was too large, and the grain transported at great cost could not meet the needs. Thus, the Guanning garrison fell into a state of inflation, with the price of each shi of grain reaching as high as more than ten taels, or even more than twenty taels.

Such a high price was an extremely heavy burden for the ordinary soldiers, military households, and common people in the local area. Although on the surface, each regular soldier received a military salary of three or four taels of silver per month, in reality, except for a few elite personal soldiers, most people rarely received their salaries on time and in full. The silver they could get, even if used entirely to buy grain, was not enough to make ends meet and could only barely maintain their survival.

However, this inflation was the best environment for the military commanders who controlled the distribution of resources to make a fortune. Through embezzlement of military salaries and grain sales, the Guanning Army commanders accumulated wealth that their predecessors could not have imagined.

Zhao Yigong believed that to solve the problem, they had to work on the grain.

“In my opinion, we still have to transport rice. The price of grain in the Liaodong area is extremely high. If we transport fifty thousand shi of rice, even if we buy it at a price of three taels per shi, we can at least double the profit when we sell it! After the delivery, it will be more than enough to cover the costs.”

Shen Tingyang’s eyes lit up, then he shook his head, “How can it be so easy! Not to mention that it will take a lot of effort to procure fifty thousand shi of grain. When it is transported to Liaodong, it will not be an easy matter to find someone to buy these fifty thousand shi of grain.”

Even at a price of six taels of silver per shi, the total price of this batch of grain would be three hundred thousand taels. Shen Tingyang really couldn’t imagine anyone being able to come up with such a huge sum to buy it.

If it were sold in small batches, the delay in the shipping schedule would be a disaster. Although this was a trial run and the deadline was very loose, if it dragged on for too long, it was not impossible that the Guanning commanders would use this as an excuse to deliberately make things difficult and extort extra benefits.

“This is not difficult. I can guarantee that someone can afford to buy it,” Zhao Yigong said with great confidence.

Shen Tingyang looked at him with suspicion. Although everyone knew that this Zhao Yigong had a mysterious background, not only with a strong “Kun thief” color, but also very likely with a powerful official in Guangdong behind him, he was so confident about the business situation in Liaodong, which everyone regarded as a dreadful journey, that it could not help but arouse suspicion.

But Zhao Yigong was so confident, and he was not a man who liked to boast. After the last trade with Japan, Zhao Yigong’s credit in the Jiangnan business circle was as good as his word. He would not use empty words to deceive him.

Shen Tingyang thought for a moment and immediately said, “In that case, I will have to trouble you, brother. This time, I mean for the China Merchants’ Bureau to handle the transport.”

Zhao Yigong immediately understood his meaning: the Shen Tingyang family had plenty of large ships of their own, and it would not take many sand ships to go to Liaodong. There was no need for the joint venture company, the China Merchants’ Bureau, to do it. Shen Tingyang was testing him. If what Zhao Yigong said was a lie or an exaggeration, he would never dare to risk the China Merchants’ Bureau, his “own daughter.” If he dared to accept, it meant he had enough confidence in this method.

Zhao Yigong showed a look of “surprise” and quickly said that this was inappropriate.

“There is absolutely no such reason,” Zhao Yigong shook his head repeatedly. “This is Brother Shen’s business.”

“Not at all, the China Merchants’ Bureau also has my shares.”

“In that case, I will obey.” Zhao Yigong no longer refused. He had intended to cut into this transaction from the beginning.

Seeing that he did not refuse, Shen Tingyang knew that he was by no means bragging, and he couldn’t help but feel half relieved. “It’s just that it won’t be easy to procure fifty thousand shi of grain in a short time.”

The key here was to find a large grain merchant who could supply such a huge amount of grain. The quality of the grain did not have to be good, because the payment was in silver, and the grain was to be sold on the market. In the current Liaodong, as long as it was grain, there would be no worry about selling it.

It was not easy to find a grain merchant who could provide fifty thousand shi of grain. In this era, the scope of grain circulation was very small. Although some grain distribution markets had been formed, their radiation range was limited.

Moreover, last year, various parts of the Southern Zhili region had suffered from disasters of varying sizes, and the grain production had been greatly reduced. After the delivery of the tribute grain, the remaining grain reserves in the local area were limited. To procure fifty thousand shi of grain, they would have to find many grain firms.

With such frequent and large-scale purchases of grain, the price would inevitably rise sharply. The current market price was already on the rise. And it was difficult to buy all the grain in one place, requiring a long time for transport. Shen Tingyang estimated that even if he purchased grain from various grain merchants in the Southern Zhili region through his commercial network, the average cost of shipping each shi of grain to Shanghai would probably exceed three taels.

“Let’s not rush this,” Zhao Yigong said unhurriedly. “I will also help to find a way for the grain. It’s just that the converted silver must be obtained as soon as possible. I will have to trouble Brother Jiming to run around for this matter.”

This converted silver was not so easy to get. For every procedure, there would be an expense. Zhao Yigong understood this principle very well. Even in the democratic and rule-of-law old timeline, when Party B settled accounts with Party A in a commercial cooperation, it was not uncommon to have to “embellish” it a little, let alone in this era where such practices were openly on the table.

“This is my duty.”

Zhao Yigong immediately got busy. The wholesale merchant in Liaodong was ready-made: Li Luoyou’s Liaohai Firm had both the strength and the sales network. It would not be a problem for his firm to buy these fifty thousand shi of grain.

Although the price sold to Li Luoyou could not be too high, a price of six taels per shi was still no problem. He did not have to pay the full three hundred thousand taels of silver in cash. He only needed to pay one hundred thousand taels to be able to deliver to the Guanning garrison. According to intelligence from the Foreign Intelligence Bureau, the circulating funds used by Li Luoyou’s Liaohai Firm in Liaodong were always around three to four hundred thousand taels. It would not be a problem to pay one hundred thousand taels in cash. The rest of the money, according to their remittance agreement with Li Luoyou, could be paid with bills of exchange to be collected at various branches within the pass or directly used to purchase goods.

In Liaodong, grain was the most sought-after and most profitable commodity. Whether it was sold to the Guanning Army, the Dongjiang Army, or the Manchu Qing, it could be sold at a high price. This would depend on the choice of the Liaodong general manager of the Liaohai Firm, and it was none of Zhao Yigong’s business.

Having the Liaohai Firm act as the wholesale merchant was also another consideration of Zhao Yigong’s. Neither the Fanhaijin nor Shen Tingyang had many connections in Liaodong. If they were to directly transport fifty thousand shi of grain to Liaodong and sell it rashly, not to mention how many merchants in Liaodong would have this kind of strength, it was very likely that all the grain would be stolen by the government troops, and they would not get a single coin. There were not a few merchants engaged in the Liaodong business in the Dengzhou and Laizhou areas who had gone bankrupt for this reason.

Li Luoyou had operated in Liaodong for many years, had deep roots, and had deep connections with the local military commanders and officials. There would naturally be no such concerns if his Liaohai Firm came forward. To be honest, only a powerful figure like him would dare to do business in that place and still make a lot of money.

The remaining crucial issue was where to get the coarse rice. The grain in Jiangnan was in a state of scarcity. The large households with grain in their hands would definitely hoard it and wait to sell it at a high price. The grain price would only fall after the summer grain came on the market, which Shen Tingyang obviously could not wait for.

Zhao Yigong’s confidence was not as strong as when he had assured Shen Tingyang. He had originally planned to ship coarse rice from Siam from Lingao. The Siamese coarse rice in Lingao had a sufficient price advantage. Even if it were shipped to Shanghai, the landed price per shi would not exceed one tael. But the arrival of the Siamese rice was still limited by insufficient transport capacity. In addition, with the influx of a large number of immigrants, the grain in Lingao was still a first-level controlled material directly controlled for import, export, and distribution by the Planning Commission. To transfer fifty thousand shi from Lingao at once, even if it could earn several times the profit, the Planning Commission would probably not approve it. Although he had already written a report to the Planning Commission, he himself felt that the hope was not great.

As for Taiwan and Jeju, although agriculture had been developed to a certain extent, they had to bear the work of transferring a large number of refugees. Except for Jeju Island, which was barely self-sufficient, Taiwan’s grain still needed to be transferred from Lingao. It was impossible to expect them to transfer grain out. Moreover, the grain reserves in these two places were largely relief rations and potatoes, which would probably be difficult to convert to cash in Liaodong.

It seemed that the grain had to be found from other places. Zhao Yigong considered several locations. The Joseon Dynasty of Korea was a poor country. Taking a few thousand shi of grain from them would make the Joseon Dynasty complain endlessly. It was too unrealistic to buy grain from them. Although Japan’s grain production was quite considerable according to the standards of the time, the amount that could be sold abroad was very limited, and grain had never been their export product.

Zhao Yigong thought and thought, but he couldn’t come up with any brilliant ideas.