Tianliangyuan

Chapter 356 usury

Fu Pei pointed out the problem incisively. In fact, he had long been dissatisfied with the emergence of private shops, which he believed was detrimental to the country.

During the previous dynasty, the money shops were always under the supervision of the imperial court. However, before Emperor Taizu ascended the throne, he received help from several powerful families, which is why they were given the opportunity to operate private money shops.

But who could have imagined that this would sow the seeds of such disaster for the new dynasty!

Xu Zhaozhao said casually, "One of the reasons why money shops exist is to facilitate transactions for merchants. To put it bluntly, whether or not the fruits from the mountains can be transported to the city to be sold depends on the merchants. Merchants are profit-driven, and the imperial court can suppress them, but no matter how much it suppresses them, the existence of merchants is inevitable and necessary. Money shops, especially private ones, are not necessarily like that."

Upon hearing this, Fu Pei fell into deep thought.

Xu Han and Xu Jun'an exchanged a glance and realized that Xu Zhaozhao's ultimate goal did not seem to be the gambling den.

"Does Lord Fu know about usury?"

Fu Pei snapped out of his daze, first looking blank for a moment, then regaining his composure: "Of course I know."

"Does Lord Fu know where the highest interest rates are for lending money?"

After a moment of silence, Fu Pei tentatively asked, "A private counter?"

Xu Zhaozhao shook her head. Private money shops dared not lend money at exorbitant interest rates on a large scale, because it was illegal and explicitly prohibited by the imperial court.

If discovered, it will be severely punished.

"There are many places that lend money at exorbitant interest rates, including gold and silver shops, private pawnshops, and even some small restaurants in small towns. But the owners of the really large sums of money lending at exorbitant interest rates are the noble families and aristocrats."

Xu Han frowned slightly, then shook his head and sighed: "As far as I know, before the Deng family fell, they had lent out nearly one million strings of cash at exorbitant interest rates. You can imagine how much profit the Deng family made!"

Fu Pei fell silent.

He still didn't understand enough about the lives of true noble families.

He is about to marry Lord Xu Wen's daughter, but that doesn't mean he has truly entered that circle.

First, he must have power and status; otherwise, given his background, it would be a pipe dream for him to jump directly into this circle simply by getting married.

Xu Zhaozhao smiled and said, "Usury is a form of high-interest lending. Lenders issue loans at high interest rates, and the principal and interest are calculated together at maturity. Borrowers must repay in installments."

For example: If you lend ten strings of cash for one month at a monthly interest rate of 2%, the total principal and interest for the month will be ten strings and two hundred cash. Dividing by thirty days, the daily repayment amount is three hundred and forty cash. When the principal is loaned out, the principal and interest are deducted, and then the daily repayment is collected until the full amount is received at maturity. Because each repayment is marked on the ledger, it is called "creditor's money."

Xu Junan nodded in agreement: "The practice of charging interest on loans in the private sector, with the principal and interest being equal, is called 'credit money'."

Xu Zhaozhao glanced at him, then turned her gaze back to Fu Pei: "The example I just gave is only a relatively normal example of usury. In reality, many high-ranking officials and nobles will increase interest rates to seek exorbitant profits. For example, they might lend ten strings of cash at a monthly interest rate of two percent, but this only applies to the first month. After the second month, the interest rate might suddenly rise to three or four percent."

"Consider this, Lord Fu. The money already owed is accruing interest. If we increase the interest rate further, ordinary people won't be able to repay it even if they sell everything they own. Even if some people don't see the interest increase, they will deliberately create obstacles to prevent repayment, allowing interest to compound. Therefore, ultimately, it will only lead to one outcome."

After Xu Zhaozhao finished speaking, she fixed her gaze on Fu Pei.

Fu Pei did not disappoint her, and said in a deep voice, "Farmers will start selling their grain and land, merchants will sell their shops, and those craftsmen on the labor register will most likely sell themselves into a workshop for three to five years, or even ten or twenty years, to make a living..."

Fu Pei couldn't bring himself to say the rest.

In reality, many people still can't repay their debts even after selling their assets, so they have no choice but to sell their children.

As the saying goes: "Original interest, one loan will be repaid three times; interest compoundes year after year; one year's loan, ten years' repayment; several lifetimes' worth of debt!"

Migrants, beggars, and even bandits and thugs may have been born from this.

This whole chain of factors, including usury, became a major cause of instability in people's lives.

Fu Pei is now an official, and looking at the whole country, this will lead to instability in the foundation of large-scale development, which is a major problem!

Thinking of this, Fu Pei stood up, straightened his clothes, and then bowed deeply to Xu Zhaozhao: "I have learned a great deal today!"

Seeing that he had grasped the implications, Xu Zhaozhao smiled and said, "Please sit down, Lord Fu, let's continue."

"Those who lend large sums of money at exorbitant interest rates are indeed from noble and aristocratic families, but not all of them are. Moreover, not all those who lend money at exorbitant interest rates are rich and heartless people."

Some orphans of large families or widows who are unable to work will sell their ancestral homes to raise money to make a living by lending money at exorbitant interest rates.

However, such people often lend money but never receive it back, because they lack the backing and power to recover interest or even principal. To put it bluntly, they are a vulnerable force. They often pay thugs or powerful individuals to help them, and while bullying others, they are also being bullied themselves.

This shows that usury is a highly irregular practice with many drawbacks, but there are two points we cannot deny.

Fu Pei's attitude was even more humble at this moment, and he cupped his hands and said, "Please enlighten me, County Princess."

Xu Zhaozhao casually raised her hand slightly to indicate that there was no need for formalities.

"We cannot deny that usury can indeed be profitable, and the larger the amount of money involved, the greater the profit. Moreover, if someone encounters an emergency, usury can indeed provide immediate relief!"

Fu Pei's expression darkened slightly: "Please enlighten me, Your Highness."

"For example, if there is an emergency at home, such as someone falling seriously ill, or if there is a wedding or celebration in the family and money is tight, ordinary people might be able to borrow from their relatives and friends to tide them over. But what about merchants?"

When a merchant travels, for example, carrying only 100,000 strings of cash, if he encounters a business opportunity but doesn't have enough money on hand, where will he borrow such a large sum?

Fu Pei looked completely bewildered, and Xu Zhaozhao looked at her father and brothers, who had the same reaction.

Sure enough, we still need to find a way to cram some more ideas into their heads.

"For example, if my subordinate goes to Nanzhao to buy tea and comes across some good tea, but doesn't have enough money, what if there happens to be a money exchange in Daxing that can lend or loan the tea?"

A word to wake up the dreamer!

Fu Pei understood instantly!

Suddenly, he stood up excitedly, his expression slightly frenzied.