Beyond domestic profits made in China, merchants engaged in overseas trade by investing money in trading vessels that docked at foreign ports as far away as East Africa. The world's first development of the banknote, or printed paper money (see Jiaozi, Huizi), was established on a massive scale. Combined with a unified tax system and an efficient canal and roadways, this meant the development of a true nationwide market system in China. Although much of the revenue in the central government's treasury was consumed by the needs of the military defense budget, government taxes imposed on the rising commercial base in China refilled the monetary coffers of the Song government. For certain production items and marketed goods, the Song government imposed monopolies in order to boost revenues and secure resources that were vital to the empire's security, such as steel, iron, and chemical components for gunpowder.
During the Song Dynasty, the merchant class became more sophisticated, well-respected and organized than in earlier periods of China. Their accumulated wealth often rivaled that of the scholar-officials who administered the affairs of government. For their organizational skills, Ebrey, Walthall, and Palais state that Song Dynasty merchants:
...set up partnerships and joint stock companies, with a separation of owners (shareholders) and managers. In the large cities, merchants were organized into guilds according to the type of product sold; they periodically set prices and arranged sales from wholesalers to shop owners. When the government requisitioned goods or assessed taxes, it dealt with the guild heads.
Although large government run industries and large privately-owned enterprises dominated the market system of urban China during the Song period, there was a plethora of small private businesses and entrepreneurs throughout the large suburbs and rural areas that thrived off the economic boom of the period. There was even a large black market in China during the Song period, which was actually enhanced once the Jurchens conquered northern China and established the Jin Dynasty. For example, around 1160 AD there was an annual black market smuggling of some 70 to 80 thousand cattle. There were multitudes of successful small kilns and pottery shops owned by local families, along with oil presses, wine-making shops, small local paper-making businesses, etc. There was also room for small economic success with the "inn keeper, the petty diviner, the drug seller, the cloth trader," and many others.
Rural families that sold a large agricultural surplus to the market not only could afford to buy more charcoal, tea, oil, and wine, but they could also amass enough funds to establish secondary means of production for generating more wealth. Besides necessary agricultural foodstuffs, farming families could often produce wine, charcoal, paper, textiles, and other goods they sold through brokers. Farmers in Suzhou often specialized in raising bombyx mori to produce silk wares, while in Fujian, Sichuan, and Guangdong farmers often grew sugarcane. In order to ensure the prosperity of rural areas, technical applications for public works projects and improved agricultural techniques were essential. The vast irrigation system of China had to be furnished with multitudes of wheelwrights mass-producing standardized waterwheels and square-pallet chain pumps that could lift water from lower planes to higher irrigation planes.
For clothing, silken robes were worn by the wealthy and elite while hemp and ramie was worn by the poor; by the late Song period cotton clothes were also in use. Shipment of all these materials and goods was aided by the 10th century innovation of the canal pound lock in China; the Song scientist and statesman Shen Kuo (1031ndash;1095) wrote that the building of pound lock gates at Zhenzhou (presumably Kuozhou along the Yangtze) during the 1020s and 1030s freed up the use of five hundred working laborers at the canal each year, amounting to the saving of up to 1,250,000 strings of cash annually. He wrote that the old method of hauling boats over limited the size of the cargo to 300 tan of rice per vessel (roughly 21 tons/21337 kg), but after the pound locks were introduced, boats carrying 400 tan (roughly 28 tons/28449 kg) could then be used. Shen wrote that by his time (c. 1080) government boats could carry cargo weights of up to 700 tan (49½ tons/50294 kg), while private boats could hold as much as 800 bags, each weighing 2 tan (i.e. a total of 113 tons/114813 kg).
Sea trade abroad to the South East Pacific, the Hindu world, the Islamic world, and the East African world brought merchants great fortune. Although the massive amount of indigenous trade along the Grand Canal, the Yangzi River, its tributaries and lakes, and other canal systems trumped the commercial gains of overseas trade, there were still many large seaports during the Song period that bolstered the economy, such as Quanzhou, Fuzhou, Guangzhou, and Xiamen. These seaports, now heavily connected to the hinterland via canal, lake, and river traffic, acted as a long string of large market centers for the sale of cash crops produced in the interior. The high demand in China for foreign luxury goods and spices coming from the East Indies facilitated the growth of Chinese maritime trade abroad during the Song period. Along with the mining industry, the shipbuilding industry of Fujian province during the Song period increased its production exponentially as maritime trade was given more importance and as the province's population growth began to increase dramatically. The Song capital at Hangzhou had a large canal that connected its waterways directly to the seaport at Mingzhou (modern Ningbo), the center where many of the foreign imported goods were shipped out to the rest of the country. Despite the installation of fire stations and a large fire fighting force, fires continued to threaten the city of Hangzhou and the various businesses within it. In safeguarding stored supplies and providing rented space for merchants and shopkeepers to keep their surplus goods safe from city fires, the rich families of Hangzhou, palace eunuchs, and empresses had large warehouses built near the northeast walls; these warehouses were surrounded by channels of water on all sides and were heavily guarded by hired night watchmen. Shipbuilders generated means of employment for many skilled craftsmen, while sailors for ship crews found many opportunities of employment as more families had enough capital to purchase boats and invest in commercial trading abroad. Foreigners and merchants from abroad had an impact on the economy from within China as well. For example, many Muslims went to Song China not only to trade, but dominated the import and export industry and in some cases became officials of economic regulations. For Chinese maritime merchants, however, there was risk involved in such long overseas ventures to foreign trade posts and seaports as far away as Egypt. In order to reduce the risk of losing money instead of gaining it on maritime trade missions abroad:
[Song era] investors usually divided their investment among many ships, and each ship had many investors behind it. One observer thought eagerness to invest in overseas trade was leading to an outflow of copper cash. He wrote, "People along the coast are on intimate terms with the merchants who engage in overseas trade, either because they are fellow-countrymen or personal acquaintances...[They give the merchants] money to take with them on their ships for purchase and return conveyance of foreign goods. They invest from ten to a hundred strings of cash, and regularly make profits of several hundred percent."
Wealthy landholders were still typically those who were able to educate their sons to the highest degree. Hence small groups of prominent families in any given local county would gain national spotlight for having sons travel far off to be educated and appointed as ministers of the state. Yet downward social mobility was always an issue with the matter of divided inheritance. Suggesting ways to increase a family's property, Yuan Cai (1140–1190) wrote in the late 12th century that those who obtained office with decent salaries shouldn't convert it to gold and silver, but instead could watch their values grow with investment:
For instance, if he had 100,000 strings worth of gold and silver and used this money to buy productive property, in a year he would gain 10,000 strings; after ten years or so, he would have regained the 100,000 strings and what would be divided among the family would be interest. If it were invested in a pawn broking business, in three years the interest would equal the capital. He would still have the 100,000 strings, and the rest, being interest, could be divided. Moreover, it could be doubled again in another three years, ad infinitum.
Shen Kuo (1031–1095), a minister of finance, was of the same opinion; in his understanding of the velocity of circulation, he stated in 1077:
The utility of money derives from circulation and loan-making. A village of ten households may have 100,000 coins. If the cash is stored in the household of one individual, even after a century, the sum remains 100,000. If the coins are circulated through business transactions so that every individual of the ten households can enjoy the utility of the 100,000 coins, then the utility will amount to that of 1,000,000 cash. If circulation continues without stop, the utility of the cash will be beyond enumeration.
The author Zhu Yu wrote in his Pingzhou Ketan (萍洲可談; Pingzhou Table Talks) of 1119 AD about the organization, maritime practices, and government standards of seagoing vessels, their merchants, and sailing crews. His book stated:
According to government regulations concerning seagoing ships, the larger ones can carry several hundred men, and the smaller ones may have more than a hundred men on board. One of the most important merchants is chosen to be Leader (Gang Shou), another is Deputy Leader (Fu Gang Shou), and a third is Business Manager (Za Shi). The Superintendent of Merchant Shipping gives them an unofficially sealed red certificate permitting them to use the light bamboo for punishing their company when necessary. Should anyone die at sea, his property becomes forfeit to the government...The ship's pilots are acquainted with the configuration of the coasts; at night they steer by the stars, and in the day-time by the sun. In dark weather they look at the south-pointing needle (i.e. the magnetic compass). They also use a line a hundred feet long with a hook at the end which they let down to take samples of mud from the sea-bottom; by its (appearance and) smell they can determine their whereabouts.
Foreign travelers to China often made remarks on the economic strength of the country. The later Muslim Moroccan Berber traveler Ibn Batutta (1304–1377) wrote about many of his travel experiences in places across the Eurasian world, including China at the farthest eastern extremity. After describing lavish Chinese ships holding palatial cabins and saloons, along with the life of Chinese ship crews and captains, Batutta wrote:
Among the inhabitants of China there are those who own numerous ships, on which they send their agents to foreign places. For nowhere in the world are there to be found people richer than the Chinese.
Accompanying the widespread printing of paper money was the beginnings of what one might term an early Chinese industrial revolution. For example the historian Robert Hartwell has estimated that per capita iron output rose sixfold between 806 and 1078, such that, by 1078 China was producing 127000000 kg (125,000 t) in weight of iron per year. In the smelting process of using huge bellows driven by waterwheels, massive amounts of charcoal were used in the production process, leading to a wide range of deforestation in northern China. However, by the end of the 11th century the Chinese discovered that using bituminous coke could replace the role of charcoal, hence many acres of forested land in northern China were spared from the steel and iron industry with this switch of resources. Iron and steel of this period were used to mass produce ploughs, hammers, needles, pins, nails for ships, musical cymbals, chains for suspension bridges, Buddhist statues, and other routine items for an indigenous mass market. Iron was also a necessary manufacturing component for the production processes of salt and copper. Many newly constructed canals linked the major iron and steel production centers to the capital city's main market. This was also extended to trade with the outside world, which greatly expanded with the high level of Chinese maritime activity abroad during the Southern Song period.
Through many written petitions to the central government by regional administrators of the Song Empire, historical scholars can piece evidence together to appropriate the size and scope of the Chinese iron industry during the Song era. The famed magistrate Bao Qingtian (999–1062) wrote of the iron industry at Hancheng, Tongzhou Prefecture, along the Yellow River in what is today eastern Shaanxi province, with iron smelting households that were overseen by government regulators. He wrote that 700 such households were acting as iron smelters, with 200 having the most adequate amount of government support, such as charcoal supplies and skilled craftsmen (the iron households hired local unskilled labor themselves). Bao's complaint to the throne was that government laws against private smelting in Shaanxi hindered profits of the industry, so the government finally heeded his plea and lifted the ban on private smelting for Shaanxi in 1055. The result of this was an increase in profit (with lower prices for iron) as well as production; 100,000 jin (60 tonnes) of iron was produced annually in Shaanxi in the 1040s AD, increasing to 600,000 jin (360 tonnes) produced annually by the 1110s, furbished by the revival of the Shaanxi mining industry in 1112. Although the iron smelters of Shaanxi were managed and supplied by the government, there were many independent smelters operated and owned by rich families. While acting as governor of Xuzhou in 1078, the famous Song poet and statesman Su Shi (1037–1101) wrote that in the Liguo Industrial Prefecture under his administered region, there were 36 iron smelters run by different local families, each employing a work force of several hundred people to mine ore, produce their own charcoal, and smelt iron.
This arrangement of allowing competitive industry to flourish in some regions while setting up its opposite of strict government-regulated and monopolized production and trade in others was not exclusive to iron manufacturing. In the beginning of the Song Dynasty, the government supported competitive silk mills and brocade workshops in the eastern provinces and in the capital city of Kaifeng. However, at the same time the government established strict legal prohibition on the merchant trade of privately produced silk in Sichuan province. This prohibition dealt an economic blow to Sichuan that caused a small rebellion (which was subdued), yet in the Song Dynasty Sichuan was well-known for its independent industries producing timber and cultivated oranges. The reforms of the Chancellor Wang Anshi (1021–1086) sparked heated debate amongst ministers of court when he nationalized the industries manufacturing, processing, and distributing tea, salt, and wine. The state monopoly on Sichuan tea was the prime source of revenue for the state's purchase of horses in Qinghai for the Song army's cavalry forces. The restrictions on the private manufacture and trade of salt were even criticized in a famous poem by Su Shi, and while the opposing politically-charged faction at court gained advantage and lost favor, Wang Anshi's reforms were continually abandoned and reinstated. Despite this political quarrel, the Song Empire's main source of revenue continued to come from state-managed monopolies and indirect taxes. As for private entrepreneurship, great profits could still be pursued by the merchants in the luxury item trades and specialized regional production. For example, the silk producers of Raoyang County, Shenzhou Prefecture, southern Hebei province were especially known for producing silken headwear for the Song emperor and high court officials in the capital.
During the Song period, there was a great deal of organized labor and bureaucracy involved in the extraction of resources from the various provinces in China. The production of sulfur, which the Chinese called 'vitriol liquid', was extracted from pyrite and used for pharmaceutical purposes as well as for the creation of gunpowder. This was done by roasting iron pyrites, converting the sulphide to oxide, as the ore was piled up with coal briquettes in an earthenware furnace with a type of still-head to send the sulphur over as vapour, after which it would solidify and crystallize. The historical text of the Song Shi (History of the Song, compiled in 1345 AD) stated that the major producer of sulfur in the Tang and Song dynasties was the Jin Zhou sub-provincial administrative region (modern Linfen in southern Shanxi). The bureaucrats appointed to the region managed the industrial processing and sale of it, and the amount created and distributed from the years 996 to 997 alone was 405,000 jin (roughly 200 tons). It was recorded that in 1076 AD the Song Dynasty government held a strict commercial monopoly on sulfur production, and if dye houses and government workshops sold their products to private dealers in the black market, they were subject to meted penalties by government authorities. Even before this point, in 1067 AD, the Song government had issued an edict that the people living in Shanxi and Hebei were forbidden to sell foreigners any products containing saltpetre and sulfur. This act by the Song government displayed their fears of the grave potential of gunpowder weapons being developed by Song China's territorial enemies as well (i.e. the Tanguts and Khitans).
Since Jin Zhou was in close proximity to the Song capital at Kaifeng, the latter became the largest producer of gunpowder during the Northern Song period. With enhanced sulfur from pyrite instead of natural sulfur (along with ehanced potassium nitrate), the Chinese were able to shift the use of gunpowder from an incendiary use into an explosive one for early artillery. There were large manufacturing plants in the Song Dynasty for the purpose of making 'fire-weapons' employing the use of gunpowder, such as fire lances and fire arrows. While engaged in a war with the Mongols, in the year 1259 the official Li Zengbo wrote in his Ko Zhai Za Gao, Xu Gao Hou that the city of Qingzhou was manufacturing one to two thousand strong iron-cased bomb shells a month, dispatching to Xiangyang and Yingzhou about ten to twenty thousand such bombs at a time. One of the main armories and arsenals for the storage of gunpowder and weapons was located at Weiyang, which accidentally caught fire and produced a massive explosion in 1280 AD.
Within the cities there were a multitude of professions and places of work to choose from, if one weren't strictly inheriting a profession of his paternal line. Sinologist historians are fortunate enough to have a wide variety of written sources describing minute details about each location and the businesses within the cities of Song China. For example, in the alleys and avenues around the East Gate of the Xiangguo Temple in Kaifeng, historian Stephen H. West quotes one source:
Along the Temple Eastgate Avenue...are to be found shops specializing in cloth caps with pointed tails, belts and waiststraps, books, caps and flowers as well as the vegetarian tea meal of the Ding family...South of the temple are the brothels of Manager's Alley...The nuns and the brocade workers live in Embroidery Alley...On the north is Small Sweetwater Alley...There are a particularly large number of Southern restaurants inside the alley, as well as a plethora of brothels.
Similarly, in the "Pleasure District" along the Horse Guild Avenue, near a Zoroastrian temple in Kaifeng, West quotes the same source, Dongjing meng Hua lu:
In addition to the household gates and shops that line the two sides of New Fengqiu Gate Street...military encampments of the various brigades and columns [of the Imperial Guard] are situated in facing pairs along approximately ten li of the approach to the gate. Other wards, alleys, and confined open spaces crisscross the area, numbering in the tens of thousands—none knows their real number. In every single place, the gates are squeezed up against each other, each with its own tea wards, wineshops, stages, and food and drink. Normally the small business households of the marketplace simply purchase [prepared] food and drink at food stores; they do not cook at home. For northern food there are the Shi Feng style dried meat cubes...made of various stewed items...for southern food, the House of Jin at Temple Bridge...and the House of Zhou at Ninebends...are acknowledged to be the finest. The night markets close after the third watch only to reopen at the fifth.
West points out that Kaifeng shopkeepers rarely had time to eat at home, so they chose to go out and eat at a variety of places such as restaurants, temples, and food stalls. Restaurant businesses thrived on this new clientele, while restaurants that catered to regional cooking targeted customers such as merchants and officials who came from regions of China where cuisine styles and flavors were drastically different than those commonly served in the capital. The pleasure district mentioned above—where stunts, games, theatrical stage performances, taverns and singing girl houses were located—was teeming with food stalls where business could be had virtually all night. West makes a direct connection between the success of the theatre industry and the food industry in the cities. Of the fifty some theatres within the pleasure districts of Kaifeng, four of these could entertain audiences of several thousand each, drawing huge crowds which would then give nearby businesses an enormous potential customer base. Besides food, traders in eagles and hawks, precious paintings, as well as shops selling bolts of silk and cloth, jewelry of pearls, jade, rhinocerous horn, gold and silver, hair ornaments, combs, caps, scarves, and aromatic incense thrived in the marketplaces.
The root of the development of the banknote goes back to the earlier Tang Dynasty (618–907), when the government outlawed the use of bolts of silk as currency, which increased the use of copper coinage as money. By the year 1085 the output of copper currency was driven to a rate of 6 billion coins a year. This displayed evidence of remarkable and unprecedented expansion of Song China's economic power, in consideration of the output of coinage currency in the earlier year of 997 AD, which was only 800 million coins a year. In the year 1120 alone, the Song government collected 18,000,000 ounces of silver in taxes. With many 9th century Tang era merchants avoiding the weight and bulk of so many copper coins in each transaction, this led them to using trading receipts from deposit shops where goods or money were left previously. Merchants would deposit copper currency into the stores of wealthy families and prominent wholesalers, whereupon they would receive receipts that could be cashed in a number of nearby towns by accredited persons. Since the 10th century, the early Song government began issuing their own receipts of deposit, yet this was restricted mainly to their monopolized salt industry and trade. China's first official regional paper-printed money can be traced back to the year 1024, in Sichuan province. Robert K. G. Temple says that the Sichuan bills can be traced back to 1023; before that year, sixteen private businesses or 'banks' issued notes of exchange, but in that year the Song government took over this enterprise under an official agency.
Although the output of copper currency had expanded immensely by 1085, some fifty copper mines were shut down between the years 1078 and 1085. Although there were on average more copper mines found in Northern Song China than in the previous Tang Dynasty, this case was reversed during the Southern Song with a sharp decline and depletion of mined copper deposits by 1165. Even though copper cash was abundant in the late 11th century, Chancellor Wang Anshi's tax substitution for corvée labor and government takeover of agricultural finance loans meant that people now had to find additional cash, driving up the price of copper money which would become scarce. To make matters worse, large amounts of government-issued copper currency exited the country via international trade, while the Liao Dynasty and Western Xia actively pursued the exchange of their iron-minted coins for Song copper coins. The government attempted to prohibit the use of copper currency in border regions and in seaports, but the Song-issued copper coin became common in the Liao, Western Xia, Japanese, and Southeast Asian economies. The Song government would turn to other types of material for its currency in order to ease the demand on the government mint, including the issuing of iron coinage and paper banknotes. In the year 976, the percentage of issued currency using copper coinage was 65%; after 1135, this had dropped significantly to 54%, a government attempt to debase the copper currency.
The central government soon observed the economic advantages of printing paper money, issuing a monopoly right of several of the deposit shops to the issuance of these certificates of deposit. By the early 12th century, the amount of banknotes issued in a single year amounted to an annual rate of 26 million strings of cash coins. By the 1120s the central government officially stepped in and produced their own state-issued paper money (using woodblock printing). Even before this point, the Song government was amassing large amounts of paper tribute. It was recorded that each year before 1101 AD, the prefecture of Xinan (modern Xi-xian, Anhui) alone would send 1,500,000 sheets of paper in seven different varieties to the capital at Kaifeng. In that year of 1101, the Emperor Huizong of Song decided to lessen the amount of paper taken in the tribute quota, because it was causing detrimental effects and creating heavy burdens on the people of the region. However, the government still needed masses of paper product for the exchange certificates and the state's new issuing of paper money. For the printing of paper money alone, the Song court established several government-run factories in the cities of Huizhou, Chengdu, Hangzhou, and Anqi. The size of the workforce employed in these paper money factories were quite large, as it was recorded in 1175 AD that the factory at Hangzhou alone employed more than a thousand workers a day. However, the government issues of paper money were not yet nationwide standards of currency at that point; issues of banknotes were limited to regional zones of the empire, and were valid for use only in a designated and temprorary limit of 3-year's time. The geographic limitation changed between the years 1265 and 1274, when the late Southern Song government finally produced a nationwide standard currency of paper money, once its widespread circulation was backed by gold or silver. The range of varying values for these banknotes was perhaps from one string of cash to one hundred at the most. Ever since 1107, the government printed money in no less than six ink colors and printed notes with intricate designs and sometimes even with mixture of unique fiber in the paper to avoid counterfeiting.
The subsequent Yuan, Ming, and Qing dynasties would issue their own paper money as well. Even the Southern Song's contemporary of the Jin Dynasty to the north caught on to this trend and issued their own paper money. At the archeological dig at Jehol there was a printing plate found that dated to the year 1214, which produced notes that measured 10 cm by 19 cm in size and were worth a hundred strings of 80 cash coins. This Jurchen-Jin issued paper money bore a serial number, the number of the series, and a warning label that counterfeiters would be decapitated, and the denouncer rewarded with three hundred strings of cash.
Drug seller, gun runner sentenced to 17 years ; Gang member Stanley Jenkins ran a gun-and-crack cocaine ring between Maine and Boston.
Jun 26, 2009; TREVOR MAXWELL By TREVOR MAXWELL Staff Writer Portland Press Herald (Maine) 06-26-2009 Drug seller, gun runner sentenced to 17...