The Northern Song Dynasty used "Currency War" to restrain the powerful Liao Dynasty
Overview of Song and Liao mutual trade before and after the "Chanyuan Alliance"
The establishment of the Song Dynasty In the early days, there were constant military confrontations between the Northern Song Dynasty and the Liao Dynasty established by the Khitan people in the north. The long-term state of war brought endless disasters to the people of Song and Liao. In December of the first year of Jingde reign of Emperor Zhenzong of the Song Dynasty (1004), the Song and Liao Dynasties formally signed the "Chanyuan Alliance". The alliance stipulates that the Song Dynasty will pay "two hundred thousand pieces of silk and one hundred thousand taels of silver every year" as tribute to the Liao Dynasty. Both sides will "army along the border states, each guarding the border, and the residents of the two places shall not invade each other." The signing of the "Chanyuan Alliance" brought an end to the forty-three years of intermittent war between the two sides, and opened up a situation of relative peace between Song and Liao for nearly a hundred years. This peaceful situation played a positive role in ensuring the stable life of the people of Song and Liao, and developing social productivity and economic and cultural exchanges. Moreover, the economic and trade activities on the border between the two sides brought huge benefits to the Song Dynasty and earned more wealth for the Song Dynasty.
The official trade relationship between the Northern Song Dynasty and the Liao Dynasty was not formally established in the early years of the Northern Song Dynasty. Most of the commercial exchanges between the two sides were spontaneous by the border residents. Before and after the Song and Liao Dynasties signed the "Chanyuan Alliance", as the relationship between the two sides gradually stabilized, the two sides set up multiple "forums" and other activities along the border to conduct border trade activities. The tax revenue from "Ganchang" has also become an important fiscal revenue for each country. In particular, Song Fang "earned more than 400,000 yuan a year" from the "Ganchang" trade. This profit can actually completely make up for the loss of Sui coins.
In the late Northern Song Dynasty, the courtiers of the Huizong period mentioned in the book: "The fees given by the ancestors are all from the market. The interest earned during the year is taken from the captives and given back to the captives. There was no loss at all in the early days of China. Over the years, the method of forging has been damaged, which has consumed internal funds." This means that in the early and middle periods of the Northern Song Dynasty, the profits from the forging trade could fully make up for the losses caused by the currency, but it was only in the late Northern Song Dynasty. After the reign of Huizong, due to the deterioration of the market law, annual coins had to be paid from internal funds.
In addition to the "market" trade, in order to meet the daily needs of the people of Song and Liao, there were also a large number of uncountable private trade activities between the two places.
With the continuous development of the economy and the cross-regional circulation of goods, the degree of economic integration between Song and Liao became increasingly high. Because the level of social productivity in the Liao Dynasty lagged far behind that of the Northern Song Dynasty.
In economic and trade exchanges, most of the exports were raw materials and semi-finished products such as livestock and animal husbandry products. The Northern Song Dynasty mainly exported porcelain and processed finished products. The technical content and added value of the exported goods determined the trade between the two parties. of asymmetry. The trade surplus caused the commodity supply and demand relationship between Song and Liao to gradually develop under the leadership of the Northern Song Dynasty.
In addition, because the economic types of Song and Liao are also complementary to a certain extent, the exchanges between the two sides not only meet the needs of their respective economic lives, but also partially integrate the Liao Dynasty's economy into the Song Dynasty's economy. Within the system, the degree of "economic integration" between Song and Liao continued to increase.
The starting point of the Northern Song Dynasty government's fiscal and monetary policies was to respond to military pressure and resolve the fiscal crisis. Due to the long-term war in the early years of the Northern Song Dynasty, which resulted in large-scale fiscal expenditures, the Northern Song government tried to macro-control the economy and solve the government's fiscal deficit by expanding the minting, release and recycling of currency, and adjusting the currency issuance. This resulted in a decline in the amount of coins minted. Unprecedentedly huge. On the one hand, the release of a large number of new coins into circulation has intensified the risk of inflation.
But on the other hand, the expansion of money supply also objectively improved the degree of monetization of the Northern Song Dynasty's economy. The sufficient money supply promoted and promoted the prosperity of the commodity economy in the Northern Song Dynasty society. Mr. Quan Hansheng spoke highly of the monetary policy of the Northern Song Dynasty in "Research on Chinese Economic History": "The supply of coins in the Northern Song Dynasty increased due to the high minting amount, and commodity exchange was particularly developed due to the increase in production and consumption. , will only facilitate the exchange of these commodities, but will not stimulate the rise of prices. In other words, the main task of the increased currency today is to adapt to the unprecedented development of commerce and facilitate the turnover of funds in the production process. After the quantity increased, not only did inflation not occur, but the economic life of the entire society was more generally baptized by the monetary economy."
Because the Northern Song Dynasty was the most advanced in the world economically and culturally. The level of coinage in the Northern Song Dynasty was high and the quality was high, so it became the most stable common currency in international trade. Countries "obtained Chinese money and stored it in separate treasuries, thinking it was a national treasure. Therefore, those who entered Tibet would not go unless they had copper coins, and Tibet Goods cannot be sold even if they are not made of copper coins." During the two hundred years since the founding of the Liao Dynasty, through trade and war, a large amount of Tang and Song currency flowed into the Liao territory, especially after the "Chanyuan Alliance", "Sui coins" were collected. The inflow of huge wealth greatly stimulated the economic development and social prosperity of the Liao Dynasty. At the same time, due to many constraints such as coinage technology and raw material costs, the Liao Dynasty's self-minted currency was scarce in quantity and its circulation was limited. Therefore, the Liao Dynasty relied heavily on the Song Dynasty economically, especially in the field of currency circulation.
Most of the currencies circulating in the Liao Dynasty were Song coins, and the extremely rare Liao Dynasty self-minted coins had a political propaganda role that was obviously greater than its economic attributes. Judging from the coins handed down and unearthed during the Song and Liao Dynasties, more than 90% of them are coins from the Tang and Song Dynasties, and less than one hundred coins from the Liao Dynasty also confirm this.
"Song money flows northward" on the one hand, it alleviated the inflationary pressure within the Northern Song Dynasty, and on the other hand, because the Liao Dynasty basically gave up the right to issue currency, it almost exclusively used Song coins for settlement in economic activities. This allowed Liao's raw materials and commodities to continuously flow back to the Song Dynasty through free trade together with Song money.
The economic impact of "Song money flowing northward" on both Song and Liao dynasties
Looking at the currency issuance in the Northern Song Dynasty, it can be seen that the casting of copper coins and iron coins was actively expanded, and even paper currency was issued, increasing Money supply has always been the mainstream of fiscal and monetary policies in various periods of the Northern Song Dynasty. In the early Song Dynasty, a large number of coins were minted basically to meet the needs of social and economic development. However, after the middle of the Northern Song Dynasty, it was no longer based on the development of the social commodity economy, but depended on the country's financial situation, based on solving the shortage of military spending or increasing fiscal revenue. Overall performance As the amount of coins minted gradually increased, by the late Northern Song Dynasty, it transformed into intervening in the free development of the monetary economy through expanding currency issuance and administrative and legal means to solve the government's financial difficulties and make up for the fiscal deficit. By the end of the Northern Song Dynasty, the total amount of Song coins issued had reached 262.04 million coins.
Under such circumstances, if a large amount of Song money continued to remain in the Northern Song Dynasty, inflation would inevitably be further aggravated. Therefore, exporting money from the Song Dynasty means diluting inflation and easing pressure. Although there are economic losses, on the whole it promotes currency circulation, increases the export of goods, and alleviates the inflationary pressure in the Northern Song Dynasty to a certain extent. After being imported into the Liao Dynasty, a large part of the Song coins could be "returned to the Han border trade" and returned to the Song Dynasty through bilateral trade. However, it is worth thinking about that some literati in the Northern Song Dynasty attributed the inflation caused by the government's unrestricted issuance of currency and excessive currency injection, and thus the "money shortage", to the "outflow of Song money".
For example, Su Che described his visit to the Liao Dynasty in the fourth year of Yuanyou (1089): "I secretly saw that there were no coins in the northern border, and public and private transactions made copper coins of the dynasty. Although the laws prohibiting money along the border were extremely strict, , and where there is benefit, there is no end to the power. This dynasty mints millions of money every year, but there is always a shortage of money, and the power is dispersed into the four barbarians." Shen Kuo also proposed, "What are the rewards for hundreds of officials in the capital?" In the future, those who bring sheep and cattle to the private market will only trade them with department stores...but the cattle and sheep that come from foreign countries (Liao) will all be traded privately with real Chinese money. In this way, those who leak Chinese money to the north will I don’t know how old I am.”
The situation in the Liao Dynasty is: "Chinese money is obtained and stored in separate treasury, which is regarded as a national treasure. Therefore, those who enter Tibet will not go there unless they have copper coins, and Tibetan goods will not be sold unless they have copper coins." The large amount of Song Dynasty money circulating within the country and the large amount of "Sui coins" earned every year caused the increase in the total money supply to far exceed the increase in the total economic output, resulting in a situation similar to the "excessive currency issuance" in modern society in the Liao Dynasty.
From the perspective of modern economics, the right to issue currency has a great impact on a country’s economic development. Liao’s livestock products and other raw materials were continuously imported into the Song Dynasty through bilateral economic and trade activities. Realm, in exchange for various Song Dynasty commodities needed by the nobility and the people. The increasing economic dependence on the Northern Song Dynasty caused the Liao Dynasty to slowly lose their fighting spirit while enjoying the rich products of the Song Dynasty. The Liao Dynasty unknowingly "selflessly" handed back part of its profits to the Song Dynasty, a powerful production and trade machine, and turned it into nutrients that nourished the Song Dynasty's economy. The Northern Song Dynasty made use of its advanced science and technology culture and developed commodity economy, as well as economic and trade exchanges, to successfully restrain the powerful Liao Dynasty and obtain benefits that could not be obtained by military means.
The trade on the border between Liao and Song Dynasty not only led to a large loss of wealth in the Liao Kingdom, and the Northern Song Dynasty gained huge wealth, but also profoundly affected all aspects of the economy and society of the two places. Both sides enjoyed it, but neglected the importance of peace. At the same time as development, a strategy of strengthening the army and the country is also needed. Both sides have laid the groundwork for future subjugation due to their weakened armaments.
Currency is a commodity that everyone needs. If anyone can monopolize the issuance of currency in a country, he or she will have unlimited means of making super profits. The Liao Dynasty was greatly influenced economically by the Northern Song Dynasty. In fact, it had inadvertently handed over the country's currency issuance rights to the Song Dynasty. Looking at the Liao Dynasty's economy under the influence of the "Song money flowing northward" from the perspective of modern economics is undoubtedly a This "currency war" also has enlightening significance for us to maintain a sound monetary and fiscal policy in the current complex international economic environment, curb "inflation", prevent "excess liquidity", and maintain the smooth operation of the macro economy.