on commercial history during the Ming and Qing dynasties last Tuesday.
Q: Devise an investment plan for a capital of 10,000 taels of silver, for the beginning and mid Ming dynasty and the end of Qing dynasty.
We had the information that during the Ming dynasty, loan interest rate of 2% per month to 5% per month was common, although by law annual interest rate was capped at 30%, and loan sharks charging higher annual interest rates would be punished by spanking or something.
There were of course ways to get around the law, no different to the deceptive tactics deployed by modern financial institutes, e.g. charge a handling fee. Historic documents also show that money lenders would just renew a loan every three or six months, rolling any unpaid interest back into the capital.
So one of my proposals was to becoming a money lender, charging an average interest rate of 3.5% per month, or 42% per annum. I have no idea why the tutor seemed to dislike my proposal. Even if I stay strictly legit, a profit of 30% per annum (assuming nominal inflation rate and minimum bad debt) is IMO quite respectable.
One of the reference books for the course was 十六世紀明代中國之財政與稅收, a Chinese version of Ray Huangs book “Taxation in Sixteenth-Century Ming China” originally published in 1970s in English. The problem is, the Chinese version reads like it was machine-translated (say fsck-fried-cow-river for fried beef rice noodle) and in many important places the translations were plain wrong, making the text highly confusing. I photocopied chapter 5 of the Chinese book for study (the book was on 4 hours reserve at the library) and I must say it was not worth the paper I photocopied the chapter on. I read the Chinese text a couple of time, panicked and got the original English version (oddly it was not on reserve) from the library and things became much clearer.
I don’t think many in the tutorial group read the text carefully enough to really understand the salt monopoly and the gigantic loophole in the official barter system during the Ming dynasty. One of the undergraduate students raised the question on how to ensure the income from salt trading when the barter system was collapsing, while he totally missed that the system was collapsing from the POV of government taxation while salt traders were making bloody fortunes.
Under-prepared. It was a bit of a bizzare experience.