Counting the Successes and Failures of the Jin Merchants

Author: Zhu Tong
Publisher:
Publish Date: 2006-08-01
Features: During the Ming and Qing dynasties, the Jin merchants encountered five major historical opportunities. Four of them seized these opportunities firmly, allowing them to showcase their talents and achieve significant growth. However, the last opportunity was missed, leading to their decline.
The first historical opportunity: The "Kai Zhong Method" created salt merchants. The first historical opportunity the Jin merchants faced was in the early Ming Dynasty. As we all know, salt is essential to everyone, especially in times of underdeveloped commodity economies, where salt is a bulk commodity. During the Spring and Autumn Period, Guan Zhong said, "In a family of ten, ten people consume salt. In a family of five, five people consume salt. Without salt, you will starve and swell." If you don’t eat salt, in today’s common parlance, you will get goiter. Due to the importance of salt in daily life, rulers have always controlled salt as a special commodity, even formulating salt laws to regulate its distribution reasonably. During the Ming Dynasty, the sale of salt was divided into two types: the "Household Salt Supply Method" and the "Kai Zhong Method." The Household Salt Supply Method involved supplying salt based on population numbers, and this supply was provided by the government but not free. The people had to pay for salt in grain or silver notes according to the salt price. This method was established in the early years of the Yongle reign, but due to poor management, sometimes people paid for the salt price but could not receive the salt in a timely manner. Therefore, this method soon lost its significance.
In such circumstances, another method gradually became popular—the Kai Zhong Method. The Kai Zhong Method was actually the core of the entire Ming Dynasty’s salt system. Initially, it was a policy adopted to supply military consumption in the northern frontier regions. The background at the time was that after the Ming Dynasty was established, to consolidate its power, it repeatedly launched campaigns to pursue the remnants of the Yuan-Mongol forces beyond the borders. Meanwhile, the Mongol tribes frequently invaded the frontier regions, posing a severe threat to the Ming Dynasty’s rule. To defend against the Mongols, the Ming government stationed 860,000 troops in the nine frontier regions. So many troops and horses required a large amount of military expenses to maintain, forming a vast military consumption area. To solve the financial needs of the frontier garrisons, the Kai Zhong Method was implemented. Simply put, the Kai Zhong Method allowed merchants to transport grain to designated locations in exchange for the right to trade salt as compensation. The entire transaction process was roughly as follows: Merchants delivered grain to designated frontier granaries, which then issued receipts (known as "cang chao") to the merchants upon receiving the grain. These receipts were equivalent to invoices or receipts today. With this invoice, merchants could exchange it for salt licenses (known as "salt transport permits") at designated salt transport authorities. Then, they would take this salt transport permit to salt fields (the production sites of salt) to collect salt according to the quantity specified on the permit. After passing inspections at designated locations, they could transport the salt to government-approved sales regions. According to regulations, salt transport permits, which were the certificates allowing salt trading, had to be carried at all times. And from delivering grain to the frontier granaries to selling salt in the designated areas, the entire process had to be completed by the same merchant. It was strictly prohibited to trade salt outside the designated areas, transfer salt transport permits midway, or entrust agents to handle these businesses. These regulations naturally led to the entire transaction process being handled by specialists, gradually forming the first generation of salt merchants.
Taking advantage of their proximity to the frontier, the Jin merchants quickly seized the opportunity when the Kai Zhong system was implemented in the early Ming Dynasty. They rushed into the northern frontier market, combining grain, salt, and cloth trading, and rose in the business world. What has been described above is the Jin merchants’ first historical opportunity during the Ming and Qing dynasties. From the development of Shanxi salt merchants, it can be seen that the implementation of the Kai Zhong system in the Ming Dynasty brought them historical opportunities. The ancestors of the Shanxi salt merchants were not engaged in agriculture but later abandoned farming to engage in salt trading. They advanced from frontier hubs to salt industry centers, from grain merchants and permit merchants to full-fledged salt merchants, becoming one of the earliest and most successful merchant groups among the Jin merchants. P3-5