Chapter 16: Is Trading with Copper Coins Really Convenient?

The Lu Family Bank was a financial hub meticulously crafted by Lu Chuan. Even though many of his concepts were constrained by the limitations of the era, they remained remarkably ahead of their time.

Miss Mi was struck by the sight at the entrance, and upon entering, she was surprised to find the interior bustling with activity. The bank was divided into several counters, each handling different services, and each had a queue of people. It was clear that the commoners of Lu County and the merchants visiting to conduct business had fully embraced the existence of the Lu Family Bank.

Watching the line, Miss Mi could not help but ask, "Magistrate Lu, what exactly can this bank do? Why are there so many people waiting?"

Lu Chuan explained, "The role of the bank is immense. For instance, this counter provides exchange services. People can bring copper coins to exchange for merchant notes, or vice versa. We charge a small service fee for each transaction—one percent, with a cap of one thousand coins."

"Exchanging copper coins for merchant notes?" Miss Mi was puzzled. "Isn't it fine to trade with copper coins? Why bother exchanging them for notes? And you even charge a fee!"

"Is trading with copper coins truly convenient?" Lu Chuan looked at her and posed a question. Without waiting for an answer, he continued, "Suppose your Mi family wants to purchase a batch of goods worth one million coins, and the deal can only be settled in copper. How much manpower and resources would you need to transport one million coins to the seller's estate? What if they are far away, perhaps even outside Xuzhou? How would you ensure the safety of those coins during transport?"

Miss Mi frowned. This was a scenario the Mi family had encountered more than once. While a single copper coin is light, a large quantity becomes incredibly difficult to move. When they traveled for business, especially for large procurements, those copper coins required entire carriages, or in rare cases, gold, which was highly inconvenient. If one could exchange coins for merchant notes, the transaction process would be far simpler. For merchants, eliminating the hassle of transport and counting made the one-percent fee seem negligible. Furthermore, Lu Chuan had stipulated that exchanging copper for notes was free, with the fee applied only to the reverse, and even that was capped. He clearly had no intention of profiteering. Miss Mi quickly grasped that the emergence of these notes could significantly boost commerce.

Yet, a question remained. "Magistrate Lu, I understand your point. The notes are indeed a fine innovation, but how do you ensure that all merchants will accept them?"

"That is simple."

Lu Chuan, eager to showcase the strength of his bank to Miss Mi, explained, "I have pledged the backing of the Lu County Magistrate’s Office for the Lu Family Bank. At any time, anyone holding a Lu Family Bank merchant note can come to the office and unconditionally exchange it for copper coins, though the service fee is slightly higher at two percent. With this policy, the Magistrate’s Office acts as the ultimate guarantor. Unless the office itself ceases to exist, there is no chance that a note cannot be redeemed for cash."

"The Magistrate’s Office as a guarantor?" Miss Mi repeated, as if she had discovered something profound. This was, in essence, official government endorsement for a commercial institution. With this layer of security, the resistance from the people of Lu County would be significantly reduced.

Lu Chuan continued, "Of course, relying solely on the office's guarantee is not enough. The bank must demonstrate its commitment. I have mandated that the Lu Family Bank open at dawn and remain open until the curfew. During business hours, no matter the circumstances, if someone presents a note for redemption, it must be honored without excuse or delay. When people see that their notes are truly exchangeable for hard currency at any time, they will naturally accept them. At least within the vicinity of Lu County, these notes hold great validity."

"Unconditional, all-day redemption? Aren't you worried about someone deliberately sabotaging you?" Miss Mi was once again stunned by his audacity. If someone targeted the bank and orchestrated a massive, sudden withdrawal, could the bank really produce that much copper?

"Sabotage? That depends on whether they have the capability!" Lu Chuan sneered. All of Lu County was his; he was the ultimate master of the game. There was no such thing as "leverage" in this era, and as long as he did not misappropriate the funds, he had no fear of mass redemptions. As for counterfeiting? He had incorporated at least ten anti-counterfeiting measures into the notes, and the silk used was produced by his own special method, making forgery extremely difficult. Most importantly, the notes bore the official seal of the Lu County Industrial and Commercial Administration. The penalty for private forgery of an official seal was no laughing matter. Anyone who dared to forge a note was essentially signing their own death warrant.

Once discovered by Lu Chuan, beheading would be a mercy; it could implicate their entire family and lead to their erasure from the clan records. Anyone who posed a threat to the development of Lu County was his enemy, and Lu Chuan never showed mercy to his enemies.

Although Lu Chuan appeared imposing, Miss Mi remained skeptical. Even if they didn't forge the notes, if the Mi family were to deposit ten million coins and then demand the full amount back after some time, could he really produce it? Ten million coins were no small sum; they would require dozens of carriages. That was only possible if he truly kept the money untouched.

Seeing her expression, Lu Chuan guessed her thoughts. He took her by the wrist and led her to the counter nearby. "Young Master Jun, you wouldn't say that if you knew the function of these counters."

Miss Mi hurriedly pulled her hand away, her face flushing red. How could Lu Chuan be so flirtatious? Was he unaware of the boundaries between men and women? Yet, upon hearing the address "Young Master Jun," she found herself speechless. After all, she was the one who had insisted on dressing as a man.

Lu Chuan would never admit it was intentional. He had brought her here to formally introduce the purpose of these counters. "These counters here are the very foundation of the Lu Family Bank. Their functions are: deposits, investments, and loans."