University of Virginia Library

INTRODUCTION

CHAPTER I

HISTORICAL BACKGROUNDS OF THE DEBATE

When Wu-ti[1] , the "Martial Emperor" of the Han dynasty, lay
on his death bed, after a reign of no less than fifty-four years
(140—87 B. C.), the first period in the history of the Chinese
Empire was drawing to its close. Ended was the era of prodigious
activity in every department of life, when all the latent forces of
the consolidated Chinese state sought freedom of expression. The
first cursory inventory of Chinese civilization was being completed.
Ssŭ-ma Ch'ien[2] had just written the last pages of his great history.
Everywhere scholars were applying themselves to the task of digesting
mentally the accumulated literary material of preceding centuries.

Though a Canon was not yet established, the Biblia of Chinese
moral philosophy were already taking shape. Saints were being
allotted their respective niches in the Pantheon, and fragments of
ancient lore were being collected in sufficient number to supply
numerous preachers with unanswerable and unshakable texts. At
whatever date be fixed the origin of one of the most fundamental
ideas of Chinese civilization, the concept that the principal function
of government is education,[3] there is no doubt that in the middle
Han period it formed the corner-stone of Chinese political science.
An article of faith, it speedily became a method. Chinese thought
was set in didactical forms. The homilies of the Han pamphleteers,

all written ad usum delphini, set the standard for future literary
productions.

The scholars of the Han renaissance, the "Literati", whose models
were the itinerant sages of old, aspired again to the position of
permanent pedagogue at the side of the "Son of Heaven". They
have for ages deplored the fact that during Wu Ti's reign, when
blood and iron policy ruled supreme, the gentle, ceremonious method
of rule of their paragons of Imperial virtue, the Emperors Wên
and Ching,[4] was shaken to its foundation. This resulted from
pernicious influences at the Court, where the combined forces of
Taoist quacks and unprincipled adventurers, devoid of culture and
refinement, as the "Confucian" scholars viewed them, brought again
to light the sinister methods and the fatal policies of the execrated
Shang Yang and his like.[5] It is clear, nevertheless, that behind
the veil of gross superstition upon which the later Confucian historians
loved to dwell, to show the depth of depravity reached by
the Court, a battle of ideological principles went on between two
traditions. On the one hand was the party repository of technical
knowledge, the Legalists, with their reliance on Power and their
relationship to the Taoists, and on the other hand that of the moralists,
later to be distinguished sharply as the Confucian school.

The great stage of history is, however, occupied by those whose
primary concern is "real politik", "les hommes de grandes affaires",
whose philosophical and religious affiliations are not always clear.
Such are the two outstanding personalities of the age, Sang Hung-yang,[6]
the Lord Grand Secretary of the Yen T'ieh Lun, and Ho
Kuang,[7] the "king-maker", men who, busy with the government
of the far-flung empire, have little time to bother with ideological

subtilties and yet are unconsciously swayed by them, and too often
see their policies checked by the doctrinaire arguments of the despised
"intellectuals".

Sang Hung-yang's whole economic policy, dictated by the exigencies
of his master's imperialistic activity, was subjected to the fire of a
vicious attack by the men of letters during the famous forum on
"Salt and Iron" in the sixth year of Chao Ti's reign (81 B. C.).
This debate serves as the canvass on which Huan K'uan embroiders
many a dialectical gem, and into which he weaves the red thread
of "Confucian" aphorisms and "sacred texts".

The effective consolidation of the Chinese Empire first took place
at the end of the third, and the beginning of the second century
before the Christian era. Numerous feudal states, largely autonomous,
and hitherto constantly at war with one another save for the brief
period of Ch'in's supremacy, were now united under the strong hand
of the first emperor of the Han dynasty, Liu Pang, posthumously
canonized as Kao Tsu[8] The Middle Kingdom developed rapidly in
industry and commerce, as well as intellectually, from the fifth
century onward. Energetic individuals, distinguished for their great
wealth, began to appear, and the names and deeds of many of them
are found preserved in the chronicles of the time.[9] Two of the
early Chinese industrialists, I-tun and Kuo Tsung,[10] are recorded
as having amassed princely fortunes through the production of salt
and iron. The one resided in Lu,[11] in the modern province of Shantung,
traditional site of salt manufacture, the other was a citizen of Han-tan.[12]
The Cho family[13] of Shu,[14] the K'ung family[15] of Yüan,[16] and the
Tsao Ping family[17] of Lu, were all prosperous iron workers, while

a certain Tiao Chien[18] of Ch'i[19] accumulated a colossal sum through
salt manufacturing and fisheries.

Prior to the Han period, the statesmen and scholars of China,
had all, irrespective of the "school" of thought to which later centuries
assigned them, stressed the importance of agriculture.[20] Farming
was looked upon as the fundamental of national wealth; industry
and commerce as merely accessory to the cultivator, "so that his
iron implements might be supplied by the artisan and his produce
distributed by the trader". Apart from this basic agreement on all
sides, various shades of opinion arose. Generally two groups of
thinkers dominated, schools which in time came to be designated
as the School of Law, the fa-chia,[21] and the "Confucian School",[22]
the ju-chia, which based itself on the transmitted doctrines of
Confucius and his successors.

The jurists or writers on law, representing the fa-chia, were not,
so far as their extant works indicate, a numerous class, though many
lost books are also cited in the catalogues. They did not compare
in popular esteem with their antagonists, the austere followers of
Confucius.[23] The Kuan-tzŭ,[24] the Shang-chün-shu[25] and the Han-fei-tzü[26]
exhaust the names of their greatest texts. But as the dominant
politicians of the times, having by their effective financial resource
fulness the ear of their sovereign, the power and importance of
the writers of the School of Law continued to grow. The influence
of their methods is clearly discernible into Han times.

The opponents of the representatives of the fa-chia, the ju,[27] are
defined in the introductory sentence of chapter XI of the Yen T'ieh
Lun as those who "venerate Confucius as their intellectual progenitor,
and intone lauds in praise of his virtue as being unsurpassed from

high antiquity down to the present time."[28] The ju were thus the
Han representatives of the school of Confucius. The strife in words
as disclosed in the Yen T'ieh Lun, represents the conflict between
the economic and political ideology of this group and that of the
Han administrative officials, who may be described as the inheritors
of the principles of the fa-chia writers of the preceding centuries.

This strife did not have for its actual backgrounds merely ideological
disputation. According to the Confucian tradition, the adherents of
the school did not assume to be philosophers. Confucius believed
himself to be a man of action, an administrator and politician,
capable of conducting the world in the true Way. His ambition
was not to record his ideas but to put them into operation through the
government of a principality, entrusted to him by his sovereign.
Those who followed him, his disciples, did not, accordingly, look
to him for a philosophical system, but for a science of government.
Displaced in the councils of their princes by the practical administrators
of the fa-chia, they were not prepared to resign themselves
to the passive role of disseminators of ideas, after having expected
to be the rulers of men.[29] On the other hand, the School of Law
could not properly be designated a school, in-so-far as claiming to
be based upon the principles of a founder; it consisted merely of
such persons as were inclined to think of government after a certain
fashion, and who attempted to associate their empirical view of the
world with the principles of such school as that to which each one
may have belonged.[30]

In early Chinese economic and political thought we find then, on
the one hand, the administrators, the responsible officials, advocating
certain methods of government, adumbrated in the writings of the
fa-chia, and, on the other, the intellectuals not in office, the ju,
pursuing certain ideas ascribed to Confucius and his successors. It
may generally be said that the School of Law emphasized the
problem of production, while their opponents, the men of letters,

stressed the problem of distribution. They were frankly in favor of trading
activities, as clearly exposed in the writings of Mencius.[31] In the
late Vth and early VIth centuries, a work assigned to Li K'uei[32]
applied the principles of the law writers and employed scientific
statistical methods to problems of political economy. The two central
points of his policy were 1) full utilization of soil productivity,
and 2) equalization of grain prices. This policy was directed to the
encouragement of agriculture. As industry and commerce began to
prosper after the middle of the Warring States period, two branches
of the School of Law came into being. First, the agrarian branch
was represented by the Shang-chün-shu laying stress on agriculture;
second, the commercial branch was represented by part of the
Kuan-tzŭ text, laying more emphasis on commerce.

The school of the Kuan-tzŭ emphasized especially the importance
of the currency and of grain, a suitable control of which would
contribute to the wealth of the nation. It held that evils resulting
from powerful combinations were due to private manipulations of
money and of grain prices. To prevent private competition and the
resultant inequality of wealth among the people, what may be
termed nationalization of capital was proposed, and the undertaking
of commerce by the state. It further advocated nationalization of
the salt and iron industries as a source of public revenue. Whether
agrarian or commercial, the writers of the School of Law all based
their economic policy on national aims, i.e., "I can expand the
territory and enrich the treasury for the Prince".

The school of Mo Ti, the Mo-chia,[33] emphasized production also.
But the concept of production was connected with consumption, i.e.,
to them regulated consumption meant equally production. It is from
this theory of regulated consumption that the school attacked the observance
of funeral rites, the performance of music, and aggressive warfare.
It maintained the theory that by manufacturing necessities to the exclusion
of luxuries, the productivity of a nation would naturally increase.

The Confucianist economists emphasized the word Equality, chün.[34]
Confucius said, "The ruler of a kingdom or the chief of a house is
not concerned about his people being few, but about lack of equitable
treatment". The idea is to stress the problem of distribution.
But the problems of production and consumption are considered
too. The Ta Hsüeh[35] of the Confucian School says, "Let the producers
be many and the consumers few. Let there be activity in the production,
and economy in the expenditure. Then the wealth will
always be sufficient". This school purports to concern itself primarily
with the "people's economy" or "social economy", in the modern
terminology popular in China. The belief was held that if the problem
of social economy were solved, the political or fiscal regimen would
take care of itself, thus relying upon Confucius, "If the people
enjoy plenty, with whom will the Prince share want? But if the
people are in want, with whom will the Prince share plenty?"[36] Hence
the strong condemnation of this school upon the law writers' policy
of "enriching the state". The legalist financiers were condemned as
"money grabbers",[37] or "small men", probably because when the
ruler and the state were not distinctly differentiated, to enrich the
state was to enrich the ruler; and also because concentration of
wealth in the government would discourage individual initiative.
The Confucianists would not therefore adopt the policy of state
interference in individual activity. The function of the government
was to remove all obstacles to the productivity of labor, or to equality
in the distribution of wealth. The rest would be left to the
people.[38]

Now there would appear a reversal of policy or principle on the
part of what may be termed the Confucian school of the early
Han era. Due to the development of the state, the scholars, unlike

their most articulate prototype Mencius,[39] no longer whole-heartedly
favor trade. This seems to have come about due to the fact that
practical statesmen, such as Sang Hung-yang, responsible for financing
an extravagant government, sought to control the profits of
industry and commerce for the benefit of the public exchequer.
Confucianism, as represented in the writings of Mencius, called for
a laissez faire policy, government by remote influence, the impressive
but inactive "virtue" of the Ruler.[40] The Han Confucianists
now resented the interference of the state in industry and trade,
and hence are made to appear to oppose such activities on general
principles, which was certainly not the case.

Per contra, the Han dynasts, parvenus as they were, even compared
with the house of Ch'in which preceded them, erected a
façade of conformance to "Confucianism". To acquire prestige,
they professed to follow the practices, largely fictive, we may believe,
of the venerated house of Chou. They were prepared to conform
to the outward ceremonies and observances of traditional antiquity.
But in the actual administrative measures of the state, they reverted
to the execrated policies of the legalist statesmen of Ch'in, whose
aim had been to unify the state, by controlling all activities. While
in Shang Yang's time, as Prime Minister of Ch'in, all was subordinated
to agriculture and war, now state control of industry and
commerce in the expanded Han Empire, was of equal importance.
It was at this point that in the early Han reigns the "Confucianists",
represented by the Literati of the Yen T'ieh Lun, and the legalist
statesmen, such as Sang Hung-yang, diverged. The former, desirous
of reviving "antiquity", harked back to a perhaps largely factitious
"feudal" period; the latter sought to revive and restore in practice
the state control of private undertakings of the Ch'in regime. Seeming
paradoxes[41] in the Yen T'ieh Lun where the men of letters,
the ju, oppose trade, and the Secretary, Sang Hung-yang, advocates

the practices of antiquity, are only intelligible in the light of this
interpretation.

The first of the Han Emperors, Kao Tsu, favored agriculture at
the expense of industry and commerce, by discriminations enforced
against the mercantile classes. This included ineligibility to public
office. Kao Tsu's agrarian policy was continued by his immediate
successors by the reduction of the land tax.[42] This bore fruit in
China's "golden age of agriculture". Within little more than two
generations, however, the Chinese Empire appears to have increased
greatly in population, with large numbers of people congregating
in growing urban centres. Constant "treasury deficits", represented
actually by lack of supplies for the armies on the frontiers, were
incurred through costly campaigns which extended the boundaries
of China to the most distant regions of eastern Asia.[43] In the
distress of the people and the state, new sources of revenue had to
be devised.[44]

To meet the fast approaching bankruptcy of the government,
various expedients were resorted to. Notably the yen-t'ieh-kuan,[45]
officers to control the salt and iron industries, were instituted in
119 B.C., in Han Wu-ti's reign. Salt and iron were the two most
universal necessities, after grain, in the ancient Chinese commonwealth.
Their sale by government agency, on the plea of adjusting the
price, was maintained at such a high rate as to yield a heavy
profit. In the year 115 B.C., officers to "equalize distribution",
chün shu,[46] which may be termed equable marketing, were appointed.
These functionaries undertook to regulate commercial transactions
throughout the Empire. Their duty appears to have been to purchase
staple commodities when cheap and sell them when dear, thus
preventing prices from falling too low or becoming excessively high.
A bureau of "equalization and standardization", p'ing chun,[47] to
regulate the system of equable marketing, was set up at the Capital
in 110 B.C. This was done at the instance of Sang Hung-yang,

who had been promoted Grain Intendant, Sou-su-tu-wei,[48] in the
same year.

While treasury deficits now disappeared, with adequate stores
of grain accumulating in the public granaries, and the armies on
the frontiers once more receiving adequate supplies, the country at
large seethed with discontent.[49] Due to its high cost, people were
often forced to eat without salt. The iron implements employed on
the farms, as supplied by the government monopoly, were criticized
as inferior and unsuitable.[50] To deal with the situation, the representatives
of the Literati and Worthy classes, to the number of
sixty, were summoned to present the popular grievances before the
Throne, in the sixth year of the shih-yüan era of Chao-ti's reign
(81 B.C.).[51] It fell to the statesman and economist, Sang Hung-yang,
to defend his and the government's policies, against the demand
of the representatives of the people for the abolition of state control
over essential commodities, and a return to the laissez faire system
of earlier times. It is the record of this memorable debate which
Huan K'uan,[52] a scholar of Hsüan-ti's time (73-49 B.C), has preserved
in the Yen T'ieh Lun.

Huan K'uan's work, though nominally representing a debate on
the state control of salt and iron, actually covers a far broader field
than the title indicates. It touches various problems of government,
domestic and external policies, social and economic questions.[53] Though
classed among the ju-chia writers, Huan K'uan cannot be charged
with withholding the most telling arguments of his antagonists, the
legalist administrators. The work is notable for its impartial and objective
exposition of the principles of the two opposing groups of the Han
period. The arguments advanced on either side receive equal attention.

The literati attacked the state monopoly of salt and iron, the
imposition of the wine tax and the system of equable marketing, i.e.,
equalized or balanced transportation, on the grounds that it was the
competition of the state with the people in commerce. This, they

held, created an atmosphere of greed and extravagance among the
people leading them from the essential (agricultural) pursuits to nonessential
(commercial) enterprises.[54] The officials are represented as
replying to the charge with arguments based on reasonsof national
defence. The Hsiung Nu, fierce nomads beyond the northern frontiers,
were a national menace. To protect the inhabitants of the marches,
fortresses must be established and garrisoned. To finance these operations,
the very measures complained of had been adopted.[55] This is
the fundamental reason for the introduction of the state administration
of essential commodities in Han Wu Ti's time, called into being
primarily by the urgent needs of frontier defence.

Again these realistic statesmen pointed out that the wealth of
salt and iron was concealed in remote mountains and lonely marshes,
and could be exploited only by rich and aggressive individuals.
Prior to the institution of state control, there were the examples
of Ping of Chü among the commoners, and among the nobles there
was Prince P'i of Wu.[56] The possession of the resources of the
mountains meant the rapid accumulation of wealth, firstly by coinage
of money, and secondly by the manufacture of arms. The salt
industry was highly profitable. Both the salt and iron industries
favored seditious enterprises and full-blown rebellions.[57] It was
because of the existence of such evils that state monopolies had
been introduced. These measures had centralized financial power in
the imperial government as against over-powerful nobles on the
one hand, and prevented, on the other, exploitation of the poor
by the rich.

The literati, however, had their own arguments to advance. They
refuted the effectiveness of the grandiose military display and advocated
pacifying the Huns through the all-rewarding influence of a
benevolent rule.[58] They saw no value in the cold barren lands, the
desolate wastes, inhabited by the Hsiung Nu, and emphasized the
self-sufficiency and wealth of the Middle Kingdom.[59]

The spokesmen for the government maintained, on the other hand,
that the repeated incursions of the Hsiung Nu at the frontier could
only be held in check by military force. As the financing of
the troops depended upon revenue from salt and iron, the abolition
of the government monopoly would mean the cessation of military
expeditions and injury to the prestige of the Empire.[60] Neither did
they hold that the lands of the barbarians[61] were valueless. They
recalled how in former days the central districts of the Empire were
over-populated. Supplies of water and fodder were insufficient and
the hot damp summers were unfavorable for raising horses[62] and cattle.

All labor being done by men, production was meagre. Even the
old and the weak had to carry burdens on the roads and the ministers
and officials had often to ride in ox carts. But after the extensive
conquests of the Warrior Emperor in the south, in the west, and over
the Hsiung Nu of the north, the standard of living had been greatly improved.
Exotic products filled the palace, and fine horses the Imperial
stud. The populace could now ride on excellent mounts and enjoy
delicious fruits.[63] A curious argument was put forth too. The new
system placed in the hands of the state the trade whereby the
barbarians were deprived of their wealth.[64] This novel theory was
developed as a means of getting control of the wealth of the barbarians:

"Now the treasures of the mountains and marshes and the reserves
of the equable marketing system are means of holding the balance
of natural wealth and controlling the principalities. Ju Han gold
and other insignificant articles of tribute are means of inveigling
foreign countries and snaring the treasures of the Ch`iang and the
Hu. Thus a piece of Chinese plain silk can be exchanged with the
Hsiung Nu for articles worth several pieces of gold and thereby
reduce the resources of our enemy. Mules, donkeys, and camels
enter the frontier in unbroken lines; horses, dapples and bays and

prancing mounts, come into our possession. The furs of sables,
marmots, foxes and badgers, colored rugs and decorated carpets, fill
the Imperial treasury, while jade, and auspicious stones, corals and
crystals, become national treasures. That is to say, foreign products
keep flowing in, while our wealth is not dissipated. Novelties flowing in,
the government has plenty. National wealth not being dispersed
abroad, the people enjoy abundance.[65]

To meet the Scholars' advocacy of a return to agricultural pursuits,
Sang Hung-yang asserted that state control of salt and iron would
concentrate the people on the land, thus actually encouraging
agriculture.[66] His Literati opponents, with bitter irony, maintained
the contrary, "Far-sighted and far-reaching in intent is your policy
but contiguous with profit for powerful families. The aim of your
prohibitory laws is profound indeed, but manifestly leading you into
the path of wild extravagance . . . . The result is that we see the
farmer abandoning his plough and toiling no more; the people
becoming vagabonds or growing idle — and why? Because while
they toil, others reap the fruit of their labor. Wasters continue to
compete with each other, unceasingly trying to reach higher levels
of extravagance. This is the only explanation for the people increasing
in dishonest practices and the dwindling number of those who turn
to fundamental occupations [agriculture]."[67]

The Literati, and their associates the Worthies, had been summoned
to discuss "the grievances of the people".[68] These were the various
forms of injustice, extortion and inconvenience, which the people
were subjected to by the salt and iron monopolies, the liquor excise
and the system of equable marketing. The men of letters were
concerned in opposing, as a matter of principle, state interference
in commerce and industry. For such policies were those of the
legalist school represented by Shang Yang, Ch'ao T'so and Li Ssŭ,
all of whom are criticised by the Literati in the debate.[69]

There is, however, a deeper motivation for the courage of the

"country intellectuals", as represented at least in Huan K'uan's
composition, in opposing the policies of the powerful Minister, Sang
Hung-yang. This is their determination to recover the "Confucian"
prerogative of advisor to the Throne, a position wrested from them
by the adroit legalist statesmen, in actual control of state affairs.
Their vigorous denunciation of the administrators of the Ch'in and
early Han periods, turns at times to a violent invective upon the
actual government authorities participating in the debate (usually
returned with interest by the latter).[70] The Yen Ti'eh Lun thus
plays its role among those inspired documents which, like the Hsin-yü
of Lu Chia[71] of a century and more earlier, were designed for the
express purpose of accomplishing the reinstatement of the scholars
in their traditional position of mentor to the Son of Heaven.