7—
Looking Ahead: the Breakdown of the Huo-Hao Kuei-Kung Reforms

Even under an absolutist regime, no administrative system remains precisely as those who established it intended. Opposition from within the elite and outside it will usually compel modification of the original ideal, as will the necessity to make radical change conform to the widely held norms of a society. In addition, changes may occur in the economic, political, social, and natural environments of a state, which were not anticipated by the originators of reform or which might even have been a by-product of the reforms themselves.^[1] Even when they do not completely reverse earlier innovations, later rulers and administrators often do not hold the same vision of a system as that of their predecessors nor have the same commitment to its principles. Finally, within a sociopolitical system, there might he contradictions and defects that no piecemeal effort at reform could rectify, and that, with time, erode earlier achievements.

Following the Yung-cheng emperor's death, a renewed concern for Confucian principles of benevolent rule contributed to the introduction of measures that rendered huo-hao kuei-kung unworkable by the end of the eighteenth century. It was not simply traditional philosophy, however, that stood as a barrier to the development of a strong centralized state in China. Behind Confucian exhortations to decrease taxes and protect "the people" lay

the more fundamental realities of the late Ch'ing economy and social structure.

Even during the reign of the Yung-cheng emperor, the requirements of widely differing economic and social patterns caused provincial variations in the implementation of huo-hao kuei-kung . Ancillary problems connected with arrears and deficits led to a wide range of bureaucratic reforms designed to improve the government's control of official malfeasance, but they left unresolved the issue of clerk and runner engrossment. Furthermore, absentee landlordism and the concentration of landholdings, particularly in the wealthy Kiangnan provinces, were beginning to pose a new threat to the government's ability to collect the taxes needed to make huo-hao kuei-kung a success.

The predominance of the agrarian sector in the Chinese economy of the eighteenth century made dependence on revenues from the land a necessity. With this dependence came a natural concern that the demands of government not exceed the ability of the people to pay. In part, the resurgence of traditional rhetoric was a reflection of the competition between the government and the local elite for the productive output of the countryside. But it was also a manifestation of an awareness that the demographic changes fostered by Ch'ing rule would diminish the per capita income of China's growing peasant population.

For the huo-hao kuei-kung reforms to continue to function as a deterrent to corruption and a stimulus to greater government participation in the development of the local economic infrastructure, two things were necessary. Local autonomy in the management of huo-hao revenues had to be protected in order to ensure flexibility in the collection and allocation of funds. Equally important, local government had to be able to increase levels of income to meet the rising costs of government services that would inevitably result from economic and demographic growth. Neither of those conditions existed during the years after the Yung-cheng reign. Low levels of communications technology and the difficulties encountered in collecting agricultural taxes provoked an increase in bureaucratic control over local kung-fei expenditures. At the same time, fear that rising taxes would lead to instability and even popular revolt led to the limitation of the revenues legally available to local government.

The modifications in huo-hao kuei-kung introduced during the Ch'ien-lung period were not calculated to destroy the reforms, but

this is precisely what they did. By the end of the reign, local officials were even more handicapped in the fulfillment of their duties than they had been fifty years before, and corruption became a threat to the very survival of the unified Chinese state.

The Debate over Huo-Hao Kuei-Kung in the Early Ch'ien-Lung Period

Unlike the Wang An-shih reforms of the Sung dynasty, the reforms of the Yung-cheng period did not polarize the bureaucracy in such a way as to invite a complete reversal of the programs upon the death of the emperor in whose name they were carried out. In part this was due to the decline of "cabinet politics" with the elimination of the post of prime minister. Although the Yung-cheng emperor attempted to make the reforms effected during his reign appear to be the result of "grass-roots" impulses, without a clear forum for policy formation outside the person of the emperor, any direct attack on the huo-hao kuei-kung reforms would appear to be an attack on the emperor himself. This was even more the case given the greatly circumscribed role of eunuchs, members of the imperial family, and central-government ministers under the Ch'ing. Moreover, the Yung-cheng emperor's untimely death, and his institution of an indisputable method for naming an heir, precluded the factional struggles surrounding rival claimants to the throne that had so plagued the K'ang-hsi emperor in the last years of his reign. Yung-cheng's meticulous use of the palace-memorial system and selective appointments to high official posts assured that most of the officials in positions of power supported his programs and had been intimately involved in their implementation for more than a decade. Many of these officials continued to hold responsible posts in government for as much as twenty years after the Ch'ien-lung emperor took the throne.

Yet opposition to huo-hao kuei-kung did exist.

It was not uncommon for high officials to send a new emperor advice during the first few months of his reign. To accept such counsel was a symbol of the new ruler's intention to open the "avenues of discussion" (yen-lu ) and govern in a sage manner. A great many of the memorials dispatched to the Ch'ien-lung emperor following his father's death were simply traditional diatribes on the need to improve official discipline and morale, though some did

offer specific suggestions for the perfection of government.^[2] A number of these addressed the issue of huo-hao .

Although no one seems to have been bold enough to suggest the immediate abolition of the Yung-cheng reforms, many of the memorialists were openly critical of certain aspects of their implementation. The old fear that legalization would lead to the collection of new illegal surtaxes in excess of the huo-hao quota was voiced with particular vigor.^[3] Even though grudging acknowledgement was made of the fact that huo-hao was necessary as a source of kung-fei and yang-lien , critics of the reforms insisted that it be viewed as no more than a temporary expedient. Even the Yung-cheng emperor, they claimed, had pledged that when deficits were cleared up and the treasuries were full, huo-hao could gradually be reduced and ultimately banned. Until that time, the new emperor was urged to decrease huo-hao to the bare minimum necessary for yang-lien and kung-fei , so that even those who wished to embezzle would have nothing to embezzle from, and all would know that huo-hao was something that could be lowered but could never be raised.

The authors of these memorials shared several basic views on the nature of government. First, their arguments all reflected a belief in a static economy. Hsü Wang-yu began his memorial with one of the traditional formulae for good kingship. The way to ensure the sufficiency of the state's wealth is first to ensure the sufficiency of the people's resources. The way to ensure the sufficiency of the people's resources lies in light taxation. According to Hsü, "there is a fixed amount of wealth on heaven and on earth. If it does not belong to the officials then it belongs to the people."^[4] Hsü therefore felt that every penny not taken by the government as taxes was a penny that could benefit the common folk.

Such beliefs were closely linked to a nonactivist conception of the role of local administration. As metropolitan officials, these men had little knowledge of the real costs of public services, nor, it seems, did they recognize their possible benefits to the people. One metropolitan censor later even suggested that huo-hao be reduced to a sum equivalent to yang-lien alone, on the theory that any expenditures that needed to be made at the local level could be covered by regular ts'un-liu taxes.^[5]

Finally, though they acknowledged the efficacy of the reforms in counteracting many of the causes of official corruption, the critics of huo-hao kuei-kung continued to harbor a deep distrust of local

officials. In their judgement, magistrates would always find new ways to milk the people. Furthermore, they felt that by legitimizing one form of surcharge, the effect of huo-hao kuei-kung would be to legitimate all surcharges in the eyes of greedy bureaucrats.

It should be noted that most of these memorials displayed a certain ignorance of the reforms, and particularly, how they had come about. Some contained trivial mistakes, such as the belief that T'ien Wen-ching was already governor of Honan when the reforms were proposed.^[6] Other mistakes were more important, such as the statement that Yung-cheng had immediately ordered all magistrates to remit huo-hao directly to their financial commissioners,^[7] or that court approval of the reforms had been swift and implementation uniform and speedy in all places.^[8] Few seem to have been cognizant of the lengthy process of deliberation and accommodation that had brought the reforms to their present state. These and other misconceptions no doubt made it easier to propose changes in the system that could substantially alter their original intent.

Because most of these memorials arrived while the Ch'ien-lung emperor was still officially in mourning, they were handled mainly by the Grand Secretariat. In most instances the well-meaning advice of officials was disposed of with a simple "No need to deliberate this memorial," written in black to indicate that the decision had not been made by the emperor. However, in the case of at least two of the memorials calling for a decrease in huo-hao , the court felt that a more detailed comment was necessary. They agreed that the people would benefit from a reduction in huo-hao , but were also concerned that the elimination of that levy would leave the chou and hsien without a source of yang-lien . Although they did not comply with the request that huo-hao be lowered, the Grand Secretaries did recommend that the emperor issue a forceful edict condemning exactions in excess of the legal quota and confirming the memorialists' claim that huo-hao could be lowered but could not be raised.^[9]

The Ch'ien-lung emperor's own approach to huo-hao was an ambivalent one. Initially, he tried to present himself to his subjects as a benevolent and lenient ruler in the tradition of his grandfather, K'ang-hsi. Many viewed his exemption of accumulated arrears as a repudiation of the vigorous ch'ing-ch'a undertaken during the last half of the Yung-cheng reign.^[10] Ch'ien-lung also canceled a ch'ing-ch'a of huo-hao revenues scheduled by the late

emperor shortly before his death.^[11] At the same time he took the advice of the Grand Secretariat and issued an edict banning future increases in huo-hao .^[12] In several provinces, huo-hao rates were actually lowered in keeping with the spirit of the new policy.^[13]Huo-hao in Szechuan, which, at 25 percent, had been the highest in the empire, was lowered to 15 percent, as were the rates in Kweichow and Kansu.^[14] Yet, just two years later the emperor granted all provinces an increment to their public-expense funds in the form of p'ing-yü , a small surcharge which had originally been remitted to the Boards.^[15] This action was taken in recognition of the fact that local governments were experiencing shortages in their kung-fei budgets.

Throughout these early years, Ch'ien-lung never questioned the importance of his father's reforms in the fight against corruption in the provinces, and gave no succor to those who hoped for their demise. Nevertheless, the few pronouncements he did make on the subject reflected his sympathy with the primary concern of the critics of huo-hao kuei-kung , that is, provincial misconduct in the handling of the newly instituted system of local funding.

If huo-hao kuei-kung could not be eliminated altogether, its detractors could at least lobby for stricter supervision of local fiscal management. It will be recalled that under the Yung-cheng emperor, the disbursal and expenditure of huo-hao revenues was left entirely to the discretion of the provincial governments. Except for an edict in 1730 that required Board of Revenue approval for any changes in yang-lien quotas, the provinces were not required to report to the central government on any matters concerning huo-hao . The storage and accounting of such funds, as well as the method of remittance and allocation, was left entirely up to the governors, governors-general, and financial commissioners, although at the emperor's urging, most provinces had adopted direct remittance of huo-hao to the financial commissioner. The purpose of allowing provincial governments such unprecedented freedom in handling their own resources was to permit enough flexibility in local finance to conform to local needs and changing fiscal conditions.

The fear that local officials could not be trusted to administer their own finances honestly had been raised even before the late emperor's death. In 1735, the discovery of an 87,000-tael discrepancy in his predecessor's accounts prompted Fukien Financial Commissioner Chang T'ing-mei to propose that there be an audit

of all kung-fei and yang-lien deposited in financial commissioners' treasuries.^[16] In response, Yung-cheng agreed to instigate a ch'ing-ch'a of all huo-hao revenues, an order later canceled by Ch'ien-lung. However, he could not accede to Chang's second request—that each province be required to compile an annual account of its kung-fei and yang-lien to be sent to the Board of Revenue for examination and approval along with the annual tsou-hsiao of regular taxes. This would have constituted too great a breach of the provincial fiscal autonomy the reforms were intended to provide.

Almost immediately after the death of the Yung-cheng emperor, efforts to impose greater control over local fiscal administration were renewed. The first step in this direction was a campaign to create uniformity (hua-i ) in the rates at which huo-hao was levied. During the Yung-cheng period, officials had been successful in fixing rates of collection and lowering existing levels of customary exactions, but the percentage of regular tax quotas levied as huo-hao still varied among the provinces and within some provinces as well. In Chihli, for example, several chou and hsien collected no huo-hao at all, whereas others collected anywhere from 5 to 16 percent, depending on the level of regular taxation and on the people's ability to pay.^[17] The Board of Revenue recognized that differing local conditions made uniformity among the provinces impossible. However, following a memorial by the censor, Yang Ssu-ching, it recommended that rates within each province be made the same in order to facilitate central-government supervision of local finances and make more difficult manipulation of the rates at taxpayers' expense.^[18]

The provinces were quick to resist this interference in their fiscal affairs. In those where huo-hao rates were already uniform, the move was resented as a dangerous violation of the principle of provincial fiscal discretion. Officials in the few provinces where the rates did vary argued that local conditions made uniformity impossible.^[19] In the end the drive failed,^[20] but the notion that some form of standardization would be essential to prevent corruption among the empire's nearly two thousand local administrators continued to gain adherents.

After four years of virtual silence on the subject, the new emperor opened the fifth year of his reign with what was to be his major policy statement on the huo-hao kuei-kung reforms.^[21] It began with a lament over the paucity of virtue within the bureaucracy not unlike hundreds of imperial remonstrances issued during

the centuries of dynastic rule in China. What was unusual about this edict was the fact that the emperor, in the very first line, lumped huo-hao together with other forms of taxation that both legally and by common practice were the exclusive property of the central government. During the Yung-cheng reign, references to corruption in tax collection involving huo-hao had always included a disclaimer to the effect that huo-hao was not the same as regular and miscellaneous taxes. Thus, the Ch'ien-lung emperor had taken the first step in fulfilling the prophecy that huo-hao would some day come to be regarded as the same as cheng-hsiang .

This was not unintentional, for the emperor's purpose was to reform the reforms, and to do so he would need to authorize far more centralized control over their implementation than had ever been allowed during his father's time. Although he recognized the success of huo-hao kuei-kung in freeing officials from financial difficulties and in ridding the people of the burden of extortion, Ch'ien-lung was deeply troubled by the evidence that many officials had continued to indulge in excessive and unnecessary expenditures. In order to control the mismanagement and abuse of local revenues, he ordered the Board of Revenue to undertake a total reassessment of the operations of local-government finance.

In order to accomplish this task, the governor and governor-general of each province were directed to evaluate every item for which public monies were spent within their jurisdiction and to draw up a schedule of proposed allowable expenditures (li-ting chang-ch'eng ). Once approved by the Board, these categories of expenditure would function as a kind of budget against which local income and expenditure each year would be compared. The yang-lien of each official would be treated in a similar fashion, though the amount allocated would vary in relation to his time in office and whether the post was held in an acting capacity.^[22] Armed with these figures, the governor and governor-general were to determine which officials had delayed remittance of funds or had disbursed huo-hao in excess of the authorized amounts. At the end of the year, the province would then submit a register of all local revenues saved, paid, and in arrears, to be audited by the Board of Revenue.^[23]

In this way, the emperor gave the Board of Revenue full authority to approve or reject the huo-hao expenditures of individual provinces, in the same manner that it approved or rejected their expenditures of cheng-hsiang . At the same time, by requiring

that expenditures be categorized and that reasonable quotas be set for each category of public spending, this edict greatly limited the ability of local-government officials to shift provincial funds to meet their changing fiscal needs. Distrustful of local officials, and concerned that acceptance of huo-hao would lead to the introduction of new surcharges, critics of huo-hao kuei-kung had favored increased central-government supervision of provincial income and expenditure. The emperor came to share their fears. What neither had considered was that the very act of imposing stricter controls over the use of provincial revenues might produce just the results they were intended to avert. For, as we shall see, the introduction of Board scrutiny over the entire management of huo-hao created conditions that greatly handicapped the smooth functioning of local finance and did indeed make huo-hao appear to be the same as cheng-hsiang .

Changes in the method of administering huo-hao revenues did not silence the staunchest detractors of the Yung-cheng emperor's reforms. One crucial question remained unanswered. Did the legalized collection of huo-hao and its remittance to the public coffers conform with traditionally accepted tenets of good government? Or was it a terrible source of hardship for both honest officials and the common people? Always concerned with his image as a sage ruler, this question seems to have haunted the new emperor. Finally, in early 1742, Ch'ien-lung decided to open the issue to public discussion by posing the question of continued implementation of huo-hao kuei-kung as part of the palace examination for aspirants to the chin-shih degree.

In what appears to be his address to the students, the emperor frankly revealed his uncertainties regarding his father's efforts at reform.^[24] A chief cause of concern was that huo-hao kuei-kung might not conform to the way of the ancients. Echoing the classics, Ch'ien-lung acknowledged the importance of light corvée and low taxes as an expression of a ruler's love of his people. Inasmuch as the Ch'ing did not levy taxes in the form of labor service, there was no question of their transgressing the first requirement. But, Ch'ien-lung wondered, did the legalization of huo-hao in addition to the regular land tax constitute a violation of the latter? If it did not exist in ancient times, how could it now be condoned? On the other hand, if it only recently came under official supervision, how could we know it did not exist in the days of the sages? Having wormed his way out of this initial dilemma, the emperor turned to

the real problem posed by the classical test of benevolent rule. What effect did current fiscal policy have on the government and on the people?

Ch'ien-lung quickly dismissed the claim by opponents of the reforms that the Yung-cheng emperor's use of administrative techniques to control corruption was a result of his personal failure as an emperor to inspire virtue in his officials.^[25] Less easily dispelled was the accusation that the collection of huo-hao constituted an increase in taxes (chia-fu ). This would be not only a violation of the ancient proscription against heavy taxation, but also a direct violation of K'ang-hsi's promise of 1710 never to raise taxes again (yung-pu chia-fu ). To contravene one's predecessor's supreme act of benevolence would truly be a sign that the empire was beyond purification. Nevertheless, there was always the possibility that the reforms were precisely what the dynasty required to improve the life of the people and that the criticism now being voiced was really the work of men who hoped to profit by the restoration of huo-hao to the status of a private levy.

It was this confusion that prompted the emperor to put the question of huo-hao kuei-kung 's fate to the students assembled for the palace examination. As men of character, recently arrived from the countryside, they would be able to judge whether the reforms were beneficial or harmful to the people. They could help him make up his mind whether or not to change the law.

Ch'ien-lung seems to have been sincere in his desire to solicit opinions on huo-hao . In his opening remarks in the examination hall he urged the students to speak frankly, without fear of punishment for expressing unpopular opinions. In another edict issued the same day, he instructed the Grand Secretaries Oertai and Chang T'ing-yü to order the officials reading the examination papers to devote special attention to the sections concerning the meltage fee. The authors of any suggestions worthy of implementation were to be selected for the honor of an imperial audience.^[26] In addition, a separate order was sent out to all ministers of the central government, members of the Hanlin Academy, censors, and provincial governors and governors-general, calling for their analysis of the Yung-cheng emperor's reforms.^[27]

Nevertheless, the emperor's hesitation on the issue of huo-hao kuei-kung may have been due less to questions of its benefits than to fear of being branded, along with Yung-cheng, as a tyrannical and unjust ruler. Did he really seek an open debate on its merits

and demerits, or did he hope for a mandate for its continuation, perhaps with minor adjustments? Unlike his father, Ch'ien-lung was not willing to boldly challenge "public opinion." Yung-cheng would never have posed problems of public policy in terms of ancient precedent or the purity of the empire. Perhaps Ch'ien-lung was considering the abrogation of the reforms, but if this were so, how can we explain his outrage when he received the opinions he had so keenly sought? According to the emperor's edict of the sixteenth day of the fourth month of the seventh year of his reign, none of the answers composed by the students displayed careful consideration of the matter at hand. Some dragged in issues totally unrelated to huo-hao . Even those who did mention the reforms did not seem to fully understand them, or made suggestions which, in Ch'ien-lung's opinion, it would be impossible to carry out. On the whole, the emperor labeled their responses stupid and unfounded.

It is not likely that all the responses were simply inane or off the subject, as Ch'ien-lung would have us believe. Most of his edict was addressed to the need for greater official obedience to the law. In particular, he cautioned those officials who would question the very system of government (cheng-t'i ) with their "numerous and wild" memorials. By rights, he said, these officials should be disciplined, but because they were responding to an edict calling for opinions, he would grant them special leniency. However, such actions would be punished in the future as a warning to "those who spout lies" (wang-yen che ).^[28] Such venom could not have been directed against officials simply for bringing up extraneous issues. Ch'ien-lung did mention one official who used the opportunity to request the opening up of contributions to purchase degrees and another who offered suggestions on coinage. However, although the original memorials no longer exist, the emperor's attack on "those who spout lies," and especially his warning against those who would speculate on the basic system of government, indicates that a fair number of the responses from officials must have contained not suggestions for improving huo-hao kuei-kung , but outright appeals for its abolition.

This is confirmed by a memorial written by T'an Hsing-i only two months after the emperor called upon officials and students to assist him in deciding the fate of the reforms. T'an noted that opponents of the return of the meltage fee to the public coffers (kuei-kung ) were now numerous, and divided them into two groups:

those who favored its total elimination as a public levy—the "return to the people" (kuei-min ) faction—and those who favored its retention by the chou and hsien magistrates without remittance to the provincial treasury—the "return to the officials" (kuei-kuan ) faction.^[29]

Several years later, the censor Chao Ching-li submitted a refutation of these two groups that sheds some light on the arguments offered by each of the factions in the debate.^[30] Returning huo-hao to the people meant, in effect, that huo-hao would no longer be collected, either as a public or as a private levy. This might be called the purist view, because all would agree that huo-hao had originated as an illegal surcharge that should not have been levied in the first place. Chao admitted that in terms of morality this position was correct, and that, if implemented, its benefits would be extensive. However, in terms of "the times and the circumstances" it was impractical. Now, through the use of huo-hao , there was a constant source of income for state expenses and for each official's yang-lien . He hoped that the emperor would not forget this fact and would opt for the long-term welfare of state and society, rather than try to satisfy present public opinion.

Those who favored return of huo-hao to the officials did not seek the total abolition of the meltage fee, but wanted it to revert to the kind of private levy, collected by and used by the chou and hsien officials themselves, that had existed prior to the reforms. In this way, it was argued, officials would collect only what was needed and could adjust (t'ung-jung ) huo-hao rates to their requirements. The kuei-kuan faction was clearly the same group that was spreading the idea that kuei-kung constituted an increase in taxes. Chao was at a loss, however, to explain how this system would any less result in an increase in popular remittances, inasmuch as it entailed no regulation by outside authorities.

Chao Ching-li attacked the kuei-kuan faction on four counts. First, if the huo-hao quota was eliminated and magistrates were left to collect it at their own discretion, there would be no guarantee that future magistrates would not renew the unrestrained exploitation of the common people. Secondly, if huo-hao were returned to the hands of the magistrates, it would again become their private property. When local official business arose, they would have to levy further taxes on the people to make up for the funds they had already applied to their personal expenses. High and low officials in need of funds would return to the practice of

covering up for each other and investigations of local finances would become impossible. Thirdly, if one advocated the return of huo-hao to the magistrates, one had also to advocate a return to sending gifts to superiors and the favoritism and bribery that accompanied such lou-kuei . Finally, Chao pointed out that huo-hao kuei-kung served a redistributive purpose. If magistrates kept their huo-hao , in areas with high tax quotas there would be a surplus, whereas in areas where the quotas were low, there would be great hardship in carrying out the duties of government.

Apart from expressing his outrage at the stupidity of those who responded immediately to his call for opinions, Ch'ien-lung took no action regarding huo-hao for months. Perhaps he was awaiting further discussion after making known his disappointment with the early respondents. Several memorials preserved in the Huang-ch'ao ching-shih wen-pien that defend the reforms may have been part of this second wave of replies, for by the end of the year the Grand Secretariat reported that "popular opinion" had swung overwhelmingly to the side of preserving the reforms as they were.^[31] In general, they sought to show (1) that huo-hao was not an invention or a product of the Yung-cheng reign; (2) that huo-hao kuei-kung had resulted not in an increase but in a decrease in the tax burden imposed on the people; (3) that huo-hao was indispensable as a source of local-government revenues; and (4) that there was no danger that legalization of huo-hao would result in its being regarded as cheng-hsiang , thereby encouraging the collection of additional surcharges.^[32]

These arguments were not new, but the way in which they were presented tended to highlight the differences between the more progressive advocates of the reforms and their conservative opponents. Given the link between the spread of huo-hao and the growing monetization and diversification of the economy in the late imperial period, it is no surprise that those who sought to ban its collection were often the same people whose writings were filled with nostalgia for China's ancient agrarian past. In the days when the land was divided into well-fields^[33] and everyone was contentedly engaged in farming, there was no need to debate the merits and demerits of an evil like huo-hao , nor was the people's livelihood threatened by the unequal distribution of land. At least one champion of the reforms saw fit to point out that this undifferentiated agrarian paradise had never existed. Neither its passing nor the imposition of huo-hao levies could be blamed for the plight of the Chinese masses. What was now needed were efforts to improve

agricultural productivity and a realization that it was diligence and hard work that brought about economic prosperity, whatever one's occupation or relation to the land. In fact, the continuation of huo-hao kuei-kung would contribute to the improvement of the general welfare. Uncollected, huo-hao was just a few more unproductive coppers in the pockets of millions of individual taxpayers, but combined in the public coffers, it was an invaluable pool of revenue for public works and other projects for the common good.^[34]

In the eleventh month of CL 7 (1742) the Grand Secretariat delivered its verdict on the matter of huo-hao .^[35] Responses to the emperor's call for opinions had continued to pour in from all over the empire and the consensus was that huo-hao kuei-kung should be retained unchanged. According to the Grand Secretaries, the one or two dissenting views they received had shown no grasp of the situation and had failed to understand the need to "measure income against expenditure." What ultimately saved huo-hao kuei-kung was the recognition that no other policy could solve the pressing need for regular funding at the local and provincial level. Those who opposed it held to outmoded ideals of righteous government that could not serve the needs of the present day.

The Grand Secretariat did not attempt a detailed analysis of huo-hao kuei-kung at this time. However, it did address one issue raised by supporters of the reforms. Several memorialists were concerned that the imposition of Board scrutiny over huo-hao revenues ran counter to the Yung-cheng emperor's original intentions. One in particular, Sun Chia-kan, pointed out that the increasingly restrictive regulations now governing the allocation of huo-hao threatened to destroy any usefulness the reforms may have had in controlling corruption at the local level.^[36] Expenditures not approved by the Board of Revenue would still have to be defrayed, whether by exacting gifts from one's subordinates or, in the case of low-level officials, by levying surtaxes on the people. It was not without reason that the late emperor had firmly resisted any moves to eliminate local discretion in the management of huo-hao funds. The Grand Secretaries acknowledged the Board's inability to appreciate fully the details of local finance and the likelihood that in exercising its authority it would greatly impede the freedom of action of provincial officials. However, their overriding concern remained the unreliability of local official morality. An annual Board of Revenue audit of provincial huo-hao accounts was the only method they could envisage to control embezzlement and excessive expenditure of yang-lien and public-expense funds.

Following the Grand Secretariat's recommendations, the emperor issued his own pronouncement on the future of huo-hao kuei-kung . He also concluded that the reforms were absolutely essential for the regulation of the country and its people. After reviewing their history and their importance to local finance, Ch'ienlung made one more attempt to answer the charges of the critics of his father's most controversial policy. His tone was almost that of a hurt parent addressing his ungrateful children.

The emperor first assured his subjects that huo-hao kuei-kung had been a product of love for the people and of a desire to preserve order in government. It had not, as some people held, been contrived to increase the revenues of the central government. The state derived no profit when it allowed the government of a locale to supply its own needs by tapping the resources of its own people. In fact, Ch'ien-lung maintained that in the entire empire there were no more than two or three provinces in which the huo-hao collected was sufficient to meet all provincial and local expenses. In the remaining places, regular tax funds (cheng-hsiang ) were allocated by the central government to make up the shortfall. This, the emperor lamented, was something of which the officials and the people were not completely aware.

Ch'ien-lung reminded officialdom of his own hesitation and painstaking consideration of the issue. In particular, he expressed his suspicion that those who favored returning huo-hao to local officials (kuei-kuan ) really desired to satisfy their personal greed. Ending with an exhortation to all officials to be virtuous, the emperor once more affirmed his belief in huo-hao kuei-kung . To change the regulations now would not only lead the people to avarice, but even worse, would constitute a reversal of the late Yung-cheng emperor's legacy of benevolence toward the people and guidance of his officials. For huo-hao kuei-kung the future seemed assured. But was it? To understand well the fate of the Yung-cheng emperor's legacy, we must examine the actual operation of huo-hao kuei-kung during the next hundred years and how government policy and external circumstances acted upon it.

The Operation of Huo-Hao Kuei-Kung in the Ch'ien-Lung Period

On the surface, the fiscal record of the first half of the Ch'ienlung reign was an impressive one. After the initial debates on their

implementation, the huo-hao kuei-kung reforms had become part of the routine management of local finances. The surplus huo-hao available in some provinces seems to have diminished in the latter part of the century, but even in this there was no clear pattern. Random samples of fiscal accounts for those years show that the total deposits after expenditures fluctuated greatly depending on harvests, imperial tax remissions, and the number of emergency outlays in the particular province. Nevertheless, in those provinces for which data are available, reports of continuing huo-hao reserves present a picture of general prosperity (see table 7.1), although central-government reserves may not have been as abundant as they had been during the early years of the reforms.^[37]

Yang-lien quotas remained largely the same as they were under the Yung-cheng emperor. Yang-lien was provided for newly created posts.^[38] There is also limited evidence that some officials were granted increases in yang-lien commensurate with the augmentation of their official responsibilities. In CL 6, submagisterial officials in Honan were given additional yang-lien if they were called upon to supervise water-conservancy projects in addition to their regular duties.^[39] The yang-lien of military officials in Chekiang were also raised when certain jurisdictions were consolidated.^[40] Moreover, the yang-lien of a number of officials in Hunan were adjusted to correspond better to the simplicity or complexity of their posts.^[41]

One major innovation in the handling of yang-lien was introduced during the Ch'ien-lung period. A frequently cited cause of official corruption was the high cost of traveling from the capital in Peking to posts in the provinces. Many officials simply did not have the funds and were forced to borrow from usurers in the capital. These loans, known as ching-tai , were generally granted at rates of interest ranging from 20 to 40 percent, deducted from the principal in advance.^[42] Pressure to repay them was a powerful incentive to steal public funds once an official reached his post.^[43]

The recognition of officials' need for adequate funds that grew out of the huo-hao kuei-kung reforms also focused attention on this problem. During the Yung-cheng period, several proposals were offered to alleviate this source of corruption, but no action was taken to relieve the burdens on newly appointed officials until the reign of Ch'ien-lung. In CL 14 (1749), a metropolitan censor named Ko Chün memorialized requesting harsh punishment of officials who took out private loans and equally severe treatment

of those who profited by making such advances to officials. The emperor sympathized with the officials, however, feeling that they would turn to usurers only if they were in dire economic difficulty. Rather than deprive them of access to loans altogether, the emperor proposed that loans from the government be made available. Only officials chosen in the monthly selections in the capital would be eligible for such assistance. The financial and judicial commis-

sioners, who were chosen by a special process, and minor officials, who did not come to the capital for selection, would not be included. All others could receive an advance from their yang-lien , calculated on the basis of their rank and the distance of their posts from the capital.^[44] (See table 7.2.) Once an official arrived at his new post, the yang-lien advanced would be paid back in four quarterly installments, or in six installments if an official's salary was smaller than or just equivalent to the loan.^[45]

As always seemed to be the case when changes in administration designed to curb corruption were made, new abuses arose after a few years. The original regulations held that if an official failed to repay his debt to the Board, the responsibility would fall on the officials of the whole province.^[46] So many officials took advantage of these loans without paying them back that in CL 27 (1762) the emperor had them discontinued. They were soon reinstituted, however, with stricter regulations for repayment and stipulations designed to prevent those who had purchased office and those who had failed to repay previous yang-lien advances from receiving these funds.^[47]

Another innovation that grew out of a practice first introduced under the Yung-cheng emperor was the investment of public funds at interest. During the Yung-cheng period the emperor made grants of regular tax revenues to military garrisons in several provinces. These funds, called sheng-hsi yin , were to be invested with merchants, generally salt merchants or pawnbrokers. The accrued interest was then used to provide money for soldiers' aid, weddings, funerals, and so on. The principal itself was not spent, and it provided a perpetual endowment for the welfare of the empire's military men.^[48] In YC 13, officials in Kiangsi extended this method of funding to the civilian realm when the emperor gave them a grant of 1,000 taels to open an academy. Traditionally such grants would be invested in land and the rents derived from the land would be used to support the school and its students. This was done, but the income from rents was insufficient to provide for all the school's operating costs. Rather than make up the shortage on a year-toyear basis from current kung-fei revenues, the provincial officials decided to allocate one large loan from the provincial treasury and invest it at interest with salt merchants and pawnbrokers. The interest was then used to finance the academy and gradually repay the principal borrowed from the province.^[49]

Other provinces also made use of this modern technique of

financing local expenditures. When the central government cut off the supply of customs lou-kuei that had previously supplemented the income of the Kiangsu governor's yamen, enterprising officials decided to invest the lou-kuei remaining in the provincial treasury so that the interest could be used to pay the expenses that would arise in future years.^[50] Similar steps were taken in Hunan, producing an extra 9,000 taels per year to meet the pressing needs of local public expenditure.^[51] Even the Imperial Household invested surplus revenues from the salt administration with salt merchants to provide funds for imperial rewards and other expenditures.^[52] It is thus clear that commercial forms of generating wealth were quite acceptable in eighteenth-century Chinese official circles. The general economic prosperity of this period and the stability of the fiscal system meant that whereas various agencies of government in Europe and Japan were borrowing heavily from private commercial sources during their early modern period, in China the government itself was still the largest source of liquid capital in the land.^[53]

This account of a flourishing fiscal system, however, must not be exaggerated. By the end of the eighteenth century, signs of decay had already begun to appear. Part of the problem may be traced directly to the evolution that took place in the huo-hao system itself. One of the first principles of the Yung-cheng reforms violated under the Ch'ien-lung emperor was that of provincial jurisdiction over huo-hao income. Unlike cheng-hsiang, huo-hao was to be the exclusive property of the province in which it originated. As we have seen, Yung-cheng opposed any suggestion that huo-hao be used for state or military purposes outside a province or to aid other provinces. Early in his term as emperor, however, Ch'ienlung set a precedent that opened the way for the central government to shift huo-hao revenues from province to province and eventually to its own coffers.

During the first few years of the Ch'ien-lung reign, a large portion of the regular taxes of Chihli, Anhui, and Kiangsu were exempted from payment by imperial decree. Because these tax remissions were granted to relieve the burden on taxpayers affected by natural disaster, the huo-hao due on these taxes were also exempted. As a result, the three provinces faced shortages in funds for official yang-lien and kung-fei . In an effort to solve his province's financial difficulties, the Chihli financial commissioner memorialized, requesting that 100,000 taels of Honan's 400,000-tael

huo-hao surplus be appropriated to aid Chihli. Ch'ien-lung not only approved this request, but ordered the Board to determine how much of Honan's excess reserves should be granted to help Kiangsu and Anhui as well. Ch'ien-lung knew he was violating an important precept, but felt he could justify doing so as a temporary expedient. After all, this still constituted the use of the wealth of the people of the empire to help the people of the empire.^[54]

It was not long before this "temporary expedient" became a common practice. In CL 16 (1751) Shantung, Shansi, and Honan were ordered to send part of their surplus huo-hao to Chihli to assist in the repair of city walls in that province.^[55] The next year it was discovered that Hupei and Anhui had large reserves of huo-hao and miscellaneous duties in their treasuries. The governors of those two provinces were ordered to calculate how much they could spare to assist other provinces.^[56] We do not know how much Anhui contributed, but for the next few years Hupei deducted 150,000 taels from its huo-hao revenues for distribution outside its borders.^[57] In CL 23 (1758), this process was formalized. After analyzing the huo-hao schedules submitted by the provinces, the Board of Revenue determined that thirteen provinces had just enough huo-hao for their own needs, but Kweichow, Hunan, and Kansu were found deficient in huo-hao income. To supplement their insufficient treasury stores, Honan, Shantung, and Shansi, each of which had surplus huo-hao , were instructed to contribute 6,000 taels annually to their poorer neighbors.^[58] Other, temporary transfers for which we no longer have a record probably continued throughout the dynasty, as in the case of a transfer of 150,000 taels from Honan and Kiangsu in CC 17 (1812), when a tax remission following a natural disaster depleted Anhui's huo-hao reserves.^[59]

Thus, instead of trying to broaden the fiscal base in provinces with chronic shortages, the central government chose to manipulate the levels of funding already available. The surpluses recorded by individual provinces no longer represented a cushion to cover changing local needs. Even more important was the fact that the provinces could no longer expend these surpluses as they saw fit. Large reserves piled up in some treasuries at the same time that shortages began to plague officials in the field.

The cause of this paradox was the imposition of Board scrutiny over provincial income and expenditure. Board scrutiny did not simply give the Board of Revenue the authority to audit and reject

provincial huo-hao expenditures. It also involved the establishment of schedules for expenditure in which all income and expenses were divided into rigid categories and the amount of funds to be allocated for each item was predetermined. Some flexibility was allowed by dividing all expenses into those with and without fixed categories (yu-ting-hsiang wu-ting-hsiang ).^[60]Huo-hao funds for which there were no fixed categories were known as sui-shih tung-yung chih hsiang and served as a discretionary fund from which unpredictable expenditures could be made.^[61] In addition, some provinces also had an item called hsien-k'uan , which, though small, also served as a discretionary fund for emergency use.^[62] These funds did not actually originate as huo-hao , but as profits from the sale of stabilization rice and confiscated goods.^[63] Items for which there was a fixed category in the provincial huo-hao schedule were also divided into those for which a fixed amount of funds was allocated annually, and those for which the amount of allowable expenditure was not fixed (wu-ting-shu ). The latter included items such as clothing, food, and money for prisoners, which could vary from year to year. Allocations were set aside and averaged over a five-year period for items of this kind.^[64]

Difficulties should have been anticipated from the beginning. So great was the discrepancy between the provinces' concepts of their fiscal needs and the Board's own analysis of these needs that it took almost ten years for the Board to approve all the schedules of huo-hao expenses ordered compiled in CL 5 (1740).^[65] Once these schedules were established, if an expenditure was not already certified, a memorial had to be sent to the Board requesting permission to disburse funds. Failure to receive Board authorization before making unscheduled allocations could result in impeachment.^[66] Because many expenditures of this type were emergencies, officials occasionally did not have time to go through the tedious procedures outlined above. In such cases, even if the expenditure was legitimate, the official concerned could be held personally responsible for repayment of the money involved.^[67]

Approved expenditures outside the established schedules were called "items beyond the normal regulations that should be disbursed" (ch'ang-li wai ying-hsing tung-yung chih hsiang ). The rigidity of the huo-hao schedules is demonstrated by some of the items included as "beyond the normal regulations." In Honan, yang-lien allocated for two newly created posts was considered to be ch'ang-li chih-wai .^[68] In a number of provinces, additional funds

used to make up the difference between the Board price and the market price of goods sent to the capital were also designated as ch'ang-li chih-wai and had to be memorialized year after year.^[69] The variety and small size of expenditures that could require Board approval are vividly illustrated by a memorial requesting approval of disbursements beyond the normal regulations in Chihli. These included 48 taels for the wages of guards posted on bridges over two rivers in Mi-yün hsien, 105 taels for sailors' wages, and 12 taels to supplement government allowances granted to two chaste widows.^[70] One of the reasons for the proliferation of such requests was that once these schedules were drawn up they were not revised to take into consideration new expenses or changing fiscal needs arising from inflation or other external causes.

Petition to the Board of Revenue did not guarantee approval, even of legitimate expenditures. The dilemma facing Kwangtung Governor Hao Nien was probably not exceptional. Kwangtung province was responsible for purchases of white wax for the capital. However, the Board price of 0.3 tael was 0.653 tael less than the market price. In addition, the price did not include the costs of shipping and fan-shih for the Board staff. During the Yung-cheng reign, the difference was made up from the province's huo-hao . When the governor reported this to the Board and requested additional allocations from the huo-hao for which there was no fixed category of expenditures, the Board refused approval on the ground that the additional sum, more than twice the Board price, could not have been an honest calculation. Instead, they ordered the governor to lower his estimates. Repeated attempts to explain the reasons for so large a discrepancy proved futile, and the Board continued to return Hao's memorials with orders to recheck his figures.^[71]

Consequently, not only was the paperwork involved in handling huo-hao increased by the imposition of Board scrutiny, but the risk of punishment or impeachment for "mishandling" huo-hao revenues was greatly enhanced. In view of this, and the fact that management of huo-hao became a criterion in an official's evaluation for promotion,^[72] there is little wonder that many officials were disinclined to be creative or innovative in the management of local resources.

Although none of the original schedules established in CL 15 have been preserved, we are fortunate that there is a surviving hao-hsien register, compiled by the Board of Revenue during the Kuang-hsü reign (1875–1907).^[73] This document illustrates the

rigidity of the system of accounting imposed on local finances after Yung-cheng's death. It appears to be an exact duplicate of the schedules established during the early Ch'ien-lung period, with annotations of minor changes made during subsequent reigns.^[74] It is evident that until the end of the Ch'ing no major effort was made to overhaul the allocation of huo-hao to meet the growing costs of government or to allow for new types of expenditures at the local level.

Variations in the budget for a particular year did exist. These were handled by the inclusion of classifications of expenditure such as "items with fixed categories and fixed allocations where expenditure is more (or less) than the scheduled amount" and "unpredictable expenses." An examination of the former demonstrates that, in all the provinces listed, reductions in fixed allocations far exceeded additions. In Honan, for example, more than 9,000 taels were deducted from the original quotas for fixed allocations, whereas only about 2,300 taels were added to existing levels of funding. Even more striking is the case of Hunan, where 26,143.2 taels were cut from the Ch'ien-lung quotas, largely because of a massive reduction in yang-lien , whereas only 205 taels were added to fixed expenditures, almost all of which went toward Board fees and travel expenses for deputies on official business.

It is under "unpredictable expenses" that we would expect to find those items for which huo-hao made its most vital contribution to local revenues—relief, construction, water conservancy, and so on. In fact, this was only occasionally the case. For the most part, sui-shih tung-yung chih k'uan encompassed routine expenditures which for one reason or another tended to fluctuate. These included clothing and food for prisoners, travel and transport expenses, partial allocations of yang-lien , and in rare instances, supplemental local expenses for such tasks as conducting sacrifices and apprehending criminals. Moreover, of the four provinces listed in this register, only Honan and Chekiang recorded a specific category of kung-fei for subordinate administrative units in general. We can only assume that local governments elsewhere were once again forced either to rely on irregular modes of funding or to limit greatly their role in local affairs.

A final category of funds not mentioned in the statutes appears at the end of several of these provincial accounts. Supplemental expenditures (pu-kei chih k'uan ) were funds that should have been disbursed in previous years but were not. Among these were nu-

merous items of yang-lien . That they were not received must have been a hardship for the officials involved. The reason for such a category is not given, but it may have been the high levels of huo-hao arrears evident in the register. Budgeted expenditures often exceeded annual income, and collections in any one year always included a certain amount of taxes that should have been paid in the past. Inability to collect the full quota of land and head taxes was a problem that increased seriously during the second half of the dynasty and severely impeded the effectiveness of the huo-hao kueikung reforms.^[75]

Both in shifting huo-hao from one province to another and in setting up rigid schedules for expenditure, the central government demonstrated its view that provincial fiscal needs were basically immutable. In the former instance, instead of promoting the expansion of government services and its contribution to local society, as the Yung-cheng emperor had done, the Ch'ien-lung court held that after yang-lien and certain kung-fei had been paid, any surplus revenues were excessive (to-yü ). In the latter instance, the court locked local finance into schedules that might have corresponded to minimum needs in CL 15 but failed to respond to changes in the economy, population, and administrative requirements. These schedules were not constantly revised budgets or guidelines, but were regulations. To cope with rigidity, some officials were content simply to follow the regulations in a perfunctory manner so as to avoid disciplinary sanctions. Others, as we shall see, saw no option other than to bend or circumvent the rules and hope that they were not caught.

Several additional factors adversely affected the functioning of huo-hao kuei-kung . Whenever natural disaster prompted the emperor to issue an exemption of regular tax payments, the huo-hao levied as a percentage of those taxes was also exempted. Provinces that did not rely exclusively on revenues from land taxes still had a "cushion" with which to sustain local government in lean years. In contrast, provinces that derived most of their income from huo-hao were often left without funds to pay for yang-lien and kung-fei . This is precisely why, during the Yung-cheng period, Honan Governor T'ien Wen-ching had argued for maintenance of large huo-hao reserves in individual provincial treasuries. If no huo-hao was collected in a given year, a province could still cover that year's expenses by disbursing surplus huo-hao accumulated in the past. This is exactly what happened in Chihli and Shensi in CL 16

(1751).^[76] If the resources of a province were meager, however, or natural disasters brought famine for more than one year at a time, a province could be left with no resources to cover local and provincial expenses and salaries. The government dealt with this problem by transferring huo-hao funds from one province to another, as explained above. Unfortunately, this served to deplete the reserves of the donor province and could potentially leave it vulnerable to the same problems faced by its poorer neighbors.

So great were such problems that even so solvent a province as Honan faced extreme difficulties by the end of the Ch'ien-lung reign.^[77] Successive years of bad harvests made it impossible to collect the cheng-hsiang tax. As a result, the funds from the provincial treasury had to be transferred to pay for labor and materials used in river works that normally would have been paid for from regular taxes. Surcharges of sixty-nine wen per tael were also levied in chou and hsien along the river to help defray the costs of construction. However, after CL 43 (1778), flooding along the Yellow River necessitated so many emergency repairs that this small fee was raised to as much as three ch'ien per tael. Claims of large provincial reserves must therefore be seen as deceptive. They could quickly be depleted in times of flood or drought. Moreover, they sometimes represented funds that could not be used because of the strict rules against shifting huo-hao earmarked for one item of expenditure to another purpose. Consequently, by the late eighteenth century the imposition of special surcharges for public expenses was once again a common occurrence.

Another problem facing local officials during the Ch'ien-lung reign was that of levies to cover the expense of imperial tours. During the K'ang-hsi period, the main burden for such tours was naturally borne by the provinces, by means of "contributions" exacted from the people. The question of how to pay for such tours under the new system of funding did not arise during the Yungcheng reign, because that emperor rarely traveled far from Peking. Ch'ien-lung, in contrast, was notorious for his southern excursions, undertaken ostensibly to entertain his mother. The costs of such trips fell only on those provinces visited by the emperor and empress dowager, and were particularly great in Kiangnan. In preparation for one southern tour, Kiangsu Governor Chiang Yukung was ordered to repair all the bridges and roads along the imperial route. Provincial kung-fei revenues were to be used for this purpose, although merchant contributions were solicited to

provide for the arrangement of visits to scenic places and of entertainments for the imperial party. In all, 568,351 taels were approved for the occasion, 149,796 taels of which were allocated from cheng-hsiang revenues stored in the provincial treasury. The remainder came from merchant contributions (150,000 taels) and hsien-k'uan and fines (268,555 taels) that otherwise would have been available for the expenses of the province itself.^[78]

Despite the severity of the central government's controls over huo-hao expenditure, one crucial aspect of huo-hao kuei-kung was changed so many times that it probably completely lost its effectiveness. By the end of the Yung-cheng period, most provinces had implemented remittance of huo-hao directly to the financial commissioner for redistribution as yang-lien and kung-fei . But in CL 3 (1738), a communiqué was issued by the Board of Revenue ordering provinces to allow the chou and hsien to deduct the yang-lien of all officials of the rank of magistrate and below to avoid their having to go to the capital to receive their salaries from the financial commissioner.^[79] In CL 48 (1783), this ruling was reversed at the behest of the Shantung financial commissioner, Lu Shao.^[80] Lu reported that under these new regulations, the chou and hsien magistrates sent only the regular tax to the provincial treasury. Their own huo-hao and funds for the purchase of grain were stored in their own yamen. As a result, magistrates had begun to siphon off these funds as they pleased and local-government deficits were once again increasing. This was the very problem that remittance to the financial commissioner (kuei-kung ) was designed to prevent. Nevertheless, vacillation between remittance and nonremittance seems to have continued, for in the Su-chou fu-chih there is a report that prior to Tao-kuang 5 (1825) the yang-lien of all officials of the rank of magistrate and below was deducted at the hsien level. After that date, magistrates were required to receive their share of local huo-hao directly from the financial commissioner, but payment to miscellaneous officials was still made at the source.^[81]

Ironically, it was probably in the poorest provinces that the reforms were retained in their most pristine form, for it was there that supplementary commercial revenues and huo-hao kuei-kung 's redistributive mechanisms played their most important role. The governors and governors-general of Kwangsi and Kweichow fought vigorously against deduction of huo-hao by the magistrate on the grounds that few hsien in their provinces collected enough huo -

hao to cover all administrative costs. The Board of Revenue had hoped to solve this problem by instructing poorer chou and hsien to procure their additional allowances directly from the magistrates of their richer neighbors, a system that could only have increased the opportunities for corruption and fiscal manipulation. Nevertheless, in the mountainous areas of the southwest, poor transportation often made it easier to go to the provincial capital than to travel the shorter distances to a nearby county seat.^[82] Even more important was the fact that in both Kwangsi and Kweichow it was only by the addition of customs revenues that sufficient funds were made available for local expenses. In Kwangsi, direct deduction of huo-hao would have provided, on the average, only 20 percent of a magistrate's yang-lien , much less any surplus for the other costs of local administration.^[83] Hence, once again, the quest for uniformity fell afoul of China's diverse local conditions.

One area in which uniformity did prevail was in the provinces' continued struggle to find new sources of revenues to meet rising administrative expenses. Some provinces suffered from the central government's persistent drive to lower huo-hao rates.^[84] Kiangsu not only experienced a reduction in huo-hao rates but also lost over 100,000 taels in huo-hao revenues because of benevolent actions such as the elimination of fu-liang and reductions in pailiang quotas.^[85] Supplementary sources of income were also occasionally lost, as when the central government eliminated the surcharge collected in Kwangtung on military-colony rice^[86] or declared provincial p'ing-yü to be an illegal surcharge.^[87] These revenues were sometimes made up in other ways, but few provinces could finance the added expenses incurred when the central government created new administrative jurisdictions without providing new sources for their funding.

Hardest hit by this practice was the southwest, where, during the eighteenth century, numerous new prefectures and counties were carved out of former wastelands and aborigine territories. Already suffering from the lowering of its huo-hao rate to 15 percent and the elimination of its huo-hao on commercial taxes (shuihao ), Kweichow was faced, in the early Ch'ien-lung period, with a shortage of 23,418 taels. Most of this arose from additional yang-lien and kung-fei which had to be paid to new officials installed on the frontier.^[88] In Hunan, the creation of Yung-shun prefecture cost the province 4,000 taels a year in yang-lien for its four subordinate hsien. For a few years this was paid from customs surplus, but in

1734 this supplement was converted to cheng-hsiang and remitted to the central government. The following year the addition of another prefecture and a post and salt intendancy required yet another infusion of yang-lien . By 1744, over 40,000 taets had been "advanced" (no-i ) to cover the increasing shortages that resulted from this bureaucratic reorganization.^[89] Even provinces in the long-settled economic heartland, like Kiangsu, saw their fiscal burden increased by the creation of new prefectures and the division of hsien.^[90]

The most difficult problems, however, with which local officials had to cope were only indirectly the outgrowth of government policies. Nothing seems to have so impeded the efforts of the provincial bureaucracy to deal with fixed salaries and a rigid system of local funding as the apparent rise in prices and population in the second half of the eighteenth century.

One clear indicator of rising provincial expenses was the funds necessary for the purchase of local specialty products sent to the capital. The Board of Revenue set rates by which regular tax funds were allocated for the purchase of these goods in the provinces. During the early part of the dynasty, as we have seen, local officials often made a profit by buying tribute goods at the market price, which was generally cheaper than the Board price. By the early Ch'ien-lung period, however, numerous provinces were discovering that rather than yielding a surplus, the Board price for tribute goods was insufficient. On the contrary, it now became necessary to allocate additional funds from provincial huo-hao to make up the difference between the Board price and the cost of goods in the marketplace.^[91]

As early as CL 10 (1745), a censor named Ch'ai Hu-sheng memorialized concerning the narrow margin within which government finances operated.^[92] Ch'ai acknowledged that fiscal difficulties had always plagued Chinese governments, but claimed that in the past the solution had been to economize. This could be done by cutting down on supernumerary soldiers and officials and by eliminating government waste. Now, Ch'ai felt, there were neither superfluous officials nor extravagance at court. Moreover, every possible method was being used to wring the surplus from the population. Until the late Ming, officials had been expected to collect only 80 to 90 percent of the tax quota, but under Chang Chucheng, 100-percent collection had become the standard for official evaluations. Now, not only were few taxes retained by the prov-

inces, but they themselves were drawing in all possible revenues in the form of huo-hao on the land and head tax, ying-yü on the customs tax, and excess quota (i-e ) on the salt tax. Yet, the sum available to administer the empire was barely sufficient. In the future, he feared, expenses would certainly outstrip income. It was therefore imperative to increase income and reduce expenditures (k'aiyuan chieh-liu ) now.

Ch'ai proposed several solutions to the problem. The first was to open new colony land (t'un-t'ien ) in Manchuria to provide for those who had left their native places for lack of work. Secondly, the government should issue several years' wages and disband the Han army. Finally, he suggested that the regulations for purchase of degrees (chüan-chien ) be liberalized and the revenues generated made available to supplement local public expenses (kung-fei ). Ch'ai also felt that the stringent Board regulations governing the use of provincial huo-hao would impede local finance and initiative by causing officials to fear any action that could involve them in rejected accounts or poor official evaluations. As evidence of the effect this could have on the economy, he noted that large areas of land in Kwangtung had not been reclaimed, waterworks in Shensi had deteriorated to a state unknown since ancient times, and, although Hukwang rice production was vital to the supply of staples in the southeast, the dikes along the lakes in that region were suffering from neglect. All of these projects should have been undertaken by local officials using kung-fei , but because of a combination of fear and revenue shortages, they were not. Moreover, Ch'ai claimed that the yang-lien allocated to officials was also inadequate, providing only enough to pay private secretaries and servants' wages, entertainment costs, and the costs of carts and horses, firewood, and fuel. With nothing left over, it was difficult for officials to initiate any programs of benefit to agriculture, sericulture, and the education of the people.

Although Ch'ai may have exaggerated the financial stringency that officials were experiencing during the early Ch'ien-lung reign, the recollections of officials and gentry show that one clear indicator of inflation, rice prices, was increasing. In a memorial arguing against large government purchases of rice that took the staple off the open market and drove prices up, Kweichow Censor Sun Hao presented a vivid picture of hardships facing the people in the southeast. Sun recalled that in his home province of Chekiang several decades earlier, the price of one picul of rice had been only 8

ch'ien (0.8 tael).^[93] Now it had doubled, costing between 1.5 and 1.8 taels per picul. One factor was population growth which was not matched by a comparable increase in arable land. Another was the severe shortage of copper coins that plagued China during the early eighteenth century.^[94]

Later writers confirm the continuation of a serious inflationary trend during the eighteenth century. Writing in CL 57 (1792), Wang Hui-tsu stated that the price of one peck (tou ) of rice fluctuated between 180 wen and 310 wen . Yet Wang could recall that when he was a little over ten years old (around CL 10), the price of rice was only 90 to 100 wen . When, occasionally, it rose to 120 wen , everyone was astonished by its high cost. After CL 13 (1748), the price rose as high as 160 wen and hunger was not uncommon. But in the last ten years or so, even a price of 200 copper cash for a peck of rice was considered low.^[95]

Ch'ien Ping offered similar testimony concerning rice prices in Kiangnan. According to Ch'ien, in the Yung-cheng and early Ch'ien-lung periods the price of a pint (sheng ) of rice, the equivalent of one-tenth of a peck, was around 10 wen . However, in CL 20 (1755) there was a plague of insects, and the price of rice in Suchow, Sung-chiang, Ch'ang-chou, and Cheng-chiang rose to as much as 35 or 36 wen . Countless people died of starvation as a result. Even after the harvests bad returned to normal several years later, the price stabilized at 14 or 15 wen . In CL 50 (1785), there was a great drought and the price of a pint of rice rose to the incredible sum of 56 or 57 wen . Thereafter, regardless of the state of the harvest, the price never fell below 27 wen and could rise to as much as 34 or 35 wen , more than three times the price prevalent in the Yung-cheng period.^[96]

Ch'ien also remarked on changes in the price of land.^[97] By his calculations, in the early Shun-chih reign a mou of land had not cost more than 2 or 3 taels. These rates rose in the K'ang-hsi period to 4 or 5 taels per mou . During the Yung-cheng period, land prices fell to the levels common during the early years of the dynasty, perhaps because of the numerous land-reclamation projects promoted during those years. In the early Ch'ien-lung period, the price rose again to 7 or 8 taels and occasionally even 10 taels per mou . By the late Ch'ien-lung and early Chia-ch'ing reigns, land prices per mou had risen to an average of 50 taels.

One of the most interesting contemporary efforts to explain the

inflation under way in China during the eighteenth century was presented in CL 13 (1748) by Hupei Governor Yang Hsi-fu.^[98] Yang felt that the prevailing high prices for rice and other grains were not primarily due to natural disaster or to hoarding, the usual explanation given for rising prices, but were caused by the large number of people buying food. The reason they bought food was that they were poor. This was not a sudden occurrence, but the result of what Yang call four "gradual circumstances." These were (1) population growth, (2) increasingly extravagant habits, (3) the concentration of land in the hands of wealthy households, and (4) government purchases of granary stores.

Regarding the first issue, Yang pointed out that most of the land that could be reclaimed had already been opened to cultivation. Now the population was growing in excess of available tillage. The inevitable result was a rise in grain prices as demand exceeded supply. Yang recalled that he himself had grown up in the countryside, where his family had tilled the soil for generations. In the K'anghsi period, paddy rice had sold for no more than 2 or 3 ch'ien a picul. By the Yung-cheng period the price had risen to 4 or 5 ch'ien , and never fell to the prices seen under K'ang-hsi. Now the price was even higher, 5 or 6 ch'ien per picul, and the prices known during the Yung-cheng period were no more than a memory.

Extravagant life-styles also drove up the price of grain. When the dynasty first entered China, there was disorder and life was hard. People's habits were of necessity frugal. Once peace was restored and people could obtain employment, they began to yearn for elaborate clothing and food and stylish appearances in marriages and funerals. This trend began in the large towns and cities and spread even to out-of-the-way mountain villages. Yang offered more than a traditional diatribe against luxurious living and wasteful habits. For he recognized that one consequence of selling crops to buy luxuries was the increased involvement of the peasantry in the market economy. Although he did not express it in these terms, Yang was lamenting the effects of the increasing commercialization of agriculture. More people sold their crops after the harvest and were forced to buy rice later in the year. As the number of people purchasing rice in market towns increased, so did the price of that crucial commodity.

The concentration of land in the hands of wealthy households also contributed to the rising price of grain and was closely related

to the above two factors. Governor Yang's description of these effects conveys a keen understanding of what would later be called monopoly capitalism.

When the dynasty began there was more land than people. Thus the price of land was cheap. After peace [was restored] there was enough land to nourish the people, so land prices were stable. After a long period of peace there were more people than land, so land became expensive. In the past every mou was one or two taels. One sold after becoming poor and once having sold [one's land] one did not have the means to buy it back. One bought after becoming wealthy and having bought [land] one did not have to resell.

Recently about 50 or 60 percent of the land has become the property of wealthy households. People who in the past were landowners are now all tenant farmers. Their annual income is barely enough to feed their families. They must buy rice to tide themselves over. But after the wealthy farmers have brought in their harvest, if they cannot get a high price [for their grain] they are not willing to sell cheaply. In the case of any commodity, if one person buys it, the price cannot increase. If ten people buy it, then the price will suddenly grow. If ten people sell, they cannot ask a high price. If one person sells exclusively, then he can demand as high [a price] as he wants. Under such circumstances, how can grain not be expensive?^[99]

Finally, the government policy of buying grain for storage in case of emergencies exacerbated the already serious general grain shortage. According to Yang, almost half the grain produced by the people was removed from the market through government purchase, and rigid guidelines allowed the return of only 30 percent of these grain stores during the slack season between harvests.

Try as it might, the government could do little to reverse any of these trends. It was, in fact, the benevolent policies of the government and the peace brought about by Ch'ing rule that had led to the enormous increase in population during the century. Although several folk methods of birth control were practiced during that period, they were not sufficiently effective to control China's eighteenth-century demographic growth. Moreover, both the government and the people tended to view high birth rates as a positive good to be encouraged, not banned. Concentration of landowner-

ship also presented an insuperable dilemma for the government. Only a policy of land equalization could end the monopoly power of large landed interests and help achieve the ancient ideal of a large, independent peasantry. But those who owned the land were still the major bulwark of dynastic power, a fact that tempered even the mildest efforts to alleviate poverty and land hunger. Yang's assertion that such a policy would be "difficult to carry out" was a gross understatement. As a last resort, the dynasty could fall back on the old strategy of encouraging frugality, but even this, Yang felt, would not produce immediate results, human nature being what it is.

Nevertheless, Yang was not entirely pessimistic. The problems brought about by overstocking government granaries could be eased by reductions in stores and flexibility in the application of rules governing the sale of stabilization rice. More important, the governor recommended increased government activity aimed at improving production. Although much of the available land had been reclaimed, agricultural output could still be improved by means of greater government encouragement of, and participation in, irrigation projects. However, the combination of factors underlined by Yang was largely beyond the control of any Chinese government in the eighteenth and nineteenth centuries. Granary stores were unlikely to be reduced, because they were the government's one defense against famine. This, together with the fact that officials were even less likely to initiate new projects now that their huo-hao accounts were part of their official evaluations, meant that hopes for alleviation of this inflationary trend were slim indeed.

By the middle of the Ch'ien-lung reign, an important new factor began to contribute to China's inflationary spiral. The growth of Chinese trade with the West, and especially Great Britain, led to a great influx of silver into the economy. By increasing the money in circulation, this trade contributed to the rise in prices of even the most basic commodities.^[100] If the figures cited by officials at the time are accurate, we can assume that the rise in prices between the time huo-hao kuei-kung was first implemented and the early Ch'ien-lung period was substantial. The difference between prices in the Yung-cheng period and those of the late Ch'ien-lung and early Chia-ch'ing reign was enormous. Based on scattered reports by officials throughout the eighteenth century, Wang Yeh-chien has estimated that prices underwent an almost threefold increase during this period. Moreover, he has postulated that this inflation-

ary trend was a steady one, providing few periods of relief for a beleaguered bureaucracy.^[101]

The effects of inflation on the huo-hao kuei-kung reforms cannot be underestimated. Not only would increases in the cost of living for officials place tremendous strains on unchanging yang-lien quotas, but the costs of construction materials, wage labor, and salaries for private secretaries and clerks must also have risen considerably. Moreover, as Wang Yeh-chien has pointed out, as population grew, a growing number of clerks were needed to handle local administration and more and more funds were required for expenses such as poor relief.^[102] It is little wonder that reports of official and clerical corruption continued to appear intermittently throughout the Ch'ien-lung period. However, it was not until the reign of the Chia-ch'ing emperor that huo-hao kuei-kung began to appear to be damaged beyond repair.

Huo-Hao Kuei-Kung in the Chia-Ch'ing Period

Had the officials engaged in the debates over huo-hao in the early Ch'ien-lung period lived to the Chia-ch'ing reign, they would have seen all their worst predictions borne out. Inflation, rising population, and increased government regulation of local finance had taken their toll. Although not yet totally defunct, the great panacea of local fiscal reform barely resembled the vigorous program first instituted almost a century before.

Deficits were not the only indicators of local fiscal difficulties.^[103] Finances were so tight in Chihli that when taxes were exempted, loans had to be made to the province by the central government. However, the province found itself handicapped in repaying these funds because of the cancellation of past arrears in provincial land taxes and huo-hao .^[104] So small were the reserves of regular taxes in Kiangsu that the governor was forced to advance provincial huo-hao to cover expenses that had normally been disbursed from cheng-hsiang .^[105]

In some places, deficits became so serious that deductions were made from the yang-lien of each official in the province to repay shortages accumulated by previous officials. This practice may have arisen out of the Chia-ch'ing emperor's own zeal in preventing official mishandling of local funds. By the mid-Chia-ch'ing period, Anhui province had deficits totaling over 2 million taels.

Although schedules had been established for repayment, only a quarter of these debts had actually been cleared by CC 14 (1809). The governor felt that deficits were unavoidable, because the burden of government business in busy chou and hsien far exceeded their fiscal resources. The emperor, however, saw these deficits as the result of excessive expenditure and laxity in arranging repayment. Insisting that budgeted funds existed for every item of acceptable public expenditure, Chia-ch'ing ordered the governor to encourage his subordinates to exercise greater economy. Officials with new deficits that could be shown not to be the result of embezzlement were allowed to repay their shortages within four years. But in the case of old arrears and deficits, the emperor instructed the governor to deduct 50 percent of the yang-lien of each commissioner, circuit intendant, prefect, and magistrate until the missing funds were cleared.^[106]

During the Yung-cheng period, the wu-cho deficits of a province could be made up by using the huo-hao of the whole province. However, this was never allowed to interfere with the payment of yang-lien to individual officials. By the end of the Chia-ch'ing period, deductions of yang-lien to repay deficits seem to have become institutionalized. In CC 23 (1818), Kweichow Censor Wu Chieh complained bitterly about the demands placed on officials' yang-lien , one item of which was called "apportioned reimbursements" (t'an-p'ei ).^[107] By this method the wu-cho deficits of previous officials were apportioned among all the officials in a province in yearly installments. A vicious cycle was thus set in motion. If shortages in local revenues had contributed to deficits, this system of deficit repayment could only increase local fiscal difficulties by depriving officials of a large portion of the funds on which they depended to live and to operate their yamen.

Deductions from yang-lien were not limited to deficit reimbursements. The central government itself faced shortages by the Chia-ch'ing period, and turned to local officials for assistance in the form of "contributions to demonstrate gratitude" (chüan-shu pao-hsiao ). Although these were technically voluntary, the provincial governors and governors-general clearly felt that their careers depended on their performance in providing the central government with additional funds, particularly to supplement imperial military expenditures. The source of these high officials' "gifts" to the court was once again forced deductions (t'an-k'ou ) from the yang-lien of each official in the province.^[108] In both this and the

above case, not only was the strict prohibition against deductions from officials' yang-lien violated, but the inalienability of provincial huo-hao was dealt a blow even more severe than that when Ch'ien-lung issued his edict allowing huo-hao surplus to be transferred from one province to another.

Even without these drains on provincial huo-hao , officials in the field were beginning to notice serious insufficiencies in the huo-hao revenues available for provincial administration and public services. As we have seen, Artbui Governor Tung Chiao-tseng felt that deficits in his province were the result of inadequate funds in busier chou and hsien.^[109] In Kiangsu, high officials pointed out that since the huo-hao expenditure schedules (chang-ch'eng ) had been established for their province in CL 12 (1747), no increases in allocations had been made. Nevertheless, during that time the cost of such items as paper and food had increased several fold.^[110] To make matters worse, in CC 6 (1801), the Board of Revenue had ordered each province to make substantial reductions in its kung-fei expenditures. In Shantung this included 20-percent cuts in the kung-fei allowed for stationery expenses and clerical wages in county-level units.^[111] In Kiangsu, the Board called upon officials to reduce allocations for the governor's, governor-general's, and two financial commissioners' clerks' paper and wages, wages for the governor's and governor-general's regimental soldiers, and travel expenses for missions carried out by members of the governor's staff.^[112] These reductions were not the first that officials had been asked to make, and they seem to have been resisted, though to what effect we do not know.

What is known is that the central government's view of huo-hao had changed dramatically since the debates of the early Ch'ienlung period. For the first time, rather than defending the distinction between huo-hao and cheng-hsiang , the emperor declared that they were really one and the same: "Each province's hao-hsien yin is collected along with the cheng-hsiang . Thus, it is no different from regular taxes and should not be disbursed as one pleases."^[113] Not only were the provinces required to request an edict in order to disburse huo-hao funds, but expenditure of huo-hao was now considered a last resort, and not the regular source of provincial funding that it was originally intended to be. According to Chia-ch'ing, when a province had public expenses, it should first use up the hsien-k'uan in its treasury. "Only if this is insufficient may hao-hsien be borrowed and disbursed."^[114]

The pressures placed on provincial finances had predictable results. As superior officials found themselves with diminished real income, they too began to shift the burden of expenses onto their subordinates. As in the days before huo-hao kuei-kung , officials on missions in the provinces began to demand from the officials through whose territory they passed the costs of food, firewood, servants, carts and horses, entertainment, and gifts. Deductions were taken from officials' yang-lien to pay not only for wu-cho deficits but also for public expenses incurred by officials higher up in the provincial hierarchy.^[115] The demands made on the yang-lien of lower officials were so great that in CC 25 (1820) the emperor could issue an edict stating that "the contribution they must make toward official missions increases daily. Some have their [yang-lien ] deducted in full, leaving nothing."^[116]

Deprived in large measure of their own legitimate sources of income, it is not surprising that local officials began to resort to illegal surcharges, forced contributions, customary fees (lou-kuei ), manipulation of salver-copper ratios, and other devices for raising funds.^[117] Even the Chia-ch'ing emperor was forced to admit that local officials had no choice but to rely on lou-kuei . Rather than allow them to extort from the people as they pleased, the emperor made the extraordinary recommendation that lou-kuei be legalized and schedules set up for its collection.^[118]

Thus, in one hundred years, history had come full circle. Huo-hao had indeed become the same as cheng-hsiang and equally inadequate to meet the needs of provincial and local government. The "lesson" of huo-hao kuei-kung seems to have ruled out the implementation of Chia-ch'ing's plan, but thenceforth, the acceptance of lou-kuei became the mark of even a virtuous official. From that point on, any effort by the government to improve official discipline was doomed to failure. Rational fiscal administration was dead, and informal networks of funding once again became the hallmark of the Chinese bureaucracy.