3—
The Return of the Meltage Fee to the Public Coffers

The informal funding network was one of the most telling manifestations of the contradictions inherent in the traditional Chinese political economy. In its commitment to benevolent rule, the Ch'ing dynasty had doomed the Chinese people to an uncertain existence, prey to the demands of officials, runners and clerks, and numerous local power brokers who took advantage of the government's weak financial condition to act as middlemen in the taxation process. Only by recognizing the need for a thorough reorganization of the revenue-sharing system could the government hope to combat the evils of a corrupt bureaucracy. Yet to do so would mean a rejection of some of the basic principles of good government upon which the dynasty's legitimacy depended.

It was not ignorance that prevented a more rational approach to local fiscal administration. Many of the reforms initiated in the early Ch'ing were specifically designed to eliminate the most conspicuous abuses associated with the informal funding network. Surcharges were prohibited as early as the first year of the Shunchih reign, and the K'ang-hsi emperor warned twice against their collection, permitting the people to report officials who persisted in this practice.^[1] Needless to say, the practice continued, but the aversion to high taxation was so strong that many in government preferred to close their eyes to the evidence of surcharges rather

than admit their necessity and make them legal. The K'ang-hsi emperor himself stated that "If a magistrate collects a 10-percent meltage fee (huo-hao ) and does not collect a bit more, he may be called a good official."^[2] However, when Shen-kan Governor-general Nien Keng-yao took this opportunity to request the legalization of meltage fees, the emperor demurred. Nien pointed out that the level of illegal surcharges collected in his jurisdiction had reached as much as 40 or 50 percent of the regular tax quota. Inasmuch as magistrates obviously needed additional funds, he suggested that they be allowed to keep a portion of the current meltage fee to cover their yamen expenses and make up deficits. K'ang-hsi reminded Nien of the stiff penalties for the collection of "private exactions" (ssu-p'ai ), but could offer no concrete solution to the problem.^[3]

This is basically a private matter. I once said to Ch'en Pin that a 10 percent meltage fee seemed tolerable. He felt this was a great benevolence, but I could not permit him to make my words public. Today, though Nien Keng-yao has sent a secret memorial, if I write a rescript it will have the same precedent-making effect as if I granted a request presented in a routine memorial. How can I bear the stigma of one who approves of surcharges?

K'ang-hsi could not deny the logic of Nien's request, but to say so would be to sanction the legalization of increased taxes and recognize the legitimate need for surcharges. Moreover, although his government did employ legal means to control the behavior of officials, the emperor's statements reflected a very narrow interpretation of Confucian principles of good administration. Thus, institutional change was not the ultimate solution to corruption. Only personal restraint on the part of moral officials would serve this purpose. It was for this reason that the emperor preferred to relegate the issue of surcharges to the private realm. This was also why the emperor could praise an official if he limited his "private exactions" to a minimal amount. What the emperor failed to confront was why a good official should have to collect any surcharges at all.

If K'ang-hsi's rejection of institutional reform was based on principle, there were many in the bureaucracy with a more immediate interest in concealing the magnitude of local need and local

corruption. Magistrates often welcomed the insecurity of the informal funding network rather than risk the increased control by central-government officials that rationalization would entail.^[4] For their part, the latter had little understanding of the administrative difficulties or fiscal requirements of their provincial subordinates. Anxieties over the health of their own treasuries caused them to underestimate local needs, and ignorance led them to suspect the motives of the few who did take up the cause of local fiscal reform.

Ironically, it was the informal funding network itself that was probably most responsible for the persistence of the fiscal inequities in response to which it had evolved. The real requirements of local administration were masked by the success with which informal methods provided local and provincial officials with additional revenues. Pleas for more funds for public business rang less true at court when one's predecessors seemed to fare perfectly well on what they had. More important, the techniques used within the informal funding system to raise revenues necessarily sabotaged the statutory checks on corruption and destroyed the utility of tsuo-hsiao accounts as an accurate reflection of local expenditure. Before fundamental reform could take place, the smokescreen created by the informal funding network had to be dispersed. One precondition for this was a new emperor whose approach to government was different from that of his father. A necessary catalyst was a new approach to the problem of government shortages that would leave local officials exposed, without the mechanisms of the informal funding network to hide behind.

The Attack On Government Deficits

Arrears and Deficits in the Early Ch'ing

Arrears and deficits were a chronic feature of Ch'ing fiscal administration. An important distinction existed between these two categories of government shortages. Strictly speaking, arrears (min-ch'ien ) referred to shortages in tax receipts, the result of failure of officials to collect the tax quota in full. Deficits (k'uei-k'ung ), on the other hand, applied specifically to discrepancies between the funds on hand in government treasuries or granaries and the amount that should have been there had all funds been disbursed according to government regulations. During different periods, emphasis was placed on alleviating shortages in one or the other of these two categories. In fact, deficits and arrears were inti-

mately related. Real tax evasion naturally contributed to the fiscal insolvency of local officials, and the pressure on officials to cover the costs of government expenditures not provided by the regular funding network led officials and their staff to utilize a number of devices that camouflaged their deficits as arrears. The decision to wage a campaign against deficits or against arrears was often a reflection more of the central government's perceptions of who was more guilty of abuses, the people or the bureaucracy, than of evidence that could be culled from administrative records.

This is not to say that arrears and deficits were not distinct problems or that one or the other was not more central to financial difficulties in different places or at different times. Severe natural disaster always brought on a period of economic hardship for the people in the stricken area, which was usually reflected in tax arrears for a number of years thereafter. However, the traditional fiscal apparatus was fairly well prepared to meet such crises in the form of imperial tax exemptions and deferred payments (liu-ti ). Certain areas, most notably Kiangnan, suffered from endemic arrears, in part as a result of tax resistance perpetrated by the large numbers of literati households with tax-exempt status in the region.^[5] Measures designed to restrict the privileges of degree holders and reductions in the region's excessive tax quota were combined to bring the situation under control for a time.^[6] Moreover, as we have seen, reforms in tax-collection procedures were introduced throughout the empire to reduce opportunities for interference by middlemen and peculation by yamen staff. Despite these efforts, arrears continued to exist, and when they became too great the usual solution was to declare a tax amnesty, wiping the slate clean or relieving the population of current obligations in order to allow them to catch up with debts long due.^[7]

Deficits were a more enigmatic issue in the early Ch'ing. As we have seen, given the level of regular local funding, it was almost impossible for a provincial official to spend any time in office without incurring some deficits. Although the official position of the government was to discourage shortages and punish offenders, the actual record of prosecutions and impeachments points to a good deal of tolerance toward such malfeasance.^[8] Many cases of deficits went unreported, and when missing funds were brought to the attention of the government, it was common practice to use the wages and salaries of all the officials in a province to pay them back.^[9] As a result, some officials became complacent about balancing their accounts. Moreover, the practice of feng-kung contribu-

tions to make up shortages furthered government insolvency because these same funds were needed to offset the expenses that had led to deficits in the first place.

The existence of large deficits in government treasuries during the early Ch'ing did not grow out of a failure to institute statutory controls on official behavior. Stringent regulations existed to ensure the meticulous monitoring of local-government income and expenditure. Under the tsou-hsiao system of annual accounting, officials were required to report all expenditures to the Board of Revenue. Only after approval was given by the Board could an official disburse funds and declare their expenditure (k'ai-hsiao ) in his annual accounts. One could not simply report expenditures at the end of the year. If an official had to appropriate more funds than originally requested, or failed to request permission in advance to allocate funds for a particular purpose, he was acting contrary to the regulations and could be impeached. Whether or not the additional disbursements were legitimate, they were considered deficits and the guilty official was compelled to pay them back.

Laws such as these were designed to forestall embezzlement, the only recognized cause of deficits. Similar precautions were taken when an official handed his office over to his successor (chiao-tai ). When an incumbent official left his post, he compiled an inventory of all income, arrears, and taxes disbursed and actually on hand and turned it over to the incoming official. The latter checked the records and weighed the funds on hand to be sure they agreed with the incumbent's inventory. Only after his successor had issued a bond of guarantee testifying to the accuracy of his chiao-tai accounts was the outgoing official supposed to leave his post for transfer or retirement. If discrepancies existed, the incoming official was to report them to the governor or governor-general, who would impeach the outgoing official. The latter was then held responsible for the deficit and the new official was cleared of any liability.

The operation of the informal funding network had a profound effect on these two methods of fiscal scrutiny, rendering them useless in many cases. Oertai described the situation graphically when he was Kiangsu financial commissioner.^[10]

Kiangsu's wealth is the greatest in the empire. Regarding previous items of deficits, those owed by the people are probably caused by disaster and famine, [but] those

owed by officials are in part caused by avarice. Investigating deeply into the cause, leniency (tan-ku ) is really the source of avarice and following the old habits (yin-hsün ) is the legacy of leniency. Given leniency and adherence to old habits, there are none who will not tend toward avarice. The high officials extort from their subordinates and the subordinates oppress the little people. When the income extorted [from the people] is insufficient to meet expenses, then they disburse treasury funds (k'u-t'ang , i.e., cheng-hsiang tax revenues) . . . The result is deficits. The chou and hsien are not necessarily all without scruples (wu-liang ). In reality, sometimes unscrupulous governors, governors-general, commissioners, and circuit intendants are responsible.

In return for their heavy contribution to provincial expenses, magistrates were often protected against charges of amassing deficits. Only rarely did the high provincial officials impeach lower officials as part of the tsou-hsiao process. The early Yung-cheng investigations of official deficits uncovered hundreds of thousands of taels of deficits that had never been brought to the attention of the central government by the governors of the province at the time they occurred.^[11] Moreover, to protect themselves from implication in these cover-ups, the governors had to subvert the chiao-tai process and force incoming officials to accept the accounts of their outgoing subordinates, deficits and all.^[12] Most new officials were willing to do so because they knew that in all probability they too would incur deficits and would receive similar protection from prosecution.

Officials of the central government also participated in the subversion of the scrutiny system established during the first two reigns of the dynasty. Because Board officials were no more adequately provided with administrative expenses than were their colleagues in the provinces, the Boards participated in the informal funding network by accepting "Board fees" (pu-fei ) whenever they had business with provincial officials.^[13] This practice was particularly damaging in the case of fees that accompanied provincial annual accounts.

Although the accounts are clear and in order, if Board fees are not paid, they will be rejected on the grounds that the figures therein do not match those in the routine memorials [requesting prior Board approval for said expenditures] or on the pretext that the figures

are a few taels off. As soon as the Board fees are paid, millions of taels may be wasted, but the tsou-hsiao accounts will still be approved. Sometimes [the accounts] will be rejected for an unimportant matter to preserve the pretense of rejecting accounts while the truth is covered up. Then when [the official concerned] replies, [the Board] will deliberate to approve his accounts. Officials in the capital and in the provinces conspire to steal and lie.^[14]

Thus, even if an official had deficits his accounts were approved, so long as he paid the required fee to the Board of Revenue. The façade of fiscal scrutiny was maintained while deficits in the provinces grew year after year.

The Target Shifts

The focus of reform during the K'ang-hsi period was on arrears. This was reflected in efforts to improve tax prompting and in the liberal granting of tax remissions. The tendency to view fiscal problems primarily in terms of the failure of the people to pay their taxes in full handicapped officials seeking to rectify basic weaknesses within the regular tax system itself. In fact, if arrears really were the main problem, little could be done beyond exhorting officials to exert greater energy in tax collection or issuing exemptions and remissions. The latter measure, in effect, removed the problem by decreeing it out of existence.

This focus changed dramatically with the Yung-cheng emperor's ascent to the throne. His first policy initiative was to declare a frontal attack on the problem of government deficits and official and clerical peculation. Almost immediately after K'ang-hsi's death, the Yung-cheng emperor issued two edicts laying the blame for deficits not on the people but on the corrupt activities of officials and their clerks. In an edict to the Board of Revenue and Board of Works he first called for stricter auditing of provincial cheng-hsiang expenditures.^[15]

Wealth is the means for accomplishing one's ends. The ancient rulers considered frugality the basis for abundance for the state and the people. Since taking the throne I have constantly worried about embezzlement of government treasury funds by clerks. Hereafter, these two Boards must carefully investigate all taxes in cash and in kind and the costs of materials and labor

in the annual accounts (tsou-hsiao ) and compile and memorialize them in a clear account (ch'ing-ts'e ). They may not report vague estimates. If there are those who report less as more (i.e. in disbursing funds) or cheap as expensive, or whose figures don't balance or who make false estimates [of the costs of labor and materials], when they are discovered, let the Board officials [who approved their falsified accounts] be severely punished along with them.

The emperor recognized that one way in which funds were diverted from the regular tax network to the informal network was by manipulating the accounting of those projects for which regular tax funds were provided. By holding the Board officials equally accountable, Yung-cheng was also making clear his knowledge of the Board's complicity in this process. As a check against collaboration by the Board of Revenue in circumventing the tsou-hsiao system, the emperor established a separate accounting office called the Hui-k'ao fu. At the head of the Hui-k'ao fu, Yung-cheng placed his most trusted officials in the central government—his favorite brother, Prince I; his uncle, Lungkodo; the Grand Secretary Pai Huang; and the Censor Chu Shih. These four officials were commissioned to handle all tsou-hsiao matters, no matter which Board was involved. To assist them in their investigations, a separate yamen was established with a staff consisting of a Manchu and a Chinese assistant department director (lang-chung yuan-wai lang ), three second-class board secretaries (chu-shih ), and ten clerks of the seventh to ninth rank (pi-t'ieh-shih ).^[16] By requiring that all questionable annual accounts be investigated by this independent authority the emperor hoped to halt the practice of evading scrutiny by paying a fee to the Board of Revenue. Moreover, the Hui-k'ao fu undertook to investigate the accounts of the Boards themselves to help clear up deficits on the central-government level. In YC 3 (1725), when the emperor was satisfied that the corruption in local and central finances had been brought under control, the Hui-k'ao fu was disbanded and its duties returned to the jurisdiction of the Board of Revenue.

Yung-cheng's understanding of the vicious cycle of revenue manipulation and concealment was expressed even more vividly in the second of these edicts.^[17]

Since ancient times, regular taxes have been stored up for the expenses of the military and the state. In times

of peace, [we] must cause the granaries and treasuries to be full in order to be prepared and without cause for worry. Recently there have been numerous circuit intendants, prefects, and chou and hsien magistrates in each province with tax deficits. The governors and governors-general are well aware of this abuse, but cover up for them until a time of extreme difficulty, when they usually report embezzlement as "shifting funds for public expenses." When ordered to set a time limit for recovery [of the embezzled funds] they regard them as ancient history and those who pay up in full are few. Repayment is put off for years but the pretense of recovering [deficits] remains. In the end there is no one who can be held responsible (ch'üan-wu-cho-lo ). New officials are forced by their superior officials to accept the handing over of their predecessors' accounts (chiao-tai ). Although [these accounts] contain deficits, [an incoming official's] fear of the power of high officials compels him to accept them. Moreover, in imitation of [his superior's corruption] he will use [the fact that his superior allowed the previous incumbent to amass deficits] to intimidate his superior and will of necessity get [his superior's] protection for wrongdoings so that he may embezzle as he pleases. This in turn leads to even worse deficits. I calculate that this was the cause of several hundreds of thousands of taels of deficits in the Shantung financial commissioner's treasury. How could this all be the result of shifting funds for public expenses (yin-kung no-i )? Now, although [officials in Shantung] are using feng-kung to make up the deficits, in reality they cannot but take [the needed funds] from the people, adding on surcharges beyond the tax quota. If this is the case in Shantung, [the situation] in other provinces can be imagined. When the flesh and blood of the common people is used to rectify [the deficits] of the officials, how can there not be hardship in the countryside? I am deeply concerned about these abuses.

The emperor's first impulse was to combat corruption by instituting a general audit of all provincial treasuries similar to the type used in earlier reigns to ferret out gentry tax evaders. However, his recognition of the extent to which these practices were imbedded in the fabric of local government prompted him to leniency. Rather than create conflicts between the central government and the provinces by sending imperial commissioners to pry into local affairs, he ordered the governors and governors-general

to investigate the deficits of their own subordinates. No one would be punished for having shortages in his yamen treasury or for having failed to detect such shortages in those of his underlings, but all deficits would have to be repaid within three years. Moreover, officials were warned against trying to settle their accounts with the government by extorting from the common people or further falsifying local records.

Thus began the Yung-cheng emperor's crusade against corruption. All government deficits were to be cleared within three years. Thereafter, anyone whose treasury exhibited shortages would be severely punished. This was a policy marked by stern determination, but it promised little originality in the management of the empire's fiscal affairs. What ruler in Chinese history would not have liked to wipe the slate clean, so that moral government under his own leadership could be given a fresh start? The emperor's hard line on official peculation precluded any consideration of the difficulties faced by the bureaucrat in the field. On the contrary, his equally strong commitment to the protection of the people from the excessive demands of the county tax collector magnified the problems of local officials. At least during the first few months of his reign, Yung-cheng continued to view with skepticism claims that missing funds were "shifted for public expenses," and held to the conviction that deficits could have resulted only from the embezzlement of local revenues.

Therefore, it is not surprising that on the inaugural day of his own reign period, Yung-cheng categorically refused permission to use huo-hao to make up deficits in the manner suggested by Nien Keng-yao and others during his father's reign. Instead, he took advantage of this auspicious occasion to deliver a series of traditional exhortations to officials at each level of the bureaucracy to behave virtuously in their assigned duties. In his edict to chou and hsien magistrates he linked the pursuit of moral conduct directly to the issue of deficits.^[18]

As for taxes, they are especially important. The smallest grain of rice represents the blood and sweat of the people. Increase the taxes by one fen [0.01 tael] and you increase the burden on the people by one fen . Decrease them by one fen and the people receive one fen of grace. In the past there were those who requested to add huo-hao temporarily [to the people's taxes] in order to make up deficits in the public treasury. The late emperor issued an edict in court disapproving the re-

quest and all the officials heard it. Now the huo-hao of the chou and hsien is being increased with impunity and is viewed as a fixed precedent. How can the people bear it? Henceforth it must be prohibited. If it is discovered and [the official is] impeached by his superior or impeached by a censor, he must be severely punished and certainly cannot be treated leniently. If one wants to clear up the source of deficits, there is no better [way] than frugality and upright conduct. If one is frugal there will be no lack of funds for expenses. If one is upright in conduct, one cannot be [drawn into misdoings] by one's superior.

It is impossible to determine whether the emperor's stance during these first few months was dictated by the exigencies of filial piety, hesitancy to offend the sensibilities of officials who had risen in the bureaucracy under his father, or a genuine belief that the real source of difficulty lay in official corruption and not in the fiscal system itself. What we do know is that Yung-cheng's commitment to clearing deficits remained firm, but his approach to the problem was soon to change.

Who is Responsible? Who Shall Pay?

The emperor's decision not to penalize officials for deficits incurred prior to the Yung-cheng reign was a shrewd one. Within weeks of his edict, reports of shortages began pouring into the capital as officials attempted to demonstrate their zeal and struggled to rid themselves of the burden of deceit and manipulation that deficits demanded. The missing funds uncovered during the three-year grace period totalled millions of taels. Unraveling the tangle of accounting devices used to disguise fiscal insolvency was an onerous task. However, the real challenge lay in transforming acknowledged shortages and fictitious reserves into tangible stores of silver and grain.

For those deficits that did have to be repaid, primary responsibility fell on the chou and hsien magistrates and on financial commissioners. In cases where these officials did not have the resources to compensate the central government and the governor had failed to report the debts at the time they were incurred, the latter was held jointly responsible for repayment.^[19] High provincial officials were also held responsible when expenditures had been made without prior approval or funds had been shifted from one cate-

gory to pay for expenses in another.^[20] In cases where an official was no longer in the post in which he incurred his deficit, the amount of the shortage was supposed to be retrieved by voluntary or forced sale of the official's personal property, both at his new post and at his ancestral home.^[21]

On paper, such an allocation of responsibility promised the speedy retrieval of all outstanding revenues. As the investigations proceeded, however, it became increasingly obvious that it would require more than an imperial fiat to succeed in eliminating deficits and the corruption that had brought them about. Not only was there no consensus regarding either the causes of deficits or the way to prevent them in the future, but it soon also became apparent that a large number of deficits existed for which it was impossible to assign responsibility.

The one source of deficits widely acknowledged by both provincial and central-government officials was mismanagement of granary stores.^[22] Scattered throughout the provinces, government granaries were, by nature, more difficult to inspect than treasuries and were equally prey to manipulation. It was not uncommon for officials short of silver in their treasuries to sell off grain as a source of additional revenues. In some places, public grain contributions were diverted immediately to other uses and never stored as a safeguard against famine or high grain prices. When they were set aside for disaster relief, it was often in the form of an equivalent sum of silver. Not only did this result in shortages when grain was needed promptly for relief, but the conversion rate at which the silver was stored was frequently below the current market price of grain.^[23] Even the most scrupulous magistrate could find himself without the statutory stocks of grain because loans made to the people in bad times were often never repaid.^[24]

Far more controversial was the issue of treasury deficits. Most central-government officials felt that shortages in provincial- and local-government supplies of silver were the result of embezzlement. Therefore, their contributions to the debate were usually in the form of suggestions for more stringent oversight of provincial financial transactions.^[25] In particular, they decried the shifting of funds for public expenses (yin-kung no-i ). Under this rubric were included all instances in which local officials used funds designated for one purpose to pay for something else, even if those funds were originally intended for remittance to the central government. Implicit in the condemnation of such practices was the belief that

shortages at the local level were the result of official extravagance and not real need.^[26] In no case was it accepted that either inadequate revenue allocations to local government or heavy demands for funds from superiors were responsible for the discrepancies in local accounts.^[27]

The recommendations of central-government officials tended to deflect attention away from the causes to the symptoms of the disease that infected the Chinese fiscal system. They cannot be blamed for ignoring the real problems faced by local officials trying to fulfill their administrative duties. Many central officials had no experience in local government and their present positions excused them from the practical tasks of clearing the deficits that already existed. Even censors, whose role it was to oversee the activities of officials in the field, spent little time in the provinces. However, as reports began filtering in from provincial officials themselves, a very different picture of the problem began to emerge.

A frequent claim was that deficits in treasury stores were actually the result of arrears on the part of the taxpayers. Particularly in Kiangnan, the tax quotas were often too large for a single official to handle. The likelihood that an official assigned to such a post would be dismissed for failure to collect his taxes in full was great. When a new official came to replace him, he would not only be responsible for collecting the taxes for that year, but would also have to dun the arrears accumulated under his predecessor. In order to avoid removal himself, the new official would have to shift regular taxes (cheng-hsiang ) designated for other purposes to cover the taxes he was unable to collect.^[28] Eventually the shortage would be discovered, but by that time the manipulation of tax records would have hidden all evidence that the deficit was once "people's arrears." Even in remote and tax-poor provinces such as Kwangsi, tax resistance and embezzlement by tax farmers could force magistrates to take such measures to prevent impeachment.^[29] In fact, so common was this problem that in some provinces Prince I and the Board of Revenue ordered a special investigation to determine whether any of the deficits attributed to official peculation could be traced to nonpayment by the taxpayers.^[30]

The central government was less sympathetic toward officials who reported that their deficits had resulted from legitimate expenditure. Scores of officials memorialized having allocated funds for necessary purchases not provided for under the regular revenue-sharing system. In most cases they were in support of the military,

maintenance of public security, and construction of public works. All of these areas were of vital concern to the central government, as well as the local jurisdiction. Nevertheless, once the deficits were discovered, the funds had to be reimbursed, either by the official who had authorized the expenditure or by remanding the wages and salaries of all the low-level officials and functionaries in the province.^[31]

Although the responsibility for the repayment of deficits was supposed to fall on the official who had incurred them, it was not always possible to determine who that person was. This was particularly true when shortages appeared in the financial commissioner's treasury. The manipulation of accounts that was the product of the informal funding system had its greatest impact at the provincial level. With well-placed gifts, a lower official could avoid impeachment for failure to fulfill his tax quota. At the same time, governors and governors-general frequently borrowed funds which the financial commissioner would be forced to cover up. Since even expenditures for public purposes were illegal if not authorized by the central government, high provincial officials had a powerful incentive to make the accounts of the financial commissioner's treasury as difficult as possible to understand.^[32] This became vividly clear when the Board of Punishments attempted to clear up a case of deficits in the Hupei provincial treasury.^[33]

From the beginning, the Board's interrogation of high-level Hupei officials did not promise a speedy solution to the disappearance of funds placed in their care. After much cajoling, the former governor-general, Man-pi, admitted that 100,000 taels had been missing from the treasury during his term of office. This, he claimed, had been repaid out of his own income from huo-hao and customary fees and that of the governor and financial commissioner. However, when questioned on this subject, the present financial commissioner, Chang Sheng-pi, reported that the funds had not been made up at all. Instead, the shortage had been camouflaged by Hsü Ta-ting, who had been appointed to replace the financial commissioner in whose term the deficit had arisen. In order to hide the fact that 100,000 taels could not be accounted for, Hsü had ostensibly fabricated allocations of 60,000 taels to make up a shortage in the funds set aside to purchase copper and 40,000 taels of feng-kung yin to purchase horses for the military. Chang Sheng-pi had then been forced to go along with this deception when he took office.

If the investigators thought they now had the truth, they were once again thrown into confusion by the testimony of the original financial commissioner, Chang Wen-rs'an. According to him, the money involved was not 100,000 taels, but 150,000 taels. Moreover, it was not a deficit, but the result of people's arrears. Nevertheless, as the official in charge of fulfilling the province's tax quota, Chang Wen-ts'an had personally undertaken to make up the funds, some of which dated back to the period before he had taken office. With money obtained from the sale of considerable family property, several loans, remittances from servants and treasury officers implicated in the case, and a grant of 20,000 taels of huo-hao from the governor and governor-general, Chang claimed to have been able to replace the entire amount in one year.

Who was really to blame? Certainly, after so much tampering, the records of the Hupei provincial treasury would yield few clues. Moreover, more than 100,000 taels were still missing. Presumably, these funds would end up like so many others for which responsibility was indeterminate. Such deficits were usually classified as wu-cho chih-k'uan . Their very existence was a clear indication of the laxity with which shortages in government treasuries had been handled under previous administrations. Time and again, officials trying to clear up the accounts in local and provincial yamen bemoaned the passage of years and often decades during which deficits had been allowed to grow unchecked and unreported. In some cases the official originally responsible for the shortages was long dead.^[34] Even if he was still alive, his personal and family property was often insufficient to make up deficits that could amount to thousands or tens of thousands of taels.^[35] The web of deception that had grown up around the system of turning over accounts created many cases of disputed responsibility. The position taken by officials in the field was that the original official should make good any shortages that arose during his term of office, even if he had already left government service. However, fearing delays in repayment and complications resulting from attempts to retrieve funds from outside the province in question, Prince I and the Board of Revenue held to a strict interpretation of the dynastic statutes. Once an official had issued a bond of guarantee stating that all revenues placed in his charge were present and accounted for, it was his responsibility to rectify any discrepancies that might later be uncovered. If an incoming official had signed such a bond knowing that his predecessor's accounts were not in order, it could

only have been in hope of some future illicit gain.^[36] In effect, this ruling made officials now holding a post exclusively responsible for the repayment of the deficits of all their predecessors who had not been impeached, except in cases where evidence existed that they had filed a report and had been coerced into accepting the chiao-tai of the outgoing incumbent.

Needless to say, the local officials at the time of the deficit investigations balked at having such a huge financial burden placed on their shoulders.^[37] However, their resistance to paying for the crimes of others constituted only one of the obstacles confronting officials trying to replenish provincial silver stores. Retrieval of missing funds by confiscation of the guilty party's family property was a slow process and involved one province in what amounted to litigation in another province. Officials in the guilty official's horne province had their own deficits to worry about and were usually unenthusiastic about engaging in the tedious process of uncovering a person's assets and selling them, especially when the proceeds would be sent elsewhere. Moreover, when the guilty party was an official who held higher office than the magistrate or prefect in charge of his case, it was often extremely difficult for the latter to treat him with the severity that was usually necessary.^[38] When responsibility for deficits that had not been reported, or which had arisen out of unauthorized expenditures at the provincial level, devolved upon one or two high officials, the sums were often so great that there was no realistic expectation that they could be repaid swiftly. Finally, in the case of wu-cho deficits, responsibility for repayment could not even be assigned.

Under these circumstances, many provincial officials turned once again to the system of informal funding. On the level of the chou and hsien, magistrates often forced the people to pay surtaxes to make up their deficits.^[39] Some higher officials continued to rely on contributions of wages and salaries from their subordinates (chüan-feng ).^[40] Because feng-kung was still a major source of funding for provincial expenses, and deficits usually far exceeded the funds these wages and salaries made available, most provinces also relied on contributions of officials' customary gifts and fees to make up shortages in the provincial treasury.^[41]

It was at this point that the Yung-cheng emperor dealt the decisive blow to local fiscal administration as it had functioned for several years. In the process of investigating deficits, the emperor became increasingly convinced that the demands placed on lower

officials by their superiors were one of the major factors leading to shortages in cheng-hsiang funds. Therefore, in an edict to all governors and governors-general, he issued a ban on contributions of wages and salaries. At the same time, he issued an edict ordering that steps be taken to eliminate the sending and receiving of lou-kuei .^[42] It might have been possible for officials to ignore the emperor's instructions and secretly continue to rely on these two sources of funds in daily transactions to cover expenses for which cheng-hsiang revenues had not been provided. However, when repayment of deficits was being handled directly by the Board of Revenue, it was impossible to camouflage the source of such huge sums. The hands of provincial officials were tied. A new solution, both to the problem of repayment of deficits and to that of preventing similar shortages in the future, had to be found.

The Reform of Local Fiscal Administration: Huo-Hao Kuei-Kung

The crisis generated by the emperor's ban on feng-kung and lou-kuei contributions once again focused official attention on the richest of all informal sources of revenue. References to huo-hao , or meltage fees, appear as early as the Sung dynasty.^[43] However, their importance as a form of tax surcharge is associated with the increasing monetization of the Chinese economy in the late Ming. Technically, the meltage fee was a charge added to regular tax remittances to compensate for the inevitable loss of silver that resulted when taxes were melted down into large ingots for transporting to the central government. Loss of silver also occurred because of the difference between the quality of silver received from taxpayers and the standard fineness required of taxes sent to the capital. Although the actual loss was rarely more than 1 or 2 percent, the proportion of meltage fees levied on land and head taxes increased steadily from the late Ming until the eighteenth century.^[44] At the same time, the term huo-hao came to describe almost any general percentage surcharge for which no other special term existed.

The amorphous nature of meltage fees and their diminished connection with actual silver depreciation led to their immediate ban by the new Manchu rulers of China.^[45] This proscription was continued under K'ang-hsi, who was not incorrect in equating huo-hao with the unauthorized appropriation of the people's re-

sources through the informal funding system.^[46] Under the K'ang-hsi emperor, laws were promulgated permitting commoners to report officials who collected taxes beyond the quota and specifying punishments for superior officials who covered up for subordinates who exacted huo-hao .^[47] Nevertheless, the magistrates' need for funds for daily living expenses and the wages of servants, clerks, and runners compelled officials to recognize the need to collect at least some extra revenue in the form of huo-hao . As we have seen, even K'ang-hsi had to concede that an official who demanded only 10 percent above the tax quota could still be recommended as a good administrator.^[48]Huo-hao therefore came to occupy an ambiguous position as both an illegal surcharge and a source of funds increasingly viewed as the private property of the chou and hsien bureaucracy. Notwithstanding frequent exhortations to high provincial officials urging them to supervise their subordinates and eliminate abuses in tax collection, huo-hao continued to be collected and rates continued to rise.

Once alternative means to eliminate deficits were obstructed by the emperor's ban on lou-kuei and salary contributions, several characteristics of huo-hao made it an obvious choice. As an openly declared percentage of regular taxes, huo-hao escaped the stigma of more deviously contrived methods of milking the common people through falsification of records, tampering with weights and measures, and extortion. Moreover, because the collection of huo-hao could be integrated into the system of "wrapping and depositing one's own taxes," officials would not be forced to rely on the complicity of clerks and runners to defraud the taxpayer. Integration of huo-hao into the legal fiscal administration would therefore not undermine the taxpayer's direct dealings with the state, a principle central to Ch'ing administrative ideology. The collection of huo-hao , although generally viewed as a form of peculation, had always been tied to real levels of local revenue and government fiscal requirements. Areas with large gross tax receipts customarily levied huo-hao at considerably lower rates than areas with very small tax receipts. This put a greater burden on the taxpayers in the agriculturally depressed parts of the empire, but guaranteed all magistrates comparable funds for at least a portion of their administrative expenses. Perhaps even more important to officials at the time was the fact that as a strictly local levy, huo-hao was not associated with bribery. Although revenues from huo-hao contributed to the pool of funds sent to higher officials in the guise of lou-kuei ,

it was not linked directly to the concealment of official malfeasance that critics of local fiscal administration saw as the main cause of deficits.

It was probably such considerations that had prompted officials such as Nien Keng-yao to recommend the legalization of huo-hao to clear deficits in the past. However, if the return of the meltage fee to the public coffers (huo-hao kuei-kung ) had been simply a program to eradicate government debts, it would deserve little more than a footnote in the annals of Chinese fiscal administration. The great achievement of officials seeking a solution to the immediate issue of debt repayment was their attempt, for the first time in late-imperial history, to attack the causes of deficits. Their efforts gave rise to a complete reorganization of local-government finance, in which huo-hao would play the pivotal role.

From Desperation to Innovation

Government toleration of salary contributions and lou-kuei had been founded on a monumental fallacy. Because these funds appeared to come out of the officials' own pockets, they were rarely associated with increased taxation imposed on the common people. On the other hand, huo-hao , the source of much of the lou-kuei that circulated within the bureaucracy, was nothing more than an illegal surcharge, a deplorable evil. The Yung-cheng emperor's attack on salary contributions and lou-kuei was aimed at improving state finances by rehabilitating official discipline and morale. How was it, then, that after decades of resisting such a step, the Ch'ing dynasty legalized the collection of huo-hao and transformed it into the basis for the rationalization of government funding at the local level? Huo-hao kuei-kung violated the supreme taboo, that against high taxes. How was the emperor able to implement a policy which to many Chinese officials appeared to sacrifice the people's livelihood for the sake of state finances?

The manner in which huo-hao kuei-kung became public policy bears some resemblance to the way in which the Single-Whip reforms were implemented in the late Ming. Initiative appeared to be local, transmitted to the central government by the governors and financial commissioners of individual provinces. No general order or legislation was enacted requiring empire-wide implementation, and when it was carried out, each province took into consideration local differences in establishing rates and methods of collection

and remittance. However, beneath the surface a crucial difference existed in the mediating and guiding role played by the emperor during the Ch'ing reform. In part, this was the result of the emperor's dynamic personality and personal commitment to fiscal reform, which we have already seen demonstrated in his attack on deficits. Closely related to these factors was the institution of a new communication device, the secret palace-memorial system, in this same period.^[49]

One persistent theme in late imperial Chinese history was the devolution of imperial control over the bureaucracy and the decision-making process. In the routine memorial system, or t'i-pen chih-tu , the correspondence of local officials passed through the offices of the Grand Secretariat, which not only selected those memorials that were deserving of the emperor's attention but drafted possible responses from which the emperor could choose his rescript. At times, this system enabled the central bureaucracy to manipulate policy by screening the information available to the emperor. It also produced a situation in which weak emperors could evade all responsibility for government decisions. In a political system where decision-making authority was ambiguous, this greatly limited the possibility for innovation, particularly that emanating from the provincial level. Moreover, it obstructed rationalizing reforms for which a major prerequisite is the most complete possible information about conditions as they really are.

Beginning in the last years of the K'ang-hsi reign, a second memorial system was instituted. Its full development was realized under the Yung-cheng emperor. This secret palace-memorial system, or tsou-che chih-tu , made possible unmediated communication between the emperor and his officials in the field. The existing central-government organs were completely by-passed and correspondence by this route was guaranteed total confidentiality. Because all high officials knew that all other high officials had the same privilege of secret communication with the emperor, the latter was assured of honest reporting from his subordinates. Their reports were for the emperor alone, hence officials could express their opinions and present their ideas freely, without fear of censure from their peers in the central government or of accusation that they were spurning widely held values. Moreover, the emperor, who composed most of his rescripts himself, was in a position to experiment with new ideas without the formal sanction that adhered to any imperial statement made in response to a t'i-

pen .^[50] Through private communications of this kind the emperor could also help mold official opinions and actions by means of subtle suggestions and criticisms while preserving provincial autonomy in areas where he felt it important. Thus, through the secret memorial system, both imperial and provincial decision-making power were greatly enhanced. One of the most notable examples of this may be found in the implementation of the huo-hao kuei-kung reforms.

Among many high provincial officials the prospect that their main avenues of funding would be cut off inspired panic rather than creativity. Some governors and financial commissioners even nurtured the hope that a persuasive argument could win exemption from the ban applied elsewhere. Kiangsi Governor P'ei Shuai-tu boasted that he had eliminated all customary gifts previously sent to his own yamen and that of the commissioners, circuit intendents, and prefects. However, his virtuous display of compliance with the emperor's wishes did not prevent him from receiving 12,000 taels in fees from the grain intendant and the financial commissioner. P'ei realized that his role as a Confucian administrator was to set a good example for those beneath him. To accept such fees would encourage his subordinates to do the same. Yet without some informal source of funding, neither he nor the financial commissioner would be able to operate their yamen.^[51]

Whereas P'ei sought imperial sanction for his continued acceptance of lou-kuei , other officials attempted to circumvent the prohibition of contributions of feng-kung . Liang-kuang Governorgeneral K'ung Yü-hsün feared that without contributions of feng-kung the provincial government would be forced to farm out purchases of materials and supplies to the individual chou and hsien. This could only result in the latter making up the costs by levying surcharges on the people. Interpreting the emperor's ban as a demonstration of concern for poorly paid officers and staff on the lowest rungs of the official hierarchy, K'ung proposed that Kwangtung continue to appropriate official salaries, but only those of officials of magisterial rank and above.^[52] Along the same lines, Chekiang Governor Huang Shu-lin proposed solving the problem of wu-cho deficits in his province by using contributions of feng-kung collected during the period before the imperial ban was issued.^[53]

In each of the above cases the emperor's rescript was noncommittal. On the one hand, he reiterated his concern that the collec-

tion of fees and salary contributions be terminated. On the other, he promised that the pleas of officials who really found themselves in financial straits would not go unheeded. Although only a few were aware of it at the time, Yung-cheng himself was becoming convinced that no provincial official could survive on the revenues legally made available to him by the state. Communicating with them through secret palace memorials, he allowed a small number of officials to experiment with the use of huo-hao to make up deficits and provide a more stable source of income for provincial administration.

The earliest evidence of a plan to use huo-hao for public expenses appears in a memorial from Hukwang Governor-general Yang Tsung-jen. Even before Yung-cheng issued his edict prohibiting the contribution of feng-kung , Yang expressed his fear that if lower officials were deprived of their salaries they would have no choice but to extort funds from the people. However, if no provision was made for provincial expenses, the costs of government projects would inevitably fall on the magistrates, who in turn would pass them on to the taxpayer. In order to solve this problem, Yang proposed that the chou and hsien be allowed to collect huo-hao at a rate of 10 percent. Of this, 20 percent would be sent to the financial commissioner for provincial expenses, 10 percent would be sent to the Board of Revenue to cover losses in the regular taxes remitted (yü-p'ing ), and 70 percent would be retained by the chou and hsien to meet their own administrative costs. The emperor's response to Yang's plan was extremely enthusiastic. He called it "completely correct and without a flaw," but warned Yang to be cautious in carrying it out.^[54]

At the same time that Yang Tsung-jen was implementing his plan in Hunan and Hupei, Shansi Governor No-min was formulating the scheme that would eventually become the model for the whole empire. No-min's original memorials have not survived. However, Shansi Financial Commissioner Kao Ch'eng-ling reported two years later that in a memorial dated YC 1, 5, 13, Nomin requested that the rate of collection for huo-hao in Shansi be standardized at 20 percent. Inasmuch as nowhere in the province was the rate lower than 20 percent, this meant an immediate saving for many of Shansi's taxpayers. The governor then estimated that the total huo-hao for the province would be approximately 500,000 taels. Of this, 300,000 taels were to be set aside for officials' expenses and for the public expenses of the whole prov-

ince. The remaining 200,000 taels would be deducted annually to make up wu-cho deficits.^[55]

Although they receive no mention in the official accounts of the huo-hao kuei-kung reforms, other provinces were also initiating programs utilizing this new method of funding. After receiving an ambiguous response to his own proposal to continue the use of salary contributions for public expenses, Chihli Governor Li Weichün memorialized the emperor, advocating limited use of huo-hao for this purpose.^[56] Shantung Governor Huang Ping began to investigate the collection of huo-hao in his province as early as the end of YC 1 (1723).^[57] His efforts to control rates of collection as a prelude to their use in deficit repayment was reported to the emperor early the next year.^[58] However, an elaborate scheme for sharing huo-hao on a provincial basis was already being attempted at this time. According to Wu Lung-yuan, who passed through Shantung's Yen-chou prefecture on his way to proctor the examinations in Kiangnan, the rate of huo-hao collection in Shantung had been fixed at 15 percent of the regular tax. For every tael of tax collected in Yen-chou an additional 0.03 tael was put aside for transportation expenses, 0.01 tael for the prefect, 0.007 tael for the Yen-ning circuit intendant, and 0.005 tael for the judicial commissioner. The remaining 0.098 tael (65.3 percent of the total huo-hao ) was being used to make up deficits. Once all the deficits were paid in full, the chou and hsien would be permitted to deduct an additional 0.03 tael for themselves, the remainder being allocated for public expenses.^[59] Surviving documentation makes it impossible to determine whether the situation observed by Wu Lung-yuan was typical of all administrative units in the province. Nevertheless, it is clear that some form of huo-hao kuei-kung was being practiced quite early in Shantung.

The same may be said of neighboring Honan. Toward the end of YC 1, Honan Governor Shih Wen-cho toyed with the idea of using the huo-hao of the whole province to make up wu-cho deficits. The bans on lou-kuei and salary contributions were not yet in effect, but Honan's feng-kung was already completely committed to military-supply costs and dike repairs. However, Shih still shared the common view that huo-hao was the exclusive property of the chou and hsien magistrates, and at this point felt it was unfair to require magistrates without deficits to contribute to the repayment of deficits for those who did have them.^[60] Instead, he decided to continue the use of lou-kuei to make up these shortages.

By the new year, lou-kuei was no longer a permissible remedy for government shortages and Shih proceeded to present the emperor with a detailed proposal for the use of huo-hao to clear deficits and furnish local officials with funds for their expenses. Governor Shih's plan made no attempt to alter the existing rates of huo-hao collection, rates which at the time varied between those paid by the gentry and those paid by commoners. He estimated that the average rate was about 13 percent. Given Honan's annual land- and head-tax quota of approximately 3,600,000 taels, this would provide the province with around 400,000 taels of huo-hao each year. From this total, each official would be granted personal expenses, as well as public expenses, and funds would be set aside for advance payments (p'ei-chih , probably to cover unexpected costs that would be paid back from the cheng-hsiang after approval was received from the Board of Revenue). Once the above were deducted, Shih calculated that between 150,000 and 260,000 taels would be left over to make up deficits and pay for provincial-level expenses.^[61]

The emperor's reply to Shih Wen-cho's memorial is very revealing. Unlike the noncommittal responses he made to officials who tried to bend the rules and continue the use of funds from the informal network, Yung-cheng's rescript openly praised Shih's plan. The emperor told him that this memorial could not be compared with the vague mutterings in his previous memorials. Yung-cheng pointed out that a high provincial official's duty lay precisely in this kind of thorough attention to fiscal matters. Only by calculating total available funds and determining how much was needed to make up deficits and to pay for officials' personal and public expenses could the smooth functioning of government be assured. Platitudes about morality and good government were not enough. "If one speaks in imprecise and confused generalities, uttering phrases such as 'taxes are important,' then what one says amounts to empty words on paper. What practical [result] does it have?"^[62]

What differentiated Shih's and others' discussions of huo-hao reform from previous proposals to clean up government was their focus on rectifying the dysfunctional aspects of the regular system of revenue sharing. In every case, huo-hao was recommended not only as a temporary means to repay deficits, but as a long-term source of official living and administrative expenses. The idea that virtue in administration was the product of factors other than the moral qualities of the men in office was not a new one. At least as

early as the late K'ang-hsi reign, memorials on good government referred to the need to nourish virtue (yang-lien ) by assuring officials adequate income. As we have seen, however, most officials in the central government persisted in the belief that the Ch'ing dynasty had already achieved this ideal through existing fiscal arrangements. It was not until the Yung-cheng period that the term yang-lien was applied to funds designated specifically to provide provincial officials with a substantial and autonomous source of revenue.

In the middle of the first year of the Yung-cheng reign, Shih Ichih wrote a memorial linking deficits to the insatiable demand for funds imposed by provincial governors and governors-general on their subordinates. These high officials made a great show at being virtuous (chiao-lien ), but even when they claimed to have eliminated lou-kuei and huo-hao in their jurisdictions, the amount they continued to extort was great. Shih's observations did not come as a revelation to the emperor, but his remedy reflected the sentiments of a growing number of practical reformers in the field. Shih felt that the reason corruption continued unabated was that the expenses of officials exceeded their share of legal tax revenues. No individual could possess the personal resources necessary to run a whole province. Rather than warning against greed, Shih proposed that the best way to eliminate the pretense of virtue and make it a reality was to liberalize these high officials' sources of yang-lien . Therefore, he requested that the emperor issue an edict to all the governors and governors-general in the empire to calculate the amount of huo-hao, chieh-li , salt, post, customs, and tribute administration fees for their provinces and present a list of them to the emperor. The emperor would then calculate the amounts and items that could be retained on the basis of the size and remoteness of the province and the harm and benefit pertaining to the collection of each kind of fee. Those funds approved by the emperor would be a source of yang-lien for the governor and governor-general, and all other informal sources of income would be eliminated.^[63]

The emperor did not issue such an edict at this time, but the concept of a regular source of yang-lien was integrated into most of the plans for huo-hao kuei-kung presented to the emperor. The term was used by Shih Wen-cho, Yang Tsung-jen, and No-min in their memorials to refer to the funds they proposed to set aside from huo-hao for provincial officials' expenses. Their initial pro-

posals were rather vague in this regard and it remained for specific procedures to be established for determining who would receive yang-lien , what amounts would be given each official, and how the new funds would be distributed.

The catalyst for this final stage of fiscal rationalization was introduced in Shansi late in YC 1. Governor No-min and Financial Commissioner T'ien Wen-ching decided to require that the chou and hsien magistrates remit their huo-hao in its entirety to the province's financial commissioner. The latter would then calculate the amount of public-expense funds and yang-lien to be issued to each official yamen. In all the previously memorialized plans the magistrates were allowed to deduct their own expenses from the huo-hao collected, remitting only that amount that was allocated for higher levels of government and to repay deficits. As we shall see, it was this innovation that really distinguished huo-hao kuei-kung from plans that merely coopted previously illegal levies into the regular network for the purpose of paying up deficits.

Reactions to Reform

Criticism of the new fiscal practices began to appear during the early part of YC 2. Experiments with huo-hao kuei-kung not having been publicized through official channels, most of those who commented on the reforms at this time were central-government officials who had been sent to proctor examinations in provinces where the reforms were being tested.

One of the main targets of these early critics was the newly proposed requirement that chou and hsien magistrates remit all of their quota of huo-hao to the provincial treasury. Censor Wang Chih-lin was not averse to the legalization of huo-hao or its use to provide provincial officials with yang-lien . He did object to the waste in resources that transportation to the provincial capital and back to the local administrative units would entail.^[64] Others were not so sanguine. Lo Ch'i-ch'ang, who witnessed the reforms in action while proctoring the examinations in Honan, expressed unqualified opposition to the remittance of huo-hao . During his travels, Lo had heard that in Chihli, Shantung, Shansi, Shensi, and Honan the governors and financial commissioners had demanded that all huo-hao collected on the land and head tax be deposited in the provincial treasury in preparation for expenses incurred in carrying out public business. In return for their sacrifice the chou

and hsien magistrates were given yang-lien . The amount allocated varied with the size of the jurisdiction, ranging from 600 to 1,000 taels per year. Although this may have solved the fiscal problems of high government officials, Lo reported that the magistrates were now complaining about inadequate funding from yang-lien .^[65]

Criticism was also leveled against the reforms by officials who felt that the issue of reform could not be divorced from Confucian principles of rule. A number of officials feared that legalization of huo-hao would result in higher taxes. If huo-hao were drawn upon to make up deficits, magistrates would use this as a pretext to increase the rates at which this surcharge was collected. One such critic invoked the ancient precept that stressed the rule of men over the rule of law (yu chih-jen, wu chih-fa ). If the emperor truly wished to solve the problem of deficits, he would be best advised to abandon these administrative schemes and concentrate on choosing virtuous men for the posts of governor and governorgeneral.^[66]

Probably the most famous opponent of huo-hao kuei-kung was Shen Chin-ssu. Best known as a philosopher and devoted follower of the Chu Hsi school, Shen's critique of the reforms also reflected a concern for the preservation of Confucian moral values. Unlike many other central-government officials, Shen had had a distinguished career as a local magistrate, a fact that added credence to his evaluation of the new policies. In 1723 the new emperor appointed Shen to the post of director in the Board of Civil Appointments, and in 1724 Shen was sent to proctor the examinations in Shantung.^[67] Shen also feared that the legalization of huo-hao would encourage official avarice and lead to heavier tax burdens on the people. However, his main concern at this time was the effect that huo-hao kuei-kung as a method of making up deficits would have on official morale.

In his memorial, Shen pointed out that not all deficits were the same. He felt that the governors and financial commissioners in each province should be ordered to undertake a general audit of all deficits. The deficits should then be divided into four categories: (1) those that were the result of an edict ordering officials to make public contributions (kung-chüan ) for construction or other projects; (2) those that were the result of funds being used on the official's own initiative for projects of benefit to the whole province; (3) those in which one official was taking the responsibility for deficits left by a former official; and (4) those that were the result

of embezzlement or shifting of funds by the incumbent official himself. Shen insisted that in cases where funds were embezzled by the incumbent himself, repayment should be made by that official and should be accompanied by severe punishment. In cases where an edict was issued to contribute funds the officials should be exempted entirely from repayment. He agreed that where an official was being held responsible for funds used for province-wide expenses or for deficits left by his predecessor, it was not fair to make him use his own wealth to make up the shortage. Nevertheless, Shen persisted in the belief that huo-hao was a strictly local source of funds. To use huo-hao to make up any but the official's own deficits would still be equivalent to confiscating his personal resources.

According to Shen, the desire of the reformers to restock their treasuries had led them to overlook the importance of moral factors in governing the empire. Even if an official had good cause to have accumulated deficits, the very fact that his accounts were not clean was a blot on his integrity and a sign that he did not know how to economize. Shen was convinced that, if such an official were left in office, not only would he fail to repay his previous deficits, but he would surely run up new ones in the future. The result could only bring more harm to the people and increase levies of huo-hao . Therefore, he recommended that any official with deficits be removed from office and another official be appointed in his place. The latter could then record the exact size of the deficit in the jurisdiction and calculate how much should be paid back each year from collection of huo-hao . Moreover, huo-hao rates would be fixed at no more than to percent of the regular tax quota, and any official exceeding this amount would be impeached for avarice (t'an-wu ) and severely punished.^[68]

The implication of Shen Chin-ssu's remarks was that, although the policy was not ideal, it was permissible to legalize the collection of a limited amount of huo-hao for the express purpose of repaying deficits. This was because the harm caused by deficits to official morality was greater than the potential damage caused by legitimizing huo-hao . However, collection could be sanctioned for only a specified time period and would be controlled by having a yearly quota calculated and remitted for deficit repayment. Given his conclusion that, even in extenuating circumstances, deficits were a sign of moral depravity, it is not surprising that Shen made no mention of using huo-hao to rationalize provincial expenditure.

Not all the reactions to the new policies were negative. Some

central-government officials were impressed with the reforms and urged the emperor to make improvements in their implementation. One such proposal came from Board of Punishments Vice-president Chang Ch'ing-tu, who was sent to proctor the examinations in Hunan. As we have already seen, in that province magistrates collected a uniform percentage of huo-hao , deducting their own share at the source. Chiang suggested that the chou and hsien continue to collect huo-hao at a rate of 10 percent, but that they be ordered to remit it in full along with their regular taxes. The governor and governor-general could then calculate allocation on the basis of each administrative unit's location and the complexity of its government business. In this way an official's yanglien would reflect his needs and not just the size of the tax quota in his area.^[69] Chang probably did not know that his was precisely the method being introduced in Shansi and Honan, a method others did not find so appealing.

Backlash in Honan

Much of the initial reaction against huo-hao kuei-kung was prompted by a genuine concern that Confucian principles of benevolent rule not be violated. However, concern for personal gain also motivated the reluctance of many officials to abandon the informal funding system. It is no accident that the magistrate's right to control huo-hao became the rallying cry of huo-hao kuei-kung 's most fervent critics. As long as huo-hao remained illegal and its collection unregulated, it could provide the magistrate and his superiors with a lucrative source of personal income. Even among those for whom profit was not an issue, the idea of supervised collection and allocation of meltage fees raised the spectre of new shortages at the local level. Only several years of successful implementation could dispel this fear. Consequently, the physical remittance of huo-hao to the provincial coffers became the main target of resistance to the reforms in the provinces where they were actually being implemented. By the summer of 1724, opposition to the theory of huo-hao kuei-kung was translated into opposition to the practice of huo-hao kuei-kung .

In Shansi this was manifested in the refusal of a number of magistrates to remit their huo-hao to the provincial treasury.^[70] Rapid impeachment of the recalcitrant minority soon brought the situation under control, and as a result, the reforms received little ad-

verse publicity. In Honan, magistrates also sought to forestall the remittance of huo-hao , but here they did so by joining forces with officials in the capital to discredit one of the earliest proponents of the reforms, the newly appointed Honan financial commissioner, T'ien Wen-ching. Requests for T'ien's impeachment and the simultaneous outbreak of gentry resistance to another of T'ien's policies focused the attention of officialdom on huo-hao kuei-kung and prompted the emperor's first public intervention on behalf of the reforms.

T'ien typified the kind of energetic, practical administrators who were selected for high provincial posts by the Yung-cheng emperor. Like the other officials instrumental in Yung-cheng's campaign to improve local government, T'ien had entered the bureaucracy by the irregular route.^[71] His rise to prominence was a direct result of imperial patronage.^[72] T'ien Wen-ching began his career as an assistant magistrate in 1684 and in twenty years of government service rose no higher than the rank of magistrate of an independent chou. In 1708 he was transferred to Peking and held several middle-level positions. During the last years of the K'ang-hsi reign, however, T'ien seems to have developed a close relationship with the prince who was soon to become the new emperor,^[73] and throughout his reign Yung-cheng referred to T'ien as one of his three most trusted officials.^[74]

T'ien's relationship with the Yung-cheng emperor was based in part on a common approach to administrative affairs. In their public lives, both men demonstrated a deep commitment to the aim of improving the institutions through which virtue could be revealed in government. Though reviled in his own day, T'ien was one of the great exemplars of ching-shih activism in office, and many of his memorials were republished in the nineteenth century. The minister and the ruler also shared an intense distrust of scholar-officials and the cliques that were often formed among successful examination candidates.^[75] This may explain their readiness to blame many of the problems inherent in Ch'ing fiscal administrations on favoritism and cover-ups among provincial officials. T'ien's long tenure in local government led him to place value on practical experience and not on the effete book learning of Confucian degree holders. He consistently emphasized administrative expertise in his evaluations of his subordinates and may have been responsible for the introduction of a system of official apprenticeship (shih-yung kuan ) adopted during the Yung-cheng period.^[76]

Moreover, T'ien's own writings on administrative matters were published by the government as part of its efforts to train local officials.^[77]

Although we do not know whether T'ien Wen-cbing was promoted to high provincial office with the specific purpose of advancing the cause of huo-hao reform, he was clearly an ideal vehicle.^[78] T'ien was sixty-two years old when he was rescued from obscurity and sent to Shansi as financial commissioner. As he himself often stated, he was too old to let career concerns influence his actions in office. As a Chinese bannerman without local ties or literati interests, his loyalty was to the emperor alone. T'ien's intimacy with Yung-cheng and his confidence that he was carrying out the emperor's desires contributed to his single-minded pursuit of reform.^[79] Nevertheless, his lack of tact made him one of the least popular of provincial officials. It is not surprising, therefore, that early resistance to the new policies came to focus on the person of T'ien Wen-ching.

Once the concept of the return of the meltage fee to the public coffers was established in Shansi, T'ien was transferred to the post of financial commissioner in Honan. Just as his arrival in Shansi marked the beginning of a systematic use of huo-hao to finance local government, T'ien's move to Honan was immediately reflected in changes in fiscal administration there. As we have seen, it was early in YC 2 that Governor Shih Wen-cho decided to use huo-hao to make up deficits and provide officials with a stable source of operating funds. With T'ien as his second in command, this was accomplished by means of full remittance of huo-hao to the provincial treasury.

Lo Ch'i-ch'ang's criticism of this method of local funding was soon echoed in a barrage of memorials calling for T'ien's removal from office. According to his impeachers, under T'ien's leadership "not a 'cent' is given to the chou and hsien." As a result, "the officials are poor and the people are experiencing hardship."^[80]

Shih Wen-cho responded to these accusations by pointing out that in return for sending their huo-hao to the provincial capital, all officials in Honan now received yang-lien as well as additional funds for public expenses. Because the magistrates were no longer called upon to provide their superiors with gifts and fees or submit to unscheduled calls for contributions to public expenses, their financial situation was now much better than before.^[81] T'ien's own reply was even more emphatic in its insistence on the importance

of full remittance of huo-hao . If huo-hao was deposited in locked chests along with the regular tax and sent in full to the financial commissioner, the magistrate would have no incentive to increase the demands he made on the people. Only in this way could high provincial officials ensure a steady flow of funds for all provincial expenses and halt the escalation of surcharges imposed on the taxpayer.^[82]

Yung-cheng had no personal doubts as to T'ien's integrity, but his reply to T'ien's memorial clearly reflects the experimental nature of the reforms at this point and the caution with which officials had to proceed in carrying them out.^[83]

Now that I see your explanation, although it is clear, you and the Governor seem to have managed this inappropriately, arousing suspicion and hate. Even more incredible, there are those who say this action of yours is worse than accepting bribes. Your hearts do not harbor such things, but in your actions there is perhaps a little to lead people to suspect that you do. Be careful to examine yourself, act fairly, and be flexible. You cannot let people have the slightest excuse to make trouble.

The trouble that Yung-cheng feared was not long in coming. By early July, 1724, T'ien's efforts to reform local finance were being linked to the oppression of the masses in the execution of public works. Within a short time the interests of local gentry and of opponents of huo-hao kuei-kung were joined in a scandal that could have brought an end to the rationalization of fiscal administration.

The incident that precipitated this crisis was the result of extensive dike repairs being undertaken in Honan. To ensure the success of the project, local effort had been enlisted to supply labor and materials. According to denunciations of T'ien's policies, the financial commissioner, by forcing the magistrates to send all their huo-hao to the provincial treasury, had left them no choice but to confiscate straw from the common people and compel them to transport it to the construction sites. In addition, despite the Ch'ing abandonment of corvée labor, both gentry and commoners were being conscripted to work on the dikes.^[84]

In fact, the situation in Honan was somewhat different from that described. Large numbers of peasants were transporting straw to the construction sites, but only because the government was offering a good price that would probably drop once the new harvest

was in. However, the real target of T'ien's opponents was the government's assessment of labor service on the dikes. In order to hasten completion of the project before the onset of the rainy season, T'ien had authorized the chou and hsien to apportion the necessary number of workers among the people on the basis of land holdings. One man was to be provided for every 150–200 mou of land owned. Each laborer would then be paid a wage calculated according to the amount and difficulty of the work he accomplished. Clearly, the assessment of labor on the dikes was aimed at the wealthier inhabitants of the local community, for few peasants owned this much land. T'ien himself acknowledged that those who would fill the quota were gentry households with large holdings and few adult males. As a result, "(the gentry will) hire poor people to work on the river for them. So apart from their wages, these people will also get paid by the rich to substitute for them. This is a case of the landless poor getting a means of livelihood, not a case of burdening the people."^[85]

Not everyone judged the situation as T'ien did. Before the month was over, 100 Honan sheng-yuan, chü-jen , and chin-shih had staged a protest against the labor assessment. Blocking the reentry of the Feng-ch'iu magistrate into the hsien city, they presented a series of demands aimed at halting the government's employment of hired labor on the dikes. However, their most important grievance was the government's failure to distinguish between gentry and commoners in taxation and assessment of labor service. Vigorous efforts to calm the protestors failed, and in late July lower-gentry discontent reached its climax in a boycott by all but twenty-three of the students enrolled to sit for the hsien examinations.^[86]

The examination boycott was taken very seriously by the Yungcheng emperor. Refusal to take the examinations was one of the few outlets available to the literati to express their displeasure with the government. In effect, such an act challenged the dynasty's right to rule. Despite efforts by the Honan educational commissioner and other high officials to gloss over the affair, the emperor insisted that the leaders be arrested, and in a secret rescript to T'ien Wen-ching, suggested that one or two be executed as an antidote to this kind of wicked behavior.^[87]

T'ien Wen-ching was also worried about the implications of the boycott. Throughout the ensuing month and a half, protest over the labor assessments continued to be linked to dissatisfaction

with huo-hao kuei-kung . Some of T'ien's own subordinates joined in the outcry against remittance of huo-hao to the provincial treasury, charging T'ien with using this innovation to line his own pockets.^[88] T'ien's anxiety was expressed in the growing defensiveness of his memorials, which sought again and again to show that huo-hao kuei-kung was a measure designed to end corruption and not contribute to it. The financial commissioner's fear that he had perhaps gone too far in the interest of reform was partially assuaged by the assurances the emperor appended to his memorials. Time and time again Yung-cheng urged him to ignore the hatred that his zeal had engendered.^[89] In the emperor's own words, T'ien was "one of those who really understands my wishes and I trust you to do your best."^[90]

The emperor's rescripts must have been comforting to this ageing bureaucrat, but Yung-cheng's greatest expression of support for reform came in actions, not words. Three months after these protests took place, T'ien Wen-ching was promoted to the post of governor of Honan.^[91] Of even greater significance, at the height of the conflict over reform in that province, Yung-cheng chose to make his support of the new policies public by presenting the Shansi version of huo-hao kuei-kung for the approval of the court.

From Experimentation to Empire-Wide Implementation

Prior to the summer of 1724, discussion of huo-hao kuei-kung had taken place exclusively through the medium of secret palace memorials. For the first year and a half of his reign, the Yungcheng emperor had been content to allow these officials in the provinces to examine local conditions and present plans for the solution of the fiscal crisis independent of any coercive action from above. Perhaps because of his recognition of the divergence of attitudes and interests between officials serving in the provinces and those in the central government, Yung-cheng preferred to grant provincial officials considerable autonomy in fiscal matters throughout his reign. During the early months of huo-hao experimentation, no edicts were issued on the subject beyond a reiteration of the ban on official extortion of gifts from one's subordinates.^[92] In his rescripts to the secret memorials of those who had put forth solutions to the deficit problem, he had encouraged those whose ideas coincided with his own, but had not advocated any specific course of action.

In mid-July the emperor decided to press the issue of huo-hao kuei-kung by having Shansi Governor No-min request its implementation in a memorial to the Grand Secretariat.^[93] Opposition to the reforms was mounting. In particular, magistrates in the field were gaining allies in their fight against loss of control over informal revenues. Yung-cheng could have avoided intervening in the controversy, but only by risking the abandonment of the reforms where they had already been carried out. Perhaps he felt that a demonstration of his own support for the new policies, however veiled, would force court officials to consider the merits of Nomin's plan. If so, he was soon disappointed. Rejection of No-min's request was swift and unanimous.^[94]

Only two individual responses to No-min's memorial have survived. Shen Chin-ssu, who had already expressed reservations regarding the use of huo-hao to make up deficits, offered new grounds for opposing legalization of this surcharge. In particular, he feared that by converting a surcharge which until now had had no fixed quota to a tax remitted to the provincial treasury, officials would come to regard huo-hao as a regular tax (cheng-hsiang ). In Shen's view, this would inevitably lead to additional levies of huo-hao in order to compensate for that which the magistrates were forced to send elsewhere. The result would only be hardship for the common people.^[95]

An equally emphatic condemnation was put forward by Ch'a Ssu-t'ing.^[96] Ch'a felt that huo-hao should not be legalized, but was willing to concede that it might be necessary to do as a temporary expedient for the purpose of clearing deficits. However, his greatest concern was the lack of any provision for Board supervision of huo-hao revenues in No-min's plan.^[97] As a remedy, he proposed that the financial commissioner of each province compile an account of the amount of huo-hao that could be collected each year and the amounts of the deficits that had to be repaid. On the basis of this information, a schedule of repayment could be drawn up and the Board could monitor the use of huo-hao by comparing the amount collected against the amount of deficits reimbursed. Knowledge of each province's capacity to clear its debts would then allow the Board to set a definite time for the completion of the task, after which remittance of huo-hao could be terminated.

Ch'a clearly had little faith in the moral qualities of most provincial officials, a fact that led him to oppose any plan to use huo-hao to pay for provincial and local public expenses. Not only

would this interfere with the repayment of deficits; it would also provide officials with the opportunity to embezzle government funds. Once again the issue of Board scrutiny of provincial fiscal affairs was crucial to Ch'a's objections. As presented by No-min, huo-hao allocations for public expenses would not be subject to Board approval and would not be reported in the annual accounts (tsou-hsiao ). If officials were able to embezzle millions of taels from the cheng-hsiang that was reported in the annual accounts, Ch'a could imagine only too well what would happen if the provinces were allowed to collect funds over which they alone had control.

The apprehensions expressed by these two men were valid and would continue to worry supporters of rational local funding for many years. The system of informal funding that was now threatened had grown out of the inability of the bureaucracy to cope with the tension between centralization and the need for local autonomy, and that between a belief in low taxation and the fiscal requirements of local government. The official response of the Grand Secretariat to No-min's memorial reflected their unwillingness to tamper with a system that had worked so well, albeit by masking these tensions and encouraging a double standard of morality in official life.

The Grand Secretariat's deliberations were published in the Peking Gazette (T'i-ch'ao ). Although the original text no longer exists, we can reconstruct their argument in the detailed rebuttal offered by the new Shansi financial commissioner, Kao Ch'eng-ling.

Kao Ch'eng-ling's memorial was one of the most convincing defenses of huo-hao kuei-kung written during this period.^[98] Kao began by attacking the basic misconception that huo-hao was the exclusive property of the chou and hsien. The key to his argument was the classical premise that all the land in the empire belonged to the monarch. The greatness of the kingly way (wang-tao ) being rooted in human feelings (jen-ch'ing ), the regular taxes are used to supply the state's expenses, whereas huo-hao is used to nourish virtuous officials. "Ruling men and feeding men are intimately connected." In other words, an official can be a good administrator only if he himself has the means to live. Although huo-hao is the people's money, it is also the dynasty's wealth, because all land belongs to the king. Therefore, according to Kao, the emperor, in his sympathy for his officials, decided to supplement the regular salary of all officials, including governors, commissioners, circuit

intendants, and prefects. These funds were not established for the sake of the chou and hsien alone.

Kao asserted that if, as the Grand Secretaries stated, hao-hsien belongs to the chou and hsien and should not be remitted to their superiors, then they do not understand that there is an intimate relationship between hao-hsien and customary gifts (chieh-li ). If hao-hsien is not remitted to the high officials, then their subordinates must send them chieh-li . Under these circumstances the lower officials weigh the power and influence of the governors, governors-general, commissioners, prefects, circuit intendants, and t'ing officials, and determine the amount of chieh-li to send them accordingly. Gifts are given on the occasion of the Dragon Boat Festival, Mid-Autumn Festival, New Year's, and birthdays. These are called "the four-festivals gifts." To the four-festivals gifts must be added gifts when paying a visit to the superior official (piao-li ). To the gifts on paying a visit must be added gifts of local products (t'u-i ). To the gifts of local products must be added gifts of seasonal delicacies (shih-hsien ). Lower officials send gifts to ingratiate themselves with their superiors. Once they have established a dependency relationship they can intimidate their superior to the point that they can do as they please with no fear of reprisal. Superiors crave the gifts of their subordinates and therefore cover up for them and say nothing when they are involved in malfeasance. Moral integrity is damaged and the official code of conduct is destroyed. The exploitation of the people and the deficits in the state treasury are a result of this.

Kao then anticipated the rebuttal of moralists by pointing out that banning gift-giving and selecting virtuous officials would not solve the problem. Even if chieh-li were prohibited, unscrupulous officials would find a way to defraud and give license to their insatiable demands. Even if there were those who were content with a simple life and wanted to break off the exchange of gifts, high yamen officials would have no other source of funds. They would have to do their jobs without salary while the chou and hsien peacefully enjoyed large profits. Who, Kao asked, could bear that?

For the above reasons, Kao advocated that the huo-hao of the chou and hsien be remitted to the provincial treasury. The high provincial officials would redistribute it, using everyone's huo-hao to supply everyone's yang-lien . This, Kao assured the opposition, was in fulfillment of both heavenly principle (t'ien-li ) and human feelings and was not prohibited by the law of the empire. He

stressed that when huo-hao was remitted, if the whole province incurred unavoidable public expenses, they could be allocated as needed without recourse to assessments on the chou and hsien (fen-p'ai ). If the high officials did not have to levy assessments, then the chou and hsien would not have a pretext to extort from the villages. In this way, remitting huo-hao could also eliminate private surcharges (ssu-p'ai ). Thus Kao sought to transform the very policy that K'ang-hsi refused to endorse for fear of being accused of approving ssu-p'ai into a major force against ssu-p'ai .

Kao then defended the reforms against accusations that it would burden the taxpayers. He showed that in the case of Shansi province the huo-hao in each chou and hsien had been investigated and reduced so that the rates of collection were now half as much as they had been in the past. Moreover, in keeping with the emperor's edict on tax arrears, collection was being carried out in installments over a period of three years so as to ease the people's ability to pay. Against arguments that a fixed huo-hao quota would lead to higher taxes, Kao pointed out that only by fixing the rate of collection could the people know how much tax they should pay and protect themselves against officials who collected taxes in any way they pleased. He linked the fixing of huo-hao rates with the practice of having the individual taxpayer deposit his own taxes in locked chests and reiterated that because the chests were locked and the rates fixed, the chou and hsien could not interfere. Therefore, as T'ien Wen-ching had earlier emphasized, magistrates would have no incentive to collect more than the quota. He also assuaged the fears of those who wondered what would happen to huo-hao collections in famine years by stating, sarcastically, that one did not have to be a sage to know that when the regular taxes could not be paid in full, neither would the huo-hao .

To those who complained that reductions in the amount of huo-hao retained by the magistrates would leave them with too small a sum for their expenses, Kao also had a riposte. On the one hand, if the share of funds received by the chou and hsien now seemed diminished it should be remembered that they would also save on expenses, because they no longer had to send chieh-li to their superiors and no longer had to find their own sources for public expenses. Kao felt that if officials followed the regulations and refrained from bringing large entourages to their posts, and practiced frugality and virtue, then their yang-lien , coupled with miscellaneous duties (tsa-shui ) and surplus, would be more than

enough for their food and clothing. In any case in Shansi, besides their yang-lien , chou and hsien officials also received funds for transportation and smelting taxes, and additional fodder for post horses beyond the Board quota. Busy chou and hsien at much-traveled crossroads were given over 2,000 taels in yang-lien , and that of even the simple and out-of-the-way chou and hsien was not a mere three fen per tael, as claimed by some critics.

Kao finished his memorial by assuring the opposition that using huo-hao to make up deficits did not constitute giving officials with deficits a free ride at the expense of their more virtuous peers. In Shansi the policy was still to impeach officials with deficits and retrieve the missing funds from their office and family property before declaring them wu-cho and repaying them with huo-hao .

Kao conceded that good government depended on men and not laws. In the final analysis there would be no way for him to guarantee that there would not be unscrupulous officials who would abuse the remitting of huo-hao to profit themselves. Nevertheless, he requested that the emperor order the governor and governor-general of each province to follow Governor No-min's memorial to carry out huo-hao kuei-kung . At the end of each year they could then calculate the amount of huo-hao collected, and on the last day of the year memorialize in a t'i-pen how much was disbursed for yang-lien , how much was allocated for public expenses, and how much was retained to make up deficits. In Kao's words, "under the emperor's scrutiny, who would dare embezzle?"

Armed with Kao Ch'eng-ling's penetrating analysis, Yung-cheng again submitted the idea of huo-hao kuei-kung to the court. This time he extended discussion to the Censorate and the Council of Ministers and Princes, which included the top echelon of all the Boards. He cautioned them to deliberate calmly, fairly, and justly or heads literally would roll. In case opinions were split, the emperor granted permission to present two or even three opinions.^[99]

Yung-cheng may have hoped that by expanding the arena of debate he would be presented with a mandate to implement the reforms. There could be no doubt in the minds of the officials asked to comment that the emperor favored this measure. Therefore, it is no surprise that the court submitted an endorsement of the plan. However, as the emperor's reply to their memorial shows, it was an endorsement with grave reservations that reflected the persistent differences between the emperor and his ministers on fiscal organization.^[100]

Originally huo-hao should not exist. However, the expenses and yang-lien of the whole province must come from it. Huo-hao has been collected for many years, but the chou and hsien magistrates still levy additional surcharges and embezzle state funds. Deficits amount to over several thousand taels [in each administrative unit]. The reason is that the magistrates send gifts from this money to their superiors and the superiors demand all their daily expenses from the magistrates. . . . Thus, magistrates have an excuse to satisfy their own greed and their superiors, because they too are involved in wrongdoing, tolerate the situation. These long-standing abuses must be eliminated. Would it not be better for the superiors to appropriate huo-hao to support the magistrates rather than having the chou and hsien save huo-hao to support the superior officials?

You memorialized to set a quota for each subordinate's huo-hao . But I think in each province there are large and small chou and hsien, places with high and low tax quotas. Where a chou or hsien is large and its taxes are great, if you collect huo-hao [at a low rate] it will be enough. But this will not be so in a small chou or hsien with few taxes. Only by not setting a quota can more funds be raised to handle situations of extreme need. On the other hand, if one year a locale's affairs are few and simple, huo-hao can then be reduced. . . . If one sets a quota, in the future it will become an established quota. It will only rise and never decrease. So we cannot set quotas for huo-hao .

As for your suggestion that we should let the magistrate deduct the funds he should receive and not remit it to be allocated back to him: Now when the chou and hsien magistrates collect taxes, the people wrap the money themselves and throw it in the locked chest. If, when the time comes, all the responsible officials open the chests together and examine the contents, and the huo-hao and the regular taxes are remitted together, not a bit can go into their own pockets. Then the magistrates will all know there is no benefit to themselves in collecting exorbitant huo-hao . In that case who will be willing to collect extra huo-hao? On the one hand huo-hao will be used to furnish yang-lien for all the high and low officials. On the other hand, by using it to make up deficits it will be beneficial to the state finances. If you let the magistrates take out the amount they should receive, they definitely will exact more surcharges beyond their quota and burden the people. [An

even more pressing reason is] if you have it all sent to the provincial governor there will be obvious evidence [of how much has been collected and disbursed]. But if it is deducted in the chou and hsien, it will be very hard to verify who is greedy and who is not. This is why the magistrates cannot deduct their hsien-yü .

You also said Governor No-min is incorruptible and very able and that Financial Commissioner Kao Ch'eng-ling's character is very good. You therefore suggested that these two be allowed to wholeheartedly deliberate and test their proposal in Shansi first. This is particularly impermissible. In the world, things either can be carried out or they cannot be carried out. If something can be carried out it can be carried out in the whole empire. If it [is a wrong policy], then it should not even be tried out first in Shansi. It is the same as in the treatment of an illness. If you try every medicine, one at a time, rarely will you get a cure. Thus, I cannot bear for you to use Shansi as an experimental province. Are you trying to say that in the whole empire no other governors or financial commissioners can compare with No-min and Kao Ch'engling. Are these two alone capable of implementing [such a policy]?

You also said that sending the huo-hao to the provincial treasury is not a method which can be carried out for a long time. I think whenever a law is promulgated there is no guarantee that it will never incur abuses. In the past we have had the rule of men and not the rule of law. However, the development of civil or military administration depends on one's policy. If the person [whose strategy it is] remains, the policy will develop. Laws must change to suit the situation. For example, if a person is sick you give him medicine according to the disease and you stop the medicine as soon as the disease is cured. Thus, now to remit the huo-hao is a policy to fit the situation of the present time. In the future, when the deficits are made up and the treasuries are full and officials all know how to be incorrupt, then we will not have to send up [the huo-hao ] and the [amounts collected] can also be reduced.

Are your deliberations for the benefit of the state finances? Are they for the good of the people? They are only for the good of the magistrates. You think the magistrates have their problems, but the high officials have their problems too. Your arguments must be fair and impartial. Furthermore, the court and the people

are one body. If the state finances are sufficient, then, if the people encounter a bad year, there will be enough to furnish them with relief. The people need not worry that there is not enough. This is why clearing the deficits is beneficial to the state's finances and to the people.

Foremost in the emperor's mind was the problem of eliminating corruption by rationalizing the local fiscal base. Yung-cheng located the source of local fiscal instability in the irregular funding practices of provincial officials and not in the inability or unwillingness of the people to pay taxes. More important, he recognized that the problem resulted from the inadequacy of regular fiscal arrangements on the local level. Although he acknowledged that huo-hao had its origins as an illegal surcharge, he now felt that its collection was essential to supply officials with yang-lien and provincial administrative expenses.

Traditional Chinese political economy, with its emphasis on low tax rates, carried with it an implicit injunction against raising the tax burden of the people. As we have seen in K'ang-hsi's rescript to Nien Keng-yao, the late emperor feared that raising taxes by legalizing huo-hao would be viewed as a sign of bad government. In traditional historiography, the three tax rises at the end of the Ming were seen as primary causes of the downfall of the dynasty. Rather than recognize the need for expanded revenues as population and services performed by the government increased, most rulers closed their eyes to the informal funding network, thereby giving tacit approval to corruption. The results were as Yungcheng described them in his edict. Now, for the first time, in place of exhortations to virtue, Yung-cheng hoped to supply the practical prerequisites for good government—a regular and sufficient source of provincial funds, administered through the provincial treasury, but with enough local autonomy to guarantee the flexibility demanded by changing local needs.

As for the method of implementing huo-hao kuei-kung , Yung-cheng clearly favored complete remittance of chou and hsien huo-hao to the provincial treasury. The arguments he presented in favor of this method were precisely those made earlier by T'ien Wen-ching and Kao Ch'eng-ling. However, complete remittance was a measure designed for the sole purpose of curbing corruption and should not be confused with other aspects of the reform. Many later officials interpreted Yung-cheng's remarks—that in the

future when deficits were made up, the treasuries full, and official morale had been restored, remittance would no longer be necessary and huo-hao rates could be reduced—to mean that huo-hao kuei-kung was a temporary expedient to be eliminated as soon as possible. This was a complete misunderstanding. What Yung-cheng meant was that once deficits were eliminated and efficient management restored to local finance, not as much huo-hao would be needed. Once rational financing had become the rule it would no longer be necessary to require complete remittance to guard against official peculation. However, the use of huo-hao to supply officials with yang-lien and public expenses was a policy of lasting benefit to the state and to the people.

Yung-cheng's rejection of the suggestion that huo-hao kuei-kung be carried out first in Shansi was not a rejection of the experimental approach, but rather an indication that he felt that the experiments prior to this point had been successful. The court could not have been ignorant of the fact that in addition to Shansi, remittance of huo-hao was already in effect in Hupei, Honan, Shantung, and Chihli. It is likely that the emperor saw their recommendation as an attempt not to experiment with the policy but to curtail its use in those places where it was already being carried out. By now, the emperor was ready to see the reforms extended throughout the empire.

Even more revealing was the fact that the emperor chastised the court for its reliance on virtuous officials to carry out the reforms. Implicit in the court's remarks was the Confucian interdiction against fa , laws or methods. Yung-cheng's confidence in the primacy of methods was expressed in his insistence that if a policy is good it can be carried out everywhere and if it is bad it should not be carried out at all. What had virtuous officials to do with the issue? The emperor recognized that all laws contained within them the potential for being violated. However, in his own words, "the development of civil or military administration depends on one's policy." In a subtle reinterpretation of the adage that good government relies on the rule of men over the rule of law, the emperor stated that what was important was not the virtue of men (for Yung-cheng had grave doubts about the virtue of most men in public office), but the policies they put forth. With new men, new policies could be implemented to benefit the country and the people. Moreover, as the circumstances of both change, so must the laws. Thus, here as elsewhere, the Yung-cheng emperor freed him-

self from the constraints of tradition to govern in the best way he saw fit.

The policy of huo-hao kuei-kung was not without its own philosophical underpinnings. Concern for the people's livelihood was a fundamental principle of both Confucianism and what Abe Takeo has called "Manchu benevolence." ^{[ 101]} Although on the surface the reforms of the Yung-cheng period appeared to raise taxes, in practice the emperor saw them as a means to lower the gross burden on the people by eliminating all other surcharges. Whereas proponents of Confucian statecraft placed their faith in the morality of the scholar in office and at home to promote the general welfare, early Manchu rulers harbored a deep distrust of the degree-holding elite. It was this distrust that prompted the Ch'ing reduction of gentry tax exemptions, as well as Yung-cheng's expansion of the number of non-degree holders in office.^[102] The emperor felt that court opposition to huo-hao kuei-kung reflected an exclusive concern for the profits that a magistrate could gain by milking the people of their taxes. This abuse of office holding as a source of personal wealth violated the major tenet of Manchu benevolence or what Frederic Wakeman has labelled Manchu paternalism—the unity of national welfare and people's welfare. This concept was expressed in Dorgon's compact (yüeh ) with the Chinese people when he first entered Peking in 1644.^[103] Inherent in the statements of both Dorgon and Yung-cheng was a belief that the corruption of Han officials was the main threat to an almost sacred bond between the dynasty and the people. Moreover, this bond was the foundation for the prosperity of all the inhabitants of the realm.

Embodied in Yung-cheng's fiscal program was a bold challenge to the vested interests of the Han scholar-gentry. Therefore, although his edict was an unqualified endorsement of the huo-hao kuei-kung reforms, the emperor still felt it necessary to proceed with caution. In the face of only grudging acquiescence on the part of officials in the central government and growing opposition on the part of many officials and gentry in the provinces, Yung-cheng was forced to leave the implementation of huo-hao kuei-kung to the discretion of the individual governors and governors-general in the provinces. Once again, the palace-memorial system provided the vehicle to ensure that discretion should be exercised in the way the emperor intended.