Research On The Institutional Change Of Salt-Tax Of Nanjing National Government(1927-1937)

"The world is all for profit".Based on the hypothesis of“economic man” and from the point view of economists,people’s productive and unproductive activities are not only for fame but also for profit.The tax on salt is an important source of financial revenue as salt is a necessity for daily life.Over hundreds of years in Chinese history,the reforms of salt tax either on rent-creating activities or rent-seeking activities are all aiming at financial goals.In Qi and Han Dynasty,the policy on salt monopoly helped the government accumulate wealth and prevented foreign invasion.The salt dealer monopoly and sales area system was first for med in Ming Dynasty.While in the early Republic of China,the salt market appeared high price,private salt trading,and also poor quality of salt,which leads to shortage of government revenue on salt.At the same time,the refined salt had no development because it had no sales location.During the period of Beiyang Government,the market was governed and controlled by western countries who tried to carry out the free trade market.However,the development of salt tax policy was hindered by the rent-seeking activities.Rent-seeking theory was first introducedinthemid-1960 s.As a branch of economics,it broadened there search perspective of economics,and clarified that both the market means and non-market means of activities can be used for maximizing benefits.Rent-seeking activities consume economic resources but can not increase wealth.Rent-seeking theory inherits the tradition of public choice theory,and takes the government as an active participant in market,which enriches the theory of economics greatly.With the theory of rent-seeking,it will be an effective analysis on the institutional change of salt dealer monopoly and sales area system for the period of Nanjing National Government.Policies contribute to the performance and policies are provided by the government,so the institution and the rent-seeking are interwoven together.The economic system which is beneficial must be the goal of rent-seeking,and the government is the object of rent-seeking as the provider of system.When the Nanjing national government was just established,the government was confronting short of financial saving,while the military expenditure was huge,so the government decided to put taxation on salt and began its own rent-creating activities.At this time,because the contribution of refined salt merchants was smaller than traditional merchants,the government took the traditional merchants as the first choice for rent-setting.The government did not hesitate to use methods such as arresting merchants to borrow money from them,while at the same time forcing them to check their tickets through free trade.After being guaranteed by the government to restrict the development of refined salt,the rent-seeking business obtained its legal status and forced the government to issue the general rules of refined salt which restricted the development of refined salt.In 1928 the National Government of the Republic of China opened up public opinion to gain popular support.Refined salt merchants,progressive people and some officials abolished the old salt-tax system through various means of rent-seeking.The traditional merchants opposed free trade through all kinds of non-productive means.Facing of the strong public pressure,the Nanjing government had to issue the new salt law in May 1931.However,the new salt law stipulated that the implementation date will be determined by the administration,which gives the traditional merchants time to continue to rent-seeking.In July 1931,the National Government of the Republic of China issued eighty million of the salt tax bonds,but the traditional merchants were unwilling to subscribe to the bonds on the grounds that the introduction of the new salt law would result in the loss of credit.The National Government of the Republic of China had no choice but to declare that the new salt law would not be implemented until the salt tax bond was repaid.The refined salt merchants and the people forced the government to issue the Organic Law of the Salt Administration Reform Commission and the interim measures on the marketing of refined salt to implement the new salt law.The traditional merchants opposed the implementation of the new salt law on the grounds of lacking of conditions and compensation.It was also under the influence of the rent-seeking activities of the new and old salt merchants that the government vacillated from side to side in order to realize its own interests.Finally,although the new Salt Law clarified the free trade system,but it never implemented in practice until the war of anti-Japanese.In this paper,based on rent-seeking theory and the historical research of the development process of salt tax system changes during Nanjing National Government is clearly stated.The process of institutional change is a process of redistribution of interests,including rent-creating by the government and rent-seeking to rent-protecting by the salt merchants.It was the rent-seeking activities among the multi-subjects that led to the abandonment of the monopoly system in the National Government of the Republic of China.