Rising Silk Prices: The Clan’s Countermeasure

As Emperor Taizong led his ministers to observe the Dragon Cavalry’s performance, Li Zhi’s silk business finally began to impact the clans that had long monopolized the industry.

Thanks to his improvements to the spinning machine, the efficiency of silk thread production had soared. Coupled with the vast scale of his workshops, the daily consumption of raw silk was substantial. With a large supply of silk thread, Li Zhi was able to produce more and more top-grade silk. This caused a dramatic shift in the previously stable market.

What’s more, this shift was highly unfavorable to those clans. Because Li Zhi’s massive purchases drove up the price of raw silk significantly, while the efficiency of the new spinning machines slightly lowered the price of high-quality silk. Although high-grade silk was highly profitable, these adverse factors barely affected Li Zhi. However, the increased costs forced the prices of mid- to low-grade silks to rise accordingly.

As a result, many mainstream consumers of mid- to low-grade silk had to cut back on their purchases. Some even downgraded their consumption—those who once bought mid-grade silk began purchasing lower grades, while those who could barely afford low-grade silk had to reduce their consumption or stop altogether.

It’s important to note that despite the rich profits from high-grade silk, its overall market size was not very large. The best-selling products had always been these mid- to low-grade silks. This situation caused a severe contraction in the silk trade controlled by the clans, forcing them to gather and discuss countermeasures.

In the ancestral residence of the Lu clan in Fanyang, more than ten clan heads convened to address the soaring prices of raw silk. Lu Zhaolin, the head of the Lu family, wore a worried expression as he spoke, “Fellow heads of families, with raw silk prices having doubled, our days are surely difficult from here on.”

Dou Xiao, head of the Dou family, sitting first on the left, added, “Raw silk is already scarce throughout the northern regions, and in my opinion, prices will rise even further.”

Opposite him, Zou, head of the Zou family, said, “The price of thin gauze has doubled and other low-grade silks have increased by fifty percent. At this rate, many customers simply won’t be able to afford them.”

Lu Zhaolin continued, “Although sales of high-grade silk have surged, our profits have taken a sharp hit.”

He sighed, then added, “I hear that the spinning machine developed by Prince Jin has increased output by tens of times, so the price of raw silk barely affects him.”

Another person chimed in, “Don’t forget that Prince Jin employs refugees for silk spinning. Aside from food and lodging, there are no other expenses.”

Everyone nodded at this. In truth, these were only temporary cost advantages for Li Zhi. For now, he merely dispatched people to purchase raw silk from various regions and transport it to his workshops for further processing. With superior equipment and manpower, controlling costs was naturally easier.

But soon, the refugees would gradually return home. Then Li Zhi would have to pay wages to hire workers, reducing his cost advantage accordingly.

Yet the clans failed to consider this. Their only concern was how to cope with the immediate crisis.

The clans monopolized the sales channels, purchasing silk from the people and selling it. As raw silk prices rose, so did the selling price for the people, making them the first victims of this price surge.

One voiced, “It’s useless to talk about this now. We must find a way to sell off the silk stock in our hands.”

Zou suggested, “Business within the empire is surely tough. Perhaps we should increase trade with foreign merchants, which might bring new opportunities.”

Lu Zhaolin sighed, “The Maritime Trade Office imposes heavy taxes and restricts transaction volumes, so expanding foreign markets is not easy.”

Zou replied, “Foreign countries mainly purchase mid- to low-grade silk, and domestic consumption is now greatly affected.”

He smiled darkly and said, “The court surely cannot just stand by and watch this silk go unsold.”

His words struck a chord. Though rising prices had eroded some domestic purchasing power, total silk production had not declined. If the court turned a blind eye, the clans would have to reduce their purchases. Since the court forbade private silk trade among the people, they would be left unable to sell their silk.

This would strip the people of a major source of income, and their lives would quickly become difficult.

Having realized this, the clans no longer worried about their silk going unsold. Their mood lightened considerably.

Lu Zhaolin smiled and said, “Foreign merchants won’t haggle—they deal with the wealthiest clients.”

With a solution in sight, the atmosphere grew more relaxed.

Zou, clearly disgruntled, said, “That Prince Jin has caused us no small trouble. He’s made a fortune but brought us endless headaches.”

Lu Zhaolin nodded, “Brother Zou speaks truly. As a royal prince, he should study diligently, yet he competes with commoners for profits. It’s truly infuriating.”

Someone suggested, “We should think of a way to punish this prince, lest he grow reckless and harm our interests further.”

Dou Xiao spoke up, “I have an idea. I wonder if it might work.”

A man nearby urged, “Please share it with us.”

Dou Xiao explained, “Now is the season for silkworm farmers to raise their silkworms. Why don’t we pre-order some cocoons from them?”

Seeing their puzzled looks, he clarified, “Since the rise in raw silk prices no longer affects us much, we can hoard cocoons. When the time comes, won’t we be able to make a hefty profit?”

His proposal immediately brightened the others’ eyes. Although the court restricted private silk trade, control over raw silk was not very strict. This gave them an opening.

They could leverage their financial strength to influence raw silk prices. If this idea succeeded, they could freely manipulate silk prices.

Though court regulations prevented long-term control over raw silk flow, short-term control would suffice to grant them pricing power.

This strategy would be profitable and would also prevent Li Zhi from acquiring enough raw silk, forcing him to scale back production.

At that point, Li Zhi’s efficiency advantage would be greatly weakened, and he would no longer pose a threat to those present.