Duke Huan asked Guanzi further，“A man named Qing Shi has asked me why I have not strictly administered all the people with skills and talents．”Guanzi asked．“What does‘strictly administer all the people with skills and talents’ mean?”Duke Huan said，“That means to let the wise people contribute their wisdom to the state tooth and nail, let the tacticians contribute their ideas to the state tooth and nail, let the craftsmen also contribute their skills to the state tooth and nail．Do you think the state can be kept in order and governed effectively this way?”Guanzi replied，“This point of view of Qing Shi is wrong．When salaries conferred by the sovereign are insignificant, the intellectuals will not devote their lives to the state．When the value of money is low，intellectuals will not attach much importance to rewards．When prices of tens of thousands of things are low，the people will not work hard to make a living．When all these three problems coexist in the state，how can it be kept in order? If the state can manage to control seven tenths of the grain output and let the other three tenths of it circulate among the common people，the tacticians will contribute all their ideas to the state，the wise people will contribute their wisdom fully，and the brave ones will not hesitate to devote their lives for the sake of the sovereign．The point of view of Qing Shi is justified．He does not know anything about the degree of seriousness of the issues at all. So，his words are unwarranted．”

Duke Huan asked Guanzi．“The Zhou Dynasty used to control the whole world and at that time，sovereigns of all feudatories submitted to its authority and orders issued by the Son of Heaven were carried out all over the world. However，the regime was toppled by its subjects．What kinds of measures do you think the subjects took?”Guanzi replied，“The Son of Heaven should ask different areas to offer different things to him and then put these offerings into circulation together with other goods．Allowing gold to be traded freely on the market is one economic tactic．Allowing pearls produced in Jiang Yang to be traded freely on the market is one economic tactic．Allowing Zeng Qing (it might be the name of a kind of metal) produced in Mount Ming of the state of Qin to be traded freely on the market is another economic tactic．Thus，the interest on things can be multiplied and small lands can be enlarged．That is the result from taking the right economic policies．”

Duke Huan asked，“Is it enough to govern the whole world by taking right economic policies only?”(Guanzi said：)“Given that the price of grain had risen ten times higher compared with the price in the past，but all other commodities were cheaper，high-ranking officials of the government would call in some merchants and tell them：‘Please sell out my store of grain to purchase other commodities for me．’If this is the case，they will reap a profit nine times higher compared with the amount they invested，because grain is expensive and all other things are cheap．Thus，the high-ranking officials can collect nine tenths of the assets of the state．When the price of grain come down to the normal level。they will dump the properties they collected at prices two times higher compared with the prices they paid previously．Thus，most of the assets will be kept among the people，and nine tenths of the money of the state will be in the hands of these officials．As a result，they will control almost all interest gained by both grain and assets of the state．Under such circumstances，the Son of Heaven will be somewhat like a guest，and all orders will be issued from these wealthy and powerful officials instead．People who are clever at doing grain business will emigrate from the state and sovereigns of other states will accept them and employ them in their governments．These people will then build up cliques to manipulate the prices and monopolize the market for all kinds of commodities．At home，all the high-ranking officials are planning to take advantage to benefit themselves but do not serve the regime loyally．And abroad，sovereigns of other states are engaged in building up cartels with one another to manipulate the market．People who are clever in the grain business will leave for other states．As a result，the authority of the Son of Heaven will be lost．”Duke Huan said，“I see．”

Duke Huan asked Guanzi further．“Is there any way to maintain power over the whole world during a lifetime?” Guanzi replied，“Please do not popularize that method all over the world，but use it inside our own state exclusively．”Duke Huan asked．“What do you mean?”Guanzi replied．“Factors such as the size of the state，the actual conditions of various fields，the amount of grain consumed by the whole nation and grain surplus of each year are all fixed．A sovereign can maintain the throne by maintaining the grain produced in his state．In other words，no matter what the sizes of the counties are，large or small，all of them should save some money so that they can grant loans to the common people of the local regions．When the harvest season comes in autumn，the price of grain will come down by one third．The sovereign should issue an order to ask all counties (1i and yi under supervision of the high-ranking officials) to pay taxes in grain to the state．Prices offered by the government will be in accordance with the market price．Thus，some grain is kept by the state．About two thirds of the grain can be controlled by the sovereign this way．During spring，it is natural that the price of grain will go up two times．During midsummer，grain is lent to the common people，according to the market price，to facilitate farm work and all farmers can borrow grain from the state．During autumn，an order should be issued to them as follows：‘You people have borrowed some grain from the state．Now the sovereign is asking you to pay back the amount of grain you borrowed with money．’If the common people say that they do not have money，they will have to pay in grain．Thus，three tenths of the harvest of the year will belong to the state．So，making good use of the increase in the price of grain and taking advantage of the changes in the market caused by the four seasons are all efficient measures for increasing wealth of the state．The sovereign can take control of the grain stores of the high-ranking officials through distribution．He can also take control of the grain kept by the common people through measures taken to regulate the price according to price fluctuations caused by the four seasons．Grain is hoarded at the time when the price is low．Then it is sold when the price goes up certain extent．That is a very efficient economic policy．If this is done，how can high-ranking officials have a chance to corner the grain market? Offer a purchase price two times higher than the price of grain sold in other states，and then grain produced in others states will flow into our state．Hence，a sovereign who is accomplished in maintaining power over the world will attach much importance to regulating the prices and distribution so that our stocks of grain will not flow out to others states．Grain will pour into places where the price is higher like water flowing down to lower-lying areas．At times when the harvest of the state is not bad，invest some money in grain．As a result，the price of grain will go up two times and therefore the grain store of other states will flow into our state．Hence，if one share of grain is stored，it will attract another share from other states．Thus，assets of our state will not be plundered by other states，and the high-ranking officials will not be able to hoard too much grain．Sell stored things when the prices are higher，purchase things when prices are low to store them to gain future profits．Thus，the income of the state can reach as much as the sum of the incomes of ten other states combined．And as a result，all other states will submit to your authority and all officials will serve you with loyalty．That is the method for governing the world with the right economic policies established according to the degree of seriousness of various issues．It is also regarded as a very efficient method for the state finances．”
Duke Huan asked Guanzi，“Would you please tell me something about the accounting of a state?”Guanzi replied，“If a sovereign loses control over the financial conditions of his high-ranking officials，he will not have any subordinates．If he loses control over the financial conditions of the common people，he will lose the foundation of the throne．So，the financial conditions of a high-ranking official should be controlled according to the economic statistics of a county under his supervision．The financial conditions of a county can be controlled according to the economic statistics of a xiang under its supervision．The financial conditions of a xiang can be controlled according to the economic statistics of one family under its supervision．The financial conditions of one family can be controlled according to the economic statistics of one member of the family．”Duke Huan asked，“What kind of methods should be taken for regulating national accounting and financing?” Guanzi replied，“According to the standard of the sum of money put in circulation，every county should have its own statistical data based on the quality of the land of the local region，every xiang should have its own statistical data based on the quality of the land of the local region，and every family should have its own statistical data based on the expenditure of all family members．Hence，if the sovereign does not take action to record the data of each county on time，he will not have any partners．If he does not take action to record the data of each xiang on time。he will not have any subordinates．”

Duke Huan asked．“How can that policy be executed?” Guanzi replied，“For a sovereign to be able to unify the whole world，the wealth of his state is kept among the common people．For a sovereign being able to establish one of the most formidable powers，the wealth of the state is kept among the high-ranking officials．But for a sovereign whose regime will be toppled and whose states will be ruined，the wealth of the state is kept in small suitcases．” Duke Huan asked，“What does’ wealth of a state is kept among the common people’ mean?”Guanzi said．“Grant money saved at Zhan Tai to the people of Yang Cheng．Lend money stored at Liu Tai to the people living on the northern side of the Ji River．Then you can issue an order to people all over the state as follows：‘When the common people are wealthy，the sovereign will not be left alone in poverty．When the common people are impoverished，the sovereign cannot enjoy his wealth alone．Hence，the state will not collect money or fabrics from the common people any more and there will be no assets stored in the national depots from now on．All wealth will be kept among the people of the state．’At times when the harvest of the year is good，the price of grain will come down considerably to a half compared with the price of the last year．Then you can ask the people to repay the amount of money they borrowed in grain．Thus，grain produced by the state will belong to you and money will go to the common people．When all the money of the state is in the hands of the people，the value of the currency will depreciate，and the price of grain will go up one and a half times．The common people keep two fifths of the grain output of the previous year and the state also controls two fifths．During the forthcoming year，the situation is stilI the same，so the state can control four fifths in two years．Thus，only one fifth of grain will be kept among people of the state．As a result，the price of grain will go up three times．If poll-tax is collected，the state can get only ten qian from each person．However，if all the people need to buy their food supply from the state，and if the price of grain produced by ten mu is increased by ten qian，the amount the state gains from each person is about ten times higher than the poll-tax．This level of profit is gained because the right economic policies have been taken to regulate the prices and circulation of currency and grain．Then grant half of the savings of the state to the common people．Divide the grain of the state into four portions．Make sure that three portions are held by the state and only one portion is divided among the common people．Then this measure will be repeated all over again．Since parts of the territory of the state have been conferred upon high-ranking officials，they accumulate wealth and become antagonistic towards the throne．Deprive them of their assets by enforcing the national accounting system．”

Duke Huan asked，“How can I deprive them of their assets by enforcing accounting system?”Guanzi replied．“When you have stored three fourths of the state’s grain，then you can instruct people all over the state to buy grain from the state，and you can sell as much as possible．Thus，the price of grain will come down by three tenths．Then purchase one fourth of grain kept among the high-ranking officials and other people at the current market price．Thus，the high-ranking officials are not able to drive up the price any more．After that，salaries can be granted in terms of money instead of grain，thus，you can control all the state’s grain．Then grant seven tenths of the store of grain to the people of the state．That means you keep three tenths and lend the other seven tenths to people who don’t have enough means of survival．That will also show your benevolence．Then the price of grain will depreciate because the right economic policy has been used．Regulating the price of grain of each xiang to restrain the wealth of the high-ranking officials and strengthen the state is also an efficient economic policy．Granting grain and other properties to the people to popularize the benevolence and righteousness of the throne and to reduce the prices of tens of thousands of items is a right economic policy as well．So，grasp all opportunities and take timely suitable actions．So，it is said：A sovereign who is able to unify the world should take opportunities to act at the right time．A sage can take the chances provided by the ever changing situation．”Duke Huan said，“I see．”

Duke Huan asked Guanzi，“Once Te told me：‘If the mourning apparels of the Son of Heaven are restricted to no more than three hundred sets。it will be considered to be too frugal．However，in order to let the high-ranking officials use up their wealth，this standard should be applied to all high-ranking officials．’What do you think of that?’’Guanzi replied，“That is not the right standard a state should set．When the high-ranking officials are allowed to erect huge tombs and luxurious residences，it will not only impede the farm work，hut also exploit laborers who are selling their labor for survival．That is not helpful to the state at all．People should not be allowed to wrap the coffins in a lot of fabric and then bury it under the ground．A sovereign who is accomplished in governing the state will issue the right economic policies of greater or less urgency according to the situation of the supply of grain and other commodities．That is called national accounting．”

Duke Huan asked Guanzi，“Would you please tell me the reason for power struggle?”Guanzi said．“The reason for power struggle is due to the number of the relatives of the throne．”Duke Huan asked，“Why do you say so?”Guanzi replied，“If the sovereign has ten sons，the territory of the state will be divided into ten parts．If the sovereign has five sons，the territory of the state will be divided into five parts．Three generations later，the offspring of these people will still belong to the same clan．Ten generations later，they will become the people with memorial tablets of their ancient ancestors sacrificed only at the same temple．So，the bodies of people who died during wars will spread all over the state，and military actions will never stop．Moreover，people clever at manipulating the supply and demand of commodities travel around to take advantage．So，it is said，‘Do not confer your land on others．Do not give away your resources．’These resources can be used again and again．Prices of commodities produced by them are fluctuating according to the changes caused by the four seasons．A sage sovereign will take economic policies of greater or lesser urgency to administer the prices．He will take the right measures to maintain prices，or will adjust prices of commodities．He will also act according to the principles of benevolence and righteousness to manipulate prices．Thus，the throne can be maintained as long as Heaven and the Earth are in existence．That is the most important rule，and all sovereigns should master it．"

Duke Huan asked Guanzi，“Would you please tell me how to calculate the wealth of the state?”Guanzi replied，“On average，there are three adult males in each family． People living on a land of six square li should contribute one chariot to the state together，and each chariot should be accompanied by twenty-seven people．The way of calculating the wealth of the state is to make clear how much cultivated land each unit of six square li has，and make investigations to gain information about the quality of the fields，the total output of these fields，the price of grain produced there，how much money it needs to take care of these fields and how much the grain produced is worth in terms of money．So，the amount of currency of the state can be known by calculating the total amount needed by all these units to make sure that this sum and the value of the grain output match each other．That is the so-called calculating the amount of wealth of the state．”

Duke Huan asked，“What kind of measures shall I take to enforce it?”Guanzi replied．“Disburse salaries to intellectuals in terms of money．Collect taxes from fiefs conferred upon the high-ranking officials in terms of money．Pay the people who work for the government and pay for horses purchased by the state in terms of money．Thus，grain will be controlled by the state and money is circulated among people all over the state．The price of grain will go up ten times due to the enforcement of this policy．As a result，prices of tens of thousands of items will be reduced by two tenths．Materials such as leather，tendons，feathers，bamboos and all utensils useful to the state and the sovereign can be collected under contract．These things can be stored in the local governments of xiang and counties．Then issue an order to people all over the state as follows：‘On … day in … month，make sure all debts are paid．If you have borrowed from the xiang，pay back to the xiang．If you have borrowed from the zhou，pay back to the zhou．’So it is said that all debts can be paid within one day．All economic policies issued by the state should be based on the statistics of grain production．The  collection of those above-mentioned materials is also done according to the national accounting which arranges the finances of the state．Nowadays，even though the currency is controlled and stored by the government，never the less，merchants manipulate the prices of tens of thousands of commodities by handling the currency skillfully．When the value of the currency goes up，prices of tens of thousands of other items will come down．When the value of currency comes down，prices of tens of thousands of other things will increase．When the price of grain is high，gold will be cheap．If the sovereign can take firm control of grain，currency and gold and keep a balance between these three，the whole world will be kept in order．That is the right method for unifying and maintaining the world．”

Duke Huan asked Guanzi，“Now that I have been taught about the methods for regulating prices and distribution，the degree of seriousness of various issues and national accounting, would you please tell me something about regulating the economy of the state with regard to the offerings used in ceremonies?”Guanzi replied．“The area between Lang Du and Feng Hui Kou and the region from the northern side of Long Xia till Hai Zhuang are suitable for raising sheep，cows and other kinds of livestock．Why don’t you make good use of the livestock produced by these areas to carry through policies on financing?”
Duke Huan asked，“What does ‘make good use of livestock produced by these areas to carry through policies on financing’ mean?” Guanzi replied，“Appoint one official to each of these grasslands，such as Feng Hui Kou and ask them to record information on the propagation of livestock and to take charge of related affairs．For dutiful sub-officials who have not made any mistakes in performing their tasks in raising livestock，their salaries and ranks will be promoted from ‘Du’ level to the county level．Those high-ranking officials who don’t provide their stallions for mating with the livestock raised on grasslands will be regarded as disregarding the rules of propriety．High-ranking officials who have committed this kind of mistake will be forbidden to hold ceremonies both in spring and in autumn during which cows or sheep are offered for sacrifice．Those common people who have committed similar mistakes will not be allowed to participate in ceremonies held to worship the door-god and the deities in charge of mountains．Thus，the monthly income of livestock used as offerings of Feng Hui Kou and Long Xia will reach a ten times higher level．This policy is established based on the rules of propriety and is aimed at both making money from the lands normally regarded as useless and monopolizing the marketing of livestock．Thus，the finances of the state can be well organized．”

Duke Huan asked Guanzi，“Would you please tell me something about the geographical conditions of a state?’’ Guanzi replied，“Some areas are mountainous，some are low-lying and well watered，some areas consist of both plains and mountains，some places face the threat of flood all year round，and some face the danger of soil erosion．Normally，sovereigns often worry about these five geographical conditions of their states．In mountainous areas，normally one third of the grain produced there should be stored by the state．For areas that are low-lying and well watered，normally one third of the grain produced there should be stored by the state．For areas consisting of both plains and mountains，normally three tenths of the grain produced there should be stored by the state．For places suffering from flood all year round，normally two tenths of the grain produced there should be stored by the state．For areas facing the danger of soil erosion，the state should take careful action to bring grain from other states to support the people there．People living there can focus on sculpting beautiful and exquisite utensils made of wood and then trade them for grain produced by other states of the world．These are timely methods used to solve problems caused by the five kinds of unfavorable geographical conditions．"

Duke Huan asked Guanzi，“Suppose that all the territory of the world were under my control and sovereigns of all other states were obedient to me，would it still be necessary to take these measures to solve problems caused by the unfavorable geographical conditions?”Guanzi replied．“The current situation of the world is that the money surpluses of all states are still in the hands of their sovereigns．So it is necessary to use suitable economic policies to regulate the prices and distribution of all the items and also to make sure that things produced in areas of all four directions can complement one another to meet the needs of the people and so that the finances of the states can be balanced．So，it is said：As a sovereign of one of the most powerful states，you should regulate the prices of tens of thousands of commodities to compete with other sovereigns．As a Son of Heaven holding power over the whole world，you should control the fluctuation of prices with money to maintain balance．Export some goods to other states if the markets are overly supplied，and forbid the export of goods when they are inadequate to meet the needs at home．A sovereign should inspect the economic conditions of all xiang and zhou in good time，so that people will not compete with one another for the sake of profits．Therefore，they can feel well settled in their hometown．All sovereigns should adhere to the most important policy of taking firm control over the economic situation of their states．And that is the  so-called manipulating the economy of the state as a whole．”