Duke Huan asked Guanzi，“Would you please tell me something about ‘Shi Zhun (Shi Zhun refers to totally losing control of a situation)’?”Guanzi replied，“Shi Zhun means that we are under control of other states all over the world． However，we are not able to do anything to change it．That is the so-called‘Shi Zhun’，”

Duke Huan asked，“What does that mean．?”Guanzi replied．“If other states of the world were attacking us，officials capable of safeguarding the state and have well designed plans，should be conferred with some lands．Those officers able to accomplish achievements during military action to defeat enemies and gain fame should also be conferred with some lands．As a matter of fact，the territory should be conferred to your officials by other states of the world，but not by yourself．If ten li of land had been conferred to your officials by the world，twenty li would be conferred to them if there were another military action launched by other states．Thus，the wealthy people of our state are not enriched by yourself but by sovereigns of the neighboring states instead．Any time the neighboring states take military action against our state，the wealth of the rich people of our state would be increased two times．As a result，the poor people would become even poorer and the rich would become richer．That situation occurs because you have lost control of the situation．”

Duke Huan asked，“What does that mean?”Guanzi replied．“If other states of the world attack us，the common people will put aside their ploughs，ploughshares and fetch their daggers and leave their homes to defend the state．Thus，the fields of the state cannot be cultivated．This kind of disaster is not caused by natural catastrophe but by human beings instead．Under the stressful conditions of war，the sovereign will ask all taxes to be paid on the same day the order is issued．The common people are forced to sell their assets and grain at half-price to accumulate the amount of taxes they need to pay．Merchants will take the chance to store these things．Thus，half of the total wealth of the state will be controlled in their hands．When the war is finished，the common people will go back to their old jobs again，and the prices of things will return to previous levels．The merchants will sell off goods they hoarded．In that case，a little less than one half of the money of the state will be kept by them．Thus，the value of money will be driven up by three tenths，but the prices of other items will come down by three tenths．The merchants will do business within a profit range of three tenths of the original capital they invested．As a result，all assets of the state will be controlled in their hands and the sovereign cannot do anything to change the situation．Thus，the common people will enslave one another based on the wealth they possess and the sovereign becomes helpless．In this case，the sovereign loses control of the situation because he is not able to regulate prices and supply．”

Guanzi said，“If the sovereign takes control of essentials，the wealthy merchants will not have opportunity to focus on trifles．If the sovereign takes control of the beginning，the wealthy merchants will not have opportunity to focus on the end．As the goods and their transportation，they should be put in the markets of communication centers to make profits．As for grain，the right measures should be taken during spring and autumn to regulate consumption and supply．As for tens of thousands of other goods，purchase contracts should be made in advance．So，whenever there is any fluctuation of prices，the right actions should be taken in time to deal with it．So，if all paths for buying and selling are blocked，the merchants will not have the chance to continue to do business．If the distribution of all goods is firmly controlled by the sovereign，the merchants are no longer able to drive up the prices of goods．So，if the prices of items all over the state are firmly controlled by the sovereign，there will be no merchants traveling to buy or sell things，and the prices will remain reasonable．That is called the economic balance of the state．If the sovereign can take the right methods to regulate prices and distribution，all profits will belong to him．’’

Guanzi said．“If a sovereign is clever at administering commerce and industry，he will allow the government to set up business centers directly．When the government is doing business，all the markets of the state will be sluggish．When the markets are sluggish，there will be enough people working in the fields．When there are enough people working in the fields，there will be enough wealth created to meet the needs of the common people．When the common people have enough wealth，the source of taxes levied by the sovereign will not dry up．However，the current situation of the state is not the same．When the merchants sell commodities at high prices，the sovereign will buy at high prices correspondingly，because he is incapable of making the high prices lower．When the merchants sell commodities at low prices，the sovereign will buy at low prices correspondingly，because he is incapable of making the low prices higher．A sovereign who is clever at governing the world is not the same．When the merchants are charging too high prices for commodities，he will make the prices come down．When the merchants are charging overly cheap prices，he will drive the prices up．Thus，the money surplus of the wealthy will be used to support the poor people who are short of the means to make a living．So，sovereigns not being able to regulate reasonable profits among the common people will never put their states in good order．Those not being capable of discerning the subtlety of commerce and industry cannot organize their states well．If the sovereign can manipulate prices effectively，the income of the state can reach twenty times higher．If the sovereign can use the right policy to monopolize salt and iron，the income of the state can reach twenty times higher．If the sovereign can use the right policy to monopolize tin and gold effectively，the income of the state can reach twenty times higher．In that case，all expenditures of the five government departments can be settled by the state alone and it is no longer necessary to collect money from the common people．”

Duke Huan asked Guanzi,“Will there be an end to policies on regulating prices and distribution according to the degree of seriousness of various issues?”Guanzi replied，“It is somewhat the same as the four seasons taking turns to return again and again．There will be no end at all．When the state encounters some problems，the expenditure of the government can be met by regulating the price of grain．Thus a money surplus can be accumulated and then used to reward people who contributed to the state．If all other states of the world submit to your authority and you can maintain the power of the whole world，then you can enrich the honest，kind and righteous people，so the common people will adhere to the important rules of propriety and not commit misconduct any more．Regulating prices and supply according to the degree of seriousness of various issues is so important that it can be utilised to launch attacks against other states if they are disobedient．It can also be relied on to popularize the principles of benevolence and righteousness if the sovereigns of all other states submit to your authority．”

Guanzi said，“If the harvest of one year is enough to support the state for five years，you can act to drive up the price of grain five times higher．If the harvest of one year is enough to support the state for six years，you can act to drive up the price of grain six times higher．In this case，grain produced over two years is enough to support the whole state for eleven years．In addition，if you are able to transfer the wealth of the rich people to help the poor．you will be able to unify the whole world．If you can ensure that people all over the world will accept this policy and adhere to it，you will be able to keep the whole world in order．As to governing the people of the world，they can certainly be controlled，but you should make sure that they themselves don’t realize it．And they can certainly be employed，but you should make sure that they themselves cannot realize it either．So，sovereigns clever at governing people all over the world will not claim that they are manipulating the people，but there is no other choice left to them but being manipulated by their sovereigns．And sovereigns will not claim that they are using the people，but there is no other choice left for them other than being used．”

 Guanzi said，“Sovereigns clever at governing their states will know that keeping an economic balance is somewhat the same as keeping the balance of scales with gold on one side and the weight on the other side．If the weight is heavier，the side with gold will slide down．Hence，a state will be prosperous if it is governed by taking reasonable economic measures．It will be weakened if it is governed in conventional ways．If the price of grain is high in our state and low in other areas of the world，grain from other states will be dumped here like water pouring into low-lying areas．So，if prices are higher in our state，goods will accumulate here．If prices are lower in our state。goods will flow out to other areas．If some goods have been accumulated in our state because the prices here were higher，but now they start to come down，you can invest from them．Then，we will be the exclusive owners of these goods across the world．  When commodities are hoarded，their prices will go up．When goods are dumped，their prices will come down．When goods are distributed，there will be plenty circulating on the market．When the value of money goes up，people will devote their lives to pursue profits．When the value of money is insignificant，it will be kept unused．So，the prices of things should be regulated at a reasonable 1evel．”

“The lives of the common people are dependent upon grain．Money is the means for trade．And the importance of orders is decided by the extent of urgency,‘Orders are more important than treasure，and the national ancestor temple is more important than one’s own parents．’What does that mean? The answer is：‘If the protective walls are broken，no sacrificial ceremony with fresh blood of livestock can be held at the national ancestor temple any more．None of the officials can survive (because they should all devote their lives to defend the state and should all die for the state when it is occupied by the enemy)．However，when parents die，none of the sons will be buried alive along with the dead，so the national ancestor temple is more important than one’s own parents．Even though there are some soldiers defending the destroyed protective walls，it is still regarded as defending ruins．If the soldiers are running out of weapons and food supplies，it is known as being in deep trouble．”

Duke Huan asked Guanzi，“I have heard that there are seven methods for making good use of the most important currencies of the world．Would you please tell me something about that?”Guanzi replied．“Using Lei Min (the name of a kind of precious stone，which is second to jade) produced at Mount Yin is one of these methods；using silver produced at Mount Zi of the state of Yan is one of these methods；using furs with beautiful patterns produced in the state of Fa and Korea is one of these methods；using gold produced along the right side of the Ru and Han Rivers is one of these methods；using pearls produced at Jiang Yang is one of these methods；using Zeng Qing produced at Mount Ming of the state of Qin is one of these methods；and using jade produced by Mount Bian of Yu Shi is one of these methods．That is the so-called minority being able to take control over the majority and the  small state capable of manipulating the large ones．The most important and valuable thing of the world is to control the way of regulating prices and distribution according to the degree of seriousness of various issues．”

Duke Huan asked Guanzi，“Horses raised on Mount Yin are enough to equip one thousand chariots (each chariot should be pulled by four horses，so that there are four thousand horses in this area)．The average price of each horse is ten thousand qian，and the average price of one jin of gold is also ten thousand qian．Nevertheless，I have saved only one thousand jin of gold．What shall I do to reach this goal for buying horses to equip the chariots then?”Guanzi replied，“You can order all people obligated to pay taxes to pay in terms of gold instead of money．Thus，the price of gold will go up four times and as a result，the total amount of gold you saved will be increased four times．It is not that we were melting gold with crucible and blast furnace，however，the price of gold can be driven up four times higher because suitable economic measures have been taken．Pearls are produced at Wei Guang of Chi Ye．Gold is produced along the right riverside of both the Ru River and the Han River，and jade is buried in Mount Bian of Yu Shi．All these areas are seven thousand eight hundred li away from the capital of the Zhou Dynasty．Since these treasures are produced in such remote areas，they are very difficult to transport．Ancient kings used to make good use of their value and used pearls and jade as first-rate currency，gold as second-rate currency and money as third-rate currency．They would also regulate the price of the secondary currency，gold，to take control over the other two kinds of currencies．”

“For a state of one hundred chariots，a market should be set up at the centre of the state．Therefore it is about fifty li to the borders in all four directions．Business plans should be made within one day．Goods should be embarked on the second day．Then a caravan of merchants should leave the country on the third day．They should come back to the state on the fifth day．If a state of one hundred chariots is going to manipulate the prices of the various merchandise of its neighboring states，the whole process of doing business with them should be finished within five days each time．A state of one hundred chariots should have ten thousand qing (a unit of area which is amount to 6．6667 hectares) of land，ten thousand families，a population of one hundred thousand people，ten thousand tax payers，one hundred light carts and four hundred horses．For a state of one thousand chariots，a market should be set up at the centre of the state．Therefore it is about one hundred and fifty li to the borders in all four directions．Business plans should be made within two days．Goods should be embarked within three days．Then a caravan of merchants should leave the country on the fifth day．And they should return to the state on the tenth day．If a state of one thousand chariots is going to manipulate the prices of various merchandise of its neighboring states，the whole process of doing business with them should be finished within ten days each time．A state of one thousand chariots should have one hundred thousand qing of land，one hundred thousand families，a population of one million people，one hundred thousand tax payers，one thousand light carts and four thousand horses．For a state of ten thousand chariots，a market should be set up at the centre of the state．Therefore it is about five hundred li to the borders in all four directions．Business plans should be made within three days．Goods should be embarked within five days．Then a caravan of merchants should leave the country on the tenth day．They should return to the state within ten days．If a state of ten thousand chariots is going to manipulate the prices of various merchandise of its neighboring states，the whole process of doing business with them should be finished within twenty days each time．A state of ten thousand chariots should have one million qing of land，one million families and a population of ten million people，one million tax payers，ten thousand light carts and forty thousand horses．”

Guanzi said．“Adult males without wives are addressed as Guan (widower); adult females without husbands are addressed as Gua (widow)；and old people without children are addressed as Du (old people without offspring)．The sovereign should make an investigation among his people．Those who have lost all of their children during military action should also be considered as Du．For those young men who have given their lives for the sake of the state，the cost of their funeral ceremonies should be borne by the state．Three set of shrouds and a wooden coffin of three cun thick should be provided to each of them，and officials of xiang should take care of the burials and the corpses should be buried in public cemeteries．If some of them were the only son of their families．their parents will be conferred with a piece of land that can be ploughed with one horse．Hence，the parents will not be bitter towards the regime even though their children lost their lives for the sake of the state．The sovereign should travel through the state all year round to inspect the situation．When he sees that there are some families having the same amount of 1abourers as other families but their residences are much better than those of the others’，he will realize that members of these families living in better buildings are good people and they must have worked assiduously，so he will reward them with two bunches of jerky and one dan of wine．For people who are strong enough to work but will not do anything to earn a living，the old among them will be scolded and the young robust ones will be sent out to defend the border．Common people who are short of means will be granted some land and money from the government．Thus，all kinds of state undertakings will be put under way and no one will shirk his duty or miss the right time for the farm work．These are the right methods for governing a state．”

"Grain produced by one first-rate farmer is enough to support five people．Grain produced by one second-rate farmer is enough to support four people and grain produced by one third-rate farmer is enough to support three people．Fabric produced by one first-rate female spinner is enough to provide clothes for five people．Fabric produced by one second-rate female spinner is enough to provide clothes for four people，and that of one third-rate female spinner is enough to provide clothes for three people．All farmers should focus on farming all the time and all females should be engaged in spinning and weaving．If one farmer does not grow crops，there will be some people suffering from hunger because of it．If one female does not spin or weave，there will be some people suffering from cold because of it．Both cold and hunger depend on how the fields are cultivated．So，all ancient kings were very careful about that．If the income of the farmers reaches two times higher compared with the amount of the capital they invested，common people will no longer be forced to sell their children because of not having enough food to support them．If it reaches three times higher，the common people will have enough to eat．If it reaches four times higher，people all over the local region will be enriched．If it reaches five times higher，the grain surplus will be transported everywhere and funeral ceremonies for the dead can also be afforded．If the harvest cannot match the amount of capital invested，and the sovereign is endlessly levying taxes and collecting assets from the common people，no one will dare walk on the road alone because of the threat of bandits，and people will not feel secure even though they have some properties at home．If they are suppressed by the law，it will do nothing but hurt the people．If prices and distribution cannot be regulated by the state，hungry people cannot be well governed and those who have been forced to sell their children cannot be controlled effectively．Thus，the sovereign will lose his people，and fathers will lose their sons．If this is the case，the state is doomed to be ruined．

Guanzi said，“According to the measures taken by Shen Nong，it is said，‘If one kind of crop does not ripen，this type of grain product will be missed and as a result，the price of grain will be increased ten times．If two kinds of crops do not ripen，these two kinds of grain product will be missed．As a result，the price of grain will be increased twenty times．’If this is the case，the people should support themselves with vegetables and fruit as a substitute for grain．Grant some food from the grain surplus of the past to those not having enough to eat and lend seeds produced during the same year to those short of them．Then there will not be merchants earning a profit ten times higher compared with the amount invested or usurers demanding an interest rate of one hundred percent．’’