The Twilight of an Emperor and the Rise of Skepticism

In October 779 AD, the funeral procession for Emperor Daizong of Tang wound its way through the capital. His successor, Emperor Dezong (Li Shi), noticed something peculiar – the imperial carriage wasn’t following the central path but veering slightly to the southwest. When questioned, officials explained they were avoiding the “horse” zodiac direction that matched Dezong’s birth year, fearing cosmic collision. Dezong’s tearful rebuke – “How could we dishonor my father’s spirit for my sake?” – marked more than filial piety; it signaled a dramatic shift in imperial attitudes toward mysticism.

Daizong’s reign (762-779) had been steeped in Buddhist devotion. Following the catastrophic An Lushan Rebellion (755-763), the emperor, influenced by his Buddhist chancellor Wang Jin, transformed into “Li Bodhisattva.” He maintained 100 monks in the palace to recite protective sutras during invasions, lavished riches on temples (including the gold-tiled Wutai Mountain monastery), and granted monks like Bukong unprecedented political power – even making them dukes and high officials. The capital’s prime farmland increasingly fell under monastic control while government administration deteriorated.

The Financial Wizard Who Saved the Tang

Amid this spiritual fervor stood Liu Yan (715-780), perhaps the most brilliant financial administrator in Tang history. Tasked with reviving the empire’s economy post-rebellion, he achieved what seemed impossible:

Logistical Marvels:
– Rebuilt the Grand Canal system, creating a four-stage transport network using specialized ships for different river conditions
– Established strategic salt reserves to stabilize prices during shortages
– Implemented performance-based rewards for transport officers, achieving legendary efficiency (30,000 hu of grain moved from Yangzhou to Chang’an in 40 days)

Market Innovations:
– Reformed the salt monopoly by allowing private merchants to handle distribution after government wholesale
– Created price stabilization systems using courier networks that provided real-time market data (“like seeing coins flow on the ground”)
– Maintained low taxes while increasing revenue from 4 million to over 10 million strings of cash annually

Liu’s success stemmed from ruthless meritocracy. He recruited only “quick-witted, vigorous, and honest” officials, assigning scholars to corruption-prone posts since their career ambitions deterred theft. His personal work ethic became legendary – calculating budgets on horseback during court commutes, working from dawn till midnight without holidays.

The Poet vs. The Accountant: A Fatal Clash of Visions

Dezong’s accession brought seismic changes. Unlike his devout father, the new emperor distrusted both Buddhism and the eunuch power structure. His early reforms targeted:
1. Demoting the revered general Guo Ziyi
2. Punishing corrupt eunuch tax collectors
3. Directing the elite Shence Army himself

For economic policy, Dezong turned to Yang Yan (727-781), a literary genius known for crafting elegant imperial decrees but with no financial experience. Their “Two Tax System” reform (780 AD) aimed to:
– Replace the crumbling equal-field system with property-based taxation
– Consolidate various surtaxes into biannual payments
– Shift from grain/cloth to cash payments

While theoretically sound, the reforms ignored practical realities:
– Local officials arbitrarily assessed wealth levels
– Currency shortages made tax payments crushingly expensive
– Central quotas encouraged predatory collection

The Reckoning: When Ideology Overrides Competence

Yang Yan, nursing old grudges from their time together in the personnel ministry, engineered Liu Yan’s downfall. False rumors linked Liu to a disputed succession issue, allowing Yang to:
1. Strip Liu of all financial offices
2. Exile him to a minor post
3. Have him secretly strangled in 780 AD

The repercussions were immediate and severe:
– Provincial governors like Li Zhengji protested the unjust execution
– The skilled bureaucracy Liu built disintegrated
– Yang’s own reforms floundered without competent implementation

Simultaneously, Yang’s heavy-handed treatment of frontier troops at Jingzhou sparked rebellion. When veteran officer Liu Wenxi refused orders to relocate his garrison, imperial forces besieged him for months until his own men killed him – but the damage was done. The western armies now deeply distrusted the court.

Legacy of a Financial Revolution

Liu Yan’s systems outlived him by nearly a century, sustaining the Tang through:
– Flexible salt monopoly adaptations
– Efficient canal transport networks
– Price stabilization mechanisms

His death marked a turning point. Dezong’s subsequent wars against provincial governors (781-786) and flight from rebel forces in 783 (to the fortified city of Fengtian, as predicted by an astronomer he’d initially dismissed) revealed the costs of replacing competence with ideology. The “Two Tax System,” while enduring in form, became burdened with extra levies – exemplifying what historian Huang Zongxi later termed the “law of accumulating taxes without return.”

The tragedy of Liu Yan underscores a perennial dilemma: the tension between administrative expertise and political control. His story remains eerily relevant – a cautionary tale about the consequences when governments prioritize loyalty over ability, and when financial systems designed to empower the state end up alienating both elites and commoners. The Tang would limp on for another century, but never recapture the fiscal vitality Liu Yan had painstakingly crafted.