The Salt and Iron Debate of 81 BCE

An Empire Runs Short

1The Han dynasty ruled China from 206 BCE to 220 CE. Most of its people were farmers. Nearly every farm family needed salt to season and preserve food, and iron hoes, plows and sickles to work the land. Salt came from seacoasts, salt marshes and deep brine wells, and iron from mines and furnaces found in only some parts of the empire.

2Emperor Wu, who ruled from 141 to 87 BCE, fought long wars against the Xiongnu, horse-riding herders from the grasslands to the north who raided farms along China's border. Armies, horses, supplies and border forts cost enormous sums, and the treasury ran low.

3About 117 BCE, the government took over the making and selling of salt and iron. Private salt makers and ironworkers, some of whom had grown very rich, had to stop. Government offices ran the salt works and the iron foundries, sold the goods and kept the profits.

4In 81 BCE, after Wu's death, the court of the young Emperor Zhao called more than 60 scholars from across the empire to the capital. They debated the government's top officials, led by Sang Hongyang, the imperial secretary, who had helped run the salt and iron offices for years. A scholar named Huan Kuan later wrote up the arguments in a book called Discourses on Salt and Iron.

5Economists use two ideas to study choices like this one. Scarcity means people's wants are greater than the resources they have. Because of scarcity, every choice gives something up. The opportunity cost of a choice is the next-best use of the resource, the one that was not chosen.