The Beginning
The Economy of the Han Dynasty started off damaged due to the suppressive laws and policies of the preceding dynasty, the Qin. Heavy taxes and labor corvée on the peasant population took a toll on the economy. The first few emperors took action by lowering taxes imposed on peasants and merchants. Since the Han relied on the production output of the merchants though, they lowered taxes on small land owners and taxed merchants more heavily. The government heavily encouraged farming.
Agriculture
Agriculture was very important during the Han Dynasty. Grains could be used to feed the hungry and fibers could be used to cloth the cold and warm them. Everybody needed agriculture. The output of the farmers and peasants was also the base for the tax revenue. Because of this, the Han encouraged people in the field. In the beginning, taxes were lowered on small land owners and peasants and farmers to encourage farming. Land was even taken from nobles to encourage farmers to plant more. Emperor Wudi also invented a new cultivation method called daitianfa (replacement-field method). The fields were divided into furrows and ridges and seeds were placed into the furrows. The soil that fell from the ridges supported the stalks of new plants. This method also made watering easier.
During this time, due to the improvement of iron, new agricultural tools were developed and helped increase the output and tax revenue for the empire. Horse and oxen also became more important as draught animals, or animals used to pull a load. More advanced plows were now pulled by two oxen and mastered by three men, which helped speed along planting.
Trade and the Silk Road
Merchants during the Han dynasty were valued less than farmers and were lower on the social pyramid. The things they sold couldn't always contribute actively to the economy, unlike grains and fibers, and they didn't always work for the things they sold. They were, however, rewarded if they substantially contributed to the economic output. They could also sell their wares at high prices if demand was high and if they exploited the ruler's wants and desires. Because of this, it was possible for merchants and traders to become extremely wealthy and obtain land estates.
Silk had already been around in China for centuries but proved to become very important in the Han Dynasty. The invention of the loom allowed silk to be produced faster and traded to western people through the Silk Road. The Silk Road was a network of trade routes that linked two superpowers, China and Rome. It began in the Han Dynasty's capital Chang'an, then crossed the Yellow River and wound through deserts and mountains to reach Rome. The Han traded silk and in return got new foods such as grapes, figs, and cucumbers from Southern Asia, furs from Central Asia, muslin from India, and glass from Rome. This brought the empire even more economic success and would last for centuries to come, eventually stretching for over 4,000 miles.
the salt and Iron industries
Emperor Wudi was the most famous Han emperor and strengthened the economy and government. He improved canals and roads and bought grain when it was abundant and sold it at stable prices when it was scarce.
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