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While the tuntian system was made famous by Cao Cao's administration, Cao's writings show that the system had been instituted as early as the Western Han dynasty, during the reign of Emperor Wu, where soldiers on distant expeditions were set to work converting and farming the conquered land, both to provide food for the army and to convert the region into one based around agriculture - in effect, an economic conquest. After the death of Emperor Wu, however, the system was only used sporadically and therefore less effectively.
The final years of the Eastern Han dynasty witnessed great economic disruption and widespread devastation, particularly through the Yellow Turban Rebellion of 184; agricultural production in particular was severely disrupted, and population movements from warzones led to massive flows of refugees. It was under these circumstances that Cao Cao's use of the tuntian system made its impact on the economic revival of China after the damage suffered previously.
The mechanism of the 'civilian tuntian' system as implemented by Cao Cao had its basis in government organisation, encouragement and to some extent even coercion. Peasants without land, or refugees, or soldiers, were assigned to plots of land which they were to farm, while the implements required (such as ploughs and oxen) were provided by the government at a low price. In exchange for this, the peasant was to give over half of his harvest to the government.
The tuntian system had its origins in the military, and for much of the Han dynasty the land in question was farmed by soldiers on orders of the military authorities; in this case all of the crop harvested was to be kept by the military for supply uses, following the example set by Emperor Wu. Cao Cao's innovation was the introduction of the 'civilian tuntian' on a large scale both for common people and for soldiers during peacetime, whereby he successfully solved two great economic problems facing his administration: the large number of unemployed refugees, and the great tracts of land abandoned by big proprietors in the preceding chaos.
The tuntian system was to have far-reaching effects, both for Cao Cao himself and for the overall economy of China. Once the scheme had proven successful initially, Cao wasted no time in extending the scheme to all areas under his control; as a result the positive effects of this organised farming was soon felt all over northern China, which he reunified.
In the short-term, meanwhile, the tuntian system was also instrumental to the success of Cao Cao's campaigns, many of which were long-range offensives across the plains of northern China; with a massive and efficient agriculture to support his army, he was able to sustain these offensives and gain victory. Overall it can be said that the tuntian system, along with the repair of irrigation works, were amongst the foremost contributions of Cao Cao to the Han economy, and contributed to the enduring strength of the state of Cao Wei (founded by his descendants) in the Three Kingdoms period.