CHAPTER 24
Yu Hyongwon's Analysis of Currency
"Why currency does not circulate is not because it cannot do so; it is only
because the people do not use it.'"In his usual fashion, Yu Hyongwon sought to ground his policy recommenda-
tions for money on a thorough study of the history of currcncy since early Chou
times, but it would be nai've to assume that Yu was conducting an inductive study
to discover whether currency was truly beneficial or harmful to the Korean econ-
omy. We cannot be certain exactly when Yu wrote his essay, but it is safe to assume
that he was aware of the general outlines of Kim Yuk's campaign to introduce
currency into Korea against great odds. In my view, he must have been aware
that King Hyojong had supported Kim in this effort from 1651 to 1656. Since
the king had made no effort to resume the policy of monetizing the Korean econ-
omy after I 656, the main issue after that date was whether Kim Yuk's policy was
right or wrong. As we will soon sec, Yu Hyongwon had obviously decided for
himself that Kim Yuk was on the right track. He may have reached that decision
based on his study of the classics and the Chinese historical experience, but I
suspect that he mined those resources to reinforce the conclusion he had drawn
from observing the Korean experience with cash in his own time.
Yu found that the Chinese had a long history of metallic currency, but the
record by no means demonstrated unmitigated success in the utility of metal-
lic cash in all periods. It was, of course, of crucial importance to Yu to find
whether the sages of antiquity cast their favor on currency or not, but it was
also important to determine whether currency had proved to be an unmitigated
blessing after the decline from perfection that accompanied the fall of the Chou
dynasty. During the Han dynasty, metallic cash grew tremendously along with
the expansion of the empire, and that growth carried with it more complex prob-
lems in the use and regulation of cash than had existed in classical times. But
after the fall of the Han, and particularly the "'barbarian" incursions into north
China in the fourth century, the use of cash declined and even disappeared from
the market in many areas in a fashion that was similar to the situation in medieval
Europe after the fall of the Roman Empire.