Yu's ANALYSIS OF CURRENCY 923planning and regulation, the government could calculate just how much cash
was needed to enable the conversion of most taxes and government payments
to cash, and set a face value on the coin that could be maintained indefinitely.
In one of his suggestions he displayed a kind of courage that some other advo-
cates of cash could not bring themselves to advocate, that the endemic shortage
of copper be overcome by importing whatever was needed from Japan to achieve
a full conversion of taxes to cash. Had he also proposed expanded exports to
Japan to pay for the copper, he might have taken another step toward more
advanced economic thinking. Unfortunately, he did not develop the idea that
trade could produce wealth, or even the mercantilist notion that a favorable bal-
ance of trade with foreign countries would produce wealth through a constant
import of specie to pay for those exports.
His idea of a fixed value of cash to be maintained by government flexibility
in controlling the money supply appears to have been reasonable and cautious,
but it was not likely to stimulate the benefits of trade by providing more liquid
capital to merchants and producers. It certainly did not allow any adjustment
that might benefit the poor, debt-ridden, and taxpaying peasants, who might have
been well served by a looser monetary policy that would allow moderate infla-
tion in difficult times. His more conservative monetary policy would have pre-
vented the damaging effects of inflation, but it would also have guaranteed a
steady return to the creditor class of landlords, state grain-loan officials, and
merchant moneylenders by preserving the value of loans at the expense of debtors
and the poor.
His calculation of the total money supply that would be needed to monetize
taxes presupposed a fixed volume of currency because it had not occurred either
to his Chinese sources or Korean contemporaries that it might be possible for
the economy to expand by nonagricultural production and foreign trade, and
that the demand for cash might increase indefinitely in the long term without
necessarily causing inflation. Certainly, if he had hoped for an ever-expanding
economy, or had been interested in expanded commercial (let alone industrial)
production, he could never have rested content with a cash economy based on
the penny alone. Had his Chinese sources provided some clue about the con-
venience of bills of exchange and drafts for long-distance trade, he might have
been awakened to the economic benefits of nonagricultural activity, but he was
unable to appreciate the use of paper money in Sung and YUan times in China.
He only thought that paper money had been tried in Koryo and fifteenth-cen-
tury Choson and had failed because it was too susceptible to adulteration and
inflation, and he believed the same fate was destined for any multiple-denomi-
nation coin. In short, Yu was more progressive than the majority of Koreans in
the sixteenth century but was still too firmly attached intellectually to the wis-
dom of economic thought in classical times, which to him appeared far more
advanced than contemporary Korea.