INFLATION AND DEFLATION 927of cotton to obtain cash to pay the commuted support taxes for soldiers, arti-
sans, or labor service workers, or official slaves who wanted to pay their slave
cloth tribute in cash, now had to pay a premium for this transaction.
Min pointed out that the corruption of the commissioners over the past sev-
eral years had not only wrecked the plan to spread the use of cash, it had stopped
the circulation of cash and commercial activity in the southern provinces, and
the commissioners themselves became liquor merchants or local tavern own-
ers. Since many people had come to believe that the royal court had, in fact,
abolished its circulation of cash purposely, it would now be even more difficult
to reinstitute its use in the market. Min then won Sukchong's approval to tum
responsibility for transporting newly minted cash to the market towns and vil-
lages over to the provincial governors and district magistrates, and set prices or
exchange rates for goods according to prices in the capital market to eliminate
price differentials between the capital and the countryside.^4
Unfortunately the policy to centralize minting in the capital under the Min-
istry of Taxation was frustrated when meager cash tax revenues for government
offices throughout the country left them without enough cash to pay bills or make
purchases. In r683 Sukchong was forced to grant permission to mint cash for
a limited period of time on an ad hoc basis to capital ministries suffering criti-
cal shortages of funds or local districts in dire need of relief funds to combat
famine. Won Yuhan interpreted this decision as a significant change in the pur-
pose of minting cash from promotion of the circulation of cash in the economy
to raising additional revenues from the profits of seigniorage, but that view is
neither fair nor accurate. Sukchong had been forced to modify his plan for cen-
tral control of minting and the money supply to meet emergency demands for
funds for relief as well as ordinary expenses, not simply to increase revenue by
minting as much cash as possible. Had he really been devoted to maximizing
the profits of seigniorage, he might have favored multiple-denomination cash
or paper money instead of the less profitable "penny" cash in current use.
1689-91, Contracting the Money Supply
Once he opened the door to ad hoc minting by local agencies, however, more
cash flowed into the market and the value of cash declined. Then, early in 1689
Minister of Taxation Kwon Taejae won Sukchong's approval to contract the money
supply by suspending his ministry's minting operations.^5 Later that month Chief
State Councilor Kwon Taeun told Sukchong that reports of a surplus of cash
were misleading because it was only true of the capital and little was circulat-
ing in the countryside. Not only was cloth still the main medium for the pay-
ment of taxes by the rural people, it had even replaced cash in the revenues of
the capital bureaus. He then suggested that the capital bureaus be required to
collect at least one-third their revenues in cash to restore confidence among the
taxpayers in the value of cash and help expand its use in the provincial economies.
He also argued that using cash instead of cloth for tax payments would prevent