Confucian Statecraft and Korean Institutions. Yu Hyongwon and the Late Choson Dynasty - James B. Palais

INFLATION AND DEFLATION 931

the rich were getting richer and the poor poorer. It has heen less than twenty

years since cash has circulated. but the problem [of loan interest] has become so

great that all the people in the provinces hoped that it would be abolished. But

because cash had circulated for both official and private transactions for such a

long period of time, it had become difficult to abolish it immediately. We should

establish a law changing the discriminatory interest rate on cash loans, so that

the poor and lowly people would perhaps be granted the benefit of some relief.

Ch'oe argued that interest rate reduction was the least the government could
do since the peasants also had to deal with the avarice of the district magistrates,
the demands for bribes from the district clerks, and the predations of bandits. I I
Ch'oe's account of the multiplying effect of cash loans on interest rates may
not have taken account of the benefits conferred on borrowers by the deprecia-
tion of the currency because if the value of cash dropped by 50 percent in the
space of a year, the cost of a loan even with a usurious interest rate might be
reduced by half. Unfortunately, cutting a seasonal interest of 800 percent in half
might not have succeeded in saving the impoverished debtor from financial ruin.
Ch'oe's castigation of the adverse affect of cash on interest rates marked the devel-
opment of a negative reaction to cash that was born of direct experience rather
than the hackneyed moralism of traditional anti-cash prejudice.
The historian responsible for compiling this section of the Veritable Record
for King SukchOng (Sukchong sillok), probably in the late I 720S when anti-cash
bias was at its height, inserted a statement in the text right after the above notice
describing three of the ill effects of cash that may also been perceived in 1695
as well. He charged that cash made people prone to spend their savings more
freely than other media of exchange, stimulated them to pursue commerce at
the expense of agriculture (because it was less arduous and provided the
prospect of easy money). and put debtors at the mercy of wealthy usurers who
gained as much as five or six times the amount of the original loan when they
converted cash payments into grain. 12

Sukchong's Ban on Minting, 1697

At the end of 1695, Sukchong again authorized the Royal Division to mint cash
for a ten-month limit, and his authorization of military as well as civilian agen-
cies to mint cash to provide funds for relief produced inflationary consequences
and a drop in the value of copper cash. The compiler of the Sillok section that
reviewed this period expressed his own admiration for the pioneers of cash in
the seventeenth century, Yi Won'ik, Kim Yuk, and Kim's grandson, Kim Sokchu,
but he charged King Sukchong with irresponsibility by authorizing the exces-
sive minting of cash to make up for financial shortages caused by periods of
famine.IJ
King Sukchong did, however, become wary of the negative consequences of
an excessive cash supply and specified that he was authorizing this additional