940 FINANCIAL REFORM AND THE ECONOMY
if the legal exchange rate were ignored, urban taxpayers would eventually have
to pay more cash to obtain cloth for tax payments. Even Sim T'aekhy6n, who
preferred that cash be abolished altogether once YOngjo had decided to prevent
government offices from using it, still believed that converting all taxes to cloth
would create new problems, and he advised YOngjo to test the system for two
or three years before adopting cloth taxes permanently.
Y6ngjo said that since opinion was divided, he needed to study the problem
for a few more months, and he wondered why Korea had faced such difficulties
in the circulation of cash when the Chinese had never had such trouble since
the five-shu coin was adopted in the Han dynasty - an erroneous assumption.
Although conceding that the Korean government was obliged to solve whatever
problems arose after cash was introduced, he was still amazed how cash had
succeeded in circulating at all in Korea because rice and grain were products
that were indispensable to life and always seemed to circulate without any major
problems - another erroneous assumption. It was easy for him to prohibit its
use, but he would then have to decide what substance could best replace it as a
medium of cxchange.
If he adopted Hong Ch' ijung's compromise and prohibited the official use of
cash but permitted its use in the private market, he agreed it would produce other
kinds of problems. If he ordered people in the southern three provinces to pay
taxes in cloth but allowed them the right to make substitute payments in cash
under certain circumstances as Hong suggested, it would only be justified as a
temporary adjustment whenever a poor cotton crop cause an abnormal rise in
the price of cloth. He could allow provincial taxes to be paid in cloth but have
capital bureaus use cash in the capital to purchase tribute items from the mar-
ket. After one or two years ofthis, he would expect that the price of cloth would
rise and the value of cash would decline as Hong had predicted.
Y6ngjo announced his decision to modify Hong's original proposal by pro-
hibiting the use of cash only in the payment of taedong taxes for the southern
three provinces of Ch'ungch'ong, Ch6lla, and Ky6ngsang, but Hong quickly urged
YOngjo to extend the scope of cloth payment to the military support taxes for
cavalrymen (kiho) and infantrymen (kunp'o), and other taxes where the law
allowed 50 percent payments to be made in cash in addition to cloth. YOngjo
relented and also added on tribute taxes owed by official slaves of which 50 per-
cent had been previously paid in cash. He also mentioned that he would reserve
the option to reverse the policy after a couple of years no matter how much embar-
rassment he might suffer.
Yi Py6ngsang then said that the state always had the power to reduce an
excessively high value of cash by minting more of it, but if Hong's compro-
mise policy succeeded, the king might be able to change the policy later on,
presumably by reinstating the use of cash for taxes and official disbursements.
YOngjo concluded the session by praising Hong's compromise as providing a
means of solving current problems without having to mint more cash, and he