INFLATION AND DEFLATION 961replied that rice could be used for small transactions, and cotton or silk for large
transactions, and after about twenty or thirty years, he might be able to reintro-
duce small cash again. YOngjo made no reply, but after struggling vainly for years
to obtain acquiescence to a total abolition of cash from ministers who had a far
more astute understanding of the operation and function of cash in the econ-
omy than Song, he must have regarded him as either an obscurantist or an igno-
ramus out of touch with the recent debates of 1726-27.
Yi Chongsong, who had opposed the use of large cash because it would stim-
ulate counterfeiting. also showed some flexibility. Counterfeiters would be
attracted by the prospect of large profits of seigniorage. but the government's
purpose should not be to increase its profit, but to solve some of the problems
that existed in the cash market at the time. The king had the option to choose
between small or large denomination cash. Uhe chose small denomination cash
and problems developed, he could change the currency and introduce multiple-
denomination cash, or vice versa. When Yongjo asked him if he really believed
that the people would not suffer no matter which type he used, Yi replied that
in fact in Chinese history, a large variety of coins had been used, evidently with-
out any ill effect. Some were so light that "they floated on water" or so fragile
that they could be "crushed in the hand." Paper bills were used in the reign of
Hsiian-tsung in the T'ang, and in the Southern Sung, and these examples proved
that there was never any single or fixed monetary system, but that Chinese emper-
ors might convert small cash to multiple-denomination coins or vice versa, as
the situation demanded.
YOngjo said that people were now suggesting that he convert small cash to
multiple-denomination coins, but how could he be sure that if he did, there would
not be even worse problems if he were forced to convert multiple-denomina-
tion coins back to small denomination coins in the future. a justifiable question
since "floating" or "crushable" cash had long since become cliches for the kind
of debasement that automatically produced commodity price infiation.^36 Yongjo
did not reach a final decision on the question of multiple-denomination cash at
this time, but a few months later in 1736 when Yi Kwangjwa told him that in
his view it would be wiser not to do so, the idea was abandoned.^37 Nonetheless,
not only Song Chinmyong, but even Yongjo and a few of his officials were will-
ing to discuss multiple-denomination cash as if it were a possible, if not entirely
feasible, alternative. The level of discussion on monetary policy had ostensibly
become more liberal than the ideas ofYu Hyongwon a half-century before because
Yu believed that the face value of coins always had to be virtually equal to the
cost of minting, but the result of the debate in 1731 was adoption of Yu
Hyongwon's preference for penny cash based on an aversion to either paper
money or multiple-denomination coins, without any knowledge at court ofYu's
position. Once King Yongjo had been forced to realize that cash had become
indispensable to the Choson economy, he preferred to opt for the most conser-
vative policy available.