PART VI
Financial Reform and the Economy:
Conclusion
Consideration of the history of cash and the development of commerce and
industry in the period after 16oo indicates clearly that most statecraft writers
did not playa major role in stimulating institutional changes because they often
followed the initiatives of reform-minded officials who preceded them or more
progressive foreign examples, primarily from China. In fact, one of Yu
Hyongwon's key concepts was that the economy ofthe ancient Chou had already
surpassed contemporary, seventeenth-century Korea, and he hoped that Korea
would be able to catch up to Chou levels by instituting the safe and dependable
penny cash to convert at least one-third of the nation's revenues to cash receipts.
Still a believer in the primacy of agriculture, he thought that the state would
have to grant merchants and artisans some minimal allotment of land because
he neither foresaw nor desired the development of independent merchant activ-
ity. He did realize that the government would have the important task of regu-
lating the money supply to ensure stable prices, but it never occurred to him that
the economy could, or should, grow in size because he did not believe that new
wealth could be created indefinitely, especially by nonagricultural production.
Thus, his estimate of the optimum money supply was erroneously based on the
assumption of a static economy.
He did not foresee the problems in prices and interest rates that would be cre-
ated by regional as well as national shortages of currency. Although he planned
to guarantee a sufficient supply of copper from Japanese imports, he did not
anticipate the Japanese copper shortage and the reduction of copper export quo-
tas in Japan that began under Arai Hakuseki in the early eighteenth century and
continued into the late eighteenth and early nineteenth centuries. He did not real-
ize that regulation of the money supply, prices, and interest rates would be a dif-
ficult and complex affair that would require constant attention.
The times surpassed Yu's monetary vision, but his successors did not always
build upon some of his more progressive attitudes. The progressive, pro-cash
climate of the seventeenth century was followed by the emergence of animos-
ity toward cash in the early eighteenth century, and this mood swept up state-
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