690 REFORM OF GOVERNMENT ORGANIZATIONabandoned and only a wastage surcharge of 3 sheng/shih (3 percent) was col-
lected. In Korea, the law called for a similar elimination of interest and a reduc-
tion to a wastage surchage of 6.7 percent after the original capitalization was
repaid. The most important aspect of Chu Hsi's sach 'ang system, however, was
that eontrol over it was supposed to be vested in the hands of locallcaders, not
the district magistrate, on the presumption that local leaders were more trust-
worthy and less likely to exploit the indigent peasants. In fifteenth-century
Choson, however, the district magistrate was given responsibility to manage the
sach 'ang system.^34
Since poor peasants had difficulty repaying the principle, let alone the inter-
est, the relief aspect of the system was mitigated and the fiscal demise of the
village granaries was assured. Even though 20 percent was less than half the
standard 50 percent rate on private loans during the growing season, many peo-
ple opposed the permanent collection of interest because it contradicted Chu
Hsi's original objective to provide relief to the poor. By the end of the fifteenth
century, the formal interest rate was abandoned and replaced by a so-called
wastage surcharge (mogok) that soon grew to 10 percent. Chu Hsi's village gra-
nary system had been subverted in two ways: the 10 percent interest charge had
becomc permanent, and the granaries and loans were controlled by the district
magistrate rather than the local community. By the mid-sixteenth century, dis-
trict magistrates began to take an increasing portion of this wastage surchargc
for their own expenses as a recording fee (hoerok), and in 1650 the Ever-Nor-
mal Agency in the capital took it over for its own purposes, leaving I percent
to the Ministry of Taxation, and only 6 percent for the magistrate's expenses.
Korea also conducted ever-normal price stabilization activities through Ever-
Normal Granaries stationed in a few market towns, but in a famine or other cri-
sis, the officials often used Ever-Normal Granary reserves for relief and loans.
Furthermore, all state granaries practiced loaning grain in the winter and col-
lecting it again after the fall harvest to prevent rotting. In the seventeenth cen-
tury, the practice of granting loans to peasants from individual government and
military agencies spread throughout the country as a direct means of raising rev-
enues in the face of the fiscal crisis of the central government. By the mid-sev-
enteenth century the ever-normal granaries ceased to have much effect on market
prices, and the system of state grain loans had been turned into an agency of
repression rather than aid and relief.3s
State institutions for loans and reI ief had been obstructed by the administra-
tion of the system, the revenue shortage of the state, and the need for income.
Interest charges werc imposed on reliefloans at first to maintain the basic grain
fund, and then to raise rcvenues, and the stock of the ever-normal granary sys-
tem was depleted by transfers for relief and ordinary revenue requirements.
Yu Hyongwon was faeed with this situation in the mid-seventeenth century,
and he sought a solution by examining the Chinese response to these problems
in earlier periods. He found that Chinese experience showed that proponents of
reform were divided into two camps: those who favored the restitution of the