880 FINANCIAL REFORM AND THE ECONOMY
markets by licensing specific merchants to sell certain goods, setting fair prices,
and buffering prices by actively intervening with state reserves of cash and com-
modities in market transactions. Not only was Yu pointing out that Korea was
almost three millennia behind the ancient example of the successful use of cash
in the economy, but that the fundamental methods for introducing cash into the
Korean economy were already delineated in ancient Chinese texts.
Yu commented that regulations for cash dovetailed with the well-field sys-
tem of Chou, which meant that cash did not interfere with the primacy of agri-
cultural production. Not only were peasants granted the means to earn a living
but shopkeepers and merchants were given an area to conduct business so that
"the people of the four occupations [officials, farmers, artisans and merchants 1
would each obtain a place [sam in kaktuk kisol." Cash was used as a means of
measuring the value of goods, and the merchants performed the task of circu-
lating money. The merchants were indispensable to general economic welfare
because they had to prosper before sufficient goods could be exchanged to guar-
antee the flow of cun'ency, and the flow of currency was necessary for supply-
ing food to the people in a period of famine and shortage.
Yu indicated that cash had been more useful than grain or cloth as a medium
of exchange because the state could choose to mint more cash in an emergency
simply by an expenditure oflabor; the supply of cash did not fluctuate like grain
suppl ies, which depended on weather conditions. He also found another late Chou
source, the Kuan-tzu, that illustrated another advantage of currency - providing
relief to the starving. It stated that the founders of the Hsia and Shang dynas-
ties of the late third and mid-second millennia B.C., Yu and T'ang, had mined
gold and minted gold currency to save the common people from starvation dur-
ing famines caused by drought and flood, not because currency represented an
article of consumption that could feed or clothe people, but because its supply
could determine the prices of things and the government could lower prices by
putting more currency into circulation. It was for that reason that the ancients
commonly referred to money as "the scale" (heng) because it could raise or lower
prices.'
Currency Problems after the Fall of the ChouDebasement, Private Minting, and Counterfeiting. Unfortunately, as Wang
Ch'eng explained in the early sixth century, the centralized regulation of cur-
rency described in the Rites of Chou and the uniform cash standard of that period
had been lost by the Ch'in unification. There were so many types of coins that
trading across provincial boundaries was sometimes stopped because districts
refused to accept strange coins.^6
The ability of money to raise or lower prices depended as much on the money
supply as the quantity of goods for sale in the marketplace, for an imbalance in
that relationship could result in either inflation or deflation. In addition, the abil-
ity of money to act as a stabilizing influence over prices depended on public