Yu's ANALYSIS OF CURRENCY 881confidence in the value of the coins in circulation. In a period when paper money
and bills of exchange had yet to make their appearance in market transactions,
the public was usually suspicious of any coins whose intrinsic value was
markedly less than the value of the metal used to make them plus the cost of
production. On the other hand, problems in public confidence might occur if
the minters of coins debased their intrinsic value by using cheaper metals in the
alloys or cut the weight of the coin.
During the Ch'in dynasty (255-206 B.C.) the government minted the pan-liang
or "half-liang" cash, but in the Han dynasty (after 206 B.C.) the government aban-
doned the Ch'in coin and minted lightweight cash that rapidly lost value and
caused inflation, driving the price of a picul (shih, sok) of rice up to ten thou-
sand pieces of cash. The problem of inflation was solved in 175 B.C. when another
"half-liang" coin was minted that actually weighed 4 shu ('/6 liang ). Even though
the actual weight of the coin (2/12 liang) was less than the face value Wl2liang),
it was probably close enough to restore some confidence in the ability of the
coin to retain its value. In other words, minting debased cash or too much cash
could be just as disastrous as not having enough of it.7
Chia I: State Control over Minting. Counterfeiting was another factor that
resulted in the debasement of currency and an unwanted increase in the money
supply. It had been prohibited in Han times, but because ordinary persons were
allowed to mint cash privately, the control over the content of cash was less than
perfect. Chia I of Emperor Wen's reign (180- 157 B.c.) in the Former Han dynasty
held that counterfeiting and debasement of the coinage could not be stopped as
long as private minting was allowed. He explained that the government allowed
private minters to alloy copper with tin, but prescribed a punishment of brand-
ing on the face for the use of any alloys with lead, zinc, or iron. The punish-
ment, however, could not deter the crime because the potential for profit was
too great. The state did not have the capacity to monitor what had been granted
as a legal occupation to everyone, and punishment for such an easy violation
was tantamount to entrapment of ordinary persons.
He also pointed out that because the state had not been able to guarantee a
uniform weight and quality of all cash in circulation in every region, people
refused to accept cash that was not common to their own area. The plethora of
different coins merely created confusion in the markets while the profits from
private minting or counterfeiting only increased the number of copper miners,
reduced the number of productive peasants, and damaged the standard of hon-
esty among the general popUlation.
Chia I's warning was quite relevant to Korea in the I 650S because King Hyo-
jong had permitted private minting and Kim Yuk had even urged more of it to
ensure a sufficient cash supply for the cash-short Korean economy. Had cash
been accepted by the Korean population, Korea might have been forced to con-
front either a debasement of the currency or an oversupply of money and price
inflation almost immediately, but she was spared this difficulty because the king
decided to withdraw cash from circulation.