888 FINANCIAL REFORM AND THE ECONOMY
transactions, and the people had no confidence that others would honor them.
Sun was forced eventually to admit failure, melt all the cash down, and reim-
burse all holders of the coins still in circulation.
Yu Hyongwon, however, did not accept Sun's excuse that he had simply made
an error in judging popular trust in the coin. Instead he accused him of an avari-
cious desire to reap huge profits, violating the basic purpose of money, which
was only to permit the free exchange of goods. Goods and cash were to be
exchanged for amounts of "equivalent" value, and it was improper for there to
be any major discrepancy between the value of a product and its price. Minting
a multiple denomination coin was simply an immoral act of deception for profit
with adverse consequences for his kingdom as a whole. 19
Even though Yu had learned that sage rulers of ancient China had used objects
of no value such as cowry shells as a medium of exchange, or that the use of
metallic coins was preferable to rice and cloth for money because they had less
utility as objects of consumption, he could not appreciate that money could func-
tion as a symbol rather than simply as a good with a value content and price. Yu
could not countenance using a coin, let alone a piece of paper, to represent large
units of wealth even if their symbolic use would have conferred enormous ben-
efits by eliminating the high cost of transporting carts of cash to purchase large
items. He therefore believed that multiple denomination coins (and paper
money) constituted an immoral scheme to maximize profits.
Reemergence of Counterfeiting and Excess Cash. Fan T'ai of the southern Liu-
Sung dynasty was also concerned about destabilizing ft.uctuations in the value
of coins, which he attributed to the desire by counterfeiters to gain from the prof-
its of seigniorage. Instead of reducing those profits to a minimum so that the
face value of a coin would approximate its intrinsic value, the counterfeiters had
adulterated their coins to increase their profits, thereby destroying public trust
and confidence in the coins. He praised the policy in the Later Han dynasty dur-
ing the yiian-chia year period (15 I-53) to drive counterfeiters out of business
by eliminating the profits of seigniorage. They did this by minting a new four-
shu copper coin, shaped like the older five-shu coin and with a raised rim, that
had a face value very close to its metallic value.
Unfortunately, when another four-shu coin was minted in the hsiao-chien year
period in the Liu Sung dynasty (454-56), the results were disastrous because
the coin was small and light and the outer rim was poorly made. Counterfeiters
had no trouble in reproducing it and compounded their transgressions by adul-
terating the coins with lead. Stiff penalties and even executions of corrupt offi-
cials failed to stem the practice, and commodity prices skyrocketed. Then the
government responded by increasing the quality of the coin and forbidding the
circulation of coins that were too small or lacked raised rims.20
Later during the Liu-Sung dynasty the better coins were driven off the mar-
ket by cheaper ones, and the less valuable two-shu coin was minted. Counter-
feiters had difficulty matching its weight and size, but the market was ft.ooded
by a variety of irregular coins. The oversupply of cheap cash was exacerbated