Yu's ANALYSIS OF CURRENCY 919situation at the time. The only thing [that is important] is that at the time the
rate is set you do your best to fit the rate to conditions. Even though you may
set the rate in this manner, once the rate is set, it should last permanently and
never be changed." Yu's flexibility on the cash/silver exchange rate was appar-
ently limited to the period prior to the final determination of the exchange rate;
thereafter it was to remain constant.6I
Yu also set the exchange rate of cash in rice at twenty mun of cash for one
mal of rice, but he did concede that in the short term the price of millet and rice
could fluctuate widely, that the price of rice might rise to sixty mun of cash (300
percent) after a poor crop. In other words, the cash/silver exchange rate was to
be fixed and fundamental, but the exchange value of cash with grain, cloth, and
other commodities could fluctuate.^02
Yu explained that since the t'ou (peck) in Liao-tung was twice the volume of
the Korean mal, cash prices for grain were not as high as Koreans thought, and
in any case the price of grain was determined by what price the government
chose to set. Even though Manchurian coins might appear to be only half the
value that Yu proposed for the new Korean coin since 400 Manchurian coins
were needed to purchase I yang of silver, because of the difference in grain mea-
sures, Korean cash could buy twice as much rice in Korea than in Manchuria,
and his proposed rate of exchange for Korean cash would be equivalent to the
Manchurian rate.
He contrasted the contemporary situation in China with recent monetary his-
tory in Korea. He pointed out that cash had not been circulating in Korea except
for the area around Kaesong, and then when cash was first adopted, the value
of cash was set at 30 mun of cash for I chon of silver (or 300 mun per yang of
silver). Later, however, the value of cash dropped severely to 500, 700, and then
1,000 mun per yang of silver. Yu provided an intriguing hypothesis to explain
this phenomenon by arguing that the inflation in the value of silver was pro-
duced because cash was really not used anywhere but in the Kaesong area and
all the cash minted in the country found its way to Kaesong, glutting that dis-
trict with cash. Cash was attracted to the Kaesong area because the government
did not do enough to spread the supply of it throughout the kingdom nor stim-
ulate its use by requiring that cash be used for taxes or expenditures, leaving
only private persons to conduct trade in cash on their own. Yu's explanation of
the reasons for this depreciation in the value of cash might seem entirely con-
jectural except that the experience with cash after King Sukchong reinstated the
minting of copper currency in 1678, to be described later, displayed similar symp-
toms: surplus cash concentrated in the capital and very little of it reached the
countryside.
When the government finally introduced cash in 1635 and later in 1650, it set
its value at one mUll of cash made of brass (tusok) per toe (one-tenth mal) of
rice (ten mUll per lIlal) and two mun of cash made of red copper (twenty mun
per mal), but later on only one type of cash (which'?) circulated at a cheaper rate
of three mun per toe of rice, that is, thirty mun per mal of rice. Because the coin