INFLATION AND DEFLATION 925had either disappeared or was replaced by bolts of cotton cloth in the country-
side. The problems associated with initiating the proper circulation of cash had
been quite formidable.
King Sukchong wanted to spread cash use and had to increase the supply of
cash in the economy to do so, but inflation and debasement had forced him to
curtail the money supply and stop the minting of cash - a serious contradiction
in policy. The minting of cash in the seventeenth century did not solve all the
economic problems caused by the lack of an adequate money supply because
the management of money was also a problem for which the Koreans lacked
adequate experience. Maintaining a stable value of currency was complex because
copper cash was not used in many areas of the country, and there were delays
in its flow from the countryside to the major market and urban areas. Because
mints were not concentrated under a single source of authority, controlling the
money supply was difficult. And the desire for restraint to dampen the poten-
tial for inflation was often countered by the need for cash to finance government
operations or relief in times of famine and distress. By the end of the seven-
teenth century conservative spokesmen against inflation had emerged to do bat-
tle against the more liberal advocates of greater market activity.
THE FIRST CYCLE: INFLATION IN A PRIMITIVE CASH ECONOMYResumption of Minting, 1681-89King Sukchong authorized the minting of cash in 1678, five years after Yu
Hyongwon's death, but only two years later the country suffered from inflation
caused by the excessive minting of cash, followed by contraction of the money
supply and deflation. When King Sukchong began to mint copper cash in r678,
he set the exchange rate of copper cash against silver at 400 coins (mun) per
yang of silver, raised its value to 200 mun in 1679, and lowered its value again
to 600 mun per yang of silver in r680 to match the real market value of cash in
an inflationary situation. Since a severe famine had occurred in 1680, Sukchong
had probably minted too much cash to provide relief to the peasants, lowering
its value on the market.
The pattern was now about to be repeated, but now over a protracted period,
and this experience fostered changes in attitudes toward cash and its merits. Suk-
chong's suspension of minting in the provinces continued until the beginning of
168 I, when he adopted Second State Councilor Min ChOngjung's request to
resume minting both in the capital and the provinces. but under the direction of
the Ministry of Taxation in the capital and the provincial govemors in the provinces.
Min made his proposal not simply to expand the volume of cash in circulation,
but to eliminate the corrupt manipulation of the rules for commuting grain taxes
to cloth by officials and clerks. He was inspired by the semiretired Song Siyol,
who complained that peasants required to pay a cloth commutation of the tae-
dong rice tax were being charged too much by the district magistrates. In r 623