938 FINANCIAL REFORM AND THE ECONOMY
YOngjo felt that disposing of government cash reserves was only a minor issue,
but Left Royal Secretary Han Ijo said that despite the assertions of the Ministry
of Taxation, the military agencies and divisions in the capital, and the gover-
nors' and military commander's offices in the provinces that they had spent all
their funds, he believed that they still had large reserves of cash, more than what
private families had. Since cash had been circulating for such a long time, it was
almost impossible to find any other substance that could take its place as a medium
of exchange despite its current inflated value, and it would be mistaken to declare
all that potential revenue illegal.
Yongjo weakened slightly by finally expressing concern about how the gov-
ernment could dispose of its cash reserves. Hong could have seized on this sign
of weakness in YOngjo's resolve to abandon his own compromise plan and even
argue for expansion of the money supply, but he must have concluded already
that his own compromise solution was the best he could hope for. He toldYOngjo
that it was in fact because the problem of cash reserves was indeed insurmountable
that he had devised his compromise solution by which cash would remain as
legal tender in the marketplace. While it was true that neither the Ministry of
Taxation nor the Office for Dispensing Benevolence were currently holding any
cash reserves, the king could not abolish cash outright because various military
divisions or agencies and wealthy private individuals still must have had huge
cash reserves. Or even if he prohibited the use of cash as legal tender, it would
never be carried out because too many individuals and government agencies
would be unwilling to witness the obliteration of their savings at one stroke of
the regal pen. If the government simply ceased using cash for taxes and dis-
bursements, it would free more cash for use in private markets, drive down the
market value of cash, and eliminate the need to mint more of it. Besides, cash
had been used in the marketplace since the Han dynasty in China, presumably
with no untoward effects.
Sim Taekhyon, who had earlier proposed abolishing cash altogether from the
private market as well as from government finances, did make a concession to
Hong's argument about the importance of government cash reserves by point-
ing out that Yongjo could only prohibit the government from using cash for its
finances if state treasuries showed a surplus. Unfortunately, at the current time
the reserves were almost fully depleted and government agencies had no other
choice but to use their cash reserves to meet their obligations. This argument,
however, only confirmed YOngjo's belief that the government's expenditure of
cash could be continued until all government agencies spent all the cash they
had, but not beyond that time.
While Yongjo approved Hong's compromise primarily to relieve the tax and
debt burdens of the common people and eliminate usurious loans, some officials
took issue with his assumption that cash was responsible for these problems.
Third Inspector Kim Uch'ol of the Office of Inspector-General conceded that it
might be better to abolish cash altogether, but he felt it would be far better to
reduce the value of cash simply by minting more of it. He also refuted Yongjo's