INFLATION AND DEFLATION 949by making a bold decision to abolish cash and return to the monetary system of
the early Choson kings. Even the laudable taedong reform of the seventeenth
century, which provided immediate benefits at the time and was still regarded
favorably by the people, had been established only through the resolute orders
of seventeenth-century kings.
In arguing for the abolition of cash, Prince YohUng and Yun Sun, just as Yongjo
himself had done previously, were asserting that moral combat against evil was
more important than the instrumental manipulation of the money supply to redress
imbalances among the prices, values, and interest rates. Third Magistrate of Seoul
Yi Chongje agreed that moral issues could not be divorced from the economic
problems associated with the use of cash, but contrary to the other moralists he
held that it was not cash itself but the human mind (insim) that was the true source
of evil. Since Chou and Han times in China, every Chinese dynasty used cash,
but if the spirit of virtue was able to work its way gradually into the human mind,
and the mores and standards of society remained firm even to a limited degree,
people would be able to rectify their own problems without the need to abolish
the use of cash. On the other hand, if mores and standards had not been estab-
lished, then even if cash were abolished and another medium of exchange found,
it would not improve the situation. Those who thought that the minds of men
were already corrupt and minting more cash would make them even more cor-
rupt would never be persuaded that additional minting could alleviate the cash
shortage or solve the fundamental problems associated with cash. As a good
moral philosopher he disagreed with the association of cash with immorality,
but as an unsteady economist he could not appreciate the argument that mint-
ing more cash would solve imbalances in prices and interest rates. Neverthe-
less, he may have at least weakened the bond in Yongjo's mind between cash
and immorality.
Possibly the most significant recommendation of the day was made by Sec-
ond Royal Secretary Yi Chunggwan, who was strongly opposed to abolishing
cash because cash was essential to the economy and its abolition would elimi-
nate the best means for providing relief to the poor. He favored expanding the
volume of cash in circulation and solving the problem of usurious interest rates
by imposing a legal maximum on interest rates at 20 percent per season, but he
never discussed whether the existing bureaucracy would really be capable of
enforcing the interest limit in every village.
He also proposed that the king cut the value of cash to silver so that I yang
of silver would be equal to 2 yang of cash, that is, 100 coins. IfYi's assessment
of the current value of cash were accurate, the value of cash would have increased
800 percent over the cash/silver exchange rate of 800 coins/yang of silver that
King Sukchong set in 1680.^25
Yi opposed a cut of one p'i! per adult male in the military cloth tax rate, but
he favored a reduction of one yang of cash per adult male on the presumption
that half the military support tax be paid in cash and half in cloth. He predicted
this would have an immediate effect, and after a few years, state finances would