Koryeo Dynasty Coins

According to the Koryeosa 高麗史 (History of the Koryeo Dynasty), King Seongjeong ordered the minting of an iron coin in 996 (Vol. 79, “Economy, Section 2: Money”, Seongjeong 15.4), which marks the first time the Koryeo dynasty issued a coin. These iron coins continued to be used in the reign of the next monarch, King Mokjong (r. 998–1009). Officials recommended that their circulation be encouraged by abolishing the use of “coarse cloth” ch'up'o 麤布 of two or three sae as a medium of exchange, and by establishing licensed stores selling tea, liquor, food and condiments. With the dethronement of King Mokjong in a coup d'état, and the upheavals caused by the Liao (Khitan) invasion of 1010 (with the censure of this action as a pretext), the minting of coinage seems to have been discontinued. Though there are no surviving documents recording the inscriptions on the coins issued under Seongjeong, it is thought that the iron coins cast at that time were the keonwong jungbo 乾元重宝 (“Keonwong” Heavy Treasure) coins that have been found in the graves of nobles, and bear the inscription tongguk 東国 (“Eastern Country”) on the reverse.

In 1097, around a century after the first iron coins were issued, in the second year of the reign of King Sukjong (r. 1096–1105), an Officer of the Mint was appointed to oversee currency, and in 1102 the first copper coin, the haedong t'ongbo 海東通宝 (“Circulating Treasure of the Eastern Sea”) was issued (Sukjong 7.12). In order to encourage circulation, food and liquor stores were established in the capital Kaeseong and also in the provinces. Because there is a lack of documentary evidence concerning the coins with the five other inscriptions (see Introduction), it is unclear when they were issued and for how long they continued to be minted. However, by 1112 officials were already advising King Yejong (r. 1105–1122) that it was inconvenient to use the coinage (because of the ubiquity of grain and cloth as media of exchange).

According to the Xuanhe fengshi Gaoli tujing (Illustrated Record of the Chinese Embassy to the Koryeo Court during the Xuanhe Era) of Xu Jing (1091–1153), a Chinese official who visited Koryeo as an envoy from the court of the Northern Song emperor in 1123, “there was no law regarding money, just prices determined by hemp cloth and silver eunbyeong. Small goods, not large enough to be traded by silver or bolts of cloth, use rice, which is measured out in very small amounts in payment” (Vol. 3, “Cities, Trade”). “In Koryeo, goods are all bartered. Only medicine, when brought to market, is, exceptionally, traded for coins” (Vol. 16, “Court, Pharmacies”). Though copper coins were not used as a medium for general trade, they were employed at times for transactions in pharmaceutical products also imported from China.

In comparison with the sluggish use of copper coins, the silver eunbyeong, minted first in 1101 and weighing one kun (around 440 grams) appears to have entered circulation immediately.

Koryeo Dynasty Silver

Silver in Koryeo had traditionally been produced, refined and crafted into vessels by specialist craftsmen groups called eunso 銀所. These products were used not only on a daily basis at court, but, by the latter half of the eleventh century, were being widely used as return gifts for the horses and other items sent by the Jurchen tribes as tribute, as presents to the Northern Song court, and as gifts to members of the royal clan and ministers. Koryeo shared its northern border with the state of Liao (907–1125), formed by nomadic Khitan tribes in Manchuria, Mongolia and northeastern China, and was subject to repeated invasions by that state of the territory on the left bank of the Amnok (Yalu) river. After 994, Liao-era names were used here for years other than during the period 1015–1022, as was the Liao system of rank bequeathal. However this Liao-dominated area did not emerge as a territory for ritual exchange, nor did trade relations deepen. In 1088, it was proposed that a special centre be set up on the banks of the Amnok river as a trading hub for goods from Liao, but that same year Koryeo sought its abolition. As for trade with Northern Song, records exist of visits by Song Chinese from the beginning of the eleventh century, and in 1078 both merchants and envoys resumed their formal intercourse (after a considerable hiatus). Records also show that several hundred Chinese were living in Kaeseong at the time (Songshi Vol. 487, Record of Koryeo). The expansion of trade with Northern Song from the second half of the eleventh century is thought to have led to the appearance of the eunbyeong, whose quality and weight were both fixed, as a means of foreign payment.

The value of the eunbyeong was equivalent to one per 100 p'il (bolts) of cloth. It was used not only for trade with the Northern Song but also for large-scale domestic transactions. Counterfeiters long continued to adulterate silver with copper, lowering its quality, so the government decided to ban this action when it began minting the eunbyeong in 1101, and stamped the coin to authorize it. In 1105 it was announced that it was strictly forbidden to “mix sand into rice, and copper or iron into silver, thereby bewildering the common people” (Koryeosa Vol. 79, “Economy, Section 2: Money”, Yejong 1). Private minting of copper coins, however, was never specifically forbidden. The Koryeosa also mentions that silver eunbyeong were paid to generals and soldiers dispatched to fight the Jurchen (Vol. 13, Sukjong 4.2, 4.5 [1099]); and that thieves broke into the government office and stole them (Vol. 79, Sukjong 5.5 [1100]). In addition, state-run granaries (jangsaenggo 長生庫, literally “long life storehouses”), which extended loans of grain on interest, were directed in 1100 to store eunbyeong and cloth in place of millet, which tended to rot quickly (Vol. 79, “Borrowing and Lending”, Sukjong 6.5).

Records concerning the famine that broke out in 1132 mention that there was a parity between rice and the eunbyeong, together with a pony, a cow and a bolt of cloth (Koryeosa Vol. 16, Injun 10.7); it therefore appears that the eunbyeong functioned as a pricing standard along with cloth. The silver eunbyeong was even used to bribe the powerful nobility (Koryeosa Vol. 16, Injun 9.8). It was frequently used as a domestic currency, as well as for foreign trade. Because the supply of silver as a raw material was limited to that mined by the eunso, the right to issue it as a currency rested in reality with the king. Yet even as the use of the eunbyeong broadened and it circulated in the markets, there was no move to make silver the standard for finances, in terms of, for instance, collecting taxes in silver instead of rice.

Changes in the Financial System and the Emergence of Debates about Monetary Reform

The financial system of twelfth-century Koryeo was based on taxation in kind, in which taxes were paid in three ways: the land tax paid in rice (cho 租), the “cloth tax” paid in kind (p 'o 布), and military and labour service (yeok 役). There were also regional “tribute” taxes called sanggong 常貢 (regular tax, actually a household tax) and byeolkong 別貢 (special tax, levied on special local products, such as copper, iron, pottery, paper and black ink). Labour service meant the requisition of labour not simply for civil engineering work, but more commonly for manufacturing and procuring tribute products. Such labour and tribute taxes gradually changed in character and later came to be paid in cloth. From around the beginning of the thirteenth century, the three taxes (cho, p 'o and yeok) were packaged together, and further taxes, called sangyo 常徭 (“regular service”) and chapkong 雑貢 (“miscellaneous tribute”) were levied separately.Footnote ⁴

The addition of these new taxable items can be attributed to firstly an increase of consumption expenditure among the ruling class, and secondly a decrease in state income as a result of the vast and rapid expansion in the acquisition of private land by military officers from the latter part of the twelfth century. The Mongol invasions of 1231–1258 too brought widespread devastation to farmland and a substantial displacement of people, but even after the country recovered from the chaos, sangyo and chapkong both remained in place because state finances remained at a low ebb due to the increase of privately held land by the ruling class. This state of affairs continued until the end of the Koryeo period.

In 1270, the court returned to Kaeseong from the island of Kanghwa, where it had fled in 1232 to take refuge from the Mongols, and a policy of close relations ensued. The period of Mongol domination lasted until 1356. During this time direct trade with the Mongols expanded along the overland route. The Koryeo king too spent long periods in the Mongol capital, since after 1239 the Crown Prince, who was frequently also the son-in-law of the Great Khan, was expected to live as a hostage in Dadou. Because he frequently journeyed between the capital and Kaeseong, costs were very great, and funds were raised by means of silver, cloth and rice. The ruling class, including the king, participated actively in trade with the Mongols, and this trade formed one of the bases of their economic wellbeing.Footnote ⁵ Commercial development, coming from abroad and above, encouraged the rapid expansion of business in Kaeseong. Privately held land in the provinces was one of the economic bases of power-holders in the late Koryeo period, though they themselves preferred to remain in the capital, delegating cultivation and tax collection to their serfs. The king too made every effort to increase the financial resources of the royal clan, unconcerned about the poverty of state finances, and attached large quantities of lands and serfs to the royal treasury. Goods from provincial land taxes were taken forcibly to the capital, together with items acquired through forced trade.Footnote ⁶

In the fourteenth century, silver production by the eunso came to an end, due to workers absconding and the exhaustion of the mines. Because silver continued to flow out as the medium of trade, a domestic shortage developed, with the result that in 1331 the “small” eunbyeong was cast in place of the regular eunbyeong, with a lowering of both weight and quality. Privately cast piece silver, of no fixed weight or quality, was also in circulation among the populace. As the amount of silver in circulation decreased, cloth took on the function of a currency and became increasingly the medium for exchange in place of silver in the ongoing commercial development. Already widely employed in transactions among the common people, cloth, becoming standardized, was also used for the payment of taxes. In addition, large quantities were exported to the Mongols as a commodity of the international trade. In 1342, 48,000 bolts of cloth were released from the private warehouses of the royal household (the Euiseongch'ang, Teokch'eongch'ang and Boheungo) onto the capital markets, and a month later, a chamberlain, Namgung Shin, was dispatched to the Yuan court to sell 20,000 bolts of cloth, as well as gold and silver (Koryeosa Vol. 36, Latter Ch'unghye 3.2, 3). These items reflect the changes that occurred as cloth replaced silver as a means of tax payment.

From the thirteenth century, an extraordinary tax called kwaryeom 科斂, to be paid in silver, rice, etc., often was exacted from officials and rich merchants in order to meet deficiencies in government expenditure, but by the fourteenth century cloth took the place of silver. The kwaryeom implemented in 1343 was an occupational tax targeting those who lived in the provinces and held government positions. Officials of the sixth rank and above paid 150 bolts of cloth, while those below the seventh rank paid 100 bolts. Salaried officials on sinecures (sanjik 散職) were required to pay 15 bolts (Koryeosa Vol. 79, “Economy, Section 2: Money”, Latter Ch'unghe 4). The record tells of a certain poor sanjik who could not pay the tax even though he sold all of his property. Unable to ignore her father's plight, his daughter sold her hair and purchased cloth, and then father and daughter both hanged themselves. This anecdote demonstrates that at the time cloth was used widely among wealthy families, including officials in local areas, as a means to store wealth.

Thus in the fourteenth century, cloth had come to be used not simply as a means of distribution but also as a means to pay taxes and to store wealth. Originally a raw material for clothing, woven by women, the amount that could be supplied to the market was limited in how much it could be used either as a financial or a consumer item. In 1356, there was a discussion concerning the reform of the currency system, which may be summarized by the aphorism “The eunbyeong changes daily and becomes copper; hemp thread coarsens daily and does not become cloth” (Koryeosa Vol. 79, “Economy, Section 2: Money”, Kongmin 5.9). This increase in demand for cloth as a means of finance immediately led to its being used as a means both of paying the land tax, and as a currency. As a result, the quality of cloth deteriorated.

Debate about reforms to the currency system led to the decision to issue silver coins in place of the piece silver privately minted without any official stamp, and, in order to combat the lowered quality of cloth, use standardized five sae cloth authorized as to quality and stamped with an official seal. Yet silver coins were not issued at that time and there is no confirmation that cloth was stamped with an official seal. Still, the notion that the king should retain the exclusive right to issue currency appears here for the first time. It is an idea that would persist in later debates about currency reform.Footnote ⁷

In the fourteenth century, Koryeo trade with the Mongols expanded rapidly, and commercial development advanced both laterally and in a top-down fashion. This trade was in the hands of powerful families who stood between the Korean and Mongol royal houses, and the commodities that comprised its main products were forcibly extracted from the people of Koryeo. At the end of the period, there was a demand for a reform of private land-holding from members of a reform movement which looked to the power of Ming China. These were young literati who had studied Zhu Xi neo-Confucianism and who had entered official circles through the civil service examinations initiated at the time of King Kongmin (r. 1351–1374). Their concern about the prosperity and extravagance of Kaeseong, allied to the Mongol trade, and the exploitation of the people by the royal house and powerful families who backed the trade, reflected their youthful idealism.

Debate Concerning the Issue of Paper Money at the End of the Koryeo Period

In 1391, the third year of the reign of Koryeo's last king, Kongyang (r. 1389–1392), Bang Saryang 房士良, an official of the rank of chungnangjang 中郎将, submitted a memorial in which he proposed that the government mint copper coins, print paper money, and ban the use of coarse cloth (ch'up'o) for currency (Koryeosa Vol. 79, “Economy, Section 2: Money”, Kongyang 3.3). Besides seeking the reform of the currency system, he also called for a strict prohibition of “smuggling” (i.e. private trade) with Ming China. This memorial signals the beginning of the debate about paper money, which already had appeared in Ming China. The proposal to print paper money was accepted and in the seventh lunar month the Paper Money Treasury (Chaseom cheohwago 資贍楮貨庫) was established.

In other words, the lack of a suitable currency medium was obstructing business transactions. Furthermore, there was also a deficiency of metallic resources, since “neither copper not silver are being produced in this country,” so it had been difficult to introduce copper and silver coins. It was for these reasons that it had been decided to issue paper money and have it circulate in conjunction with five sae cloth. This money was not to be simply a medium of exchange, but was also to be used for financial disbursement “in [times of] flood or drought or military excursions.” It also meant that cloth and paper money were permitted for the payment of those taxes traditionally collected in kind.

If this reform had come about, the payment of taxes in money would have expanded, and there would have been a considerable increase in the relative importance of commercial activities in terms of financial demand, particularly when we consider that land tax and tribute items from the provinces were increasingly being collected. Such a reform might have brought with it a considerable invigoration of business, as it acted as a motive force in the supply of goods to the various government offices. But circumstances did not work out in this way.

The land reform that began immediately after Yi Seonggye's coup d'état in 1388 when the future King T'aejo (1335–1408, r. 1392–1398) conducted a land survey throughout the country, bringing former power relationships to an end with the burning of sajeon 私田 (“private land”) prebendal certificates in the ninth lunar month of 1390 and, in the fifth lunar month of the following year, the promulgation of the “Rank Land” (kwajeon 科田) Law, whereby land, whose ownership ultimately rested with the king, was distributed according to the rank of office holders, giving them the right to collect rents and taxes. Bang's proposal and the decision to issue paper money may be understood in the context of the series of reforms in the financial system that were being undertaken at the time. While there was support among officials for the implementation of the land reform, however, at the same time there were deepening confrontations regarding the enforcement of other components of political reform, such as the mandate for dynastic change (yixing geming 易姓革命). In the fourth lunar month of 1392, Cheong Mongju 鄭夢周 (1337–1392), an influential Confucian scholar who refused to support the new dynasty and sought the continuation of the Koryeo royal house, was assassinated by subordinates of Yi Seonggye's fifth son, Yi Bangwon, who later reigned as King T'aejong (1400–1418). Thus the opponents of Yi's new dynasty were eliminated. Paper money, though capable of stimulating commerce and reviving the economic base of the old Koryeo power-holders, was associated with the policies of Cheong Mongju's faction and was abolished without ever having been issued.

The Issuance of Paper Money in the Early Choseon Period

Paper money (cheohwa) was not issued under the first two kings of the Choseon dynasty, T'aejo and Cheonjong (r. 1398–1400). It was issued for the first time during the first three years of the reign of the next monarch, T'aejong (r. 1400–1418), but was abandoned in 1403. In 1410, T'aejong tried for a second time to introduce the cheohwa. Its use was suspended between 1425 and 1445, when a copper coin (the Choseon Circulating Treasure, Choseon t'ongbo 朝鮮通宝) was issued in its place. But following the restoration of the cheohwa in 1445 it was given the status of a national currency, according to the provisions of the Great Law Code (Kyeongguk taejeon) drawn up under King Sejo (r. 1455–1468) and published in 1460. Transactions thenceforth could be made using either cheohwa or cloth (whether the “correct cloth” [cheongp'o 正布] of five sae or the “ordinary cloth” [sangp'o 常布, i.e. ch'up'o] of two or three sae. Thus paper money alone went through two periods of abolition and three of reissue, experiencing what might be called bewildering change. What was the political intent that underlay currency issue in the fifteenth century?

At the centre of the strategy concerning the issue of paper money during the reign of King T'aejong was Ha Ryun 河崙 (1347–1416), a neo-Confucianist scholar-bureaucrat. According to the Veritable Record of King Sejong,

In other words, the land tax would be levied in rice and grain, but other necessary goods could be paid for using cheohwa. Grain necessary for relief could be bought for storage using cheohwa, and in bad years grain could be distributed widely in exchange for cheohwa. However, the cheohwa did not work as hoped, since the reform of the taxation system early in the new dynasty already had progressed in the direction of reconfirming the tribute system and the payment of taxes in kind.

As previously mentioned, the late Koryeo taxation system lumped together the three taxes that had existed from former times (the land tax, the cloth tax, and labour service) in order to compensate for budget deficits due to the broad expansion of sajeon, or “private land”. It also levied the supplementary sangyo (“regular service”) and chapkong (“miscellaneous tribute”) taxes. There existed however an understanding that the levy of the miscellaneous tribute and the household cloth tax (hop'o 戸布) was a duplication of the category taxes in kind. In the seventh lunar month of 1392, eleven days after the accession of T'aejo, an edict announced that the household cloth tax had been levied due to reductions and exemptions regarding the miscellaneous tribute. Since the levy of miscellaneous tribute in conjunction with the household cloth tax annoyed people, clearly the latter would have to be abolished in the future (T 'aejo sillok, T'aejo 1.7). The General Directorate for Determining Taxes (Kongbu p'yeongjeong togam 貢賦評定都監) accordingly advised that the tribute ledgers (kong'an 貢案) of the previous dynasty would be revised to reduce the amount of tribute required of the people. For instance, citrus fruits were placed in a new category called byeolkong 別貢 or “special tribute”, distinct from regular tribute (sangkong 常貢). New tribute ledgers were ready by the tenth lunar month (T'aejo sillok, T'aejo 1.10). In other words, the new dynasty simply revised part of the miscellaneous tribute, made up of the supplementary tax items added in the late Koryeo period, changed the nomenclature (sangkong and byeolkong), and authorized them as formal tax items.Footnote ⁸ Produce needed by the various government offices was acquired through tribute tax payable in kind, thus, unlike Ha Ryun's conception, the procurement of goods by means of paying paper money actually functioned as a simple way of supplementing finances.

It was intended that the cheohwa, released in the markets as payment for goods for government offices and part of the salary of officials, would be returned to circulation through being used to pay various taxes and tribute, such as the taxes levied on merchants and craftsmen and the personal tribute (sinking 身貢) paid by outside resident serfs to the government. However, it turned out to be impossible to maintain the fixed value of the paper money. When the cheohwa came into use, the use of five sae cloth as a currency was forbidden. Previous studies have regarded this ban as a device to encourage the acceptance of paper money,Footnote ⁹ but the actual intention of the policy was not quite so straightforward.

The Royal Prerogative Over All Economic Activities

In the first half of the fifteenth century, that is, during the reigns of T'aejong (r. 1400–1418) and Sejong (r. 1418–1450), there were frequent changes in the monetary system, with the issue and withdrawal of the cheohwa, and the issue of copper coins in place of the cheohwa. At each instance, the issue under discussion was that the king should take the initiative in economic management. This idea was expressed at the time as the “rights of kings” 人主之利権 or ikkwon jaesang 利権在上. It was the ideology of state management that the king had to take in hand all aspects of economic administration. In the broadest sense, this meant that all the bounty attained from natural resources was to be used and allocated by the state.Footnote ¹⁰ Activities such as stockpiling and transporting grain, and gathering salt and trading in it naturally fell under the aegis of state management, and the registration of merchants and the designation of their areas of activity, as well as the issue of money and decisions about how much should be put into circulation, all may be thought of as measures associated with the royal prerogative over economic activities.Footnote ¹¹

Seen in the light of ikkwon jaesang, it is clear that cloth was not a suitable form of currency. First, of the cloth woven by the people, the amount collected as part of the taxes and tribute that went immediately into storage in state warehouses was the same as the amount disbursed from the warehouses; thus, to the extent it was not exacted remorselessly, the amount received and disbursed was inflexible. It was difficult to control with certainty the amount in circulation. Furthermore, in terms of price setting, since cloth was the raw material for clothing and so commanded a commodity price, the government did not have much leeway to manipulate values. As a result, the banning of the use of five sae cloth was discussed specifically in terms of the loss of a method of state control if vested interests were dispersed, over and above its utility for trade among the people. In 1438, when high officials were discussing currency management policy before King Sejong, particularly whether or not iron coins should be issued in place of copper coins and whether five sae cloth be allowed to circulate in conjunction with coined money, the faction in favour of the cheohwa argued that the previous monarch (T'aejung) had ordered the issue of coins.

What position did the cheohwa, conceived as a way of ensuring the state's economic prerogative, occupy in terms of actual economic management? In the fourth lunar month of 1425, copper coins were issued anew, and the cheohwa that had been used since 1410 were withdrawn from circulation at the rate of one bill (jang 張) per one mun coin. The amount of copper coins calculated as being necessary for the exchange was 500 strings (kan) in the capital, 50 strings each in Kaeseong, Kyeonggido, Cheolrado, Kyeongsangdo, Ch'ungch'eongdo and P'yeongando, and 30 strings each in Kangwondo, Hwanghaedo, Hamgildo and Hamgyeongdo, totalling 890 strings (equivalent to 890,000 mun and 890,000 jang) (Sejong sillok, Sejong 7.4). This demonstrates that more than half was distributed in the capital. In the fifth lunar month of the same year, regulations established that one mun (copper coin) was to be equivalent to one mal 升 of rice (0.6 litres) (Sejong sillok, Sejong 7.5). If we consider between 1415 and 1423 the value of the cheohwa fluctuated according to a ratio of one to 2 or 3 toe, this is a reflection of the actual rate. According to the official rate for the copper coin, where one jang of paper money equalled one mal of rice, 890,000 jang was equivalent to around 6,000 seok 石 (one seok was equivalent to 15 mal; the Korean seok was about 90 litres, around half the Japanese koku 石). However, in 1423, less than 1,070,000 seok of rice, beans and grains was being stored in the state granaries for the purpose of famine relief.Footnote ¹² Of course this figure does not represent the grain that could be stored, but it does indicate the amount calculated as being necessary for famine and other relief, over and above that needed for military provisions (kunja 軍資). If we consider the possibility of the cheohwa being used to pay for relief, we may be able to make a comparative value. Even supposing that all the cheohwa were used for relief, we would arrive at a quantity that only made up less than one percent of the fixed quantity stockpiled.Footnote ¹³

The economic management system of the Choseon dynasty was built around the payment of tribute in kind. Crafted and manufactured items required by the court and government offices were produced by the labour service of artisans in workshops attached to those offices using as their raw materials the tribute items collected. If we take this fact into consideration, the early Choseon economy was constructed from the beginning as a system that did not particularly involve either money or commercial distribution. The role played by the release of surplus or old materials by government offices in the capital or of resources bought in by the central or local authorities to meet temporary needs was neither anticipated nor indeed one that the authorities originally intended to meet. Nevertheless, the reason that currency issuance continued to be a concern until the use of the five sae cloth already in circulation was banned can be sought in the fact that the state attempted to promulgate to the greatest degree the ideology of ikkwon jaesang, denying merchants control of distribution in areas outside the direct reach of the government and influence over the national economy.

Stagnation of the Cheohwa and Authorization of Cloth

King Sejong had tried to restore the cheohwa in 1445, in place of copper coins. When King Munjong came to the throne in 1450 he found that the reason the cheohwa was not successful was because its value was low, due to government departments all using it to pay expenses. He commented that government departments should pay their expenses in cloth rather than in paper money [so paper money would rise in value] (Munjong sillok, Mujong 1.10). During the reign of King Sejo (r. 1455–1468) there was increasing support for lifting the ban on the use of cloth as a means of payment. In 1459, after consulting with his ministers about whether or not the cheohwa should remain in use, the king advised the Board of Revenue that henceforth transactions in any medium, be it pongee, cotton or standard cloth, five sae cloth or paper money, should be allowed, according to circumstances (Sejo sillok, Sejo 4.11).

Authorization of the use of cloth as currency derived from King Sejo's deep concern about the current state of affairs. The taxation section of the Law Code (Kyeongguk taejeon 経国大典), initiated in 1460, specified in the original draft of 1461 that there were to be in circulation three grades of official currency (kukp'e 国幣), the highest being five sae cloth, the middle being three sae cloth and the lowest being paper money. Cloth being used as currency was to be stamped with a seal reading “Choseon Circulating Treasure” (Choseon t'ongp'e 朝鮮通幣). In the draft of 1462, one p'il (bolt) of currency cloth was to be standardized at 35 cha 尺 and half a p'il was to be 17.5 cha. Each end of the cloth was to be stamped with the above seal. The fee for the seal was to be levied at a rate of one jang (bill) of paper money for half a p'il of “ordinary cloth” or sangp'o (i.e. ch'up'o, two or three sae cloth). The official rate between the various media was to be one p'il of standard cloth (cheongp'o, i.e. five sae cloth) = two p'il of ordinary cloth = eighty jang of paper money (Sejo sillok, Sejo 6.8, 7.2). This rate reflected the depreciation of the cheohwa, but what I would like to emphasize is that paper money occupied the position of a low-value subsidiary currency, whereas cloth money (p'ohwa 布貨) was the cornerstone. In the final version of the Law Code, completed in 1469, the fixed ratio of exchange was maintained with a certain modification: one p'il of standard cloth = two p'il of ordinary cloth = twenty jang of paper money. We can therefore say that in the course of the latter half of the fifteenth century “cloth money” became the official currency. In terms of quality, though, whereas previously the cloth had been hemp, because of the rapid diffusion of cotton cultivation, the Supplementary Law Code (Taejeon songnok 大典続緑) of 1492 reflected the circumstances whereby cotton cloth was being used as the main form of “cloth money”, both officially and privately. The code standardized its usage: five sae in texture, 35 cha in length, and over seven chi in breadth.

Circulation of Inferior Cotton Cloth

Standardized cotton was not the only cloth being circulated. During the reign of King Seongjong (r. 1469–1494) so-called “short cloth” (尺短) appeared, the length of the standard bolt (p'il) having been shortened to 32.3 cha; other bolts of one p'il appeared, made by joining three or four tan 端 together. This was a cause for official concern (Seongjong sillok 18.1). The situation became worse during Yeonsan'gun's reign (1494–1506); not only did the cloth fall short in terms of length, but cloth with a thread count of three or four sae came into common use for transactions. In the sixteenth century, during the reign of King Chungjong (1505–1544), two or three sae cloth also appeared. Since one sae was eighty warp threads, cotton cloth with a low thread count was a coarse weave and it also meant that the amount of cotton thread needed to weave it was less. Compared with the five sae cloth, its exchange value was low.

Regarding the circulation of this non-standard cotton cloth, or “bad cloth” (akp'o 悪布), in the seventh lunar month of 1515, King Chungjong decided to attempt once more to spend paper money, increasing its circulation and use. This was not so much forcing a restoration of the use of the cheohwa as it was a countermeasure against the use of “bad cloth” for small-scale trade. At this juncture, penalties were exacted against those who wove “bad cloth” and those who made the yarn guides used in its production. In view of the circumstances its use was banned in the third lunar month of the following year. Seeing however that it was difficult to forbid “bad cloth” simply by decree, the government decided to declare “bad cloth” that met the regulations regarding length (termed chunch'eokp'o 准尺布) to be excluded from the ban, and made two bolts of it correspond to one bolt of “correct” cotton cloth (cheongmyeonp'o 正綿布) (Chungjong sillok, Chungjong 10.7). To this extent, the official exchange rate of one bolt of “correct cloth” = two bolts of “bad cloth” can be seen as a restoration of the authorized rate that had existed under King Sejo. However, the problem then became that “bad cloth” (such as samseungp'o 三升布) was driving “correct” cloth from the market.

Despite measures to ban it, “bad cloth” remained in use as before, so in 1519 penalties were prescribed not only for weavers and producers of yarn guides but also for those who split the bolts and for users of “short cloth”. But chunch'eokp'o remained exempt, although it was “bad cloth”. Because prohibiting the use of “bad cloth” might incur the resentment of the common people who used “bad cloth” in their daily transactions, the law was not strictly enforced (Chungjong sillok, Chungjong 15.int.8). Though the weaving of “bad cloth” was banned, there was no prohibition about using it commercially as long as the length met the required standards. As a result people appear to have thought that its use was authorized. Later, three sae cotton cloth circulated as “ordinary cloth” (sangp'o, sangmok 常木).Footnote ¹⁴

As far as the state was concerned, the cloth standard for the payment of taxes and tribute was necessarily five sae. However, in the Supplementary Law Code of 1543 (Taejeon husongnok 大典後続録), there are exceptional examples of a horse that was priced according to four sae cotton cloth and a boat according to three sae cotton cloth (“Taxes and Tribute”).

How was cloth money actually used in transactions at the time? A large number of sixteenth-century land sale documents contained in the Gyeongbuk jibang gomunseo jipseong generally express the sale price according to the formula “field of x toe corresponds to y p'il of cotton cloth, payment to be made according to this amount”. In other words, cotton cloth functioned as a measure of value. We must be aware here that when cotton cloth with a different thread count to a sangmok such as five sae cotton cloth was used, the thread count was meticulously noted. For example, Document 355 (dated Chungjong 37 [1542]) rarely specifies three sae cloth (i.e. non-standard cloth) but it expressly mentions thread count and material when referring to six, five or four sae cloth. The equivalent value of a field valued at 120 bolts was calculated in terms of grain (rice plants, harvested rice) and cloth (cotton, hemp), and we should also note that the theoretically prohibited half bolt was also used.

Serf sale records in the same collection of documents give a number of examples, even into the seventeenth century, of transactions being recorded in paper money (e.g. Document No. 280 [1625]). Paper money was not, however, used in the actual payment. This is because an article in the Kyeongguk taejon stated that the sale of a serf should be reported to authorities and a contract made up. The style of documentation had been determined in the above Law Code, where the price was set out in terms of cheohwa. In fact, the sale was made based on the actual price determined in cloth, etc.

Social Change

If we characterize economic management in the first half of the fifteenth century in terms of the ideology of ikkwon jaesang, with its control from above and emphasis on the establishment of a new order, and the use of paper money as one strategy towards achieving it, the second half of the fifteenth century was a time when those in power went along with the status quo, symbolized by their giving up on the forcible imposition of paper money and allowing the use of cloth money, including “bad cloth”. For example, in 1529 the official Eo Teokkang (1470–1550) sought to reinforce the punishment of weavers who made “bad cloth” by banishing their entire households. King Chungjong opposed his plan on the grounds that to enact a severe law to prohibit “bad cloth” with undue haste would be to incur the resentment of the people. The new law might be effective for a time, but it would ultimately bring disaster (Chungjong sillok, Chungjong 24.4). This is an attitude in direct contrast to the policy of 1410 under King T'aejong, when it was made a crime to use rice and cloth and not paper money. At that time violators would receive one hundred strokes of the cane, have their property confiscated and be assigned to the navy to undertake heavy labour (T'aejong sillok, T'aejong 10.1).

In the latter part of the fifteenth century periodic regional markets called changmun 場門 sprang up around the country.Footnote ¹⁵ The earliest record concerning the changmun dates from 1472.

This item illustrates the policy changes referred to above. The important point is that people in Choelra were able to survive the Kweongin famine by setting up markets. In the first half of the fifteenth century, famine relief was supposed to be a function of the state, so the government gave its attention to stockpiling grain in the state granaries, the so-called “Righteousness Storehouses” (euich'ang 義倉). The issue of paper money too should have been helpful in buying in grain for stockpiling. However, the problem was not simply one of gathering together sufficient amounts of grain, but of its distribution and transportation.

The idea that changmon were beneficial in terms of famine relief can be confirmed by other items in the Veritable Records. In 1487, Kim Chongjik 金宗直 (1431–1492), the governor of Choelra, reported to the king that the existence of changmon in the province made it easier for stolen property to be disposed of, and that, compared with other provinces, incidence of theft in Choelra was high. However, “In bad years, changmon are beneficial in regards famine relief, and should not [at those times] be banned.” Because in that particular year the prospects for the harvest seemed to be good, he recommended that they be banned. The king, however, determined that “they should not be abolished since whether or not they exist [affects] trade and commerce” (Seongjong sillok, Seongjong 18.6). Changmon, the appearance of which in bad years is confirmed above, subsequently were banned, but more than a decade later they appear to have been opened again, though it had not been a year of bad harvest.

An item dated 1520 reports that despite measures taken to forbid changmon, they had spread to other provinces.

To talk of “tens of thousands” attending a market clearly is an overstatement, but the picture this offers of the hustle and bustle of the market and stalls selling food and drink recalls similar scenes belonging to market descriptions of the eighteenth century. The attitude of central figures in the government who wanted to ban markets in order to protect the agricultural norm was shaken by figures wanting to approve the markets because of the benefits they offered. In the middle of the sixteenth century, they were completely accepted.

The appearance of regional markets was in part stimulated by the necessities of years of bad harvests, but we must not forget that this was also the period when “bad cloth” became more and more prevalent. This seems to be in agreement with what Kuroda Akinobu describes as “the ‘currency circuit’ in which regions autonomously adjust the demand and supply of money.”Footnote ¹⁶ Between the latter half of the fifteenth century and the sixteenth century, the Choseon court, in the face of a gradual dismantlement of the supremacy of the ikkwon position, took very few measures other than a loose supervision of the ban of “bad cloth” of non-stipulated lengths; however, there was no issuance of a new copper coin.

Regarding the issuance of paper money, an item in the Veritable Record of King Chungjong from 1520 recognizes that its reintroduction was beset by many problems.

Retreat from the Ideology of Ikkwon Jaesang

As I have argued already, it is clear that during the first half of the fifteenth century the ideology of ikkwon jaesang, whereby all economic activities were under the control of the state, was no longer being followed to the letter. By the latter part of the century, especially during the reign of Seongjong (1469–1494), there was a vast increase in money-making activities by local power holders (yangban 両班, scholar-officials [sadaebu 士大夫]) in collaboration with government agencies. They intervened in the transportation of tribute grain, salt, and other goods to the capital. For example, according to region, the price of tribute grain (napkok suga 納穀受価) that was paid in kind locally, and that of grain of the same amount that was received in the capital or in those provinces that wanted it, might be very different. By exploiting this price differential, great profits could be made. In the sixteenth century, rights to use and benefit from the products of the seashore could be extended as payment for tribute grain. Such trade in privileges often occurred as a way to dispose of grain surpluses from the provincial estates of the royal family and government officials. At the same time it was also a way to make profits from the grain stored in state granaries for relief or military funding.Footnote ¹⁷

The period from the latter half of the fifteenth century, particularly from the reign of Seongjong (1469–1494), was marked by the ongoing dismantling of the systems of tribute in kind and labour service that had been set up with the founding of the dynasty. Tribute payments were no longer sent directly from the provinces to the government offices. Instead middlemen such as merchants, officials and priests collected them from taxpayers in the form of rice or cloth substitute payments (taenap 代納). These materials were then used to buy the actual tribute items on the market. This practice grew into a system of tribute contracting (pangnap 防納) by clerks and serfs (nobok) in the government bureaus, whereby taxpayers were directly responsible for paying in rice or cloth. This system did not, however, reduce the burden on taxpayers: the contractors profited because a levy several times the tribute price was exacted. The labour service system that was laid out at the beginning of the dynasty was determined in terms of the needs of the state and military, and was provided on a rota according to the type required. However, from the latter half of the fifteenth century, there was an increase in substitute labour: people could pay in cloth in lieu of performing labour service or have others perform it in their stead. Because of rises in the substitute labour fee, in 1493 the fee for soldiers and sailors used in public works and maintenance was officially set. Regardless of the preferences of those providing labour during the reign of Chungjong (1506–1544), clerks and slaves attached to the various bureaus combined several roles, collecting the substitute labour fees and accumulating profits. No distinction was made about the nature of the labour performed as male labourers as a whole became subject to the substitution of labour service by payment in cloth. In function, labour service had turned into a capitation, or poll, tax. The tribute and labour service system, now reduced to a mere skeleton of its former self, had changed into a mechanism of exploitation by intermediaries. Full-scale reform though had to wait until the seventeenth century.Footnote ¹⁸

At the beginning of the fifteenth century, the Korean state focused its attention on constructing a system mobilizing and directly supervising not only the profits from natural resources but from surplus labour as well. Thus the state and the people can be considered to have directly exchanged goods and labour. Commercial distribution, autonomous markets and the intermediate groups that operated them were understood to represent the dispersion below of the rights and benefits that belonged to those in power, and so had to be eliminated. However, from the latter part of the fifteenth century, this strict ikkwon jaesang system began to be undermined as a result of the misconduct and profit-seeking of members of the ruling class and those who served them, through the prevalence of substitute payments for tribute and labour service. Eventually the system came to exist in name only. The spread of substitute payments contributed to the increase in scale and numbers of markets.Footnote ¹⁹ Financial activities deepened the reliance on commercial measures.

Key government figures, including the king, did not try overmuch to check the situation, but instead passively accepted it. This attitude arose because the changes did not directly threaten their vested interests, and because commercial stimulation promised new opportunities for profit through the trade in prerogatives. In the sixteenth century, paper money, which once had been conceived as an intervention meant to eliminate exploitation by middlemen and to facilitate direct exchange between the state and the people, was welcomed no longer, even by the rulers, and was not brought back into circulation.