Ch 13 - The Hermit Kingdom

Coin of the Realm

Choson's recovery from the devastating Imjin Wars produced major reforms under the Uniform Land Tax Law, taedongpop, including a restructured tax system, the introduction of tribute contractors and the minting of coins, all of which opened the way for the future development of a commercial economy in Korea.

In two separate invasions in 1592 and 1596, the Japanese army laid waste to whole villages, dramatically reduced Choson's population, destroyed over two-thirds of the country's cultivated farmland, and left the country's economy in shambles. The wars were particularly devastating in Kyongsang Province, one of the richest grain producing areas in Choson and an area occupied by the largest number of Japanese troops for the longest period of time. Kyongsang suffered the destruction of over eighty percent of its farming communities and the slaughter of thousands of people.

Two of the most urgent tasks facing the Choson government in the postwar period were the need to reorganize the country's defense forces and the desperate need to increase state revenues. The royal court elevated the Border Defense Council, Pibyonsa, to the status of a de facto decision-making body. A national defense council consisting of state councilors, ministers of the six boards and military staff generals made important decisions ranging from war to selection of a crown prince. The arts of war which proved so effective in defending Choson against Japanese pirates were given first priority in the postwar defense activity. This system of army training however, required even more money, which had to be collected as taxes from the peasants.

The dramatic loss of grain production in Choson's agriculture-based economy placed a nearly intolerable burden on other provinces that suffered the challenge of trying to make up for the losses. Everyone concerned with farming eagerly sought to increase the land's productivity as soon as possible, because practically all business transactions in Choson involved payments of grain. During the seventeenth and eighteenth centuries, Choson's paramount interest in agricultural technology produced numerous developments in the cultivation of fruit trees, livestock breeding, crop irrigation, weather, forestry, horticulture, sericulture, food processing, and food and crop storage. Farmers in the southern provinces developed new techniques for transplanting rice seedlings. Rice growers started the young rice plants in a small seedbed. After a suitable growth period, they transplanted the seedlings to the paddy field.

Because farmers used the prior year's rice crop either for food or to pay taxes and tribute, they needed another marketable crop to carry them until the newly planted rice could be harvested in the fall. To increase their grain production, farmers no longer let the land remain idle during the autumn and winter months. After the fall rice harvest, farmers planted some of their fields with barley, a hardy cereal crop that could easily withstand the harsh winter weather. After harvesting the barley crop in May and June, they once again tilled the fields and planted rice. Even today the late spring and summer seasons are known as the "barley pass," that time between the barley harvest and the fall rice harvest. Taking a lesson from the southern provinces, this method of two-crop farming spread throughout Korea as more efficient planting methods took hold in Kyonggi and Chungchong Provinces.

Choson suffered stunning social and cultural depredations during the Japanese invasions. Many of those not killed in the fighting, or who failed to escape the evacuating Japanese troops, became prisoners of war. Among the many craftsmen and artisans taken back to Japan never again to return were skilled potters who later made substantial contributions to a ceramic industry that Japan came to think of as all its own. The loss of artisans brought a decline in the quality of Choson handiwork and such manufactured goods as pottery and book printing. The Japanese troops also took printing equipment, movable type fonts, and the printers to use them back to Japan. Some of Choson's prisoners later became the instruments of great cultural advances in Japanese scholarship and philosophy. One of these men, Kang Hang, reputedly established a foothold for Zhu Xi's Neo-Confucian philosophy in Japan at the beginning of the seventeenth century.

Choson lost a substantial amount of cultural treasure and innumerable works of fine art. The devastating fires set by Japanese troops destroyed many of Korea's great palaces and government buildings, among them the beautiful wooden structures at Pulguk-sa in Kyongju and the king's principal residence in Seoul, the Kyongbok Palace. The invading soldiers also put three of Choson's four historical archives to the torch, reducing volumes of governmental records and rare books to ashes, including the official records of the reigns of the Yi dynasty kings. Only the repository at Chonju survived. From this cultural loss, some 2,950 books later found their way into the Sumpu Library of Tokugawa Ieyasu. The destruction was so widespread that there is hardly a building standing in Korea today, except those made of stone, which antedates the Japanese invasions of Toyotomi Hideyoshi.

The desperate fiscal situation facing Choson in the seventeenth century proved even more destructive than the loss of agriculture caused by the Japanese invasions. The Yi government's postwar financial problems mandated the need for new measures to solve a growing economic crisis, including the additional taxation of less devastated provinces such as Kyonggi-do and Chungchong-do. Following the Japanese destruction of land and census registers, King Sonjo's government had no way to systematically assess taxes. This left the government hard pressed to collect revenues and enforce conscriptions for forced labor. The reconstruction of palace buildings and the printing of lost books, such as duplicate sets of the Annals of the Dynasty of Choson, Choson Wangjo Shillok, land ledgers and census records, all required extra funds. Because of the metal shortage caused by arms production during the wars, printers had to carve wooden block type. The government even resorted to selling books to pay for expenses.

National revenues shrank so dramatically that for a time the nearly impotent government resorted to selling official titles of nobility and government posts to anyone who would supply it with money or grain. This desperate act only caused a further disruption of the social structure. The government began pursuing reforms to revive the peasant economy, the main source of revenue. After lengthy discussions of various suggested reforms, the government resurrected a proposal that had been discussed before the Japanese invasions;  the Uniform Land Tax Law, or taedongpop.

Kyonggi Province first successfully instituted the taedongpop in 1608, at the urging of the Chief State Councilor Yi Won-ik. Fifteen years later the new tax system extended to Chungchong and Cholla Provinces. In its simplest form, the Uniform Land Tax Law replaced the tribute tax levied against households with a tax of about one percent of the harvest from each unit of arable land. Before the introduction of the Uniform Land Tax Law, also known as the "Great Equity System," the royal court and the government met their economic needs through tribute taxes and by imposing regional levies for specified products on local artisans and craftsmen who produced the required goods. Local tribute collectors, paid by the government, gathered the goods locally and sent them on to Seoul. By the beginning of the seventeenth century, the government's grave financial situation made this system impossible to maintain.

Although the government retained the old tribute in local specialty products as necessity required, the Uniform Land Tax Law produced two early benefits:  it dramatically eased the tax burden on the peasants and greatly increased government revenues. The government still collected its tribute under the new tax law, but peasant taxes were now able to pay the majority of their taxes in either grain, cotton cloth, or coin. The former tribute collectors remained in business. They merely took on a new role. Many of the dismissed government craftsmen started their own businesses and began selling their products in the open market. Some of Choson's more successful craftsmen worked for the government as "tribute men," kong-in, or "government purchasing agents" in their own specialties. Under this new arrangement, the government took its share of the proceeds, gave a percentage to local contractors to buy needed products locally and allowed them to compensate themselves from the surplus. To keep commercial activity at a minimum while maintaining tight control over what it regarded as a necessary evil at best, government policy restricted commercial activity in Choson to the tribute contractors and government-licensed merchants.

The introduction of tribute contractors stimulated economic development in Choson. Because the demand for various goods frequently exceeded the amount of tribute fixed by law, an enterprising contractor could gather sufficient capital to purchase the additional amounts needed. By reselling his surplus, he could, and usually did, turn an easy profit. Thus the tribute contractor became a kind of wholesaler, much like a modern broker or commission agent. Government-sponsored agents soon developed large-scale monopolistic enterprises under this arrangement and specialized in only certain categories of goods such as silks, ramie cloth, cottons, paper and marine products.

The wholesalers held their monopoly under the right of expropriation, which meant they could confiscate the goods of any merchant who attempted to deal in those goods or products that only government-sponsored agents had authority to handle. Many wholesalers in Seoul actually used this claimed right to corner the market in given commodities and force prices up. Government attempts to halt this practice proved to be generally ineffective, especially when the contractors or merchants happened to be military officers or slaves acting on behalf of powerful yangban families.

Choson's economy and society felt the widespread impact of the taedongpop over the next one hundred years as the full effect of the new law's provisions took hold. Except for P'yongsan and Hamgyong, the two northernmost provinces which grew relatively little grain, the Uniform Land Tax Law took effect throughout Choson by 1708. Despite the Confucian discrimination against commerce and the government's intensive efforts to control, restrict, or even prohibit the development of local markets, tolerating its existence opened the way for the future development of a commercial economy in Korea.

Specialized markets and trade fairs sprang to life throughout the provinces. Villages specializing in certain products emerged and communities of wealthy merchants developed in major towns such as Kaesong, Pyongyang, Taegu, Miryang and Anju. Peddlers traveled regular circuits among local markets that typically opened once every five days on a regular schedule. They brought their pack-horses loaded with such items as clothing, household goods, buttons, needles, combs and tools to sell to visiting merchants from Seoul. The semi-annual herb markets held at Taegu, Chongju and Kongju drew dealers from throughout Korea. In addition, innkeepers, wine shop owners and restaurateurs formed a trade guild that became quite active in loaning money and making wholesale brokerage deals. This particular guild formed a close working relationship with the country's peddlers and became a principal source of capital for their enterprises.

The final ingredient in Choson's greatly expanded commercial activity in the period following the Japanese invasions came in the form of newly minted coinage. The government viewed the minting and issuance of coins as little more than an economic expedient, but the economic changes produced by these small, easily carried symbols of value went far beyond the government's expectations. Mercantile wealth no longer consisted of land and bondsmen, but of hard commodities for quantitative trade in the coin of the realm;  money. The use of coins for payment instead of such bulky commodities as grain or textiles greatly enhanced commercial transactions of all kinds. When people discovered they could make a profit by loaning these new coins at a price, the most notable consequence of all this economic activity finally arrived in Korea;  financing.

The stimulated economic growth that occurred in Choson during the seventeenth century came into direct conflict with long-established traditions. Confucian doctrine deeply disapproved of the practice of lending money and charging interest. Nevertheless, many yangban, wealthy merchants, and even some government offices found the temptation for gain too great to resist. They leaped at the opportunity to turn a profit. The pursuit of economic gain disrupted and confused Choson society's traditional class structure. As upward social mobility began to occur throughout the country, a phenomenon almost unknown in the prewar period, people began to blur or totally ignore class distinctions and Choson's once rigid class system became confused. Neo-Confucian norms and values were shaken, and the class distinctions which the yangban tried to uphold began to crumble as rich peasants and merchants acquired yangban status.

In Western terms, Choson took its first tentative steps toward the development of a laissez-faire capitalist economy. The early stages of this economic transformation produced a phenomenon characteristic of virtually all developing economies:  the rich got richer and the poor got poorer. As the yangban moved up the social scale, the common people went down until the situation reached the limit of the people's endurance.