King of Commerce, Yeonsan-gun ch.9
Let’s Get Down to Business, Part 2
Upon hearing Yun Hyo-jeong’s seemingly naive question, the official almost wanted to explain, “Ah, do you ignorant country scholars not understand? It’s because of the principle of 'Jeonryangjiri' (the theory of currency quantity or inflation).” But he held his tongue.
‘Why do all Hojo officials speak in this manner? Now I’m even starting to catch it myself,’ the official thought, suppressing the words.
Instead, he gave a straightforward explanation:
"The government releases Ji-pye (the new currency) gradually every three months to prevent its value from depreciating too quickly. If you had read the public notice, you would have seen the details on how much Ji-pye is distributed at each exchange and warehouse for purchasing grain."
Yun Hyo-jeong knew that much. That’s why he came to Gongjinchang, the closest exchange with the highest allocation of Ji-pye and favorable rates.
And clearly, he wasn’t the only one with this idea.
"That’s why so many private traders and merchants from both Yangho and Yeongnam have flocked to Gongjinchang. The exchange here has already gathered more grain than its usual yearly tax collection, but the Ji-pye has run out."
"But the traders are still gathered here in Asan."
The official continued, explaining that the government had allowed local residents to borrow Ji-pye, enabling them to buy grain from the gathered merchants.
"The traders are selling grain to the local residents at prices higher than what the exchange offers," he added.
More specifically, the prices of millet and beans had risen significantly. While millet and beans usually traded at a third of the price of rice, during times of famine, the poor were desperate for anything to eat, even if it wasn’t rice.
Even those who had money to buy rice at three times the price found it more economical to buy millet. As a result, the price of millet had doubled, reaching two-thirds the price of rice. Beans, being less desirable, didn’t see as significant a price increase .
Moreover, rice was a highly liquid commodity in Joseon, often used like a cash crop and one of the standard currencies alongside woven fabric and Jeohwa.
Although the new Ji-pye currency had only been in circulation for a few months, it hadn’t lost its appeal as a former official currency. The exchange preferred to stockpile valuable rice over less desirable millet or beans, especially since they didn’t even have proper storage facilities for such commodities at Gongjinchang .
Now, Yun Hyo-jeong understood why the merchant earlier had tried to bargain with him for his rice. And when he refused, the merchant’s smug “you’re doomed” smile made sense.
'So, all the nearby exchanges must be out of Ji-pye too! Those merchants probably know exactly where there’s still enough Ji-pye!'
Not only that, but the local residents were too poor to buy rice. In this area, finding someone willing to pay a fair price for rice was unlikely.
It was a curious phenomenon. Back in King Seongjong’s reign, during a severe famine in Honam, local people in resource-rich districts like Muan and Naju had established their own markets .
Yun Hyo-jeong had seen these markets during his visits to Naju to pay tribute. Although he had never been to Seoul, Naju’s bustling market seemed to rival even the capital in vibrancy (though Seoul residents would likely find this notion amusing).
These markets allowed merchants from the border provinces to bring grain to the southern regions, sustaining the local population during tough times.
Initially, the government had tried to ban these markets, but recognizing their value in relief efforts, they allowed the markets in Muan and Naju to continue.
Now, seeing the traders gathered in Asan, Yun Hyo-jeong was reminded of those markets. Even though Asan wasn’t as bustling as Naju, the principle was the same: merchants gathered to sell grain to the starving people.
'A thriving market could soon emerge here in Asan, similar to the ones in Honam,' Yun Hyo-jeong thought.
But his sharp insight had to be set aside for the moment.
“What do we do with this rice, master?” Maksoe asked, interrupting his thoughts.
“Maksoe, as I said, a gentleman doesn’t pursue profit but righteousness,” Yun Hyo-jeong responded, quoting Mencius to emphasize his scholarly status.
“So what? If we can’t sell this rice, won’t you just get kicked out by your in-laws for being a useless freeloader?” Maksoe retorted.
Maksoe’s long-standing familiarity with the Jeong household gave him the audacity to speak so frankly to his master. To an outsider, it might seem shocking for a servant to talk back like this.
“You’ve got a lot to say for a servant. I’ll put this rice to good use. It’s time to show that it’s the scholars, not the greedy merchants, who truly serve the people.”
He gathered his servants and issued an order:
“Spread the word around. Here’s what you’re going to say…”
In modern economic terms, the official currencies of Joseon included rice, woven fabric, and legal tender (early on, Jeohwa; later, Sangpyeong Tongbo coins).
It’s easy to dismiss the use of rice and fabric as simple barter, but these commodities held not just intrinsic value but also legally recognized value. They were used to pay taxes, store wealth, and circulate widely as a medium of exchange .
While this system didn’t function perfectly, with everyone from government officials to commoners engaging in rampant currency arbitrage to exploit price differences, it contributed to frequent financial instability.
This zero-sum game often resulted in widespread poverty and chaotic finances, culminating during the opening of ports when the introduction of British cotton led to a collapse in the value of cloth-based taxes, further wrecking the economy already strained by the depreciation of currency like Dangbaekjeon.
In the alternate Joseon envisioned by Kyung-sik, a severe deflationary environment was emerging due to the imbalance between the fixed tax demand in Ji-pye and the limited supply.
Moreover, the current exchanges primarily accepted rice. Kyung-sik’s decree had set fixed exchange rates for rice but left millet and beans to be traded at market rates, a decision influenced by his misguided impression of Joseon’s rice-centric culture.
This led the exchanges to prefer rice over millet and beans, which they found difficult to manage without adequate storage facilities.
However, for the poorer classes in Joseon, millet was a staple, especially during times when rice was scarce. Even into the late Joseon and Japanese colonial periods, millet remained a primary food source for the impoverished.
Given that high-ranking officials typically concerned themselves with rice prices and paid little attention to millet prices, Kyung-sik’s isolated policy decisions were somewhat disconnected from the realities of the people.
The officials didn’t question Kyung-sik’s flawed policies because they saw the new Ji-pye law as a way to extract more rice from the southern provinces to fill the national granaries. Convincing them that the new policy was in line with the unfulfilled ambitions of Taejong, Kyung-sik managed to sway them.
Due to these factors, both the value of Ji-pye and the price of rice were skyrocketing across Joseon. Rice was the only commodity consistently accepted in exchange for Ji-pye, making it the most sought-after resource.
In Asan, the price of rice fell while the price of millet rose, temporarily due to the halt in the exchange’s rice purchases. However, rice remained the most valuable commodity because it could be exchanged for the scarce Ji-pye.
Merchants in Asan were caught between holding onto their rice in hopes that the exchange would resume buying, debating whether to move to another exchange, or abandoning their rice sales altogether.
As these hopeful and doubtful merchants crossed paths, two rumors spread simultaneously:
“The government is short on Ji-pye and is reverting to accepting rice for taxes instead!”
“No, I heard they’ve printed enough Ji-pye and it’s on its way to Asan!”
Given Joseon’s history, the former seemed more plausible. Without knowledge of Kyung-sik’s new powers and the mass production of Ji-pye in the capital, skepticism was rational.
However, people tend to believe what aligns with their expectations.
Regardless of which rumor they believed, the incentive to buy rice increased. Those who believed the former rumor would buy rice to hedge against a drop in Ji-pye’s value, while those who believed the latter would buy rice to convert it into Ji-pye.
Reflecting on it now, it seems curious why people in Joseon, a country with a history of failed currency policies, suddenly scrambled to hoard Ji-pye. Those who believed the first rumor were fully betting against Ji-pye’s value.
Yun Hyo-jeong’s surplus rice soon attracted the attention of the merchants.
“Hehe, sir. You came here to sell your rice for Ji-pye, didn’t you? We’ll buy it for 1 jeon and 5 mun per du...”
“Four du of millet,” Yun Hyo-jeong interrupted.
“Pardon?”
“Four du of millet for one du of rice. Let’s trade.”
“Even in normal times, millet trades at about three du for one du of rice. How can we agree to four du in a famine? Let’s settle for 1 jeon and 5 mun.”
“Four du.”
“How about three and a half du?”
“Four du.”
“This is unreasonable... How about three du?”
“Four du.”
“Fine, we’ll take it at four du,” the merchant conceded, exasperated.
“Excellent, thank you! Four du it is!”
Soon, Yun Hyo-jeong’s boat was empty of rice and overflowing with millet. The volume increased fourfold, so much that they couldn’t load it all on the boat and had to unload some on the nearby beach.
“Master, what are we going to do with all this millet? We’re not starving peasants! We’re going to be in big trouble when we get home!” Maksoe lamented.
“Don’t worry, Maksoe. I have a plan. Let’s go.”
Yun Hyo-jeong’s plan was to sell the millet at half the price to the starving peasants in the nearby villages.
While his servants were eager to sell the mountain of millet and return home, they found the villagers less enthusiastic.
“We’ve already bought enough millet to survive. Why should we buy more at twice the normal price? We’re already in debt to the government for next year,” one villager complained.
The villages around Asan had already secured enough millet to stave off immediate hunger, and their purchasing power was limited. Selling more millet would only drive the price down and lead to losses.
Additionally, with rumors suggesting a possible depreciation in Ji-pye’s value (despite being spread by Yun Hyo-jeong himself), the only currency the local residents could offer was Ji-pye.
This was why the merchants had been willing to sell their millet to Yun Hyo-jeong at a steep discount.
“What now, Master?” Maksoe asked.
“I told you before, Maksoe. A scholar speaks of righteousness, not profit.”
“Is that the only saying you know? You haven’t even passed the preliminary civil service exam...”
Smack!
“Ow! Why did you hit me?” Maksoe protested.
“I will pass soon enough! You’ve been quite chatty since we arrived in Asan.”
Yun Hyo-jeong decided to sell the millet at a steep discount to those who were truly destitute and to those who had already eaten their seed grain, ensuring they could survive the coming months.
Grateful villagers bowed deeply to Yun Hyo-jeong and his servants as they distributed the millet at these reduced prices. The price of millet in the Asan area returned to its usual level, about one-third the price of rice.
In the end, Yun Hyo-jeong’s household ended up with more Ji-pye than they would have if they had sold their rice directly to the exchange.
Although the profit margin wasn’t astronomical by pre-modern standards, where grain prices could fluctuate tenfold with each harvest, it was still a gain.
“Oh, Master! I didn’t know you had such business acumen!” Maksoe exclaimed.
“There’s nothing remarkable about this. When you have a heart for the people, profit naturally follows.”
In fact, Yun Hyo-jeong didn’t come up with this strategy on his own. His wife’s family had long practiced buying rice with cloth during bumper harvests and selling it during lean years, stabilizing grain prices while making a profit. This method had made the Jeong family wealthy in Haenam.
Such dealings were nothing to be ashamed of for a scholar. Yun Hyo-jeong had acted honorably as a scholar, benefiting his community and fulfilling his duties to his family and neighbors.
“This righteous scholar has been hiding away in Haenam! Feeding the starving people of Chungcheong shows his love for the people, and following the king’s Ji-pye policy demonstrates his loyalty to the nation!” the exchange official praised, clasping Yun Hyo-jeong’s hand.
“The government is preparing a new law to find and use hidden scholars from rural areas. If you, Master Yun, seek a position, the Haenam council will surely recommend you. You must join the ranks and leave your mark in the annals of history!”
The official even hinted at the upcoming changes in the government’s recruitment policies, something usually considered top secret.
Yun Hyo-jeong felt elated as he sailed back to Haenam. That is, until Maksoe disrupted his good mood with another question.
“Master, about that new law the official mentioned. Doesn’t it mean they’ll be selecting scholars and recommending them for government positions?”
“Yes, that’s right.”
“But you haven’t even passed the basic civil service exam. How will you get recommended?”
Smack!
“Ow! Why hit me again?”
“I told you I’d pass soon enough. You’ve been quite talkative lately, Maksoe.”
Though he had to discipline Maksoe, Yun Hyo-jeong’s mood remained relatively good.
‘The new law...!’
It had been less than a year since the old king passed away, but already the new king had implemented the transformative Ji-pye policy and was planning another unprecedented recruitment law.
Despite being from a remote area, Haenam still received news from Seoul from time to time.
Initially, the reports about the new king painted him as a tyrant who despised counsel and had dismissed the censors, a wild and unruly ruler.
‘But is that the whole story? If he truly hated advice, why would he introduce a new law to recruit scholars?’
And the Ji-pye policy was said to be designed to relieve the starving people in Gyeonggi, Hwanghae, and Chungcheong provinces.
His own family would not have ventured to sell rice in distant Chungcheong without this new policy. Moreover, his efforts had indirectly helped to feed the hungry people there.
‘Would a true tyrant care for the welfare of his people in this way?’
Yun Hyo-jeong found himself curious about the happenings in Seoul.
“When I return, I’ll study diligently and pass the civil service exam. A true man must at least achieve that much,” he resolved.
Maksoe’s mouth twitched, wanting to say something more, but he decided to keep quiet, having just been reprimanded and sensing the sincerity in his master’s words.
Footnotes:
*1: This phenomenon, where the demand for a commodity increases despite rising prices, is known in economics as a Giffen good. Typically, as income increases, demand for normal goods rises, and for inferior goods, it decreases. Giffen goods, however, see increased demand as their price rises, particularly in cases of extreme poverty where cheaper staples become even more necessary. This phenomenon has been observed historically during famines and in modern times in impoverished areas such as Afghanistan and among the poorest in China.
*2: Throughout the early Joseon period, despite continuous efforts to improve the system for transporting tax grain, conditions remained poor. Even during King Seongjong’s reign, regional granaries often lacked proper storage facilities, leading to grain being piled openly on riverbanks. It wasn't until 1523, during King Jungjong’s reign, that a proper 80-kan warehouse was built at Gongjinchang. Given that even the official grain transport ships were in disrepair, it’s clear that Joseon’s logistics system never fully operated as planned.
*3: The first mention of jangsi (markets) in the Joseon Annals occurs in the third year of King Seongjong’s reign. Initially, these markets were seen as harmful by Joseon’s scholars. However, by the fourth year, some officials argued that these markets were crucial for relief efforts, leading to a shift in policy. Prominent scholars like Shin Suk-ju even suggested that these markets were a unique opportunity to establish local markets and promote currency circulation. By the middle of King Jungjong’s reign, markets had become widespread throughout the country. This novel, set during the reign of King Yeonsan, captures this period of significant socio-economic change.
*4: While Jeohwa (paper currency) and coins are often cited as failures, leading to assumptions about the underdevelopment of early Joseon commerce, recent studies challenge this view. Some argue that cloth money, like Oseungpo, functioned as a legitimate currency rather than simple barter. This perspective suggests that early Joseon’s commerce was more developed than previously thought and that proper policies could have successfully integrated currency and promoted commerce. The story in this novel explores the “what if” scenario of such policies leading to early commercial success.
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