185. Currency War (1)
“Your Majesty, our merchants have been using a large amount of paper money made in Joseon recently,” the Senior Grand Secretary reported.
The Xuande Emperor stroked his beard. “Joseon’s paper money? Didn’t we just deal with an envoy about exchange rates and forgery issues? So, are our merchants causing problems now?”
The Senior Grand Secretary elaborated, “To obtain Joseon’s silver coin, one *nyang* [a unit of currency] in paper money, many merchants are handing over silver to Joseon.”
“Why?”
“Because Joseon’s court guarantees payment, making it trustworthy. It’s also more convenient than carrying actual silver, so they exchange it for Joseon’s paper money.”
“So, how much silver has flowed out?”
“The exact amount is still under investigation, but reports indicate it’s considerable.”
The Xuande Emperor’s expression turned serious. The Ming economy relied heavily on silver. Taxes were increasingly paid in silver, and market transactions also used silver.
If significant amounts of silver flowed out, it could pose a serious problem.
With a worried look, the Xuande Emperor ordered, “Immediately confirm the exact figures and report back.”
“Yes, Your Majesty.”
A month later, the Senior Grand Secretary reported, “The exchange of silver is occurring at the Joseon trading post in Shandong. Last month alone, 1 million silver *nyang* were exchanged.”
“One million *nyang*… Is it that serious?”
The Senior Grand Secretary hesitated. ‘Considering the size of the Ming Dynasty, one million *nyang* isn’t a huge burden right now. But if we consider the future… Should I emphasize the seriousness? No, His Majesty has profited considerably through Joseon, especially the Crown Prince. I could lose my head if I answer incorrectly.’
Carefully, he said, “It’s not a critical burden at the moment. However, if trade increases at the current rate, it will eventually become a significant problem.”
“Is that so? Then what should we do?”
The Xuande Emperor frowned. The Senior Grand Secretary often worried prematurely, but he was competent. His leadership in the cabinet had strengthened Ming’s finances.
‘But pressuring Joseon…’ The easiest solution was to pressure Joseon to return silver through tribute or other means, but that wasn’t in his best interest.
Joseon enriched *his* pocket—the emperor’s personal finances, not the Ming Dynasty’s. Arbitrarily pressuring Joseon would be like killing the cow to fix the horns (*矯角殺牛* [a Chinese idiom meaning ruining something in an attempt to fix a minor problem]).
As the Xuande Emperor and his cabinet officials deliberated, an urgent report arrived from Shandong.
“An envoy from Joseon has arrived?”
The Xuande Emperor looked at the Senior Grand Secretary. “Is this the right time for an envoy?”
“No, Your Majesty.”
“What’s happening? I wonder what the problem is this time.”
As the Xuande Emperor suppressed his curiosity, the envoys sent by Sejong arrived at the Forbidden City.
* * *
“So… what brings the envoys from Joseon?” After exchanging formal greetings, the Xuande Emperor cut to the chase.
The Vice Minister of the Ministry of Taxation, leading the delegation, knelt and declared, “Your Majesty! Please save our small country of Joseon!”
“Huh?”
The Xuande Emperor and the Senior Grand Secretary blinked in surprise.
After a moment, the Xuande Emperor asked, “As far as I know, neither I nor my empire has harmed Joseon. What are you talking about?”
“Who doesn’t know Your Majesty is mindful of Joseon? However, too much silver from Ming is flowing into our country! Joseon is small and cannot withstand this influx. Please bestow your imperial grace, Your Majesty!”
The Xuande Emperor looked at the Senior Grand Secretary. “It seems the silver is also a problem for Joseon.”
“It appears so.”
The Xuande Emperor turned back to the Vice Minister. “I knew a large amount of silver was flowing into Joseon and was seeking countermeasures. However, these are legitimate transactions between merchants, so I cannot arbitrarily interfere. Does Joseon have any solutions?”
The Senior Grand Secretary was slightly surprised by the last question. He realized the Emperor intended to use this as an excuse to pressure Joseon if they didn’t provide a suitable answer.
However, the Xuande Emperor seemed to expect an answer, not an opportunity for pressure.
‘If it’s the Crown Prince of Joseon I know, he wouldn’t stand idly by.’
The Vice Minister carefully rephrased the question. “How can a small country interfere in the affairs of a great one?”
“However, this affects both our empires. Joseon must have devised some solution. Tell me. This is an imperial order.”
The Vice Minister hesitated, then said, “Joseon believes the best solution is for the suzerain state to create and circulate its own currency.”
“Create currency? Hmm…”
The Xuande Emperor looked at the Senior Grand Secretary, who wore a similar expression of concern.
They knew the Yuan Dynasty had created and circulated *Gyochao* [Yuan Dynasty paper currency], and the Ming Dynasty had also attempted to circulate paper money (*紙錢*). However, it had failed.
The main reason was the loss of credibility due to inflation and forgery caused by the Yongle Emperor’s frequent expeditions.
The Senior Grand Secretary spoke, “Listen, Joseon’s envoy. The Ming Dynasty tried to circulate paper money, but it didn’t work. Are you suggesting we try again?”
“Joseon is aware of that. However, Ming merchants seek Joseon’s paper money, suggesting there’s a solution.”
The Xuande Emperor and the Senior Grand Secretary nodded. The demand for Joseon’s paper money indicated that the existence of paper money itself wasn’t the problem.
“Hmm…” The Xuande Emperor asked, “Was the envoy sent by the Crown Prince?”
“No! I came with the royal order from the King.”
The Xuande Emperor chuckled. “I’ve heard the King of Joseon is excellent, but also more of a scholar. The envoy’s answer sounds like a merchant’s. The only one in the Joseon palace who thinks like a merchant is the Crown Prince. Am I wrong?”
“We received the royal order and…”
The Xuande Emperor smiled. “Okay, let’s leave it at that. Joseon suggests we make paper money again. To circulate paper money that has already failed, you must have a solution. What is it?”
The Vice Minister answered, “Trust.”
“Trust?”
“The belief that one *nyang* printed on paper money is actually worth one *nyang* of silver. The belief that it cannot be forged.”
The Xuande Emperor said, “It’s a textbook answer.”
‘Everyone knows that. The Crown Prince must know more.’
The Vice Minister replied calmly, “To establish currency, there’s no trick but to protect those two things.”
“Why are you so confident?”
“I was involved in issuing the paper money.”
The Xuande Emperor looked at the delegation, then at the Senior Grand Secretary. “Even though it’s paper money, the fact that merchants seek it means they trust it. But I’ve never seen Joseon’s paper money. Do you have any, Senior Grand Secretary?”
The Senior Grand Secretary knelt. He had heard rumors about Joseon’s paper money but deliberately avoided it.
It was a matter of pride.
‘How could a small country’s paper money…!’
“I do not have it. Please forgive my disloyalty, Your Majesty.”
The Xuande Emperor waved his hand. “It’s not disloyalty… Get up.”
“Thank you for your grace!”
The Vice Minister gritted his teeth. He understood the conversation.
‘That thing! All the effort I put into making and distributing it! If you haven’t seen it, shouldn’t you have asked me? Are you looking down on Joseon!’
He suppressed his anger, remembering Hyang’s instructions: ‘Joseon cannot deal with Ming right now. Leave everything, including your liver and gallbladder, in Joseon for now! The day will come when we repay you!’
He joined the conversation. “I have it.”
“Is that so? Where is it? Let me see it.”
The Vice Minister took out a wallet and carefully removed a paper money with one *nyang* printed on it, handing it to the eunuch.
“It is Joseon’s paper money.”
“Is that so?”
Though indifferent, the Xuande Emperor received it carefully, knowing it had a royal seal.
“It’s beautiful! This isn’t paper money, but a work of art!”
The Xuande Emperor exclaimed. Blue and red lines framed a beautiful landscape painting. Sejong’s royal seal was stamped on one corner, reading ‘1 *nyang* of silver’.
“The royal seal is different from the one on the national letter?”
“It’s a new seal created for currency.”
“Is that so…” The Xuande Emperor handed it to the Senior Grand Secretary. “Take a look. At least we don’t have to worry about forgery.”
The Senior Grand Secretary examined it, then looked at the Vice Minister. “Is this really printed?”
“It is printed.”
The Senior Grand Secretary muttered, “I’ve heard the printing technology of the East Sea was excellent…”
He raised the paper money. “Your Majesty is right. We don’t need to worry about forgery.”
“Isn’t that right? Envoy, take it back.” The Xuande Emperor returned the paper money and muttered, “The missed fish is bigger… It’s a pity.”
He regretted Hyang.
“I know the answer to the forgery problem. What about protecting the value?”
“First, create and circulate currency equal to the fixed budget. If the people have faith, the circulation will increase, but you must have the same amount of real goods. To issue additional currency, only exchange it for silver brought in. Examine the quality of the silver and accurately assess its value.”
“It’s textbook.”
The Xuande Emperor nodded and looked at the Senior Grand Secretary. “I know why we failed.”
“That is correct.”
The Ming cabinet recklessly printed paper money to fund the Yongle Emperor’s conquests and voyages, devaluing the currency.
“Envoy, you may leave.” The delegation paid their respects.
As they left, the Xuande Emperor looked at the Senior Grand Secretary. “If we prepare properly, wouldn’t it be possible?”
“It is definitely possible.”
“We must end the humiliation of our paper money being treated worse than promissory notes from a merchant group. And…” The Xuande Emperor paused. “Wouldn’t it be ridiculous if we couldn’t do what that small country succeeded in?”
“That is correct.”
Thus, the Ming Dynasty challenged the issuance of paper money again, beginning a period of hardship for Ming artisans.
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