“Your Majesty, it has come to our attention that our merchants are extensively using banknotes issued by Joseon.”
As the Cabinet Secretary reported, Emperor Xuande stroked his beard.
“Banknotes from Joseon? Wasn’t there a diplomat here not long ago discussing issues of exchange and forgery? But what issue have our merchants caused now?”
To Emperor Xuande’s question, the Cabinet Secretary began his explanation.
“A significant number of merchants are exchanging silver for Joseon’s one-nyang banknotes, seeking to acquire them.”
“Why is that?”
“Because the Joseon government guarantees the value, and it’s believed to be more reliable and convenient than carrying physical silver, our merchants prefer to exchange for Joseon’s banknotes.”
“And how much silver has been lost to this?”
“We have yet to determine the exact amount, but reports suggest it’s significant.”
The report turned Emperor Xuande’s expression grave.
The economy of the Ming Dynasty was heavily reliant on silver. The proportion of taxes collected in silver was gradually increasing, and market transactions were also predominantly conducted in silver.
The outflow of such a crucial resource could pose a serious problem.
With a grave look, Emperor Xuande instructed the Cabinet Secretary.
“Verify the facts immediately and report back.”
“Yes, Your Majesty.”
A month later, the Cabinet Secretary reported back to Emperor Xuande.
“The exchange of silver is taking place at the Joseon trade office in Shandong, with last month’s transactions alone amounting to 1 million nyang.”
“1 million nyang… Is that a serious amount?”
At Emperor Xuande’s question, the Cabinet Secretary pondered for a moment.
‘Considering the current scale of our Ming Dynasty, 1 million nyang isn’t an unbearable burden. However, thinking ahead… Should I declare it a serious matter? No, considering the substantial benefits the Emperor has gained through Joseon, especially from the Crown Prince of Joseon, speaking carelessly could endanger my own position.’
Contemplating the best response, the Cabinet Secretary cautiously began to speak.
“At present, the burden isn’t significant. However, if the volume of transactions continues to increase at the current pace, it will eventually become a major problem.”
“Is that so? Then what should be done…”
Emperor Xuande frowned at the Cabinet Secretary’s words.
While the Cabinet Secretary often preemptively worried, he was far from incompetent.
On the contrary, under the Cabinet Secretary’s leadership, the Ming empire’s finances were becoming more robust.
‘But to pressure Joseon…’
Applying pressure on Joseon to reclaim silver through tribute or other means seemed the easiest route, but it was not favorable for him.
Joseon had been enriching his personal coffers—not the state treasury of Ming but the emperor’s own finances. Recklessly pressuring Joseon could lead to a foolish act akin to ‘killing the cow to straighten its horn,’ where excessive measures lead to adverse outcomes.
As Emperor Xuande and his ministers mulled over their options, urgent news arrived from Shandong.
“A diplomat from Joseon has come?”
After reading the message, Emperor Xuande turned to the Cabinet Secretary.
“Is now the time for a diplomat to visit?”
“It is not.”
“What’s the matter then? I’m curious about what issue has arisen this time.”
As Emperor Xuande’s curiosity peaked, the envoys sent by King Sejong arrived at the Forbidden City.
* * *
“So… What brings the envoys from Joseon here?”
After the exchange of pleasantries adorned with all sorts of polite expressions and their corresponding replies, Emperor Xuande quickly got to the point.
At Emperor Xuande’s inquiry, the head of the envoy, the official from the Minister of Taxation, immediately knelt and raised his voice.
“Your Majesty! Please spare our small border country, Joseon!”
“Eh?”
Taken aback by the unexpected plea, both Emperor Xuande and the Cabinet Secretary blinked in surprise.
After regaining his composure, Emperor Xuande, with a face full of questions, asked, “To my knowledge, neither I nor my empire have caused harm to Joseon. What is this absurd claim?”
“Who wouldn’t know of Your Majesty’s special consideration for Joseon? However, currently, an excessive amount of Ming’s silver is flowing into our Joseon! Our nation is small and struggles to bear this burden. We beseech Your Majesty to bestow your grace and control the flow of silver!”
Hearing the Ministry of Taxation official’s plea, Emperor Xuande turned to the Cabinet Secretary.
“It seems that this influx of silver is also a problem for Joseon.”
“It appears so.”
With the Cabinet Secretary’s nod, Emperor Xuande turned back to the Ministry of Taxation official and spoke, “I too am aware that a significant amount of our Ming’s silver is entering Joseon and have been seeking measures to address it. However, this involves legitimate trade by merchants, and it’s not something we can easily interfere with. Does Joseon have any proposals to manage this situation?”
At Emperor Xuande’s final question, the Cabinet Secretary looked at him with slightly surprised eyes, realizing that if Joseon didn’t have a suitable answer, it could be used as a pretext to pressure them.
Yet, Emperor Xuande wasn’t thinking of pressure; he genuinely hoped for a solution, believing that the Crown Prince of Joseon, whom he knew well, would not stand idly by. ‘It’s clear,’ he thought.
Faced with Emperor Xuande’s inquiry, the Ministry of Taxation official slightly changed the topic, “How could a small nation interfere in the affairs of a great one?”
“However, this issue pertains not only to my empire but to Joseon as well. Thus, Joseon must have contemplated some solutions. Speak now. It is an imperial command.”
Upon Emperor Xuande’s command, the Ministry of Taxation official hesitated for a moment before speaking, “Our Joseon believes that the best solution would be for the great nation to also mint and circulate its currency.”
“Create currency? Hmm…”
Upon hearing the Ministry of Taxation official’s suggestion, Emperor Xuande looked towards the Cabinet Secretary.
The Cabinet Secretary shared a similarly troubled expression with Emperor Xuande.
They were well aware of the Yuan Dynasty’s issuance and circulation of Jiaochao (paper money) and had attempted to circulate paper money (Jizhuan) in the Ming as well. However, the circulation of paper money was heading towards failure.
https://upload.wikimedia.org/wikipedia/commons/d/de/Yuan_dynasty_banknote_with_its_printing_plate_1287.jpg
The primary reasons were the inflation caused by Emperor Yongle’s frequent military expeditions and the depreciation of paper money’s credibility due to counterfeiting.
Eventually, the Cabinet Secretary intervened on behalf of Emperor Xuande.
“Let the envoy from Joseon listen. Our Ming empire also attempted to circulate paper money, but it did not go well. And now, you suggest we issue it again?”
The Ministry of Taxation official replied to the Cabinet Secretary’s question, “How could we in Joseon not know? However, seeing Ming merchants seeking our Joseon banknotes, we believe there must be a solution.”
At the Ministry of Taxation official’s response, both Emperor Xuande and the Cabinet Secretary nodded in agreement. The fact that merchants sought after Joseon’s banknotes indicated that the concept of paper currency itself wasn’t the issue.
“Hmm…”
After quietly observing the envoy, Emperor Xuande posed a question to the Ministry of Taxation official.
“Is the envoy sent by the Crown Prince?”
“Eh? No, Your Majesty! I am here by the command of our king.”
The Ministry of Taxation official’s response elicited a slight smile from Emperor Xuande.
“I’ve heard that the King of Joseon is a remarkable person. However, I’ve also heard that he is more of a scholar. The answer you just gave sounds more like that of a merchant. In the current Joseon palace, the only one capable of thinking like a merchant would be the Crown Prince. Am I wrong?”
As the Ministry of Taxation official continued to deny, Emperor Xuande concluded with a smile, “Very well. Let it be known as such. So, Joseon is suggesting that we reintroduce paper money. But to suggest reissuing a form of currency that has already failed implies there’s a solution to its problems. What might that be?”
Promptly, the Ministry of Taxation official answered, “Trust.”
“Trust?”
“The belief that if a paper note is marked with the value of one nyang of silver, it genuinely holds the value of one nyang of silver. And the belief that it cannot be counterfeited.”
Emperor Xuande murmured in a slightly disappointed tone upon hearing the Ministry of Taxation official’s response, “That’s a well-known principle…”
‘Everyone knows this principle. The Crown Prince would surely be aware of it.’
Emperor Xuande was disappointed because this was common knowledge. However, the Ministry of Taxation official calmly replied, “To establish currency, there is no other strategy but to adhere to these two principles to the best of our ability.”
“Why are you so confident?”
“Because I, too, was involved in the issuance of our banknotes.”
At the Ministry of Taxation official’s response, Emperor Xuande, who had been observing the envoy, turned to the Cabinet Secretary, “Now that I think about it… if merchants seek it out, it must be because they trust it. But I have never seen Joseon’s paper money. Do you have it, Cabinet Secretary?”
Upon Emperor Xuande’s inquiry, the Cabinet Secretary immediately knelt down.
Although curious about the rumors of Joseon’s paper money, the Cabinet Secretary had deliberately refrained from seeking it out, a matter of pride.
‘How could the currency of a minor nation be of any consequence!’
“I do not possess it either. Please forgive my disloyalty, Your Majesty.”
As the Cabinet Secretary sought forgiveness, Emperor Xuande waved his hand dismissively.
“Such a trivial matter is hardly disloyalty… Rise.”
“Your grace is boundless!”
Meanwhile, the Ministry of Taxation official, witnessing the exchange, clenched his teeth.
Being somewhat proficient in Chinese, he understood the conversation and felt slighted.
‘To dismiss it as such! Do they not realize the effort it took to create and properly circulate our currency? If they haven’t seen it, they could have simply asked me! How belittling towards Joseon!’
The Ministry of Taxation official suppressed his anger, recalling the advice given before departure.
‘Given our current circumstances, Joseon is not in a position to confront Ming. For now, and for the foreseeable future, leave your pride and ego behind in Joseon! There will come a time when we can repay any debts.’
Remembering this counsel, the Ministry of Taxation official calmed himself and interjected into the conversation.
“I have one with me.”
“Is that so? Let me see it.”
At Emperor Xuande’s request, the Ministry of Taxation official took out a wallet from his sleeve.
With careful movements, he extracted a one-nyang banknote and handed it to the eunuch.
“This is a banknote from Joseon.”
“Is it?”
Though his tone was nonchalant, Emperor Xuande carefully received the banknote. He was aware that Joseon’s banknotes were stamped with a seal.
“This is truly beautiful! This is not just a banknote; it’s closer to a work of art!”
Upon seeing Joseon’s banknote for the first time, Emperor Xuande involuntarily exclaimed in admiration.
Blue and red lines framed the banknote, and within these borders lay a beautiful landscape painting. In one corner of the banknote, marked with ‘one nyang,’ was King Sejong’s seal, clearly imprinted.
“The seal looks slightly different from the one on official documents?”
At Emperor Xuande’s inquiry, the Ministry of Taxation official promptly responded, “This is a new seal created specifically for use on currency.”
“Is that so…”
After examining the Joseon banknote thoroughly, Emperor Xuande handed it to the Cabinet Secretary.
“Take a look, Cabinet Secretary. It seems we won’t have to worry about counterfeiting, at least.”
As the Cabinet Secretary examined the banknote, he looked at the Ministry of Taxation official in astonishment.
“Is this truly printed?”
“It is indeed printed.”
Hearing the Ministry of Taxation official’s confirmation, the Cabinet Secretary stared at the banknote in a daze, murmuring to himself unwittingly.
“I’ve heard that the printing technology from the East has always been superior…”
Regaining his composure, the Cabinet Secretary presented the banknote back to Emperor Xuande, saying, “Your Majesty’s insight is correct. It seems we need not worry about the issue of counterfeiting.”
“Right? Let the envoy take it back.”
After returning the banknote through the eunuch, Emperor Xuande murmured as he gazed into the distance, “The one that got away is always the biggest… Truly a pity.”
Emperor Xuande was evidently regretting the missed opportunity regarding the technology.
“We’ve understood the solution to counterfeiting. But what about maintaining its value?”
“The first step is to issue currency only up to the value of the predetermined budget. This builds trust among the people, who will gradually accept an increased circulation, provided there is an equivalent amount of physical assets backing it. Furthermore, any additional issuance should only be in exchange for an equivalent amount of silver brought by those wishing to exchange, meticulously assessing the quality of the silver to accurately determine its value.”
“That’s the standard approach.”
Pleased with the Ministry of Taxation official’s succinct explanation, Emperor Xuande nodded and then looked towards the Cabinet Secretary.
“Now I see why we failed.”
“Indeed, Your Majesty.”
The Cabinet Secretary nodded in agreement with Emperor Xuande’s observation.
To secure the budget for Emperor Yongle’s military campaigns and voyages of exploration, the Ming cabinet at the time had recklessly printed paper money.
This led to the devaluation of the paper currency.
“The envoy may withdraw.”
Following Emperor Xuande’s command, the envoy bowed respectfully and withdrew.
After the envoy left with a three-fold cheer for the emperor, Emperor Xuande turned to the Cabinet Secretary.
“If we prepare properly, we could manage it, couldn’t we?”
“It is entirely feasible.”
“Right? The humiliation of our state-issued paper money being treated as inferior to a merchant guild’s promissory notes must end. And…”
Pausing briefly, Emperor Xuande revealed his true thoughts.
“It would be absurd if we couldn’t succeed in something even that small nation has accomplished.”
“Indeed, Your Majesty.”
Thus, the Ming empire embarked on another attempt to issue paper currency, marking the beginning of a challenging period for Ming craftsmen.