RESOURCES AND FINANCE
The resources of the Korean peninsula have never been systematically
developed; indeed, until a very recent date no intelligent attempt has
ever been made to determine what they actually are. The Korean Government
has usually been content with such an adjustment of “squeezes” as seemed
best to meet the exigencies of the times—administered according to the
temperament and interests of the local magistracy. At intervals, however,
the Court officials have carried their more erratic and incalculable
method of extortion and of plundering the people rather widely into
effect. Then those of their number who chanced to be His Majesty’s
favorites of the hour have enjoyed most of the surplus; the people
have submitted to, or savagely and desperately revolted against, the
inevitable; but the country at large has continued poor at all times,
and has frequently been devastated by famine. As to the exploiting of
Korea’s resources by foreign capital, the facts have been quite uniformly
these: a combination of adventurers from abroad with Koreans who either
possessed themselves, or through others could obtain “influence” at Court
has been effected; sometimes, but by no means always, the Emperor’s
privy purse has profited temporarily; but the main part of the proceeds
has been divided among the native and foreign promoters. Of late years,
some of the “concessions” have been almost, or quite, given away in the
hope of thus obtaining foreign interference or sympathy. In only rare
instances has the national wealth been greatly increased in this way, or
even the treasury of the Government been made much the richer.
It is plain, then, that if the Japanese Protectorate is to be made really
effective for the industrial uplift and development of the Korean people,
as well as capable of rewarding Japan for its expenditure in substantial
ways, the resources of the country must be intelligently explored and
systematically developed. Here is where the work of reform must begin. In
intimate relations with this work stands, of course, the establishment
of a sound and stable currency. For the financial condition of Korea up
to very recent times was as disgraceful as its industrial condition was
deplorable. To this important task of developing the resources of Korea
and reforming its finances, Marquis Ito, as Resident-General, and Mr.
Megata, as Financial Adviser, have devoted themselves with a patience,
self-sacrifice, and skill, which ought ultimately to overcome the
tremendous difficulties involved.
“Korea,” says the _Seoul Press_, “is essentially an agricultural country.
Eighty per cent. of her population till the soil, and stinted as are the
returns which the soil is willing to yield under the present method of
cultivation, the produce from land constitutes at least ninety per cent.
of the annual income of the country. To improve the lot of the toiling
millions on the farms is therefore to improve the lot of virtually the
whole nation. It was in recognition of this obvious fact that Marquis
Ito, in addressing the leading editors of Tokyo, in February, 1906,
previous to his departure for Korea to assume the duties of his newly
appointed post as Resident-General, laid particular emphasis on the
urgent importance of introducing agricultural improvements in this
country. This question was consequently the very first to engage the
serious attention of the authorities of the Residency-General.”[58] The
statistics for the year ending December 31, 1906, show that out of an
amount of taxes estimated at 6,422,744 _yen_, the sum of 5,208,228 _yen_
was apportioned to the land tax, and 234,096 _yen_ to the house tax. The
difficulty of collecting the taxes, either through the corruption of the
officials, or by reason of the inability or inexcusable and often violent
resistance of the people, can be estimated by the fact that, of the land
tax 2,214,823+ _yen_ was still “outstanding,” and of the house tax,
68,794+ _yen_.[59]
The institution of an Experimental Station and Agricultural School
at Suwon has already been described (p. 122 _f._). But in order to
accomplish the needed development of Korea’s agricultural resources, the
peasant farmers must themselves be induced to reform their methods of
cultivation. As might be expected, however, the Korean peasant farmer is
suspicious of all attempts to improve his wasteful methods, is extremely
“conservative” (a much-abused word) in his habits, and slow to learn.
Some good work has, however, already been done by way of opening his
eyes. The example of the Model Farm, which is limited to one locality,
is supplemented by the example of the Japanese farmers who are settling
in numerous localities. To take an instance: improved Japanese rice
seed was distributed _gratis_ in various parts of the country. But even
then it was necessary to guarantee the farmers against loss in order to
induce them to try the experiment of cultivating it. The result of the
experiment was most encouraging. The yield was in every case greater than
that obtained from the native seed; in some cases the gain in the product
being as much as from six to ten _tō_ (3-5 bushels) per _tan_ (¼ acre).
Similar experiments are now in progress with the seed of barley and
wheat, imported from Japan, America, and Europe.
In intimate connection with these plans for developing the agricultural
resources of Korea stands the project for utilizing the unreclaimed
state lands. And surely here, at least, all those who have the slightest
honest feeling of regard for the real interests of the country ought to
wish that the _people_, and not the Court, and not the foreign promoter,
should be primarily considered and protected. How great are the chances
for waste, fraud, and unwise action in the distribution of this form of
the nation’s resources, no other country has had better reason to know
than has the United States.
For the purpose of “Utilization of Unreclaimed State Lands” a law
was prepared under the advice, and by the urgency, of the Japanese
Government, and promulgated in March of 1907. This law, including the
Supplement, consists of seventeen articles, according to which all
uncultivated lands, marshes and dry beaches not constituting private
properties, will be included in the category. On application to the
Minister of Agriculture, Commerce and Industry, these lands will be
leased for a period not exceeding ten years. The Minister of Agriculture,
Commerce and Industry is authorized to sell or give _gratis_ the leased
lands to lessees who have successfully carried out the prescribed work
on them. For the five years following the year in which such a sale or
bestowal has taken place, taxation on these lands will be at the rate of
one-third of the tax levied on the lowest class lands of the province
of which they form a part. The lessees will be unable to sell, transfer
or mortgage the leased lands without permission of the Minister above
mentioned. Charters for lands on which the prescribed work has not been
started within one year of the date of their granting shall be cancelled,
also those for lands on which the work, after commencement, does not
make sufficient progress—unless proper reason for that can be shown.
Any person who utilizes unreclaimed state lands in violation of the
present law will be liable to a fine of between five and two hundred
_yen_ inclusive. In the case of the utilization of unreclaimed state land
less than three _cho_ (some 7 acres) in area, the present law will not
be applied for the time being, the old custom in force being adhered to.
Possessors of charters for the utilization of unreclaimed state lands
which have been obtained before the promulgation of the new law and which
are still valid must apply to the Minister of Agriculture, Commerce
and Industry for their recognition within three months of the date of
enforcement of the present law. When the lessees who have obtained such
recognition have succeeded in carrying out the prescribed work on the
leased lands, the lands will be presented to them by the Government.
Another important part of the development of the agricultural resources
of Korea is the introduction of wholly or largely new products of
the land. This is, indeed, a more truly “experimental,” and in some
cases highly speculative, procedure. There will doubtless be, as its
inevitable accompaniment, a larger percentage of failures; there maybe,
if the experiments are not intelligently made and hedged about with
educational and legal precautions, financial losses which the poverty
of the country can ill afford to bear. There is, perhaps, peculiar
danger of this under the dominant Japanese influences; for Japan has
herself not as yet, industrially and financially, got her heel firmly
on the ground. Experiments of various kinds, of a highly speculative
character, are still according to the mind of the nation at large. But
the Government of Japan is meantime training its own young men to a
more thorough scientific acquaintance with the facts and laws which
determine industrial prosperity; and under the administration of the
Residency-General in Korea the Japanese Government is committed to the
plan of giving to the Koreans also the fullest share in the benefits of
this training.
To mention a single instance of the class of projects to which reference
has just been made, we quote the following paragraph from an official
paper:[60]
The climate of Korea is thought to be well suited for cotton
cultivation. Whether through misjudgment in the choice of
the seed, or blunders in the method, the experiments made
in this direction have, however, been so far fruitless of
satisfactory results. Taking this fact to heart, those Japanese
and Koreans interested in the matter, some time ago formed “A
Cotton Cultivation Association,” and memorialized the Korean
Government of their resolution to carry through their aim.
Lending its ears to their memorial, the Government decided
on a plan to open a cotton nursery, to be first sown with
the imported, continental seed, then to distribute among
planters at large the seed obtainable from the crop; and also
to start a cotton-ginning factory with the special object of
preventing the seed from being wastefully thrown away. It was
then arranged for this purpose to disburse a sum of 100,000
_yen_, distributed over several years, commencing in 1906.
The management of the undertaking was first placed wholly in
the hands of the “Cotton Cultivation Association,” and the
Resident-General intrusted the supervision of the Association’s
work to the Residency-General’s Industrial Model Farm. In its
turn, however, the Association asked the Farm to take over the
entire business primarily placed in its control. The request
being granted, the Farm opened a branch office at Mok-pho
on the 15th of June, 1906, calling it the “Kwang-yo Mohanjo
Mok-pho Branch.” There were selected ten sites for cotton beds
(covering altogether 51 _cho_,[61] six _tan_, or about 120
acres, of land in Mok-pho); and forthwith commenced work. The
site for the cotton-ginning factory was chosen in Mok-pho, and
its buildings are now completed.
Of the same character as the project for raising cotton in Korea,
although rather less experimental, are the plans for increasing the
product of tobacco. Of this Mr. Megata says in his last report:
“Investigations are being made of the various sources of wealth, of
which tobacco is regarded as the most promising. Practical examination
as to the state of tobacco manufacture in this country was started in
the preceding years. Exertion is being made by the Government for the
extension of the general demand for Korean tobacco. Better qualities of
it were selected and sent to the Tobacco Monopoly Bureau of Japan for
trial manufacture. The improvement of its planting and manufacture and of
the selection of seed is being studied. For the purpose of investigating
the relation between the climate and tobacco-planting, the survey of the
climate of the country was commenced; and the result of the investigation
is now to be taken into consideration for the safety and progress of that
industry in this country. Korean youths to engage in the investigation of
the resources of national wealth are being trained for the task.”
[Illustration: The Hall of Congratulations.]
Next to agriculture in importance stands the development of forestation
in Korea. The Koreans have never given any attention to the art of
growing trees either for timber or for fuel. The late Tai Won Kun, as
one of the ways adopted by him for ruining the country while building
a palace for his son, ordered every owner of large, serviceable trees
throughout the land to cut them down and transport them to Seoul at
his own expense. Day by day, and hour by hour, the Korean populace, to
the number of thousands of old men, women, and boys, with hundreds of
bullocks and ponies, are engaged in exterminating the future forests
in order to provide themselves with fuel, of which they will not be
persuaded to make economical use, and which they cannot dispense
with so long as their present tastes and contrivances for heating
themselves and cooking their food are not changed. Hence, all over
the more frequented parts of Korea the hills and mountains, unless in
comparatively rare cases they are especially protected, are denuded and
barren. This constant deforestation has its customary inevitable results.
In dry seasons there are those chronic water famines which discourage
the farmer’s cheerful industry, and which encourage him to hatred of
the government, to refusal to pay taxes, and to violent and murderous
revolt. But when there is abundance of rain, then follow inundations,
almost as destructive to the fields as are the droughts. Mining and all
other industries suffer from the same source. Thus, as says the Report
of the Residency-General, when “seen from the economic, sanitary, or
political point of view, one of the greatest needs of Korea at present is
the rehabilitation of its forests.” The task involved in this matter of
industrial reform and development of resources is, however, of the most
difficult order. The rights of the people, not only to use as they please
their own trees, but to plunder the hill and mountain sides of their
fuel, regardless of ownership, are firmly established by usage. In the
bitter weather of winter much suffering would ensue, and its consequent
political disturbance, if these customs were suddenly and extensively
controlled. Nevertheless, model forests have been established and
instruction in forestation is given to Korean youths in a school founded
for that purpose. Below are given the names of localities and the sizes
of the model forests so far established, with their outlays:[62]
“_Koan-ak-san_ and three other places in the vicinity of Seoul. Total
area 2,060 _cho_. Outlay, about 152,000 _yen_, distributed over five
years, commencing 1907.
“_Tai-syong-san_ and two other places in the vicinity of Pyeng-yang.
Total area 610 _cho_. Outlay, about 63,000 _yen_, distributed over five
years, commencing 1908. [Nursery beds expected to be opened in 1907.]
“_Oa-yong-san_ and one other place in the vicinity of Taiku. Total area
650 _cho_. Outlay, about 63,000 _yen_, distributed over six years,
commencing 1908. [Nursery beds expected to be started in 1907.]”
The more important resources of this class are, however, the existing
forests along the banks of the Yalu and Amur rivers. Indeed, the desire
to gain control of this wealth of timber was one of the more immediate
causes leading to the Russo-Japanese war; it is still one of the more
difficult points for satisfactory adjustment on the part of the three
nations chiefly concerned. For the development of these resources an
agreement between Japan and Korea was signed on October 19, 1906, by the
Marquis Ito and the Korean Prime Minister, the Minister of Finance, and
the Minister of Agriculture, Commerce and Industry. The text of this
agreement and a brief introduction, stating its importance, is given
in Mr. Megata’s last report.[63] “The banks along the Yalu and Amur,”
says this report, “are rich in forests which have never been cut. Proper
management of those forests would yield a considerable revenue to the
treasury; but at the same time it would require not a little expense.
In the present condition of the Korean finances it would not be wise to
undertake this on the account of Korea alone, although the opening up of
such a source of wealth is highly necessary.” An agreement was concluded
between the governments of Japan and Korea in October last to carry on
the forestry along those banks on their joint account, each government
investing 600,000 _yen_. The agreement newly concluded reads as follows:
The Governments of Japan and Korea, regarding the forests in
the districts along the Yalu and Amur rivers to be the richest
source of wealth on the Korean frontier, hereby agree on the
terms mentioned below as to the management of those forests:
Art. 1. The forests in the districts along the Yalu and
Amur rivers shall be subject to the joint management of the
Governments of Japan and Korea.
Art. 2. The fund for the management shall be 1,200,000 _yen_, a
half of which shall be invested by each Government.
Art. 3. As to the management of the forests and its income and
expenditure, a special account shall be created in order to
make them clear.
The details of the account shall be notified to each Government
once a year.
Art. 4. The profit or loss of the undertaking shall be divided
between the two Governments in proportion to the amounts of
their investments.
Art. 5. In case necessity arises to increase the investment
stated in the Art. 2, it shall be done, on the recognition of
both Governments.
Art. 6. In case necessity arises to enact detailed rules in
order to enforce the present agreement, it shall be submitted
to the hands of commissioners appointed by both Governments.
Art. 7. On the progress of the undertaking, when necessity
arises to change its organization into a company so as to
enable the subjects of both the countries to join in the
undertaking, the necessary processes shall be determined by an
agreement of both Governments.
For centuries Korea has been reputed to be rich in deposits of gold; and
it is a fact that Japan, by trading with Korea, obtained most of this
precious metal, which the Dutch, by shrewd management of their relations
in trade with Japan, carried off to Holland. Both these Oriental
countries in this way contributed to the enrichment of a limited number
of Europeans. But the real condition of the mining resources of the
peninsula has never been investigated; even the amount of the annual
product of gold has never been accurately ascertained; and—worst of
all—there have never been any laws or accepted principles to govern the
mining industry. The result of all this ignorance, confusion and fraud
is not difficult to conjecture. “Some mines,” says the official report,
“are under the direct control of the Minister of Agriculture, Commerce
and Industry; with others the granting of a concession rests with the
Chief of the Mining Bureau; with others again, the subordinate officials
on the spot have it in their power to allow or disallow their working;
and to make confusion worse confounded, there are even mines operated
under patents secretly granted by the Emperor without consulting the
Cabinet. This chaotic state of things is bad enough, but it does not stop
here. For in some cases the concessions granted are cancelled without
compensation; while in other cases, one and the same mining district has
been leased to several persons one after another until it has become
utterly impossible to tell which is the rightful concessionaire. Then,
again, there are cases in which the Departments of Agriculture, Commerce
and Industry, of Finance, and of the Imperial Household, severally and
independently, have levied mining taxes to suit their own convenience;
while in others, the provincial authorities quite arbitrarily collect
imposts. In the midst of this indescribable confusion, the cunning and
unscrupulous have not been slow to make the most of the situation,
by having recourse to bribery, instigation, intimidation, and other
unlawful schemes, until vast tracts of mining lands have come under their
control.”[64]
To remedy, as far as possible, these evils and to limit their continuance
into the future, a General Mining Law was proclaimed on July 12, 1906,
and a Placer Mining Law on the 28th of the same month. Both these laws
were accompanied by the enactment of detailed rules. The principal
features of these laws provided that mines, whose ownership could not
be definitely ascertained, should revert to the state; that the limits
of mining concessions should be definitely prescribed; that mining
rights which could be established as legally gained should be legally
protected; that the taxes on mining properties should be unified; and
that priority of application, in cases of competing concessions, should,
until examination could be made, stop the granting to others of the same
concession in an arbitrary way. In the effort to put into effective
operation these legal enactments it was necessary to call upon the
Korean authorities to promulgate a list of the mines belonging to the
Imperial Household, and also a list of such Crown mines as the Household
might intend to work for itself. But the Korean authorities, either
from ignorance, sloth, or other even less creditable reasons, did not
make haste to prepare such a list. Meantime, all mining rights were,
legally considered, in abeyance. It was only after repeated and urgent
remonstrances from the Resident-General, and as late as November 17,
1906, that the required list was promulgated. It then appeared that the
Imperial Household not only laid claim to mines claimed by Japanese, but
also by American and European concessionaires.
The falsity of the statement, so repeatedly made abroad, that the Koreans
are being robbed by Japanese, to the detriment of the interests of other
foreigners, under the protection of the Japanese Government in Korea, is
made obvious by the following, among other facts. Had the applicants to
these contested claims been only Japanese or Koreans, they would have
been required to survey the properties and make out maps at their own
expense; but in deference to the interests of the American and European
claimants the survey was made by experts at the expense of the state. And
while only twenty per cent. of the 200 applications made by Japanese
were granted, “virtually all the applications made by Americans and
Europeans were granted.”
Besides gold, which is found especially in the form of gold-dust, there
are in Korea silver, copper, graphite, and coal. The coal is not good for
steaming purposes, nor fitted for export; but when made, by mixing it
with earth, into bricks or balls, it is valuable as fuel for those who
can afford its use. The total annual value of these mineral products, for
reasons already explained, cannot be accurately ascertained. Hitherto
much of the gold has been smuggled out of the country in order to
escape the export and other taxes. It is calculated, however, by the
Residency-General that in the aggregate these products do not fall below
6,000,000 _yen_.
We shall not attempt to speak in detail of the other natural resources
of Korea, of its fisheries, or its sericulture, or its raising of fruit.
But all these have been in the past left in a lamentable condition of
ignorance and disorder; and all of these are to be made objects of
attention, with the purpose of reform, by the Korean Government under the
Japanese Protectorate.
What has been shown to be true of the natural resources of Korea, in
soil, forests, mines, and other products, is true of its manufacturing
industries. Early in her history Korea attained a considerable
development in the arts of weaving, pottery, paper-making, metal-casting,
and the dressing of skins. In several instances Japan borrowed her models
from Korea in all these lines of the industrial arts. But to-day there is
absolutely nothing that a foreign traveller would covet to take away from
Korea except, perhaps, a Korean brass-bound chest or a set of its rude
brass utensils for holding food. The founding of an Industrial Training
Institute in the spring of 1907, and a statement of what it proposes to
try to accomplish for the revival and development of Korean industrial
arts, have been referred to in an earlier chapter (p. 128 _f._). Its
practical results must be awaited with patience; but now that the control
of the Resident-General over internal affairs in Korea is increased by
the Convention of July, 1907, we may reasonably anticipate favorable
results in due time.
The matter of the Customs stands midway between the development of the
natural resources and the control of finance; it therefore concerns both
the topics which are being briefly treated in this chapter. The following
quotation from the last report of the Financial Adviser to the Korean
Government gives all the information necessary to our purpose upon this
point:
On the conclusion of the Russo-Japanese war, trade on the
Yalu River became suddenly prosperous. It is a well-known
fact that the districts along the river are rich in various
sources of wealth, the opening up of which depends greatly upon
the facility of transportation, as well as the prosperity of
trade in those districts. While making arrangements for the
convenience of traders at large, the prevention of illegal
traders, as smugglers, is being carried out more strictly
than ever before; and a healthy development of the trade is
thus aimed at. On the seventh of June, a branch office of the
Chemulpo Customs was established in Shin-Wiju. On the third
of August last, a Customs Agency of this branch office was
commenced at Yong-am-po, and an Inspection Station at Wiju. On
the first of October last the Chin-nampo Branch Office of the
Chemulpo Customs was promoted to an independent office, and
the above-mentioned branch offices, agency, and station were
transferred to its jurisdiction.
The increase of trade after the Russo-Japanese war was not
limited to the banks of the Yalu River. A similar increase was
also shown in Northern Korea, and a sufficient equipment to
meet the customs demands of this increase was lacking. As a
means of meeting the present requirements, the reconstruction
of the Song-chin Customs Godown, which had been destroyed by
fire during the war, was commenced in June last, and completed
in the following October. In September last, the construction
of the Customs Wharf at Song-chin was commenced and completed
in November. The Wonsan Customs had not been provided with
sufficient sheds, and consequently damage to the goods was an
affair of frequent occurrence. Sheds were newly built there in
December last. Steam launches were provided in the Customs of
Chemulpo, Fusan, Wonsan, Chin-nampo and Mokpo, for purposes of
inspection.
Though Japanese have now been appointed as Commissioners at
Chemulpo and Fusan, the customs business is being managed in
essentially the same way as when those offices were being held
by Europeans, but not without some changes. From the first of
September last, the institution of new customs regulations was
undertaken. In October the service rules for customs officials
were issued, and uniforms were prescribed for officials of
the outdoor service. In November the jurisdiction of each
customs office was clearly defined. Uniformity of taxes was
arranged. The work was divided into several departments and
sections. Various procedures in the collection of customs were
altered. The new arrangements are intended both to regulate
and to expedite the work of customs; but the before-mentioned
concern matters of internal administration only. As to the
reform of more fundamental matters, this must be undertaken
in connection with the reconstruction of harbors, customs,
accommodations on land, and the building of lighthouses. The
Customs Maritime Works Department has been organized for this
purpose—the first stage of the work to be concluded in 1911.
As the port regulations now in force do not fit the present
conditions in each port, alterations are now being planned. In
February last the method of quarantine inspection was altered.
The accounts of the Korean Customs Department have hitherto
been separate from the Korean Government accounts—the revenue
and expenditure of the former not being entered in the annual
budget. [On the last item the Report of the Residency-General
upon Administrative Reforms remarks that the impropriety of
this omission is obvious.] They are, however, entered in the
budget of 1907 for the first time.
The development of the resources of any country is, of course, intimately
dependent upon the soundness and wisdom of its financial policy and
administration. This is increasingly so under modern conditions in
countries where international relations are of the greatest importance.
Nothing could have been worse than the chaotic condition of the Korean
finances when Mr. Megata, in conformity with the Convention signed
between Japan and Korea on the 22d of August, 1905, was appointed
Financial Adviser to the Korean Government by the Imperial Japanese
Government.[65] Mr. Hulbert, who afterward became the most unsparing
critic of Mr. Megata’s policy, himself wrote in the _Korean Review_, in
1903: “It is encouraging to note that every part of the Korean Executive
has come to the conclusion that something has got to be done to put
Korea’s money system on a more secure foundation.” It was, however,
largely this same “Korean Executive” which had been chiefly responsible
for the deterioration of the currency and for the entire confusion in the
financial condition of the country. On this matter of the deterioration
of the currency, the Financial Adviser says in one of his Reports:[66]
“The currency of Korea, though nominally on a silver basis, has hitherto
in reality possessed no standard, and only cash and nickel coins have
been in circulation. Before the commencement of the reorganization of the
currency, the market rate of the nickel coins fell to 250 _won_ for 100
_yen_ in gold (Japanese currency); while that of the cash fluctuated from
100 per cent. to 60 per cent. premium. All cash pass at a uniform rate
in spite of their different sizes and weights. The market rate varies
according to the condition of supply and demand. When the market rate
is equivalent to one _rin_ (1-1000 _yen_ Japanese currency) it is called
_par_; when it is 2 _rin_, the cash is at 100 per cent. premium. Cash are
preferred in some provinces, nickel coins in other provinces. Since the
commencement of the withdrawal of the old nickel coins in June, 1905,
the market rate has gradually risen, and at present it is steady at the
normal rate of 200 _won_ to 100 _yen_. (According to the Currency Law,
the face value of the old nickel coin is 2.5 _sen_, its intrinsic value
being 2 _sen_).”[67]
Nor was the chaotic state of the currency the only evil connected
with its use. The cash, while having the preference over the nickel
coins because its intrinsic value was more nearly equal to its market
value, and it was therefore more stable, was intolerably inconvenient
for monetary transactions of any considerable size. Its value was so
low as to make it not worth the risk of counterfeiting. But even the
traveller for a few weeks in the country could pay his expenses only by
taking along several mule-loads of these petty coins. The nickels, on
the contrary, were exceedingly unstable, and were subject to wholesale
debasement and counterfeiting. It is true, as Mr. Hulbert charges, that
“counterfeit nickels were made largely by the Japanese in Osaka”; but it
is also true that these coins were counterfeited in large quantities by
the Chinese, and that the worst offenders were the Koreans themselves.
Here, as everywhere during the contemporaneous history of Korean affairs,
it was the “Korean Executive” which was chiefly to blame. In some cases
the Government loaned its coining machine for a money consideration; in
others, the “promoter of the minting industry” was obliged to content
himself with a manufacturing outfit obtained on private account. In this
connection the author calls to mind an astonishing but authentic story
of how a boy, deputed by his father to return to a benevolent association
in Seoul a sum of money which had been originally stolen by the trusted
agent of this association and loaned to the father, stole the money again
and spent it in the purchase of a counterfeiting machine. It should be
added that these remarkable transactions were of recent occurrence.
Japanese counterfeiters were arrested, tried and punished, after the
passage of a law by the Diet making it an offence to counterfeit foreign
money in Japan, with the same penalties as those applied to cases of
counterfeiting Japanese money.[68] Even before that, administrative
measures were taken by the Japanese to break up the illicit industry. So
far as Korean offenders were concerned, nothing was done to punish the
chief culprits. In fact, the Korean Government was hardly in a position
to do anything, having itself made large over-issues of nickels, and even
surreptitiously farmed out the right to private individuals to coin them.
This right was exercised, among others, by a relative of the Emperor.
Doubtless this official malfeasance is what Mr. Hulbert alludes to when
he speaks of the “prime movers in the deterioration of the currency.”
The history of this nickel coinage is another illustration of the _opera
bouffe_ methods which characterize Korean public administration. The
discovery of the potentialities of fiat currency probably came in the
nature of a revelation to Korean officialdom. It opened vistas of profit
never before dreamed of; all that was needed was the raw material and a
machine. Finally the industry ceased to be as remunerative as at first;
and the “Korean Executive,” all branches of it, discovered (in 1903)
that, sooner or later, even a nickel coinage will find its true level.
Such, briefly described, was the deplorable state of the financial
affairs of Korea when Mr. Megata’s administration began. This was only
a brief time ago, or in 1905. What has already been accomplished for
the reform of the Korean finances may be summarized as follows.[69] The
first step taken was the adoption of the gold standard, followed by the
promulgation of a law strictly prohibiting the private minting of nickel
coins, and the endeavor to recall this currency already in circulation.
Measures were also taken to popularize the circulation of notes issued by
the Dai Ichi Ginko (First Bank), and to enlarge the sphere of circulation
for the coins newly introduced. “The organ for the circulation of money
and the collection of the taxes having been now fairly well provided,
efforts will be made to restrict and ultimately prohibit the circulation
of the fractional cash now in use in the three southern provinces, by
encouraging the employment of notes in accordance with the law regulating
currency.” “As regards the bank-notes issued by the General Office of
the First Bank in Korea, the Korean Government has officially sanctioned
their compulsory circulation. But, it being deemed desirable to have
said Government grow firm and content in the idea that the notes are
the national currency, a contract was concluded in July, last year
(1906), between the Government and the First Bank, providing that the
pattern and denomination of the notes shall be subject to the approval
of the Resident-General and the Korean Minister of Finance; that the
amount of their issue and of the reserve be reported every week to the
said Minister; that the Korean Government have the power to institute
inquiries and examinations with respect to the issue of notes; and
that the bank be placed under reasonable obligations in return for the
exclusive privilege of issuing notes.”
The General Office of the First Bank at Seoul has now been made the
Central Treasury of the Government of Korea; and therefore receives on
deposit and pays out the exchequer funds. It is under the competent
management of Mr. Ichihara, who, after several years of study of
economics and finance in the United States, became prominent as a banker
in Japan, and was subsequently chosen Mayor of Yokohama. Its branches
and sub-branches throughout Korea are assisted by the postal organs in
handling the exchequer funds. “Notes Associations,” which undertake to
popularize the circulation of reliable negotiable bills, and Agricultural
and Industrial Banks, established at different centres for the
accommodation of long loans, are also in part the results of Mr. Megata’s
reform of the Korean finances. The most important, and doubtless most
difficult, thing remaining to be done is the purifying and reorganization
of the revenue system. For, as has already been repeatedly indicated,
nothing can exceed the measure of ignorance, extortion and corruption,
which has hitherto characterized the conduct of the provincial
administrative organs.
Perhaps the most difficult problem with which the newly appointed
Financial Adviser to the Korean Government had to cope was the
retirement of the nickel currency. The solution of this problem was
indeed difficult, but it was absolutely indispensable to the very
beginning of any systematic reform. The distinction between spurious
and genuine coins was scarcely possible; the distinction between those
counterfeited without, and those counterfeited with, the sanction of the
“Korean Executive” was impossible. The amount of both kinds was hard to
determine. According to Mr. Megata’s calculation, the old nickel coins
minted by the Government amounted in value to 17,000,000 _won_; while
the spurious, but not debased, coins in circulation may have amounted to
some 4,000,000 _won_.[70] His plan involved both the exchange of the old
nickel coins for new coins of a standard value and issued under proper
safeguards and restrictions, in accordance with the newly inaugurated
gold basis; and also the reduction of the cash by re-minting such coins
as were deficient and returning the balance to circulation. From October,
1905, the coinage of silver ten-_sen_ pieces and of bronze one-_sen_ and
one-half-_sen_ pieces was begun. By these it was intended to displace the
circulation of the old nickel coins. The coins tendered for exchange were
classified into three classes: Class A—coins exchanged at the rate of 2
old for 1 new coin; Class B—coins exchanged at the rate of 5 old for 1
new coin; and Class C—counterfeit and debased coins, defaced and returned
to the applicants. By these means there was withdrawn from circulation
of old coins, between July 1 and October 15, 1905, in Korean dollars to
the amount of 10,722,162, of which, however, 1,411,184 were received in
payment of taxes.
So radical a change in the currency of the country could not be
accomplished without working hardship in certain directions. But those
who have carefully examined the existing condition of Korean finances and
the working in detail of the plans for reform find reason for praising
the prudence and skill of Mr. Megata’s way of accomplishing a most
difficult task. The details are to be found, carefully worked out and
tabulated, in the official reports. It is enough for us to recognize the
enormous change for the better which has taken place during the past
two years in the financial condition of the peninsula, and in all the
foreign financial relations to Korean business affairs; and, at the same
time, to reply with a brief, categorical denial to certain criticisms
from unfriendly and prejudiced sources. As to the latter point, “it is
untrue,” says a trustworthy informant, “that any Korean capitalists came
forward with a _bona fide_ offer of a loan at a lower rate of interest
than that procured by the Japanese Government for the retirement of the
old nickel coinage. The only plan of the kind which was ever mooted had
in view the borrowing of foreign capital, not Japanese. A great deal
was said, _after the fact_, about the readiness of these capitalists to
intervene; but Mr. Megata was never given an opportunity to avail himself
of their alleged willingness to advance the funds until it was too late.
Mr. Megata’s first object was, of course, to obtain the money as cheaply
as possible. It was not until he had looked the situation over very
carefully, and had made enquiries concerning the possibility of making
better arrangements with foreign capitalists that he finally concluded
the arrangement with the Dai Ichi Ginko.”
Another example of the same species of criticism is shown in connection
with the story that the Korean Emperor desired to advance to the
merchants of Seoul 300,000 _yen_ to relieve the distress over the
increased stringency in the money market, which was, of course, one of
the first results of the conversion of the nickel-coin currency. “For
this offer,” the authority just quoted says, “the underlying motive
was undoubtedly political. There was distress among the merchants of
Seoul, but there was no necessity for the Emperor’s direct intervention.
If, indeed, the distress had been as great as was represented at the
time, the sum offered, 300,000 _yen_, was not sufficient to afford
permanent relief. The offer of the money was merely another instance of
Korean methods. The process of reasoning was simple: Financial distress
existed, due to the action of the Japanese Financial Adviser; His Majesty
generously came to the assistance of his embarrassed subjects; hence
gratitude to His Majesty and humiliation for the discredited Japanese
Adviser. Mr. Megata did no more than to treat the matter as its childish
nature warranted. It should be added that, in addition to the genuine
distress caused by the stringency of the money market, there was a patent
attempt to heighten the resultant agitation for political effect. This
was met by offers, due to Mr. Megata’s initiative, to advance money on
easy terms in deserving cases. The native capitalists made no move to
relieve the situation at this supposedly critical juncture.”
The recent condition of the resources and finance of Korea can be
discovered in the most trustworthy way possible under existing
circumstances, only by a critical study of the detailed reports to
which reference has already been made in this chapter. The following
more important items are taken from the Report of March, 1907. In this
report the total estimated revenue for 1907 is given at 13,189,336 _yen_,
which is an increase of 5,704,592 _yen_ over that of 1906. Of this
total, however, 3,624,233 _yen_ is extraordinary. The total estimated
expenditure for the same year is 13,963,035 _yen_, which is in excess of
that of the year of 1906, by the sum of 5,995,647 _yen_. The increase in
expenditure is partly to provide for increase in salaries—a necessary
measure if the amount of “squeezes” is to be reduced and a sufficient
number of competent and honest officials secured; but more largely
for the reform of the educational organization, for the founding and
support of technical schools, for the extension of engineering works,
the building of roads, of law courts, and other public buildings, the
founding of hospitals; and for the extension of the police and judicial
systems. As to individual items it is noticeable that the military
estimates have been reduced from 2,426,087 _yen_, in 1905, when they
were 26 per cent. of the total expenditure, to 1,522,209 _yen_, or 11
per cent. of the total expenditure for the year 1907. This sum has now
further been much reduced by the disbanding of the Korean army, with
the exception of a body of palace guards, as a consequence of the new
Convention of July, 1907.
One-tenth of the entire estimated expenditure—or, more precisely,
1,309,000 _yen_—is attributed to the Imperial Household. But even
this by no means represents the cost to the nation of the Emperor and
his Court under the former occupant of the throne. For all manner of
irregular, illicit, and scandalous ways of obtaining money for his
privy purse were resorted to by the ruler, whose character and habits
in the obtaining and use of money have already been sufficiently
described.[71] The trials which have come upon the Financial Adviser of
the Korean Government since his appointment, through the behavior of the
so-called “Korean Executive,” can scarcely be exaggerated. One of the
questions pending when Mr. Megata first assumed office concerned the
size of the allowance for the expenses of the Crown Princess’ funeral.
The Emperor’s private funds were at a low ebb (they always are); the
national treasury was impoverished (it always had been). Yet the Imperial
Treasurer, an official of the old-time stamp, insisted that one million
_yen_ was absolutely indispensable for the proper carrying out of the
burial ceremony(!). This way of plundering the treasury of the country,
which was considered especially legitimate by the Korean Court and its
parasites, Mr. Megata dealt with in that spirit of “philosophical
humor” which is characteristic of him. He patiently pointed out that the
estimated prices of many of the items called for were greatly in excess
of their market value. In this manner he finally reduced the wily claims
of the Korean official to the modest sum of a half-million _yen_. Two
full-dress rehearsals, which differed from the actual ceremony only in
the circumstance that the coffin was empty and no official invitations
to attend were issued, preceded the final pageant. On each of these
occasions the long procession marched pompously through the streets,
which were crowded with wrangling lantern-bearers, chair coolies, and
the innumerable other horde of a low-lived Korean populace, to the
dissipation of all the solemnity of a death-ceremonial, but to the
delectation of the spectators as well as the participants.
The public debt of Korea in March, 1907, is here exhibited in tabular
form:
TABLE OF NATIONAL DEBT
----------------+-----------+----------+--------+-----------+-----------
Name of Loan | Date of | Amount |Interest| Term | Date of
| Issue | | |Outstanding| Redemption
----------------+-----------+----------+--------+-----------+-----------
Treasury Bonds |June, 1905|$2,000,000| 7 %| 3 years |June, 1910
| | | | |
Currency | | | | |
Adjustment | ” 1905| 3,000,000| 6 %| 6 ” |June, 1915
| | | | |
For Increased | | | | |
Circulation |Dec., 1905| 1,500,000| 6 %| 6 ” |Dec., 1912
| | | | |
New Enterprises |March, 1906| 5,000,000| 6½ %| 5 ” |March, 1916
| | | | |
----------------+-----------+----------+--------+-----------+-----------
This debt, while insignificant as compared with that of civilized
nations generally, is by no means so when compared with the poverty of
Korea. And it will doubtless be largely increased in the near future
by the necessity of putting into operation many imperative reforms
and improvements of the existing material condition of the country.
The possibility, however, of a rapid development of the resources and
increase of revenue is also great. To take a single item: while the
amount estimated from Port Duties for the year ending December 31, 1906,
was only 850,000 _yen_, the actual income was 2,434,118 _yen_. Some
reduction in the items allowed for expenditure is also possible—for
example, that of the Imperial Household, and for the Military (a
reduction already accomplished). Under a just administration, with
a revision of the system of taxation, the resources and the revenue
can probably be doubled in a few years, and at the same time the
material welfare of the people improved. With the policy of the present
Resident-General continued in force, the prospect is therefore by no
means without dominant elements of hope for Korea’s future.