Foreign action in Korea—Exhausted Exchequer—Taxes—Budgets—Debased
currency—The Dai Ichi ginko—Dishonest officials
The events, which have led up to the present complex condition of Korean
politics, originated in the attempt of the Russians to secure control
of the Customs and Finance of the Empire in the autumn of 1897. As the
effort of the Russian Minister of that time, M. de Speyer, was only
in part successful, his immediate successor, M. Matunine, the present
representative, M. Pavloff, and his _confrère_ of the French Legation,
M. Colin de Plancy, have in the interval consistently directed their
diplomacy to the completion of the task. Their inability to force
compliance with their demands upon the Korean Government has embittered
their action towards the British Minister and the Chief Commissioner
of the Customs. In the prosecution of a work, at once discreditable and
inspired by very petty prejudices, no single diplomatic device, which
could serve their purpose, has been omitted from their policy. The
check, which the plans of the Franco-Russian-Korean party received in
consequence of British action has only retarded their development for
the moment. It does not perceptibly relieve the situation, nor make the
office of the Chief Commissioner more comfortable or the path of the
British Minister more easy to follow. Indeed, it is quite certain that
the opposition of the Russian and French Ministers to British activity
will become more vigorous in the future.
The assistance accorded by the British Government to Mr. Gubbins during
the recent crisis, has done much to dispel from the minds of the Koreans
those illusions which our past indifference had created. It is improbable
that quite identical methods will be employed in any future attempt of
the Court to oust Mr. McLeavy Brown from his position. If the Court gave
way in the face of the British demonstration, the tact and consideration
for the interests of both parties, which Mr. Gubbins subsequently
displayed, materially contributed to the restoration of the _status quo_.
Upon the other hand, the apathy of the British Government in failing to
protect Mr. McLeavy Brown when he was deprived of the Comptrollership of
the Finances at the instigation of the Russian Minister, in 1897, was of
course conducive to the late disturbances. The two offices are so closely
related, and the masterful and aggressive spirit of the Franco-Russian
policy is such, that the accession of a Russian or French nominee to
the Chief Commissionership of the Customs would imply their subsequent
fusion to the complete obliteration of British influence. This, of
course, should be impossible; and it would be, if the British Government
would awaken to the importance of maintaining unimpaired its prestige
in Korea. We have little material interest in Korea, but it must not be
forgotten that our position in the kingdom should be superior to that of
France, and equal to that of Russia. If it were not that France is the
partisan and ally of Russia in Korea, as well as elsewhere, there would
be no occasion to do aught but support benevolently the policy of Japan,
without unnecessarily endorsing the aggressiveness which distinguishes
the attitude of the Island Empire to its neighbour. But if we wish to
preserve our position we must put a little more vigour into our policy,
and, while maintaining our working agreement with Japan, proceed to
guarantee the integrity of our own interests. These would be best served
by insisting upon the retention of a British nominee in the supervision
of the Korean Maritime Customs. Our action in this respect would meet
with the unqualified approval of Japan and the United States of America,
whose trading interests, equally with our own, justify predominance in
this control.
The financial embarrassment of the Korean Government, at the present
time, is the outcome of the abnormal extravagance of the Court. Anything
which would tend to increase the load of debt with which the Emperor
encumbers the dwindling resources of the national wealth, is neither
politic nor desirable. The sources of the Imperial revenue resemble in
lesser degree those which prevail in China. There are the Land Tax, paid
no longer in grain, which returned four and a half of the seven million
yen odd, composing the total domestic revenue in 1901; a House Tax,
assessed capriciously and evaded by the practice of a little discreet
bribery; the net Customs revenue, which was returned for 1901 at more
than one million and a quarter yen (1,325,414 yen; £135,303 sterling at
exchange of 2_s._ 0½_d._), and the proceeds of the various concessions,
monopolies, mines, and mint, and the sums derived from such miscellaneous
and irregular taxation as may suggest itself to that keen-witted Minister
Yi Yong-ik.
Taxation is heavy and relentless. The list of the more important
objects, upon which an impost is levied, includes, in addition to the
land, customs and house taxes, salt, tobacco, fish, fur, lumber lands,
minerals, ginseng, minting, cargo-boats, guilds, licences, paper,
cowhides, pawnbroking, &c. In more recent times certain taxes have become
obsolete. But this list, however, does not by any means exhaust the means
by which the Emperor contrives to make his subjects “pay the piper.”
Quite subsidiary to the regular cases, but of great value in themselves,
are the donations which are sent up from various parts of the country
for the gratification of the Throne. These gifts are very comprehensive,
and embrace the fruits of the land as well as the products of the sea.
Little escapes the schedule of donations, and no intervention can bring
about the discontinuation of the custom, while a failure on the part of a
prefect to attend to this matter would result speedily enough in the loss
of his office.
The Budget for the year 1901 was assessed at nine million yen odd, of
which one million yen odd was dedicated to Imperial expenditure, and a
trifle more than this sum paid to the Imperial Privy Purse. The estimated
difference between the revenue and the expenditure of the same year was
the small sum of 775 dollars. The Budget for 1902 provided for seven
and a half million yen; the estimated revenue was placed approximately
at the same figures, the balance between expenditure and revenue being
653 yen. It will be seen, therefore, that there is little reason for the
financial difficulties in which the Throne is placed. If it were not that
his Majesty frittered away his income upon the purchase of land, the
adornment of his Palaces and his person, his relatives, his women, and
the perpetual entertainment of his Court, this chronic impoverishment
of his exchequer would not exist. Moreover, at least one quarter of his
revenue is appropriated by the native officials through whose hands it
passes. Under these circumstances he has never been averse from accepting
the assistance of interested parties; but this ill-omened relief does not
free the country from its burden of mortgage and taxation.
The disbursements upon the different departments engage the revenue to a
degree which is out of all relation to the precise utility or importance
of any of these fantastic bureaux. The War Office claimed in 1901, in
round figures, more than three and one half million yen, and the Foreign
Office a quarter of a million yen, the Finance Department three-quarters
of a million yen, the Palace a little more than one million yen, and
the Home Department a little less than that amount. One million yen is
roughly £100,000. The amount paid to the War Office for 1902 was, in
round figures, very nearly three million yen; to the Foreign Office,
something in excess of a quarter of a million yen; to the Finance
Department, rather more than half a million yen. The Departments of
Law, Agriculture, Police, Education, and Communications in this highly
expensive and totally inefficient administration, all make good their
claims upon the Budget, until there is nothing left and very little to
show for this lavish distribution of the public moneys.
The Budget for 1903 I give in detail:—
The total revenue is estimated at $10,766,115. The total expenditure is
estimated at $10,765,491. This leaves a balance of $624.
REVENUE
Land Tax $7,603,020
House Tax 460,295
Miscellaneous 210,000
Balance from 1902 (including surplus from loan) 1,142,800
Customs Duties 850,000
Various Imposts 150,000
Mint 350,000
----------
10,766,115
EXPENDITURE
The Emperor’s private purse $817,361
Sacrifices 186,639
---------
1,004,000
THE IMPERIAL HOUSEHOLD
Railway Bureau $21,980
Palace Police 118,645
Police in Open Ports 69,917
North-west Railway 22,882
Ceremonial Bureau 17,608
Mining Bureau 10,000
-------
261,022
THE OLD MAN BUREAU 24,026
BUREAU OF GENERALS 65,853
THE CABINET 38,730
THE HOME DEPARTMENT
Office 34,624
Mayor’s Office 6,144
Provincial Governments 91,862
Prefectural Governments, 2nd class 52,674
Quelpart 4,222
Prefectures 778,325
Imperial Hospital 7,632
Vaccination Bureau 3,354
Travelling Expenses 730
Prefectural Sacrifices 866
-------
980,533
THE FOREIGN DEPARTMENT
Office 26,024
Superintendents of Trade 51,154
Foreign Representatives 201,020
-------
278,198
THE FINANCE DEPARTMENT
Office 53,910
Tax Collectors 141,600
Mint 280,000
Payment on Debt 989,250
Pensions 1,956
Transportation 200,000
---------
1,666,716
WAR DEPARTMENT
Office 50,651
Soldiers 4,072,931
---------
4,123,582
LAW DEPARTMENT
Office 31,603
Supreme Court 15,686
Mayoralty Court 8,162
Prefectural Courts 1,251
-------
56,702
POLICE BUREAU
Office 252,857
Seoul Prison 32,650
Policemen 51,462
Border Police, &c. 23,762
Travelling Expense, &c. 600
-------
361,331
EDUCATIONAL DEPARTMENT
Office 24,822
Calendar 6,022
Schools in Seoul 89,969
Schools in Country 22,580
Subsidies for Private Schools 5,430
Students Abroad 15,920
-------
164,943
AGRICULTURAL DEPARTMENT
Office 38,060
General Expense 8,240
-------
46,300
COUNCIL
Office 18,580
IMPERIAL BODY-GUARD
Office 58,099
BUREAU OF DECORATIONS
Office 20,993
TELEGRAPH AND POST
Office 23,640
General Expense 438,295
-------
461,935
BUREAU OF SURVEYS
Office 21,018
Surveys 50,000
-------
71,018
INCIDENTALS
Road and other Repairs 35,000
Repairs in Country 10,000
Arrest of Robbers 500
Relief Work 5,000
Burial of Destitute 300
Miscellaneous 480
Police at Mines, &c. 1,840
Shrinkage 3,120
------
56,240
EMERGENCY FUND 1,015,000
Steps have been taken from time to time by the Foreign Representatives to
improve the finances of the country. Upon one occasion seven reforms were
recommended, and the report subsequently presented to his Majesty. In the
course of an inquiry it transpired that, in addition to nickels which
were minted by the Government, there were more than twenty-five separate
and distinct brands of nickels then circulating in Korea. Until recent
years the counterfeiting of Korean currency has not been remunerative.
The old time cash was of such small value, and the combined cost of the
metal and work together so nearly equalled the face value of the true
token, that the risk was not commensurate with the profit. A single
nickel of the present currency, however, is equivalent to twenty-five of
the old coinage, and as the net cost of their manufacture is less than
a cent and a half a-piece, it will be seen that there is some incentive
to the production of false money. The number of counterfeit nickels is
rapidly increasing, and permits to coin were at one time freely issued by
the Government to private individuals. Nickel is openly imported through
the Customs; spurious coins in large quantities are brought by almost
every steamer from Japan and smuggled into the country. The Government
care only for the profit which they derive from their illegitimate
transaction, and, ignoring the permanent injury which they are doing
to the solvency of the country, adopt every means to circulate these
depreciated coins. Until quite lately the circulation of nickel pieces
was confined to the capital and the vicinity of two or three Treaty
ports, the old copper cash being current elsewhere. With a view to
extending their use, however, the magistrates throughout the Empire were
ordered to accept redemption of taxes only in this currency. But as wages
are generally paid in the nickel currency, and as the purchasing power of
the nickel Korean dollar is less than half it was with copper cash, while
the standard of payment remains the same, the bulk of the nation is paid
no better than formerly, while the purchasing power of their earnings is
infinitely less. There appears no prospect of any immediate improvement,
since the Government contracted for the issue of a further forty million
nickels. With this accomplished, the face value of the coinage in
circulation, as against the Japanese gold yen, will be fourteen million
yen, or nearly one million and a half pounds sterling. There is, of
course, no gold or silver reserve with which to redeem this gigantic sum.
To such a pitch has this condition of affairs attained that in Chemulpo
quotations are current for:—
(1) Government nickels;
(2) First-class counterfeits;
(3) Medium counterfeits; and
(4) Those passable only after dark.
There is little wonder, therefore, that the currency question is engaging
the earnest attention of the foreign representatives. Awakening at last
to some sense of its responsibilities in this matter, the Japanese
Government issued, on November 7th, 1902, an Imperial ordinance, which
came into force on the 15th, with a view to deterring Japanese from
making spurious coins or despatching such nickels of Japanese manufacture
to Korea. The punishment to which offenders against the ordinance are
liable is imprisonment for a period not exceeding one year or a fine of
not more than 200 yen (£20 8_s._ 4_d._). This enactment gave the Japanese
customs officers power to prevent the counterfeit coins from being
shipped abroad, and enabled the Korean customs authorities to institute
proceedings against Japanese found guilty of importing nickels of this
description. From January 22nd, 1902, when the first seizure of the year
took place, until the close of December, 3,573,138 pieces (coins and
blanks), the total face value being £18,191, were confiscated by the
Chemulpo customs officers. The largest quantity taken at one time was
739,000 pieces, face value £3772, detected on August 19th aboard a Korean
junk, the second largest haul was made on September 8th in a cargo-boat,
and consisted of 530,090 pieces, with a face value of £2512.
With a view to provide a remedy against the deplorable condition of the
Korean currency, a Japanese Bank, Dai Ichi Ginko (No. I. Bank), which
is under direction of Baron Shibusawa, decided, with the support of the
Japanese Government, to undertake the issue of notes by which a promise
was made to pay the bearer on demand in Japanese currency at any of its
branches in Korea. The Dai Ichi Ginko possesses branches at all the
larger Treaty ports, as well as in Seoul, and is, perhaps, the most
important commercial agent in the country. The Japanese Consular officers
are authorised to supervise the issue and to receive statements of the
circulation and reserves twice a month. They are also entrusted with
certain discretionary powers as to limiting the number of notes in use.
The denomination of the notes are 1 yen (2_s._ 0½_d._), 5 yen (10_s._
2½_d._), 10 yen (£1 0_s._ 5_d._), and on May 10th, 1902, there appeared
the first issue of notes of 1 yen value. Those of 5 yen were put in
circulation on September 20th following. The 10 yen notes were not issued
until a later time.
On February 28th, 1903, the circulation of Dai Ichi Ginko notes and the
reserves held for their redemption stood as follows:
Amount.
Branch. In circulation. Reserves.
Chemulpo 18,927 18,927
Fusan 24,568 19,701
Seoul 1,894 1,894
Mok-po 14,406 12,250
------ ------
Total 59,795 52,772
This action upon the part of the Dai Ichi Ginko gave rise to vehement
opposition from the Korean Government. Although the issue of the notes
was duly authorised by the Emperor, the Minister of Foreign Affairs
persistently obstructed the circulation of the notes. Upon September
11th, 1902, an order was issued from the Foreign Office, upon the
authority of the Acting Minister of Foreign Affairs, prohibiting the use
of the notes by Koreans upon grounds which impugned the credit of the
entire proceeding. This order was inspired, of course, by Yi Yong-ik, and
when a few months later, on January 8th, 1903, Cho Pyöng-sik—then Foreign
Minister—removed the prohibition, Yi Yong-ik at once contrived the
dismissal of his too complaisant colleague. The Foreign Office was now
without its Chancellor, and Yi Yong-ik immediately set himself to revoke
the charter of the bank. After declaring that the Japanese paper-money
would be the ruin of the country and alleging that the compensation
claims against the Seoul-Fusan Railway Company were purposely paid in
those notes with a view to an ultimate declaration of bankruptcy upon
behalf of the bank, Yi Yong-ik summoned on January 24th a meeting of the
Pedlar’s Guild, at which he forbade their acceptance of this paper-money.
A few days later, February 1st, the Mayor of Seoul posted an edict
throughout the city giving effect to this prohibition and, at the same
time, threatening with most severe penalties any one who used the notes
or in any way assisted to circulate them. The Finance Department then
circulated the edict throughout the provinces, whereupon an immediate
run upon the bank ensued. Three days later, upon February 4th, the
Acting Japanese Minister threatened the Government with the demand of an
indemnity and a number of mining and railway concessions in compensation
for the injury occasioned the bank, unless the obnoxious measure was
withdrawn. After considerable discussion and various meetings, the Korean
authorities agreed to withdraw all obstruction and to publish throughout
the Empire their recognition of the existence of the bank. From that day
the validity of the position of the Dai Ichi Ginko has been unquestioned.
The exactions and dishonesty of the officials impose a perpetual drain
upon the national exchequer. In the removal of this one great evil,
another serious obstacle to a more flourishing financial condition
would be surmounted. Unfortunately, the drought and famine of 1901,
added to the decrease in the revenues of 1902, created a discrepancy
of five million yen. If this deficit may be considered extraordinary,
no extenuating circumstances can excuse the supplementary losses of
revenue attributable to the personal peculations of the officials.
The stringency of the financial situation created by the famine drew
attention to the very large deficits, with which many of the more
important metropolitan and chief provincial officials were debited. The
inability of any of these gentry to disgorge their ill-gotten gains
resulted in their immediate prosecution at the instigation of the Finance
Minister, Yi Yong-ik. Ministers of State, governors of provinces,
prefects and inspectors were brought sharply to account by the execution,
banishment, or imprisonment of many offenders.
In such a moment the peculiar astuteness of Yi Yong-ik becomes
conspicuous. While he visited any official who was compromised with
the full penalties of the law, he himself executed, in his capacity of
Minister of Finance, a bluff by which he netted almost half a million yen
for the Imperial Treasury at one stroke. Yi Yong-ik arranged to buy the
ginseng crop from the ginseng farmers. This is a Government monopoly, and
the price was arranged at eight dollars a pound for sixty-three thousand
pounds’ weight, dried and undried. When the time came to pay, and he had
secured possession of the ginseng, Yi Yong-ik refused to give more than
one dollar a pound, alleging that the ginseng growers had misrepresented
the condition and weight of the consignment. In the meantime the ginseng
was sold; the money was appropriated, and the balance in the Treasury
correspondingly increased.
Upon another occasion, at a time when the discount of nickel against
yen gold was very low, Yi Yong-ik was instrumental in promoting the
presentation of a gift of two million dollars Korean to the Emperor. By
careful adjustment the value of the exchange, nickel currency as against
yen gold, hardened twenty points the day after the presentation. It is,
perhaps, unnecessary to point out that Yi Yong-ik occupied the interval
in disposing of the difference to the advantage of his master.
[Illustration: A SEOUL GATE.]