Korea (Hamilton)/Chapter 8

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 2s. 0½d.), 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:—

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 8s. 41d.). 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 (2s. 0½d.), 5 yen (10s. 2½d.), 10 yen (£1 0s. 5d.), 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:

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 Pyōng-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.