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 Issue | Amount | Interest | Term Outstanding | Date of 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.