The Imjin War... it goes without saying, but it was a war that had a massive impact on Joseon at the time.
While the Ming Dynasty army committed their fair share of atrocities, they also left behind something that changed Joseon forever, and that was...
A currency economy. At the time, Ming soldiers received about 1.5 nyang of silver per month as a standard wage. They used this silver to buy the supplies they needed. Over seven years of trading, they basically hard-wired the concept of a monetary economy into the heads of Joseon people before leaving.
The spark that turned this into a fire was the 'Sangpyeong Tongbo' (brass coins) created in the 11th year of King Injo. At first, the commoners' understanding of currency was so low and distrustful that they would melt the coins down to make bowls or household items. But after some ups and downs, the Sangpyeong Tongbo secured its status as money. This led directly to the expansion of the Joseon private loan market. Now, you Sing-boongs are definitely going to ask...
Why the hell does a circulating currency mean the loan market expands? What's the connection?
There are three main reasons. Let's break them down one by one.
First, the expansion of commerce and industry flipped the average commoner's economic mindset. You've probably heard of the legendary merchant Im Sang-ok; even he was from the 'Jungin' (middle) class. The success of professional middle-class groups after the 17th century acted as a catalyst. People realized they didn't have to just dig in the dirt their whole lives; they could dream of hitting the jackpot through trade or other means.
Second, the 'barrier to entry' dropped significantly. Before currency, if you wanted to start a high-interest lending business (Jang-ri), you had to secure a massive amount of 'rice' or 'fabric.' To manage that, you needed warehouses and transport. Plus, rice as a 'currency' had the downside of about 10% natural loss every year (rot, pests, etc.). Unless you were seriously wealthy, it wasn't easy to be a loan shark. However, the appearance of Sangpyeong Tongbo blew those constraints away. Since it was made of copper, you didn't worry about rust or rats eating it. It was light and portable, so you didn't need a huge warehouse. Even an average person could start 'money-playing' if they just had a little bit of seed money.
Third, the explosion of demand. With the development of commerce and the circulation of coins, the demand for cash skyrocketed, and the market expanded accordingly. With the private loan market blowing up like this, it was only a matter of time before it became a major social problem, right?
By the early 18th century, Joseon had fully transitioned into a currency economy, and everyone and their mother jumped into the loan business. Because brass coins were light, didn't rot, and weren't rat-food, private lending became the nation's go-to side hustle. It's said that a 50% annual interest rate became the standard. You can see how serious the situation was from the petitions (Sangso) of that time.
"Honestly, ever since money started circulating, people have lost their damn minds and prices are skyrocketing—no cap. It's so bad that even grandmas gathering herbs or 'Jam-min-is' (kids) making salt aren't doing actual productive work; they're just obsessed with money and running around 'mining' cash. (Omitted) The gold-spoon elites are hoarding cash and running predatory loan businesses on the dirt-spoons, and these bastards are truly malicious. During the 'Barley Hump' (famine season), rice is expensive, so a commoner has to take out a full loan of 100 jeon just to buy one sack of rice to survive. But when they try to pay it back in autumn, the price of rice has tanked, so they have to sell three or four sacks of rice just to make up the 100 jeon principal. If you tap the calculator on the interest too, they basically eat one sack and vomit out six or seven later. Does this make sense? In the old days, if we borrowed rice and paid back in rice, the interest was capped at double, but with currency, the commoners are getting absolutely rekt and liquidated. People are rioting and demanding we get rid of money. Fine, we can't melt down the money already minted, but why the hell are you printing more money without a thought and turning this into an Inflation-Hell-Bando?" - Excerpt from the petition of Yu Bok-myeong, August 3rd, 44th year of King Sukjong (1718).
King Sukjong realized the situation was sus and declared a 'War on Private Loans,' announcing the 'Interest Rate Limitation Decree' (the Joseon version of the Interest Limitation Act). 'Hey, things are looking crazy. From now on, no matter what currency is used, the interest rate cannot exceed 20% per year!'
The 'currency' mentioned here included rice, fabric, and Sangpyeong Tongbo. Considering 50% was the average, this was a massive regulation. At first, Sukjong's law seemed to work, but as time passed, the loan market started moving again, and 50% interest became the norm under the table. So, Sukjong dropped a second special measure.
From then on, regardless of the interest, he blocked anyone from collecting interest for more than a year. He changed the law so interest could only be collected after a year had passed. This was meant to protect the borrowers, but it was also a way to squeeze the loan sharks. It was basically saying only those with enough capital to survive without collecting interest for over a year should stay in the market. In other words, he was trying to stop every random person from becoming a loan shark.
However, human greed was scarier than the King's command. Joseon people, who couldn't give up on the most reliable investment method of the era, continued 'money-playing' until the dynasty fell. Of course, the 50% annual interest remained the benchmark. Private lending persisted through the fall of Joseon and even after the Republic of Korea was founded. You Sing-boongs have probably heard stories from your grandparents about some lady in the neighborhood who used to run a private loan business. Source: Sing-beong-gul Earth Village Gallery
"Users are geeking out over Joseon's messy economic history, roasting the 'Rice-sung' elites for being out of touch, and reminiscing about how loan sharking has been the national side hustle since forever."
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