(49) Trade, Commerce Tightly Controlled

By Yang Sung-jin

Free market principles spawn misconceptions. One of them is an argument for a completely regulation-free economy where government interference, however slight, is unwelcome. But a balanced dose of government supervision and “laissez faire” is effective — and sometimes inevitable — in establishing some order in otherwise hectic marketplaces.

In April of 1617, the Choson court had to grapple with the sudden disintegration of order in the marketplace. At the time, the government’s grip on merchants was somehow loosened; as a result, thugs lined the pedestrian shopping areas in the downtown area, selling sable, silk and other goods illegally.

The unlicensed traders hid a number of items in large cases in residential houses nearby and went in for high-pressure selling. The 100-odd thugs hardly flinched at the sight of suspicious government officials.

In general, however, the Choson Kingdom had a tightly controlled economy. Political incidents of any magnitude often forced markets to be shuttered. Foremost in the list were the king’s death and natural disasters.

According to an article dated May 20, 1433, Choson officials held the view that the king’s death warranted a three-day closure of the markets as a show of deference, a practice following the Chinese tradition in which an Emperor’s death closed markets for seven days.

Despite the closure of markets across the nation for the specified period, the governments in both the Choson Kingdom and China allowed people to trade on the streets for daily necessaries, a custom called “sasi.”

Another place which served as makeshift markets when the conventional markets were officially closed, was the port. Merchants were forced to conduct business so that essential everyday items could circulate to ordinary people. The temporary market there was called “hangsi,” which served nicely to keep the economy going while politicians in Seoul organized the requisite ceremony.

Conditions for Market Closure

Natural disasters also led to the market closures. In April of 1439, King Sejong ordered merchants to do business on the open street for awhile due to a severe drought which had hit the nation. In 1469, a prolonged drought drove the merchants out of the designated marketplace.

On Aug. 1, 1768, high-ranking official Suh Ji-soo died. In a brief biographical note about Suh, historiographers stated that villagers voluntarily closed up downtown markets to mourn his death.

In September of 1553, a fire broke out in Kyongbok Palace, unsettling officials and King Myongjong. To ease the shock, the king canceled morning briefing sessions for three days and ordered the suspension of market activities for the same period.

Even the death of a Chinese Emperor — an incident far-removed from the interest of Choson merchants eager to buy and sell goods — forced a closure. In early 1464, news of the Chinese Emperor’s death was delivered to King Sejong, who promptly suspended the morning briefings and licensed marketplaces for seven days. Furthermore, the king went so far as to order the populace in Kyonggi-do, Hwanghae-do and Pyongan-do to wear white mourning clothes for three days.

All the suspensions and closures of marketplaces were part of the Choson’s favoring a state-controlled, planned economy. It took a great deal of patience and effort on the part of would-be merchants in Choson before they received official permission to do just about anything, and this only after they waded through a sea of red-tape.

“Pyongsiso,” a state-run agency, played a central role in the planned economy by controlling the number of shops, weights and measures and even standard prices.

An article dated Feb. 13, 1503 sheds light on the role of Pyongsiso: “The reason for the creation of markets is to help merchants earn a living through trade. Meanwhile, Pyongsiso is intended to correct the wrongdoing of merchants while ensuring that they don’t cheat the public. But these days people often lose money at marketplaces because of wicked merchants.”

No Fish for Fat Cat

Earlier in the Choson period, even a small shop in a shabby corner of the marketplace was impossible to set up without government approval. But in the 17th century, a group of powerful merchants armed with immense wealth and influence-peddling ability emerged. They formed a sort of guild and secured the exclusive right to do business in designated areas in Seoul in return for paying taxes to the government.

But their lucrative business skidded to a halt in 1791 when King Chongjo abolished at a stroke the privileges granted to the merchants, with the exception of the original Six Licensed Stores.

The measure, called “Commercial Equalization Enactment,” was aimed at encouraging the growth of private merchants in opposition to the government-sanctioned “fat cats.”

In issuing the order, King Chongjo announced, “Peddlers and hawkers alike have nothing to feel ashamed of. Whoever wants to conduct trade and commerce should feel free to do so. In the past, the government arrested and expelled those who wanted to sell their goods in the market, which is far from appropriate.”

Thanks to King Chongjo’s market-oriented stance, three large-scale markets operated by private merchants sprang up in Seoul — Ihyon inside the East Gate, Chongmu in the Chongno area and Chilpae outside the South Gate. The three markets traded both Korean products and goods from China and Japan.

The booming business in Seoul spread into the countryside, which also saw the establishment of numerous markets in the 18th century. Free from rigid government restrictions, wholesale brokers and itinerant peddlers emerged and laid the groundwork for solid economic growth in the following period.