[War & Business] Lessons from Hwangok

The appearance of Jinhyulcheong in Chungnam Suyeong, Boryeong-gun, Chungcheongnam-do, which operated the Hwangok system during the Joseon Dynasty
[Image source=Cultural Heritage Administration]

[Asia Economy Reporter Hyunwoo Lee] Around 200 years ago, in the early 19th century, Joseon was known as the country with the best disaster relief fund system in Northeast Asia. The disaster relief fund called ‘Hwangok,’ which lent grains at low interest during the spring famine season and collected the principal with a small interest during the autumn harvest season, was the most abundantly stocked and actively operated by the Joseon Dynasty in Northeast Asia.

At that time, the Qing Dynasty of China, with a population of 400 million, had only stocked 20 million seok of rice as Hwangok, but Joseon, with a population of just about 10 million, had more than 10 million seok, which was half of China’s stockpile. Considering that the annual revenue of the Joseon Dynasty was about 4 million seok, it meant that at least three years’ worth of revenue was accumulated as disaster relief funds.

In contrast, Japan did not prepare such disaster relief funds at all, and except for the capital and major cities, local lords were responsible for managing their own regions. As a result, when famines and epidemics such as smallpox occurred due to various weather anomalies from the 17th to the 18th century, the Joseon Dynasty was evaluated to have responded better than China or Japan. Thanks to this Hwangok system, unlike other countries, large-scale peasant uprisings did not occur.

However, this enormous scale of Hwangok burdened Joseon’s finances throughout the 19th century. To maintain this disaster relief fund equivalent to three years’ revenue, the Joseon Dynasty began to consume a huge portion of its revenue solely for the preparation of Hwangok.

Since rice cannot be stored for a long time, old rice was released into the market and replaced with newly harvested rice, causing enormous exchange costs to be wasted. Corruption also crept into this process, turning Hwangok into a heavy burden for the state. By the mid-19th century, when global political situations were rapidly changing, the budget that could have been used for new technology or weapon development for national survival was entirely consumed.

Local officials were anxious about losses in the Hwangok allocated to their regions. If there was a loss in Hwangok, the local official was immediately replaced for incompetence, so they had to preserve the amount allocated by the central government at all costs. They had no choice but to become corrupt officials against their will. When the Hwangok payment deadline approached, it was not uncommon for local merchants to be forced to pay the Hwangok in advance and then be handed the tax collection rights.

Ultimately, as the entire national budget was entangled in the disaster relief fund, Joseon failed to secure funds for modernization. Although Japan’s Meiji government had a much smaller budget than the Joseon Dynasty, the gap widened here because Japan invested more than 90% of its total budget in military expenses. If the Hwangok budget had been used for modernization, our modern history might have been very different from what is known today.