Historical Sketch

In the year 918, the Korean peninsula saw the first unification under the Goryeo dynasty, before that rivalling kingdoms had existed for many centuries. The Goryeo were ousted after a military coup, and Joseon got established as new dynasty, which remained in power until the end of Korean independence. In the 1870s, Japan gained more and more influence over Korean affairs. An amity agreement was concluded in 1876 which gave Japan the economic dominance. After the Japanese victory over China in 1895, Korea restyled itself as empire in the Japanese model. When Japan had also defeated Russia in 1904, the time had come to first establish a protectorate which the was made more and more comprehensive up to the full annexation of the country in August 1910. A governor general was installed, and the international name was changed from Korea to Chōsen. After the Japanese defeat in World War II the annexation was reverted by the Allied powers. The United Nations had developed a plan to establish an international trusteeship over Korea, and in in September 1945, administration was mandated to the Soviet Union for the territories north to the 38th parallel and to the United States for the southern part.

Monetary History Overview

Traditionally, Korea's economy was based on silver like in neighbouring China. In transactions bullion was used, the weight of which was measured in Taels (Korean: "Ryang"). For small transactions, cast copper coins with a square hole in the Chinese Cash style were used (Korean: "Mun"). For most of the time, Korea did not produce a lot of coins on its own but relied on those flowing in from its neighbors.

In the late 19th century, Korea increasingly came under Japanese dominance. During this period, the Korean financial system including the coinage got modernized and aligned with Japan. In 1885, a first attempt at creating a Korean coinage failed. The planned currency unit "Won (Warn)" equal to the Japanese Yen in silver, did not go beyond trial phase, just a few subsidiary coppers entered circulation in small amounts. The second attempt in 1892 was more successful, when the newly inaugurated mint in Incheon began issuing coins denominated in Korean Yang. It was nominally rated at a fifth of a silver Yen. However, the vast majority of the mint's output were subsidiary coins to the end of stopping the inflow of Chinese Cash coins which had triggered inflation. The mint was so successful that its own coinage triggered another inflationary surge. The increasing foreign influence pushed Korea towards adoption of a national currency. The currency law of 1901 introduced the Korean Won as gold currency in the Japanese standard. However, the reform could not be implemented due to the lack of banking infrastructure. The issuance of coins did not go beyond a trial phase. With the establishment of the Japanese protectorate the entire financial administration was then placed under the control of the Japanese Treasury. The revised currency law of 1905 made the Won nominally identical to the Japanese currency. The Japanese First National Bank took over the role as (acting) central bank until the Bank of Korea was ready to take over in 1909. The coinage was produced by the Osaka mint with its much higher capacity than the Korean mints. The 1910 annexation had only little influence on the monetary situation. In the following year, the Japanese Yen was officially taken over and the Tokyo-based Bank of Chōsen became the issuance institution. The Korean (Chōsen) Yen was not a separate curreny anymore, the Koran banknotes were, however, not convertible into Japanese.

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