Black Corporation: Joseon

Chapter 394

The next morning, seated in the royal court, King Sejong addressed the ministers.

“I’ve been thinking again. I’m concerned about those who attempted to start new businesses but failed.”

Hwang Hui, understanding the meaning of Sejong’s words, immediately asked.

“Do you wish to relax the loan criteria of the royal treasury, Your Majesty?”

“Wouldn’t it be good to consider ways that won’t cause undue strain? I find it distressing to see subjects striving for a better future.”

“Since Your Majesty is concerned, we will consider it.”

As soon as Hwang Hui finished speaking, Heo Jo immediately objected.

“It’s absolutely impossible! If we make a mistake, the people might lose trust in the country!”

At Heo Jo’s words, Hwang Hui raised his voice.

“These are people who, despite being rejected by the business evaluation, still insist on pursuing their ventures even using high-interest private loans! If we leave them be, won’t they start saying, ‘What has the country done for me?’ Aren’t you worried about that?”

“We can’t undermine the trust in the royal treasury because of a few such individuals!”

“Aren’t people failing to repay loans even now? Isn’t the ratio the same whether 1 out of 10 can’t repay or 10 out of 100?”

“It’s worrying enough when one person fails, but if 10 fail, that’s a big problem!”

“Isn’t it more beneficial for our Joseon if 90 people succeed rather than just 9?”

“Even if 90 people who borrowed 10 nyang of silver succeed, if 10 people who borrowed 10 nyang of gold fail, we’re ruined! Don’t just play with numbers!”

Hyang, who had been quietly observing since the meeting began, inwardly muttered while watching the two men’s heated debate.

‘A debate between a rational optimist and a rational pessimist…’

Both Hwang Hui and Heo Jo had the common trait of analyzing state affairs coldly. However, after such cold analysis, Heo Jo tended to produce negative results, while Hwang Hui often came up with positive ones.

This difference between them was due to their values. Both were royalists who prioritized royal authority over that of ministers, faithfully carrying out Sejong’s wishes. However, when problems arose, they showed different approaches.

-If possible, follow the king’s will even if it’s somewhat risky.

This was Hwang Hui’s stance.

-Persuade the king as much as possible to avoid risks.

This was Heo Jo’s stance. He valued the country’s survival as much as the king.

And now, these two were clashing.

***

“As Minister Jo said before, let’s be a bit more positive! Come on!”

“If we’re only positive, we might ruin the country! We need to face reality!”

Watching the two men’s heated argument, Hyang stepped forward and addressed Sejong.

“Father, I have something I wish to propose to you.”

As Hyang spoke up, Hwang Hui and Heo Jo stopped their debate and immediately turned their attention to the Crown Prince.

It wasn’t just them. The eyes of all the ministers present focused on Hyang.

‘What now!’

‘Judging by his stepping forward now, he’s certainly going to meddle in this matter!’

‘Huh! We might hear that tongue-clicking sound again if we’re not careful!’

While the ministers tensed up, Sejong looked at Hyang with a brightened expression.

“Go ahead! I permit it! Speak quickly!”

“I’m deeply grateful.”

Thanking Sejong for his permission, Hyang cleared his throat.

“Ahem! Ahem! As I was listening to the two gentlemen’s discussion, an idea came to mind, so I’ve taken the liberty of interrupting.”

As Hyang apologized for his interruption, Hwang Hui and Heo Jo shook their heads.

“It’s alright.”

“No problem.”

Having subtly set up his defense, Hyang began to lay the groundwork.

“First, the General Affairs Minister’s words are correct. The money coming into the royal treasury is the people’s hard-earned money, so it’s natural that it cannot be used carelessly.”

Heo Jo’s face brightened at Hyang’s words supporting his view, and he nodded.

“Of course, of course!”

Glancing at Heo Jo’s face, Hyang continued.

“However, the Prime Minister’s opinion to give more people opportunities to succeed and strengthen Joseon is also a good one.”

This time, Hwang Hui’s face brightened, while the other ministers wore puzzled expressions.

‘What’s this? Both are right? What does he mean?’

Seeing the ministers’ faces, Hyang inwardly muttered.

‘I’m sorry, Elder Hwang Hui. I’ll borrow from you first.’

“Therefore, I wish to propose to Father the establishment of a ‘Venture Capital Fund’ (冒險資本金庫).”

“Hm?”

“Eh?”

At Hyang’s proposal, Sejong and the ministers all uttered exclamations of confusion.

Among those analyzing the meaning of Hyang’s words, Sejong and Kim Jeom were the first to understand.

“Crown Prince, are you suggesting we create a separate loan department for those who don’t meet the Business Evaluation Department’s criteria but still seem to have potential?”

“That’s correct.”

“You mentioned ‘venture capital,’ so there must be differences from existing loans… Will there be a difference in interest rates?”

“Yes! You’ve understood correctly!”

Hyang explained in more detail.

-It will provide capital for starting businesses that show considerable potential, even if they didn’t pass the Business Evaluation Department’s criteria.

-However, it won’t support unconditionally. It will decide whether to provide support based on the applicant’s background and the relevance to their intended field of business. The criteria will just be more relaxed.

-As it’s a loan that assumes the risk of failure, it will charge relatively high interest rates. While the Business Evaluation Department’s loan interest rate is 35% per annum, the venture capital will apply an interest rate of 65% per annum.

-Due to the high rate, applicants will be given a choice:

1. Endure the application of the 65% annual interest rate.
2. Transfer shares of the established business. It’s a kind of partnership where the royal treasury takes 51% of the shares. If this is chosen, a 30% annual interest rate will be applied.

“‘Taking shares’… Does this mean sharing profits if it succeeds later?”

At Sejong’s question, Hyang nodded.

“That’s right. That’s why we’re applying a 30% annual interest rate.”

“Hmm…”

As Sejong stroked his beard in thought, Hyang added more.

“The reason I added the term ‘fund’ is to create this as a separate department within the royal treasury.”

“A separate department?”

“From borrowing funds to operation, although it belongs to the royal treasury, it operates separately from the treasury’s main operations.”

Kim Jeom, who had been focusing on Hyang’s words as if not to miss a single one, asked a question.

“Does operating the fund-raising separately mean paying higher interest rates to those who provide the funds?”

“That’s correct.”

At Hyang’s answer, Kim Jeom muttered while calculating profits and losses.

“Hmm… If done well…”

This was the same for Sejong, who was considering various scenarios on his throne.

“Hmm… If done well, we could even absorb the wealth of those who were running high-interest private loans?”

“That’s right. On one side, we strongly crack down on illegal high-interest private loans, and on the other side, we guide them towards the Venture Capital Fund, which offers lower profits than private loans but higher than regular savings, and is legal.”

‘Of course, underground finance will never completely disappear, but we should absorb as much as possible.’

“Hmm…”

Seeming to find Hyang’s words reasonable, Sejong nodded with a slightly brightened expression.

At that moment, Heo Jo raised a question.

“As it’s literally a venture, won’t people worry about losing their wealth if the investments fail?”

To Heo Jo’s point, Hyang immediately provided an answer.

“That’s why we’ll give investors two choices as well.”

• A. Simply put money into the fund and leave investment choices to the fund.

• B. Directly choose investments for their funds based on information about businesses evaluated by the fund.

“This way, in case A, we’ll operate on a collective basis to minimize losses even if it fails. However, the profits returned to investors will be smaller even if it succeeds. In case B, while the risk increases, the potential returns for investors become overwhelmingly larger.”

At Hyang’s explanation, Hwang Hui’s eyes sparkled.

“Whichever option is chosen, it would greatly reduce the burden on the court and the royal treasury, wouldn’t it?”

“Yes. That’s what we’re aiming for.”

Following Hwang Hui, Heo Jo also nodded.

“Whichever case they choose, it would be their own decision, making it difficult to hold the court responsible. Hmm… It seems quite good.”

‘Well, if things go wrong, there might be many people wanting to experience how sturdy their house beam is, or how deep the village reservoir is, or how warm the water flowing in the Han River is.’

While Hyang was muttering this to himself, Heo Jo addressed Sejong.

“I think it’s a good plan. It reduces the burden on the court and the royal treasury, and more people can have the opportunity to start businesses.”

“You think so too?”

Sejong’s face brightened as Heo Jo, known for his strictness, showed a positive reaction.

At that moment, Jo Gye-saeng, the Minister of Education, interjected.

“Your Majesty! While it’s a good plan, implementing it as is would be absolutely unacceptable!”

“Why is that?”

When Sejong asked for the reason, Jo Gye-saeng explained.

“Humans are inherently greedy beings, not thinking about the future…”

“You mean some people might push in all their assets without considering the risks.”

As Sejong finished the thought, Jo Gye-saeng, who had paused momentarily, immediately nodded.

“That’s correct, Your Majesty.”

“Hmm…”

After pondering for a moment, Sejong turned to Hyang.

“Crown Prince, would a fixed amount or a fixed rate be better?”

To Sejong’s question, Hyang immediately replied.

“Both, Your Majesty. When wealthy individuals invest privately, we should apply a fixed rate, and when those with less wealth want to invest, we should accept only a fixed amount determined by their wealth.”

“Will those with little wealth want to participate?”

“As the Minister of Education said, humans are inherently greedy beings.”

Sejong nodded at Hyang’s words.

“That’s right. People are greedy creatures. Minister of General Affairs.”

At Sejong’s call, Heo Jo immediately responded.

“It needs some refining, but I think it’s the best plan.”

“Prime Minister?”

“I agree with the Minister of General Affairs.”

“Then, lastly, what does the Minister of Finance, who will be at the center of this matter, think?”

To Sejong’s question, Kim Jeom immediately replied.

“While it’s a good plan, few people will step forward immediately. Therefore, I believe we should release more of the gold and silver we’ve accumulated to create initial capital and implement it. If the performance using this initial capital is good, everything else will follow easily.”

“Let’s do that.”

Immediately accepting Kim Jeom’s words, Sejong looked around at the ministers.

“As our people’s permanent assets increase and Joseon’s economic capacity grows, our Joseon will become stronger. I hope you all will do your best for this.”

“We receive your command!”

And so, the world’s first official – as recorded in definitive official documents – venture capital financing was born.