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P’yŏngyang was one of the most populated and urbanized city in late Chosŏn Korea. It was also a city of material affluence and refined culture. Yet, not much is known for its administrative structure and administration’s interactions with its residents over various administrative matters. What were major administrative challenges and how did the administration negotiate with its tax-paying residents to attain its administrative goals as commercial economy developed in the eighteenth century? By closely reading administrative correspondences between local magistrate and provincial governor, which provide unusual details on daily administrative matters, this paper examines how the local government took advantage of emerging commercial economy and liberally utilized interest-bearing loans to raise funds. It will try to answer these questions—why Chosŏn government depended on government lending rather than raising tax rate on land and what historical significance we find in such practices.