The 1890’ saw the formation of the Incheon-Shanghai, and Incheon-Osaka overseas distribution networks. These two networks served as the routes through which goods were imported into Korea by Chinese and Japanese merchants before Japan’ introduction of the gold standard in 1897 and the expansion of Shanghai- Osaka trade. During this period, the competition between Chinese and Japanese merchants to import goods through Incheon for intermediate trade became a heated one. However, as a result of the Sino-Japanese War of 1894, the traditionally competitive relationship between the Chinese and Japanese merchantsoperating within Korea’ foreign community gave way to one that was more complementary in nature. Thereafter, Chinese and Japanese merchants began to import different goods and to target different consumption markets. Chinese merchants in Incheon became intermediate wholesalerswho would purchase the goods imported by Japanese merchants and then resell them. As copper became the main currency within theforeign community after 1897, Korean merchants, who were already well placed to distribute the imported goods within the domestic market, were able to further strengthen their position by controlling the circulation of copper currency within foreign community. Meanwhile, as Korea, China, and Japan found them using different currency systems as a result of Japan’ introduction of the gold standard in 1897, the abovementioned overseas distribution networks, which had originally served as the routes through which goods were imported from Japan and China, suddenly found them serving as the main conduits for Japanese currency. As the volume of imports of cotton products from Osaka increased significantly, in Incheon, where both silver and gold were accepted as currency, Japanese currency began to be used to pay for the cotton products imported from Shanghai. In addition, to secure the position of the Japanese currency as the main currency within the Korean foreign community following the introduction of the gold standard, the Japanese began to remit large amounts of goldback to Japan through Incheon, while Japanese currency streamed into Chosun. As a result of the emergence of such anexchange structure, the exchange rate for the silver originating from Shanghai rapidly dropped. In the Shanghai market, the terms of trade on the items imported from countries which had adopted the gold standard started to worsen. Chinese merchants in Incheon began to import goods from Shanghai when prices there dropped, selling these wares in exchange for Japanese currencyin order to be able to purchase cotton goods from Osaka. As a result of these Chinese merchants’activities and the concurrent drop in the Shanghai market the exchange rate in Incheon rapidly deteriorated. Moreover, increasing amounts of the Japanese currency circulating in Incheon found its way into Osaka. The arrival of the Japanese military in Manchuria after 1900 and the Russo-Japanese War of 1904 brought about an opening up of the Manchurian market. As a result of the Chinese merchants in Incheon, Japanese currency began to also circulate in the Manchurianmarket, thus expanding the circulation sphere of the Japanese currency and assuring that the overseas networks connecting Shanghai-Incheon-Osaka remained intact. The difference between the exchanges rate for copper currency in the foreign community and the domestic market allowed the Korean merchants in Incheon, who were actively engaged in both the overseas and domestic markets, to grow in stature. The exchange rate for copper currency, influenced by changes in the exchange rate in the foreign community, was higher in the domestic market. This difference in the terms of trade resulted in linking foreign trade to the domestic trade in Incheon. As the terms of trade for imported goods worsened as a result of the rising exchange rate, Korean merchants purchased an increasing amount of domestic goods. During this process, copper currencybecame more widely used within the domestic market, allowing Korean merchants to reap large profits. As such, the Korean merchants’controlled both the overseas and domestic distribution networks. On the other hand, these distribution networks also resulted in creating commercial monopoliesin Taehan Empire. The growth of credit-based transactions within the foreign community between these three countries’merchants resulted in weeding out small capital merchants. The growth of large-scaled Korean merchants who controlled the supply of the copper currency in both the foreign community and domestic markets, while also monopolizing domestic trade, created an environment in which small-sized goods manufacturers and merchants were excluded from the market. Furthermore, the instability of the currency market caused by the fluctuation in the exchange rate weakened small-scale capitalists’ability to respond to these challenges. As such, these overseas distribution networks contributed to the development of a credit system and provided the foundation for Korean merchants to develop a strangleholdin the foreign community. However, this process contributed to the creation of a monopolistic market system controlled by largescaled capitalists.