Discussion Papers In Economics
And Business
Early monetary policies of the Tokugawa
shogunate and merchants’ coping strategies:
1695–1736
Atsuko Suzuki

Discussion Paper 21-15

November 2021

Graduate School of Economics
Osaka University, Toyonaka, Osaka 560-0043, JAPANEarly monetary policies of the Tokugawa shogunate andmerchants’ coping strategies: 1695–1736
Atsuko Suzuki †Abstract‡: The Tokugawa monetary system was a new experience in Japanese history, and
the Genroku debasement, which was necessitated by the exhaustion of gold and silver
resources, was a new experiment for both the shogunate and merchants, the representativesof the townspeople. For the same reason, the shogunate had no choice but to implement amonetary policy “nominalistically,” but the merchants responded “metallistically.” This was
because the merchants valued money as bullion. The conflict between the shogunate andmerchants played an important role in invigorating the Tokugawa economy. This study
describes the historical economic situation.
JEL Classification: D46, E31, K42, N15, Z13.
Keywords: commodity money, early modern Japan, fixed and floating exchange rates, Edo andOsaka, nominalistic and metallistic.

Abbreviations
60MMT

60 momme multiplication table (Rokujyume no kakeho)

HTLxxxx

Horeki Tokugawa Law No. xxxx (Ofuregaki Horeki shusei)

KTLxxxx

Kanpo Tokugawa Law No. xxxx (Ofuregaki Kanpo shusei)

MFDbxxxx–xxx Mitsui Family Documents betsu No. xxxx–xxx
MFDhxxxx–xxx Mitsui Family Documents hon No. xxxx–xxx
TMG

Tokyo Metropolitan Government

Style
The style of this paper is (author, date: page numbers) system.
The macron ¯ of Hepburn romanization system [the vowel letters (ā, ē, ī, ō, ū)] is omitted inthis paper.

 This article is based on a paper presented at the Second World Congress on Business History, 2021.

This study is supported by the Japan Society for the Promotion of Science Grants-in-Aid for Scientific
Research (C) (No. JP19K01778).
Graduate School of Economics, Osaka University, 1–7 Machikaneyama, Toyonaka, Osaka 560-0043,
Japan. E-mail: suzuki@econ.osaka-u.ac.jp†‡

This paper is inspired primarily by the following two books: Fox & Ernst, 2016; Desan, 2014.

1

1. Introduction
Around 1716, something strange happened in the Edo market. Many Keicho kobans,which had completely disappeared from the market over the past two decades,began to be used. Ultimately, they amounted to nine-tenths of the kobans in themarket (Dazai, 1729/1914: 139). Arai Hakuseki, the adviser of the shogun, believedthat new good silver coins could draw the hoarded good silver coins back into
circulation (Muro, 1713/1914: 250). Although he was wrong about this in terms ofsilver coins, it did work for gold coins.
This enigma can be explained. The reason old Keicho kobans flowed into themarket in short bursts can be attributed to the socio-cultural characteristics of themarket in early modern Japan. Gold production in Japan peaked at the beginning of
the 17th century. This was when almost all Keicho kobans were minted. Over thefollowing 75 years, they wore down with use. In 1674, 90% of them were worn
down, 8% had been repaired, and 2% were under the legal weight, which meant
their weight had reduced by at least 0.84% (approximately 0.15 g; Mitsui, 1932: 44) .
Nevertheless, because people disliked the worn kobans due to their low weight andliked only the repaired kobans, circulation of kobans decreased in the market. The
shogunate had to order that legal lightweight kobans be used in the market and thatall kobans be considered of the same value, regardless of weight (KTL1756,
1674/1934: 892). Subsequently, people looked forward to exchanging the worn
kobans for new good ones. However, the first recoinage of 1695 involved reducing
the quality of coins and the shogunate’s “nominalistic” policy. By the fourthrecoinage of gold coins, the highest quality kobans were minted from 1716 with a“metallistic” policy. This period was when people were most willing to exchangehoarded kobans for new ones.
This study covers the period 1695–1736 and focuses on recoinages. The reason
the paper does not cover the entire Tokugawa period is that a type of silver coin was
issued as a gold coin in 1772, which indicates a revolutionary change in the
Tokugawa monetary system.

2. Commodity money and commodity market
Modern Western theories of money have focused intensively on the functions ofmoney, for example, as a medium of exchange, a unit of account, and a store ofvalue. Consequently, commodity money, through extensive investigations by
economists, has been separated into commodities and money. In conformance with2

the development of theories of money, commodity money has also changed in thereal world to commodity-backed money, fiat money, and cryptocurrency.
Considering this, where has the commodity gone? Fortunately or unfortunately,
precious metals continue to be valuable without being abstracted and excluded fromour society.
Of course, commodity money was not only money; it was also a commodity.
Discussing the debate of Locke versus Lowndes, Desan says the following about
international trade:
The anomaly was not so mysterious. The reason coins traveled across foreign borders
according to their silver content was that, in precisely that circumstance, they werenot “money.” Money was a domestic affair, a political project based on theinstitutions of minting, spending, taxing, adjudicating, and enforcing that made it
work as a way to count value, settle debts, and circulate value at home. Stripped ofthat infrastructure—outside of the engineering that made it circulate as money—coin
was, in fact, bullion. European polities had long settled external accounts in silver orgold, given the value those metals held for money-making within their bounds.
(Desan, 2014: 347)

The merchants in early modern Japan recognized the value of money asbullion. Therefore, they considered weight and quality of money as its mostimportant factors. Money was measured during the selling and buying of
merchandise (see Figure 1). For instance, the great novelist Takizawa Bakin was aregular customer of the Daimaru kimono fabric shop in Edo city. On September 3,
1828, he bought a kimono at the shop with gold coins, as he usually did (Takizawa,
1828/2009: 415). However, the shop clerk said that because Bakin’s koban weighed
less than the original one, he had to pay three momme to compensate for the
shortage, which was approximately 0.89 g. The clerks were always very careful
about underweight coins or imitations. Their examination of money was sometimes
stricter than that imposed by the law of the shogunate, for such laws generally
aimed to reduce the strictness of the cash handling system in the market.
Today, one distinguishes between gold coins counted by face value and silver
coins valued by weight; during the Edo period, they were used as two types ofcurrency. However, those days, not only silver coins, but also gold coins were
weighed. Gold and silver coins were commodities for merchants, just like kimonos.
They always paid attention to these values. The most valuable of the three types(gold, silver, and kimonos), which varied with the times, was stocked by kimono
merchants (MFDb921, 1793).
3

(a) Portable scale in the shop(b) Coins and a portable scale
Figure 1. Portable scales in the Handbooks of Japanese Mathematics.
Sources: (a) Takeda, 1826. (b) Daikoeki jinkoki sekaigyoku, 1794.

3. Recoinages and exchange laws
This section discusses the recoinages and exchange laws from the beginning of theTokugawa regime to the Genbun debasement. This is explained simply by using
figures and tables.

3.1. Measurement system
Table 1. Calculation of Gold, Silver, and Copper coins in the Edo period.

4Notes:Gold coins 金貨: (ryo 両; bu 分; shu 朱)
The quaternary numeral system was used as the accounting unit for gold coins.
The face value of all types of kobans was 1 ryo 両.
Silver coins 銀貨: (kan 貫; momme 匁; fun 分; rin 厘; mo 毛)
Denominations of weight were used as the accounting unit for silver coins.
Fun 分, rin 厘, and mou 毛 were the decimal parts of a momme, which was thebasic unit of silver coins.
Copper coins 銭貨: (kan mon 貫文; mon 文)
The accounting unit of copper coins was mon 文.
Many types of copper coins made in China were used as currencies in medieval
Japan, where no official coins were issued (minted).
The monetary policy in medieval Japan was monometallism by means of imported
copper coins.

3.2. Recoinages
The Shotoku and Kyoho recoinages were a temporary monetary ‘reversionism’,
which aimed to restore the debased coins to the standing of the original Keichocoinage and to emulate the apparently ideal monetary system of the reign of the first
shogun Ieyasu, who was also referred to as ‘God lord’ (see Tables 2 and 3).

3.2.1. Recoinage of gold coins
Table 2. Gold coins 1601–1736.

Sources: Mitsui, 1933a: 777–794; Tsukamoto, 1923.
5

Notes:Apart from the coins shown in the above table, there were Oban gold coins (Tensho,
Keicho, Genroku, Kyoho). For instance, Genroku Oban—face value: 10 ryo; minting
period: 1695–1725; gold: 56.36%; weight: 165 g; amount of mintage: ca. 30,000 Obans(Kusama, 1815/1916: 493; KLT1824, 1725/1934: 922).
Shotoku koban was modeled after Keicho koban.
Kyoho koban was modeled after Sandaime Keicho koban.
“Length” and “width” are not averages, but examples from Tsukamoto (1923).
The amount of mintage of Keicho kobans in Table 2 is underestimated.

3.2.2. Recoinage of silver coins
Table 3. Silver coins 1601–1736.

Source: Mitsui, 1933a: 777–794.

Notes:
There were two types of silver coins (gin): chogin and mameitagin.
Chogin weighed approximately 161.25 g.
Mameitagin were small silver coins of no certain weight.
Kyohogin was modeled after Keichogin.

3.3. Exchange laws
During the Genroku debasement, a premium was offered when old coins were
exchanged for new ones at the mint. However, considering the reduction in thequality of the gold, this premium, which was only one ryo for every 100 ryo of
Keicho kobans until 1707, was insignificant. As many types of coins were present in6the market, the exchange rates were determined by law in 1714. The law was
proposed by Tani Choemon, a merchant in Sakai City (Arai, ca. 1716/1964: 462–463;
see also Muro, 1713/1914: 278). Until then, for instance, the silver mint bought 1,000
momme of Keichogin for 1,500 momme of Yotsuhogin (Arai, 1713–1714/1907: 199–
200). However, after 1714, the mint had to buy them for 2,000 momme of Yotsuhogin(KTL1800, 1714/1934: 908), and everyone was able to buy them for 2,000 momme of
Yotsuhogin (MFDh1481–6–1, 1714). Based on the quality of silver, 4,000 momme of
Yotsuhogin should have been paid (see Table 5). This means that the shogunate
defrayed a shortage of 2,000 momme of Yotsuhogin. The reign of Shotoku’s law was
remarkable.
Table 4. Exchange rate law of gold coins 1714–1744 [kin=koban.]

Sources: KTL, 1934: 905–931; HTL, 1935: 430.
*1: Kusama, 1815/1916: 576–577. *2: Kusama, 1815/1916: 291.

7

Table 5. Exchange rate law of silver coins 1714, 1718.

Source: KTL, 1934: 905–919.
Table 6. Exchange rate law of silver coins 1724–1744.

Sources: KTL, 1934: 925–931; HTL, 1935: 430.
*1 Kusama, 1815/1916: 585.

However, the Kyoho law of 1718 subsequently ordered the correct exchange
rates according to quality (KTL1811, 1718/1934: 917–918). Nevertheless, Choemon’s
law was undoubtedly “metallistic.” In other words, it was a merchant’s law. The“nominalistic” policy was inadequate to resolve the chaos caused by the use of many8

types of money. Although the law was implemented, the complexity regarding
many different types of coins continued. All types of coins, both good and bad, were
present in the market. This situation differed from Gresham’s law derived from thesocio-cultural conditions in the English market, where, for instance, there were manyclipped coins. To ease the confusion regarding money, diagrams were sold in themarket (see Figures 2 and 3; Table 7).

Figure 2. Diagram for the exchange of silver coins (before the Genbun debasement).
Source: Yamagata, 1820/1916: 312.
Table 7. A part of the calculation shown in the Diagram of Figure 2.

9Figure 3. Diagram for the exchange of silver coins (after the Genbun debasement).
Source: Mitsui, 1933b: 201.

4. Inflation and the shogunate
The Tokugawa monetary system, which introduced gold and silver money
nationally, was a new experience in Japanese history, a new experiment, and it
caused fresh confusion. At the beginning of the Edo period, the system worked very
well because of the abundant production of precious metals. The shogunate owned
almost all precious metal resources and managed gold, silver, and copper mints.
Nobody knew that gold and silver resources were going to be almost exhausted in a
few years. Thanks to the good quality of the coins, people could use them for a
century. However, the shogunate treasury was completely emptied in a century(Ogyu, ca. 1727/1914: 414), which was a serious problem. Recoinage was an option torefill the treasury by effectively reutilizing the finite resources, namely, the minted
coins in the market.1 Hence, the shogunate carried out the 1695 Genroku
debasement.
This debasement caused several problems, the worst of which was runaway
inflation. The reason behind the rise in prices was frequently discussed in the city
(Muro, 1713/1914: 214–216). The most common opinion was that the reduction in thequality of coins corresponded with rising prices. However, this opinion lacked an
impregnable theoretical background. From ancient times, Japan had considered
China an advanced nation. Chinese classics were for the Japanese what Greek andRoman classics were for Europeans. Unfortunately, few Chinese philosophers
The shogunate's plan was very simple, namely, that if the shogunate were to withdraw all thecurrency present in the country, remint twice the amount from the withdrawn currency, and return
half of it into circulation, the shogunate would be able to refill the treasury with the same amount.
The plan had nothing to do with the quality of the money (see Muro, 1714/1914: 290).
110

studied the theory of money. In addition, the gold–silver monetary system was used
for only short periods in the entire Chinese history. Therefore, Japanese scholars
tried to understand economic phenomena by reading the rare book Guanzi, which
deals with money and commodities. Von Glahn writes:
Pseudo-Guanzi ignored the fundamentally moral issue that preoccupied Aristotle,
namely, how can the use value of goods be expressed in terms that makes anequitable exchange possible. Instead, he asserted that the value of a commodity isdetermined not by its intrinsic worth but, rather, by the laws of supply and demand.
Drawing, no doubt, on empirical observation of price fluctuations, Pseudo-Guanzi
enunciated an equation of exchange that became the keystone of Chinese monetary
thought: the values of money and commodities were related in inverse proportion toeach other. This equation can be seen as a quantity theory of money, since it holds
that the value of money (as measured by purchasing power) and the value of goods(measured by prices) are functions of the relative quantities of each. By manipulating
the quantities of goods and money, the ruler can adjust the ratios of exchange andthereby control market prices. (von Glahn, 1996: 29)2

As many Chinese classics were written for rulers, von Glahn’s highlighting of
the ruler is correct. His words “the laws of supply and demand” and “the ratios of
exchange” come from Guanzi’s theory of “qingzhong; the light and the heavy” (vonGlahn, 1996: 28). The theory states, “If money is valued (zhong 重), goods will all becheap (qing 輕), but if money is cheap, goods will all be expensive” (Rickett, 1998:
417). Just as von Glahn says, the theory was induced by an “empirical observation ofprice fluctuations.”
Chinese history books, e.g., “Equalization” in Shiji or “Treatise on Foodstuffs”
in Book of Han, tell us what the concrete experiences were, which refer almost
exclusively to copper coins. In other words, recoinage to thinner and a greaternumber of coins progressively accelerated inflation. Therefore, the quality of copper
coins was proportional to the quantity, because the quality and weight of the coins
were reduced in most cases. Hence, one must also consider the ‘quality’ theory ofmoney to be able to analyse inflation.
The Genroku debasement presented the same situation, namely, less quality
and more quantity. Hence, considering the increase in the supply of money,
Japanese historians currently use the quantity theory of money to explain the
Genroku inflation (see Honjo, 1940: 10–12; see also Miyamoto, 2004: 61; Nishikawa,2

See also von Glahn, 2016: 120–123.

111985: 49–52). However, such an understanding is incorrect. It is well known that
Hakuseki statistically researched coins, gathering information from gold and silvermint officers. According to his estimation, the circulation quantity of the coins in themarket did not change during the Genroku debasement because of the hoarding ofmany old coins.3 Therefore, people attributed the inflation to the debasing of thequality of coins, not to the increase in quantity.
Subsequently, the shogunate was constantly on the brink of a fiscal crisis. The
recoinage to increase money was ineffective in the long term because of inflation.
The shogunate also attempted to increase taxes on merchants. However, merchants
added taxes to merchandise prices. The vicious circle of taxes and prices also
factored in inflation. Hence, the shogunate could not escape the inflationary spiral.

5. East and West
The Tokugawa monetary regime was supposedly trimetallic (high denomination
gold coins, middle denomination silver coins, and low denomination copper coins).
However, it was not really trimetallic, for the chief mediums of exchange in WestJapan were silver and copper coins, while those in East Japan were gold and copper
coins. The regional economies were bimetallic or monometallic, mostly copper. The
trade of merchants was also bimetallic, specifically, gold and silver.
Because Edo, the center of East Japan, was an emergent city that had graduallydeveloped since the 17th century, sophisticated goods were largely imported into
Edo from the old cities in West Japan. The commercial center in West Japan was
Osaka, where many goods were packed and exported to Edo, the biggest consumer
city (see Figure 4).
3

The amount of reminted Keicho gold and silver coins is known from the mint documents.

Hakuseki’s report, which largely concurs with these documents, reveals that 8,824,350 ryo of Keichogold coins and 287,617.155 kan of Keicho silver coins were reminted to 13,236,534 ryo of Genroku
gold coins and 357,535.380 kan of Genroku silver coins (Arai, 1713/1907: 192). Currently, nobody
knows the amount of coinage of Keicho gold coins because the mint documents were destroyed in afire. However, Hakuseki’s report tells us that the mint officer put the number of Keicho gold coins at
20,000,000 ryo and the number of Keicho silver coins in the city at that time at 400,000 kan (Arai,
1711/1906: 673). Hence, broadly, one can say that half the Keicho coins were reminted and theremaining coins were hoarded. This means that the total amount of currency in the market was
unchanged or reduced a little. The abundant outflow abroad is not referred to here.

12Figure 4. East and West Japan

East and West Japan had different market characteristics. Broadly, themerchandise in Edo city was priced in gold-denominated moneys of account, which
followed the non-decimal system, that is, the quaternary numeral system. In otherwords, people sold and bought goods according to the face values of gold coins, just
as is currently done. Meanwhile, in West Japan, the merchandise was priced in termsof the silver-based moneys of account, wherein the prices were stated in weights ofsilver coins, which had no face values. For merchants, the accounting unit of silver
weight and the decimal system were very convenient for calculating prices in minutedetail. Conversely, high-denominated gold coins and the quaternary numeral systemwere unsuitable for counting pennies.
Generally speaking, the commodity market in East Japan operated with thegold standard and the fixed exchange rate system, but in West Japan, the silver
standard and floating exchange system were applied. Accordingly, one could
assume that East Japan was a country separate from West Japan. The East–Westexchange rates were similar to the international exchange rate.

6. Exchange rates and commodity prices
In early modern Japan, there were multiple exchange rates between gold and silver;
in other words, they were determined at the regional level, namely, the markets ofOsaka, Edo, Kyoto, and so on. The difference in the rates, especially between Osakaand Edo, gave rise to price inflation because it was reflected in commodity prices.
13

For instance, if the exchange rate was 40 momme of silver to 1 ryo of gold in Osakaand 80 momme of silver to 1 ryo of gold in Edo, the merchants in the West shipped
goods to Edo at twice the price as in the West. The delivered goods were purchasedwith gold coins in Edo, then the gross gold income was exchanged for silver inOsaka, and thus, the accounts were settled. Hence, if the merchants in the West had
sold the goods in Edo at their original prices, they would have sold them at half theprice (see Figure 5).4

Figure 5. One fictional example: An Osaka Merchant selling in Edo (before 1700)

Hence, the difference in exchange rates was by no means negligible as a cause
of inflation. Until the Genroku debasement, the exchange rates in the East and theWest were extremely stable, 60 momme of silver to 1 ryo of gold. However, after thedebasement, violent fluctuations ensued in the gold–silver exchange rates. The
exchange rate of silver was generally higher in Osaka than in Edo, which caused
inflation only in the latter. Ten guilds, called the Edo Tokumi Donya, were annoyedby the East–West exchange rate, which caused inflation and cooled the Edo
economy. The shogunate finally paid heed to their frequent entreaties in 1700 andestablished a fixed rate of 60 momme of silver to 1 ryo of gold throughout the nation.
The ten guilds were willing to obey the fixed 60–1 law strictly; in short, all
As an actual example, the exchange rate in the West was 45 momme of silver to 1 ryo of gold, whilein the East it was 60 momme to 1 ryo in the commodity market in November 1718.
414

commodity markets in Edo operated under a fixed exchange rate, while theexchange rate was floating in money markets in Edo (see Figure 6).5

Figure 6. Exchange rates from the documents of the Konoike Family in Osaka [= Blue line]. [Redline =] Fixed 60-momme rate in Edo’s commodity market from the Genroku fixed rate law of1700.
Sources: KTL1767, 1700/1934: 895; Konoike Zenemon family documents, 1669–1744: Nos. 1071–
1075.

However, Western commodity merchants did not obey the fixed exchange rate
law. In those days, people did not commonly obey monetary laws, except for whenthese laws served to benefit them. Furthermore, the rate difference benefited
Western merchants. In this way, the unique situation of commodity markets arose
between the East and the West.

7. Merchants’ strategy and the shogunate policy
7.1. Chaotic monetary policy versus the double-price strategy
The law of the Genroku debasement dictated that the new Genroku coins be used
like old Keicho coins without distinction in the market. This meant that theevaluation criterion of gold coins would be face value, regardless of the quality. In
the case of silver coins, old and new coins of the same weight would have the samevalue, regardless of their relative quality. Following the law, the shogunate tried to
The floating exchange rates of the money markets in both the West and the East did not vary toomuch. This means that the fixed exchange rate of 60 momme to 1 ryo in the commodity market in Edo
was not the exchange rate of real money, but the rate used to calculate the gold denomination value in
Edo based on the silver prices of the goods from the West.
5

15

switch from the old coins to the new ones, adding a slight premium. However,people delayed switching to them, as their color clearly indicated lower value.
Nevertheless, as this was the only devised solution, the shogunate continued withthe recoinages to escape from financial difficulties. Consequently, six types of gold
kobans and eight types of silver chogins were circulated in 1736 in the market (seeFigure 3).6
Fluctuations in the gold–silver exchange rates in the money markets were also
erratic. However, there was an exception to this situation. The fixed exchange rate
law of the shogunate implemented in 1700 was obeyed only by the shogunate itself
and the Edo commodity market.7 As discussed previously, the merchants in theWest had to reflect the differences in the East–West rates in their prices. Specifically,
this was the difference between the fixed exchange rate in the East and the floatingexchange rate in the West. If the fluctuation in the latter was extreme, merchants inthe West had to change their price tags tremendously. This meant enormous menu
costs.
The kimono fabric shop “Echigoya” is now known as Mitsukoshi. The most
famous business method of Echigoya is well known even now as “Genkin Kakene
Nashi,” which means, “If you buy a kimono by cash, we will sell it at the cheapest
price.” When this method of sale was launched, deferred payment sales werecommon. In short, it was a sales innovation that affected the sales methods of all
shops. Thus, the “Genkin Kakene Nashi” method became the most popular all overthe country. Echigoya’s cash method was strongly connected to the price tag on
which the cheapest price was written. However, the chaotic monetary policy began,
and the cheapest price tag strategy faced a crisis because of the huge menu costs.
The solution also involved a price tag, which listed the doubled price. The new
method was named “60 Me no Kakeho (60MMT),” from the fixed exchange rate of 1
ryo–60 momme in Edo (MFDh1031–1, 1719; TMG, 1967: 369–374). In the table, a listof ratios of doubled prices to selling prices was provided. The information the clerk
had to obtain was of four kinds: the doubled price of the kimono the customer
selected, the method of payment the customer desired, the floating exchange rate in
the West, and the suitable ratio in the 60MMT. By multiplying the doubled price by
the suitable ratio, the clerk was able to calculate the selling price immediately (seeTable 8). The merit of the 60MMT system was that one did not need to change theMany types of coins were already legally banned in the market in 1736. However, the diagram
shown in Figure 3 indicates that such coins were used as currencies, disregarding the law (seeKusama, 1815/1916: 571).
7 The accounting of the shogunate was based on the fixed exchange rate all over the country.
6

16

tag prices thanks to the double-price tag, even if the exchange rate in the West
fluctuated intensely.
Table 8. 60 Momme Multiplication Table (60MMT), 1719.

Sources: MFDh1031–1, 1719; TMG, 1967: 369–374.

Thus, Echigoya managed sales in Edo despite the chaotic monetary policy ofthe shogunate, and handled the pricing well.

7.2. “Nominalistic” policy versus “Metallistic” strategy
This subsection could also be retitled as “nominal or face value policy versus bullion
or intrinsic value strategy.” The Genbun debasement was implemented in 1736. The
debasement from Kyoho gold koban and Kyoho silver chogin to Genbun gold koban
and Genbun silver chogin was more radical than the Genroku debasement fromKeicho coins to Genroku coins. The lowering rate of pure gold from Kyoho koban to
Genbun koban was 44.34%, while that of the Genroku debasement was 31.91%. The
lowering rate of pure silver was 42.5% from Kyoho to Genbun and 20% from Keicho
to Genroku. The rates of the Genbun debasement were radical, but they maintained
the rate balance between gold and silver. This showed that the shogunate hadlearned from the experience of the Genroku debasement that the disproportionate
lowering rates of gold–silver coins induce disproportionate exchange rates.
The monetary policy of the shogunate tried not only to compensate for theempty treasury, but also to lighten the greatly increased debts of samurais. The
debasement was proved useful for the latter purpose. In the long term, the17debasement was fatally ineffective because of inflation, which followed without fail.
However, in the short term, specifically, before inflation, the shogunate was
effectively able to use the debasement by treating it legally and “nominalistically.”
The law of the Genbun debasement stipulated that the new Genbun kobans would
be as valuable as the old Keicho kobans in the market. This was similar to the law of
the Genroku debasement. However, when people would exchange 100 ryo of old
Keicho kobans for new Genbun ones at the mint, the shogunate would exchange
them for 165 ryo of new kobans with a proper premium. Similarly, 10,000 momme ofthe old silver would be exchanged for 15,000 momme of new silver (see Tables 4 and
6). This was a contradictory policy, “nominalistic” as well as “metallistic.”
For example, the Eastern merchants, Tokumi Donya, complained to the
shogunate about the acts of lending and borrowing on May 28, 1736 (MFDh1498–23,
1736; Mitsui, 1933a: 645–646); if one were to repay the debts of old kobans with thesame face value of new kobans according to the law of currency without distinction
between old and new, the lender would face considerable loss. In response to this,the shogunate maintained the nominalistic view that one ryo equaled one ryo,irrespective of the quality of the gold coins. In fact, many Daimyos (territorial lords)
repaid their multitudinous debts with new kobans a few days after the debasement(see Kusama, 1815/1916: 577). It was the very short-term “nominalistic” strategy
favoring samurais.
Incidentally, what was Echigoya up to? Wealthy merchants mostly received
information about the debasement in advance. With this information, Echigoya
planned a short-term “metallistic” strategy. To sum up, the plan was that Echigoyacollect as many old kobans as possible. To do this, Echigoya held huge sales in both
Edo and Osaka from June 15, 1736. The sale price is now known from historical
documents of the Mitsui family (MFDb921, 1793). The doubled price, which was 120
momme (the original price was 60 momme = 1 ryo) before the debasement, wasreduced to 48 momme. In other words, it was 0.8 ryo (3 gold bu and 3 silver
momme), 20% off. If one would make the purchase with new gold kobans, the pricewas 79.2 momme (1.32 gold ryo). Nevertheless, people could buy a kimono,
originally priced 1 ryo, with a new 1 ryo koban, based on the law of no distinction
between the old and new coins. However, the new 1 ryo koban contained 8.581726
grams of pure gold, while the sale price of 0.8 ryo with the old koban provided
11.9759232 grams of pure gold based on simple calculations. This sale was highly

18popular with customers, so Echigoya was inundated with visitors from distantplaces every day.8 They were willing to buy kimonos using old kobans.
In general, people withheld from any purchases at the time of debasement
because of anxiety. Echigoya brilliantly converted the business crisis into a goodsales opportunity.

8. Conclusion
Arai wrote twice in his petition against the debasement that samurais originally did
not think at all about the quality of money (Arai, 1714/1907: 248), which meant thatthey would hardly think of money, because they were samurais who had to devotetheir lives to more worthy causes than money. In addition, they could think lightly
of money, relying on the Chinese classical thought of money, which treated it
nominalistically and quantitatively, because money itself could not be food for thehungry and clothing for the naked. Therefore, grain was more important to them.
Conversely, because many samurais regarded gold and silver as treasures of thenation directly connected to national prestige, money made of precious metals wastremendously more valuable to them than paper money, for example, of the Yuan
dynasty. These factors caused the chaotic and contradictory monetary policies of the
shogunate. If precious metal resources had not been exhausted during the Edo
period, the shogunate would not have faced monetary difficulties and would nothave considered managing monetary systems. In other words, samurais wereunavoidably engaged in their weakest subject.
Samurais and merchants differed drastically in their attitudes toward money.
Of course, to most merchants, money was extremely valuable and the center of theirbusiness, not as a function, but as an object. However, the shogunate often fiddledaround with money and made alterations in terms of quality, weight, and size.
Hence, the merchants made it their business to not only purchase and sellmerchandise, but also manage many kinds of money and exchange rates.
Observationally, there was a difference between Western and Eastern
merchants. For instance, a type of copper coin was minted in 1768,9 whose worth
was legally four times that of the normal copper coins in the market. Such coins
circulated in East Japan, but not in West Japan (Nakai, 1789/1915: 401–402), because
they did not weigh four times as much as the normal copper ones. The maincurrency in the West was silver coins, whose monetary value was dependent on
8This sale became the stuff of legends in the business history of Mitsui (MFDh468–2, 1794).

9Technically speaking, the four-mon coins were brass coins. (ca. 70% copper, zinc, lead, etc.)

19

weight. Western people were more sensitive than Easterners regarding the weight ofcoins. For them, the value of copper coins also depended on their weight. Therefore,
the worth of coins should correspond exactly with their weight (coins that were fourtimes as valuable should have been four times as heavy). However, the actual weightof these coins was one and a half times that of normal copper coins. Nonetheless,they were used in the East because such coins were extremely convenient tocalculate with and carry because of their lightness. The lightness of the coins wasgood for Easterners, but bad for Westerners. Hence, one could say that Easterners
tended to be legal and nominalistic, while Westerners tended to be illegal andmetallistic.
The conflict between the shogunate and merchants and the difference between
the Eastern and Western merchants played an important role in vitalizing the
Tokugawa economy. Most of the money the shogunate minted flowed into themarket, which was controlled by merchants, and never returned. Consequently, it
gave birth to a unique society wherein there were many wealthy merchants
classified as the lowest order in the Edo period and a considerable number of poor
samurais who occupied the highest position in the social hierarchy at the time.10
This was because the business talent of merchants was especially outstanding
compared to that of the shogunate.

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