page_title: Tokugawa coinage
section_title: Demise
hierarchical_section_title: Tokugawa coinage / Demise
caption_attribution_description: English: Keicho_koban_1601_1695_vs_Manen_koban_1860_1867
context_page_description: Tokugawa coinage was a unitary and independent metallic monetary system established by shōgun Tokugawa Ieyasu in 1601 in Japan, and which lasted throughout the Tokugawa period until its end in 1867.
context_section_description: From 1772, the silver coins had a denomination in function of their value in gold, and had significantly less silver than their face value (rather than being just silver-by-weight) so as to cover coinage expenses, a practice known as token or fiduciary coinage, and a characteristic of modern coinage. This technique was introduced later in England, in 1816, with its adoption of the full gold standard. At the market rates of 1858 10 silver units could be exchanged for 1 gold unit by weight, whereas the face value of silver units was only convertible at 5 to 1. This permitted an increase of monetary circulation without actual production of more bullion, and provided great profit (seigniorage) for the Bakufu.
  World ratios for silver and gold were significantly different, gold being generally valued much higher than silver, at about 15 to 16 weights of silver for 1 weight of gold. This difference motivated foreigners to bring silver to Japan, to exchange it for gold at a very profitable rate.
  In 1858, Western countries, especially the United States, France and Great Britain imposed through "unequal treaties" (Treaty of Amity and Commerce") free trade, free monetary flow, and very low tariffs, effectively taking away Japanese control of its foreign exchange: The 1715 export embargo on bullion was thus lifted:
  "All foreign coin shall be current in Japan and pass for its corresponding weight of Japanese coin of the same description... Coins of all description (with the exception of Japanese copper coin) may be exported from Japan"
  — Treaty of Amity and Commerce, 1858, extract
  This created a massive outflow of gold from Japan, as foreigners rushed to exchange their silver for "token" silver Japanese coinage and again exchange these against gold, giving a 200% profit to the transaction. In 1860, about 4 million ryōs thus left Japan, that is about 70 tons of gold. This effectively destroyed Japan's gold standard system, and forced it to return to weight-based system with International rates. The Bakufu instead responded to the crises by debasing the gold content of its coins by two thirds, so as to match foreign gold-silver exchange ratios.
  As a consequence, the Bakufu lost the major profit source of recoinage (seigniorage), and was forced to issue unbacked paper money, leading to major inflation. This was one of the major causes of discontent during the Bakumatsu period, and one of the causes of the demise of the shogunate.
caption: A Keichō koban (minted 1601-1695), versus a Man'en koban (minted 1860-1867), shows the drastic reduction in gold weight of the koban denomination.
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