The Online Library of Liberty

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• Banking In Germany.
• Chapter I.: Non-issuing Credit Institutions.
• Chapter II.: German Banks of Issue.
• History of Banking In Austria-hungary.
• Chapter I.: The Austrian National Bank.
• Chapter II.: Austrian Joint-stock Banks and Banking Associations.
• Chapter III.: Hungarian Joint-stock Banks and Private Credit Institutions.
• Appendix to Banking In Germany and Austria-hungary.
• II.: Statistics of Banking In Austria-hungary.
• Banking In the Netherlands.
• Introduction.
• Chapter I.: Era of Exchange Banks.
• Chapter II.: Period From 1814. Modern Dutch Banking.
• Chapter III.: Period 1814-1863. the Netherlands Bank.
• Chapter IV.: The Netherlands Bank, 1864 to 1895.
• Chapter V.: Banks of Issue In the Dutch Colonies.
• Chapter VI.: “cashiers,” Joint-stock Banks, and Private Bankers.
• Banking In the Scandinavian Nations.
• Part I.: Banking In Denmark.
• Chapter I.: History Previous to the National Bank.
• Chapter II.: The National Bank During the First Half of the Nineteenth Century.
• Chapter III.: Private Banks.
• Part II.: Banking In Sweden.
• Part III.: Banking In Norway.
• Banking and Money In Japan.
• Part I.: The Banking System.
• Chapter I.: Common Banks.
• Chapter II.: The National Banks.
• Chapter III.: The Yokohama Specie Bank. ( Shiokinginko. )
• Chapter IV.: The Bank of Japan. ( Nippon Ginko )
• Chapter V.: Land Mortgage Banks.
• Part II.: The Currency of Japan.
• Chapter I.: The Old Coinage System.
• Chapter II.: The New Coinage Period.
• Chapter III.: The Paper Currency.
• Chapter IV.: Readjustment of the Public Debt.
• Chapter V.: The Future Money Standard.
• Appendices.
• Appendix D.: National Debt In Japan. (from the “british Economic Association Journal” of June, 1895.)
• Banking, Currency and Land Tenure In the Chinese Empire.
• I.: China’s Currencies.
• II.: Chinese Banking: Ancient and Modern.
• III.: Land Tenure and Taxation In China.

CHAPTER I.

THE OLD COINAGE SYSTEM.

THE EARLIEST FORMS OF CURRENCY.

THE ancient records do not give a clear description of the currency of their time. But in a prehistoric period, shells, precious stones, rice, corn, clothing, and other commodities seem to have been used as the medium of exchange. Magatama and Kudatama made of precious stones, which are often dug out of old mounds and caves, were hung around the neck. They served as an ornament, and perhaps also the purpose of money as well. Gold, silver, and copper were imported from continental Asia tens of centuries before the Christian era. It is most likely they were used as instruments of commerce. According to a record in the reign of the Emperor Hansei (406 to 411 ad), gold, silver, and copper coins circulated at the following ratios: One sho* of rice = one mon of copper; ten mon of copper = one mon of silver; ten mon of silver = one mon of gold.

In the time of the Emperor Kenso (485 to 487 ad), we have the first recorded issue of silver coins. In 683 ad, copper coins were made with metal imported as the tribute from Corea, to take the place of silver coin. In 699 ad, a mint was established, whence copper coins were issued. In 708 ad, was coined Wado Kaichin of silver and copper. In the next year, coinage outside of the mint was prohibited, and for payments of four mon and upward, silver was used; while for below three mon, copper was legal tender. Those who coined privately were beheaded, and anyone giving them assistance was exiled. It was not till 712 ad that the taxes were paid with money. As a special favor, the right of coining copper was allowed in 758 ad to Yemino Oshikatsu, an influential courtier. It was in the beginning of the eighth century that an order to use coin was issued, and from this we must judge that barter still existed to a large extent, rice and clothing being chiefly used. Travelers carried rice with them to pay for lodging. In 760 ad, gold, silver, and copper coins were issued. Those who coined privately were arrested in 766 ad and obliged to work in the mint. In 797 ad, in order to accumulate corn, because of pestilence and a failure of crops, the taxes were received in kind instead of in coin.

CONFUSION AND DEBASEMENT OF COINS.

In 818 ad, the responsibility of coinage was imposed on the province of Nagato, and for this work it was freed from the payment of taxes. In 865 ad, the refusal of light coin was prohibited, and in 872 ad the mint was ordered not to debase the coins. It seems, however, that debasement had already begun, and as all sorts of coins issued in different eras, as well as those imported from China and some coined privately, circulated at the same time, great confusion prevailed. Moreover, owing to the prevalence of Buddhism, coins were melted into idols, bells, etc. The coins of China were so much better, compared with the debased coins issued from the mint, as to interfere with the free circulation of the latter. Therefore, in 1091 ad the use of the Chinese coins was prohibited, and in 1230 ad the price of rice was fixed. But in order to meet the demands of the market, merchants were sent to China with gold to be changed into copper coins in 1277 ad In 1407 ad, a Chinese junk laden with Yeiraku* coins arrived, and these coins circulated freely, especially in the eastern provinces, but were prohibited in 1608 ad Not content with presents of coin from China, in 1464 ad Shiogun Yoshimasa sent a message to China to obtain copper coins in exchange for the produce of the country. This way of raising a loan was often repeated. Most of the proceeds were used for his personal expenses, although the avowed purpose was to supply the deficiency of coins. In 1587 ad, silver, copper, and lead coins were issued. In addition to these, gold dust was used as money, being enclosed in bags or bamboo pipes. Also bar gold and gold plates were used by chopping off and weighing, though this currency was limited to large transactions. These served to increase the existing confusion, and commerce was fettered to a great extent. Besides, in each locality all sorts of coins were manufactured, varying in form and weight, causing endless perplexity.

THE KOBANG PERIOD—CREATION OF MINTS—VALUE OF COINS.

Gradually, as the level of prices rose, transactions increased, and the confused state of the currency became no longer bearable. In 1578 ad, large obang and small kobang coins were issued, in addition to plated silver tiogin, by Toyotomi Hideyoshi. Thus the way was paved for the unification of the currency, which, though contemplated by the predecessor of the ruler Nobunaga, was executed by the latter. Gold and silver coins for smaller payments were also issued. In 1595 ad, the Kinza, i. e., gold mint, was established by Tokugawa, and in 1599 adichibu kobang was issued. The legal ratio of gold to silver was 1 to 11.89—much lower than, for instance, in Holland, where it stood at 1 to 14.7; so that gold naturally began to be exported.

In 1601 ad, the Ginza, i. e., silver mint, was established, and it became the monopoly of the Goto family, the examiners of coins. Coins were made in Kioto, Yedo, Suruga, Kai, and Sado. The amount of kobang produced reached 14,727,055 rio, because of the increase of the output of the Sado mines. Though the inscription on the small kobang was printed, that on the larger ones was written with Indian ink, and thus was easily defaced. In case of the coin not being accepted because of defacement, the holder had to bring it to Goto and have it rewritten. Great care was consequently required in the handling. Keichio obang weighed 44.0551476 sen (8.28 sen equal to 1 ounce), its composition being 67.2 per cent. gold, 29.4 per cent. silver, 3.4 per cent. alloy; and its value nearly equal to 76.1473 yen of the present time. Keichio kobang were also made, ten of which weighed 47.3004936 sen, 85.69 per cent. being gold, 14.25 per cent. silver, and .06 per cent. alloy, the value being equal to nearly 102.54984 yen.

Besides, there were square gold pieces, called Keichio Ichibuban, ten of which were equal to one kobang. Silver coins of chiogin and mameitagin were also issued, under the names of Keichio Chiogin and Keichio Mameitagin. These being mere drops of melted silver, the fineness was 80 per cent. silver and 20 per cent. copper. An order was issued fixing the value of the Yeiraku pieces as equal to four iron coins, 250 of the former being equal to bu, or one-fourth of a rio of kobang. But this coin was abolished in 1608. In 1614 ad, refusal of coins, except those cracked, deformed, abraded, or made of lead, was punished by branding the face. This was a consequence of the debasement and popular distrust of the coinage. In 1636 ad, Kuanyei pieces were coined, whose composition was 50 per cent. of copper, 35 per cent. of tin, and 15 per cent. of lead. They were coined exclusively in Sakamoto of Omi and in Yedo. In 1638 ad, foreign trade being regarded as the means of impoverishing the country, was strictly prohibited, the Chinese and the Dutch only being allowed to trade exclusively in the port of Nagasaki. Christianity was also prohibited, and foreign trade, which had been extensively carried on by everybody and everywhere, suddenly dwindled.

SCARCITY OF COIN AND MEASURES TO CONSERVE IT

In 1667 ad, the sale and purchase of copper was prohibited. Next year the copper Daibutsu (Giant Buddha) at Kioto was melted down and made into coins—quite a contrast to the practice of an earlier time of melting down coins for idols. The export of copper was also prohibited. In those days there was an extensive trade with the Dutch and the exportation of gold increased. The exportation of gold coins was prohibited, but without any effect. In 1686, in order to lessen the exportation of precious metals, which had been incessantly going on for centuries, the amount of trade with Corea was fixed at 18,000 rio, and that of Riukiu at 2000 rio per year. The recoining and debasement of gold coins were practised in 1695 to supply the financial deficiency and to increase the profit of the hereditary superintendent of the mint, viz., Goto. But the chief cause was the scarcity of the precious metals, owing to the increased exportation, only 8,634,000 rio of gold and 77,000 quan* of silver remaining out of 14,727,000 rio and 1,200,000 quan, respectively, coined. The output of the precious metals also decreased, and the only alternative left was debasement of the coinage. The plan was formulated by a financier named Ogiwara Ominokami Naohide, and was adapted to the needs of the time, about 5,000,000 rio of genroku obang being coined. His opinion took the extreme ground that “when issued by the State, even tiles and pebbles can be used as currency.”

Old coins were ordered to be exchanged in 1699 into the new ones at par, but actually the latter were at a discount of twenty per cent. This was inevitable, as they differed very greatly in fineness, as will be seen from the following comparison:

It was also ordered that stored silver should be sold to the mint. The use of gold and silver in stock transactions and the hoarding of silver coins were prohibited. However, the hoarding of the old coins went on, those available being melted down and changed into counterfeited new coins. In 1706, hoyei silver was issued, but as it was greatly debased it did not circulate at all, the fineness being fifty per cent. only, which, when compared with keichio silver’s eighty per cent. fine and genroku silver’s sixty-four per cent., was a great deterioration. Hoyei copper was issued, but was withdrawn on account of its inconvenience. The efflux of silver, and especially of gold, continued, and the amount exported after 1648 has been estimated at 25,473,000 yen of gold and 58,000,000 yen of silver. Measures were taken to discourage the exportation of the precious metals, but to no effect. It was in these times that the Europeans came in search of gold, making great profit by changing it for silver and merchandise.

FRESH DEBASEMENTS OF THE COIN.

Compelled by financial difficulties, another reduction of the size and fineness of the gold and silver coins was effected in 1710. The fineness of the silver coin was only thirty-two per cent., and in some cases but twelve per cent., the rest being copper, and the value of ten kobang was equal to 52.54308 yen, the composition being 83.40 per cent. gold, 16.55 per cent. silver, and .05 per cent. alloy. The monetary ratio of kobang was fixed, and the value of the old and new coins was ordered to be alike. But these restrictions were futile; prices rose, people suffered, and counterfeit coins made their appearance. Arai Hakuseki urged the necessity of remedial measures by raising the fineness and even lessening the amount of circulation. Although his enlightened views were opposed by many, especially by Buisumokoio, the inflationist, they were adopted in 1714, kobang being issued of the same fineness as that of keichio (1591 to 1614). Then prices began to fall, and general credit recovered.

VICISSITUDES OF THE COINAGE FROM 1715 TO 1884.

Another restriction of the export of copper and of the number of Chinese and Dutch vessels admitted to the ports of Japan was ordered in 1715, and next year kioho kobang was issued of the fineness of 86.70 per cent. gold, 13.25 per cent. silver, and .05 per cent. alloy. Ten of these were equal to 103.07247 yen. The obang was also struck equal in fineness to that of the keichio period. Prices went down, but not to the extent desired, because the new coins were hoarded. So prices were lowered by compulsion of legal penalties. Coin and copper were still exported; and in 1736, Dutch vessels lying at Nagasaki were ordered to return, their number being restricted to twenty-five. Again debasement of the coinage was resorted to, and genbun coins were issued more or less under value, the inflationists’ view being adopted; an arrest of the fall of prices and the deficiency of coins being the plea. The composition of the new coins was 65.32 per cent. gold, 32.53 per cent. silver, and .15 per cent. alloy, ten of them being equal to 58.69374 yen.

In the case of silver coins, the fineness was only forty-six per cent. In 1742, the burying of coins with the dead* was prohibited, and the use of silver as ornaments was forbidden in the next year. In 1765, miowa silver coin was issued of forty-six per cent. fineness, being necessitated by the influx of silver in exchange for gold, which was enormously exported by the Dutch. In 1768, kuanyei tsuho were coined, consisting of 68 per cent. of copper, 24 per cent. of lead, and 8 per cent. of tin. These are still used as equal to two rin; and in 1772 anyei nan rio silver was made of 97.75 per cent. silver and 2.25 per cent. alloy, equivalent to 3.289 yen. The maximum abrasion was fixed at .004 per cent. in 1779. In the next year, Zeniza, or the mint for copper and iron coins, was opened in Osaka. In 1818, the financial difficulties of the Tokugawa Government increased, and new kobang was issued in 1819, more or less debased. The silver coins were also reduced in value, becoming 29.84 per cent. gold, 69.99 per cent. silver, and 17 per cent. alloy, equal to 2.944 yen. Hitherto, the silver coins being less debased, they were preferred to gold; but now, when the former were also recoined, the state of the currency fell into utter confusion.

In 1835, tempo sen was issued, consisting of 78 per cent. copper, 10 per cent. tin, and 12 per cent. lead, in order to redeem paper notes of the Daimios. But as the stock of copper became deficient, this scheme miscarried, only the bulky and unpopular coins remaining. This coin circulated at an equivalent of eight rin, but was abolished in 1884, and after 1896 it is irredeemable. The value of gold fell as compared with silver, and the ratio stood as low as 1 gold to 4.64 silver. Recovering a little in fineness, five rio tempo coin was issued in 1837, the composition being: gold, 83.75 per cent.; silver, 16.65 per cent., and alloy, .20 per cent., or equal to 19.05926 yen. Ichibu silver of 99.14 per cent. fineness, ten rio of which were equal to 14.1746 yen, was also issued, besides many other denominations. In 1838, to supply a pressing demand, tempo obang was issued, equal in fineness to that of the keichio period, and chio and mameita silver were largely coined.

COINAGE UNDER THE NEW COMMERCIAL ERA.

In 1853, Commodore Perry, of the United States Navy, came with his fleet to Uraga, and, awakening Japan from her long slumber and seclusion, induced her to open the country. The new era dawned, and after this the popular bent was radically changed. His arrival shook the nation, and the Tokugawa Government began to build fortresses and import men-of-war from Holland. But such a sudden increase of expenditure was beyond the power of the distressed Government. So again the usual method of resorting to the issue of debased coins was adopted, and one-siu kayei silver was issued, consisting of silver, 96.78 per cent., and alloy, 3.22 per cent.; ten rio being equal to 12.09173 yen. In the next year the use of gold and silver for other purposes than coinage was forbidden. The treaty with the United States of 1854 expressly allowed the receipt of American coins in payment of Japanese goods. In 1856, ansei nibu gold was coined, in fineness being: gold, 20.92 per cent.; silver, 78.87 per cent., and alloy, .21 per cent., ten rio being equal to 19.40124 yen. The export of gold continued, foreigners buying gold at one per cent. premium. This they were glad to pay, because the gold kobang (18s. 2d.) was equal to four of one-bu silver (1s. 4d.), and they made a profit of 12s. 10d. every time they exchanged silver for gold. In 1859, Yokohama was opened to foreign trade. Foreign gold and silver coins were ordered to be circulated, weight by weight, with the coins of the realm, after being stamped in the mint. The new ichibu silver was issued of the same fineness as the foreign coins. By this means it was hoped that the exportation of gold would be checked. Besides ansei, two-siu silver was issued of a fineness of 84.46 per cent., ten rio being equal to 38.009 yen. In addition to ansei, a gold kobang was issued, with 56.97 per cent. of gold, 42.82 per cent. of silver, and .21 per cent. of alloy, ten rio being equal to 35.72835 yen. Ichibu gold was also coined. In 1860, new kobang and obang were issued, the former being 57.36 per cent. gold, 42.40 per cent. silver, and .24 per cent. alloy; ten rio being equal to 13.295 yen, while the latter were 34.35 per cent. gold, 63.92 per cent. silver, and 1.73 per cent. alloy, each piece being equal to 28.829 yen. Ichibu, nibu, and nisiu gold were also coined, containing 22.85 per cent. of gold, 76.95 per cent. of silver, and .20 per cent. of alloy, ten rio being equal to 11.088 yen. The ratio of gold to silver was raised to 1 to 15.58 to stop its continuous exportation. In 1863, bunkiu money was coined, which, though circulating till now as an equivalent of one and a half rin, is gradually being melted down at the mint and nickel coins served in its stead. The amount of gold exported after 1859 was inconsiderable, as its ratio to silver was made to correspond closely to the price abroad, as shown by the following table:

The effort was made to fix prices by law, but it was ineffectual, and in 1866 riots broke out in many districts, being most violent in Yedo, Osaka, and Hiogo. The Tokugawa family had, thus, its hands full of the difficulties of coinage affairs, especially after resorting to the policy of debasement. The varieties of coins which were in use were:

These varied in fineness, name, size, weight, and form—there being sixty-six different ones in all. Besides, there were many copper and iron pieces, which also varied a great deal. The whole system was left in confusion, and the resultant inconvenience and suffering of the people were almost beyond description. To show the composition and the amount of coins issued by the Tokugawa Government, the following tables, compiled by Sato Chiwsaburo, are inserted:

[* ] Twenty-four sho are equal to nearly one American gallon; mon same as rin, or one-tenth of a cent.

[* ] These were coined by the Ming dynasty of China in 1411 ad

[* ] Quan is equal to 57870 troy grammes.

[* ] This was a practice of Buddhism, and was intended to enable the dead to pay their traveling expenses to their final abode.