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The Development of a Credit System in Seventeenth-Century Japan

Published online by Cambridge University Press:  03 February 2011

Sydney Crawcour
Sydney Crawcour
Affiliation:
Australian National University (Canberra)
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Extract

At the beginning of the seventeenth century, Japan was just emerging from a long period of internal strife and was beginning to settle down under a centralized feudal system introduced by the newly established Tokugawa government. In the following period of peace, economic development was very rapid. Along with commercial development and the monetization of important sections of the economy, a system of credit institutions evolved, notably in Osaka, which by the end of the century was not inferior to those existing in Europe at that time. The financial innovations and developments of the first half of the century were systematized in the latter half, and the resulting credit system became an indispensable part of Japan's economic life. In particular it played an important part in facilitating the spurt in Japan's economic development which occurred roughly between 1690 and 1740.

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Articles
Information
The Journal of Economic History , Volume 21 , Issue 3 , September 1961 , pp. 342 - 360
Copyright
Copyright © The Economic History Association 1961

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References

1 For recent discussions of these see Yōtarō, Sakudō, Kinsei Nihon Kahei-shi [A History of the Currency of Early-modern Japan] (Tokyo: Kōbundō, 1958)Google Scholar, and Atsushi, Kobata, Nihon no Kahei [The Currency of Japan] (Tokyo: Shibundō, 1958)Google Scholar.

2 The government went out of its way to restore Ōsaka both physically and commercially. Its direct administration by the central government from 1619 gave it great commercial advantages. See Ōsaka Ramshō-sho lk.ken [A Paper on the Beginnings of Ōsaka] and Ōsaka Sangō Chōchū Ontoritate Shōdenkt [A Relation of the Favours bestowed on the Citizens of the Three Wards of Ōsaka] (1780?)Google Scholar. Both of these documents are printed in Shiyakusho, Ōsaka [Ōsaka Municipal Government] (ed.) Ōsaka Shishi [History of Ōsaka City] (2nd ed.; Ōsaka: Ōsaka Shiyakusho, 1927), V, 1–28Google Scholar.

3 Although large areas of the economy were still on a subsistence basis, and the peasant economy remained basically so for at least another century and a half, the commercial sector was already important for public finance (central and local) and for economic development in general.

4 The high cost of overland transport of so bulky a commodity as rice made it preferable to send rice by sea from the northern provinces (Dewa, Mutsu) around the southern tip of Honshu to Ōsaka and thence to Edo. The problems of this (for those days) long sea haul were not finally settled until the 1670's when Kawamura Zuiken organized regular sea routes right around the main island of Japan. See Arai Hakuseki (1657–1725?), Ou Kaianki [Record of the Sea Transport of Mutsu and Dcwa], in Seiichi, Takimoto (ed.), Nihon Keizai Taken [Collected Japanese Economic Writings] (Tokyo: Shishi Shuppan-sha; Keimeisha, 1928-1929), IV, 233–41Google Scholar.

5 By 1626 there were m of these warehouses. See Dōjima Kyūki [Records of Dojima], in Kankōkai, Kokusho, [Association for the Publication of Japanese Books] (ed.), Tokugawa Jidai Shōgyō Sōsho [Collection of Writings on Tokugawa Period Commerce] (Tokyo: Kokusho Kankōkai, 1913), II, 9Google Scholar.

6 The novelist Ihara Saikaku wrote later in the century, “Though it be a matter of a thousand or ten thousand koku once two parties have clapped hands over a deal neither retracts an inch from his promise.” Saikaku, Ihara (trans. Sargent, G. W.), The Japanese Family Storehouse (Cambridge: Cambridge University Press, 1959), p. 22Google Scholar.

7 There seems to be little foundation for the idea that cash sales were an innovation by the Mitsui softgoods store in Edo when they hung out their famous sign which, freely translated, reads, “Cash sales mean lower prices.” Retail sales had always been for cash except for the supply of better quality goods to the upper classes by old-established “merchants by appointment.” Mitsui's practice, followed by other “modern” drapery stores of the time, was successful in capturing this trade. See Takasumi, Mitsui, “Edo Jidai ni okeru Tokushu Shōgyō toshite no Gofukuya to Ryōgaeya,” [Bankers and Drapers as a Special Type of Commerce in the Edo Period], Shaken Keizai Shigaku, II, No. 9 (12 1932), 57–61Google Scholar, and Yasunao, Nakada, “Tenna Nenkan Shinkyu Shōnin-sō no Kōsō,” [The Struggle between Old and New Merchants during the Tenna Era], Nihon Rekishi, LXXI (05 1961), 21Google Scholar.

8 These were the “Eiraku-sen,” so called because most of them bore the name of the Chinese Ming Emperor Yung-lo (pronounced “Eiraku” by the Japanese).

9 See Kōya, Nakamura, Genroku Kyōho Jidai ni okeru Keizai Shisō no Kenkyfi [A Study of Economic Thought in the Genroku-Kyōhō Period] (Tokyo: Kokumin Bunka Kenkyūkai, 1927), p. 426Google Scholar; and Brown, Delmer M., Money Economy in Medieval Japan (New Haven: Far Eastern Association, 1951)Google Scholar.

10 Particular difficulty was encountered in gaining acceptance for its copper coins. Edicts enjoining their use were issued in 1609 (twice), 1616, 1618 and 1625. See Kumiai, Ōsaka Ryogaesho [Ōsaka Money Changers Association] (ed.), Ryōgaeshō Enk.ak.ushi [A History of the Background of Money Changing], printed in Kuroha Hyōjirō (ed.),Google ScholarŌsaka Shōgyō Shiryo Shusei [Collected Materials on the Commerce of Ōsaka] (Ōsaka: Ōsaka Shōka Daigaku Keizai Kenkyujō, 1934-1940), III, 155 ffGoogle Scholar. These edicts were not effective, and it was only after further large issues in 1636 and the following years that the Tokugawa copper currency became the generally accepted standard.

11 These ratios were fixed by the government in 1609. With the increased issue of copper coins, their value fell so far that in 1656 the government authorized transactions in copper coins at the market rate. This authorization was withdrawn in 1659, but the market value of copper coins continued to fall throughout the century. See Ryōgaeshō Enkakttshi, pp. 173–74. I me = 3.750 grams.

12 The traditional arguments are marshalled by Miyamoto Mataji in his article under the heading “Kinzukai Ginzukai,” [Gold Usage and Silver Usage], in Keizaishi Kenkyukai [Association for Economic History Research] (ed.), Nihon Keizaishi Jiten [Encyclopedia of Japanese Economic History] (Tokyo: Nihon Hyōron Shinsha, Compact ed., 1961), I, 386Google Scholar.

13 This situation of multiple currencies and varying units of account, not necessarily related to any current coin, is basically no different from that which prevailed in Europe down to the end of the eighteenth century. Compare Einaudi, L., “The Theory of Imaginary Money from Charlemagne to the French Revolution,” in Lane, F. C. and Riemersma, J. C. (eds.), Enterprise and Secular Change (London: Allen and Unwin, 1953), pp. 229–61Google Scholar.

14 According to Miyamoto Mataji's article under the heading “Shōgyō Chobo,” in Nihon Keizaishi Jiten, I, 796–98Google Scholar.

15 Principally because the universal use of the abacus, or counting frame, made it, for technical reasons, unnecessary to separate debit and credit items in columns.

16 The records of the Mitsui Archives now preserved in the Historical Archives Division of the Japanese Ministry of Education (Mombusho Shiryokpn) form the most complete collection now available. This huge collection dating from the late seventeenth century could provide material for a fascinating study of Japanese accounting methods.

17 Financial statements surviving from the seventeenth century consist of a balance sheet of assets and liabilities followed by a statement of income and expenditure. These are arranged so that closing net worth appears as the balance in each case. The annual statements (sanyōchō) of Kōnoike Zenemon preserved in Kōnoike Shinden Kaisho (near Ōsaka) provide a good example.

18 See Yōtarō, Sakudō, “Kinsei Shinyō Taikei to Keizai Hatten no Mondai,” [The Problem of the Credit System and the Economic Development during the Shogunate Period], Ōsaka Daigaku Keizaigaku, VII, No. 3 (11 1957), 64–103Google Scholar.

19 See Sadao, Matsuyoshi, Nihon Ryōgaeshō Kinyūshi-ron [A History of Japanese Money Changer Finance] (Tokyo: Bungei Shunju-sha, 1932), pp. 85–87Google Scholar.

20 See Ryōgaeshō Kyukf [Records of the Money Changers], in Ōsaka Shōgyō Shiryō Shūsei, IV, 157–58Google Scholar.

21 See Ryōgaeshō Kyūki, p. 158, and Ryōgaeshō Enkakushi, p. 178.

22 See , Matsuyoshi, Nihon Ryōgaeshō Kinyūshi-ron, p. 12Google Scholar, and Eijiro, Honjo, Nihon Keizaishi Gaisetsu [An Outline Economic History of Japan] (rev. ed.; Tokyo: Nihon Hyoron-sha, 1940), p. 262Google Scholar.

23 For a description of some early money changers in Kyoto (written about 1727), see Takafusa, Mitsui (trans. Crawcour, E. S.), “A Record of Observations on Merchants,” Transactions of the Asiatic Society of Japan, 3rd Series, VIII (1961)Google Scholar.

24 The money changer Tennojiya Gohei began business in 1628. Within thirty-five years he was the leading banker of Ōsaka. See Mataji, Miyamoto, “Ōsaka no Shōgyō to Kurayashiki,” [The Kurayashikj. and the Commerce of Ōsaka], in Eijirō, Honjō (ed.), Kinsei no Ōsaka [Ōsaka in the Early Modern Period] (Ōsaka: Kansai Keizai Doyukai, 1959), p. 143Google Scholar.

25 See Mitsui Takafusa, “A Record of Observations on Merchants,” and Yasunao, Nakada, “Shoki Mitsui no Kinyūgyō no Jittai,” Nihon Rekshi, XCVIII (08 1956), 4–5Google Scholar, and the records of Konoike Shinden Kaisho.

26 Dōjima Kyūki, p. 27.

27 See Dōjima Kyūki, p. 27.

28 This ordinance which is printed in Ōsaka Shishi, III, 47, forbids the sale of rice on one-third deposit. It mentions that rice tickets passed through up to ten hands in a day. Similar restrictions on trade in rice bills were promulgated repeatedly in the following years. See Ordinances of 1660, 1661 and 1663 printed in Ōsaka Shishi, III, 67, 68, 72–73.

29 See Nakada Yasunao, “Shoki Mitsui no Kinyūgyō no Jittai,” and Kōnoike Zenemon Sanyōchō. There has been some divergence of opinion about these rates. See Shigetomo, Kōda, Nihon Keizaishi Kenkyū [Studies in Japanese Economic History] (Tokyo: Ōokayama Shoten, 1928), p. 511Google Scholar, and Kanetarō, Nomura, “Daimyōgashi ni Tsuite,” Mita Gakkai Zasshi, XXIX, No. 2 (02 1935), 170Google Scholar. Preliminary analysis of loan documents currently available at the University of Ōsaka indicates that rates for loans to daimyo were, if anything, slightly higher than for loans to merchants. Material for the seventeenth century is, however, scanty.

30 Ōsaka Shishi, I, 122.

31 Ōsaka Shishi, III, 17.

32 See Ryōgaeshō Enkakushi, p. 9. The tradition that he got the idea of issuing notes from reading about the practice of Aoto Saemoni Fujitsuna, a minister of the Kamakura government in the thirteenth century, seems rather doubtful. Bills of exchange were used in those days, but so far as I know there is no evidence of the circulation of negotiable deposit receipts at that time. The story may have been circulated to give Tennōjiya's bills added prestige.

33 See Sakudō Yōtarō, Kinsei Shinyō Taikei to Keizai Hatten no Mondai,” p. 93.

34 Ryōgaeshō Enkakushi, Dōjima Kyūi (already cited), and Shōji Kanshū Mommoku narabi ni Hōtō Shoan [Draft Questionnaire and Replies on Commercial Usages] (printed in Ōsaka Shishi, V, 471–526), in crediting Tennōjiya Gohei with the invention of bills (tegata), all say that he was the only money changer (“ryōgaeshō”) in Ōsaka at the time. Since there were then dozens of money changers in Ōsaka as well as in Kyoto, Edo and other places, this statement cannot be taken at face value. He was, however, the only member of the later Big Ten who was in the money-changing business at that time.

35 See Ryōgaeshō Enkakushi, p. 9.

36 This is the usual reading of this name. In the index to Ōsaka Shōgyō Shiryō Shūsei, III, however, it is listed under “O,” indicating a possible reading of ”Ohashiya.“

37 See Ryōgaeshō Enkakushi, p. 9.

38 See Yōtarō, Sakudō, “Kinsei Shinyō Taikei to Keizai Hatten no Mondai,” p. 79Google Scholar.

39 See Takasumi, Mitsui, Ryōgae Nendail—Gempen [Annals of the Money Changers-Text] (Tokyo: Iwanami Shoten, 1932), p. 10Google Scholar, and Takasumi, Mitsui, Shinkō Ryōgae Nendaiki Kanken [Key to the Annals of the Money Changers] (Tokyo: Iwanami Shoten, 1933), I, 221Google Scholar.

40 By the end of the Tokugawa period (mid-nineteenth century), 99 per cent of Ōsaka's transactions were made by bill according to Yōtarō, Sakudō, “Kinsei ni okeru Kawase Tegata no Hattatsu,” [The Development of the Bill of Exchange in the Tokugawa Period], Ōsaka Daigaku Keizaigaku, VIII, No. 1 (04. 1958), 97Google Scholar.

41 See Ryōgaeshō Enkakushi, p. 9.

42 See Ōsaka Shōgyō Shūkan-roku [Record of the Commercial Usages of Ōsaka], in Ōsaka Shōgyō Shiryō Shūsei, I, 228. The original ten were Tennojiya Sakubei, Tennojiya Gohei, Hondaya Yaemon, Shinya Mokuzaemon, Kōnōikeya Kiemon, Izumiya Heibei, Shinya Kuroe-mon, Kagiya Rokubei, Sukematsuya Rihei and Sakamotoya Shōzaburō. (Ōsaka Shishi, I, 400.) It is not clear why Kohashiya dropped out.

43 See Ōsaka Shishi, 1,400–1.

44 See Ōsaka Shōgyō Shūkan-roku, PP. 14, 15, 231, and Shohotsu Gonjō sōrō Chōmen no Utsushi [Copy of a Booklet setting forth Origins] (1753), in Ōsaka Shishi, V, 18–28.

45 See O-fure oyobi Kōtatsu [Ordinances and Proclamations], in Ōsaka Shishi, III.

46 See Ōsaka Sekjji no Shinyō Seido [Ōsaka's Credit System of Former Times], in Ōsaka Shishi, V, 550.

47 I can find no record of the actual number at this time. At the very end of the century there were 155 (see Naniwa Maru, referred to in Ōsaka Shishi, I, 541). By the end of the Tokugawa period the number had fallen to 120 (see Ōsaka Sektti no Shinyō Seido, p. 528).

48 See Ōsaka Shishi, I, 401.

49 See Dōjima Kyūki, pp. 52 ff. and Ōsaka Shōgyō Shūkan-roku, pp. 228–30.

50 The following description is based on Ōsaka Sekiji no Shinyō Seido, Ryōgaeshō Enkakushi and Ōsaka Shōgyō Shukan-roku (already cited); Kyūji no Ryōgae Seido [The Money Changer System of the Old Days], in Ōsaka Shōgyō Shiryō Shūsei; Matsuyoshi Sadao, Nihon Ryōgaeshō Kinyūshi-ron and Sakudō Yōtarō, “Kinsei Shinyō Taikei to Keizai Hatten no Mondai.”

51 In 1676 advances made by Konoike Zenemon, one of the Big Ten, were about two and a half times his net worth and about one and a half times deposits plus cash holdings. In 1680, advances were one and a half times net worth and about two and three-quarter times deposits plus cash. See Kōnoike Zenemon Sanyōchō.

52 Towards the end of the Tokugawa period, notes issued for sixty to seventy thousand ryō were often backed by no more than ten thousand ryō. See Ryōgaeshō Enkakushi, p. 120.

53 Mataji, Miyamoto, Ōsaka Chōnin-ron [The Ōsaka Merchant] (Kyoto: Minerva Shobō, 1959). P. 20Google Scholar.

54 A rather obscure description of the system of settlement in the nineteenth century is given in Ōsaka Sekiji no Shinyō Seido, pp. 535–36.

55 See Yōtarō, Sakudō, “Kinsei ni okeru Kawase Tegata no Hattatsu,” p. 104Google Scholar. Bills of exchange were used from the fourteenth century. See Brown, D. M., Money Economy in Medieval Japan, p. 45Google Scholar, and Takeo, Kurusu, Nihon Kinyū Seido Hattatsu no Kenkyū [A study of the Development of the Japanese Financial System] (Tokyo: Keimeisha, 1929), pp. 173–75Google Scholar.

56 This was probably established in the 1660's, according to Ōsaka Shishi, I, 400.

57 See Yōtarō, Sakudō, “Kinsei ni okeru Kawase Tegata no Hattatsu,” pp. 104–5Google Scholar.

58 There is no evidence to support the claim that the Mitsuis invented this system. The mechanism was basically no different from the Edo kawase system which had been in operation for some time. Although the Mitsui group later got the bulk of this business, they were not among the ten originally commissioned. See , Matsuyoshi, Nihon Ryōgae Kinyūshi-ron, pp. 230–33Google Scholar.

59 See Yōtarō, Sakudō, “Kinsei ni okeru Kawase Tegata no Hattatsu,” pp. 101–2Google Scholar.