From the end of the seventh century to the eighth century, Japan introduced various social systems from China (Tang Dynasty) in order to build a centralized government based on the “ritsuryo” code. During this process, coins modeled after Chinese ones were issued. Three types of copper coins were minted in the Nara period (eighth century), including the Wado Kaichin coin, and nine types in the Heian period (from the end of the eighth century). However, Japan subsequently suspended the mintage and circulation of coins.
Latter half of the 7th century
Coins used before the mintage of Wado Kaichin
An archaeological survey conducted at the Asukaike Ruins in 1998 revealed that coins known as Fuhon-sen had been minted in the latter half of the seventh century. From the ruins, Fuhon-sen coins were unearthed together with the molds, pots and other instruments used to mint them.
The Fuhon-sen coin is thought to be the coin referred to in the following rescript mentioned in the Nihon Shoki (written in 683): “From now on, use the copper coins instead of the silver coins.”
The silver coins mentioned in the above rescript are thought to be the Mumon Gin-sen coins, which were unearthed at 15 or more sites in Japan (located primarily in the Kinki area).
Beginning of the 8th century
Issuance of Wado Kaichin
The ritsuryo code-based government, while actively assimilating social systems and culture from China, minted the Wado Kaichin coin in 708, which was modeled after the Kai Yuan Tong Bao coin of the Tang Dynasty. The mintage was regarded as an essential tool for the Japanese government to display the independence and the authority of the nation, both inside and outside the country. The government strived to expand the use of the coins through various measures such as rewarding those who had saved a large number of coins with a court rank.
The government used the coins to cover the costs of building the Heijo imperial palace. Face value of the coins was higher than the actual value of the metal they were composed of; therefore the government could earn seigniorage from the mintage.
From the 8th to 10th centuries
Decline in the usage of coins
The ritsuryo code-based government minted 12 kinds of copper coins, including the Wado Kaichin. The coins became smaller in size and lower in quality (lead content increased due to a shortage of copper) over time and the exchange rate was set at one new coin for 10 old coins. This resulted in a rapid decrease in the value of the copper coins, and people subsequently lost faith in the value of the coins. The government suspended minting copper coins in the mid 10th century; the last coin was called the Kengen Taiho minted in 958.
The Naganobori copper mine (presently located in Yamaguchi Prefecture), is believed to be one of the largest copper production sites of ancient Japan. From 9th century, its copper production began to decrease, while the production of lead increased.
From the 11th century to the middle of the 12th century
Use of commodity money
After the mintage of copper coins in the mid 10th century, coin circulation was suspended, and rice, silk and (hemp) clothes, which all maintained stable value, began to be used as a substitute for the coins. These products gained commodity money status, as they became stable criteria to evaluate the monetary value of various goods.
Because carrying around rice, silk and (hemp) clothes as currency was inconvenient, a credit economy emerged to save handling and transportation costs. Government offices in the capital issued payment orders to rice warehouses under their jurisdiction, and these documents played the role of present-day checks.