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A History of Coins

1-13 One-Yen Gold and Silver Coins: The Birth of the Yen

Man'en Nibu-kin（1860） 18mm(length)×11mm(width) Weight: 3.0g Fineness: 22percent  Pure gold content: 0.7g	One-Yen Gold Coin（1872） Diameter: 14mm Weight: 1.7g Fineness: 90percent Pure silver content: 1.5g
20-Yen Gold Coin（1871） Diameter: 35mm Weight: 33.3g Fineness: 90percent Pure gold content: 30.0g	One-Yen Silver Coin for Foreign Trade （1871） Diameter:38mm Weight: 27.0g Fineness: 90percent Pure silver content: 24.3g
The newly instituted Meiji government enacted the New Currency Act of 1871, under which the gold standard and the currency unit of the yen were adopted. The small-denomination gold coin of the Edo period (1603-1867), the Man'en Nibu-kin gold coin, played a vital role in the transition from the old currency unit of ryo to the yen. Meanwhile, the one-yen silver coin, originally minted as the standard currency, was used mainly for the settling of foreign trade.

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A variety of coins were circulating in Japan shortly after the Meiji Restoration in 1868. In addition to the Dajokan-satsu, gold notes issued by the Cabinet, and paper money issued by the local governments, gold, silver, and copper coins minted by the Tokugawa Shogunate were also utilized as a means of exchange. To unify the complicated currency system under the single currency of the yen and lay the foundation for a modern nation, the Meiji government decided to introduce the silver standard in October 1870, and in November it began minting a one-yen silver coin of approximately the same weight and fineness as the internationally circulated Mexican silver dollar. The silver standard system was selected because many Asian countries Japan's major trading partners) applied the silver standard, and thus silver coins were widely used as a means of payment. The relationship between old and new coins under the silver standard system was as follows: 100 pieces of one-yen silver coins = 100 dollars in Western silver coins = , 311 pieces of ichibu-gin, the Japanese silver coins (31 1 bu = 77 ryo 3 bu). Hence, one yen equaled approximately 3 bu of old gold coins, an exchange rate of roughly 4:3.       Despite this, it was the gold standard that was finally adopted under the New Currency Act of 1871. It is thought that the gold standard was adopted instead of silver in response to a suggestion made by lto Hirobumi, an influential politician who was visiting the United States, that Japan adopt the gold standard in line with the United States and major European countries. It must be noted, however, that due consideration was given to the smooth conversion from the ryo to the yen.       Among various currencies in circulation at the time, the Man 'en Nibu-kin gold coin-which had been issued to prevent the outflow of gold at the end of the Edo Period-essentially functioned as a standard currency. However, the ichibu-gin silver coins-which were of higher quality than the Man 'en Nibu-kin-were preferred by foreign countries. When the silver standard was adopted for international reasons, new and old coins had to be converted at the above-mentioned rate of 4:3. To eliminate the complications accompanying such conversions, the Meiji government set 311 pieces of ichibu-gin (77 ryo 3 bu) equal to 200 pieces of nibu-kin (100 ryo) in terms of their bullion value (the gold/silver parity was 1:15), and made the value of 100 pieces of one-yen gold coin and 100 dollars in Western silver coins equivalent to the above coins. As a result, the transition to the new currency system was simplified by merely changing the currency unit (from one ryo to one yen), and Japan was able to achieve a gold/silver parity in line with the international level.       At the same time, the already-minted one-yen silver coins were approved for unlimited circulation in ports as a means of settlement of foreign trade, as well as for general transactions with the consent of both parties concerned. In 1878, the one-yen silver coin was also approved for unlimited circulation as a standard currency. At that time, the currency system in Japan shifted to a dual gold/silver standard.

Hideki Otsuka: Research Division 3, Institute for Monetary and Economic Studies, Bank of Japan Monetary and Economic Studies 16(2), Bank of Japan, 1998

References Bank of Japan, Economic Research Department, Zuroku Nihon no Kahei (Japanese Money), Vol. 7, Toyo Keizai Shimposha, 1973 (in Japanese). Mikami, Ryuzo, Edo no Kahei Monogatari (The Story of Money in the Edo Period), Toyo Keizai Shimposha, 1996 (in Japanese). Yamamoto, Yuzo, Ryo kara En e (From Ryo to Yen), Mineruva Shobo, 1994 (in Japanese).