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Paper Money in Japan

2-6 The Dajoukansatsu

10-ryo Dajoukansatsu (front and back) The Dajoukansatsu, issued by the Meiji Government in 1868, was the first paper money to be issued by the central government of Japan with nationwide circulation. It had an initial circulation of 13 years, from the Year of the Dragon in which it was issued to the end of the next Year of the Dragon.

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In February of its first year (1868) after replacing the Tokugawa Shogunate, the Meiji Government decided to follow the shogunate's currency system by recognizing gold and silver coins currently in circulation and allowing older, previously banned currency to circulate at current values. In addition, the Meiji Government issued currency in units of ryo and its fractions: two-bu gold coins, one-bu silver coins, and the like. The government subsequently attempted to stabilize currency values by setting standard prices for older currency, but the practice of trading for current values did not abate, making the circulation of money at this time an extremely complex process.       The government was short of funds to pay for the Boshin War (in which it had defeated the shogunate) and to promote agriculture and industry, so in May it issued a new government bill called the Dajoukansatsu (also called the Kinsatsu, or "gold bill") with a limited circulation of 13 years. The program was based on the ideas of Yuri Kimimasa, who had succeeded in rebuilding the finances of the fief of Echizen-Fukui at the end of the Edo Period. The Dajoukansatsu came in denominations of 10 ryo, five ryo, one ryo, one bu, and one shu. However, it was unconvertible and there were no issuing limits, so the amount in circulation quickly rose and the bill's market value dropped below its face value. Naturally, it was also sharply discounted against specie.       To cope with this, the government ordered that all payments be made to it in Dajoukansatsu, and banned exchanges of the bill below face value for specie. These attempts to stabilize the bill's value had little effect, however. In May 1869, the government shortened the circulation period of the bill (to the end of 1872 for the 10-ryo and 5-ryo denominations and to the end of June 1878 for the smaller denominations) and announced its intention to exchange it for gold coins that would be newly issued. This switch to convertibility finally succeeded in restoring confidence in the Dajoukansatsu. In 1869 and 1870, small-denomination Mimbushosatsu were also issued as government bills. These bills were converted to the Shin-shihei (new currency) that began to be issued in 1872, and were not converted to gold coins.       The issue of the Dajoukansatsu was to a large extent an emergency measure to secure temporary financing, but it was also the first bill to be used by the central government with nationwide circulation, and served as the first step in the subsequent unification of currency. Other paper money had been issued by the central government prior to the Dajoukansatsu. (In 1867, for example, the Tokugawa Shogunate had issued three varieties of bills to cover shortfalls in the silver Mexican dollars which were then being used for trade, and to provide fiscal revenues.) Because the shogunate fell during the next year, however, these were short-lived bills that never achieved their purpose.

Mari Ohnuki, Research Division 3, Institute for Monetary and Economic Studies, Bank of Japan Monetary and Economic Studies 17(3), Bank of Japan, 1999

References Bank of Japan, Research Department, ed. Zuroku Nihon no Kahei (Japanese Money), Vols. 5 and 7, Toyo Keizai Shimposha, 1973, 1974 (in Japanese). Research lnstitute for History of Business Administration, Mitsui Ryogae-ten (Mitsui Money Exchangers), Mitsui Bank, Ltd. Editorial Committee, 1983 (in Japanese). Sakudo, Yotaro, Dai Nippon Kahei-shi Bekkan (History of Currency), Rekishi Toshosha, 1970 (in Japanese).