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Paper Money in Japan

2-8 Shin-shihei   Note (Meiji Tsuho Note)

The face and back of the 10-yen Shin-shihei note (Meiji Tsuho note) The issue in 1872 of Meiji Tsuho notes led to the standardization of the variety of bank notes in circulation until then.

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In May 1871, with a view to standardizing the monetary system, the Meiji Government promulgated the New Currency Act of 1871 and issued new gold, silver, and copper coins employing such decimal monetary units as yen, sen and rin.       In April of the next year, it also issued Shin-shihei notes (also called Meiji Tsuho notes) in 100-yen, 50-yen, 5-yen, 2-yen, 1-yen, half-yen, 20-sen, and 10-sen denominations, with the aim of standardizing the various kinds of notes in circulation then.       The first notes issued in yen units by the Meiji Government were the Convertible Note of the Ministry of Finance and Convertible Note of the Kaitakushi (both of which were officially called Shokin (specie) Convertible Notes; the latter type was issued in order to raise funds for the development kaitaku of Hokkaido). These notes were issued in order to make up for an insufficiency of national revenue. When the Shin-shihei notes were issued, however, there were such existing old notes as Local Paper Money, Dajokan, Mimbusho, and Kawase-gaisha notes; their monetary units were ryo, bu, and shu, and the purpose of their use and the areas of circulation and the people using the notes varied.       Shin-shihei notes were therefore issued to standardize the notes in circulation: after being exchanged for new notes, the old ones were withdrawn. The exchange rate between Shin-shihei notes and Dajokan, Mimbusho, and Kawase-gaisha notes was 1 ryo to 1 yen (under the New Currency Act of 1871, a one-ryo old note was equivalent to a one-yen new note). Local Paper Money began to be exchanged for new ones around August 1872 at the exchange rate in effect on July 14, 1871, when the feudal domains were replaced by prefectures to facilitate central government control. In the next phase of the transition, Shokin Convertible Notes, which had just been issued in 1871, were exchanged for Shin-shihei notes.       Because Shin-shihei notes were issued not only as a replacement for old notes but also as a means of raising funds, they were issued in considerable volumes, but the increase in monetary volume was in close proportion to the expanding economy's pace of growth from the start. Furthermore, as the new government established its financial base, little by little it began winning the confidence of the people. As a result, Shin-shihei notes began circulating smoothly and over an ever wider area.       Like traditional notes, Shin-shihei notes were rectangular. The different denominations were distinguished from each other by their colors: red, blue, green, orange, etc. To prevent forgery, their design was much more intricate than that of traditional notes: a chrysanthemum, a paulownia, cherry blossoms, a Chinese phoenix, and a dragon figured on the obverse (front), and a chrysanthemum, a peacock, a plover, a dragonfly, and a scallop shell on the reverse (back). In those days, however, such elaborate original plates were technically too difficult to create in Japan, and therefore the work was entrusted at first to a printing company in Germany (Dondorf Naumann). That's why Shin-shihei notes were popularly known as Doitsu Shihei or "German notes." But because the Shin-shihei notes printed in Germany were made mainly from hemp paper, they were of poor quality and were subject to severe wear and tear. From July 1877, they began to be printed in Japan using the German original plates and Japanese paper.

Mari Ohnuki, Research Division 3, Institute for Monetary and Economic Studies, Bank of Japan Monetary and Economic Studies 18(2), Bank of Japan, 2000

References Akashi, Teruo, and Suzuki Norihisa, Nihon Kin'yu-shi (Monetary History of Japan), Vol. 1, Toyo Keizai Shimposha, 1958 (in Japanese). Asakura, Kokichi, Shimpen: Nihon Kin'yu-shi (Revised Monetary History of Japan), Nihon Keizai Hyoronsha, 1988 (in Japanese). Bank of Japan, Research Department, ed. Zuroku Nihon no Kahei (Japanese Money), Vol. 7, Toyo Keizai Shimposha, 1973 (in Japanese). Gunji, Isao, ed. Nihon Kahei Zukan (Pictorial Book of Japanese Money), Toyo Keizai Shimposha, 1981 (in Japanese). Printing Bureau of the Ministry of Finance, Okurasho Insatsukyoku Hyakunenshi (A Hundred-Year History of the Printing Bureau of the Ministry of Finance), Vol. 1, 1971 (in Japanese). Tamaki, Norio, Nihon Kin'yu-shi (Monetary History of Japan), Yuhikaku Sensho, 1994 (in Japanese).