Monetary History
of Japan

Tang-Kanei Tsuho 618AD

As legend has it, Japan was founded around 660BC by a direct descendent of the Sun Goddess. It is from this basic legend that Japan derives the name of “Land of the Rise Sun.” Japan has a long monetary history which dates back to when coins were first introduced from neighboring Korea and China. It is not known exactly when the first imports occurred, but it may have been even earlier that the first century AD. What we know for certain is that following the establishment of diplomatic relations with the T’ang of China, Japan imported T’ang Dynasty coins, the first of which was the Kaigen Tsuho in 618 AD (3.59 grams: 24.0 mm; Chinese Denomination: 1 cash). Consequently, Chinese coins are found in Japan long before coins were actually minted in Japan.

Korea-996ADIt was Emperor Temmu (672/73-686AD), the 40th emperor of Japan, who officially imported foreign coin for circulation. These were the Chinese bronze coinage. He issued a decree forbidding the use of silver coinage in the Nihon Shoki entry of April 15, 683AD (Tenmu 12th year), and mandating the use of copper coins. This reflects that Japanese were using Chinese coins long before his reign. There is much debate concerning the coinage of Japan between 300BC and 700AD. For you see, Temmu’s foreign policy favored the Korean kingdom Silla, which took over the entire Korean peninsula in 676AD. It was sometime after the unification of Korea that Temmu decided to break diplomatic relations with the Tang dynasty of China. This may have been to keep on good terms with Silla. This change in foreign policy impacted Japan for it relied greatly upon the Chinese monetary system for a prolonged period. It is likely that this prompted the 683AD decree to prohibiting the use of silver. Even Korea did not begin to use money until the Koryo Period (936-1392AD) when coins they began to mint their own in 996AD. Chinese coinage was freely imported and began to circulate in Korea. Prior to this time, barter based on rice and cloth was the principal means of exchange.

Japan - First Coins

Under Empress Genmyo (Gemmei)(707-715AD), we find in the first year of Wado (708AD), both silver and copper coins began to be minted in Japan. This coincided with discovery of large copper deposits that were made in the Musashi province. Copper was discovered in the Chichibu District of what is now Saitama Prefecture, and the Japanese were so overjoyed with the discovery that they named the Wado era (708-715AD)  after it, where Wado means “Japanese Copper”.

These first Japanese coins are thus known as Wado Kaichin and represent the first standardized production of Japanese coinage. They were cast, as were the Chinese coins of the period. The silver coins (5.272 grams; 22.65 mm) lasted only for about one year, whereas the copper coins were minted for the total of 51 years. The term Wado Kaichin (or Wado Kaiho) (3.3 grams; 25.1 mm) meant “Japanese Copper Initial Treasure.” The Chinese coins were known as Kaigen Tsuho referring to being foreign (Kaigen). The Wado Kaichin was modeled after the Kaigen Tsuho (K’ai Yuan T’ung Pao in Chinese), and while the majority were cast in copper, a few were also cast in silver. The Japanese and Chinese coins are very similar in design. However, the Wado Kaichin is read clockwise starting from the top, whereas the Kaigen Tsuho is read top-bottom, right-left.

Shomu (b 701, 715-756AD)

It was Emperor Shomu who spent vast amounts of money constructing Buddhist Temples that included the famous Todai-ji (Todai) Temple, that was the largest wooden building in the world located at Nara. Its great hall was 284 feet long (87 meters), by 166 feet wide (51 meters), and 152 feet high (46 meters). This housed a bronze Buddha that was 53 feet high constructed of 1 million pounds of copper, tin, and lead that was gold gilded. To this day, it is the second largest bronze statue in the world constructed in 752AD.

Nonetheless, it was this extravagance, however, that left the Imperial Treasury virtually bankrupt. This is known as the Nara Period and represents a cultural peak in Japan. Nevertheless, this extravagance also resulted in a shortage of coinage that caused the hoarding of coin and thus deflation since a million pounds of copper effectively reduced the money supply creating STAGFLATION.

Emperor Junnin (758-764AD) Monetary Reform 780AD760 Japan

In 760AD, the Emperor Junnin (758-764AD) issued coins in gold, silver, and copper coinage known respectively as Kaiki Shoho, Taihei Genpo, and Mannen Tsuho (4.3786 grams; 26.3mm). The gold Kaiki Shoho was the first of its kind in Asia since not even China issued such coins beyond ceremonial. This contributed to the view that the Land of the Rising Sun is where the gold was. The silver coinage is also exceptionally rare and thus there is no evidence that the silver or gold were minted for general circulation but may have been limited for large transactions and international trade buy goods coming to Japan through Korea after traveling the Silk Road in a virtual two-tier monetary system.

765AD Jingu KaihoConsequently, this vast construction created a huge shortage of copper. During the second reign of Empress Shotoku (765-770AD)(b 718–770AD), was the 46th and the 48th monarch of Japan respectively. Her first reign was as Emperess Kōken (749-758AD). She reascended the throne in 765 until her death in 770. It was at that time during the year 765AD that marked an effort to try to restore the economy by issuing a new coinage of copper known as the Jingu Kaiho (2.623 grams; 24.2 mm). The treasury was depleted and this new issue was tariffed at 10 old Wado pieces. While this new issue helped to ease the coin shortage, it did not end the hoarding for indeed Gresham’s law applied in Japan as well, that bad money (devalued) drives out good (older heavier coinage).

The traditional monetary system in Japan had long been barter given the fact it was also much more rural than urban. Hoarding is only natural when someone would have to turnover 10 old coins for one new coin. The economic turmoil of the period is reflected by the fact that Emperor Konin (b 709; 770-781AD) was the 49th emperor of Japan who had married Imperial Princess Ikami, a daughter of Emperor Shōmu.

It was Emperor Konin who issued a decree revaluing the old and the new coinage to be equal in 772AD. This helped to restore the monetary system by devaluing the Jingu Kaiho to be equal to the old Wado coinage. Clearly, what was taking place was the old coinage had been hoarded and the money supply shrunk prompting the 772AD revaluation.

The economic conditions in Japan did not improve on a sustained basis. The revaluation of 772AD of all the outstanding previous issues actually was inflationary because it drastically increased the money supply. Emperor Kammu (b 737; 781–806) was the 50th emperor of Japan and the son of Konin. He was faced with a continuing economic decline largely by his father revaluing all the old coinage to be equal to the present in 772AD. The financial burdens upon the state increased, and the court began dismissing nonessential officials. The Buddhist monks had been dominating the imperial throne in Nara and it was Kammu who took control of the state returning it into imperial hands. He picked up an left Nara moving the capital in 784AD to Nagaoka-kyō. In 792AD universal conscription was abandoned, and district heads were allowed to establish private militia forces for local police work. Decentralization of authority became the rule despite the reforms of the Nara Period.

796AD Ryuhei Eiho JapanIn 794AD, Emperor Kammu moved the capital again to Heian-kyō (literally Capital of Peace and Tranquility), about twenty-six kilometers north of Nara. By the late eleventh century, the city was popularly called Kyoto (capital city). “To” mean east and thus Tokyo became the city east of the capital “Kyo”. Every effort to cut expenses of the state were employed but without success. His father’s revaluation of all outstanding coinage of previous emperors had simply introduced drastic inflation as old coins now dominated the money supply. Emperor Kammu was compelled to initiate a monetary reform again in 796AD. The old coins were ordered to be surrendered and were to be removed from circulation entirely within 4 years. He issued a new copper coinage, the Ryuhei Eiho (2.623 grams; 24.2 mm), that was again valued at 10 times that of the old coinage in circulation and was issued for nearly the next 23 years.

Emperor Saga (809-823AD) (b785; r 809-823; d842) was the 52nd emperor of Japan. Soon after his ascending to the throne, Saga became ill and using the former-Emperor Heizei (r 806-809) who had been the 51st Emperor of Japan, his ambitious third wife, Kusuko, and her brother Nakanari organized an attempted rebellion in 810AD. It was Heizei who reorganized the bodyguards. The existing Imperial Bodyguards became the Left Imperial Bodyguards, while the Middle Bodyguards became the Right Imperial Bodyguards. Heizei had appointed Sakanoue no Tamuramaro (758–811) as Senior Commander of the Imperial Bodyguards of the Right who ironically quickly defeated the Heizei forces during the rebellion as the bodyguards remained loyal to Emperor Saga. Heizei’s wife Kusuko died of poison and her brother was executed. Heizei took the tonsure and became a Buddhist monk. Emperor Saga played an important role as a stalwart supporter of the Buddhism and this merely depleted the treasury further. Saga was forced to modify the coinage in 818AD changing the characters. This was the Fuji Shinpo (2.8 grams; 23mm) which was designed by the Emperor Saga himself.

Japanese Inflation 818-848AD

However, in the reign of Emperor Ninmyo (b 808; 833-850AD), was the 54th emperor of Japan. The economic decline in Japan was clearly underway. The costs simply kept increasing as tax revenues declined. In the year 835AD, the monetary system was again revised introducing the Showa Shoho (2.04 grams; 20.7 mm) that was to be valued at 10 of the old copper coins. Where the Fuji Shinpo was issued for nearly 23 years again, this Showa Shoho issue lasted for just 3 years illustrating the economic decline was picking up speed. In 848AD, Emperor Ninmyo revised the monetary system again issuing the Chonen Daiho (1.77 grams; 19.5mm) that was valued at 10 times that of the Showa Shoho. These economic conditions also led to the attempt to reestablish diplomatic ties with China as a mission to Tang were headed by Fujiwara no Tsunetsugu.

858 JapanThis trend of issuing a new coinage that was valued at 10 times the old coins in circulation began to manifest as standard policy in Japan. The Chonen Daiho had been issued for about 11 years. Emperor Seiwa (858-876AD; d 878) was the 56th emperor of Japan. Upon his ascension to the throne, he also found the treasury depleted and issued in 859AD the Nyoyaku Shimpo (1.898 grams; 19 mm) that again was valued at 10 to the old coinage. This was followed by Emperor Seiwa’s second monetary reform in 870AD once again issuing new coins valued at 10 times that of the old issue. The workmanship declined sharply. This issue lasted for about 20 years. In 876AD, Seiwa stepped down handing the throne to his 5 year-old son and he became a Buddhist priest taking the name Soshin

It was Emperor Uda (b 867; 887-897; d 931AD) who was the 59th Emperor of Japan. He was one of the few to reign whose mother was not of the powerful Fujiwara family that dominated Japan between 859AD to 1160AD. Emperor Uda’s reign is marked by a prolonged struggle to reassert power by the Imperial Family away from the increasing influence of the Fujiwara. Shortly after the death of Mototsune of the Fujiwara clan, Emperor Uda assigned supporters of Mototsune, to provincial posts in the remote provinces. Meanwhile, non-Fujiwara officials mainly from the Minamoto family, were promoted to prominent ranks, while Mototsune’s son and heir, Fujiwara no Tokihira, rose in rank, but only just enough to prevent an open power struggle.

Meanwhile, Emperor Uda attempted to return Court politics to the original spirit envisioned in the Ritsuryo Codes, while reviving intellectual interest in Confucian doctrine and culture. In the seventh month of 896AD, Emperor Uda dispatched Sugawara no Michizane to review prisoners in the capitol and provide a general amnesty for the wrongfully accused, in keeping with Chinese practices. Emperor Uda also issued edicts reinforcing peasant land rights from encroachment by powerful families in the capital or Buddhist monastic institutions, while auditing tax collections made in the provinces that had evolved into extortion. Emperor Uda also stopped the practice of sending ambassadors to China.

890 JapanIn 890AD, Uda also issued a monetary reform trying to address the significant shortage of copper coinage that was in part created by the constant new issues valued at 10 times the last one. This results in massive hoarding constantly driving the older issues out of circulation. Uda introduced the Kanpei Daiho (2.22 grams; 19 mm) valued at 10 times the old coinage and were issued for about 18 years.

Uda retired in 897AD abdicating in favor of his eldest son Daigo (897-930AD). Nevertheless, Uda remained often the power behind the throne. It was Uda who issued reforms aimed at increasing tax collection among the large landowners. In 927AD, he was instrumental in enacting the Engi shiki (Institutes of the Engi, or Yengi Period) that was a major legal reform that is still looked upon as the beginning of the Japanese Rule of Law.

907 JapanIn 907AD, the year that the Tang Dynasty fell in China, Emperor Daigo backed by Uda, also issued a major monetary reform where by the Kanpei Daiho were recalled and recoined as the Engi Tsuho (3.04 grams; 19 mm) that were once again valued at 10 times that of the old coinage. This issue would last for nearly 50 years.

Emperor Murakami (b 926; r 946-967AD) was the 62nd Emperor of Japan. He also found the treasury depleted upon ascending to the throne. He issued the Kengen Daiho (3.3 grams 20.5 mm) in 958AD that were again valued at 10 times the old currency. This was the last the Japanese coin issues to be minted and the coins were so inferior that no official wanted their name on them.

958 JapanFrom 708 to 958 AD the Japanese minted only 12 coins. In addition to copper coins, the gold Kaiki Shoho and the silver Taihei Genpo were very rare and thus not truly in wide circulation. Overall the copper coins declined in quality with each successive issue, and usage never actually became widespread with barter of goods remaining the primary medium of exchange because of the fiscal mismanagement of government.

Japanese-Coinage - Color


Overall, the coinage had shrunk in size, the metal was debased, and the quality of the production appeared amateurish. By 785AD, the brief unity that made Japan a nation began to fragment. Nara had become dominated by Buddhist Temples and religion began to subordinate the state. As there was a separation between church and state that became the Protestant Reformation in Europe, this split between the state and religion resulted in the separation of the state from Nara. The split came with the 794AD movement of the capital to Kyoto, then known as Heian Period. This is when the government became dominated by the Fujiwara family. Their feudal wealth helped to create Kyoto transforming it into a new metropolitan court open to Chinese influence generally between the 9th and 11th centuries. The Buddhist monks of Nara declined in power and influence politically.

The constant issue of a new coin with its value being decreed as worth 10 times that of the old coinage ruined the economy and undermined the integrity of the state. This practice created the incentive to rely upon barter. Coinage simply fell out of use much as was the case with the fall of Rome. Government’s assumption of the power to decree value of coinage (fiat) only produced an accumulative inflation during the Nara Period and early Heian Period that remains one of the highest in history. It would have been as if government printed a new one dollar bill and declared arbitrarily that all one dollar bills dated today are worth 10 old one dollar bills. You can imagine the economic confusion this introduced.


Consequently, this belief of an assumption of power to simply decree the value of money as the government pleased with no responsibility whatsoever for the consequences based solely upon the idea that the Emperor is chosen by God, ruined the economy. This practice simply created a two tier monetary system whereby coinage just fell out of use. Money was clearly not a store of wealth. The people returned to a barter system. Tangible goods with some utility value never really fell out of use namely rice and silk. Coin production stopped for about 600 years until 1587. Some foreign coins appeared from China, Korea and Annam (now part of North Vietnam) during this period right up until the Meiji era (1868–1912), but this was minimal reflecting international commerce, not domestic.

Until 1542, Japan had no contact with Western culture and as such its monetary history is strikingly different from ancient customs found in the West. European traders and missionaries proceeded to broaden contact with Japan until the Shogunate, recognizing the potential military threat posed by these new foreign devils, made a direct effort to expel all foreigners thereby severely restricting any contact with the outside world during the 17th century.

Nearly 200 years later, the famous black ships of the United States under Commodore Perry landed in Japan during the year 1854. The economics of Japan were ripe for change and this time the American visit marked a rebirth for Japan from an economic perspective. Industrialization was rapid in the wake of abolishing the Shogunate and the transformation of government toward a parlimentary system. By the end of the 19th century, Japan had exploded with a new economic vigor unmatched by most nations. This new age of industrialization was known as the Meiji period. The Emperor Meiji forced modernization upon his people in everything from clothing to construction. By the end of the 19th centiry, Japan had indeed emerged from the backward agricultural economy into a modern industrial nation with a strong military to match. A series of wars with mainland China and Russia and her alliance with the Allies during World War I enriched Japan and broadened its territorial interests. It would be these new territorial interests in the Far East that would ultimately set the stage for a major military clash with the United States during World War II. Due to the territorial trade expansion dreams of Britain, Netherlands and the United States, Japan abandoned her old allies of World War I and found herself aligned with the interests of Germany who stood against most of Europe. After Japan’s defeat in World War II, the old military dictatorship and expansionary politics were purged from the political systems. The Japanese people, for the first time in history, were free from the military rule that had for so many centuries suppressed any hope of a true democracy emerging. Free at last, the Japanese people demonstrated their unique ability to rebuild a nation very rapidly as it once had under the brief and shining moments of the Meiji period.

Monetary System

Prior to the Meiji period (1867-1912), the monetary system of Japan was very much still a barter form of exchange. While there were coins produced, there was not any fixed exchange rate between silver, gold and copper. Each coin would trade according to its own weight and at current market conditions. No sustained attempt was made by the government during the Shogunate period to control a fixed exchange rate that was anything but a free market. There were times where government attempted to impose some fixed exchange rate between gold and silver (usually when they had more to gain by overvaluing one or the other), but such actions were largely ignored by the people. For this reason, the weight and fineness of all the coinage prior to the Meiji period varied widely. In general terms, the average relationship between gold and silver in Japan prior to the Meiji period was about:

Nisshu Kin (2 Shu Gold)

Silver Ingots Pre-Meiji Period (2 Shu Gold)

16 Shu = 4 Bu = 1 Ryo

10 Rin = 1 Sen

100 Sen = 1 Yen

Meiji Reform of 1870

In 1870, the Emperor Meiji embarked on a great new age of modernization that would be reflected in all aspects of life including the monetary system. The new monetary system would not merely change the shape of the nation’s coinage, but also for the first time clearly standardize the weights, denominations and the relationships between them. However, while the new coinage would take the shape of a round coin according to western standards, Japan’s monetary system would also follow the same direction of western trends as well. Gold coinage was issued between 1870 (Yr 3 Meiji Period) until 1931. Japan, like most of Europe, abandonded the mintage of gold coins and the gold standard during the Great Monetary Collapse of 1931.

The Monetary History of the World
© Martin A. Armstrong