Great Imperial Japanese Banknotes

Posted on 10/15/2019

This month, we take a look at the intriguing history of Japanese paper money.

During the Edo Period or the Tokugawa Period (1603-1868), Japan was ruled by a series of shoguns: military dictators who led the Samurai. The emperor of Japan was essentially a ceremonial leader, uninvolved in governance with little say in what happened politically.

Japan’s shoguns reigned over territories through military means, often outside of the law, making the shogun the true ruler. The Emperor and the shoguns disagreed on the direction of Japan’s future, and throughout the 1800s Japan dealt with a financial crisis. The two collided over what direction to take Japan, culminating in the end of the era.

In 1868, the young Emperor Mutsuhito declared that he was the supreme ruler and that all subjects of Japan were under his command. The assertion of power lead to the Boshin War beginning in 1868 and ending in 1869, with the emperor defeating the shogun’s forces. Shortly after, the last shogun, Yoshinobu, surrendered and resigned from his position. The Emperor declared the new era to be the Meiji era, which translates to the “Enlightened Era.” The era would also come to be synonymous with him posthumously, which is why he is now referred to as Emperor Meiji.

During the shoguns' reign, a currency system (Tokugawa coinage) was established in 1601 in order to deal with exports and government debts. The currency was convertible to gold, silver or copper, and was used over centuries. In 1858, Western powers and Japan passed the Treaty of Amity and Commerce, allowing for Japanese coins to be exported. At the time, Japan’s gold and silver ratios for its currency were 5 to 1; drastically different from the rest of the world, which was 15 to 1. The western powers took advantage of this, and a huge outflow of gold left Japan. This obliterated the currency system of Japan, leading to numerous local governments issuing their own currency and the use of foreign currencies for local trade. The collapse contributed to an unstable Japan and likely played a role to the end of the shogun’s rule.

The turbulent monetary system that existed prior to the Meiji period led to the adoption of a new currency system. The Japanese Yen became the new official currency of Japan in 1871. At the time, two ideas for backing of currency were discussed. The first was government-backed currency, much like many European countries. The other was the backing of currency through local banks, much like the United States did at the time. As a compromise, the country decided to do both and see what the outcome would be.

The first issue in Japan after the debate was a government issue that was known as “New Paper Money” or the “German Notes,” as they were printed in Germany. Shortly after the government issue, The National Bank Act of 1872 established a national banking system for Japan that created four national banks for its currency and later expanded it to 153. The notes look very much like the national notes of the United States and are very rare. More research is required on the issuing branches, as so few have been seen in modern times that not all listed notes have been confirmed.

Japan / Constitutional Monarchy, Pick# 13, ND (1873), 5 Yen, front.
PMG 30 Very Fine
Click image to enlarge.

Japan / Constitutional Monarchy, Pick# 13, ND (1873), 5 Yen, back.
PMG 30 Very Fine
Click image to enlarge.

Shortly after the first issue of national notes, the National Bank Note Act of 1876 was passed. The act made national notes inconvertible and Japan printed a new series of notes, possibly partly done in preparation for a scheme against the Samurai. Ever since the Edo period began in Japan, the Samurai were given a stipend as a form of payment for their services. The stipends continued for the remaining Samurai after the Edo period ended, but Japan needed to stop draining its resources. In 1876, Japan stopped paying the Samurai stipends, which lead to a rebellion.

Japan, Great Imperial Japanese National Bank, Pick# 21, ND (1878), 5 Yen, front.
PMG 35 Choice Very Fine
Click image to enlarge.

Japan’s injustices toward the Samurai culminated in the Satsuma Rebellion. The government of Japan and the Samurai fought for less than a year but left Japan financially drained. Hoarding of money began during the war, but Japan was able to stimulate the economy enough for it to recover shortly after. Ensuring the new issue of national notes were inconvertible to gold or silver may have prevented further detriment to Japan’s financial system. The drastic action helped stimulate trade and a boom in textiles helped avoid financial ruin.

Once the economy started to recover from the Satsuma Rebellion, Japan wanted better control of its currency and wanted to re-establish convertibility. Instead of allowing the National Banks to continue, as they were unstable and fleeting, Japan decided to establish a central bank. The Bank of Japan was established in 1882 and quickly revoked the note-issuing privileges of the national banks. The national banks began to transition into private banks after losing their most lucrative right of issuing notes. By 1899, notes of national banks were officially deemed invalid.

The national notes of Japan lasted a short time, yet bear some of the most stunning depictions. Coming across a Japanese national note is quite rare, and few have come to auction. Check out the PMG Registry to see just how rare they are!

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