Ichibu-gin — The 'Gold-Silver Ratio Trap' Exposed by Unequal Treaties and the Monetary Crisis of the Late Edo Period

The predecessors of the Ichibu-gin were the Chōgin (丁銀) and Mameitagin (豆板銀). The Chōgin, which had been in use since the Keichō era (early 17th century), was an irregularly shaped lump silver coin that required weighing each time it was used—a considerable inconvenience. The shogunate worked to transition to 'counted silver coins' (計数銀貨, keisū ginka) of uniform weight and fixed shape, moving through the Gomomme-gin (五匁銀) of Kyōhō 13 (1728) before finally issuing the Ichibu-gin in Bunsei 10 (1827).

The Bunsei Ichibu-gin (文政一分銀) was a high-quality rectangular silver coin weighing approximately 8.63 g with a silver fineness of approximately .988. An exchange rate was established whereby 4 coins equaled one gold ryō (one koban), and it was widely accepted as a 'reliable commercial means of payment' with fixed weight, shape, and fineness. It was particularly welcomed by merchants in Osaka and the Kamigata region. The Kamigata area operated on a silver-based economy, and the Ichibu-gin established itself as the leading silver coin to replace the Chōgin.

The Tenpō Ichibu-gin (天保一分銀) was issued in Tenpō 8 (1837) as the successor to the Bunsei Ichibu-gin, with virtually no change in fineness or weight. In the late Edo period, the Ichibu-gin circulated widely as the 'commercial infrastructure of Edo,' from the commodity exchanges of Osaka (such as the Dōjima Rice Market) to the money changers of Edo and the rural merchants of the countryside.

Within the Edo silver coin system (江戸銀貨の体系), the Ichibu-gin occupied a central position between the large-format Chōgin and Mameitagin on one hand, and the smaller Nibu-gin (二分銀) and Isshu-gin (一朱銀) on the other. This stable position would be shaken to its foundations by the 'external pressure' of the opening of the ports in 1858.

In Ansei 3 (1856), Townsend Harris arrived at Shimoda as the first Consul-General of the United States. Through a tenacious diplomatic negotiation process quite different from Perry's hardline approach, he concluded the Treaty of Amity and Commerce between Japan and the United States in Ansei 5 (1858). That same year, similar treaties were concluded with Britain, France, Russia, and the Netherlands, collectively known as the Ansei Five-Nation Treaties (安政五ヶ国条約).

One point Harris pressed strongly during the treaty negotiations was the clause on 'equal exchange with foreign currencies.' This was the principle of exchanging the same type of metal (gold for gold, silver for silver) by weight, meaning that the domestic Japanese currency conversion rates would be applied to foreign merchants. While this appeared reasonable at first glance, it contained a fatal problem, since Japan's unique gold-silver ratio (the domestic exchange rate between gold and silver) diverged greatly from international rates.

At the time, Japan's domestic gold-silver ratio was approximately 1 part gold to 5 parts silver (4–5 Ichibu-gin equaling one koban). By contrast, the international (Western) gold-silver ratio was approximately 1 part gold to 15 parts silver—a difference of roughly threefold by simple calculation.

Following the conclusion of the treaty, in Ansei 6 (1859), the three ports of Yokohama, Nagasaki, and Hakodate were opened. Foreign merchants were aware of the gold-silver ratio discrepancy from the outset and were prepared to profit from it in an organized manner. The problem of silver coin outflows in the late Edo period (幕末の銀貨流出問題) began simultaneously with the opening of the ports.

The principle of 'same metal, same weight' to which Harris adhered was written explicitly into the treaty text as: foreign currencies shall be exchanged at parity by weight for Japanese currencies of the same type of metal. When this clause was applied to customs procedures at Yokohama and Nagasaki, foreign merchants obtained the legal basis to exchange foreign silver coins they had brought—such as Mexican silver dollars—for Ichibu-gin. The shogunate accepted this clause under diplomatic pressure, but at the time of the treaty's conclusion it had not fully recognized that it would lead to a systematic outflow of gold coins through the gold-silver ratio differential.

After the ports opened, foreign merchants moved swiftly. The outline of the method they employed was as follows. First, they exercised their treaty right to exchange foreign silver coins they had brought (such as Mexican silver dollars) for Ichibu-gin, on the basis of 'same type of metal—silver—exchanged at equal weight.' Next, they exchanged the Ichibu-gin they had obtained, at 4 coins to the ryō, for koban (gold coins). At the domestic rate of approximately 1 part gold to 5 parts silver, this meant that 20 Ichibu-gin yielded 5 koban.

Finally, they took the koban they had obtained out of the country and sold them on international markets at the high gold price (approximately 1 part gold to 15 parts silver). Through this series of transactions, foreign merchants were able to nearly triple the silver they had started with. This was the essence of the 'gold-silver ratio trap.'

According to records, within just a few months of the ports opening, hundreds of thousands of ryō (some accounts suggest over 1,000,000 ryō) in koban flowed out of the country (the exact figures vary across sources). To meet the robust demand from foreign merchants, the shogunate's gold mint was forced to issue additional koban, and gold production from mines such as the Sado Gold Mine could not come close to keeping pace.

Domestically, the rapid shortage of gold coins brought rising prices. In particular, a 'internationalization of prices' occurred in which the prices of export goods such as rice, cotton, and raw silk were pushed up to international market levels, dealing a direct blow to the daily lives of ordinary people in Edo. The Ichibu-gin itself flooded the market through exchange with the large volume of foreign silver coins flowing in, and a localized reversal—'high silver, low gold'—also occurred. The shogunate struggled over how to resolve this structural problem.

The scale of the gold coins that flowed out in the year or so after the ports opened is also recorded in reports by the British Minister Alcock of the time, conveying the reality that large quantities of gold were taken out of the country through the systematic exchange of foreign currency for shogunate gold coins. The forced measure of the Manen Recoinage was required in order to bring Japan's gold-silver ratio into line with the international rate (approximately 1 gold to 15 silver).

In response to the structural problem of gold coin outflow, the solution the shogunate chose was the drastic remedy of 'lowering the value of gold coins to the international level.' In Manen 1 (1860), the shogunate enacted the Manen Recoinage (万延改鋳), drastically reducing the gold content of gold coins.

The content of the recoinage was radical. The Manen Koban (万延小判) saw its weight slashed from that of the preceding Ansei Koban (安政小判)—which had a fineness of approximately 57% and a weight of approximately 9 g—to approximately 3.3 g, with the fineness left roughly unchanged (reducing the pure gold content from approximately 5.1 g to approximately 1.9 g). By reducing the 'actual gold content' of the koban to approximately one-fifth, the aim was to bring the value of the koban in the domestic market closer to the gold value on international markets, making it unprofitable to export.

The recoinage achieved its objective. Arbitrage transactions exploiting the international gold-silver ratio differential became unviable, and the outflow of gold coins dropped sharply. However, the price paid was severe. The replacement of large quantities of old gold coins (such as the Ansei Koban) with Manen Koban effectively caused a major increase in the money supply in circulation, triggering rapid inflation. Some accounts hold that, in the period surrounding the opening of the ports and the Manen Recoinage, prices in Edo rose several-fold (specific figures vary across historical sources).

The Ichibu-gin experienced confusion in its exchange ratio with gold coins throughout this process, yet continued to be issued with its fineness maintained at a high level until Meiji 3 (1870). Meanwhile, the sudden devaluation of currency caused by the Manen Recoinage also provided a pretext for anti-shogunate criticism by the sonnō jōi and loyalist factions. The emotional argument that 'the shogunate, bowing to foreign demands, has even destroyed the economy' became linked with political discontent and, in an indirect sense, contributed to the movement to overthrow the shogunate in the late Edo period.