History of Japans trade (日本の貿易史)

We will explain the history of Japan's trade, as it concerns foreign trade.

Trade contact with northeast Asia
Tributary system of China
Japanese islands were divided from the Eurasian Continent about 10,000 years ago when the last glacial period ended. Since then it became necessary to cross the sea in order to exchange with foreign countries and areas. Therefore, Japan came to be a group of solitary islands literally separated from neighboring areas until it developed the art of ship-building and navigation. In ancient times, China occupied the central position in East Asia. In China, civilization occurred during earlier times and as the center of East Asia, China built a tributary system with neighboring countries and areas. Records indicate that China put Japan in its tributary system, going back to the age of the Later Han Dynasty. Paying tributes to Chinese dynasty stopped after the emergence of the Toyo of Yamatai-Koku kingdom. During the late 4th century, the five kings of Wa opened up again, paying tribute to the Southern Dynasty during the period of the Northern and Southern Dynasty in China, but after that Japan ceased to have contact with the Chinese continent for a long time. In the 7th century, Japan started to send Japanese envoys to Sui Dynasty China, but this envoy was not under tributary system. Japanese government intended to send envoy on an equal footing. In 617, En RI overthrew the Sui Dynasty and established the Tang Dynasty. So, in order to cope with this, the Kenzui-shi (Japanese envoy to Sui Dynasty, China), was renamed the Kento-sho (Japanese envoy to Tang Dynasty, China), and the ensuing cultural exchanges lasted until the early 9th century. Chagan, the capital of Tang became an international city with envoys and merchants from West Asia and India, and various kinds of commodities and knowledge were spread to Japan and East Asia from Chagan. During this period, the relationship between Japan and Silla worsened, causing Japan to deepen their exchanges with Bo Hai (kingdom in Manchuria and North Korea). Bo Hai exported Yakuyo ninjin (ginseng) and fur products to Japan, and Japan exported silk and cotton products to Bo Hai. After the envoy to Tang was abolished in 894 and Tang was ruined in 907, commerce with ordinary Chinese citizens continued.

Appearance of the Sung Dynasty and emergence of samurai family

After the Koso War in 875, Tang lost power to a unified China and Hanchin, local forces in various places showed the independent trends. China was officially divided for 70 years (Godai-Jikkoku period), but in reality it lasted for more than 100 years. It was the Northern Sung Dynasty that unified China again, but it can not be said that the Sung Dynasty was able to exert a controlling force over the whole area of China, since Sung was confronted with the Ryo and Jin Dynasties, but it can be thought that society achieved stability, and agriculture and commerce made remarkable progress in China during this period. On the other hand, in Japan, after abolishing their envoy to the Tang Dynasty, they continued trade in Korokan and also the commerce with ordinary Chinese merchants continued on the private-sector level at Hakata and Tsuruga. TAIRA no Tadamori who was interested in the trade between Japan and Sung, made the trade prosperous and grasped authority by bringing imported goods to the Imperial Court. After that, TAIRA no Kiyomori developed trade with Sung into prosperity by improving Owada no tomari and built a strong political system on the basis of profits from this trade. After the collapse of the Taira clan government, the Kamakura Bakufu approved trade with Sung by ordinary citizens and trade between Japan and Sung continued just before the Southern Sung Dynasty was overthrown in the 13th century. During this period, silk goods and ceramics were exported to Sung, and in the middle of the 12th century, Sung currency was introduced in Japan. Sung currency promoted the Japanese monetary economy. Gold, sulfur, Japanese swords etc. were exported to Sung from Japan.

Rise and Fall of Mongolia, and Muromachi Shogunate

The 13th century was called 'the century of Mongolia' and Mongolia swept across the Eurasian Continent. In China, Mongolia ruined Jin in the Joshin tribe dynasty and Sung which was driven out to southern China by Jin, and established the Yuan Dynasty and Mongolian Dynasty in China. In addition, Mongolia wanted to enlarge its control territory and tried to extend its influence to Japan and Vietnam. Although the relationship with neighboring countries was worsened, trade among ordinary citizens continued, and Japan's trade with the Jiagnan region was getting especially prosperous with the development of its economy. However, in Japan, since the social security had declined when the Kamakura bakufu was ruined and the Imperial Court was divided, the piracy by wako (Japanese Pirates) was rampant and the trade with China didn't carry on smoothly because of the social security worsening and public administration stagnating. During this period the Ming Dynasty replaced the Yuan Dynasty, uniting China and sought Japan to take countermeasures against the wako and to bring tributes to the Ming Dynasty from Muromachi bakufu (Japanese feudal government headed by a shogun). Yoshimitsu ASHIKAGA responded to this demand, was appointed King of Japan and started to monopolize the trade with Ming using Kangofu (certificate to show that a ship was lawfully registered by Ming). After the Onin War, the initiative for trade with Ming gradually moved to the Ouchi clan, Hosokawa clan and merchants in Sakai or Hakata. Ryukyu was the port of call en route to Ming, but Ryukyu brought tributes to Ming of itself. But after a while Ryukyu made enormous profits by reselling imported goods from Ming to Japan and Korea. After the destruction of the Ouchi clan in the middle of 16th century, the trade between Japan and the Ming Dynasty in China came to an end and Ming also enacted a policy to prohibit trade. During this period Eiraku-tsuho (bronze coins struck in the Ming Dynasty) and textile products from Ming and mineral resources such as copper and handicraft such as lacquer wares and folding screens from Japan were traded. Yi Dynasty Korea also demanded that Japan take countermeasures against wako (Japanese pirates) and seizing on the opportunity, envoy exchanges came to be conducted and trade between the two countries prospered. In those days, copper products and handicrafts from Japan and cotton materials and Asian ginseng from Korea were traded. However, after Muromachi bakufu lost its centripetal force, wako (Japanese pirates) made frequent appearances and Japan-Korea trade was interrupted for some time. In the middle of 15th century, Yi Dynasty Korea opened trade with Japan again, but the Yi Dynasty tried to regulate this trade relationship. In the middle of 16th century, the relationship between Korea and Japan worsened and the trade between both countries declined.

Contacts with Europeans
Trade with Portuguese

In the 16th century, during the Renaissance period, Europeans who visited Japan admired Japan very much. Marco POLO described Japan as having a golden temple and palace, therefore Japan was considered to be a country of gold. But due to the abundant ores resources in the top layer of soil in the volcanic mountain terrain, Japan went into the age of industry before digging out of large scale ores. During this age, Japan became the main country exporting copper and silver products.

A refined feudal society was established in Japan with rich preindustrial arts and a developed culture. Japan had a larger population than European countries and was being urbanized.

Europeans who visited Japan in the first stage of this era were surprised at the art of craftsmen and metal crafts from Japan. This stemmed from the fact that Japan was short of iron ore. Therefore the Japanese became well known as craftmen who were able to make effective use of their limited resources. The quality of copper and iron were the best in the world, and weapons made out of those materials were very sharp while Japan also stood unrivaled in the art of paper products.

Japanese called Europeans 'Nanban-jin' (southern barbarians) because they came from the south. Portuguese vessels (4-small-size ships in common each year) used to arrive in Japan bringing Chinese products (silk, porcelain). Japanese people were very much expecting for trading those Chinese products. However the Chinese emperor prohibited trade between Japan and Portugal in order to discipline wako. As a result, Portuguese tried to seek a country that could act as a reconciliatory role in trading between the Asian countries.

In 1557 when Portugal acquired Macau and was recognized as a formal trade partner with China, Portugal began to control its trade with Japan and recognized the most successful bidder the trade with Japan. As the result of this conference, an armed merchant ship of 1,000 to 1,500 tons was given exclusive rights to trade each year (an armed merchant ship was 2 to 3 times as large as junk or galleon ships). Although interrupted in the middle, this trade lasted until 1638. Trade with Portugal was finally prohibited after Japan began to prohibit Christian priests from coming to Japan.

Trade with the Dutch
Trade with Portugal was gradually overwhelmed by trading with junk ships from China and in 1592 trading by ships with a shogunal charter for foreign trade began at the rate of 10 ships a year. Since 1600, Spanish ships arrived in Japan from Manila once a year. Also since 1600 the Netherlands and since 1613 England began trade with Japan. In 1600 the Liefde was cast up on the coast of Japan and William ADAMS arrived in Japan as the first Englishman. In 1605 on the order of Ieyasu TOKUGAWA, 2 members of the Liefde crew were sent to Hollanders in the city of Pattani in the Kingdom of Thailand in order to start trade with Japan. Victor Sprinckel, Head of the Netherlands trade office in Pattani in Thailand, refused their landing, as he was too busy to cope with the situation caused by Portugal which was hostile to the Netherlands in southern Asia. However, Dutch, Jacques SPECX struggled to arrive at Hirato in 1609 and obtained permission to trade from Ieyasu through William ADAMS.

The beginning of the Edo period overlapped the end of trade with Spain and Portugal, and in this period the economic and religious relationship with Europeans arrived at certain extent. In the beginning of the Edo period, the first Japanese European style galleon ship for ocean navigation, San Juan Bautista (500 ton) started on a voyage for Europe with a Japanese delegation headed by Tsunenaga HASEKURA through America. In this age Tokugawa Shogunate gave charters for trade to 350 armed trading ships with 3 masts. Adventurers such as Nagamasa YAMADA who made a spectacular showing in Asia appeared. After 1638 only Hollanders as Europeans were permitted to trade with Japan at Dejima, Nagasaki for 200 years.

National Isolation

After the death of Ieyasu in 1616 Hidetada TOKUGAWA began an isolation policy and the policy was completed 25 years afterwards by Iemitsu TOKUGAWA, the successor of Hidetada. Because of its national isolation, commerce with England, Spain and Portugal who traded with Japan until that time stopped and commerce with ordinary citizens was also prohibited. Trade partners and their places for association were also limited: that is, Hollanders and Chinese were approved trade in Nagasaki and Dejima, Koreans were approved trade in Tsushima, Ryukyuans in Satsuma and Ainu tribe in Matsumae Province. Trade in Nagasaki included, gold, silver and copper products that were exported from Japan, and marine products that were also exported to China. On the other hand textile products were imported to Japan. Afterwards Hakuseki ARAI limited the trade volume, but Okitsugu TANUMA promoted trade after he took political power.

In the middle of 19th century, Edo became a city with a one million population and Osaka and Kyoto, having a population of 400,000, respectively. Edo had a rice-centered economy and amount of tax collected was displayed in terms of an amount of rice. For example even if a territory could not produce rice in their land, the economic scale was expressed by the rice amount corresponding to the converged worth of rice and the converged rice amount became the standard for taxation. Tax rate in Edo era was 40 % on the revenue and this was very high when compared with those in other Asian countries. Because of this situation, there is an opinion that farmers in Edo period were exploited. On the other hand, another opinion says that the cash crop (soybean, cotton, etc.) was not taxed, so farmers having lands of common size could lead a reasonably good life. Feudal lords collected mainly rice as taxes, but they had monetary economy in Edo period therefore it was necessary to turn rice into cash. Whether they had a poor crop or good harvest, it was necessary for feudal lords to have a stabilized monetary conversion, therefore in 1730, the world's first futures transaction of rice was started in the dojima rice exchange in Osaka. This was so called buying rice before a harvest.
This was many years before the establishment of the Chicago Mercantile Exchange in 1819 (present center in the world for grain futures transaction)

Reopening of contact with Europe and America
Opening of the country to the world

Due to the Peace Treaty between Japan and United States in 1854, the Japanese isolation policy that had lasted for 200 years was abolished. 4 years later, a Treaty of amity and commerce between Japan and United States was concluded, and according to this treaty Japan was not approved a tariff autonomy. Treaties of similar contents were also concluded with England, France, Holland and Russia. These unequal treaties troubled the Meiji Government for a half century. As the main trade items in this period, Japan exported raw silk thread and tea, and foreign countries, especially England, the largest trade partner of Japan exported wool, cotton fabric, military weapons and metals as raw materials for weapon were exported to Japan.

Due to the conclusion of commerce treaties with foreign countries including Treaty of amity and commerce between Japan and U.S.A., it came to be possible to use foreign silver coins in Japan. In those days it was decided that the exchange rate of gold to silver was 1:15 by the Tokugawa government. But in this rate gold was valued very low when compared to the rate in foreign countries where the exchange rate of gold to silver was 1:115. Therefore foreign merchants could obtain a lot of profits by only bringing silver into Japan, exchanging silver for gold and exchanging gold for silver again in foreign countries, such as Shanghai in China for example. In this way large volume of koban (gold coin: former Japanese oval gold coin) were flown out from Japan. Feudal government issued Manen koban (gold coin in Manen era) and reduced the amount of gold contained in koban (gold coin) to one third, thus at last stopping the outflow of gold from Japan. However, the Japanese economy in the end of Edo era encountered inflation due to the reduction of their currency value by one third and domestic products being exported through trade with foreign countries.

Encouragement of New Industry

The Meiji government took over issues from the Edo feudal government such as the acquisition of foreign currencies and revision of unequal treaties. In 1870 Meiji government established the ministry of industry, employed many foreign specialists, and promoted new industries and improved infrastructure such as railway, shipbuilding, mine, iron manufacture, telegraph, lighthouse, etc.

Japan in Those Days

Treaty Revision

Modernization of Japan and Expansion of Enterprises into the World
Boom after World War

Controlled Economy

Revival after the War and Globalization