Takanawa negotiation (高輪談判)
The Takanawa negotiation was a conference held by the the head of the Meiji Government and the ambassadors of England, France, United States of America, Italy, and Germany, in Takanawa, Tokyo Prefecture on August 19, 1869. At this conference, the collection of counterfeit coins of Japanese citizens (centered around nibukin) and the introduction of the modern currency system were decided as international commitments. Furthermore, this led to the New Currency Act and the set up of the Mint (Japan).
Meiji's bad counterfeit money problem
After Japan opened its country to the world, the Edo bakufu lowered the quality of gold coins to stop the outflow of gold to foreign countries, but because of this, prices rose, the society was in confusion, and European and American merchants also took a hard hit economically. For this reason, on June 25, 1866, Western countries and the Edo bakufu concluded a kaizeiyakusho, promising to maintain the current currency level fixed during the Manen era (end of the Edo period) for the moment for the equivalent exchange of domestic and overseas currency and it's stabilization, and that in the future Japan would adopt a currency system that corresponds with the international level.
However, the financial affairs of the bakufu at the time were on the verge of collapse, and by the time the kaizeiyakusho was concluded, the bakufu had already lowered the quality of coins even more and continued issuing them. When the Boshin War eventually started, the Oetsu-reppan alliance: the Aizu, Sendai, Nihonmatsu, Kubota, and other domains started coining counterfeit money, followed by Imperial army domains such as Satsuma, Tosa, Geishu, Uwajima, Sadowara, and Gunyama Domain, for the purpose of raising capital to import weapons from overseas. Furthermore, domains such as Kaga, Chikuzen, and Kurume Domain who did not actively participate in the war also started coining counterfeit money. Especially because at the time, the currency system centered around Europe and America was mainly the gold standard system, along with the fact that the shape of the koban (former Japanese oval gold coin) of this period was inconvenient for external transport and circulation, instead, the coining of counterfeit nibukin, which was the most used in the field of external settlement, was done frequently, and even gilded silver coins which were not so different from the forfeit coins appeared. The Meiji Government took over the kin-za (an organization in charge of casting and appraising of gold during the Edo period) and the gin-za (an organization in charge of casting and appraising of silver during the Edo period) from Shogunate, also coined around 3.81 million ryo low quality gold coins, around 2.24 million ryo silver coins, for a total amount of around 6.05 million ryo from April 1868 to the February of next year (this was more or less, the official currency issued by the government, but from the point of view that it didn't meet the monetary standard defined by the government itself, it was not much different from counterfeits). The amount coined for many domains are unknown, but the amount reported officially is: for the Geishu Domain, around 196 thousand ryo, for the Kurume Domain, around 30 thousand ryo, for the Tosa Domain, around 51 thousand ryo, and the Satsuma Domain did not officially disclose the amount, but the estimated amount after Tomozane YOSHII pressed the domain's accountant was around 1.5 million ryo. Of course in reality, many other domains and people took advantage of the civil war and had counterfeit money made similarly, and a rumor was reported by the Foreign Office (the later Ministry of Foreign Affairs) to the public chamber that 30 million counterfeit ryo fell into the hands of foreign merchants.
In other words, the government at the time also did not know the concrete amount of fake money coined, and even in the future, uncovering the whole truth would be difficult (even if 30 million ryo is exaggerated, the amount made clear presently is still close to 8 million ryo, and much more bad money and counterfeit money is thought to have been issued.)
Negotiations between Shigenobu Okuma and several foreign countries
The circulation of great amounts of counterfeit money (including bad money issued by the government) made the prices destabilize and gave a bad influence on the economy. Particularly, it was difficult for general merchants and people to distinguish real gold and silver coins from the fake, and there were foreign merchants who also acquired counterfeit money and suffered damage.
The man who was dissatisfied with this was England minister, Harry Parkes. Having the background of cooperating with the formation of the Meiji Government by supporting the Satsuma and Choshu Domain, Parkes realized that the Meiji Government was breaking the kaizeiyakusho and secretly coining bad money, but thought that leaving this matter alone would go against the profit of English merchants who were trading with Japan. Therefore, he hoped that the Meiji Government would carry out a currency reform immediately after the civil war ended.
On January 7, 1869, with the call of Parkes, ministers from France, America, Italy, and Germany successively demanded the new Japanese Government to take measures to wipe out the counterfeit money because 'since there are rumors that the new government (Meiji Government) are coining money that goes against the kaizeiyakusho, the market place for money is crashing and merchants are suffering damage.'
The Meiji Government was surprised with the sudden demand, but tried to make the vice foreign prefectural governor, Kiyokado KOMATSU (Tatewaki, a chief retainer of Satsuma Domain), deal with the problem for the time being. However, because KOMATSU became sick (suddenly died next year, at the age of 36), the man who KOMATSU recommended as his substitute was Shigenobu OKUMA from the Hizen Domain.
OKUMA was immediately appointed to vice foreign prefectural governor and counselor, and still more, he was ordered (January 12) to be sent to the finance office (the later Ministry of Finance). However, as Emperor Meiji's Tokyo Gyoko (Emperor's going out to Tokyo) was nearing, OKUMA could not immediately move from Kyoto to Yokohama City where Parkes was, so he and others such as foreign governor Munenari DATE (Uwajima Domain) had a conference, resulting in an announcement to Japan and foreign countries on February 5, that they would issue new currency in the near future, and for Parkes, he instructed officer of Foreign Affairs Council Munenori TERASHIMA, who was also the governor of Kanagawa Prefecture, to appease. However, this angered Parkes, and he sent a letter to the government on January 22 and 23 seeking an explanation for the circumstance again. Here, in the name of DATE, the government notified minsters from each country that Japan will not coin the current currency from now on (they did not formally recognize this as bad money violating the kaizeiyakusho), that the daijokan money would be used until the preparations for the new currency is completed, and that if organizations and individuals besides the daijokan coin currency, they will be subject to punishment, even if they are lords. However, in reality, the Meiji Government at the time (before the return of lands and people to the emperor) did not have the authority to give orders to various domains (therefore the notice of Daijokan [Grand Council of State], which was more of a request, was issued instead of the edict of Daijokan, which was a command from the Meiji Government), and particularly the Satsuma and Tosa Domains used their position as a "victor country" and still continued to coin counterfeit money. Furthermore, Kosei YURI, the vice prefectural governor who promoted the the plan of the Dajokan-satsu as the inconvertible paper currency at the finance office, expressed his will to resign because of his dissatisfaction with the confrontation on the existing financial issues along with his dissatisfaction with the circumstances that the diplomatic issue had grown into a monetary reform which even involved the change of position of Dajokan-satsu. Furthermore, when this series of exchange spread around Japan and foreign countries, people began to move on their various ideas, for example, merchants of Yokohama settlement held a meeting on February 28, and decided to seek compensation from the Meiji Government for the damage caused by counterfeit money, or some merchants started to buy up the counterfeit money which had slumped anticipating the next recall.
OKUMA, who entered Tokyo on March 18, talked with ministers of each country while hurrying to work out the counterfeit money disposal plan. As a result, they went as far as preparing for the first proclamation of their new policy such as 'decision to issue new currency, using the kinsatsu (Dajokan-satsu) as the same as a specie (in equal value), and the abolition of the market price of kinsatsu' on March 30, once permission from the Daijokan (Grand Council of State) was received. However, on the day before the declaration, the 29th, an opposing argument by the Daijokan was released so the declaration was canceled, and the express messenger who was in the middle of sending the declaration letter to Osaka, with the assumption that this declaration would be a formal decision, was called back to Tokyo. The main person who was against the declaration was Toshimichi OKUBO, a powerful figure of the Meiji Government.
On a letter OKUBO sent to Tomomi IWAKURA on this day, it said 'townspeople are foolish people, so if the Okami (political authorities) instructs them a little clearly, they will follow even if it was a hoax. (the gist)'
Like it says above, merchants were people who obediently followed the Okami (political authorities)'s orders, so OKUBO thought that if the Meiji Government, which was still feeble and did not have enough authority as the 'Okami' (political authorities) reformed the currency in a flurry, by doing so if in the worst case scenario, the orders did not get across, this would reveal the lack of 'people's trust' in the 'Okami' (political authorities) (Meiji Government) and their powerlessness to their own country and foreign countries, which would lead to the collapse of the government, therefore he considered the monetary reform was nonessential and nonurgent. Furthermore, OKUBO was still avoiding to reveal this at the time, but he was apprehensive about the response when the fact was made clear during the disposing process of counterfeit money that his own domain, the Satsuma Domain, was secretly making counterfeit money.
OKUMA was disappointed with this situation, and on the 30th, he began to think about resigning his post as a finance office vice prefectural governor (successor to Yuri), which he held along with his present post. Takayoshi KIDO, who was not in Tokyo because he was resting because of illness, was the one who saved this crisis. KIDO found out about these circumstances, and on a letter dated April 17 which he entrusted Tomozane YOSHII and sent to OKUBO, he explained that the present situation of the currency circulation is 'totally paralyzed,' and that if this situation is left alone the Imperial Rule Restoration (Meiji Restoration) would not go as they wanted, along with indirectly saying that if the Satsuma Domain did not reveal by themselves the fact that they were manufacturing counterfeit money, the Satsuma Domain's reputation regarding the restoration would be ruined. Two days following this, KIDO sent a separate letter to Tomomi IWAKURA, asking him to persuade OKUBO and helping OKUMA, saying that if the currency reform is not put through, the "people's trust" will be lost and Japan would be branded by foreign countries with fraud. Here, OKUBO became aware of the importance of the matter, and after consulting people from the Satsuma Domain such as YOSHII and Takamori SAIGO who was staying in Kagoshima City, OKUBO presented a petition individually, arguing that when 'your domain (the Satsuma Domain)' sacrifices its life to save the 'empire's (Japan) crisis,' then it becomes possible to 'preach the justice to the world' and he also insisted that by stopping the coining of counterfeit money and revealing the truth, the Satsuma Domain would be able to have an advantage over other domains. Also, because OKUBO withdrew his opposition to the currency reform declaration by OKUMA which he had canceled before, the reform was rescheduled to be issued on April 29.
Afterwards, various declarations concerning the currency reform were put out with OKUMA (on April 17 he became a full-time finance office vice prefectural governor, and on July 6, he transferred to Okura no taifu [a senior assistant minister of the Ministry of Treasury] due to the establishment of Ministry of finance) as the main leader. The following are the main aspects.
Decision to issue new currency, using the Kinsatsu (Dajokan-satsu) as the same as a specie (in equal value), and the abolition of the market price of kinsatsu.
Forbid the exchange of kinsatsu/specie money (because they are equivalent), and forbid the naming 'Dajokan-satsu' (because this would lead to a misunderstanding that another organization that issues currency besides the Daijokan exists).
Keep the amount of issued kinsatsu to the present 32.5 million ryo, and stop additional printing. Money-exchange business and other exchanges by merchants using counterfeit money is strictly forbidden (the fact that Japan was coining and circulating counterfeit money would be announced to Japan and foreign countries). The circulation of kinsatsu must not be prevented until the new currency is issued and is exchanged with the kinsatsu by 1872 (this is because the kinsatsu was a substitution of the specie until the new currency was issued).
June 6th (Daijokan tasshi [proclamation by the Grand Council of State])
Since kinsatsu in the three prefectures (Tokyo/Kyoto/Osaka) was to be collected, and each prefecture would be issued 2,500 ryo for each stipend of ten thousand Goku crop yields, in twice of June and July, the specie which corresponds to this is to be payed to the finance office by the appointed time (it was silently accepted that the 'specie' in this case had counterfeit money mixed in it).
- return of lands and people to the emperor
Now, since after the notification by the new government on February 30, the market price was steady for a while, Parkes decided to watch over the Meiji Government's policies, but after seeing that OKUMA's policy was more sudden than expected and after finding out through independent investigations that the amount of counterfeit money circulated by various domains was bigger than expected, he became worried that those things would be discarded after the return of lands and people to the emperor saying that 'it is unrelated to the new government.'
England in particular had traded large amounts of money with the Satsuma Domain since the end of Edo period, and Parkes was cautious about the possibility that if the counterfeit money paid during this time was to become invalid, English merchants and businesses would suffer losses, and Japanese trade would fall into great confusion. Here, Parkes consulted with ministers of the other four countries, and on July 6, he sent a memorandum to the Meiji Government notifying their request for the government to hold a conference to confirm that the government would be able to carry out Okuma's policy, and also confirm what the government was going to do about the counterfeit money that the domains issued.
On July 10, a preliminary meeting was held in the form of visit Parkes in British Embassy in Tokyo by Nobuyoshi SAWA, who assumed the position of chief of Foreign Ministry accompanying the reorganization to the Ministry of Foreign Affairs, along with OKUMA, who similarly assumed the position of Okura no taifu (senior assistant minister of the Minister of Treasury) accompanying the reorganization to the Ministry of Finance. Following this, a formal conference was held in Takanawa setsugusho on July 12.
This is called the 'Takanawa negotiation.'
From Japan, the highest officials of Daijokan, Minister of the Right Sanetomi Sanjo, chief councilor of state Tomomi IWAKURA, chief of Foreign Ministry Nobuyoshi SAWA, Okura no taifu (senior assistant minister of the Ministry of Treasury) Shigenobu Okuma, and Gaimu-taifu (post of Foreign Ministry) Munenori Terashima attended, and Hirobumi ITO was the assistant. The ministers on the other side were Parkes (England), オウトレ (France), Robert Van Valkenburg (America), コント・デ・ラ・ツール (Italy), and Max von ブライト (Germany).
According to the records written down during the negotiation that remains today, the negotiation was entirely in the hands of Parkes from start to finish, and he confronted the government with evidence indicating the fact that the Meiji Government coined bad money violating the kaizeiyakusho, and that domains coined counterfeit money (according to a part of the records, Parkes became worked up over an answer by the government which was off the point, and hit and broke a cup near him). The Meiji Government refused to admit the fact that they coined bad money until the end for the sake of appearance, but they did admit the fact that several domains had coined counterfeit money. After this, the Japanese government was forced to consent to pulling out all current currency, regardless of it being specie or counterfeit (it was already proposed by OKUMA that this would be done by May 11), and exchanging it immediately, and as a temporary measure, the nibukin owned by foreigners (this bad money/counterfeit issued by the government and domains was the biggest problem) were to be examined, encapsulated, put a stamp of approval, and handed out, and those that went though this were to be accepted as tax payment or exchange equivalent to the specie even if it was counterfeit. On the other hand, because Parkes ran the negotiation, the claim for loss put out by the French minister was virtually ignored, and objections to OKUMA's currency reform did not occur by the ministers or the heads of the Daijokan, such as SANJYO and IWAKURA, leading to an agreement from both Japan and foreign countries, and as a result the independent currency reform by the Meiji Government itself was accepted to take the shape of a policy in accordance with OKUMA's proposal. Afterwards, on July 19, the conference was held again at the same place with the same participants, but this ended with only adjustments of details such as concrete explanations of the implementation guidelines for matters decided during the last conference.
Currency reform and counterfeit money disposal
OKUMA's currency reform was recognized as the Meiji Government's policy along with as an international pledge for the moment, but to be realized, there were four problems.
The examination of the genuineness or spuriousness of nibukin held by foreigners, as agreed at the Takanawa negotiation.
The rights and wrongs of enforcement of punishment for the domains which issued counterfeit money.
The decision of the time limit and exchange rate of the counterfeit and specie money.
The decision of the new currency system, and the construction of a new mint to enforce this.
Authenticity testing at open ports and open markets.
After the conference ended on the 19th, SAWA, OKUMA, and ITO immediately organized a team with young bureaucracy and influential money exchangers in Tokyo, and started conducting authenticity tests on foreigner's nibukin at open ports and markets. For foreigners in Tokyo and Yokohama, the authenticity test for the nibukin they handed in through ministers of each country started on the 23rd, and the officials succeeded in finishing on the same day in Tokyo, and even in Yokohama, which was the Japan's leading trading port, they managed to finish by the 25th. In Osaka and Kobe, the money was handed in on the 25th, and went through the authenticity test on the 26th, in Nagasaki, the money was handed in on the 27th, and went though the authenticity test on the 28th, and in Niigata, the authenticity test was on August 3, and lastly, in Hakodate the authenticity test was on August 12. Through this, the Meiji Government showed the ministers and merchants from other countries that they were serious, along with not giving them time to bring back counterfeit nibukin which spilled abroad to Japan again to have it go through the authenticity test. Encapsulated counterfeit nibukin were exchanged for the specie money one by one at each open port and market from September to March of the next year. Foreign merchants were discontent with these drastic measures, but the movements such as asking for compensation for loss were put an end, because the ministers had accepted these measures, and also because, although they judged that it was not enough, they still received compensation through equivalent exchange with specie money.
Punishment for domains which issued counterfeit money
On August 24, the Satsuma Domain submitted a 'Jisojo' and in the following September the Tosa Domains followed.
In response to this, OKUBO and SAIGO, and Takayuki SASAKI from the Tosa Domain asked for pardon for both countries, as the Satsuma and Tosa Domains surrendered themselves, and as both domains unavoidably issued counterfeit money, not for self-interest, but because of the necessity for armament supplies to realize the restoration,
However, people from domains that were confirmed of having no truth in coining counterfeit money due to investigation, such as those from the Choshu or Hizen Domains, were offended by the fact that they supplied war expenditures at their own expense after sustained effort, while the Satsuma and Tosa Domains supplied them with illegal methods, and insisted that a penalty should be taken from both domains and that this should allot to the government funds for the exchange of counterfeit and specie money. However, when the jisojo from the Satsuma Domain was made known at shugiin on September 13, opinions from domains' representatives came up one after another asking for a gentle punishment appraising the honorable way the Satsuma and Tosa Domains confessed their misconduct voluntarily. Additionally, other domains which were coining counterfeit money successively submitted a jisojo, fearing future problems that would occur in the case that they were exposed by the government later. Consequently, on April 29, 1870, the government pardoned the domains that had handed in the jisojo before then, and also decided to overlook the coining of counterfeit money done by the other domains before the end of the Hakodate War, including the Tonami Domain (the old Aizu Domain) which used to fight with the Meiji government. By this time, most domains had stopped making counterfeit money. However, the Chikuzen Domain alone still continued to make counterfeit money by switching to forgery of the kinsatsu (Dajokan-satsu) even afterwards. On July 2, 1871 (12 days before the abolition of feudal domains and establishment of prefectures), the Chikuzen Domain, which was discovered, had to forfeit their Fukuoka-jo Castle 47 thousand koku since Yoshitaka KURODA, and was virtually changed its rank.
The problem of exchanging counterfeit and bad money.
Now, the main reason behind the scheduling of such a tight agenda for the authenticity testing was that, while the exchange of equivalent amounts of counterfeit for specie was accepted as unavoidable given the government's relationship with foreign countries, it was clear that if all the counterfeit money was exchanged for specie of an equivalent price, the Meiji Government would face financial ruin, so the Meiji Government wanted to keep this amount to a minimum; at the same time, the foreign ministers of Japan's trading partners wanted to avoid a situation in which the government might collapse so as to ensure that they could maintain their trade relationships with the Meiji Government, so the motives of both sides coincided.
On July 22, the edict of Daijokan was put out, which ordered citizens to submit counterfeit money to officials by the end of October. However, there was no method for regular people to make a distinction between a specie and counterfeit money (if there was a way to make this distinction, there would have been no reason to go through an authenticity test for foreigners in the first place), and besides, large amounts of counterfeit money were circulating so it was pointless. On August 11 when the Ministry of Finance and Ministry of Popular Affairs merged into the Ministry of Finance to be able to control financial affairs with absolute authority, measurements for putting the things in order were planned to be examined by Okuma and Ito as leaders. In the beginning, OKUMA and ITO evaluated that 100 counterfeit ryo had around 20 ryo worth actually, so added a little more to this to exchange it for 25 ryo. However, objections exploded in the government instantly. There was danger that the general public would fall into great confusion if they were suddenly told that what they had was counterfeit money and was only worth ¼ of the real value, especially since they could not tell apart their currency from counterfeit or specie, and this could develop into to an uproar such as uprisings or vandalism. The Meiji Government at this time did not have enough power to suppress these kinds of uprisings or vandalism and one wrong move could lead to a collapse of the government. Particularly since the Satsuma and Tosa Domains which the government depended on, might have been circulating large amounts of counterfeit money to their people, it further raised its uneasiness. A proposal to collect a fine from domains which coined counterfeit money such as Satsuma and Tosa, and using this as a fund for the exchange, and raising the price to around 40 ryo was put out by Saneomi HIROSAWA from the Choshu Domain, but this was thought to be difficult to realize as most opinions desired a gentle punishment, like written above.
In the end, after a long conference within the government, the following edict of Daijokan was put out on October 24.
Hereby, along with expressing the exchange of 100 counterfeit ryo to kinsatsu 30 ryo, the content hinted at the possibility of adding more in the future according to the situation. As a result, exchange of money began in November, but this did not finish by the end of year as aimed, and even when the deadline was pushed to March 2, 1870 and December 15 of the same year, the disposal of counterfeit money did not catch up. For this reason, an edict of Daijokan was issued to announce that the exchange of money would be terminated as of January 15, 1871, and that from this date on, the counterfeit money would be dealt with at the market price of a ground metal mixed of gold and silver (however, the exchange continued during the year only for the people who wished). However, the amount by the exchange in equal value for foreigners was 340 thousand ryo as mentioned above, and the amount by the exchange following the edict of Daijokan, which had become clear was 1.57 million ryo, while the amount of the bad quality gold coins (actually counterfeit coins) issued by the government, which is recognized today is 3.81 million ryo, so the former ones are much smaller than the latter. In the end, the situation was thought to be that counterfeit money, including those that circulated abroad, were mostly thrown away and handled as metal, in essence, under the cover of the confusion during the beginning of the Meiji period.
The set up of the New Currency Regulation System and the Mint Dorm
At the same time, OKUMA was proceeding the plan to enforce the modern currency system. The construction plan for the mint facility was proceeded by Kosei YURI, from the time he was a finance office vice prefectural governor, but it began in earnest after OKUMA placed a Mint Dorm along with setting up the Ministry of Finance and appointing Kaoru INOUE to the position of mint head, and the construction of a mint factory was proceeded in Osaka City.
There was a delay due to fire along the way, but the factory was completed in September 1870, and started temporary operating on February 15, 1871 (full-scale operating started on April 4). On June 17, 1871 of the following year, the yen (currency) was made the basic unit, the "sen" and "ri" were introduced as the supplementary unit, the New Currency Act was proclaimed, making 1 yen 100 sen, and 1 sen 10 ri, and Japan took its first step towards a modern currency system.