The central bank the shogunate planned, and never had

Before the Hyōgo Shōsha, Oguri had put a still larger plan to the shogunate: to set up a centralized exchange office run by the shogunate itself, handling the whole country's bills in gold and silver. It was never carried out, but the proposal that survives — “A memorandum submitted on the setting up of an exchange office by the government” — shows, down to the level of its clauses, how he meant to put the shogunate's finances back on their feet.

It opens as follows.

Since the working of gold and silver is one part of the great rights of the state, I humbly consider that it ought to fall to the government's disposal.

The working of gold and silver is one of the state's great sources of right, and so should belong to the government's management: that was the starting point. But Oguri at once added a warning. No institution will work unless the law suits high and low alike; force through what is “convenient to the government only and inconvenient to the people” and it becomes the ground of disorder.

At that time the bills between Edo and the Kyoto–Osaka region were handled by powerful money changers such as Mitsui and Kōnoike. No gold or silver was actually carried; settlement was by the passing of paper alone, and commission and the gain on the money naturally arose from it. Oguri's plan was that the shogunate should take this part itself.

The proposal names the government's own city (Edo), Kyoto, Osaka, Fushimi and Sakai, and all the provincial commissioners besides, at Hakodate, Nagasaki and elsewhere, together with the district governors and intendants of the provinces. Where peasants or townsmen applied for a bill in gold or silver, the principal would be taken and a paper issued. Do this across the shogunate's own lands and “the right of working gold and silver will of itself return to the government”.

The aim was not commission alone. In Edo, Kyoto, Osaka and Sakai the merchants' associations moved bills freely, but in the provinces beyond there were “places where the road of bills is not open”. Carrying specie about meant the risk of robbery on the way, so merchants who wished to trade with distant provinces held back. Open the road of bills and “those merchants will go even into remote places, so that the produce of those places will be disposed of, and of itself field and paddy will be opened up”. He saw financial machinery as a means of developing the provinces.

What marks the proposal is that a figure is attached to each of its claims.

• The commission to be set lower than the private rate. The merchants' associations took between forty and sixty or seventy momme of silver per hundred ryō of gold from Edo to Kyoto and Osaka. The government's exchange office should fix it at thirty to fifty momme of silver per hundred ryō of gold. If it were cheaper, “they will certainly compete to apply” — merchants would be sure to press forward with their applications. So he read it.

• An estimate of the turnover. The sake sent from the Kyoto–Osaka region to Edo came to between 400,000 and 600,000 horse-loads a year. At sixty ryō of gold for ten loads, 500,000 loads make 3,000,000 ryō of gold. Add silk cloth, grain and the rest, and the trade between Edo and the neighbourhood of Kyoto and Osaka came to about 20,000,000 ryō of gold a year. Even at thirty momme of silver per hundred ryō of gold, the government would take 400,000 ryō in gain.

• The working of idle money. Take the money in Edo on the first of the month and pay it out at Osaka on the fifteenth, and the specie lies idle in between. For Hakodate or Nagasaki it would take fifty days. With bills of 20,000,000 ryō a year, some 2,000,000 would be idle at any time; lend that out against sound security and it would yield more than 200,000 ryō of interest a year.

• The margin between deposits and loans. On money taken on deposit, interest of fifteen momme of silver a month per forty or fifty ryō of gold; on money lent out, fifteen momme of silver a month per twenty-five ryō of gold.

Failures in the private trade are cited too, with names. Two or three years before, a money changer of Kyoto by the name of Isetō had gone suddenly bankrupt on a bad reckoning. Caught in it, a merchant of Gōshū named Tonomura lost 200,000 ryō and a Kyoto merchant, Chōjiya Ginjirō, lost 140,000 or 150,000; the total loss reached a million ryō. With a government exchange office there would be no such fear — so the argument ran.

What is most striking in the proposal is that Oguri writes in the danger of the very institution he meant to create. Since paper is more convenient than specie, he reckoned, within two or three years two or three million ryō would be passing as paper alone, and the idle money would rise to five million. And then he went on as follows.

Should any of this idle money be turned to the government's own convenience and the like, there will be trouble when specie is to be paid out, and in the end an abuse will arise and the exchange office may collapse; this I fear, and I humbly consider that strict measures should be in place.

Turn the idle money on deposit to filling the hole in the shogunate's household and the thing will come to a stop when specie must be handed over, and in time the exchange office itself will go under; so a strict check should be set. Not to let the funds of an issuing institution be used to cover a fiscal deficit — the principle for maintaining convertibility was already written down in a proposal of the shogunate's last years.

The steps for carrying it out are cautious too. “To have the district governors and intendants of the provinces handle it from the first would be too wide a spread to be easily done, so for the present, and for the sake of experience, a beginning should be made with the provincial commissioners alone.” As to running it, the officials were to handle only the receipt and payment of gold and silver and the countersigning of the papers, while the practical work was to be given, with an allowance, to townsmen and peasants of sound standing. For peasants and townsmen to apply directly at a government office “would be cumbersome and not good”.

On the deposit business as well, he pointed to hatamoto and shogunal retainers who kept the rewards of long service by them as “sunken money”, to the many cases of loss by fire or theft, and to orphans and widows who could neither trade nor lend and so ate into their capital and sank. Take such money on deposit and pay interest on it, he argued, and “those who borrow at extraordinary rates in the city from the lending offices of the Three Houses and the imperial abbacies, and from the blind lenders and the rest, will be fewer”.

For the money changers already in the business, the plan was a matter of life and death. On why it ended without being carried out, Honda Natsuhiko, the editor of Oguri Nikki, writes that the money changers of the day were already running deposits, loans, bills, transfers and the issue of paper, and “getting along well enough, so that on the half-hearted view of his superiors there was no need to raise a government business and press on private ones; Kōzukenosuke's proposal was smothered, and the document itself ended without ever seeing the light”.

The proposal itself was long unknown. Around the village of Gonda much of what Oguri left, papers and belongings alike, was scattered after his death, and even Tōzenji, the family temple, was left without documents. Honda picked this one sheet out of the waste paper coming from that district, and, comparing the hand with Oguri Nikki, which he found twenty years later in another place (now a cultural property of Gunma Prefecture), considers it to be in Oguri's own hand. His note introducing it was written in 1961.

This affair did not, however, cut Oguri off from Mitsui. Rather, a little after it, he came to be deeply involved in Mitsui's internal affairs.

Source: Oguri Nikki (the Oguri diaries), Gunma Prefecture Historical Materials vol. 7, edited by Honda Natsuhiko (containing “Oguri Kōzukenosuke's proposal for setting up an exchange office”)

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