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Rice Futures Trading in Tokugawa Japan (1603-1868)

Dōjima Rice Exchange

“With the rice coupon becoming an actively traded entity, the Dojima Rice exchange became the world’s first futures exchange. Rice coupons were also called “empty rice” coupons, rice that was not in physical possession. Rice futures trading became so established in the Japanese marketplace, that in 1749, 110,000 bales (rice traded in bales) were freely traded while there were only 30,000 bales in existence throughout Japan.”

“…the Rice Exchange can be said to have been established in 1697, the year it received a license from the shogunate.

Osaka rapidly evolved into Japan‘s largest city of finance and commerce. Osaka, the “Kitchen of Japan” with its vast system of warehouses, eventually established an atmosphere of price stability by reducing regional imbalances of supply. Osaka became the profit center of all Japan.

Under Hideyoshi’s reign, a man named Yodoya Keian become a successful war merchant. He had exceptional abilities to transport, distribute and set the price of rice. His reputation become so well known, his front yard become the first rice exchange.

The Dojima Rice Exchange, the institutionalized market that developed in Yodoya’s front yard, was established in the late 1600’s. Merchants were now capable of grading the rice, and negotiated setting the market price. After 1710, actual rice trading expanding into issuance and negotiating for rice warehouse receipts. These become known as rice coupons, and were the first forms of futures. The Osaka rice brokerage became the foundation for the city’s wealth. 1,300 rice dealers occupied the Exchange. Due to the debasing of coinage, rice became the medium of exchange. A daimyo in need of money could send his surplus rice to Osaka and get a receipt from a warehouse. This receipt (coupon) could then be sold. As with many daimyo, cashflow problems could be eliminated through this method. Sometimes many future years of crops were mortgaged to take care of current expenses.

With the rice coupon becoming an actively traded entity, the Dojima Rice exchange became the world’s first futures exchange. Rice coupons were also called “empty rice” coupons, rice that was not in physical possession. Rice futures trading became so established in the Japanese marketplace, that in 1749, 110,000 bales (rice traded in bales) were freely traded while there were only 30,000 bales in existence throughout Japan.

The Dōjima Rice Exchange (Dōjima kome ichiba, Dōjima kome kaisho), located in Osaka, was the center of Japan’s system of rice brokers, which developed independently and privately in the Edo period and would be seen as the forerunners to a modern banking system. It was first established in 1697, officially sanctioned, sponsored and organized by the shogunate in 1773, reorganized in 1868, and dissolved entirely in 1939, being absorbed into the Government Rice Agency.

The Japanese economy grew rapidly throughout the 17th century, culminating in the period known as Genroku (1688–1704) during which merchants prospered like never before. It was at this time that rice brokers and moneychangers (ryōgaeshō) gathered their shops and warehouses in the Dōjima area; the Rice Exchange can be said to have been established in 1697, the year it received a license from the shogunate. Since members of the samurai class, including daimyo (feudal lords) were paid in rice, not cash, the rice brokers and moneychangers played a crucial, and incredibly profitable, role in the emerging early modern economy of Japan. Over the course of the Edo period, the entire economy would not only shift from rice to coin, but would also see the introduction and spread of paper money initiated and facilitated by the men of Dōjima. The year 1710 marks the beginning of this development, which also brought with it the emergence of the concept of trading in futures (nobemai). The Osaka merchants, like the Kyoto rice brokers three hundred years before, developed an increasingly monopolistic grasp on the rice trade, determining prices not only within Osaka, but in the entire Kinai (Home Provinces) area, and indirectly having a great effect on prices in Edo.

These economic developments among the rice merchants were intricately connected to parallel developments in other trades, and the formation of a number of networks of different types of guilds including kabunakama, rakuichi and rakuza, which developed out of the older guild types known as tonya and za.

In the first years of the 1730s, as the result of poor harvests and trade issues, the price of rice plummeted. Though this looked good for buyers on the face of it, it wreaked havoc with an economy which was still based largely on rice as a medium of exchange. Samurai, whose income was in rice, panicked over the exchange rate into coin, and meanwhile speculators and various conspiracies within the brokers’ community played games with the system, keeping vast stores of rice in the warehouses, which ensured low prices. A series of riots against the speculators, and against the conspiratorial, manipulative system as whole, erupted in 1733; starvation was widespread, and meanwhile, speculators were acting to “corner” the market and to control prices. This was the first of a number of riots, called uchikowashi , which would grow in frequency and size over the next century or so. The shogunate set a price floor in 1735, forcing merchants in Edo to sell for no less than one ryō per 1.4 koku, and in Osaka no less than 42 momme per koku. A 10 momme fine was charged of anyone found to have paid less. Over the fifteen years or so, until roughly 1750, the shogunate stepped in on a number of occasions to attempt to stabilize or control the economy. Though in 1730 the government budget as a whole was in balance (expenditures=revenue), interventions by the shogun over the ensuing years inadvertently led to economic collapse. Tokugawa Yoshimune made so many attempts at reforms and controls that he came to be known as Kome Kubō or Kome Shōgun (the Rice Shogun). At the same time, attempts were made at monetary policy, which largely resulted in solving the problems of the rice economy, while bringing debasement of the currency.

The shogunate re-established the Rice Exchange in 1773, under governmental sponsorship, regulation, and organization; the shogunate also established its own rice storehouse at this time. The direct impetus for this was a series of riots, as a result of famines, earlier that year. In general, however, by this point, the government realized the extreme economic power of the Rice Exchange in supporting the entire national economy, determining exchange rates, and even creating paper money. An incredible proportion of the nation’s monetary transactions were handled through the private, independent, merchants of Dōjima, who stored rice for most of the daimyo, exchanging it for paper money. Dōjima held what were in essence “bank accounts” for a great number of samurai and daimyo, managing deposits, withdrawals, loans, and tax payments. Though the shogunate ultimately had little sense of modern economic theory, and thus would make some serious errors in their monetary and financial policy over the course of the following century or so, they nevertheless recognized the need for governmental control of such policies; exchange rates, monetary standards and the like had to be set by the government, and not left in the hands of an increasingly wealthy and powerful merchant class which was intended to be at the bottom of the neo-Confucian mibunsei class system.

Reorganized in the Meiji period along with nearly every other element of the economy and polity, the Dōjima Rice Exchange was formally dissolved in 1939, when its function was overtaken and replaced by the Government Rice Agency.


· Frederic, Louis (2002). “Japan Encyclopedia.” Cambridge, Massachusetts: Harvard University Press.

· Kaplan, Edward. The Cultures of East Asia: Political-Material Aspects. Chap. 16. 09 Nov 2006. http://www.ac.wwu.edu/~kaplan/.

· Poitras, Geoffrey (2000). “The Early History of Financial Economics, 1478-1776 – From Commercial Arithmetic to Life Annuities and Joint Stocks”. Aldershot, UK: Edward Elgar

· Sansom, George Bailey. A History of Japan: 1615-1867. 1963: Stanford University Press.

· Schaede, Ulrike (1989). “Forwards and Futures in Tokugawa-period Japan: A New Perspective on the Dojima Rice Market”. in: Journal of Banking and Finance, 13, pp. 487–513

Homma Munehisa (1724-1803): Osaka Rice Market

Munehisa Homma (also known as Sokyu Homma, Sokyu Honma) (1724-1803), was a rice merchant from Sakata, Japan who traded in the Ojima Rice market in Osaka during the Tokugawa Shogunate. He is often considered to be the father of the Candlestick chart and his trading success reputedly led to him becoming an honorary Samurai.

Until about 1710, only physical rice was traded but then a futures market emerged where coupons, promising delivery of rice at a future time, began to be issued. From this, a secondary market of coupon trading emerged in which Munehisa flourished. Stories claim that he established a personal network of men about every 6 km between Sakata and Osaka (a distance of some 600 km) to communicate market prices. [1]

In 1755, he wrote (San-en Kinsen Hiroku, The fountain of Gold – The Three Monkey Record of Money), the first book on market psychology. In this, he claims that the psychological aspect of the market is critical to trading success and that traders’ emotions have a significant influence on rice prices. He notes that this can be used to position oneself against the market when all are bearish, there is cause for prices to rise[2] (and vice versa).

He describes the rotation of Yang (a bull market), and Yin (a bear market) and claims that within each type of market is an instance of the other type. He appears to have used weather and market volume as well as price in adopting trading positions. He is considered the most successful market trader in history, generating over $100bn in profits at today’s prices, some years earning over $10bn a year.

Some sources claim he authored two other books ( Sakata Senjyutsu Syokai, A Full Commentary on the Sakata Strategy) and (Homma Sokyu Soba Zanmai Den, Honma Sokyu — Tales of a Life Immersed in the Market)


1. Candlestick Charting Explained: Timeless Techniques for Trading Stocks and Futures, Gregory L. Morris, McGraw-Hill, 2006, ISBN 007146154X / 9780071461542

2. Beyond Candlesticks: New Japanese Charting Techniques Revealed, Steve Nison , Wiley Finance, 1994, ISBN 047100720X, p14.

· Referenced in books

Rice Futures Trading in Tokugawa Japan (1603-1868)

Dōjima Rice Exchange


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