In 1860 Japan’s Shogunate officially sent 80 samurais to the United States to establish a diplomatic and economic relationship with the White House. Their primary mission was to ratify the Treaty of Amity and Commerce Between the United States and Japan. Signed in 1858, the treaty enabled Japan to trade further with more foreign countries, which the government had long restricted to the Netherlands and China for nearly 250 years. The 1858 treaty made Japan incorporate into international relationships both politically and economically.
The Japanese envoy had another mission in the U.S.; to survey the Mint and American monetary system. They stopped at the U.S. Mint in Philadelphia after the ratification exchange in Washington D.C., before they visited New York.
Japan had been troubled by an outflow of gold since Japan had agreed upon the Kanagawa Treaty six years earlier, in 1854. This treaty initiated an economic and mutually beneficial relationship with the U.S., allowing Americans to reside on Japanese soil and engage in economic activities temporarily.
Another problem was the money Japan had circulated in its market. The monetary system was based on three kinds of coins — gold, silver, and copper. Each type of coin had a different method of denomination, which made things more complicated, mainly when they traded with other countries.
Under an agreement with the U.S General Consul Townsend Harris in 1858, Japan had consented to a 1-dollar silver coin (Mexican silver, which was used for domestic and international money at trades), which equaled three 1-bu Japanese silver coins in exchange, with which Japan was not satisfied. That was because Japan’s monetary system was based on three separate trimetallic systems: gold, silver, and copper. In measuring a 20-dollar U.S. gold coin, for example, against the value of Japanese silver bu-coins, one dollar nearly came to the value of one bu silver coin.
Harris insisted that foreign currency be circulated in Japan, but Japan was hesitant about having foreign money in its market. Consequently, with a compromise, the two parties concluded that the exchange rate of one Mexican silver coin be three Japanese bu silver coins, based on the condition that the exact weight equals the same value.
On these imbalanced exchange rate terms, the Japanese economy was at a considerable disadvantage; for example, a Mexican 1-dollar coin was traded with three Japanese silver coins (1-bu silver coins), but four Japanese silver coins could be traded with 1-ryo gold coins in the Japanese market, which had a value of four 1-dollar Mexican coins.
Put another way, according to a research paper titled “On the Monetary Unification in Japan,” published in 2019, while the ratio of gold to silver in terms of values in Japan was 1:4.6380, the ratio in the U.S. was 1:15.3778. This “alchemy” tripled the value of Mexican coins when they were traded in Japan.
Using this system, one could cash in on the Japanese monetary exchange system by moving Mexican coins through Japan, allowing foreigners to increase their money’s value quickly, and moving Japanese gold out of the country and into the world.
One of the most insightful Japanese envoys was Kozukenosuke Oguri, who acted as an inspector/censor and overseer of Japan’s diplomacy. At the Mint in Philadelphia, he demanded clarification regarding the amount of gold and silver used in both Japanese and American coins at the Mint to determine the “real values” of cash from each country.
One American, an author and educator, Patterson Du Bois depicted the event in a book, “The Great Japanese Embassy of 1860” as the following:
“Oguri produced a sort of steelyard of ivory with which he proceeded to test our weights against his own. The censor also brought forth an abacus or counting machine consisting of fifteen rows of wooden buttons sliding by five on parallel wires. Quite in accord with these crude and antiquated methods was the demand that the gold cobang (about as big as the palm of the hand) should be assayed not by a sample cut from it, but by consuming the entire piece. Three cobangs were thus tested and to satisfy the strangers, also a United States gold dollar. Notwithstanding the cumbrous method of using an entire piece the results were exceedingly satisfactory.”
Later Oguri and his men thanked the officers of the Mint for their courteous attention, “expressing satisfaction with the results, and promising to lay the whole matter before his government so that a system of exchange could be arranged between the two countries,” said Du Bois.
Source: Dvidshub
