Rice and the Economy

The Life-blood of Japan

In English, when we want to highlight the ubiquity and importance of some element in industry, or in the economy in general, we might use energy as an analogy: without oil or electricity, our economy ceases to function. In Japanese, the common analogy is to something just as important but culturally very different rice. While rice remains a nutritional staple in modern Japan, in the Edo period (1603–1867), it was much more. Rice was the life-blood of government, society and the economy.
With the shogun at its head, the shogunate included about 260 lords, called daimyo, as well as over 23,000 vassals directly under them. Their place in the feudal hierarchy was measured in units of rice called koku: one lord might have 100,000 koku, while another might have 3,000. A koku, equivalent to about 180 liters, is a unit of volume that was used in Japan from ancient times. The number of koku indicated an estimate of the volume of rice that could be produced from the land in a lord’s domain. Feudatory relationships were determined by military ranks, which were assigned based on the number of koku in a lord’s holdings. Lords also assessed taxes on farmers in their domains based on the number of koku, and farmers generally paid these taxes in rice.
While the lords used some of this rice for food, they exchanged the rest for currency, creating the impetus behind the development of the rice markets—discussed in Part III of this series—in “Japan’s Kitchen,” Osaka, and in Edo, today’s Tokyo. The Osaka rice market dates from about 1640, when rows of rice warehouses stood in the vicinity of the site currently occupied by the Sumitomo Building, home to the headquarters and branch offices of a number of Sumitomo Group companies. By around 1730, rice transactions akin to modern futures trading were already taking place in Osaka. These formed an important indicator of rice prices at the time.
Steady improvements in farming techniques, combined with the opening of new land to rice cultivation, created a long-term expansion of rice yields. From 18 million koku in the late 16th century, the rice yield grew 40% to 25 million koku at the end of the 17th century, and by another 30% to 33 million koku in the first half of the 19th century.

Rice and Copper Mining

Rice was also essential to the development of the Besshi mine, which centered on a lode Sumitomo discovered in 1690 and grew into one of the world’s greatest copper mines. Under the kai-ukemai system, the shogunate provided incentives for copper mining, copper being one of the country’s key exports at the time, by selling 6,000 koku of the rice it collected in taxes at a reduced price as food for mine workers. The price Sumitomo paid for this rice varied from year to year, but in some years the company was able to buy rice through the program for over 40% off the market price.
In the opening years of 1700, the Besshi mine employed some 3,000 workers, including 100 people involved in management, and workers who performed tasks at the mine like extracting the ore, draining waste water, and sorting the extracted ore. It took about 10,000 koku of rice a year to feed all of these people, so 6,000 koku of discounted rice from the shogunate accounted for 60% of that total. Sumitomo sold this rice to its workers at a slight discount off the market rate, and the difference was counted as profit for the mine, making the kai-ukemai system primarily a way of subsidizing the mining operation. As a further advantage of this system for the mine’s cash flow, the shogunate asked that this discounted rice be paid for 10 months after delivery. Moreover, the ability to make advance wage payments in rice also made it easier for the mine to hire the workers it needed.
This subsidiary was in a way quintessentially Japanese, tied as it was to the very sustenance of people’s lives. But it eventually grew to be a burden, despite Sumitomo’s repeated petitions for better terms, as the program became less and less favorable due to the shogunate’s deteriorating finances. Finally the policy of supplying rice to the mine, which had lasted for some 170 years from 1702, ended altogether following the shogunate’s demise, a development that ushered in a tough period for the mine’s operators.