Francis Hall described these couriers: “They travel fast, making the distance from Yokohama to Yedo, twenty miles, in three hours. They are nearly naked and carry their dispatch in a parcel tied on the end of a rod and borne over the shoulder, or in a wallet fastened by a cord around their necks … They wear cotton socks on their feet, the [highway] is free from loose stones and offers no inconvenience to such light shoeing.”29
The delivery time from Yokohama to Kōshū using a hikyaku express service was three days. The regular hikyaku service departed three times a month, on fixed days. Since the messengers traveled only along the main highways, Chūemon would have to send his letter to Isawa—the closest post station to Higashi-Aburakawa—with instructions to forward it to Higashi-Aburakawa.30 If Chūemon wanted to send an urgent message outside the regular delivery schedule, he had to pay for a special delivery, which could cost as much as three ryō for a single letter. Increasingly, Chūemon was willing to pay such high fees. His sense of urgency as he responded to global market opportunities reflects his growing awareness of information flows and the importance of information advantage. This awareness pushed merchants in the global marketplace to use every technique at their disposal to accelerate the flow of information and goods. If the telegraph and the railway had been available, Chūemon would surely have jumped at the chance to benefit from their speed and convenience. Chūemon’s reorientation toward a global market and his focus on speed of transmission reflect a new relationship both to the spatial dynamics of the modern world trading system and to the temporal dynamic of ever-faster global transport and communication networks. These transformed relationships to space and time were soon to affect livelihoods throughout the Kantō region, from wealthy merchants to marginal farmers.
Chūemon’s profits reflect the very high risk that he had to take on. From the time that Chūemon’s agents (including his sons Naotarō and Shōjirō) purchased goods, Chūemon and his venture partners were out of pocket. They had to pay all the transportation costs and bear the risk of loss or spoilage before attempting to sell the product in Yokohama. They also bore all the market risk: if the price of the goods had declined during the days or weeks it took to buy them in the countryside and ship them to Yokohama, then Chūemon and his partners had to absorb the loss. This is another reason why Chūemon was so insistent on speed in all his communications as well as in the actual transportation of the merchandise. Of course, for the foreign merchants the risk was even greater: those shipping to Europe had to wait months to receive any return on their investment, with all the attendant risks of shipwreck, spoilage, and price changes during the interim.
In spite of the influx of capital from his wealthy business partners, Chūemon’s transactions also remained highly leveraged. Chūemon’s goal was to purchase cotton for as little up-front payment as possible, allowing him to maximize the use of his capital. Typically, he was able to buy cotton for an earnest-money payment of one to two ryō per horse load. On top of that he had to pay a little more than one ryō for transportation. So a one-hundred-ryō ($233) investment could potentially buy more than forty horse loads of cotton, with a market value in Yokohama of more than thirteen hundred ryō ($3,030). But the sellers demanded full payment within days of delivery, so it was crucial for Chūemon to turn the merchandise around and remit the proceeds back to the countryside.
Moreover, Chūemon remained substantially in debt to many of his creditors in and around Higashi-Aburakawa. Although the debts had in most cases been incurred much earlier, Chūemon preferred to use his available funds to buy more cotton rather than to pay debts. For example, on December 6, 1863, Chūemon wrote, “[For the rest of] this year I plan to invest fifty ryō. In the New Year, Naotarō will go further afield to make purchases. After deducting Jizaemon’s share, I plan to throw all the rest back into the business. I will have to put off [some creditors], but they certainly won’t lose by this. Please convey my apologies … If my creditors demand the money, please just tell them that I’m not doing well.”31 And once again, at year’s end, when debtors traditionally settled all their accounts, Chūemon wrote to a group of villagers, “Unfortunately I am still unable to return home. Thank you so much for all the help you have given me this year. As you know, my biggest problem has been lack of funds, and I continue to be unable to pay my taxes and other debts. Next year I will come home and thank you in person.”32
The patience of Chūemon’s creditors in his home province is striking. It no doubt reflects Chūemon’s personal standing in the region, but it also illustrates the profit-seeking dynamic of the rural capitalist system. By the mid-nineteenth century, commercial growth and the concentration of wealth had placed substantial capital surpluses in the hands of an emerging class of wealthy farmer-merchants—the gōnō. Surviving records indicate that many wealthy villagers operated local and regional money-lending businesses on a large scale. While some of these loans were to poorer villagers and tenant farmers, moneylenders generally preferred to lend money to wealthier, and more successful, farmers and farmer-merchants, who were in turn diversifying into new business ventures—even if those loans were sometimes riskier. For example, a detailed study of the Okada family of Oka village in the Kinai region indicates that although the family had many tenants farming Okada-owned land, the family’s extensive money-lending operations were almost exclusively aimed at wealthier villagers and regional merchants. The loans extended over more than a dozen villages, and debtors included wealthy farmers, merchants, sake brewers, and the domainal administration. During the 1860s, loans averaged some six thousand ryō per year, with an average loan size of around one hundred thirty ryō.33
The expansion of lending in the village economy is a testament to the robust and growing commercial economy of rural areas in many parts of Japan.34 But given the propensity of lenders to seek higher-growth and higher-return investments, lending on this scale inevitably involved a significant level of nonperforming and defaulted loans. During the period 1848–1854, for example, the Okada family was involved in forty-seven suits against debtors, with the amounts ranging from less than two ryō to more than three hundred ryō.35 In a world in which audits and financial statements were unavailable, banks nonexistent, and the flow of information fragmentary, lenders had to rely on the quality of assets placed as security, and at times on personal trust. The high level of risk also helps explain the high interest rates that prevailed throughout most of Japan. In Chūemon’s case, it seems that many of his debts were unsecured: his property in Higashi-Aburakawa would hardly have been enough to cover his extensive financial operations.
It certainly must have been troubling to his creditors that Chūemon was unable to pay his debts at the traditional year-end settlement time. The fact that they were willing to wait for repayment, and even to extend Chūemon additional credit, surely speaks to the opportunity they saw in his business venture, and to their personal faith in Chūemon himself. From the beginning, Chūemon saw his enterprise as a communal venture to improve the economy of his region. His goal was not just to get rich himself but to increase sales of Kōshū produce, for the benefit of his community. He hoped and expected that all the participants would benefit from the rising tide of prosperity driven by the Yokohama export market. And to some extent, his creditors and business associates must have agreed with him. Indeed, the available records suggest that the continued expansion of Chūemon’s business through the 1860s brought in enough cash to keep his creditors happy, even if they were not always repaid on time.
As a result of his successes in cotton, by the end of 1863 Chūemon was able to enjoy a sense of prosperity that he had not experienced in a very long time. The previous year, his family had been almost entirely dependent on Naotarō’s earnings from his work in the office of the Yokohama Merchants’ Association, two ryō ($4.67) a month that Chūemon received from a real estate investment, and the small amount of money Naotarō and his wife made by producing tabi socks. Now Chūemon was dealing in thousands of
ryō a month. At the end of the year, Chūemon shipped twenty-five cases of Okinawan straw, useful for packing bales of cotton, to Shōjirō, telling him that if he didn’t have a use for it he could give it away to Hori Shōsuke of Ichikawa. This kind of generosity was unthinkable a year earlier.36
However, Chūemon’s cotton business came to an abrupt end with the disastrous harvest of 1864. A destructive storm wiped out 60 percent of the cotton crop as well as 30 percent of the rice crop, causing widespread hardship in farming villages.37 The scarcity of cotton pushed prices up to a point where they were no longer attractive to foreign traders, who anyway were finding alternative sources in China, India, and elsewhere.
Although the closing down of the cotton business deprived Chūemon of his most lucrative trading item, he remained highly optimistic. As a result of his success with cotton, he had gained a significant network of wealthy new business partners, including several in Edo, as well as a newfound self-confidence. Toward the end of 1864, he boasted to his son that he had done thirty thousand ryō ($70,000) worth of business—an extraordinary achievement for a man who, just five years earlier, had struggled to raise the first twenty ryō to open his shop.38
While the Japanese government was still pursuing a policy of restricting trade as much as possible, it was allowing a trickle of silk shipments to flow from Edo to Yokohama in order to avoid being accused of blatantly contravening the treaties.39 In response to the Five Products law, Chūemon made an arrangement with an Edo silk wholesaler, Mokuya in the Kobunechō district of Edo. From this point on, he asked his business associates in Kōshū to send shipments of silk to Edo rather than to Yokohama. Mokuya would certify the goods and ship them on to Yokohama.40 Chūemon himself moved to Edo in August of 1864, and he stayed there more or less continuously through the end of the year. Silk producers had been ramping up their production in response to the enormous demand from foreign buyers, and supplies were piling up in the warehouses of the Edo wholesalers, waiting for government permission to ship them on to Yokohama. No doubt Chūemon calculated that the government would have to either permit the sales or order the silk burned, which would cause untold hardship to producers.
And indeed in October 1864, after a strong intervention by the British and French ministers (supported once again by a fleet of warships in Edo Bay), the government abruptly abandoned its restrictions on silk shipments to Yokohama—although the law requiring them to go via Edo remained in place. As a result, in the final months of 1864 Yokohama was flooded with pent-up supplies of silk.
Since silk was such an expensive product, Chūemon was taking consignments on commission. Kōshū producers would ship supplies to Chūemon’s account with Mokuya in Edo. Once Mokuya received permission to ship the goods to Yokohama, Chūemon handled their sale to foreign buyers. His cut was relatively small, so he needed to drum up as many shipments as possible. In the closing months of 1864 and into 1865, most of Chūemon’s letters urge his son and business partners to send consignments of silk to Edo on commission. Chūemon himself remained busy enough that “if you have someone among your friends, I’d like them to come here to help me. Right now we have many merchants bringing goods on consignment, and I need help urgently. I will write to them separately, and if they are going to come, then they must meet with you and you must approve of them.”41
Silk was a frustrating product to deal in. There was intense competition for limited supplies. The product was seasonal and not available at all times. The government was inclined to interfere in its distribution. And it was very expensive to purchase. Consequently, Chūemon was always on the lookout for lower-value products that he could invest in more directly. While in Edo, he took advantage of the local seafood market to buy a shipment of surume (dried squid) and ship it to Yokohama. Early in 1865, Chūemon began dealing in silk by-products, such as cocoon husks and silk thread leavings, for use as fertilizer. Although these products sold for only a tiny fraction of the price of silk thread, Chūemon was able to make higher profits by investing on his own account.42
In March 1865, Chūemon mentioned for the first time the prospects for selling silkworm eggs into the foreign market.43 In the previous decade European silk producers had been devastated by the pébrine blight, which attacked silkworm larvae and made them unable to spin thread. Europe’s silk production had been virtually wiped out, and there was strong demand from European (mostly French and Italian) buyers for Japanese silkworms, which were thought to be more resistant to the parasite.44 At this point, the shogunal government still prohibited the export of silkworm eggs. Nevertheless, by mid-May Chūemon had committed to the trade: “As I mentioned in my last letter, I would definitely like to enter the egg business and succeed in it. I intend to send my people out to purchase eggs instead of silk. Please make sure that Hanjirō, Matsujirō, Shimosone, and Heiei don’t talk about this to anyone else.”45 And indeed, in early June, the government responded to strong French pressure by lifting the ban on silkworm egg exports, and trade became possible.46
Chūemon’s strategy, which he worked out with his local partners, was to turn Higashi-Aburakawa and surrounding villages into a manufacturing center for silkworm egg cards. This was a new venture. In the past villagers in the area had bred silkworms, sold cocoons, spun thread, and even woven cloth, but they had purchased their eggs from specialized producers. The preparation of silkworm eggs, carefully dried and mounted on sheets of cardboard, had long been concentrated in the Shindatsu district of Ōshū (now Fukushima prefecture) and the Ueda district of Shinshū province (now Nagano prefecture). Traders from these districts would either manufacture cards within their own families or represent groups of manufacturing families as they traveled through the silk-producing areas of Japan. They would sell their cards to small-scale cultivators, usually in the summer months, for a small down payment. They would not collect their final payment until six months later, when the farm families had cultivated silkworms from the eggs and sold their cocoons or thread. If the farmer’s crop was poor, the egg traders would be paid less, so it was in their interest to propagate the best silkworm-rearing techniques. They did this by distributing manuals to their customers. The relationship was therefore long term and mutually dependent. That was the main reason why, in spite of enormous growth in the silkworm-rearing industry, the silkworm egg card business had stayed in the hands of a relatively small group of traders from well-defined producing areas.47
Now that there was an opportunity to sell egg cards to foreigners, the dynamics of the market fundamentally changed. Foreign buyers did not need loans or long-term support. Relationships were less important to them than a high-quality product, for which they would pay in full on delivery in Yokohama. Chūemon saw this opportunity early and responded to it.
Chūemon and his investor group formulated a plan to manufacture three thousand egg cards in Higashi-Aburakawa and another three thousand in the nearby town of Ichikawa. They contracted to buy a minimum of five thousand of the cards, for resale to the foreigners. Since the export price of a single card (which would contain thousands of eggs) was close to one ryō, this represented a very significant investment.48 Chūemon also periodically sent his son cash so that Shōjirō could buy egg cards from other producers and traders in Kōshū and Shinshū. Chūemon’s willingness to make a large up-front investment was based on his knowledge of the strong foreign demand for silkworm eggs. “The foreigners are saying they would like to buy a million cards; but I don’t think there are that many in the whole of Japan. That is what they are saying about next year. At present I think we need to have large shipments coming in. I am sure I will be able to sell them.”49
As with silk, the government planned to control the trade in silkworm eggs using a licensing system. Shipments to Yokohama had to be channeled through one of eleven licensed wholesalers in Yokohama, which would handle the sales to foreigners for a standardized commission of 11 percent. But in September 1865, Chūemon himself was granted official status as an egg card wholesale
r, enabling him to participate in every stage of the production and marketing cycle from harvesting and mounting of the eggs, to wholesale purchases in the egg-producing regions, to shipment to Yokohama and direct sale to foreign buyers.
One issue that Chūemon faced in his plan to manufacture and sell Kōshū egg cards was the lack of name recognition for his region’s produce. Akira Shimizu has shown how important branding was for a variety of products in the Tokugawa era, and how hard established players worked to develop a premium for their brand and to protect its exclusivity.50 Although Kōshū was one of the top four silk-producing districts in Japan, it had no reputation for silkworm egg cards. Cards from Ōshū (which included Shindatsu) and Shinshū (including Ueda) had a high reputation; those from other provinces were an unknown quantity. On December 2, 1865, Chūemon suggested a plan to pass his Kōshū egg cards off as the produce of Ōshū by bribing a licensed Ōshū merchant. “I believe it is possible to rent a license [kansatsu] [from] … one of the Ōshū merchants … It might be a good idea to do that and sell at a high price. If you have one of these permits, then without a doubt you can travel freely on the road as the subordinate of one of the egg card merchants of Ōshū.”51
TALES OF PLENTY
In spite of financial difficulties, management issues, antiforeign extremism, violent outbursts, political tension, and the government’s attempts to squeeze trade in Yokohama, Chūemon rode on a wave of prosperity beginning in the mid-1860s. Although statistics for the period are very imperfect, total exports from Yokohama grew from roughly $2.7 million in 1861 to $10.6 million in 1863 and $17.5 million in 1865.52 Beginning in 1863, Chūemon was able to participate in that growth, and during the course of the following year he underwent a transformation from penurious shopkeeper to prosperous international trader. It seemed that Chūemon’s faith in Yokohama as a place not of fear and violence but of opportunity and wealth had been vindicated.
The Merchant's Tale Page 15
