A Short History of the Yen

When we make our annual treks to Japan, one of the small things that requires some getting used to is the Japanese money. Because it’s easiest to equate one yen being about equal to one penny, it’s not so difficult to keep track of how much money you have. For first-timers, getting used to the idea of carrying around the equivalent of $1 coins and $5 coins can take a little getting used to, since the smallest bill is equivalent to $10.

When we make our annual treks to Japan, one of the small things that requires some getting used to is the Japanese money. Because it’s easiest to equate one yen being about equal to one penny, it’s not so difficult to keep track of how much money you have. For first-timers, getting used to the idea of carrying around the equivalent of $1 coins and $5 coins can take a little getting used to, since the smallest bill is equivalent to $10.

As a result, visitors like us end up with a heavy pocket full of coins that we forget actually have monetary value. It’s not unusual to find people in the group who have the equivalent of $30 in coins in their pockets. But along with those valued 100 yen and 500 yen coins, and below the still-useful 10 yen and 50 yen coins, are the much-degraded 1 yen and 5 yen coins, which somehow seem even less valuable than pennies and nickels. (And given the exchange rate, they actually are less valuable.)

But the yen didn’t exist before the Meiji government passed the New Currency Act of 1871. Prior to that, there were different currency that were standard around different parts of the country. In the Edo (Tokyo) area, the standard gold coin was the koban, which about the equivalent of one koku (the amount of rice to feed one man for a year), which had historically been the standard measure of wealth. In the Osaka area, trade was with silver coins called momme; 50 or 60 of these coins were equivalent to a koban.

While there was the gold-standard koban and the silver-standard momme, everyday commerce was conducted with the copper coin mon. The exchange rate for the mon was 4,000 to 10,000 mon to the koban. Wages, goods, and services were paid in mon.

In 1871, the yen essentially replaced the koban. In addition to the yen, there was the sen, worth 1/100th of a yen, and the rin, worth 1/100th of a sen. At this time Japan was on a bi-metallic (gold and silver) standard, with gold yen minted for domestic use and silver yen minted for foreign exchange. At this time, the yen was worth about $30.00 in today’s money. (A 1 yen coin was 90% gold and contained 1.5 g of gold.)

With the rise of inflation during World War II and the widespread production of coins, the value of the yen plummeted. After the war, the value of the yen was re-established at 360 yen to the dollar. The value of the yen began to float in 1971, so the current value of the yen is about 117 yen to the dollar.

What happened to the old sen and rin units? The sen is used primarily in the financial markets as a unit of measure, and the rin has essentially disappeared. After all, can you imagine what 1/10000th of a yen is worth today?

 

(Orginally published in Muzosa Journal 4/21/06. Author retains all copyrights.)

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