Similarities and Differences Between Edo Period Han-satsu and Modern Local Currencies: Coercive Power, Value, and More

1. Are Edo period Han-satsu like modern local currencies?

Han-satsu and modern local currencies share a commonality in that they circulate within a limited region defined by the issuing entity, and in a sense, they can be said to be similar. However, there are several important differences.

Similarities:

• Circulation in a limited region: Han-satsu were basically valid only within the territory of the domain that issued them. Modern local currencies are also intended for use in limited areas, such as specific municipalities or shopping districts.

• Revitalization of the local economy: One of the purposes of issuing Han-satsu was to smooth out and revitalize the economy within the domain. Similarly, local currencies aim to encourage consumption within the region and stimulate economic circulation.

Differences:

• Purpose and background of issuance:

  • Han-satsu: Issued mainly to supplement the domain's financial difficulties, they were backed by future income such as rice tax or local specialties. In other words, they can be considered a form of debt for the domain. There was also the aspect of compensating for the shortage of currency within the territory.

  • Local currencies: Often issued for more diverse purposes, such as revitalizing local communities, promoting volunteer activities, circulating the local economy, and environmental considerations. The financial difficulties of the issuer are not necessarily the direct reason.

• Credit Foundation:

  • Hansatsu: The foundation of credit was the domain's creditworthiness (financial status and the authority of the daimyo) and the guarantee of convertibility (exchange) for physical goods such as rice or local specialties held by the domain. However, if convertibility stalled or the domain's finances deteriorated, the value of the Hansatsu would drop significantly.

  • Local Currency: The credit foundation is based on the credibility of the issuing entity (local governments, NPOs, shopping districts, etc.), the presence of participating stores, or participation in specific activities. The exchange rate with legal tender may or may not be fixed.

• Compulsory Legal Tender Status:

  • Hansatsu: While circulation within the domain was enforced to some extent by the power of the daimyo, the exchange rate with currency issued by the Shogunate (gold, silver, and copper coins) was prone to fluctuation and was not necessarily stable. Furthermore, they generally did not circulate outside the domain.

  • Local Currency: There is no legal compulsory tender status; it circulates solely based on agreements between participating stores and participants.

As described, while Hansatsu and modern local currencies appear similar in that their issuing areas are limited, there are significant differences in their background, purpose, and credit foundation. It can be said that Hansatsu were more closely tied to urgent financial issues.

2. Do they become worthless paper if a domain is abolished?

In principle, in cases where a domain was abolished (confiscation of territory and dissolution of the domain), the Hansatsu issued by that domain lost their value and in many cases became essentially worthless paper.

The reasons are as follows.

• Loss of Credit: The value of Hansatsu depended on the domain's creditworthiness and ability to convert them. If the domain was dissolved, the entity guaranteeing the value of the Hansatsu ceased to exist, resulting in a complete loss of credit.

• Impossibility of Conversion: Although Hansatsu were theoretically guaranteed to be exchangeable for rice or silver in the domain's storehouses, the domain's assets were seized by the Shogunate upon dissolution, leaving Hansatsu holders with nowhere to request an exchange.

• Absence of succession obligations by new feudal lords: Even if a new feudal lord was appointed after an attainder, there was generally no obligation to assume the debts of the previous domain (including han notes).

However, one cannot completely rule out the possibility of exceptional cases or some form of relief measures being taken. For instance, under special circumstances—such as when a highly influential merchant held a large quantity of han notes and lobbied the shogunate or the new lord, or when the domain's assets were transferred in relatively good condition—it is not impossible that some compensation was provided or exchanges for new currency were made. Nevertheless, in general, the attainder of a domain meant the collapse of the value of its han notes, effectively rendering them worthless scraps of paper.

The commoners and merchants who held han notes often suffered significant economic losses due to the attainder of a domain. This can be considered one of the inherent risks of the system of han notes.