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<p>[QUOTE=&quot;The Eidolon, post: 4385036, member: 102103&quot;]OK, I&#039;m not sure if anyone except me is interested in bimetallism and Japanese monetary history, but I believe my explanation yesterday for why Japan increased the weight of its subsidiary yen coins was incorrect.&nbsp; What I believe now:</p><p><br /></p><p>1)&nbsp; The yen was a brand new currency in 1870, and there was a lot of uncertainty as to how to manage gold/silver and paper money simultaneously.</p><p><br /></p><p>2)&nbsp; The worldwide price of gold was on a sharp upswing in the 1870s compared to silver.&nbsp; Japan had tremendous trouble keeping gold 1, 2, 5, 10 and 20 yen coins in circulation while it was on a silver standard until 1897.&nbsp; Gold coins were either discontinued or low mintage for most years from 1874-1897.&nbsp; The rising price of gold would have encouraged people to hoard, export or melt any gold coinage.</p><p><br /></p><p>3)&nbsp; The silver yen coin was full-bodied, at about 24.26 grams of silver per yen.&nbsp; All of the smaller silver coinage was not.&nbsp; They were 20 g/yen before the weight increase (1870-71) and about 21.6 g/yen afterward (1873-1906 or 1907).&nbsp; The smaller coins were about 20% underweight compared to the full yen coins, and would not have been accepted in foreign trade.&nbsp; (See table I threw together<img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" /></p><p>[ATTACH=full]1104541[/ATTACH] </p><p><br /></p><p>4)&nbsp; There was probably considerable domestic resistance to accepting the underweight subsidiary silver coinage, leading to shortages of small change.&nbsp; The slight weight increase may have been meant to address this and improve public acceptance of the silver small coins.</p><p><br /></p><p>5)&nbsp; Japan switched to a gold standard in 1897 and kept it until the Great Depression and inflationary pressures from Japan&#039;s imperial ambitions made it untenable.&nbsp; By the time Japan adopted the gold standard, the price of gold had approximately doubled compared to what it was in terms of silver in 1870 (<a href="https://www.kitco.com/commentaries/2016-04-28/Gold-Silver-and-the-US-Dollar-1792-1971.html" target="_blank" class="externalLink ProxyLink" data-proxy-href="https://www.kitco.com/commentaries/2016-04-28/Gold-Silver-and-the-US-Dollar-1792-1971.html" rel="nofollow">source</a>).&nbsp; The gold coins were halved in weight to keep the silver coinage about the same size on the new gold standard.&nbsp; The 1870 implied gold/silver price ratio was 16.1:1.&nbsp; By 1897 with the lighter gold coins it was 32.3:1 (compared to the silver 1 yen metal content).</p><p>[ATTACH=full]1104543[/ATTACH] </p><p><br /></p><p>6)&nbsp; The metal content of the subsidiary silver coins was reduced by about 20% in 1906-1907.&nbsp; By this point, Japan was on a gold standard and the silver money functioned as a &quot;token&quot; currency.&nbsp; The weight change may have been an attempt to gain more seignorage revenue from minting silver coins, or a response to the partial recovery of the price of silver compared to gold in the 1900-1906 period.</p><p><br /></p><p>I&#039;ll resume posting pictures of coins instead of economic theorizing shortly![/QUOTE]</p><p><br /></p>

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