Money Doctors Who Established Japan’s Modern Monetary and Financial Systems

Existing literature in English celebrates Matsukata Masayoshi, a Japanese politician who served as finance minister for many years, as the main architect of Japan’s modern monetary and financial systems in the late nineteenth century (e.g., Sylla, Journal of Economic History 62:277–292, 2002, Schiltz, The money doctors from Japan: finance, imperialism, and the building of the Yen Bloc, 1895–1937, Harvard University Press, 2012, He, Paths toward the modern fiscal state: England, Japan, and China, Harvard UP, 2013, and Ericson S (2019) Financial Stabilization in Meiji Japan: The Impact of the Matsukata Reform. Cornell UP, Ithaca). In this chapter, I revisit early attempts by the Meiji government to build modern institutions, focusing on the accomplishments of monetary and financial experts before Matsukata, to paint a more balanced picture of the transition from an indigenous system to a modern one. In doing so, I focus on the 1871 debate among three money doctors, Ito Hirobumi, Yoshida Kiyonari, and Shibusawa Eiichi, on money conversion and the establishment of the modern banking system. Despite their different backgrounds and motivations, they managed to draw blueprints that were referred to by later experts, including Matsukata.