Edo Period - Economic Development

Economic Development

The Edo period bequeathed a vital commercial sector in burgeoning urban centers, a relatively well-educated elite, a sophisticated government bureaucracy, productive agriculture, a closely unified nation with highly developed financial and marketing systems, and a national infrastructure of roads.

Economic development during the Tokugawa period included urbanization, increased shipping of commodities, a significant expansion of domestic and, initially, foreign commerce, and a diffusion of trade and handicraft industries. The construction trades flourished, along with banking facilities and merchant associations. Increasingly, han authorities oversaw the rising agricultural production and the spread of rural handicrafts.

By the mid-eighteenth century, Edo had a population of more than one million, and Osaka and Kyoto each had more than 400,000 inhabitants. Many other castle towns grew as well. Japan had almost zero population growth between the 1720s and 1820s, often attributed to lower birth rates in response to widespread famine, but some historians have presented different theories, such as a high rate of infanticide artificially controlling population. Osaka and Kyoto became busy trading and handicraft production centers, while Edo was the center for the supply of food and essential urban consumer goods.

Rice was the base of the economy, as the daimyo collected the taxes from the peasants in the form of rice. Taxes were high, about 40% of the harvest. The rice was sold at the fudasashi market in Edo. To raise money, the daimyo used forward contracts to sell rice that was not even harvested yet. These contracts were similar to modern futures trading.

It was during the Edo period that Japan developed an advanced forest management policy. Increased demand for timber resources for construction, shipbuilding and fuel had led to widespread deforestation, which resulted in forest fires, floods and soil erosion. In response the shogun, beginning around 1666, instituted a policy to reduce logging and increase the planting of trees. The policy mandated that only the shogun and daimyo could authorize the use of wood. By the 18th century, Japan had developed detailed scientific knowledge about silviculture and plantation forestry.