2022 Volume 39 Pages 68-88
This study investigates price determination methods of kimono fabric dealers in early modern Japan, conducting a case study of Naraya, a Kyoto-based merchant that had branches in the Kantō region (Edo and its neighboring areas). In order to cope with data availability limitations, the investigation utilizes historical records of other major Kyoto-based merchants with Edo branches and those of modern times as well. There were two price determination methods: namely, the “uchi-mashi” and “soto-mashi” methods.
Uchi-mashi: Cost ÷ (1 - (Profit percentage ÷ 100)) = Selling price
Soto-mashi: Cost × (1 + (Profit percentage ÷ 100)) = Selling price
Naraya used the uchi-mashi method for “kudari mono [kimono fabrics purchased in Kyoto and sent down to the Kantō region].” With regard to “kantō mono [kimono fabrics purchased in the Kantō region],” the soto-mashi method was adopted. There were three pre-determined profit rates applied in the calculation, corresponding to three different categories into which commodities were classified. In the case of kudari mono, however, it was a common practice that prices were increased higher than calculated selling prices depending on the quality of fabrics and popularity of their designs. In addition, there were unique business practices concerning price tags. When commodities were sent from Kyoto, prices were doubled, and such doubled prices were written on price tags. “Cash only, price on the tag” sales were also held. In introducing these practices, Naraya followed precedents of major merchants that had branches in Edo. This is the first Japanese economic history study that gives an in-depth analysis of early modern merchants’ actual business practices concerning price determination.
This study aims to reveal how prices of kimono fabrics were determined, examining profit rates, methods to calculate profit-added prices, business practices concerning price tags, and bookkeeping methods. Although the main research object is Naraya’s business activities during the early modern period, it also deals with cases of other merchants and utilizes historical materials of modern times in order to provide more detailed and comprehensive analyses.
Previously, researchers such as Ogura (1962), Sakudō (1966), Miyamoto (1969), Yasuoka (1970), Kawahara (1977), Nishikawa (1993) have investigated, regarding merchants they have chosen as their research objects, accounting systems, account settlement methods, bookkeeping techniques, and so on. However, previous studies have not provided an in-depth analysis of accounting books, or a detailed examination of actual retail business practices. Presumably, researchers have hesitated to undertake such inquiries due to data deficiency and strange business practices peculiar to the period.
Under those research circumstances, most relevant to this investigation is Nakai and Shimada (1971). It points out that Mitsui Echigoya, Ōmura Shirokiya, and other brokers collectively implemented price adjustments in reaction to a price survey conducted by the Tokugawa government. However, the original source tells nothing about profits that were included in selling prices to final consumers, though it does give information about “kai nedan” [purchase prices] and “edo kudashi nedan” [prices that were determined when commodities were sent down to Edo]. With regard to Echigoya, in addition, Mitsui Bunko (1980) provides some information about profit rates. Further, Kagawa (1985) refers to profit rates, and Sakurai (2004) examines price fluctuations in relation to exchange rates between gold and silver. However, although a relatively large number of studies have been conducted on kimono fabric dealers in the early modern period, nothing has been revealed about pricing methods, profit rates, or actual pricing processes.
The difficulty in elucidating actual price-setting processes still remains today. Furukawa points out the paucity of empirical studies on pricing. (Furukawa 1995, 11–12) Of course, a company would not be able to survive competition, if it sells its commodities in the market while disclosing to the public their purchase costs and other expenses. Details of pricing are top secret information of business enterprises, and scholars are in no better position than consumers in this regard, because neither can know exact components of prices. For example, the full-cost pricing principle, one of the pricing models currently being used, would not have been advocated, had it not been for the questionnaire and interview survey conducted by Oxford economists on thirty-eight companies. The pricing method revealed by the survey was not what scholars had expected.2 However, even this survey did not disclose detailed breakdowns of prices.
Concerning the early modern and modern periods, extant accounting books from which purchase prices, selling prices, and profit rates can be traced are very rare, and their examination would be very valuable. This research has found out and analyzed such records. With regard to Naraya, which this research deals with, Kagawa (2012) has shown the outline of its business activities. In addition, Sakurai (2003) has investigated its servant system. By examining accounting books of the Sakura branch, Suzuki (2013) has showed, concerning its account settlement procedures before the Tenpō era, that, first, sales value based on tag prices was written in the accounting book, then the value was multiplied by 0.5, and the reduced value was recorded in the book as net sales. On the basis of Suzuki’s investigation, this study carries out a detailed analysis of accounting books regarding Naraya’s all stores, providing a more vivid view of its actual price determination processes.
Silkworm cocoons and raw cotton are spun into yarn, which is further processed into fabrics that are put into circulation to be sold and bought. Once a product becomes a commodity, a price is set at each phase of circulation by wholesalers, brokers and retailers. Therefore, price tags are always changed during the circulation until they are removed by final consumers. The Daikokuya Tomiyama family, a representative of wealthy merchants in early years of the early modern period, had an instruction book regarding, for instance, purchasing textile products, attaching tags, and cutting fabrics.
For instance, in the book’s first section on senji [thin silk fabrics], it is instructed that a tag should be attached to each hiki [about 36 cm x 2200 cm] of purchased senji as demonstrated in Figure 1-A, and that three items, namely, price, color, and quality, should be written on the tag.
Figure 1: Price tags of Daikokuya
Source: Kyō dana shiire mono shiirehō no tome. Tsuketari sai (tachi) mono no hikae [Purchasing methods of the Kyoto store. Appendix: Sewing patterns] 1768–1769 (Tomiyama family documents, 569, National Institute of Japanese Literature, Tokyo).
The tagged senji was then glossed into neri-senji (silk cloths such as habutae). After that process, the book instructs, five percent interest should be added to the price on the tag should be increased by 5 percent per day. It is also instructed that a price ten momme higher than the original price should be written directly on the fabric. (Momme was a currency unit for silver coins traded by weight.) According to the book, the charge for glossing was between one momme and one momme and two, or three, fun per hiki. (1 momme = 10 fun.) Glossed fabrics were then sent to the dyeing process. The book instructs with illustrations that fabrics returned from the dyeing process be classified into two categories and distinguished by tags attached, on the basis of whether or not family crests are put on them. As can be seen in Figure 1-B, top right, only one tag was attached to fabrics without family crests. On the other hand, as can be seen in Figure 1-B, top left and bottom, two tags were attached to those with family crests.
Letters on the tag attached to a fabric without family crests (Figure 1-B, top right) can be read as “ヨ,” “スミル,” and “トト.” “ヨ” signifies habutae, and “スミル,” the color brownish olive green. “トト” is a sign designating 33 (momme). Letters on the second tag attached to a fabric with family crests (Figure 1-B, bottom) can be read as “ヨ,” “丸二ツ引,” “モヘキ,” and “シヨ.” Here, again, “ヨ” signifies habutae. “丸二ツ引” stands for a family crest, A, and “モヘキ,” for the dyeing color young green onion. “シヨ” is a sign designating 69 (momme).
Next, fabrics were sent to the pricing section of the merchant house, and kudashi-fuda [price tags indicating that the commodities were to be sent down to Edo] were attached. There, kakari mono (various expenses: 5 fun for glossing + 8 fun for dyeing + 5 fun for cleaning = a total of 1 momme and 8 fun) was added. Then, that price was multiplied by a rate called sadamari, which was determined by Daikokuya. On top of that, finally, dachin (shipping expenses: 2.2 momme) was added. Therefore, the price of the fabric, which had been priced at 33 momme at the beginning, was now calculated as follows.3
((33 + 1.8 = 34.8) × 3.1 = 107.88) + 2.2 = 110.08
The figure was rounded down, and the sign, “上ウ” signifying 110 momme, was written above “トト” on the tag in Figure 1-C. In this case, the original cost price was multiplied by the magnification rate of 3.1. The below are extracts from accounting books of Edo Hondana, Daikokuya’s main branch in Edo. (1 kan = 1000 momme)
Shin nimotsu daka [The value of newly arrived commodities based on original prices] 21.68120 kan
Fuda [The value of newly arrived commodities based on tag prices] 65.04360 kan
Edo kai daka Mata [The value of commodities purchased in Edo based on original prices] 295.74712 kan
Kono-fuda [The value of commodities purchased in Edo based on tag prices] 887.24136 kan4
Nokori mono Fuda [The balance carried over based on tag prices] 754.0070 kan
(The following is written on an attached paper) 248.8223 kan テテ廻し [one-third]5
In both cases of shin nimotsu daka and edo kai daka, the values based on tag prices are exactly three times as much as the values based on original prices. In the case of nokori mono, that is, the balance carried over, the magnification rate is around 3.03. The following descriptions can be found in other sources of Daikokuya: “From now on, prices of commodities that are sent down from Kyoto to Edo should be multiplied by three”6; “With regard to fabrics purchased in the Kantō region (Edo and its neighboring areas), first, their original prices should be denominated in silver. Then, those prices should be divided by three, and ten momme be added. The resulting prices should be written on tags in red ink. If the price tag falls off, the price directly written on the fabric should be multiplied by three.”7 It can be known from these findings that Daikokuya tripled original cost-based prices and such tripled prices were written on price tags.
During the early modern period, there were three basic methods to add profits to cost prices of kimono fabrics. In the first method, profit margins of commodities were decided individually. In the second, pre-determined amounts of profit were added. In the third, selling prices were calculated on the basis of pre-determined profit rates. In many cases, pre-determined amounts of profit were added in production processes. Therefore, it can be thought that selling prices were determined either through the first, or through the third method. In addition, with regard to the third method, that is, setting the selling price of a commodity on the basis of its purchase price and a pre-determined profit rate, there were two different ways of calculation. The different ways of calculation resulted in different amounts of profit, even if the same purchase price and profit rate were used in the calculations.
Daikokuya’s records include a booklet titled Naigai kagen [Inside-outside, addition-subtraction], which was about calculations of profit-added prices. It provides calculation problems and their answers in the order of uchi-hiki [inside subtraction], soto-hiki [outside subtraction], soto-mashi [outside addition] and uchi-mashi [inside addition], among which soto-mashi and uchi-mashi are related to pricing.8 One of the problems is: What is 20% more of 100 momme calculated through each of the soto-mashi and uchi-mashi methods?. The formulas to be calculated are as follows.
Soto-mashi 100 × (1 + 0.2) = 120 Uchi-mashi 100 ÷ (1 - 0.2) = 125
The so-called soto-mashi and uchi-mashi methods were rather commonly used calculation methods at the time. For instance, in Jinkōki, an exemplary arithmetic book of the Tokugawa period written by Yoshida Mitsuyoshi in 1627, these methods are used to calculate the amount of silver contained in cupellated silver. (Yoshida 2000, 77–78)
While soto-mashi price is calculated on the basis of purchase price, uchi-mashi price is calculated on the basis of selling price. In short, if a merchant wants to make sure that 20 percent of the selling price (profit-added price) will be gained as profit, he has to price the commodity through the uchi-mashi method with the profit rate of 0.2. If he uses the soto-mashi method, the proportion of profit against the selling price falls short of 20 percent.
Nowadays, the equivalent of the soto-mashi method is sometimes called uchi-gake, and the equivalent of the uchi-mashi method, soto-gake. In addition, different notions of profit are distinguished by using different terms such as rigake and rihaba. In this study, however, only the early modern terms, soto-mashi and uchi-mashi, are used to avoid confusion.9
Silk fabric wholesalers also used two different methods for pricing. The following is from Kenpu chōhō ki [Handbook of silk fabrics], which was edited by Tamiya Soshū and originally published in 1789.
Fabrics of habutae [a kind of silk fabric] are purchased by weight (memawari). Their prices depend on the quality of silk threads. As long as the silk thread quality is good, the price of the fabric is high, even if the fabric is thin. If the silk thread quality is second-rate, the price of the fabric is low, however thick and heavy the fabric is. It should be understood that when memawari is 60, the price for 120 momme of silk fabric is 72 momme. Many of the fabrics woven in Nishijin are priced by the memawari method. However, fabrics woven by the takahata looms such as brocade, chau, tangojima, taffeta, satin, and velvet are priced individually (atenedan), because these fabrics are more or less starched. These fabrics should be valued on the basis of the quality of the fabric and the popularity of their designs, regardless of the quality of the silk threads, or the thickness of the fabrics. (Tamiya 1916, 107–108)
“Memawari is 60” means that the price for 100 momme of habutae fabric (here, momme is a unit of weight: 1 momme = 3.75 grams) is set at 60 momme. Therefore, the price for 120 momme of habutae is 60 x (120/100) = 72 momme. Since memawari price was determined by the quality of silk threads, fabrics woven with high-quality threads were priced highly, even if their weights were light. On the other hand, fabrics woven with low-quality threads were priced lowly, even if they were heavy. In contrast to memawari, ategai was a method to price fabrics individually according to the quality of the fabric and the popularity of the design. This pricing method depended more on merchants’ ability to judge whether the commodity could be sold at the decided price. In this study, the method to price and sell fabrics by weight is called the memawari method, and the method to price individual fabrics on the basis of their quality is called the ategai method.
As has been mentioned in Section II-1, prices written on Daikokuya’s price tags were tripled from the originally calculated selling prices. In this section, Echigoya’s tag prices are examined. In the accounting books of its main store in Kyoto, values of commodities that were sent from the Kyoto main store to its branches are recorded under the item of “shinni kudashi daka [value of commodities newly sent down].” Regarding the first half of the year 1842, for example, the values are as follows.
Edo Hondana [the Edo main branch] shinni kudashi daka
Shōfuda [original price based value] 459.1068 kan Baifuda [doubled price based value] 918.2135 kan
Osaka Hondana [the Osaka main branch] Dō [Ditto (shinni kudashi daka)] 62.8258 kan
Edo Mukō-dana [the Mukō branch in Edo] Dō
Shōfuda 230.7455 kan Baifuda 461.4910 kan
Edo Shibaguchi-dana [the Shibaguchi branch in Edo] Dō
Shōfuda 290.9472 kan Baifuda 581.8943 kan10
It can be recognized that the total values of commodities calculated on the basis of doubled prices are reduced by half, and the original price based values are recorded in the accounting book. The double entry of both prices disappears in the accounting book of 1842. From that year onward, only original price based values were recorded in the accounting books. That was because of Shōfuda Rei [The proper price tag ordinance] issued by the Tokugawa government in October 1842, which ordered merchants to put, on each commodity, a tag with an original price written on it and to record original prices in accounting books without using secret signs. (Ishii and Harafuji 1994, no. 4285, 27–28) To put it the other way around, such an ordinance had to be issued, since many merchants were putting price tags on their commodities on which prices different from the original ones were written. They were also recording those different prices in their accounting books, using secret signs. In fact, Echigoya, too, was recording doubled prices in its accounting books in their secret signs. It can be said from these findings that it had become a common business practice for merchants at the time to multiply originally calculated selling prices and write them on price tags and in accounting books.
In the author’s view, it was in December 1719 that Echigoya began to use doubled prices for their commodities sent to Edo. In Sadame [Pricing methods], an internal document written in November 1718 for the purpose of instructing how to determine selling prices in Edo on the basis of new silver coins,11 there is no mention of doubled prices, though it does explain how to use signs. However, Koban 60 me no kakehō [60 momme multiplication table] written at the end of 1719 starts with the following words: “The fifth year of Kyōhō, the year of the rat, January. Prices on price tags attached to commodities for sale are twice as high as their real prices. The multiplication method for the calculation of selling prices at the fixed exchange rate between one ryō of gold and sixty momme of silver.” The document also contains descriptions such as: “a sign for doubling”; “Original, silver-based prices are doubled and the commodities are sent down to Edo. There, those prices are cut by half and recorded in the accounting books.”12 In Edo, Echigoya used doubled prices and adopted a pricing method in which selling prices were calculated with a multiplier which was altered according to changes in the floating exchange rate between silver and gold in the Kansai region (the region around Kyoto and Osaka).13 A document written in 1794 indicates that to sell commodities at reduced prices from the doubled prices written on price tags caused a sales promotion effect, because it gave customers the impression that they were buying at bargain prices.14
The founder of the Naraya Sugimoto family, Shin’emon, was born in present-day Matsusaka City, Mie Prefecture. He went to Kyoto and began to work as an apprentice at the age of fourteen. At the age of forty, he commenced his own business in Kyoto. Naraya’s business activities started as peddling in present-day Namegata City (Ibaraki Prefecture), Kasumigaura, and areas around the Tone River.15 Naraya opened its first branch in Sawara in 1764, and then in 1807, another branch was opened in Sakura. Naraya’s business activities continued into the modern period, opening its Chiba branch in 1909, which was turned into a department store in 1930. It thrived for a long period of time as a long-established, local department store. During the early modern period, Naraya’s basic business was, like major merchants such as Echigoya, Daikokuya, and Shirokiya, to purchase kimono fabrics at its main store in Kyoto, send them down to the Kantō region, and sell them there.
With regard to Naraya, around seven thousand historical records are now extant,16 which can be roughly classified into three categories: management, household, and religion. More than half of these records are about management. Among more than forty kinds of its accounting books, Shikiri-chō [Financial statements (FSs, hereafter)]17 were made by each of Naraya’s sales offices: that is, the Sawara and Sakura branches, the out-of-store sales department, and the Kyoto main store.18 FSs of the Sawara branch, in particular, are the basic research material for the investigation of Naraya’s business activities, because the records covers such a long period between 1751 and 1915 with only a few omissions.
An investigation into pricing methods, the main task of this study, inevitably requires an analysis of purchase records. Among Naraya’s accounting books and documents of that sort, the following four are the only records from which the merchant’s purchase activities can be traced: Kudashi mono moto-chō [Shipping ledger (SL, hereafter)] of the Kyoto main store (one book covering the period between 1892 and 1897); Daifuku-chō [Accounting book] (one book covering 1896); Niki kanjō hikae [Half yearly accounting ledger] (one book covering the period between 1865 and 1921); Kaiawase [Purchase ledgers] (ledgers covering the period between 1898 and 1912 with a few omissions). As can be seen, extant accounting records concerning the modern period are only fragmentary. As for the early modern period, there is no accounting record left from which to trace Naraya’s purchase activities.
Yorozu oboe-chō [Memoranda (MEMOs, hereafter)] consist of notes that the second to fifth heads of the Sugimoto family wrote on matters such as business, inheritance, and religious ceremonies. Concerning the limited period between 1797 and 1805, these memos provide information about Nayara’s purchase activities. The following is about Naraya’s purchases implemented in the summer of 1798. (1 ryō = 4 bu = 16 shu; 1 kan = 1,000 momme = 10,000 fun = 100,000 rin)
Kai daka 355 ryō 1 bu 2 shu
Kantō mono uchi chakuyō tsukai 4 ryō 2 bu
Shōmi mono kudari daka 2 bu
Hiki shime 350 ryō 1 bu 2 shu
Gin ni shite 21 kan 723 momme 2 fun 5 rin
Kudari daka 62 kan 745 momme 2 fun
Kai daka is the value of commodities purchased by the Kyoto main store. Kantō mono uchi chakuyō tsukai means cloths and fabrics for Naraya’s servants. Shōmi mono kudari daka means expenses for small, miscellaneous goods. The subtraction of kantō mono uchi chakuyō tsukai and shōmi mono kudari daka from kai daka becomes hiki shime. The equivalent of hiki shime in silver terms is gin ni shite. Kudari daka [Value of commodities sent to the Kantō region] is also recorded in silver terms. Both of the last two items are profit rates, which, when added together, make a profit rate of 100 percent.
A clue to find out Naraya’s pricing method lies in its Sawara branch’s FS dated July 1798. In it, “62 kan 745 momme 2 fun” is recorded as “kudari daka.” This value corresponds to the value of kudari daka in MEMOs. In the Sawara branch’s FS, this value of kudari daka is added to the value of beginning inventory, and from that sum, the value of ending inventory is subtracted. In this way, the sales value is calculated and written down. Immediately, however, this sales value is cut by half with a multiplier of 0.5. Following the same business practice as Echigoya’s and other major kimono merchants’, Naraya doubled the prices of its commodities that were sent down to its branches in the Kantō region. Therefore, kudari daka was recorded in the financial statement not on the basis of the original prices but on the basis of the doubled prices. Given that “3075 mawaru” is a profit rate of 0.3075, the formula to calculate the profit-added value from gin ni shite through the uchi-mashi method is as follows.
21 kan 723 momme 2 fun 5 rin ÷ (1 - 0.3075) = 31 kan 369 momme 31 fun 4 rin
At first glance, this value does not seem to appear anywhere in its accounting records. In fact, however, this value is almost half the value of kudari daka. The above investigation has revealed that Naraya calculated profit-added prices of commodities it purchased through the uchi-mashi method, and sent them down to the Kantō region, with those profit-added prices being doubled.
Basically, kimono fabric dealers classified commodities according to the type of fabric such as habutae (plain weaves of silk fabric) and chirimen (crepe). During the Tokugawa period, however, fabrics of the same type were also classified into different categories according to the grade of quality: that is, into the first, second and third grades. To each of these grades, fabric dealers applied a different price per weight (per 100 momme). According to price lists Edo fabric dealers such as Echigoya and Shirokiya submitted to the Tokugawa government,19 the price for 100 momme of the first grade habutae, for example, was 57.5 momme, the second grade, 52.5 momme, and the third grade, 47.5 momme in February 1786. In June 1788, the price for the same weight of the first grade habutae was 67 momme, the second grade, 62 momme, and the third grade, 57 momme.20
As for Naraya, whose turnover was far smaller,21 there is no evidence that it classified the same type of fabrics into different grades. However, it did classify its commodities into three to five grades, to which different profit rates were applied. In other words, different types of fabrics were regarded as belonging to the same category if their profit rates were the same.
Profit rates that Naraya applied during the early modern period can be traced through Kyō hondana shikiri-chō [Financial statements (FSs) of the Kyoto main store] and MEMOs concerning the years between 1771 and 1795.22 FSs of the Kyoto main store show changes of the profit rate for only one commodity category: 15 percent from January 1777 through 1800; 25 percent from January 1801 through 1808; 30 percent from January 1809 onward. However, MEMOs of 1793 indicate that there were at least three commodity categories. From January 1820 onward, five different profit rates were applied. Although those profit rates fluctuated for a while, they stabilized during and after 1834. The highest profit rate that was applied to the highest category, into which the highest grade of summer clothes and fabrics made from silk, cotton, and hemp were categorized, was set at 30 percent. The other rates were set at 5 percent intervals, with the rate for the lowest category being 10 percent. In September 1894, the highest profit rate was lowered to 25 percent and kept at that level thereafter.
It was because of the change of the accounting method to record the value of inventory that five, instead of one, profit rates for five commodity categories began to appear in accounting records, which was a more accurate reflection of the actual state of business at the time. By comparing the Kyoto main store’s two financial statements of January 1820, it can be known that during the period in which only one profit rate appeared in accounting records, only the highest profit rate was recorded among various rates, and it alone was used to calculate the value of inventory.
MEMOs are the only evidence that provides information about what kinds of commodities Naraya handled during the early modern period. According to “Mise yori shiromono watasu fudahiki oboe” [Memorandum concerning profit ratios of kimono fabrics, 1793] included in MEMOs, commodities were broadly classified into two categories; namely, kudari mono [fabrics purchased in Kyoto and sent down to Edo] and kantō mono [fabrics purchased in the Kantō region]. Each category was further classified into three grades. The first grade of kudari mono comprised high-quality commodities such as Nishijin brocade, crepe, and Kyoto-made kimono sash belt. The second grade comprised lower class commodities such as silk pongee and striped cotton fabric. The third grade included single-layer kimono and summer wear. The words, gogake [0.5 times] and niwaribiki [20 percent off], are written after the description of the content of the first grade of kudari mono. Although the word, gogake, appears in relation to all grades of kudari mono, the word never appears in relation to kantō mono. That is because prices of all kudari mono were doubled, and therefore, they had to be multiplied by 0.5 times when their values were recorded in the accounting book. The word, niwaribiki, indicates that the profit rate calculated through the uchi-mashi method was 20 percent and that when their asset values were recorded in the accounting book, this portion of the profit had to be subtracted. As for kantō mono, commodities were divided into three grades with three different profit rates. Unfortunately, what kinds of commodities constituted each grade cannot be known.
So far, the investigation has examined records concerning the settlement of accounts, which was implemented at the end of a business cycle, long after commodities’ prices had been determined in Kyoto. Although pricing methods and categories of kudari mono have been revealed, purchase and selling prices of individual commodities have not yet been traced. Fortunately, records are available that tell what happened at the crucial moment when purchased individual commodities arrived at the Kyoto main store and their selling prices were determined. SL (Shipping Ledger) of the Meiji period is the records.
SL was, when it was new, bound blank sheets of Japanese paper, with necessary pages allotted for each commodity (profit) category. Each time a purchased commodity arrived at the Kyoto main store, its value was recorded on the page corresponding to the commodity’s category. There were five categories: namely, “ichiban-fuda kudashi mono [first-tag commodities that will be sent down to the Kantō region (first-tag commodities, hereafter)],” “niban-fuda kudashi mono (second-tag commodities, hereafter),” “sanban-fuda kudashi mono (third-tag commodities, hereafter),” “bangai kudashi mono [other commodities],” and “toritsugi mono irefuda [sale on commission].” When a commodity arrived, the date of arrival was recorded in the upper row. Then, after the letter, “一 [one],” the purchase price was written in signs. Further, after the letter, “入 [enter],” another numerical figure was written in Chinese characters. In the lower row were recorded the name of the commodity and its amount. To take an example of a first-tag commodity that arrived on the thirtieth of September 1892, the following information was recorded: “一, 2 kan 40 momme; 入, 2 kan 970 momme; long-sleeved crepe kimono with design patterns up to the waist; indigo-tinged gray, 2 tan.”23
The price written after the letter, “入,” is, in fact, the selling price that was calculated from the purchase price and written on a price tag. The very moment of pricing is recorded here. Given the research results obtained so far, we are now able to calculate the selling price, as Naraya’s clerks did, from the purchase price through the uchi-mashi method by applying the first-tag commodities’ profit rate of 30 percent. This calculation method gives the formula: 2 kan 40 momme ÷ (1 - 0.3) = 2 kan 914 momme. This price, however, is not equal to the selling price written in the ledger, which is 2 kan 970 momme. The actual selling price is 56 momme higher than the theoretical price (hereafter, SPCFPP: selling price calculated from profit percentage). As a result of an investigation conducted for the purpose of checking if there is any relationship between theoretical prices and actual selling prices written in the ledgers, it is found out that differences between both prices vary from commodity to commodity and there is no regularity between them. Therefore, it can be assumed that the ategai method of pricing was being conducted. Presumably, Naraya’s clerks, while looking at an individual commodity, first calculated its SPCFPP with the help of an abacus, and then assessed its quality and popularity to increase, or decreased, the price. In most cases, the adjusted prices were higher than the SPCFPPs.
The sums of purchase costs and selling prices were recorded in shipping ledgers every half year. Table 1 shows the sums of purchase costs and selling prices of first- to third-tag commodities concerning the period between September 1892 and February 1893.
Source: Kudashi mono moto-chō [Shipping Ledger], 1892–1897 (Sugimoto family documents, Sugimoto Residence, Kyoto).
“Moto shime” means the sum of purchase costs, and “iri shime,” the sum of selling prices. In the ledger, an applied profit rate is written in signs after iri shime, and after the profit rate is written the SPCFPP calculated on the basis of moto shime and the profit rate. “Hiki shime” is the subtraction of SPCFPP from iri shime. In most cases, the value of iri shime is larger than that of SPCFPP, and in such cases, a word, “kajō [excess],” is written after hiki shime. The difference was considered excess, because SPCFPP was regarded as a yardstick of selling price. Incidentally, in the cases in which iri shime is smaller than SPCFPP, a word, “fusoku [shortfall],” is written after hiki shime. Cases with cotton clothes manufactured in Kawachi (former province located in the east of present-day Osaka Prefecture) are typical examples of such shortfall cases. The cotton industry in Kawachi was in decline at the time, partly because it was hit by the importation of foreign cotton and partly because cotton thread manufactured in Kawachi was too thick and therefore not suitable for mechanized production.
The relationship between iri shime and SPCFPP reflects both merits and demerits of the commodity categorization system combined with the differentiated profit rates. It is very convenient to apply pre-fixed profit rates. In that case, however, if categorization is too detailed, it lacks practicality. Therefore, the categorization cannot help being crude and rough. However, it is naturally anticipated that cases will arise in which commodities’ actual profit rates will not be properly represented by pre-fixed ones on account of time lapse, changes in fashion trends, and so forth. Therefore, mechanical application of a pricing system based solely on pre-fixed profit rates lacks flexibility, and would lead to a significant amount of unsold inventory and losses of business opportunities. From this point of view, the price adjustment system was an indispensable method for Naraya’s business in that it made up for the defects of the SPCFPP pricing system based on the pre-set categories by taking into consideration changing market conditions.
As for the whole six-year period in question, the breakdown of the total of iri shime, that is, the total of the adjusted selling prices, is as follows. The sum of second-tag commodities’ selling prices constitutes 51 percent of the total; first-tag commodities, 34 percent; third-tag commodities, 12 percent; bangai kudashi mono, 1 percent; and toritsugi mono irefuda, 2 percent. Concerning second-tag commodities, their profit rate calculated through the uchi-mashi method on the basis of the sums of their selling prices and purchase costs is 26 percent, which is as much as 6 percent higher than the category’s pre-set profit rate of 20 percent. During the middle and late Meiji period, Naraya was making profits not so much from high-quality fabrics, which constituted the category of first-tag commodities, as from fabrics manufactured in textile-producing provincial areas, which constituted the category of second-tag commodities.
Finally, a general overview of the relationship between adjusted selling prices and SPCFPP during the Meiji period is given in the following. Niki kanjō hikae [Half-yearly accounting ledgers] are made of half-yearly accounting figures extracted from SL such as the sum of purchase costs (moto shime), that of adjusted selling prices (iri shime), that of SPCFPPs, and the total value of shipments to the Kantō region. Shipment values in Table 2 are picked up from Niki kanjō hikae.
Sources: Kudashi mono moto-chō [Shipping ledger], 1892–1897. Niki kanjō hikae [Half yearly account ledger], 1865–1921, (Sugimoto family documents, Sugimoto Residence, Kyoto).
The values of shipments to the Kantō region are almost equal to the sums of selling prices (iri shime), despite some differences caused by the time lag of around one month in the recordings of these two accounting items. This means that commodities were sent down from the Kyoto main store to the Kantō region with price tags on which were written not SPCFPPs but adjusted selling prices. Before the Tenpō era, adjusted selling prices had been doubled. With regard to the whole period dealt with in Table 2, the average profit rate calculated through the uchi-mashi method on the basis of the totals of purchase costs and SPCFPPs is around 17 percent. On the other hand, the average profit rate calculated through the uchi-mashi method on the basis of the totals of purchase costs and adjusted selling prices is around 26 percent. On the average, prices of Naraya’s commodities sent down to the Kantō region were around 10 percent higher than prices theoretically calculated on the basis of profit rates pre-determined for each commodity category.
So far, Naraya’s pricing method has been explicated. It is about prices determined by the Kyoto main store, which purchased commodities and sent them down to the Kantō region. At the actual selling scene, however, commodities were not necessarily sold at prices the Kyoto main store had determined. Since customers asked for a discount and shops held bargain sales, prices were often reduced. Price reduction was called “fudahiki” at the time.
In January 1802, for instance, 100 ryō were recorded in the financial statement of Naraya’s Sawara branch as “price reduction.” This expense was caused by a bargain sale held on the first of November of the previous year, in which kimono fabrics, cotton clothes, and ginned cotton were sold at reduced prices. As a preparation for the bargain sale, the Kyoto main store had ordered branch servants to make sure that price tags should be replaced with new ones on which reduced selling prices were written and that all the goods for the sale should be sold for cash only and without a further price-cut.24 The branch’s sales amount for that half-year term was a record 2,074 ryō, an increase of almost a thousand ryō from the previous term.
This investigation has conducted a case study of pricing and accounting methods adopted by kimono fabric merchants during the early modern period. In Section II, Daikokuya’s practical guide book for pricing was examined, and methods to calculate selling prices through both soto-mashi and uchi-mashi methods were comprehended. In addition, it was found out that there were two ways for wholesalers to determine fabric prices: memawari (price per weight) and ategai (to determine prices of commodities individually). In Section III, baifuda (doubled prices), a unique business practice peculiar to the early modern period, was examined through the analysis of Echigoya’s accounting books. In the case of Daikokuya, prices of commodities sent down to Edo were tripled. On the basis of these research results, a detailed analysis of Naraya’s price determination processes was implemented in Section IV. It was found out through the examination of MEMOs that prices of commodities sent down to the Kantō region were calculated by the uchi-mashi method and that commodities were categorized in accordance with their profit rates. In addition, the analysis of SL revealed that final price adjustments called irine were made by increasing, or decreasing, SPCFPPs to some extent in accordance with the ategai-like assessments of commodities. Before the Tenpō era, the Kyoto main store doubled prices, when it sent commodities to its branches in the Kantō region. Although such doubled prices were written in the accounting books of the branches at the arrival of the commodities, the prices were set back to the original price at the time of account settlement. The investigation also looked into price reduction called “fudahiki” made at actual selling sites. With regard to accounting in the early modern period, it should be borne in mind that there existed a common business practice of baifuda and that, at the time of account settlement, the value of inventory was calculated, at first, as the sum of selling prices.25
Although this investigation has revealed a lot of important facts, there remain many unclear points, even if the range of questions is limited to Naraya’s business activities related to its price determination. For example, whether selling prices of commodities sent down to the Kantō region included some kinds of expenses, or all the expenses were treated in different accounting items, is obscure. To take another example from a larger perspective, it is also unknown how Naraya coped with government policies such as recoinage, famines, and economic downturns in terms of its price strategy. According to the analysis of FSs the author has conducted so far, Naraya was steadily expanding its business, and its financial situation remained stable except for the last years of the Tokugawa regime during which vicious inflation accelerated. Although it can be thought that such strong business performance was realized by enormous managerial efforts and elaborate price adjustments, details of Naraya’s business activities have not yet been comprehended. With regard to fabric dealers other than Naraya, almost everything remains a mystery. Even whether major Edo fabric dealers such as Echigoya adopted the uchi-mashi, or soto-mashi, method is still unknown. However, it can be presumed that Naraya followed precedents of major kimono fabric merchants in Edo when it established its price determination system including the business practice of baifuda. In addition, it is well known that present-day Daimaru Department Store determines selling prices of all its commodities through the uchi-mashi method.26 It can be assumed as a corollary that prices of commodities sent down to the Kantō region were calculated through the uchi-mashi method during the early modern period. To corroborate this hypothesis, more studies are needed.
In Nishijin tengu hikki [The manuscript written by a Tengu of Nishijin], the selling of silk fabrics is described as follows: No other family business is so absurd as the silk business. If customers do not like the color, or design, of the fabric, it never sells however much the profit margin is reduced. On the other hand, if they like its color, or design, it can be sold at a remarkably high price. (Izeki  1977, 369) This description wittily captures the ategai nature of the fabric business. There is an interesting story by Ihara Saikaku contained in Seken Munasanyō [This scheming world]. On the last day of the year, setta [leather-soled sandals] became very scarce. In the early evening, their price was 7, or 8, fun. At dawn, however, the price reached as high as 2 momme and 5 fun. In the story, in addition, it is asserted that in Edo the type of setta made for celebratory occasions are sometimes sold at high prices, whereas in Kyoto and Osaka nobody buys setta at extraordinarily high prices. (Ihara  1965, 126–128) Ihara Saikaku brilliantly shows that even differences in consumers’ temperament, let alone changes in the balance between supply and demand, functions as a key element in price determination. While prices changed from moment to moment like the price of setta on the last day of the year, merchants in the early modern period paid careful attention to daily price movements and selling prices their rival merchants decided. Price determining factors vary widely from economic conditions to moral issues related to merchants’ greed. Price is the alpha and the omega of business activities. The site of price determination is where business activities start, and at that moment economy begins to move. The most vivid traces of such moments are recorded in accounting books. It is only through analyses of individual accounting books that such moments of price determination can be seized.
During the seventeenth and eighteenth centuries, kimono fabrics sold at Kantō branches of Kamigata-based fabric merchants were, in the main, kudari mono, that is, commodities that were sent down from the Kamigata region. At the same time, however, the proportion of silk fabrics manufactured in the Kantō region, the region close to the final consumption markets, was also increasing gradually. Fabrics made from silk, cotton and hemp in the Kantō region were generally called kantō mono. Naraya’s accounting books indicate that, in the years around 1775, kantō mono constituted a little less than 30 percent of the total amount of fabrics handled by Naraya’s branches in the Kantō region. The proportion reached almost 50 percent at the beginning of the nineteenth century, and a quarter of a century later, the proportion began to surpass 50 percent. During the latter half of the century, kantō mono became the main commodities in fabric markets in the Kantō region.
In the case of Naraya, its Sawara branch was assigned the task of purchasing kantō mono. The oldest part of FSs are, in fact, accounting records of kudari mono sent from the main store to the Sawara branch. With regard to kantō mono, therefore, information such as values of sales and inventory are not recorded. The only information obtainable from them regarding kantō mono is monetary amounts that were sent from the branch to the Kyoto main store. To put it the other way around, the main store received money from the branch as profit, or interest, which was recorded under an accounting item, “kantō kai daka ichiwari ri [profit (interest): 10 percent of the total value of purchased kantō mono].” Between January 1775 and March 1909, the Kyoto main store continually received from the Sawara branch 10 percent of the total amount of kantō mono purchased by the branch.
From January 1817, onward, however, general information about kantō mono such as the value of purchased commodities and applied profit rates was written in red ink at the end of each FS under a subheading, “tadashi kantō kaimono [Commodities purchased in the Kantō region].” On a page of FS dated January 1849 in which the value of purchased kantō mono is recorded, a piece of paper is pasted, on which information about kantō mono is written in both old and new accounting formats. The information recorded in the old format is as follows.
Niwari [20 percent] 1,266 ryō
Ichiwari gobu [15 percent] 622 ryō
Ichiwari [10 percent] 1,935 ryō
Mikuchi shime [The total of the above three amounts] 3,823 ryō
Gobu [5 percent] 60 ryō
Hikuri shime [Final profit] 160 ryō27
Each value is denominated in gold in the old format. Niwari, ichiwari gobu, and ichiwari are values of purchased commodities whose profit rates are set at 20, 15, and 10 percent, respectively. Mikuchi shime is the total value of these three categories of purchased commodities. With regard to the same half-year term, kantō mono kai daka ichiwari ri (10 percent of the total value of purchased kantō mono, which was sent to the Kyoto main store] recorded in FS is 382 ryō 3 bu 549 mon. This amount is equal to 10 percent of mikuchi shime. Gobu designates the monetary amount the Sawara branch had paid temporarily for the Kyoto main store. The branch received 5 percent interest on this advance money from the main store. Hikuri shime is the final profit the Sawara branch obtained at the end of this half-year term. The final profit is calculated in the following ways. First of all, in order to calculate the profit gained by selling purchased commodities, the values of three different categories of purchased commodities are multiplied by respective profit rates. Then, added to this profit is the 5 percent interest the branch received from the main store. From this profit amount, finally, 10 percent of mikuchi shime, which was sent to the Kyoto main store, is subtracted. This is the final profit that was left with the Sawara branch. The below is the formula expressing the above calculations.
(1,266 × 0.2 + 622 × 0.15 + 1,935 × 0.1 + 60 × 0.05) - (3,823 × 0.1) = 160
In contrast to kudari mono, profits of kantō mono were calculated through the soto-mashi method. The below is the information recorded in the new format. From this half-year term onward, incidentally, accounting records were written only in the new format.
Moto shime 244.0398 kan
Fudaire shime 292.4479 kan
Sashihiki shime 48.4081 kan
Uchi 24.40398 kan
Hikuri shime 24.0041 kan
Mata 1.8345 kan
Futakuchi shime 25.838 kan
Kono kin 403 ryō 2 bu 2 shu28
In the new format, each value is denominated in silver. The differences between the old and new formats are not limited to the change of currency denomination. Recorded information becomes more detailed in the new format in some respects, but in others, it becomes simplified. Moto shime is the total value of purchased commodities, which corresponds to mikuchi shime in the old format. Unlike in the old format, the breakdown, by applied profit rate, of the total value of purchased commodities is not recorded in the new format. Fudaire shime is thought to be the total sum of moto shime (the total value of purchased commodities) and profits produced by selling purchased commodities. Profits here are calculated by applying profit rates pre-determined for each commodity category into which purchased commodities are classified. As to fudaire shime, a more detailed explanation will be given later. Next, sashihiki shime is the subtraction of moto shime from fudaire shime. Uchi designates 10 percent of moto shime, which was sent to the Kyoto main store as kantō kai daka ichiwari ri. The amount of uchi is equivalent to a little more than 381 ryō in gold. Hikuri shime is the subtraction of uchi from sashihiki shime, which was the profit left with the Sawara branch after the 10 percent margin was sent to the Kyoto main store. Mata means extra profits gained by increases in selling prices caused by changes in the exchange rate between gold and silver. Futakuchi shime is the sum of hikuri shime and mata, and this amount equals kono kin when denominated in gold. The exchange rate between gold and silver calculated on the basis of futakuchi shime and kono kin is: one ryō of gold = 64 momme of silver. The number 64 written on the pasted paper refers to this exchange rate.
Fudaire shime is explained in more details in the following. If the sum of sold commodities’ selling prices, which should be the amount of fudaire shime, is calculated through the soto-mashi method on the basis of the amounts of purchased commodities and pre-determined profit rates recorded in the old format, the formula below gives the amount in question.
(1,266 × 1.2 + 622 × 1.15 + 1,935 × 1.1) × 64 = 279.2320
The discrepancy between this amount and the actual amount of fudaire shime is as wide as more than 13 kan. If the calculation is carried out through the uchi-mashi method, the discrepancy is still more than 6 kan.
The key record to find out the correct profit rates applied is MEMO of July 1793.29 In this record, the profit rate for commodities classified into the category of niwari [20 percent] is set at 15 percent, the rate for the category of ichiwari gobu [15 percent], at 10 percent, and the rate for the category of ichiwari [10 percent], at 7 percent. These profit rates become 25 percent, 20 percent, and 17 percent, respectively, if 10 percent, which is the proportion of the purchase costs that was sent to the main store as profit (interest), is added to each of them. If a soto-mashi calculation is carried out with these profit rates to gain the sum of purchase costs and profits, the result is as follows.
(1,266 × 1.25 + 622 × 1.2 + 1,935 × 1.17) × 64 = 293.9424
This amount is almost equal to the actual fudaire shime of 292,4479 kan. This means that the same commodity categories with the same pre-determined profit rates were being used for more than half a century. Echigoya also adopted the soto-mashi method for the price determination of kantō mono. It used two multipliers called “bugake no hō” and “fudagake,” which were added together and made into a new multiplier called “tsugō.” Then, purchase prices of commodities were multiplied by the multiplier, tsugō. Through this memawari (price per weight) method, Echigoya determined selling prices of their commodities.30
As has been shown, Naraya used the soto-mashi and uchi-mashi methods for the price determination of kantō mono and kudari mono, respectively. In most cases, commodities were sold at higher profit rates than those pre-determined for each commodity category into which they were classified.
1This paper is an English translation of the original Japanese version that was awarded the 2018 BHSJ-SBS Best Paper Award. This is a digest version that discusses only major points. On the other hand, “Naraya’s pricing method for kantō mono,” which was omitted from the original version due to space limitations, is added as Appendix.
2Although economists have maintained that the principle of price determination is equality between marginal revenue and marginal cost in equilibrium, the survey states in its conclusion that that was not the case with most of the companies investigated. See, R. L. Hall and C. J. Hitch, “Price theory and business behaviour,” Oxford Economic Papers 2 (May 1939): 32.
3Kyō dana shiire mono shiirehō no tome. Tsuketari sai (tachi) mono no hikae [Purchasing methods of the Kyoto store. Appendix: Sewing patterns] 1768–1769 (Tomiyama family documents, 569, National Institute of Japanese Literature, Tokyo).
4Kyoto san’yō mokuroku [Financial statements of the Kyoto store], December 1751 (Tomiyama family documents, 519, National Institute of Japanese Literature, Tokyo).
5Edo ryō tana san’yō mokuroku [Financial statements of two Edo stores], August 1687 (Tomiyama family documents, 503, National Institute of Japanese Literature, Tokyo). “テテ廻し” is a sign signifying “33 mawashi [turns].” This means that tripled prices were multiplied by 0.33 (one-third).
6Kyō dana sho-yōdome. Tsuketari sho-sanpō no hikae [Miscellaneous notes of Kyoto store. Appendix: Calculation methods], n.d. (Tomiyama family documents, 570, National Institute of Japanese Literature, Tokyo).
7Oboe [Memorandum], n.d. (Tomiyama family documents, 557, National Institute of Japanese Literature, Tokyo).
8Kyō dana sho-yōdome. Tsuketari sho-sanpō no hikae [Miscellaneous notes of Kyoto store. Appendix: Calculation methods], n.d. (Tomiyama family documents, 570, National Institute of Japanese Literature, Tokyo).
9In English-speaking countries, “markup” and “margin” are used as similar, but different concepts related to profit.
10Mokuroku [Financial statements], January–July 1842 (Mitsui family documents, Zoku 4039, Mitsui Bunko [Mitsui Archives], Tokyo). In the case of Daikokuya, too, prices of commodities sent to its Osaka store were not tripled. The business practice of doubling, or tripling, prices was peculiar to commodities that were sent down to Edo.
11“Sadame” [Pricing methods], 1718 (Mitsui family documents, Hon 1483-13-4, Mitsui Bunko [Mitsui Archives], Tokyo).
12Koban 60 me no kakehō [60 momme multiplication table], 1719 (Mitsui family documents, Hon 1031-1, Mitsui Bunko [Mitsui Archives], Tokyo). See also, Tokyo-to, ed., Tokyo shishi kō: Sangyōhen 11 [History of Tokyo city: Industry edition 11] (Tokyo: Tokyo Metropolitan Government, 2000), 369–376.
13For details, see, Suzuki Atsuko, “Early monetary policies of the Tokugawa shogunate and merchants’ coping strategies: 1695–1736” (Discussion Papers In Economics And Business 21-15, Graduate School of Economics, Osaka University, Osaka, November 2021. http://www2.econ.osaka-u.ac.jp/econ_society/dp/2115.pdf).
14“Edo san tana shimeshi awase-sho” [Agreement among three Edo stores], 1794 (Mitsui family documents, Hon 468-2, Mitsui Bunko [Mitsui Archives], Tokyo).
15Sōzoku-ki [Family history], [1781–?] (Sugimoto family documents, Sugimoto Residence, Kyoto).
16About 6,000 of the records are deposited at Sugimoto Residence, about 1,000, at Otone Branch Natural History Museum and Institute, Chiba, and 19, at Chiba Prefectural Archives.
17Naraya’s Shikiri-chō [Financial statements] had slightly different titles, such as Ichiban tana shikiri-chō, Sawara mise shikiri-bo 6 ban, and Sakura mise narabi ni soto akinai shikiri-chō, depending on the time and store. In this study, however, they are all referred to as Shikiri-chō [Financial statements].
18Financial records of the Kyoto main store lacks the title page, and so, the original title is unknown. However, they can be categorized as Shikiri-chō [Financial statements]. In this study, therefore, they are referred to as Kyō hondana shikiri-chō [Financial statements of the main store].
19“Rinzu habutae saaya chirimen nedangaki” [Rinzu, habutae, saaya, and chirimen pricing notes], 1777–1779 (Mitsui family documents, Hon 1175-8, Mitsui Bunko [Mitsui Archives], Tokyo), Kansei 2 inu-doshi gofuku mono nedan-sho Kyoto yori tō nakama e kudari sōrō kakitsuke ni goza sōrō [Letter sent from Kyoto to our guild about the price of kimonos], 1790 (Shirokiya Omura family documents, 2, National Institute of Japanese Literature, Tokyo), and many others.
20“Nedan-gaki” [Prices list], 1777–1790 (Mitsui family documents, Hon 1174-1, Mitsui Bunko [Mitsui Archives], Tokyo). Nakai Nobuhiko and Shimada Sanae, “Kansei bukka chōsa ni okeru nishijin mono nedan: ‘kakiage nedan’ no sakusei katei o fukumete” [On fluctuations in prices of Nishijin cloth, surveying of prices research in Kansei period], Mitsui Bunko ronsō [The Journal of Mitsui Research Institute for Social and Economic History] 5 (November 1971): 254.
21For instance, during the period between 1845 and 1850, the average annual amount of commodities sent to Edo was 324 kan in the case of Naraya, whereas the amount was 8,722 kan in the case of Echigoya. See, Kagawa Takayuki, Kinsei Edo shōgyō shi no kenkyū [A study of the history of commerce in the early modern Edo] (Osaka: Osaka University Press, 2012), 293.
22Yorozu oboe-chō [Memoranda], 1771–1795 (Naraya documents, 3-1-8, Otone Branch Natural History Museum and Institute, Chiba).
23Kudashi mono moto-chō [Shipping ledger] (Sugimoto family documents, Sugimoto Residence, Kyoto). Monetary values recorded in SL are all denominated in silver not only in this half-year term but throughout the whole period.
24“Kakitsuke o motte tanomi iri sōrō” [Request letter], September 1801 (Sugimoto family documents, Sugimoto Residence, Kyoto).
25In the retail inventory method, one of the methods being used today to evaluate inventory assets, the value of inventory is calculated by adding together cost values of all commodity groups, which are gained by the sum of selling prices of commodities in each group multiplied by cost rate (cost price ÷ selling price) pre-determined for each commodity group. Naraya’s inventory assets evaluation method is similar to the retail inventory method in that it used the rate, (1 - profit rate), which is similar to the present-day concept of cost rate.
26Daimaru, Shiire kakari no kokoroe [Buyer's handbook] (n.p.: Daimaru, 1956), 43.
27Roku ban shikiri-chō [Financial statements no.6], 1831–1849 (Naraya documents, 3-1-15, Otone Branch Natural History Museum and Institute, Chiba).
29Yorozu oboe-chō [Memoranda], 1771–1795 (Naraya documents, 3-1-8, Otone Branch Natural History Museum and Institute, Chiba).
30“Sho-shiromono fuda mawari shirabe-sho no hikae” [Copies of the retail price survey], March 1845 (Mitsui family documents, Betsu 1334, Mitsui Bunko [Mitsui Archives], Tokyo). The examination of “Sadame” [Pricing methods] 1718 (mentioned in Note 11) reveals that, around the Kyōhō era, there were two lists of multipliers titled “Jōhō” and “Fudagake” that were used not only for kantō mono but also for kudari mono. See, “Mukō-dana chōsho hikae” [Copies of the records of ‘Mukō’ branch], 1729 (Mitsui family documents, Hon 1138-4, Mitsui Bunko [Mitsui Archives], Tokyo) and Fudagake [Profit ratios] (Mitsui family documents, Betsu 1299, Mitsui Bunko [Mitsui Archives], Tokyo).