2024 Volume 41 Pages 16-36
In this article, I summarize the history of research on private financing in early modern Japan. In particular, I focus on “house and grounds-collateralized financing” (kajichi kin’yū), which was the representative approach to getting financing in urban areas, and “farmland-collateralized financing” (shichichi kin’yū), which was the representative approach for obtaining financing in farm villages. “House and grounds-collateralized financing” entailed cash lending and borrowing with a home or estate serving as collateral, while “farmland-collateralized financing” entailed cash lending and borrowing farmlands (farm village real estate) serving as collateral. In early modern Japan, both were employed as relatively safe financial transactions; they have attracted the attention of scholars studying legal history and also those studying economic history. However, the dialogue between the legal historians and the economic historians has to date been inadequate. It would be safe to say that the research has accumulated in their separate fields. Accordingly, in this article, we explain the regional differences with regard to the legal system in early modern Japan as well as “superior vs. inferior” in terms of claim protections (saiken hogo). Based on a deepening of our understanding of claim protections with regard to house and grounds-collateralized financing and farmland-collateralized financing, we will consider the degree of impact that debt protections had on interest rates.
When researching private financing in early modern Japan, it is essential to take the legal system into account. When it comes to financial transactions, the main interests of the lender are whether or not the loan can be fully recovered, and whether or not they can collect interest without interruption. Naturally, lenders make their financing decisions after having closely looked into the borrower’s household financial situation, character, and kinship relations. However, the lender cannot obtain all of the information that a borrower has. Accordingly, it is difficult to accurately ascertain if the borrower is being deceptive about their household financial situation being good, or if they have been making plans from the start to commit the “deceitful act” of running off with the money. If the lender and the borrower belong to the same group (or community), to some degree it would be possible to suppress the incentives to deviate on the part of the borrower since deviant behavior by the borrower would invite sanctions such as a suspension of transactions within the group or expulsion. However, in order for a lender to expand their financial transactions, they also need to conclude transactions with other parties “unknown to them” from outside the group; in such cases, the sanctions of suspending transactions and expulsion will have no effect. To put it another way, with such limited sanctions, it would not be possible to cast aside any misgivings such that lending to a stranger might result in fraud or betrayal; lenders likely would be suspicious and hesitant about extending loans to someone from outside their group (Greif 2006; Ishiguro 2010a; Ishiguro 2010b; Nakabayashi 2013).
And yet, it is known that financial transactions took place in Japan during the early modern period and particularly after the 18th century in both cities and farm villages. Some studies attribute this to the growth of a marketplace economy, the expansion of lending mechanisms, and the building up of financial networks, but whatever the case the most important thing to note is the development of a legal system in which an entirely third party (the courts) exercises binding power over the fulfillment of debts. This is because, even if the borrower is a stranger, the lender will have greater inducement to make a loan the greater their expectation is of recovering that loan via a third party.
In fact, in the major city of Osaka, for example, after the decree of Kyōhō 5 (1720), the Osaka Town Magistrate's Office (Ōsaka machi bugyōsho; a regional office for the shogunate) stipulated that it would set a repayment date commensurate with the balance of a debt at the time of a suit for payment was filed, and that if the debtor defaulted after the designated date, it would execute a seizure of property (shindai kagiri) (Jimbo 2021, 512–512; Mandai 2021, 74–75). In the rural areas of those territories under direct shogunate control (bakufu-ryō), in Genroku 8 (1695) the government of shōgun Tokugawa Tsunayoshi decided to officially recognize the “foreclosed farmlands” (ryūchi; the transfer of ownership of collateralized farmlands (shitchi) to the borrower) in the event that the borrower had defaulted with regard to pawned land they were provided as collateral for exclusive occupancy when engaged in cash lending and borrowing (Oishi 1975, 104–113). The government of Tokugawa Yoshimune temporarily suspended this in Kyōhō 6.12 (1721) (Ryūchi kinshi-rei), but soon retracted the order. On Kyōhō 8.9.2 (in 1723), it stipulated that a repayment date would be set commensurate with the balance of the debt at the time the suit for payment was filed, and in the event of default after the designated date the farmland would be foreclosed (Mandai and Nakabayashi 2017, 152–154). As a result, financial transactions became so active in Osaka that one can see money lending and borrowing for securing a claim (Mandai 2024, 17–35), and in rural areas after the Genroku and Kyōhō eras (1688–1736) pawned-land financing developed to a significant degree (Kamiya 2000, 196–238; Matsunaga 2004, 431–514).
Thus, we cannot ignore the impact that the development of a legal system had on financial transactions. That said, it should be noted that there were regional differences and status-based constraints when it came to the early modern Japanese legal system.
First, when it comes to regional differences, note that there was no legal system that extended across Japan during the early modern period. In Japan during the early modern period, both the shogunate and the individual daimyō independently exercised sovereignty over the internal affairs of their respective domains. Hence, each daimyō had their own separate and individual legal systems; shogunal law in principle applied only to those territories under direct shogunate control. However, after issuing the laws for military houses (Buke shohatto) in Kan’ei 12 (1635), the shogunate demanded that all daimyō comply with shogunate law. The daimyō, too, referred new cases to the shogunate’s judicial council (hyōjōsho, the supreme judicial organ, comprising the magistrates for temples and shrines, for towns and villages, and for accounts). As such, the daimyō also incorporate shogunate laws into their how legal systems (Mandai and Nakabayashi 2017, 155–156).
Thus, the shogunate and the daimyō developed separate but mutually related legal systems; however, there were still regional differences even when it came to shogunate law. For example, under the shogunate’s magistrates of outlying provinces (ongoku bugyō, including judicature, administrative, and police organizations) assigned to major cities, operating laws that differed from the “Edo law” (Edo-hō) that was the central law of the shogunate was permitted. Unique versions of shogunate law were adopted matched to local conditions in each city, e.g., Osaka law by the Osaka Town Magistrate and Kyoto law by the Kyoto Town Magistrate. In particular, given how remarkable the development of Osaka was as a commercial and financial city, Osaka law had stronger claim protections than Edo law and was implemented in a way that took the part of creditors (Jimbo 2021, 30–36).
Next, with regard to social status-based restrictions, a unique feature was that while the shogunate was reluctant to assign responsibility when it came those of warrior status—and the daimyō in particular—for defaulting on their debts, the shogunate gave utmost priority toward protecting claims on the shogunate’s public funds.
Under existing Japanese law, regardless of the status of either the lender (creditor) or borrower (debtor), court cases are carried out based on the principle of “equality under the law”; if an amicable settlement is not reached between the parties concerned, state power can be used to collect the loan by force. However, in the status-based society of early modern Japan, there was clear “discrimination” based on an individual's status and the nature of the claim.
For example, within the jurisdiction of the court of the Osaka Town Magistrate’s Office (Osaka law), even if the creditor has filed suit for payment, if the debtor was a daimyō (warrior status), the Osaka Town Magistrate would refuse to accept the suit. If the creditor objected to this, they had no choice but to sue through the supreme court of justice in Edo, but the supreme court, too, could not enforce the seizure of daimyō property (Nakagawa 2003, 152). Even if neither of the parties involved had warrior status, there were some individuals who could preferentially recover loans and some who could not. For example, it was possible for persons who handled the shogunate's public funds to get preferential treatment when filing a suit for payment. If they were suing to demand payment of money lent as the shogunate’s public funds, it would also be possible to recover loans on a preferential basis from multiple loan borrowers (Mandai 2023, 64–69).1
That said, depending on the details of the demand in the suit, there existed “superior or inferior” when it came to the degree to which claim was protected. In Edo (under the jurisdiction of the courts of the Edo Town Magistrate), it is well-known that there was a difference when it came to litigation procedures between “hon-kuji” and “kane-kuji.” Claims attached to “kane-kuji” were treated more inhospitably than claims connected to “hon-kuji” (Ohira 2013). “Kane-kuji” referred to “suits for payment” (suits making claims on loans) related to interest-bearing or unsecured monetary claims such as debts or money due on accounts (accounts receivable), while “hon-kuji” referred to anything other than “money matters.” When it came to “kane-kuji,” the number of days in court was fewer than for “hon-kuji,” the ordering of long-term installment payments (kirigane) was fundamental, and the “mutual settlement decree” (aitai sumashi-rei) that suspended the process of accepting lawsuits was applied on an as-needed basis. Accordingly, the protections on claims were extremely weak (Jimbo 2021, 30–36). However, in Osaka (under the jurisdiction of the court of the Osaka Town Magistrate's Office), there was no concept of a “kane-kuji.” Even if it was a suit for payment concerning an interest-bearing or unsecured monetary claim, in principal the Osaka town magistrate’s office would not allow for installment repayments; if the designated repayment date had already gone by, if the borrower had defaulted on their debt, the Osaka town magistrate’s office would promptly confiscate their assets to pay it off (Jimbo 2021, 503–547，Mandai 2021, 72–126). Even the instruction for the private settlement of money disputes (aitai sumashi rei) mutual settlement decree was frequently not applied in Osaka (Mandai 2021, 63–72).
Even depending on the method for establishing the claim, there was discrimination between “superior” and “inferior” when it came to protecting the claim. When it came to establishing claims, roughly this entailed either shichi-ire or kaki-ire. Under current Japanese law, as means for establishing a claim, there is the right of pledge, under which the lender has the right of possession of the collateral until the repayment date, and there is the mortgage, under which that right is assigned to the borrower until the repayment date. However, in the early modern Japanese legal system, there was no distinction between the two.
For example, in the case of Osaka law, under the jurisdiction of the Osaka Town Magistrate’s Office, when a debtor received an asset seizure order from the shogunate, distinctions were made based on whether or not there was a prior claim (right to preferential payment) such that the creditor could obtain the subject collateral ahead of other creditors. In short, there was a prior claim on shichi-ire, and no prior claim on kaki-ire. Although a creditor needed to meet reasonable costs to obtain official recognition of a shichi-ire claim, it had the advantage of being able to obtain privileges that superseded any kaki-ire claims by a third party (Kobayakawa 1940, 287–289; Ishii 1985, 99; Jimbo 2021, 351–358; Mandai 2021, 75–78; Mandai 2024). In the case of Edo law, after the Tenpō Reforms of Tenpō 13 (1842) at the latest it was clear that any prior claims were attached to the shichi-ire. However, it is believed that prior claims were recognized even before that in the 18th century (Kobayakawa 1940, 288; Ishii 1982, 72–73).
Given the foregoing, we can understand that having a grasp on the legal system is essential to analyzing private financing in early modern Japan. We can also see that when focusing on the legal system, we need to bear in mind (1) the regional characteristics of the region to be analyzed, and (2) the status-based constraints created by “discrimination” and “superior vs. inferior” in protecting claims. In what follows, I will divide private financing into “urban financing” and “farm village financing,” and then organize the results of my research based on (1) the differences between Osaka law and Edo law, and then (2) “superior or inferior.” Furthermore, while many forms of contracts existed with respect to private financing, in this article—as I will discuss below—I will restrict myself to the representative forms of house and grounds-collateralized financing (kajichi kin’yū) and farmland-collateralized financing (shichichi kin’yū).
The representative form of urban financing was house and grounds-collateralized financing. A house and grounds-collateralized financing was collateralized by a house and grounds (urban real estate); under Osaka law, this was shichi-ire, and under Edo law this corresponded to a purely “hon-kuji” and to shichi-ire. However, it is known that when it came to setting up a household mortgage the procedures were rather different between Osaka law and Edo law.
In the case of Osaka, there were differences before and after Kyōhō 6 (1721) (promulgated Kyōhō 5.12.15, put into force Kyōhō 6.1.1). Let us suppose that a borrower uses their house and grounds as collateral for a loan. First, prior to Kyōhō 6, the borrower would entrust the bill of sale (uriwatashi shōmon, i.e., a transfer agreement, jōto keiyakusho) for the house and grounds to the lender. At the same time, a rental agreement for the house and grounds in question would be concluded with the lender, and they would be presented with a “tenant’s letter” (shakuya-ukejō, i.e., a rental agreement, chintaishaku keiyakusho). In short, the borrower would temporarily and formally sell the ownership of their own house and grounds, and then they would occupy said house and grounds in the form of a rental and then paid the house rent to the lender. The sale proceeds correspond to the loan principal, and the house rent corresponds to the interest. If the borrower fulfills the debt by the repayment date, they would foreclose the bill of sale deposited with the lender, and the tenant's letter would also be torn up and discarded. However, if the borrower defaulted on a debt, the bill of sale would officially become the property of the lender, and the ownership of the house and grounds would be transferred to the lender (Kobayakawa 1979, 312–313; Ishii 1982, 62–63). Thus, the house and grounds-collateralized financing in early modern Japan differed from pledge of collateral under present-day Japanese law in that the borrower retained the possessory right (Kobayakawa 1979, 312). This was the same under Edo law.
However, it would seem that disputes emerged from time to time over the form where a bill of sale on house and grounds that are collateral were deposited in advance and how someone would become the tenant thereof. For example, since the amount of the loan was set lower than the price of the house and grounds, it may be surmised that there were situations where the lender would assert ownership of the house and grounds based on the bill of sale they held without waiting for the borrower to repay the loan, or where the borrower would continue to occupy them based on the tenant’s letter event after the borrower had transferred ownership of the house and grounds to the lender (Ishii 1982, 62–63).
In order to eliminate such harmful practices, the Osaka Town Magistrate’s Office carried out the following revisions after Kyōhō 6 (1721). When a borrower borrows money using their house and grounds as collateral, they were forbidden to entrust the bill of sale for that house and grounds with the lender beforehand, and they were ordered to hand over a house and grounds-collateralized financing contract (kajichi-shōmon) that had to have the seal of both the village elders and the neighborhood gonin-gumi (“five-household unit”). The house and grounds-collateralized financing contract expressly stated information about the house and grounds serving as collateral, the repayment date, and the borrowed amount. It also stipulated that the borrower would pay interest to the lender until the repayment date, that the borrower would on their own perform public and town services (mainly supplying labor to the shogunate and the town) associated with the collateralized house and grounds, and that in the event of a default on the debt the house and grounds in question would be turned over to the lender. The result of this was that the borrower could obtain a loan, maintaining both ownership and the right of possession until the repayment date, subject to the transfer of both right of possession and ownership in the event of default on the debt.
Conversely, in Edo, there was a difference between around the time of the decision made by the member of the supreme court of justice (hyōjōsho ichiza) of the 12th month of Kyōhō 14 (1729) and around the 11th month of Tenpō 13.11 (1842). As before, let us assume that the borrower is using their house and grounds as collateral for the loan. First, prior to the 12th month of Kyōhō 14 council meeting, the pattern was either (1) for the borrower to transfer a bill of sale for the collateralized house and grounds to the lender, as well as a “house manager contract” (ya-mori ukejō, i.e., a rental agreement) for the house and grounds, or (2) for the borrower and the lender to exchange a house and grounds-collateralized financing contract that had the seals of the town headsman and the members of the gonin-gumi. When filing a suit for payment, whichever pattern may have been, it seems that the Edo Town Magistrate Office would hand down an order about the repayment date to the debtor (defendant) corresponding to the loan balance and—in the event of default on the debt—transfer ownership of the collateralized house and grounds to the lender (plaintiff) (Ishii 1982, 71–75). Pattern (1) resembles that of the form seen prior to Kyōhō 6 in Osaka, while pattern (2) resembles that of the Osaka post-Kyōhō 6 form; in this sense, the Edo law form was more flexible.
However, a supreme court of justice decision of Kyōhō 14 (1729) forbade pattern (2). This was exactly the opposite of Osaka law. This was due to a difference between “hon-kuji” and “kane-kuji” that was characteristic of Edo law. At a supreme court of justice meeting held in the 12th month of Kyōhō 14 (1719), it was decided that with regard to the collateralized farmland (shitchi) that was collateral for the farmland, the transfer of interest would not be allowed, and if there was mention of interest on the farmland-collateralized financing contract, it would be recognized as a “kane-kuji” than as a “hon-kuji” (Ishii 1982, 75). This was due to the fact that monetary claims with interest attached were usually classified as “kane-kuji” (Jimbo 2021, 17–18). However, frequently in practice a borrower using farmland as collateral would then borrow the right of possession to the land in question to make a leased-land tenant farming contract (shakuchi kōsaku) and then pay the lender a small tenant farming rent. Essentially, this tenant farming rent was equivalent to interest, but given that a house and grounds-collateralized financing contract was something that originated from a separate tenant farming contract, outwardly it was not interest on the house and grounds-collateralized financing. In order for a house and grounds-collateralized financing contract to be recognized as a “hon-kuji,” the contract itself had to not include text about interest, and most of all there had to be mention of a tenant farming rent in the text of the tenant farming contract appended to the pawned-land contract.
This determination naturally also had an impact on the house and grounds-collateralized financing. While it was recommended that monetary claims with interest attached normally be classified as a “kane-kuji,” if the house and grounds-collateralized financing also included language about interest then it would be classified not as a “hon-kuji” but rather as a “kane-kuji.” As a consequence, in Edo, when a borrower used their own house and grounds as collateral, they would not exchange a house and grounds-collateralized financing contract in which an interest rate had been specified with the lender; rather, they unified their approach, depositing a bill of sale with the lender and handing over a “house manager contract.” This is because the parties to the transaction on the face of it could receive interest as house rent by not mentioning interest in the bill of sale and avoiding treating it as a money matter, while also recording the house rent in the house manager contract made at same time, making them able ostensibly to receive interest as rent. Eventually, when entering a household mortgage, the practice spread wherein the borrower would entrust with the lender a bill of sale on which the sale proceeds for their own house and grounds were recorded (in effect, the loan), and hand over a house manager contract recording the household rent (in effect, the interest). Not only that, a honkokenjō (essentially, a certificate marking those times when the borrower had, in the past, acquired or purchased the house and grounds in question) for the house and grounds in question would be sealed and kept for the village headman. In the event the borrower defaulted, the town headman would turn over the honkokenjō to the lender (Kobayakawa 1979, 314–316; Ishii 1982, 75–77; Nodaka 2005, 104–105).
However, because there were many town headmen who were punished for making fraudulent use of the honkokenjō entrusted to them, the Edo Town Magistrate Office made a major revision on Tenpō 13.11.13 (1842). First, in subsequent house and grounds-collateralized financing, the pattern of a borrower entrusting a bill of sale with a lender, transferring a house manager contract, or depositing a honkokenjō with a town headman was forbidden. It was ordered that a house and grounds-collateralized financing contract that must be stamped by both the town elder and the gonin-gumi should be exchanged between the borrower and the lender, the borrower should directly deposit the honkokenjō with the lender, and the borrower should also issue a certificate of deposit for the honkokenjō with the lender. The house and grounds-collateralized financing contract clearly stated information about the house and grounds to be collateralized, as well as the repayment date and the borrowed amount. It also mentioned how the borrower would pay the land rent and house rent to the lender by the repayment date; how they would perform the public and town services associated with the collateralized house and grounds; and that the house and grounds in question would be delivered to the lender in the event of default. As a result, house and grounds-collateralized financing in Edo took on a form resembling that of Osaka law post-Kyōhō 6, but the fact that interest was not recorded whatsoever followed that which came before (Ishii 1982, 82–84). Given it was no longer necessary to submit a house manager contract, as had been the case with Osaka law since Kyōhō 6 (1721), the borrower could now obtain loans while maintaining ownership and right of possession until the repayment date.
I have spoken above about the differences in procedures between Osaka law and Edo law; the issue to note with regard to house and grounds-collateralized financing is that—as mentioned briefly earlier—the lender was able to attach a “prior claim” (“right to preferential payment”) to a collateralized house and grounds as a shichi-ire (Kobayakawa 1940, 287–289; Ishii 1985, 99; Jimbo 2021, 351–358; Mandai 2021, 75–78; Mandai 2024). In this case, even if the borrower was someone who had multiple loans, was sued for payment by a third party other than the lender, and was eventually ordered to foreclose on their property, the lender could be the first to acquire the house and grounds with a prior claim attached.
Thus, since the collateralized house and grounds was attached to a prior claim and was classified under Edo law as a “hon-kuji,” it turned out to be an extremely safe financial transaction. The fact that, when there was a default on a debt, the shogunate—as a third party—would reliably and preferentially transfer the ownership of the collateralized house and grounds is of great significance.
For the lender, the possibility of debt collection is high, so they can safely lower the interest rate. As for the borrower, the possibility that the house and grounds attached to the prior claim will be quickly foreclosed is high, so the borrower would not have agreed to the contract unless the interest rate was lower in the first place. In fact, in Tenpō 13 (1842), the Edo Kitamachi Magistrate Toyama Kagemoto in a discussion about the pros and cons of issuing an order to reduce rents presented an opinion that there were sound provisions for house rents to prevent defaulting on debts, and that, therefore, the interest rate on house and grounds-collateralized financing would be lower than those for ordinary financial transactions (Ishii 1985, 96–97).2
The maximum interest rate at which the shogunate would accept a lawsuit was 20% per annum (1.6% per month) until Genbun 1.12 (1736), and 15% per annum until Tenpō 13.6 (1736) (although 1.5% per month was customarily accepted if the interest rate was stated as monthly), and 12% per annum (1.0% per month) after the order was issued. In contrast, according to Naniwa Bunko written by kyōgen (Nō farces) author Hamamatsu Utakuni during the Genbun period (1736–1741), the annual interest rate on house and grounds-collateralized financing in Osaka was 4.2% to 4.8% (0.35% to 0.4% per month) (Osaka-shi shi Hensanjo 1981, 52–53). Meanwhile, the annual interest rate for the 1830s and 1850s was generally 3.6%–4.8% (0.3%–0.4% per month) (Mandai 2021, 135).
Even in Edo, for locations along the Tsukiji coastline, nearly half of the annual interest rates on the house and grounds-collateralized financing from around 1740 to around 1860 were in the 6% to 8% range (Yoshida 1991, 50–51), while it is clear that the rates—whether average, median, or modal value—fell from the 1760s to the 1860s from 8% to 6% (Washizaki 2016, 55–57). Going forward, researchers will need to look into the factors behind the difference in interest rates between Osaka and Edo.
As described above, the house and grounds-collateralized financing (kajichi kinyū) was widely utilized by lenders as a safe fund management method, and by borrowers as low-interest method for procuring financing. At the very least, in Edo there existed intermediaries who would match the house and grounds-collateralized financing lender with a borrower (Iwabuchi 1996, 138). Whether it was in Edo or Osaka, a person purchasing a house and grounds would—in order to reduce the burden of the purchase cost— simultaneously purchase the property in question and conclude a collateralized financing contract for the house and grounds (mochikomi kajichi, household mortgaging) to reduce the burden of the purchase cost (Iwabuchi 1996, 134; Washizaki 2016, 52–53; Mandai 2024).
The representative version of farm village financing was “pawned-land financing” (shichichi kin’yū). “Pawned lands” were collateralized paddy lands (farmland real estate). Under Osaka law (particularly in the shogunal domains of Settsu, Kawachi, Izumi, and Harima), these were regarded as shichi-ire; under Edo law (particularly in the shogunal domains of Musashi, Sagami, Kōzuke, Shimotsuke, Kazusa, Shimo’usa, Awa, and Hitachi), these corresponded to both “hon-kuji” and shichi-ire. The borrower would assign the possessory right to the lender until the repayment date. In such a case, the lender could work the collateralized farmland (tezukuri) themselves, lease the pawned land to a borrower for them to tenant farming (jiki-kosaku) it, or lease it to a third party for them to “sub-tenant farming” (betsu-kosaku) it. This was touched upon briefly in the explanation regarding the house and grounds-collateralized financing, but not having an interest clause in the farmland-collateralized financing contract was a legal requirement for farmland-collateralized financing contracts (if it had an interest clause, it would become a kaki-ire and therefore be handled as a “kane-kuji”). However, in practice when it came to working the land themselves, the harvest from the pawned land corresponded to interest, while when it came to tenant farming, it was the tenant farming rent obtained from the tenant farming that corresponded to interest (Nakada 1970, 520–523, 538–539; Kobayakawa 1979, 376–377). Of course, even when it came to the farmland-collateralized financing, as with the house and grounds-collateralized financing, in the case of a legal farmland-collateralized financing contract prior claims would be recognized as shichi-ire (Kobayakawa 1940, 288–292; Hattori 1983, 663; Ogura 2013, 74–75).3
Unlike the house and grounds-collateralized financing, under both Osaka and Edo law for collateralized farmlands the procedures were largely the same; for convenience, I will start with Edo law.
The difference between how the collateralized farmlands and houses and grounds were treated lay the fact that the shogunate prohibited the sale of farmlands. In Kan’ei 20 (1643), the shogunate promulgated an ordinance that banned “the permanent alienation of farmland” (dempata eitai baibai no kinshi). Behind this lay the shogunate policy of constraining the concentration of farmland among the more affluent population, and trying to maintain the class of independent smallholders. On the other hand, to completely deny a transfer of ownership over a field would invite restrictions on those independent smallholders who were doing business. If the sale of fields, or of foreclosed farmlands in the event of the default on a debt (the transfer of ownership of collateralized farmland), was not officially recognized, then the buyer's incentive to make the purchase would be smaller in the former case and the lender’s incentive to provide financing would be smaller in the latter case. In that light, it made it difficult for the independent smallholder working their own fields to use those lands—their greatest asset—to procure financing.
In fact, apprehensive about the constrained circumstances in agricultural financing, the shogunate confirmed in a Kanbun 6 (1666) supreme court of justice letter of mandate (kanjōsho gechijō) that it was prohibiting “the permanent alienation of farmland,” and at the same time required that farmland-collateralized financing contracts be stamped with the authenticating seals of both the village headman (shōya) and the gonin-gumi. With this, the shogunate acting as a third party to order a borrower to make repayments when they defaulted on a debt under a farmland-collateralized financing contract, the expectation of recovering a debt should have increased for the lender. However, the shogunate was doggedly reluctant to transfer the ownership of farmlands, and even this order made no mention of protections on foreclosed farmlands (Ryūchi). If foreclosing farmlands would no longer recognized when someone defaulted on a debt, this naturally would be an impediment to improving the incentives of lenders to make loans (Mandai and Nakabayashi 2017, 152).
The government of Tokugawa Tsunayoshi at first adhered to this policy. In Jōkyō 4 (1687), it was stipulated that if a borrower who had pawned their farmlands went bankrupt, the lender was forbidden to foreclose on those lands and collateralized farmland in question instead would be confiscated by the shogunate. Even at this point, the shogunate would not recognize a transfer of ownership of the farmlands via foreclosure (shichi-nagare) and remained dogged about not exercising any foreclosure on them (Oishi 1961, 204–205). In the first month of Genroku 7 (1694), the maximum period for a shichi-ire of farmlands was set at 10 years in shogunate territories. One interpretation holds that this was meant to distinguish it from the sale (“fermanent foreclosue of farmland”) of farmlands that had been prohibited, and that the shogunate had no intention of recognizing a transfer of ownership of farmland through default on a debt (Oishi 1961, 210).4
However, limiting the shichi-ire period would have led to the greater possibility of farmland foreclosures, and naturally disputes over foreclosures likely would have occurred frequently. As a matter of fact, in the 6th month of Genroku 8 (1695), Tsunayoshi’s government—perhaps out of awareness of the negative impact on not recognizing foreclosed farmlands—changed policy to recognize them. In a response to an inquiry from the Kantō deputy (Kantō gundai) who administered the shogunate’s territory in the eight provinces of the Kantō region, the government responded that when a borrower fulfilled their debt within the period stated in the farmland-collateralized financing contract, ownership would be restored (uke-kaeshi or uke-modoshi) to them. As for cases where it was clearly stipulated that the lender was free to deal with the collateralized farmland in question in the event of default on a debt, upon the borrower’s default the shogunate would not recognize the borrower's claims to recover the right of possession over the collateralized farmland in question and allow the lender to foreclose on it (Oishi 1975, 104–113). It was believed that this would dramatically increase a lender’s incentive to offer loans.5
However, the government of Tokugawa Yoshimune in complete contrast changed to a policy that gave preferential treatment to debtors (“Instruction for the private settlement of money disputes”). In the 11th month of Kyōhō 4 (1719), the shogunate issued its mutual settlement decree, promulgating that it would not accept any suits for payment regarding moneylending and borrowing or money due on accounts (accounts receivable), either in the past or in the future (the decree was withdrawn in the 12th month of Kyōhō 14). In the 9th month of Kyōhō 4, immediately prior to the issuance of the actual decree, in the draft decree the supreme court of justice submitted to Yoshimune it stated that suits for payment regarding the house and grounds-collateralized financing and farmland-collateralized financing contracts would be regarded as cases that should be accepted. In fact, even in the “Instruction for the private settlement of money disputes” issued in Genroku 15 (1702), suits for payment regarding such the house and grounds-collateralized financing contracts were treated as cases that should be accepted. Yoshimune, however, opposed the council’s proposal. Having received directions to make revisions from Yoshimune, the supreme court of justice in the 1st month of Kyōhō 5 (1720) decided that suits for payment related to the house and grounds-collateralized financing and farmland-collateralized financing contract were to be cases that would not be accepted (Ohira 2013, 112–113; Nakabayashi 2020, 149; Jimbo 2021, 132–143).
The preferential treatment given to debtors by the Yoshimune government was especially conspicuous in the ordinance banning farmland foreclosures (Ryūchi kinshirei) of Kyōhō 6 (1721). The shogunate believed that recognizing foreclosures would invite agricultural lands to concentrate in the hands of the wealthy; it therefore ordered that the ownership of foreclosed farmlands from Kyōhō 2 (1717) and later should be returned to the borrower who was the original owner by repayment of the principal. However, promulgation of the ordinance led to uprisings known as the shitchi sōdō (“foreclosed-farmland disputes”), and furthermore it produced constraints on agricultural finance. In the former case, this was because headmen (many of whom were lenders) arbitrarily suppressed knowledge of the ordinance, or borrowers misunderstood and believed that the return of ownership to all foreclosed lands would be recognized; in the latter case, this was because the expectation of recovering on a claim through foreclosure disappeared and the lender’s incentive to make loans was greatly reduced. Thus, what was meant to be a policy giving preferential treatment to debtors to the contrary would harm in the interests of the independent smallholders who were debtors; thus, eventually the shogunate withdrew the farmland foreclosure ban (Oishi 1961, 233–237; Nakabayashi 2020, 149–150).6
Yoshimune’s government took this as an opportunity to push being more thoroughgoing with its policies for preferential treatment for creditors. For example, a decision of the supreme court of justice from 2nd day, 9th month, Kyōhō 8 (1723) stipulated that—at least in the cases of legal farmland-collateralized financing contracts with the authenticating seal of a headman—when a lender has filed a suit for payment due the borrower’s default on a debt, an order will be issued to the borrower to make repayment by the designated date. In the event that the borrower was in default by the date, the lender would foreclose on the land. This also meant that suits for payment connected to the farmland-collateralized financing contract would no longer be seen as subject to the “Instruction for the private settlement of money disputes.”
In the case of the farmland-collateralized financing contracts, the lender would obtain possessory right over the collateralized farmland from the borrower for the period until the repayment date, but the tendency was to prefer having a borrower or third party to tenant farming the collateralized land rather for the lender to cultivate it themselves. Naturally, since there might be cases where the borrower could not provide the tenant farming rent, the supreme court of justice's decision of the same date also clarified in parallel the procedures for defaulting on a debt for a tenant farming contract. In sum, when there was a suit for payment from a lender due to the default on a debt for renting farmland, in the event that an order to make a repayment by a designated date was issued and—even past the date—the borrower remained in default, it was decided that for a tenant farming (jiki-kosaku), even if the farmland-collateralized financing contract was still in term the farmland would be subject to foreclosure, and in the case of a “sub-tenant farming (betu-kosaku),” on top of a return of the tenant farming rent, they would execute a shindai-kagiri (confiscate assets and force the payment of a debt) (Oishi 1975, 140–143; Mandai and Nakabayashi 2017, 152–153).7
In this way, Yoshimune’s government clarified the rights of creditors, but at the same time it also tightened the legal requirements on the farmland-collateralized financing contracts. For example, the supreme court of justice’s decision of 21st day, 9th month, Genbun 1 (1736) stipulated that if the name, place of residence, and the authenticating seal of the headman was not recorded on the the farmland-collateralized financing contract, if a suit for payment was filed it would be regarded as akin to kaki-ire rather than shichi-ire. The supreme court of justice’s decision of Kanpō 1 (1736) affirmed that, in “accordance with precedent,” when it came to the tenant farming (jiki-kosaku), even if a collateralized-land deed satisfied legal requirements, if the parties involved had not prepared a tenant farming contract, the farmland-collateralized financing contract itself would be recognized not as a shichi-ire but rather as a kaki-ire. In the case of the tenant farming (jiki-kosaku), it would have been necessary to prepare accurately and simultaneously both the farmland-collateralized financing contract and the tenant farming contract. If a farmland-collateralized financing contract winds up being recognized as a kaki-ire, naturally it would be treated as a “kane-kuji” and the claim protections would grow weaker. Thus, Yoshimune’s government promoted policies that gave preferential treatment to creditors, and also instructed them to put together deeds in a form that could be verified by a third party such that disputes would not arise (Takeyasu 1962, 100–106; Nakada 1970, 529–530; Kobayakawa 1979, 330–333; Kobayakawa 1988, 580–581; Mandai and Nakabayashi 2017, 154).8
Thus, while this was a Yoshimune government that had shifted from a policy preferential to debtors to one preferential to creditors, that does not mean that this response was one done on the spur of the moment. At first, Yoshimune’s government attempted to negate market principles through the farmland foreclosure ban in order to support independent smallholders, but debtor protection exceeded optimum levels and the attempt failed. In contrast, after the ban was withdrawn, it attempted to support the independent smallholder by fostering farm village financing through both clarifying the procedures for executing farmland foreclosures and asset confiscation and also setting a grace period for fulfilling debts, while at the same time curbing excessive borrowing. All of these were consistent in that they involved protecting the independent smallholder, which meant Yoshimune's government would search for the optimum strength of protection on debts and claims. As a result, when it came to legitimate farmland-collateralized financing contracts, they formed an institutional foundation that strengthened claim protections and made it possible for the independent smallholder to obtain opportunities for farm village financing at low interest rates (Mandai and Nakabayashi 2017, 156; Mandai and Nakabayashi 2018, 316–318; Nakabayashi 2020, 166).
Meanwhile, even with the applicable scope of Osaka law, in Kyōhō 7 (1722) a farmland foreclosure ban was promulgated, and in perhaps the 9th month of Kyōhō 8 a revocation of the ban was promulgated (Osaka City University Urban-Culture Research Center 2004, 70–71; Osaka-shi Sanjikai 1911, 227). With regard to what happened after, the records of the response that Man’nen Shichiroemon—who served as the local magistrate for the north side of Suzukimachi from around An’ei 6 (1777) to An’ei 8 (1779)—received from the Osaka Town Magistrate to an inquiry he posed about how to apply Osaka law is a useful reference. According to the record, the Osaka Town Magistrate’s Office replied that (1) in the case of a farmland-collateralized financing contract that lacked the authenticating seal of the shōya (headman), or of a farmland-collateralized financing contract that lacked a tenant farming contract, it would be treated not as shichi-ire but rather as kaki-ire; (2) in the case of a legitimate farmland-collateralized financing contract, it would order the borrower (defendant) to pay back the amount by the set repayment date deadline commensurate with the the balance of the debt at the time the suit for payment was filed; and (3) at the time a suit for payment has been filed due to default on a debt on a rent for tenant farming (jiki-kosaku), in the event that the borrower is in default on a debt even after the designated date, rather than order oshi-komi (a form of house arrest) or asset confiscation for the borrower, it would instead swiftly foreclose the farmlands (Mandai 2022, 384–387). The difference from Edo law is that, under Osaka law, even if it was a matter of kaki-ire, in principle the Osaka Town Magistrate's Office would not approve of repayment in installments, but rather order the repayment by a stipulated date commensurate with the balance of the debt and ultimately confiscate assets. In short, under Edo law when it was a kaki-ire (“kane-kuji”) the prior claim would not only be lost, but it would also lead to restrictions regarding the court day, long-term installment repayments, and sometimes being subject to a mutual settlement decree; however, under Osaka law, since the concept of a “kane-kuji” itself did not exist the prior claim was simply lost.9
As described above, in the case of a farmland-collateralized financing contract, if the borrower did not fulfill the debt by the repayment date and did not restore the right of possession for the collateralized farmland, possessory right over the collateralized farmland would be transferred (foreclosed). In any case, even for foreclosed lands, the practice was well-established in early modern Japanese farm villages that if a debt was fulfilled, it was possible to regain ownership and right of possession over forfeited farmlands. This is referred to in research history as shitchi uke-modoshi kankō. According to Shirakawabe Tatsuo, the grounds for being able to demand the uke-modoshi (request for the restoration of ownership and right of possession over forfeited lands) lay either in the claimant being in the lineage of the na-uke’nin (the payer of the annual tribute) listed in the cadastral registers (kenchichō) dating to the start of the early modern period, or it was based on maintaining or reviving the peasant shares (hyakushō kabushiki) comprised of ownership rights to land and usage rights to the commons (Shirakawabe 1999, 34–58; Shirakawabe 2012, 445–460). In this connection, Araki Jirō has offered an interpretation that originally land ownership and the right to the uke-modoshi were combined; eventually, however, the two were separated, with the sale and purchase of ownership rights to land (holding back the uke-modoshi) emerging first, followed by sale and purchase of those uke-modoshi rights (Araki 2023, 310–318).10
Uke-modoshi seems to have been contrary to shogunate law, which recognized foreclosed lands, and greatly impeded lender's incentives to offer financing. Certainly, such aspects also existed. However, the important thing is that after the shogunate clarified the procedures for foreclosing farmlands on the 2nd day and 9th month of Kyōhō 8 (1723), in actual operation the tendency eventually was to expand foreclosures and control the concentration of farmland. As an example in which this can be seen, there are the regulations regarding rainō keiyaku that will be explained below, or on farmland-collateralized contracts with han-rainō keiyaku attached.
Rainō refers to a situation in which the borrower rather than the lender has the role of being nengu shoyaku (the party responsible for annual tribute and miscellaneous taxes), while han-rainō means the lender handles the annual tribute and the borrower the other services. At the very least, rainō was clearly prohibited under shogunate law from the 4th month of Jōkyō 4 (1687) onward (Kobayakawa 1979, 363–367; Kobayakawa 1988, 546; Kenjō 2000, 367–413). Han-rainō also fell under the prohibition in terms of content. However, this can be clearly seen in shogunate law only after Enkyō 1 (1744). The decision of the supreme court of justice in Enkyō 1 stipulated that, in cases where a farmland-collateralized financing contract with an accompanying rainō contract has been discovered, the collateralized farmland would be confiscated from the lender and a fine would be taken; meanwhile, in cases where a farmland-collateralized financing contract with han-rainō contract attached has been discovered, a fine would be taken from the lender (Takeyasu 1962, 102–103; Nakada 1970, 597–598; Kobayakawa 1979, 363). On the other hand, the supreme court of justice’s decision of the 3rd month of Tenmei 2 (1743) held that, in the case of a farmland-collateralized financing contract with a han-rainō contract attached, a suit for payment owing to a default on a debt would be handled not as a shichi-ire, i.e., a “hon-kuji”, but rather as a “kane-kuji” (Kobayakawa 1979, 363–364; Mandai and Nakabayashi 2017, 155).
If the lender resided outside of the village, there was the high possibility this would bring about a moral hazard in that the borrower in complicity with village officials would stress the increase in the burden of miscellaneous taxes (i.e., to cover labor services around the village and labor rate expenditures), underestimate or falsely report harvest amounts, and ask the lender to reduce tenant farming rents or provide additional money and grains. Originally, the tenant farming rent collected by lenders included both the annual tribute and services and the landowner share. However, when the lender was someone who lived outside of the village, the borrower was expected to pay the annual tribute and miscellaneous taxes to the village treasury and pay the landowner share to the lender. Thus, since it was impossible for a lender to observe the volume of the burden from miscellaneous taxes in particular, the borrower could exaggerate their calculations for the miscellaneous taxes and reduce the landowner share going to the lender, or request grain from the lender on the grounds that the harvest was so poor it fell short of the amount needed to cover the annual tribute and miscellaneous taxes. To prevent this, it would have been necessary to either incorporate into the contract that the borrower would bear responsibility for the miscellaneous taxes, or write in the contract document that the lender would pay a fixed amount in advance for the amount of the burden of the annual tribute and miscellaneous taxes. However, the former corresponded to han-rainō, while the latter was equivalent to either han-rainō or rainō if the actual cost of the annual tribute and miscellaneous taxes exceeded the fixed amount stipulated in the contract document. If this were discovered, in the case of rainō the collateralized farmland would be confiscated and a fine imposed, while in the case of han-rainō there would be a fine, the case would be treated as a “kane-kuji,” and any prior claim would be lost. Accordingly, in many cases lenders were reluctant to conclude farmland-collateralized financing contracts with borrowers from outside their village, and it is thought that as a result this worked to constrain the concentration of lands beyond village borders (Kenjō 2000, 448–449; Nakabayashi 2020, 152–158).
Thus, for the shogunate—which had moved in the direction of maintaining the procedures for protecting claims related to farmland-collateralized financing contracts while in actual operation gradually constraining excess farmland concentration—shitchi’uke-modoshi kankō for restoring forfeited farmlands to their original possessors was to the contrary something to be welcomes. In fact, it is known that Ishikawa Tadafusa—who twice served as the shogunate's chief financial official (kanjō-bugyō), first from Kansei 9 (1797) to Bunka 3 (1806) and then from Bunsei 2 (1819) to Bunsei 11 (1828)—took the position that he would respect the shitchi’uke-modoshi kankō practice to the extent possible while also protecting foreclosed farmlands regulations. To wit, in a case where the original owner requests the restoration of ownership and right of possession over forfeited lands to the original lender, contrary to the initial situation, Ishikawa proposed the return of forfeited farmlands by concluding a new farmland-collateralized financing contract such that the original lender would put the forfeited farmlands in question in hock with the original owner, receive money for the principal amount, and using foreclosure procedures transfer the forfeited farmlands in question to the original owner. We know that within the shogunate awareness was budding about trying to balance both shitchi’uke-modoshi kankō and claim protections (Shirakawabe 2012, 471–473; Nakabayashi 2020, 146, 161–165). In due course, it was more appropriate for the shogunate to start hammering out a more flexible stance when it came to shitchi uke-modoshi kankō, even for putting constraints on the concentration of land beyond village borders.
In fact, in the mid-19th century, the shogunate did not reject an uke-modoshi even if several decades had passed after foreclosure if kaeri-shōmon indefinitely valid uke-modoshi demands had been prepared separately (Shirakawabe 2012, 209–229). Shogunate law promulgated in the eight Kantō provinces and Izu in the 2nd month of Genbun 2 (1737) stipulated that, if ten years had passed since foreclosure on farmlands, an uke-modoshi request would not be recognized (Hattori 1983, 109–110; Shirakawabe 2012, 214). Nonetheless, it is noteworthy that, under shogunal law, if a return deed (kaeri-shōmon) that had not been specifically designated was handed over, rather than reject the request for an uke-modoshi after several decades, to the contrary it recommended settlements meant to recognize the uke-modoshi request. Based on Araki Jirō’s sorting of the data, it is conceivable that the kaeri-shōmon—as a special deed that acknowledges an uke-modoshi right in perpetuity—would have been handed down privately, separately from a farmland-collateralized financing contract or a tenant farming contract (Araki 2023, 197–284).
However, the shogunate’s aforementioned regulations on rainō and han-rainō, together with the acceptance of uke-modoshi requests without any time limit, ultimately led to a weakening of claim protections. In other words, in the case of a farmland-collateralized financing contract that either went beyond village boundaries or was accompanied by a kaeri-shōmon, the lender’s incentive to offer financing would have been smaller and the interest rate would have risen.
At present, there are no studies that have clearly dissected and analyzed these matters, but the work of Uemura Shōji presented below is instructive. The Kondō family of Tarōdayū Village, Katō County, Harima Province (present-day Ono City, Hyōgo Prefecture, comprising shogunal territory and the Ono clan domain) still has 211 time-limited land transfer deeds (yuzuri-watashi shōmon) and 84 farmland-collateralized financing contracts dating from Kan’en 1 (1748) to Meiji 5 (1872). A “time-limited land transfer deed,” unlike a farmland-collateralized financing contract, is a deed wherein the borrower assigns both the ownership and the possessory right to the borrower until the designated repayment date, and then restores ownership and the possessory right when the debt has been fulfilled. Uemura calculated the sums of time-limited land transfer deeds, farmland-collateralized financing contracts, and the tenant farming contracts attached to them, so the breakdown is unclear. However, in the Kondō family’s case, the majority of transfer contracts and pawned-land contracts were with residents who lived farther than a two-kilometer radius from one another, which would have been range that went beyond village boundaries. Annual interest rates on time-limited land transfer contracts and farmland-collateralized financing contracts were around 17% until Kansei 7 (1795), and then fell from 15% to 12% between Kansei 8 and Bunsei 10 (1827) (Uemura 1980, 48; Uemura 1986, 52–82, 235–238). A supreme court of justice’s decision from the 9th month of Genbun 1 (1736) stipulated that the annual interest rate for farmland-collateralized financing contract being 15% or less was a requirement for accepting suits for payment (Shihō-shō Daijin Kanbō Shomu-ka and Hōsei-shi Gakkai 1960, 205); however, in practice the rent from the collateralized farmland (interest) was often expressed in terms of rice, and one imagines that it would have been difficult to calculate an accurate interest rate retroactively based on a floating exchange rate.11
On the other hand, also extant with the Kondō family are 704 examples of either unsecured cash lending and borrowing deeds (kinsen taishaku shōmon) or kaki-ire cash lending and borrowing deeds with no prior claims attached that date from Kan’ei 1 (1748) to Meiji 5 (1872). These annual interest rates from Meiwa 5 (1768) to Tenpō 12 (1841) were generally 18% (1.5% per month), and from Tenpō 14 (1843) to Meiji 1 (1868) 12%. These complied with the maximum rates for the shogunate to accept lawsuits (Uemura 1980, 49; Uemura 1986, 221–238).
Considering the above, certainly the annual interest rates on both transfer contracts and farmland-collateralized financing contracts were rather low compared to unsecured cash lending and borrowing contracts and kaki-ire contracts, but they were not as low as the house and grounds-collateralized financing. This suggests that, in the case of farmland-collateralized financing contracts that went beyond village boundaries are were accompanied by a kaeri-shōmon, the lender was at risk of losses in the future, and accordingly the interest rate was relatively high. The issues then becomes one of whether the interest rate is lower in the case of a farmland-collateralized financing contract that does not cross village boundaries or farmland-collateralized financing contract that relinquishes the uke-modoshi right. We cannot know any of this from Uemura's research.
However, from Hirashita Yoshinori’s research about Kanemaru Village, Ashida County, Bingo Province (then part of the Fukuyama clan’s domain and today located in Fukuyama City, Hiroshima Prefecture), about 100 kilometers away from Tarōdayū Village, Katō County, Harima Province, we know what the interest rates were for tenant farming (jiki-kosaku) on collateralized farmland within the village. Still extant are 224 pawned-land deeds from Kanemaru Village that date from Tenpō 2 (1831) to Kōka 2 (1845); if we exclude the farmland-collateralized financing contracts where harvests are used as interest, we find the annual interest rate from 212 items. There were variations in the annual interest rate that ranged from 8% or less to 14% or more, but the modal value was around 10% to 12% in the case of silver amounts from 100 monme to 500 monme (Hirashita 2012, 94–95). While we cannot quickly rush to judgment, the interest rate was quite low compared to those of the Kondō family, which had many farmland-collateralized financing contract that transcended village boundaries.12
Farmland-collateralized financing of this sort within village boundaries has frequently been highly regarded as a mutually supportive financing practice (Ohtsuka 1996, 183–243; Kamiya 2000, 157–238; Hirashita 2012, 95–96). Certainly, there may well have also been such a dimension to this, but if a farmland-collateralized financing contract within the village was at a lower interest rate outside the village, then this needs to be studied from the perspective of claim protections.
Furthermore, in the farm villages around Osaka from the late 18th century and beyond, money lending and borrowing contracts were available as kaki-ire with no prior claims attached, or in the form of unoccupied collateral where the right of possession could not be assigned to the lender even when it was still being borrowed (Nakamura 1968, 337–340). This is because, when a suit for payment was filed, in contrast to Edo law where it would result in long-term installment repayments, under Osaka law in principle a fulfillment decree for the total amount of the debt would be issued, and if the designated deadline had passed the confiscation of assets would occur. It will be necessary to study further farm village financing from the perspectives of these different legal systems as well.
1 Other studies that point to the weaknesses of protections for claims against daimyō include Uemura (1986) and Takatsuki (2012).
2 See also Mandai and Nakabayashi (2018) regarding the connection between strengthening claim protections and lower interest rates.
3 However, since the lender to whom the possessory right had been entrusted bore responsibility for the annual tribute and miscellaneous taxes for the collateralized farmland, if they worked the farmland themselves the remainder after deducting the tribute and taxes from the profit—or in the case of tenant farming the remainder after deducting the tribute and taxes from the tenant farming rent—would be profit for the lender. Also, since Jōkyō 4 (1687), the shogunate had forbidden rainō contracts where the borrower was burdened with annual tribute and miscellaneous taxes (Kobayakawa 1979, 363; Kenjō 2000, 367–413).
4 In Okanjō kumigashira narabi ni odaikan kokoroe beki okakitsuke in which this is stipulated, in the case of a legitimate farmland-collateralized financing contract accompaned by the authenticating seals of the headman and the gonin-gumi, it recorded in red letters that the farmlandwould be foreclose if the debt was in default (Shihō-shō Daijin kanbō Shomu-ka and Hōsei-shi Gakkai 1959, 130), a point seen as having been added (Oishi 1961, 205) during the Kyōhō period (1715–1736).
5 Beyond this, foreclosures on lands were also officially recognized even when there was a statement saying that a lender was free to use the collateralized farmland in question when not seeking to reclaim ownership after the term had been exceeded, or when there was a statement in an annex stating that foreclosure of the farmland was acceptable when ownership could not be restored after the period had expired.
6 There are two theories regarding promulgation of the farmland foreclosure ban: (1) the original draft was prepared in the 12th month of Kyōhō 6 (1721) and it was promulgated in the 4th month of Kyōhō 7, or (2) it had already been promulgated in shogunal territories in the 12th month of Kyōhō 6 and it was promulgated to non-shogunal territories in the 4th month of the following year (Kukita 1980, 198–204). In fact, cases have been confirmed in shogunate-controlled territory in the Tōhoku region where the farmland foreclosure ban was promulgated in the 12th month and peasant in the following 1st month submitted a petition (Kukita 1980, 201).
7 Additionally, if sub-tenant farming was the independent smallholder, from the perspective of protecting such independent smallholder the procedures were rather tortuous. The full judicial council decision of 2nd day, 3rd month, Kyōhō 9 (1724) stated that when a sub-tenant farming owned a farmland, the possessory right of the farmland in question would be transferred to the lender, and the possessory right would be returned to the sub-tenant farming when the debt had been repaid from the income obtained from those farmlands. However, this was abolished by a supreme court of justice’s decision from Genbun 5 (1740) (Oishi 1975, 140–143; Mandai and Nakabayashi 2017, 153–154).
8 However, the decision of the supreme court of justice made on the 21st day, 3rd month, Genbun 4 (1739) already recognized a farmland-collateralized financing contract as shichi-ire, even when a farmland-collateralized financing contract deed contained wording about tenant farming (jiki-kosaku) contract (Nakada 1970, 530; Kobayakawa 1979, 332; Mandai and Nakabayashi 2017, 155).
9 In the cases of the shogunate territories of Settsu, Kawachi, Izumi, and Harima—in short, areas under the jurisdiction of individual local magistrates—in general suits for payment concerning interest-bearing or unsecured loan claims were handled in conformance with Osaka law, but when it came to suits for payment regarding tenant farming rent debts it seems there were some differences in how they operated.
10 Following foreclosure, repayment of the principle without interest was a main condition for the reversion of possessory rights and ownership of foreclosured farmland (Shirakawabe 1994, 38). This is because the supreme court of justice’s decision of Genbun 3 (1738) stipulated that in the event of default on a debt under both a farmland-collateralized financing contract and a tenant farming contract, pawned land would be treated as foreclosed farmland, and claims for overdue tenant farming rent would be renounced (ki’en, "cancelled") (Takeyasu 1962, 104; Mandai and Nakabayashi 2017, 155).
11 The supreme court of justice’s decision of Kanpō 1 (1741) also initially referred to the interest rate on the farmland collateralized financing contract themselves and set a figure of 15% or less as a condition for accepting suits for payment. However, this was soon eliminated, based on the principle that the farmland collateralized financing contract did not bear interest (Hattori 1983, 337).
12 While further research must be done on maximum interest rates under Fukuyama clan law, given that interest rates of 13% or more have often been found it is certain that the rates were lower compared to the Kondō clan. Also, as Hirashita points out, there is a strong tendency for the interest rate to be lower the higher the principal, and for the rate to be higher the lower the principal; accordingly, we cannot attribute all of the highs and lows in interest rates to the strength or weakness of claim protections (Hirashita 2012, 94). Depending on the village, in some cases the maximum annual interest rate is determined based on village code (mura-okite) by the amount of the principal (Nakakoji 2004, 746–747).
