Origin of futures trading and the rice-based samurai class in the Tokugawa era (the “rice field era”)

Rice in JapanWhile looking around for the origin of futures trading and derivatives, came across an interesting paper titled The Dojima Rice Market and the Origins of Futures Trading written November 10, 2010. The paper is more of an academic paper which explains its rather sterile description of the “samurai class” back during the Tokugawa period (sometimes also referred to as the Edo Period between 1603 and 1868). The samurai were basically nothing more than paid mercenaries hired on by the Tokugawa Shoganates plucked out of the rice fields. History has treated the samurai class as some kind of a noble warrior class defending the Tokugawa Shogunate’s honor with a class system of nobility and unselfish service as the Bushido. After reading this paper and a few more articles on the subject the samurai class were a cast of syndicated criminals made legitimate by rice crops.

Most of that romantic fiction has been scribbled into history books as fact, includes the samurai who were more like “gold-hungry mercenaries, pirates, travelers, Christians, politicians, murderers, and vagabonds.” The only reason they converted to Christianity when the Jesuits showed up, was to get access to military know how and technology. If you were in the Tokugawa clan who had the most rice fields back then, which is where 90 percent of their revenue came from, they could hire the most ruthless and capable samurai who had developed their fighting skills to protect their assets. Most of the samurai were plucked from the rice fields and given training as samurai. Back then, the only way to climb the social feudalistic ladder was through the samurai class. And just to remind the rice farmer peasants of their place in that feudalistic period, the following…

“Know your station in life!” – Road sign notice common throughout Japan during the Tokugawa era.

“The offspring of a toad is a toad; the offspring of a merchant is a merchant.” – Popular saying in Tokugawa Japan.

During the Tokugawa era (the “rice field era”), the samurai class, also called bannermen, formed the military and civil administrations and they were paid in rice. When these samurai started organizing around the Tokugawa Shogunate developing civil structures, it was then that the population started increasing creating the need for further civil organization including the samurai class being paid other than in rice. Anything can be used as money as long as people trust whatever it is being used as money. During the Tokugawa era rice was used as money. These samurai were paid a fixed amount of rice and depending on the price in the market would translate in value to the samurai’s holdings of rice. During the Tokugawa era the only commodity Japan produced was rice and the samurai class were organized around this commodity.

“All wise rulers in all ages have valued cereals and despised money.” – Tokugawa era idiom