Tanomoshi in Sixteenth-Century Kyoto. Some Brief Reflections

A micro-level method of finance called tanomoshi, a type of lending circle, was used in Japan whereby people acting cooperatively could realize a set amount of capital. For example, each of ten participants would contribute 100 mon per month. After 1 year, 12,000 mon would have accrued, with the entire amount then given to one participant, determined by lottery. The recipient could use this large sum for any purpose, such as investing in expensive equipment. The following year the same process would begin again, with the previous recipient required to participate. In this way over the course of ten years each of the ten people would accrue 12,000 mon once. For people who would otherwise have difficulty amassing a large amount of capital on their own, this micro-level method offered a business opportunity. The origin of tanomoshi can be traced back to the fifteenth century or earlier, when it was apparently practiced among monks in temples. In the sixteenth century the practice probably spread to merchants and craftsmen. However, as the amount of tanomoshi increased some became dissatisfied with the system: if tanomoshi were given to ten people, the first year’s recipient would quickly earn a large sum of money while the tenth person would be obligated to provide a large sum of money for each of the following nine years before accruing any benefit. In order to eliminate this inequality, it was decided that those who received the full amount first would contribute 120 mon per month thereafter. Thus, the amount of money provided to the others would increase the later they received it. In this way, with various innovations and changes the tanomoshi system was adopted by urban Japanese until the nineteenth century as a form of common people’s finance, based on a spirit of mutual assistance.