Private ordering at the world's first futures exchange

Michigan Law Review

Volumn 98, Issue 8, 1998, Pages 2574-2614

  West, Mark D ^a  

^a NONE

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EID: 0345916211     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: 10.2307/1290356     Document Type: Article

References (216)

1. See. e.g., Stuart Banner, The Origin of the New York Stock Exchange, 1791-1860, 27 J. LEGAL STUD. 113 (1998); Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. ECON. & ORG. 83 (1989); Stephen Craig Pirrong, The Efficient Scope of Private Transactions-Cost-Reducing Institutions: The Successes and Failures of Commodities Exchanges, 24 J. LEGAL STUD. 229 (1995); Mark D. West, Legal Rules and Social Norms in Japan's Secret World of Sumo, 26 J. LEGAL STUD. 165 (1997).
2. See. e.g., Stuart Banner, The Origin of the New York Stock Exchange, 1791-1860, 27 J. LEGAL STUD. 113 (1998); Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. ECON. & ORG. 83 (1989); Stephen Craig Pirrong, The Efficient Scope of Private Transactions-Cost-Reducing Institutions: The Successes and Failures of Commodities Exchanges, 24 J. LEGAL STUD. 229 (1995); Mark D. West, Legal Rules and Social Norms in Japan's Secret World of Sumo, 26 J. LEGAL STUD. 165 (1997).
3. See. e.g., Stuart Banner, The Origin of the New York Stock Exchange, 1791-1860, 27 J. LEGAL STUD. 113 (1998); Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. ECON. & ORG. 83 (1989); Stephen Craig Pirrong, The Efficient Scope of Private Transactions-Cost-Reducing Institutions: The Successes and Failures of Commodities Exchanges, 24 J. LEGAL STUD. 229 (1995); Mark D. West, Legal Rules and Social Norms in Japan's Secret World of Sumo, 26 J. LEGAL STUD. 165 (1997).
4. See. e.g., Stuart Banner, The Origin of the New York Stock Exchange, 1791-1860, 27 J. LEGAL STUD. 113 (1998); Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. ECON. & ORG. 83 (1989); Stephen Craig Pirrong, The Efficient Scope of Private Transactions-Cost-Reducing Institutions: The Successes and Failures of Commodities Exchanges, 24 J. LEGAL STUD. 229 (1995); Mark D. West, Legal Rules and Social Norms in Japan's Secret World of Sumo, 26 J. LEGAL STUD. 165 (1997).
5. See. e.g., Stuart Banner, The Origin of the New York Stock Exchange, 1791-1860, 27 J. LEGAL STUD. 113 (1998); Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115 (1992); Robert C. Ellickson, A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry, 5 J.L. ECON. & ORG. 83 (1989); Stephen Craig Pirrong, The Efficient Scope of Private Transactions-Cost-Reducing Institutions: The Successes and Failures of Commodities Exchanges, 24 J. LEGAL STUD. 229 (1995); Mark D. West, Legal Rules and Social Norms in Japan's Secret World of Sumo, 26 J. LEGAL STUD. 165 (1997).
6. Lynn A. Stout, Why the Law Hates Speculators: Regulation and Private Ordering in the Market for OTC Derivatives, 48 DUKE L.J. 701, 777-83 (1999).
7. See Gerard Baker, Greenspan Wants Derivatives Freed Up, FIN. TIMES, Feb. 11, 2000, at 11.
8. See, e.g., Paul G. Mahoney, The Exchange as Regulator, 83 VA. L. REV. 1453 (1997) (proposing self-regulation); A.C. Pritchard, Markets as Monitors: A Proposal to Replace Class Actions with Exchanges as Securities Fraud Enforcers, 85 VA. L. REV. 925 (1999) (same); see also Tokushū, Rekishi ni Manabu "Shijō" tai "Kokka" [Special Issue: Lessons from History on the Market Versus the State], PRESIDENT 251 (Nov. 1999) (series of articles focusing on Dojima in Japanese business magazine).
9. See, e.g., Paul G. Mahoney, The Exchange as Regulator, 83 VA. L. REV. 1453 (1997) (proposing self-regulation); A.C. Pritchard, Markets as Monitors: A Proposal to Replace Class Actions with Exchanges as Securities Fraud Enforcers, 85 VA. L. REV. 925 (1999) (same); see also Tokushū, Rekishi ni Manabu "Shijō" tai "Kokka" [Special Issue: Lessons from History on the Market Versus the State], PRESIDENT 251 (Nov. 1999) (series of articles focusing on Dojima in Japanese business magazine).
10. See, e.g., Paul G. Mahoney, The Exchange as Regulator, 83 VA. L. REV. 1453 (1997) (proposing self-regulation); A.C. Pritchard, Markets as Monitors: A Proposal to Replace Class Actions with Exchanges as Securities Fraud Enforcers, 85 VA. L. REV. 925 (1999) (same); see also Tokushū, Rekishi ni Manabu "Shijō" tai "Kokka" [Special Issue: Lessons from History on the Market Versus the State], PRESIDENT 251 (Nov. 1999) (series of articles focusing on Dojima in Japanese business magazine).
11. See, e.g., Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87 (1989); David Charny, Nonlegal Sanctions in Commercial Relationships, 104 HARV. L. REV. 375, 429-44 (1990).
12. See, e.g., Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87 (1989); David Charny, Nonlegal Sanctions in Commercial Relationships, 104 HARV. L. REV. 375, 429-44 (1990).
13. See, e.g., NORITAKA DOHI, KOME TO EDO JIDAI [RICE AND THE TOKUGAWA ERA] (1980); MATAO MIYAMOTO, KINSEI NIHON NO SHIJŌ KEIZAI [EARLY MODERN JAPANESE MARKET ECONOMICS] (1988); TOKUICHI SHIMAMOTO, TOKUGAWA JIDAI NO SHŌKEN SHIJŌ NO KENKYŪ [RESEARCH ON TOKUGAWA ERA SECURITIES MARKETS] (1953); MASAHIKO SUGIE, TŌKI TO SAKIMONO TORIHIKI NO RIRON: WAGA KUNI SAKIMONO TORIHIKI SEIDO NO SEIRITSU NI KANSURU KENKYŪ [THEORY OF SPECULATION AND FORWARDS TRANSACTIONS: RESEARCH ON THE ESTABLISHMENT OF FORWARDS TRANSACTIONS IN JAPAN] (1984); Takatoshi Ito, 18 Seiki, Dojima no Kome Sakimono Shijō no Kōritsusei ni Tsuite [Regarding the Efficiency of the 18th Century Dojima Futures Market], 44 KEIZAI KENKYŪ 339 (1993); Shigeru Wakita, Kinsei Osaka Dojima Kome Sakimono Shijō ni Okeru Gōriteki Kitai no Seiritsu [The Establishment of Rational Expectations in the Early Modern Dojima Rice Futures Market in Osaka], 47 KEIZAI KENKYŪ 238 (1996).
14. See, e.g., NORITAKA DOHI, KOME TO EDO JIDAI [RICE AND THE TOKUGAWA ERA] (1980); MATAO MIYAMOTO, KINSEI NIHON NO SHIJŌ KEIZAI [EARLY MODERN JAPANESE MARKET ECONOMICS] (1988); TOKUICHI SHIMAMOTO, TOKUGAWA JIDAI NO SHŌKEN SHIJŌ NO KENKYŪ [RESEARCH ON TOKUGAWA ERA SECURITIES MARKETS] (1953); MASAHIKO SUGIE, TŌKI TO SAKIMONO TORIHIKI NO RIRON: WAGA KUNI SAKIMONO TORIHIKI SEIDO NO SEIRITSU NI KANSURU KENKYŪ [THEORY OF SPECULATION AND FORWARDS TRANSACTIONS: RESEARCH ON THE ESTABLISHMENT OF FORWARDS TRANSACTIONS IN JAPAN] (1984); Takatoshi Ito, 18 Seiki, Dojima no Kome Sakimono Shijō no Kōritsusei ni Tsuite [Regarding the Efficiency of the 18th Century Dojima Futures Market], 44 KEIZAI KENKYŪ 339 (1993); Shigeru Wakita, Kinsei Osaka Dojima Kome Sakimono Shijō ni Okeru Gōriteki Kitai no Seiritsu [The Establishment of Rational Expectations in the Early Modern Dojima Rice Futures Market in Osaka], 47 KEIZAI KENKYŪ 238 (1996).
15. See, e.g., NORITAKA DOHI, KOME TO EDO JIDAI [RICE AND THE TOKUGAWA ERA] (1980); MATAO MIYAMOTO, KINSEI NIHON NO SHIJŌ KEIZAI [EARLY MODERN JAPANESE MARKET ECONOMICS] (1988); TOKUICHI SHIMAMOTO, TOKUGAWA JIDAI NO SHŌKEN SHIJŌ NO KENKYŪ [RESEARCH ON TOKUGAWA ERA SECURITIES MARKETS] (1953); MASAHIKO SUGIE, TŌKI TO SAKIMONO TORIHIKI NO RIRON: WAGA KUNI SAKIMONO TORIHIKI SEIDO NO SEIRITSU NI KANSURU KENKYŪ [THEORY OF SPECULATION AND FORWARDS TRANSACTIONS: RESEARCH ON THE ESTABLISHMENT OF FORWARDS TRANSACTIONS IN JAPAN] (1984); Takatoshi Ito, 18 Seiki, Dojima no Kome Sakimono Shijō no Kōritsusei ni Tsuite [Regarding the Efficiency of the 18th Century Dojima Futures Market], 44 KEIZAI KENKYŪ 339 (1993); Shigeru Wakita, Kinsei Osaka Dojima Kome Sakimono Shijō ni Okeru Gōriteki Kitai no Seiritsu [The Establishment of Rational Expectations in the Early Modern Dojima Rice Futures Market in Osaka], 47 KEIZAI KENKYŪ 238 (1996).
16. See, e.g., NORITAKA DOHI, KOME TO EDO JIDAI [RICE AND THE TOKUGAWA ERA] (1980); MATAO MIYAMOTO, KINSEI NIHON NO SHIJŌ KEIZAI [EARLY MODERN JAPANESE MARKET ECONOMICS] (1988); TOKUICHI SHIMAMOTO, TOKUGAWA JIDAI NO SHŌKEN SHIJŌ NO KENKYŪ [RESEARCH ON TOKUGAWA ERA SECURITIES MARKETS] (1953); MASAHIKO SUGIE, TŌKI TO SAKIMONO TORIHIKI NO RIRON: WAGA KUNI SAKIMONO TORIHIKI SEIDO NO SEIRITSU NI KANSURU KENKYŪ [THEORY OF SPECULATION AND FORWARDS TRANSACTIONS: RESEARCH ON THE ESTABLISHMENT OF FORWARDS TRANSACTIONS IN JAPAN] (1984); Takatoshi Ito, 18 Seiki, Dojima no Kome Sakimono Shijō no Kōritsusei ni Tsuite [Regarding the Efficiency of the 18th Century Dojima Futures Market], 44 KEIZAI KENKYŪ 339 (1993); Shigeru Wakita, Kinsei Osaka Dojima Kome Sakimono Shijō ni Okeru Gōriteki Kitai no Seiritsu [The Establishment of Rational Expectations in the Early Modern Dojima Rice Futures Market in Osaka], 47 KEIZAI KENKYŪ 238 (1996).
17. See, e.g., NORITAKA DOHI, KOME TO EDO JIDAI [RICE AND THE TOKUGAWA ERA] (1980); MATAO MIYAMOTO, KINSEI NIHON NO SHIJŌ KEIZAI [EARLY MODERN JAPANESE MARKET ECONOMICS] (1988); TOKUICHI SHIMAMOTO, TOKUGAWA JIDAI NO SHŌKEN SHIJŌ NO KENKYŪ [RESEARCH ON TOKUGAWA ERA SECURITIES MARKETS] (1953); MASAHIKO SUGIE, TŌKI TO SAKIMONO TORIHIKI NO RIRON: WAGA KUNI SAKIMONO TORIHIKI SEIDO NO SEIRITSU NI KANSURU KENKYŪ [THEORY OF SPECULATION AND FORWARDS TRANSACTIONS: RESEARCH ON THE ESTABLISHMENT OF FORWARDS TRANSACTIONS IN JAPAN] (1984); Takatoshi Ito, 18 Seiki, Dojima no Kome Sakimono Shijō no Kōritsusei ni Tsuite [Regarding the Efficiency of the 18th Century Dojima Futures Market], 44 KEIZAI KENKYŪ 339 (1993); Shigeru Wakita, Kinsei Osaka Dojima Kome Sakimono Shijō ni Okeru Gōriteki Kitai no Seiritsu [The Establishment of Rational Expectations in the Early Modern Dojima Rice Futures Market in Osaka], 47 KEIZAI KENKYŪ 238 (1996).
18. See, e.g., NORITAKA DOHI, KOME TO EDO JIDAI [RICE AND THE TOKUGAWA ERA] (1980); MATAO MIYAMOTO, KINSEI NIHON NO SHIJŌ KEIZAI [EARLY MODERN JAPANESE MARKET ECONOMICS] (1988); TOKUICHI SHIMAMOTO, TOKUGAWA JIDAI NO SHŌKEN SHIJŌ NO KENKYŪ [RESEARCH ON TOKUGAWA ERA SECURITIES MARKETS] (1953); MASAHIKO SUGIE, TŌKI TO SAKIMONO TORIHIKI NO RIRON: WAGA KUNI SAKIMONO TORIHIKI SEIDO NO SEIRITSU NI KANSURU KENKYŪ [THEORY OF SPECULATION AND FORWARDS TRANSACTIONS: RESEARCH ON THE ESTABLISHMENT OF FORWARDS TRANSACTIONS IN JAPAN] (1984); Takatoshi Ito, 18 Seiki, Dojima no Kome Sakimono Shijō no Kōritsusei ni Tsuite [Regarding the Efficiency of the 18th Century Dojima Futures Market], 44 KEIZAI KENKYŪ 339 (1993); Shigeru Wakita, Kinsei Osaka Dojima Kome Sakimono Shijō ni Okeru Gōriteki Kitai no Seiritsu [The Establishment of Rational Expectations in the Early Modern Dojima Rice Futures Market in Osaka], 47 KEIZAI KENKYŪ 238 (1996).
19. A search of U.S. scholarship reveals only one article: Ulrike Schaede, Forwards and Futures in Tokugawa-Period Japan: A New Perspective on the Dōjima Rice Market, 13 J. BANK. & FIN. 487 (1989) [hereinafter Schaede, Forwards and Futures]. A slightly different version appears as Ulrike Schaede, The Development of Organized Futures Trading: The Osaka Rice Bill Market of 1730, in JAPANESE FINANCIAL MARKET RESEARCH 339 (W.T. Ziemba et al. eds., 1991). Each is largely a finance-centered description of trading mechanics. In this Article, in addition to adopting a different methodology, I rely on data and sources not examined by Schaede and sources not available at the time of that article's publication.
20. A search of U.S. scholarship reveals only one article: Ulrike Schaede, Forwards and Futures in Tokugawa-Period Japan: A New Perspective on the Dōjima Rice Market, 13 J. BANK. & FIN. 487 (1989) [hereinafter Schaede, Forwards and Futures]. A slightly different version appears as Ulrike Schaede, The Development of Organized Futures Trading: The Osaka Rice Bill Market of 1730, in JAPANESE FINANCIAL MARKET RESEARCH 339 (W.T. Ziemba et al. eds., 1991). Each is largely a finance-centered description of trading mechanics. In this Article, in addition to adopting a different methodology, I rely on data and sources not examined by Schaede and sources not available at the time of that article's publication.
21. A search of U.S. scholarship reveals only one article: Ulrike Schaede, Forwards and Futures in Tokugawa-Period Japan: A New Perspective on the Dōjima Rice Market, 13 J. BANK. & FIN. 487 (1989) [hereinafter Schaede, Forwards and Futures]. A slightly different version appears as Ulrike Schaede, The Development of Organized Futures Trading: The Osaka Rice Bill Market of 1730, in JAPANESE FINANCIAL MARKET RESEARCH 339 (W.T. Ziemba et al. eds., 1991). Each is largely a finance-centered description of trading mechanics. In this Article, in addition to adopting a different methodology, I rely on data and sources not examined by Schaede and sources not available at the time of that article's publication.
22. PETER L. BERNSTEIN, AGAINST THE GODS: THE REMARKABLE STORY OF RISK 306 (1996); BARBARA B. DIAMOND & MARK P. KOLLAR, 24-HOUR TRADING: THE GLOBAL NETWORK OF FUTURES AND OPTIONS MARKETS 6-9 (1989); JERRY W. MARKHAM, THE HISTORY OF COMMODITY FUTURES TRADING AND ITS REGULATION 3 (1987); RICHARD J. TEWELES & FRANK J. JONES, THE FUTURES GAME: WHO WINS? WHO LOSES? WHY? 8-9 (2d ed. 1987); Roberta Romano, A Thumbnail Sketch of Derivative Securities and Their Regulation, 55 MD. L. REV. 1, 10 (1996).
23. PETER L. BERNSTEIN, AGAINST THE GODS: THE REMARKABLE STORY OF RISK 306 (1996); BARBARA B. DIAMOND & MARK P. KOLLAR, 24-HOUR TRADING: THE GLOBAL NETWORK OF FUTURES AND OPTIONS MARKETS 6-9 (1989); JERRY W. MARKHAM, THE HISTORY OF COMMODITY FUTURES TRADING AND ITS REGULATION 3 (1987); RICHARD J. TEWELES & FRANK J. JONES, THE FUTURES GAME: WHO WINS? WHO LOSES? WHY? 8-9 (2d ed. 1987); Roberta Romano, A Thumbnail Sketch of Derivative Securities and Their Regulation, 55 MD. L. REV. 1, 10 (1996).
24. PETER L. BERNSTEIN, AGAINST THE GODS: THE REMARKABLE STORY OF RISK 306 (1996); BARBARA B. DIAMOND & MARK P. KOLLAR, 24-HOUR TRADING: THE GLOBAL NETWORK OF FUTURES AND OPTIONS MARKETS 6-9 (1989); JERRY W. MARKHAM, THE HISTORY OF COMMODITY FUTURES TRADING AND ITS REGULATION 3 (1987); RICHARD J. TEWELES & FRANK J. JONES, THE FUTURES GAME: WHO WINS? WHO LOSES? WHY? 8-9 (2d ed. 1987); Roberta Romano, A Thumbnail Sketch of Derivative Securities and Their Regulation, 55 MD. L. REV. 1, 10 (1996).
25. PETER L. BERNSTEIN, AGAINST THE GODS: THE REMARKABLE STORY OF RISK 306 (1996); BARBARA B. DIAMOND & MARK P. KOLLAR, 24-HOUR TRADING: THE GLOBAL NETWORK OF FUTURES AND OPTIONS MARKETS 6-9 (1989); JERRY W. MARKHAM, THE HISTORY OF COMMODITY FUTURES TRADING AND ITS REGULATION 3 (1987); RICHARD J. TEWELES & FRANK J. JONES, THE FUTURES GAME: WHO WINS? WHO LOSES? WHY? 8-9 (2d ed. 1987); Roberta Romano, A Thumbnail Sketch of Derivative Securities and Their Regulation, 55 MD. L. REV. 1, 10 (1996).
26. PETER L. BERNSTEIN, AGAINST THE GODS: THE REMARKABLE STORY OF RISK 306 (1996); BARBARA B. DIAMOND & MARK P. KOLLAR, 24-HOUR TRADING: THE GLOBAL NETWORK OF FUTURES AND OPTIONS MARKETS 6-9 (1989); JERRY W. MARKHAM, THE HISTORY OF COMMODITY FUTURES TRADING AND ITS REGULATION 3 (1987); RICHARD J. TEWELES & FRANK J. JONES, THE FUTURES GAME: WHO WINS? WHO LOSES? WHY? 8-9 (2d ed. 1987); Roberta Romano, A Thumbnail Sketch of Derivative Securities and Their Regulation, 55 MD. L. REV. 1, 10 (1996).
27. See e.g., WALTER LEFEBER, THE CLASH: A HISTORY OF U.S.-JAPANESE RELATIONS 8 (1997); PATRICK SMITH, JAPANESE: A REINTERPRETATION 53 (1997); TETSURŌ WATSUJI, SAKOKU: NIHON NO HIGEKI [NATIONAL ISOLATION: THE TRAGEDY OF JAPAN] (1953).
28. See e.g., WALTER LEFEBER, THE CLASH: A HISTORY OF U.S.-JAPANESE RELATIONS 8 (1997); PATRICK SMITH, JAPANESE: A REINTERPRETATION 53 (1997); TETSURŌ WATSUJI, SAKOKU: NIHON NO HIGEKI [NATIONAL ISOLATION: THE TRAGEDY OF JAPAN] (1953).
29. See e.g., WALTER LEFEBER, THE CLASH: A HISTORY OF U.S.-JAPANESE RELATIONS 8 (1997); PATRICK SMITH, JAPANESE: A REINTERPRETATION 53 (1997); TETSURŌ WATSUJI, SAKOKU: NIHON NO HIGEKI [NATIONAL ISOLATION: THE TRAGEDY OF JAPAN] (1953).
30. See, e.g., RONALD P. TOBY, STATE AND DIPLOMACY IN EARLY MODERN JAPAN: ASIA IN THE DEVELOPMENT OF THE TOKUGAWA BAKUFU (1984);
31. Kazui Tashiro, Foreign Relations During the Edo Period: Sakoku Reexamined, 8 J. JAPANESE STUD. 283 (Susan Downing Videen trans., 1982);
32. Robert LeRoy Innes, The Door Ajar: Japan's Foreign Trade in the Seventeenth Century (1980) (unpublished Ph.D. dissertation, University of Michigan) (on file with author).
33. See, e.g., YASUNARI MARUYAMA, NIHON KINSEI KŌTSŪSHI NO KENKYŪ [STUDY OF TRANSPORTATION HISTORY IN EARLY MODERN JAPAN] 585-600 (1989); Kenji Date, Edo ni Okeru Shokō no Keihi Seikatsu ni Tsuite [The Consumptive Life of Edo Period Feudal Lords], 4 REKISHIGAKU KENKYŪ 75 (1935).
34. See, e.g., YASUNARI MARUYAMA, NIHON KINSEI KŌTSŪSHI NO KENKYŪ [STUDY OF TRANSPORTATION HISTORY IN EARLY MODERN JAPAN] 585-600 (1989); Kenji Date, Edo ni Okeru Shokō no Keihi Seikatsu ni Tsuite [The Consumptive Life of Edo Period Feudal Lords], 4 REKISHIGAKU KENKYŪ 75 (1935).
35. See YŌTARŌ SAKUDŌ, NIHON KAHEI KIN'YŪSHI NO KENKYŪ: HŌREN SHAKAI NO SHIN'YŌ TSUKA NI KANSURU KISOTEKI KENKYŪ [A STUDY OF THE HISTORY OF JAPANESE CURRENCY IN FEUDAL SOCIETY] 33-58 (1961); Sydney Crawcour, The Development of a Credit System in Seventeenth-Century Japan, 21 J. ECON. HIST. 342 (1961).
36. See YŌTARŌ SAKUDŌ, NIHON KAHEI KIN'YŪSHI NO KENKYŪ: HŌREN SHAKAI NO SHIN'YŌ TSUKA NI KANSURU KISOTEKI KENKYŪ [A STUDY OF THE HISTORY OF JAPANESE CURRENCY IN FEUDAL SOCIETY] 33-58 (1961); Sydney Crawcour, The Development of a Credit System in Seventeenth-Century Japan, 21 J. ECON. HIST. 342 (1961).
37. Bills of credit first appeared in Osaka in 1628. See MATAJI MIYAMOTO, ŌSAKA CHŌNIN [OSAKA MERCHANTS] 41-44 (1957); see also
38. SUSUMU KITAHARA, EDO NO FUDASASHI [TOKYO MONEYLENDERS] 7-8 (1985);
39. Masaru Iwahashi, Tokugawa Jidai no Kahei Sūryō [Currency Distribution in the Tokugawa Era] in NIHON KEIZAI NO HATTEN [THE DEVELOPMENT OF JAPANESE ECONOMICS] (Mataji Umemura et al. eds., 1976). Bills of exchange are said to have begun in Europe in the late twelfth century.
40. See Meir Kohn, Bills of Exchange and the Money Market to 1600, in MEIR KOHN, FINANCE, BUSINESS, AND GOVERNMENT BEFORE THE INDUSTRIAL REVOLUTION (forthcoming 2000) (manuscript at 1, on file with author and available at http://www.srn.com).
41. For an eloquent description of rice as pure commodity, see BERTOLT BRECHT, The Measures Taken, in THE MEASURES TAKEN, AND OTHER LEHRSTŪCKE 23-24 (Carl R. Mueller et al. trans., 1997) ("What is rice anyway?/Do I know what rice is?/How should I know who should know?/I don't know what rice is./All I know is its price.").
42. Tsuneo Satō, Tokugawa Villages and Agriculture, in TOKUGAWA JAPAN: THE SOCIAL AND ECONOMIC ANTECEDENTS OF MODERN JAPAN 37, 73 (Chie Nakane & Shinzaburō Ōishi eds., 1990).
43. See FUYUJI DOMON. EDO SHŌNIN NO KEIZAIGAKU [THE ECONOMICS OF TOKUGAWA MERCHANTS] 9 (1996).
44. See OSAMU WAKITA, KINSEI HŌKEN SHAKAI NO KEIZAI KŌZŌ [THE ECONOMIC STRUCTURE OF EARLY MODERN FEUDAL SOCIETY] 23-36 (1963).
45. See, e.g., JOHN G. ROBERTS, MITSUI: THREE CENTURIES OF JAPANESE BUSINESS 36 (2d ed. 1988).
46. See J. MARK RAMSEYER, ODD MARKETS IN JAPANESE HISTORY: LAW AND ECONOMIC GROWTH 18 (1996).
47. See, e.g., MINJI KANREI RUISHŪ [COLLECTION OF CIVIL LAWS] (Yutaka Tezuka & Mitsuo Rikō eds., 1969); HARUO ŌKUBO, EDO NO KEIHŌ OSADAMEGAKI HYAKKAJŌ [CRIMINAL PROVISIONS OF TOKUGAWA ERA OSADAMEGAKI] (1978); CARL STEENSTRUP, A HISTORY OF LAW IN JAPAN UNTIL 1868, at 121 (1991).
48. See, e.g., MINJI KANREI RUISHŪ [COLLECTION OF CIVIL LAWS] (Yutaka Tezuka & Mitsuo Rikō eds., 1969); HARUO ŌKUBO, EDO NO KEIHŌ OSADAMEGAKI HYAKKAJŌ [CRIMINAL PROVISIONS OF TOKUGAWA ERA OSADAMEGAKI] (1978); CARL STEENSTRUP, A HISTORY OF LAW IN JAPAN UNTIL 1868, at 121 (1991).
49. See, e.g., MINJI KANREI RUISHŪ [COLLECTION OF CIVIL LAWS] (Yutaka Tezuka & Mitsuo Rikō eds., 1969); HARUO ŌKUBO, EDO NO KEIHŌ OSADAMEGAKI HYAKKAJŌ [CRIMINAL PROVISIONS OF TOKUGAWA ERA OSADAMEGAKI] (1978); CARL STEENSTRUP, A HISTORY OF LAW IN JAPAN UNTIL 1868, at 121 (1991).
50. Tetsuji Okazaki & Masahiro Okuno-Fujiwara, Evolution of Economic Systems: The Case of Japan, in THE INSTITUTIONS OF EAST ASIAN ECONOMIC DEVELOPMENT 482, 494 (Yujiro Hayami & Masahiko Aoki eds., 1998).
51. See Yoshirō Hiramatsu, Kinseihō [Early Modern Law], in 11 IWANAMI KŌZA NIHON REKISHI [IWANAMI SERIES ON JAPANESE HISTORY] 331, 341-42 (1976).
52. This code was in the form of the Osadamegaki. See DAN FENNO HENDERSON, 1 CONCILIATION AND JAPANESE LAW: TOKUGAWA AND MODERN 15-16 (1965).
53. See Dan F. Henderson, Some Aspects of Tokugawa Law, 27 WASH. L. REV. 85, 92 (1952).
54. See, e.g., HENDERSON, supra note 23, at 101, 132-62 (noting that "criminal-civil distinction was not clearly observed and Tokugawa practice" and including transcript of civil suit in which local official routinely threatens death penalty).
55. See DOHI, supra note 6, at 32-33; SUGIE, supra note 6, at 8-9.
56. By the end of the Tokugawa period, 99% of payments between merchants were settled by bills. See SAKUDŌ, supra note 12, at7 249.
57. See, e.g., SHIMAMOTO, supra note 6, at 14-15.
58. See SAKUDŌ, supra note 12, at 345.
59. Although many sources cite Yodoya as the birthplace of futures trading, it is possible that Yodoya was one of several trading sites. See SUGIE, supra note 6, at 12.
60. IHARA SAIKAKU, NIPPON EITAIGURA [JAPAN'S ETERNAL STOREHOUSE] (1688), quoted in YAMATANE GROUP KINEN SHUPPANKAI, NIHON SHIJŌSHI [HISTORY OF JAPANESE MARKETS] 62 (1989).
61. See, e.g., MIYAMOTO, supra note 6, at 196.
62. Yodoya's wealth was astounding; if the commonly cited inventory of his wealth is accurate, he was a thousand times richer than other merchants, was owed 100 million ryō (several times the national income of Japan), and the amount confiscated by the government was equal to two hundred years of shogunate income. See, e.g., E.S. Crawcour, Changes in Japanese Commerce in the Tokugawa Period, 22 J. ASIAN STUD. 387, 392 (1962).
63. See SUGIE, supra note 6, at 177; James L. McClain, Space, Power, Wealth and Status in Seventeenth-Century Osaka, in OSAKA: THE MERCHANT'S CAPITAL OF EARLY MODERN JAPAN (James L. McClain & Osamu Wakita eds., 1999) at 44, 58.
64. See SUGIE, supra note 6, at 177; James L. McClain, Space, Power, Wealth and Status in Seventeenth-Century Osaka, in OSAKA: THE MERCHANT'S CAPITAL OF EARLY MODERN JAPAN (James L. McClain & Osamu Wakita eds., 1999) at 44, 58.
65. See DOHI, supra note 6, at 176-79; SUGIE, supra note 6, at 17.
66. See DOHI, supra note 6, at 176-79; SUGIE, supra note 6, at 17.
67. See MIYAMOTO, supra note 6, at 196-97; SUGIE, supra note 6, at 17.
68. See, e.g., GEORGE SANSOM, A HISTORY OF JAPAN 1615-1867, at 164 (1963).
69. See ROBERTS, supra note 18, at 16.
70. See DOHI, supra note 6, at 89; MIYAMOTO, supra note 6, at 196.
71. BEISHŌ KYŪKI (1616-1870) (emphasis added) reprinted as MATAJI MIYAMOTO, 3 ŌSAKA KEIZAI SHIRYŌ SHŌSEI [COMPILATION OF OSAKA ECONOMY DOCUMENTS] 76-77 (1973); see also SHIMAMOTO, supra note 6, at 9-10; SUGIE, supra note 6, at 31. The decree applied specifically to futures contracts. Spot transactions at Dojima apparently had separate legal treatment. At some point in the An'ei era (1772-1780), the shogunate systematically gave spot transaction suits precedence over other suits, rendering quick judgments and accepting filings on days other than the two-a-month "suing days" specified for such matters. See SHIMAMOTO, supra note 6, at 20.
72. BEISHŌ KYŪKI, supra note 41, at 77.
73. See Romano, supra note 8, at 10-20. Romano's list is similar to others, see, for example, A.W.B. Simpson, The Origins of Futures Trading in the Liverpool Cotton Market, in ESSAYS FOR PATRICK ATIYAH 179, 180-81 (Peter Cane & Jane Stapleton eds., 1991). Unless otherwise indicated, I draw here principally from BEISHŌ KYŪKI, supra note 41, and more modern accounts reported in MIYAMOTO, supra note 6, at 195-232; SHIMAMOTO, supra note 6, at 11-78; and SUGIE, supra note 6, at 31-83.
74. See Romano, supra note 8, at 10-20. Romano's list is similar to others, see, for example, A.W.B. Simpson, The Origins of Futures Trading in the Liverpool Cotton Market, in ESSAYS FOR PATRICK ATIYAH 179, 180-81 (Peter Cane & Jane Stapleton eds., 1991). Unless otherwise indicated, I draw here principally from BEISHŌ KYŪKI, supra note 41, and more modern accounts reported in MIYAMOTO, supra note 6, at 195-232; SHIMAMOTO, supra note 6, at 11-78; and SUGIE, supra note 6, at 31-83.
75. See Romano, supra note 8, at 10-20. Romano's list is similar to others, see, for example, A.W.B. Simpson, The Origins of Futures Trading in the Liverpool Cotton Market, in ESSAYS FOR PATRICK ATIYAH 179, 180-81 (Peter Cane & Jane Stapleton eds., 1991). Unless otherwise indicated, I draw here principally from BEISHŌ KYŪKI, supra note 41, and more modern accounts reported in MIYAMOTO, supra note 6, at 195-232; SHIMAMOTO, supra note 6, at 11-78; and SUGIE, supra note 6, at 31-83.
76. See Romano, supra note 8, at 10-20. Romano's list is similar to others, see, for example, A.W.B. Simpson, The Origins of Futures Trading in the Liverpool Cotton Market, in ESSAYS FOR PATRICK ATIYAH 179, 180-81 (Peter Cane & Jane Stapleton eds., 1991). Unless otherwise indicated, I draw here principally from BEISHŌ KYŪKI, supra note 41, and more modern accounts reported in MIYAMOTO, supra note 6, at 195-232; SHIMAMOTO, supra note 6, at 11-78; and SUGIE, supra note 6, at 31-83.
77. See Romano, supra note 8, at 10-20. Romano's list is similar to others, see, for example, A.W.B. Simpson, The Origins of Futures Trading in the Liverpool Cotton Market, in ESSAYS FOR PATRICK ATIYAH 179, 180-81 (Peter Cane & Jane Stapleton eds., 1991). Unless otherwise indicated, I draw here principally from BEISHŌ KYŪKI, supra note 41, and more modern accounts reported in MIYAMOTO, supra note 6, at 195-232; SHIMAMOTO, supra note 6, at 11-78; and SUGIE, supra note 6, at 31-83.
78. See Meir Kohn, Risk Instruments in the Medieval and Early Modern Economy, in KOHN, supra note 13, at 10-12. The mid-sixteenth-century wagers on exchange rates at Antwerp that Kohn says "seem like modern futures contracts," id. at 12 & n.37. appear merely to be forwards, with no evidence of standardized contracts, clearinghouses, and the like. See RICHARD EHRENBERG, CAPITAL & FINANCE IN THE AGE OF THE RENAISSANCE: A STUDY OF THE FUGGERS AND THEIR CONNECTIONS 243-44 (H.M. Lucas trans., 1928).
79. See Meir Kohn, Risk Instruments in the Medieval and Early Modern Economy, in KOHN, supra note 13, at 10-12. The mid-sixteenth-century wagers on exchange rates at Antwerp that Kohn says "seem like modern futures contracts," id. at 12 & n.37. appear merely to be forwards, with no evidence of standardized contracts, clearinghouses, and the like. See RICHARD EHRENBERG, CAPITAL & FINANCE IN THE AGE OF THE RENAISSANCE: A STUDY OF THE FUGGERS AND THEIR CONNECTIONS 243-44 (H.M. Lucas trans., 1928).
80. The Exchange also has special contract rules pertaining to such matters as quality and quotation unit for each commodity. See ROBERT GIBSON-JARVIE, THE LONDON METAL EXCHANGE: A COMMODITY MARKET 29-33 (1976); RUDOLF WOLFF & Co LTD., WOLFF'S GUIDE TO THE LONDON METALS EXCHANGE 199-221 (5th ed. 1995).
81. The Exchange also has special contract rules pertaining to such matters as quality and quotation unit for each commodity. See ROBERT GIBSON-JARVIE, THE LONDON METAL EXCHANGE: A COMMODITY MARKET 29-33 (1976); RUDOLF WOLFF & Co LTD., WOLFF'S GUIDE TO THE LONDON METALS EXCHANGE 199-221 (5th ed. 1995).
82. On the importance of grading, see Pirrong, supra note 1, at 234-35; Simpson, supra note 43, at 182.
83. Dates may vary based on days of the week, and the winter and spring terms may technically have been one term split by the year-end holidays. See SHIMAMOTO, supra note 6, at 38. Technically the months are lunar months and do not correspond exactly to the solar Gregorian calendar. The particular dates referred to herein are not important enough to merit revision of dates to the Gregorian system.
84. See, e.g., FRANK J. FABOZZI ET AL., FOUNDATIONS OF FINANCIAL MARKETS AND INSTITUTIONS 507-08 (2d ed. 1998).
85. See SAKUDŌ, supra note 12, at 369.
86. See MATAHI MIYAMOTO, NIHON SHŌGYŌSHI [JAPANESE COMMERCIAL HISTORY] 120-21 (1949). But see MIYAMOTO, supra note 6, at 386-402 (noting the lack of united market until the mid-eighteenth century and finding less correlation among isolated markets).
87. Morton Rothstein, Frack Norris and Popular Perceptions of the Market, 56 AGRIC. HIST. 58 (1982), cited in WILLIAM CRONON, NATURE'S METROPOLIS: CHICAGO AND THE GREAT WEST 125 (1992).
88. Morton Rothstein, Frack Norris and Popular Perceptions of the Market, 56 AGRIC. HIST. 58 (1982), cited in WILLIAM CRONON, NATURE'S METROPOLIS: CHICAGO AND THE GREAT WEST 125 (1992).
89. See McClain, supra note 34, at 64-65.
90. Most modern exchanges rely on one central clearinghouse institution, while Dojima had multiple clearinghouses. Although competition among multiple clearinghouses operating as brokers might seem efficient, the duplication of basic clearinghouse services by multiple parties may have reduced potential gains.
91. See MIYAMOTO, supra note 6, at 205.
92. On the merits of currency competition, see F.A. HAYEK, DENATIONALISATION OF MONEY: AN ANALYSIS OF THE THEORY AND PRACTICE OF CONCURRENT CURRENCIES (1976).
93. See OSAMU WAKITA, KINSEI ŌSAKA NO KEIZAI TO BUNKA [ECONOMICS AND CULTURE OF EARLY MODERN OSAKA] 44 (1994); JACK WEATHERFORD, THE HISTORY OF MONEY: FROM SANDSTONE TO CYBERSPACE 73-74 (1997) (noting that "if Christians lent money for interest, the Catholic church excommunicated them" and that "[t]he Koran specifically prohibited bills of exchange"). While usury prohibitions may have hampered the development of debt and financial intermediaries in Europe, they did encourage the early development of bills of exchange. See Kohn, supra note 13, at 9-10.
94. See OSAMU WAKITA, KINSEI ŌSAKA NO KEIZAI TO BUNKA [ECONOMICS AND CULTURE OF EARLY MODERN OSAKA] 44 (1994); JACK WEATHERFORD, THE HISTORY OF MONEY: FROM SANDSTONE TO CYBERSPACE 73-74 (1997) (noting that "if Christians lent money for interest, the Catholic church excommunicated them" and that "[t]he Koran specifically prohibited bills of exchange"). While usury prohibitions may have hampered the development of debt and financial intermediaries in Europe, they did encourage the early development of bills of exchange. See Kohn, supra note 13, at 9-10.
95. See DOHI, supra note 6, at 206.
96. See supra text accompanying note 33. Confiscation of assets (kessho) was connected with punishments for all types of crimes. The severity of the confiscation depended on the severity of the crime. See RYŌSUKE ISHII, NIHON HŌSEISHI GAISETSU [OUTLINE OF JAPANESE LEGAL HISTORY] 495, 498 n.13 (1948) [hereinafter RYŌSUKE ISHII, NIHON HŌSEISHI GAISETSU];
97. see also RYŌSUKE ISHII, KEIBATSU NO REKISHI [THE HISTORY OF PUNISHMENT] 132 (1992) (explaining how Yoshimune established graduated fine system to complement asset confiscation in 1718). Confiscation normally applied only to the offender and not to an offender's group.
98. See SHINZŌ TAKAYANAGI, EDO JIDAI NO TSUMI TO KEIBATSU SHŌSETSU [CRIME AND PUNISHMENT IN THE TOKUGAWA PERIOD] 414 (1988).
99. See YOSHIO SAKATA, CHŌNIN [MERCHANTS] 38 (1949).
100. See Shinzaburō Ōishi, Hōreki, Tenmeiki no Bakusei [Shogunate Government in the Hōreki-Tenmei Era (1751-1789)], in 11 IWANAMI KŌZA NIHON REKISHI [IWANAMI SERIES ON JAPANESE HISTORY] 139 (1976); E.S. Crawcour & Kozo Yamamura, The Tokugawa Monetary System: 1787-1868, 18 ECON. DEV. & CULTURAL CHANGE 489, 500 (1970); Shigeaki Yasuoka, Edo Chūki no Osaka Torhiki Soshiki [The Trade Structure of Osaka in the Middle Tokugawa Era], 16 DŌSHISHA SHŌGAKU 290 (1964). After 1830 and toward the end of the Tokugawa government, price control measures occurred with some regularity. See MASANORI HONJŌ, BAKUHANSEI SHAKAI NO TENKAI BEIKOKU SHIJŌ [DEVELOPMENT OF FEUDAL GOVERNMENT AND RICE MARKETS] 361 (1994).
101. See Shinzaburō Ōishi, Hōreki, Tenmeiki no Bakusei [Shogunate Government in the Hōreki-Tenmei Era (1751-1789)], in 11 IWANAMI KŌZA NIHON REKISHI [IWANAMI SERIES ON JAPANESE HISTORY] 139 (1976); E.S. Crawcour & Kozo Yamamura, The Tokugawa Monetary System: 1787-1868, 18 ECON. DEV. & CULTURAL CHANGE 489, 500 (1970); Shigeaki Yasuoka, Edo Chūki no Osaka Torhiki Soshiki [The Trade Structure of Osaka in the Middle Tokugawa Era], 16 DŌSHISHA SHŌGAKU 290 (1964). After 1830 and toward the end of the Tokugawa government, price control measures occurred with some regularity. See MASANORI HONJŌ, BAKUHANSEI SHAKAI NO TENKAI BEIKOKU SHIJŌ [DEVELOPMENT OF FEUDAL GOVERNMENT AND RICE MARKETS] 361 (1994).
102. See Shinzaburō Ōishi, Hōreki, Tenmeiki no Bakusei [Shogunate Government in the Hōreki-Tenmei Era (1751-1789)], in 11 IWANAMI KŌZA NIHON REKISHI [IWANAMI SERIES ON JAPANESE HISTORY] 139 (1976); E.S. Crawcour & Kozo Yamamura, The Tokugawa Monetary System: 1787-1868, 18 ECON. DEV. & CULTURAL CHANGE 489, 500 (1970); Shigeaki Yasuoka, Edo Chūki no Osaka Torhiki Soshiki [The Trade Structure of Osaka in the Middle Tokugawa Era], 16 DŌSHISHA SHŌGAKU 290 (1964). After 1830 and toward the end of the Tokugawa government, price control measures occurred with some regularity. See MASANORI HONJŌ, BAKUHANSEI SHAKAI NO TENKAI BEIKOKU SHIJŌ [DEVELOPMENT OF FEUDAL GOVERNMENT AND RICE MARKETS] 361 (1994).
103. See Shinzaburō Ōishi, Hōreki, Tenmeiki no Bakusei [Shogunate Government in the Hōreki-Tenmei Era (1751-1789)], in 11 IWANAMI KŌZA NIHON REKISHI [IWANAMI SERIES ON JAPANESE HISTORY] 139 (1976); E.S. Crawcour & Kozo Yamamura, The Tokugawa Monetary System: 1787-1868, 18 ECON. DEV. & CULTURAL CHANGE 489, 500 (1970); Shigeaki Yasuoka, Edo Chūki no Osaka Torhiki Soshiki [The Trade Structure of Osaka in the Middle Tokugawa Era], 16 DŌSHISHA SHŌGAKU 290 (1964). After 1830 and toward the end of the Tokugawa government, price control measures occurred with some regularity. See MASANORI HONJŌ, BAKUHANSEI SHAKAI NO TENKAI BEIKOKU SHIJŌ [DEVELOPMENT OF FEUDAL GOVERNMENT AND RICE MARKETS] 361 (1994).
104. See SHIMAMOTO, supra note 6, at 19; Nobuhiko Nakai & James L. McClain, Commercial Change and Urban Growth in Early Modern Japan, in 4 CAMBRIDGE HISTORY OF JAPAN 519, 587 (John Whitney Hall ed., 1991). After 1773, the shogunate still occasionally issued decrees regarding money claims, twice announcing that money clims must be settled out of court, and granting amnesty to old futures-related claims. See Heiichirō Kaneda, Tokugawa Jidai no Tokubetsu Minji Soshōhō: Kanekuji no Kenkyū [Special Procedural Law of the Tokugawa Era: Research on Money Suits], 43 KOKKA GAKKAI ZASSHI 362 (1928).
105. See SHIMAMOTO, supra note 6, at 19; Nobuhiko Nakai & James L. McClain, Commercial Change and Urban Growth in Early Modern Japan, in 4 CAMBRIDGE HISTORY OF JAPAN 519, 587 (John Whitney Hall ed., 1991). After 1773, the shogunate still occasionally issued decrees regarding money claims, twice announcing that money clims must be settled out of court, and granting amnesty to old futures-related claims. See Heiichirō Kaneda, Tokugawa Jidai no Tokubetsu Minji Soshōhō: Kanekuji no Kenkyū [Special Procedural Law of the Tokugawa Era: Research on Money Suits], 43 KOKKA GAKKAI ZASSHI 362 (1928).
106. Crawcour & Yamamura, supra note 60, at 500.
107. See MIKE DASH, TULIPOMANIA: THE STORY OF THE WORLD'S MOST COVETED FLOWER AND THE EXTRAORDINARY PASSIONS IT AROUSED 187-95 (2000); see also sources cited supra note 44.
108. STUART BANNER, ANGLO-AMERICAN SECURITIES REGULATION 104-05 (1998).
109. See id. at 106.
110. Id. at 173-74. A similar phenomenon occurred in Chicago futures markets. See JEFFREY WILLIAMS, THE ECONOMIC FUNCTION OF FUTURES MARKETS § 5.2, at 154-56 (1986).
111. See Stout, supra note 2, at 717.
112. See Henry Hansmann, The Role of Nonprofit Enterprise, 89 YALE L.J. 835, 841 (1980); Craig Pirrong, A Positive Theory of Financial Exchange Organization with Normative Implications for Financial Market Regulation, at 37 (Working Paper, Oct. 16, 1997), at http://www.olin.wustl.edu/faculty/pirrong.
113. See Henry Hansmann, The Role of Nonprofit Enterprise, 89 YALE L.J. 835, 841 (1980); Craig Pirrong, A Positive Theory of Financial Exchange Organization with Normative Implications for Financial Market Regulation, at 37 (Working Paper, Oct. 16, 1997), at http://www.olin.wustl.edu/faculty/pirrong.
114. See TASHICHIRŌ TANAKA, NIHON TORIHIKIJŌ RON [THEORY OF JAPANESE MARKETS] 29 (1910); see also Schaede, Forwards and Futures, supra note 7, at 496.
115. See TASHICHIRŌ TANAKA, NIHON TORIHIKIJŌ RON [THEORY OF JAPANESE MARKETS] 29 (1910); see also Schaede, Forwards and Futures, supra note 7, at 496.
116. See MIYAMOTO, supra note 6, at 203: SHOHEI SUZUKI, DOJIMA KOME SHIJŌSHI [HISTORY OF THE DOJIMA RICE MARKET] 56-57 (1940).
117. The Kyōho reforms of the 1710s and 1720s stressed the formation of protective associations and licensing requirements across a wide variety of industries. See SHINZABURŌ ŌISHI, KYŌHŌ KAIKAKU NO SHŌGYŌ SEISAKU [COMMERCIAL POLICY OF THE KYŌHŌ REFORMS] 201-03 (1998); Nakai & McClain, supra note 61, at 570-73.
118. See BEISHŌ KYŪKI, supra note 41, at 61 (stating that the shogunate issued 451 licenses in 1730, 538 in 1731, and 362 in 1734, for a total of 1,351, of which 451 were for spot transactions and 900 for futures).
119. See HAMAKATA KIROKU [HAMAKATA RECORDS] (begun 1716), reprinted as EIJIRŌ HONJŌ ET AL., 2 KINSEI SHAKAI KEIZAI SOSHO [EARLY MODERN SOCIETY ECONOMICS SERIES] 24 (1926) (stating that the shogunate issued a total of only 1,300, including 500 in 1731, 500 in 1732, and 300 in 1736).
120. See HAMAKATA KIROKU [HAMAKATA RECORDS] (begun 1716), reprinted as EIJIRŌ HONJŌ ET AL., 2 KINSEI SHAKAI KEIZAI SOSHO [EARLY MODERN SOCIETY ECONOMICS SERIES] 24 (1926) (stating that the shogunate issued a total of only 1,300, including 500 in 1731, 500 in 1732, and 300 in 1736).
121. See DOHI, supra note 6, at 94-95: SHIMAMOTO, supra note 6, at 58.
122. In the Shōtoku Period (1711-1715), Osaka is said to have been home to 17,727 merchants, of which 483 were formal agents of feudal lords. See SANSOM, supra note 38, at 128.
123. See 2 TOKUGAWA JIDAI SHŌGYŌ SŌSHO [TOKUGAWA ERA COMMERCIAL SERIES] 9 (Matajiro Akabori ed. 1965) (1913).
124. Compare to the diamond trading industry, which allows participation by nonmembers. See Bernstein, supra note 1, at 152.
125. See Lisa Bernstein, The Questionable Empirical Basis of Article 2's Incorporation Strategy: A Preliminary Study, 66 U. CHI. L. REV. 710, 774-75 (1999) (noting that membership requirements can also aid in reputational constraints).
126. See Stephen Craig Pirrong, Manipulation of Cash-Settled Futures Contracts, 74 J. BUS. (forthcoming 2001) (manuscript at 1 n.2. on file with author and available at http:// www.olin.wustl.edu/faculty/pirrong).
127. See supra text accompanying note 47.
128. Among other things, cash settlement does not allow the buyer to demand an excessive number of deliveries. See. e.g., Frank J. Jones. The Economics of Futures and Options Contracts Based on Cash Settlement, 2 J. FUTURES MARKETS 63 (1982); Steven Manaster, Economic Consequences of Delivery Options for Financial Futures Contracts: Analysts and Review, 11 REV. FUTURES MARKETS 142 (1992); cf. Praveen Kumar & Duane J. Seppi, Futures Manipulation with "Cash Settlement," 47 J. FIN. 1485 (1992) (noting that traders can manipulate cash-settled contracts through asymmetric information exploitation by "punching the settlement price"); Pirrong, supra note 79 (noting that traders can manipulate cash- settled contracts through market power manipulation by squeezing the commodity used to determine the value of the contract).
129. Among other things, cash settlement does not allow the buyer to demand an excessive number of deliveries. See. e.g., Frank J. Jones. The Economics of Futures and Options Contracts Based on Cash Settlement, 2 J. FUTURES MARKETS 63 (1982); Steven Manaster, Economic Consequences of Delivery Options for Financial Futures Contracts: Analysts and Review, 11 REV. FUTURES MARKETS 142 (1992); cf. Praveen Kumar & Duane J. Seppi, Futures Manipulation with "Cash Settlement," 47 J. FIN. 1485 (1992) (noting that traders can manipulate cash-settled contracts through asymmetric information exploitation by "punching the settlement price"); Pirrong, supra note 79 (noting that traders can manipulate cash- settled contracts through market power manipulation by squeezing the commodity used to determine the value of the contract).
130. Among other things, cash settlement does not allow the buyer to demand an excessive number of deliveries. See. e.g., Frank J. Jones. The Economics of Futures and Options Contracts Based on Cash Settlement, 2 J. FUTURES MARKETS 63 (1982); Steven Manaster, Economic Consequences of Delivery Options for Financial Futures Contracts: Analysts and Review, 11 REV. FUTURES MARKETS 142 (1992); cf. Praveen Kumar & Duane J. Seppi, Futures Manipulation with "Cash Settlement," 47 J. FIN. 1485 (1992) (noting that traders can manipulate cash-settled contracts through asymmetric information exploitation by "punching the settlement price"); Pirrong, supra note 79 (noting that traders can manipulate cash- settled contracts through market power manipulation by squeezing the commodity used to determine the value of the contract).
131. Craig Pirrong argues that control of manipulation by the state might be desirable in some circumstances. See Stephen Craig Pirrong, The Self-Regulation of Commodity Exchanges: The Case of Market Manipulation, 38 J.L. & ECON. 141 (1995). But see Frank H. Easterbrook, Monopoly, Manipulation, and the Regulation of Futures Markets, 59 J. BUS. S103 (1986); Daniel R. Fischel & David J. Ross, Should the Law Prohibit "Manipulation" in Financial Markets?, 105 HARV. L. REV. 503 (1991). Even if Pirrong is correct, Dojima differs from the markets that Pirrong examines. The Dojima rules discussed herein (but perhaps not the practice) appear to differ from those of the Chicago Board of Trade and other exchanges that Pirrong finds "took few, if any, actions to deter manipulation." Pirrong, supra, at 195. Pirrong also finds that effective self-regulation came about only after the advent of federal commodity laws. See Pirrong, supra, at 192-95. Dojima rules changed little after legal intervention. See infra text accompanying note 130. Determining why Dojima rules differ from other markets - why traders adopted the firebox system - is more difficult. Perhaps the answer lies in homogeneity. See Pirrong, supra, at 158. But the degree of homogeneity of financial interests that existed among merchants, which comprised a very broad status group, is unclear at best, and the size of the ex- change points toward heterogeneity. See Pirrong, supra, at 162 (noting that enforcement is lower when exchange membership is large). Perhaps the answer lies in the inability to cost- shift. Pirrong argues that consumers of exchange services may bear the bulk of costs of manipulation, not exchange members. See Pirrong. supra, at 164. But while Dojima may have had fewer external consumers than some modern markets, they did exist. See supra text accompanying note 75. Perhaps a better answer is that the firebox system was adopted simply to determine objectively a closing time, and its antimanipulation effects were an inadvertent bonus.
132. Craig Pirrong argues that control of manipulation by the state might be desirable in some circumstances. See Stephen Craig Pirrong, The Self-Regulation of Commodity Exchanges: The Case of Market Manipulation, 38 J.L. & ECON. 141 (1995). But see Frank H. Easterbrook, Monopoly, Manipulation, and the Regulation of Futures Markets, 59 J. BUS. S103 (1986); Daniel R. Fischel & David J. Ross, Should the Law Prohibit "Manipulation" in Financial Markets?, 105 HARV. L. REV. 503 (1991). Even if Pirrong is correct, Dojima differs from the markets that Pirrong examines. The Dojima rules discussed herein (but perhaps not the practice) appear to differ from those of the Chicago Board of Trade and other exchanges that Pirrong finds "took few, if any, actions to deter manipulation." Pirrong, supra, at 195. Pirrong also finds that effective self-regulation came about only after the advent of federal commodity laws. See Pirrong, supra, at 192-95. Dojima rules changed little after legal intervention. See infra text accompanying note 130. Determining why Dojima rules differ from other markets - why traders adopted the firebox system - is more difficult. Perhaps the answer lies in homogeneity. See Pirrong, supra, at 158. But the degree of homogeneity of financial interests that existed among merchants, which comprised a very broad status group, is unclear at best, and the size of the ex- change points toward heterogeneity. See Pirrong, supra, at 162 (noting that enforcement is lower when exchange membership is large). Perhaps the answer lies in the inability to cost- shift. Pirrong argues that consumers of exchange services may bear the bulk of costs of manipulation, not exchange members. See Pirrong. supra, at 164. But while Dojima may have had fewer external consumers than some modern markets, they did exist. See supra text accompanying note 75. Perhaps a better answer is that the firebox system was adopted simply to determine objectively a closing time, and its antimanipulation effects were an inadvertent bonus.
133. Craig Pirrong argues that control of manipulation by the state might be desirable in some circumstances. See Stephen Craig Pirrong, The Self-Regulation of Commodity Exchanges: The Case of Market Manipulation, 38 J.L. & ECON. 141 (1995). But see Frank H. Easterbrook, Monopoly, Manipulation, and the Regulation of Futures Markets, 59 J. BUS. S103 (1986); Daniel R. Fischel & David J. Ross, Should the Law Prohibit "Manipulation" in Financial Markets?, 105 HARV. L. REV. 503 (1991). Even if Pirrong is correct, Dojima differs from the markets that Pirrong examines. The Dojima rules discussed herein (but perhaps not the practice) appear to differ from those of the Chicago Board of Trade and other exchanges that Pirrong finds "took few, if any, actions to deter manipulation." Pirrong, supra, at 195. Pirrong also finds that effective self-regulation came about only after the advent of federal commodity laws. See Pirrong, supra, at 192-95. Dojima rules changed little after legal intervention. See infra text accompanying note 130. Determining why Dojima rules differ from other markets - why traders adopted the firebox system - is more difficult. Perhaps the answer lies in homogeneity. See Pirrong, supra, at 158. But the degree of homogeneity of financial interests that existed among merchants, which comprised a very broad status group, is unclear at best, and the size of the ex-change points toward heterogeneity. See Pirrong, supra, at 162 (noting that enforcement is lower when exchange membership is large). Perhaps the answer lies in the inability to cost-shift. Pirrong argues that consumers of exchange services may bear the bulk of costs of manipulation, not exchange members. See Pirrong. supra, at 164. But while Dojima may have had fewer external consumers than some modern markets, they did exist. See supra text accompanying note 75. Perhaps a better answer is that the firebox system was adopted simply to determine objectively a closing time, and its antimanipulation effects were an inadvertent bonus.
134. See S. CRAIG PIRRONG ET AL., GRAIN FUTURES CONTRACTS: AN ECONOMIC APPRAISAL 82-102 (1993).
135. See id. at 82.
136. The following description relies on SHIMAMOTO, supra note 6, at 45-46, 107; SUGIE, supra note 6, at 46; and SUZUKI, supra note 70, at 100-01.
137. See, e.g., FABOZZI ET AL., supra note 48, at 503.
138. See SHIMAMOTO, supra note 6, at 46.
139. See id. at 43.
140. Exchange directors were once forced to issue an order to control related violence. See BEISHŌ KYŪKI, supra note 41, at 307.
141. See supra text accompanying note 69.
142. See Avner Grief, Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition, 83 A.M. ECON. REV. 525 (1993); Paul R. Milgrom et al., The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs, 2 ECON. & POL. 1 (1990).
143. See Avner Grief, Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition, 83 A.M. ECON. REV. 525 (1993); Paul R. Milgrom et al., The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs, 2 ECON. & POL. 1 (1990).
144. See Lisa Bernstein, Private Commercial Law in the Cotton Industry: Value Creation Through Rules, Norms, and Institutions, 99 MICH. L. REV. (forthcoming June 2001).
145. See supra text accompanying note 46.
146. The force-out nature of the Exchange and the rules and organization that resulted may point to a difference among self-organized markets. Organizations that have the ability to rely on relational bonds among market participants as more precisely tailored substitutes for legal rules may be more likely than other organizations to opt out of the legal system. But in force-out cases, organizations might not opt out of the legal system because the binding propensity of relations is less significant. Relations might be less binding because the group is less homogenous, because costs are significant, or because the transactions involved are complex and rely more on an informed market than a relationally sound one. In these instances groups may be more likely to turn to rules, or organizational monitoring, to govern their affairs. The opt-out/force-out dichotomy may help explain why "it is primarily the fear of damage to reputation that maintains discipline in the diamond trade, not the bourse's board of arbitrators" that governs diamond traders who "opt out" of the legal system, Bernstein, supra note 1, at 152, just as close-knit groups like cattle ranchers and farmers in Shasta County animal trespass relv on social norms, see Ellickson, supra note 1, while early participants at the New York Stock Exchange relied on a "miniature legal system" that "filled the void created by the unenforceability of time bargains in New York courts," Banner supra note 1, at 132. Although Dojima traders were all members of the merchant status group, that designation alone may have been insufficient to establish the requisite bonds needed for inter-trader monitoring and a preemptive opt-out.
147. Mieko Tsuruoka, Otsu Kokurui Sonata Sōbahyō [Chart of Grain and Other Commodity Prices in Otsu], attached to Kinsei Beikoku torhiki Shijō toshite no Ōtsu [Otsu as a Tokugawa Rice Market], 5 SHIRYŌKAN KENKYŪ KIYŌ 19, 114-207 (1972). The Bulletin was at the time administered by the Ministry of Education but now by the National Institute of Japanese Literature.
148. See MIYAMOTO, supra note 6, at 365; Ito, supra note 6, at 343; Wakita, supra note 6, at 241. To my knowledge, these three works, all in Japanese, are the only formal economic analyses of Dojima that exist. Each uses the Tsuruoka dataset. Miyamoto uses the entire dataset, but his examination focuses on the Exchange's efficiency relative to each shogun's reign and to currency valuation, and does not acknowledge the bias presented by the closed-trimester system, providing results that Ito bluntly calls "meaningless." Ito, supra note 6, at 345. Ito uses Tsuruoka data, but only for the period from 1763 to 1780, and only to fill in gaps between closing dates. Wakita uses a fuller set, from 1760 to 1811, but his focus is seasonal variation.
149. Hachimoku is an early modern word for rice. See Kahei no Sanpomichi [Currency Walking Tour], INSTITUTE FOR MONETARY AND ECONOMIC STUDIES, BANK OF JAPAN, ch. 16, available at http://imes.boj.or.jp/cm/htmls/feature_16.htm. Some sources, both English and Japanese, occasionally mistransliterate the Japanese characters as "yagi," the surname that uses the same characters.
150. See generally Tsuruoka, supra note 95, at 113.
151. See Hachimoku Sōbachō Tsuikō [Rice Price Appendix]; TOKUICHI SHIMAMOTO, DŌJIMA KOME KAIJŌ BUNKENSHŪ [COLLECTED DOJIMA RICE EXCHANGE SOURCE MATERIALS] 1-37 (1970).
152. As noted infra notes 108 and 112, Japanese economists have attempted to address both questions, using smaller data sets and different tests, but obtaining similar results.
153. Master Kenikukan, Hachimoku Ryūnokan [Dragon Book of Rice] (1798), in TARŌ ADACHI, TOKUGAWA JIDAI KEIZAI HIROKU ZENSHĪ [COMPILATION OF SECRET ECONOMIC RECORDS OF THE TOKUGAWA ERA] 371, 385 (1941).
154. See. e.g., WALTER C. LABYS & C.W.J. GRANGER, SPECULATION, HEDGING AND COMMODITY PRICE FORECASTS 25-32 (1970); MIYAMOTO, supra note 6, at 365-85. The trimester trading system, see supra text accompanying note 47, makes detailed empirical comparisons of this measure with other futures markets difficult, if not impossible.
155. See Eugene F. Fama & Kenneth R. French, Business Cycles and the Behavior of Metals Prices, 53 J. FIN. 1075 (1988); Holbrook Working, Theory of the Inverse Carrying Charge in Futures Markets, 30 J. FUTURE ECON. 9 (1949). On the efficiency of Dojima as a hedge institution, see Matao Miyamoto, Edo Jidai no Kome Shijō: Sono Kōzō to Kinō [The Structure and Function of Tokugawa Era Rice Markets], GENDAI KEIZAI, 48, 56-62 (Spring 1982).
156. See Eugene F. Fama & Kenneth R. French, Business Cycles and the Behavior of Metals Prices, 53 J. FIN. 1075 (1988); Holbrook Working, Theory of the Inverse Carrying Charge in Futures Markets, 30 J. FUTURE ECON. 9 (1949). On the efficiency of Dojima as a hedge institution, see Matao Miyamoto, Edo Jidai no Kome Shijō: Sono Kōzō to Kinō [The Structure and Function of Tokugawa Era Rice Markets], GENDAI KEIZAI, 48, 56-62 (Spring 1982).
157. See Eugene F. Fama & Kenneth R. French, Business Cycles and the Behavior of Metals Prices, 53 J. FIN. 1075 (1988); Holbrook Working, Theory of the Inverse Carrying Charge in Futures Markets, 30 J. FUTURE ECON. 9 (1949). On the efficiency of Dojima as a hedge institution, see Matao Miyamoto, Edo Jidai no Kome Shijō: Sono Kōzō to Kinō [The Structure and Function of Tokugawa Era Rice Markets], GENDAI KEIZAI, 48, 56-62 (Spring 1982).
158. See MIYAMOTO, supra note 6, at 190-91.
159. That the famine occurred at all may indicate the limited reach of the shogunate government. See AMARTYA SEN, DEVELOPMENT AS FREEDOM (1999).
160. Other large movements are more difficult to explain. The early 1762 contango occurred at about the same time that the shogunate offered financial assistance to at least one rice brokerage suffering from low physical rice prices, perhaps due to excess supply. See DOHI, supra note 6, at 206. Spot prices rose in mid-1762 due to the Kyushu drought. See supra text accompanying note 87.
161. See supra text accompanying note 47.
162. See Wakita, supra note 6, at 243 (showing seasonal efficiency with a smaller dataset by regressing the log of the spread against a seasonal dummy).
163. See PIRRONG ET AL., supra note 83, at 15-16.
164. The data in Section III.A are biased toward higher correlation because of this phenomenon, but the monthly correlations show the same general trend even in the absence of term-ending months.
165. Banto Yamagata, Yume no Shiro [The Stuff of Dreams] (1802), in TOMINAGA NAKAMOTO, YAMAGATA BANTO 141, 398 (Norihisa Mizuta et al. eds., 1973).
166. Ito conducts a similar test for different periods using a smaller dataset. See Ito, supra note 6, at 343.
167. See supra text accompanying note 41.
168. See RYŌSUKE ISHII, NIHON HŌSEISHI GAISETSU, supra note 58, at 471.
169. Henderson, supra note 23, at 108.
170. See RYŌSUKE ISHII, KINSEI TORIHIKIHŌSHI [HISTORY OF EARLY MODERN COMMERCIAL LAW] 52-58 (1982). On ten occasions in the Tokugawa period (about every twenty years, and four times after the Exchange's founding, in 1746, 1789, 1797, and 1843), the shogunate issued orders (aitaisumashirei) refusing to hear all credit-related suits. See id. at 15-49.
171. See RYŌSUKE ISHII, NIKON HŌSEISHI GAISETSU, supra note 58, at 527, 529-30.
172. See TETSUJI OKAZAKI, EDO NO SHIJŌ KEIZAI: REKISHI SEIDO BUNSEKI KARA MITA KABUNAKAMA [MARKET ECONOMICS OF EDO: COALITIONS THROUGH THE LENS OF HISTORICAL SYSTEM ANALYSIS] 76 (1999); see also MATAJI MIYAMOTO, KABUNAKAMA NO KENKYŪ [STUDY OF COMPANION SHARES] 21-33 (1938); ŌISHI, supra note 71.
173. See TETSUJI OKAZAKI, EDO NO SHIJŌ KEIZAI: REKISHI SEIDO BUNSEKI KARA MITA KABUNAKAMA [MARKET ECONOMICS OF EDO: COALITIONS THROUGH THE LENS OF HISTORICAL SYSTEM ANALYSIS] 76 (1999); see also MATAJI MIYAMOTO, KABUNAKAMA NO KENKYŪ [STUDY OF COMPANION SHARES] 21-33 (1938); ŌISHI, supra note 71.
174. See ISHII, supra note 116, at 52-58; OKAZAKI, supra note 118, at 76.
175. See BEISHŌ KYŪKI, supra note 41, at 105 (discussing provisions for dealing with rule violators); ISHII, supra note 116, at 52-58; OKAZAKI, supra note 118, at 76; see also DIAMOND & KOLLAR, supra note 8, at 7-8.
176. Unlike the Edo commissioner, which apparently was largely a civil administration organ, the Osaka commissioner was charged with the administration of justice, including the powers to legislate and hear suits. See GENTARŌ HARUHARA, ŌSAKA NO MACHIBUGYŌSHO TO SAIBAN [LAWSUITS AND THE OSAKA TOWN COMMISSION] 11 (1962). The Osaka commissioner had criminal investigative powers as well, but often relied on private enforcement. See YOSHII FUJII, ŌSAKA MACHIBUGYŌ TO KEIBATSU [CRIMINAL PUNISHMENT AND THE OSAKA TOWN COMMISSIONER] 73, 83 (1990).
177. Unlike the Edo commissioner, which apparently was largely a civil administration organ, the Osaka commissioner was charged with the administration of justice, including the powers to legislate and hear suits. See GENTARŌ HARUHARA, ŌSAKA NO MACHIBUGYŌSHO TO SAIBAN [LAWSUITS AND THE OSAKA TOWN COMMISSION] 11 (1962). The Osaka commissioner had criminal investigative powers as well, but often relied on private enforcement. See YOSHII FUJII, ŌSAKA MACHIBUGYŌ TO KEIBATSU [CRIMINAL PUNISHMENT AND THE OSAKA TOWN COMMISSIONER] 73, 83 (1990).
178. See supra text accompanying note 41.
179. See BEISHŌ KYŪKI, supra note 41, at 177 (1971); OFUREGAKI TENMEI SHŪSEI [COMPILATION OF TENMEI PERIOD ORDINANCES (1781-1789)] 835 (Shinzō Takayanagi & Ryōsuke Ishii eds., 1936);
180. See BEISHŌ KYŪKI, supra note 41, at 177 (1971); OFUREGAKI TENMEI SHŪSEI [COMPILATION OF TENMEI PERIOD ORDINANCES (1781-1789)] 835 (Shinzō Takayanagi & Ryōsuke Ishii eds., 1936);
181. SAKUDŌ, supra note 12, at 370.
182. See SHIMAMOTO, supra note 6, at 19 . If a plaintiff had been forced to enforce the judgment against the defendant, the best way to enforce a debt claim was said to be the hiring of "[g]angs of ruffians to beat up non-paying debtors." STEENSTRUP, supra note 20, at 146; see also Curtis J. Milhaupt & Mark D. West, The Dark Side of Private Ordering: An Institutional and Empirical Analysis of Organized Crime, 67 U. CHI. L. REV. 41 (2000).
183. See SHIMAMOTO, supra note 6, at 19 . If a plaintiff had been forced to enforce the judgment against the defendant, the best way to enforce a debt claim was said to be the hiring of "[g]angs of ruffians to beat up non-paying debtors." STEENSTRUP, supra note 20, at 146; see also Curtis J. Milhaupt & Mark D. West, The Dark Side of Private Ordering: An Institutional and Empirical Analysis of Organized Crime, 67 U. CHI. L. REV. 41 (2000).
184. See SHIMAMOTO, supra note 6, at 19 . If a plaintiff had been forced to enforce the judgment against the defendant, the best way to enforce a debt claim was said to be the hiring of "[g]angs of ruffians to beat up non-paying debtors." STEENSTRUP, supra note 20, at 146; see also Curtis J. Milhaupt & Mark D. West, The Dark Side of Private Ordering: An Institutional and Empirical Analysis of Organized Crime, 67 U. CHI. L. REV. 41 (2000).
185. See SAKUDŌ, supra note 12, at 370.
186. See generally CHARLES DAVID SHELDON, THE RISE OF THE MERCHANT CLASS IN TOKUGAWA JAPAN 1600-1868, at 114-21 (1958).
187. See NAOTARŌ SEKIYAMA, NIHON KAHEI KIN'YŪSHI KENKYŪ [A STUDY OF JAPANESE CURRENCY FINANCIAL HISTORY] (1943).
188. See OFUREGAKI TENMEI SHŪSEI [COMPILATION OF TENMEI PERIOD ORDINANCES (1781-1789)]. supra note 123, at 837-38. After September 1782, rice bills were required to carry the seal of the commissioner's designated rice inspector, who settled disputes. See id.; see also SAKUDŌ, supra note 12, at 370; SHIMAMOTO, supra note 6, at 20.
189. The impact of population on litigation rates in this case is ambiguous at best. The most precise estimates measure the population of Osaka at 268,760 in 1635, 389,866 in 1736, peaking at 419,863 in 1765, and gradually declining to 380,416 in 1785. See Osamu Wakita, Kinsei Ōsaka Chiiki no Toshi to Nōson [Farm Villages and Cities of the Early Modern Osaka Region], in KINSEI OSAKA CHIIKI NO SHITEKI BUNSEKI [HISTORICAL ANALYSIS OF THE EARLY MODERN OSAKA REGION] 295, 304 (Osamu Wakita ed., 1980). Other sources place the peak in the 1750s and at about 400,000. See. e.g., DOHI, supra note 6, at 18. If Wakita's figures are accurate, litigation rates in 18th-century Osaka (in 1785, about 43 suits per 1,000 population) were far higher than those in most contemporary United States jurisdictions. See Marc Galanter, Reading the Landscape of Disputes: What We Know and Don't Know (and Think We Know) About Our Allegedly Contentious and Litigious Society, 31 UCLA L. REV. 4 (1983).
190. The impact of population on litigation rates in this case is ambiguous at best. The most precise estimates measure the population of Osaka at 268,760 in 1635, 389,866 in 1736, peaking at 419,863 in 1765, and gradually declining to 380,416 in 1785. See Osamu Wakita, Kinsei Ōsaka Chiiki no Toshi to Nōson [Farm Villages and Cities of the Early Modern Osaka Region], in KINSEI OSAKA CHIIKI NO SHITEKI BUNSEKI [HISTORICAL ANALYSIS OF THE EARLY MODERN OSAKA REGION] 295, 304 (Osamu Wakita ed., 1980). Other sources place the peak in the 1750s and at about 400,000. See. e.g., DOHI, supra note 6, at 18. If Wakita's figures are accurate, litigation rates in 18th-century Osaka (in 1785, about 43 suits per 1,000 population) were far higher than those in most contemporary United States jurisdictions. See Marc Galanter, Reading the Landscape of Disputes: What We Know and Don't Know (and Think We Know) About Our Allegedly Contentious and Litigious Society, 31 UCLA L. REV. 4 (1983).
191. See OFUREGAKI TENMEI SHŪSEI [COMPILATION OF TENMEI PERIOD ORDINANCES (1781-1789)], supra note 123, at 837-38; see also SAKUDŌ, supra note 12, at 370.
192. Matao Miyamoto, The Development of Business Associations in Prewar Japan, in TRADE ASSOCIATIONS IN BUSINESS HISTORY 7 (Hiroaki Yamazaki & Matao Miyamoto eds., 1988); see also OKAZAKI, supra note 118.
193. Dan Henderson finds that the general philosophy of Tokugawa courts was that "[r]eason is significantly superior to customary law." HENDERSON, supra note 23, at 58-59.
194. See George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). In the Japanese context, see J. MARK RAMSEYER & MINORU NAKAZATO, JAPANESE LAW: AN ECONOMIC APPROACH 92-95 (1999).
195. See George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984). In the Japanese context, see J. MARK RAMSEYER & MINORU NAKAZATO, JAPANESE LAW: AN ECONOMIC APPROACH 92-95 (1999).
196. See. e.g., OKAZAKI, supra note 118, at 71.
197. See Avery Katz, Taking Private Ordering Seriously, 144 U. PA. L. REV 1745, 1752 (1996).
198. The latter two variables I examine at the suggestion of Omri Yadlin. An event study to calculate abnormal returns based on the 1773 edict would be probative, but the data are too scarce for such a study.
199. Of course, because of Dojima's futures trading monopoly, the only legal alternative to futures trading at Dojima is not trading futures.
200. Average = 3,797,840; standard deviation = 293,081.2.
201. Standard deviation = 305,362.1.
202. Standard deviation = 254,788.7.
203. For volume, the periods are pre-edict 1763-1772 and edict 1773-1780, as limited by the available data. For correlation, volatility, and price, I used equal eleven-year periods: pre-edict 1761-1772, edict 1773-1784, and post-edict 1785-1796. Using the full dataset for these periods results in pre-edict (1755-1772) correlation of .924 and post-edict (1785-1827) correlation of .807. Removing the Great Tenmei Famine period raises the edict period correlation to .898 and the post-edict correlation to .817. Using the full dataset for volatility results in pre-edict (1755-1772) log-volatility of spots .06286 and futures .06061. and post-edict log-volatility of spots .08404 and futures .07954. Using the full dataset for price results in a pre-edict (1755-1772) average spot price of 60.911 and average futures price of 61.367. and a post-edict (1785-1827) spot price of 61.364 and futures price of 61.034.
204. Standard deviation, which I mistakenly reported in an early draft of this Article, is an inappropriate and inaccurate measure of volatility because, among other things, it assumes a normal price distribution in which negative prices could exist. See Glyn A. Holton, Time: The Second Dimension of Risk, FIN. ANALYSTS J., Nov./Dec. 1992, at 38.
205. Because these figures may be affected by the Great Tenmei Famine (1783-1787), I also calculated log-volatilities designating the edict period as ending in 1782, and designating the post-edict period as beginning in 1788. The figures for the 1773-1782 period are spots, .06705: futures, .06178. The figures for the 1788-1827 period are spots, .07977; futures, .07484. I also calculated volatility at five-year intervals, with the following results: 1768-1772, spots, .06456: futures, .05903: 1773-1777, spots, .07015; futures, .06604-1778-1782, spots, .07377; futures, .07167.
206. See generally Robert J. Shiller, The Use of Volatility Measures in Assessing Market Efficiency, 36 J. FIN. 291 (1981).
207. See supra text accompanying notes 38-42.
208. See KINSEI KŌKI NI OKERU SHUYŌ BUKKA NO DŌTAI [MOVEMENTS OF MAJOR COMMODITY PRICES DURING THE LATE TOKUGAWA PERIOD] 68-72 (Nobuhiko Nakai ed., 1952).
209. See Crawcour & Yamamura, supra note 60, at 27-28.
210. See Charny, supra note 5, at 433-35; see also Ayres & Gertner, supra note 5; Richard A. Posner & Eric B. Rasmusen, Creating and Enforcing Norms, with Special Reference to Sanctions, 19 INT'L REV. L. & ECON. 369, 381 (1999).
211. Perhaps state laws to address issues not addressed well by traders, such as nationwide trading or long-term contracting, might have been more successful.
212. See, e.g., SHIMAMOTO, supra note 6, at 1.
213. See MASAYUKI TSUGAWA, ŌSAKA DŌJIMA KOME SHŌKAIJO NO KENKYŪ [A STUDY OF THE DOJIMA RICE MARKET] 6-26 (1990).
214. Zensaku Sano & Sentaro Iura, Commodity Exchanges in Japan, 155 ANNALS AM. ACAD. POL. & SOC. SCI. 223, 228 (1931).
215. See, e.g., YAMATANE GROUP KINEN SHUPPANKAI, supra note 31, at 130-31.
216. See ŌSAKA DŌJIMA SHŌKAIJO KISOKU [OSAKA DOJIMA RICE MARKET RULES] 2 (Kunimatsu Miyamoto ed., 1880), microformed on 4DM48902 (capitalized at 75,000 yen with 750 shares and formally established officers); Sano & Iura, supra note 152, at 225, 230.