Because Japan was overwhelmingly rural with few consumers, commerce did not play a significant role in the economy or most people’s lives during the six centuries from 600 to 1200. This period may be divided into three phases based upon the nature of commercial relations. The 8th century witnessed a construction boom led by a relatively centralized state. Besides building five capital cities and numerous other governmental and religious structures, the state minted copper cash. Low-ranking bureaucrats traded in lumber, cloth, and other commodities, often for profit. The commercially most advanced region in Japan was in and around the numerous capitals located in the Kinai (Kyoto-Osaka-Nara) region. Interregional trade bound local regions together and was a source of illegal profiteering for officials. Gift-giving and barter dominated the less developed provinces, mostly in eastern Japan. Across the ocean, Japan participated in exchange with China and Korea on a limited basis to 800.
Beginning as early as 735, epidemics and famines decimated Japan’s population. The value of copper cash declined, as inflation commenced. Government revenues also dropped. Government-appointed tax farmers garnered tax items for the tiny elite at court, enriching themselves in the process. The Song Dynasty (960–1279) arose in China and began trading with the Japanese elite, providing a spur to Japan’s commercial development for the rest of period. Overseas merchants were forced by Japan’s ruling elite to stop at Dazaifu in northern Kyushu, where Chinese goods could be obtained for Japanese gold.
Japan’s depopulation continued unabated, subject to particularly harsh epidemics between 990 and 1050. To reverse flight from the land, the court initiated a two-pronged land system consisting of tax-farmed provincial areas and estates cultivated by sharecroppers and paying rents to capital and local elites. The rents were paid in-kind, and to secure the value of goods such as rice, salt, lacquer, iron, tea, and many other products, values were pegged to a gold standard. Song merchants also received gold for their wares. To buy Japanese raw materials, the Chinese paid with their own copper cash, helping to remonetize the archipelago. By the 1170s, inflation took off in Japan. A Ningbo–Hakata trade route became established for Song merchants, with bulk items such as sulfur, lumber, and mercury traded from Japan to China. By the late 1100s, the warrior family known as the Ise Taira took control of overseas trade with China, bolstering the family’s power at the Kyoto court.
