In Japan in the 19th century, there was an excellent opportunity for gold trading.
In the 1950s, in order to trade with Japan, the United States needed to identify a new payment system. Prior to that, payments between international trades were usually based on the Spanish silver dollar.
The Spanish silver dollar is also known as the Mexican dollar, namely the pillar.
But in Japan at the time, there was a lack of Spanish silver dollars, and it used a golden currency system. Therefore, determining the exchange rate between the two becomes an important part of its trade.
The US Navy Brigadier General Matthew C Perry, who traded with Japan at that time, accepted the exchange rate of gold coins and Spanish silver dollars provided by Japan, that is, 1 Mexican dollar against 1 Japanese silver coin (ichibu), while 4 Japanese silver coins were equivalent to 1 gold coin. This means that 4 Mexican dollars is equivalent to 1 Japanese gold coin (koban).
However, it should be noted that the weight of 1 Mexican dollar at that time was almost three times that of a Japanese silver coin, with almost 25 grams of silver, while the latter was only 8.5 grams of silver. Such exchange rates mean a large amount of revenue for the United States in trade.
Therefore, after the re-election of the first US consul, Townsend Harris, it was considered that the exchange rate should be equal to the currency exchange rate, which means that 1 Mexican dollar against 3 Japanese silver coins.
Of course, this was opposed by the Japanese side. They pointed out that the value of Japanese silver coins is not based on the silver that makes its weight, but the value behind it.
This is basically close to the meaning of modern currency, such as a 1 euro coin, weighing 7.5 grams, including 75% copper, 15% nickel and 10% zinc. The total value of the material is 0.05 Euro, but its value is 1 Euro. It is recognized by everyone.
Under the insistence of the US, in 1858, in the trade between the United States and Japan, the currency began to be calculated by weight, and three Japanese silver coins were exchanged for one Mexican dollar.
This means that the value of Japanese silver coins has been disintegrated, but at the same time, it has brought the best gold trading opportunity in history.
In the previous exchange rate of 1 Mexican dollar against 1 Japanese silver coin, 4 Mexican dollars can be exchanged for a Japanese gold coin, but according to the latest exchange rate, a little more Mexican dollars can be exchanged for a Japanese gold coin, while Japanese gold coins contain 6.3 grams of gold.
You know, the ratio of global gold and silver is 1 to 15.5. That is to say, if one Japanese gold coin is melted, it can be exchanged for almost 98 grams of silver. Under the new exchange rate, one more Mexican dollar is included. The silver is far below this level, which creates a huge arbitrage opportunity.
Basically, American traders get 12 Japanese silver coins after trading in Japan with 4 Mexican dollars, and these 12 Japanese silver coins can be exchanged for 3 Japanese gold coins, and 3 Japanese gold coins can be exchanged for 12 Mexican coins. Dollar.
In general, arbitrageurs can exchange 12 Mexican dollars for 12 Mexican dollars under constant exchange.
However, the Japanese side has long realized the above risks, so it introduced a new currency, nishu, which has a silver content of half a Mexican dollar, that is, two nishu can be exchanged for one Mexican dollar. In the Japanese currency system, 8 nishu can be exchanged for 1 Japanese gold coin. Passing this currency means that four Mexican dollars can be exchanged for one Japanese gold coin, which is unprofitable.
However, this currency has been strongly opposed by the US, and Japan has to abolish nishu in a few weeks.
After that, despite the Japanese government's series of preventive measures, such as not allowing gold coins to be sold to foreigners, and reducing the circulation of Japanese silver coins, it did not prevent the biggest gold arbitrage trade in history from happening wildly.
By the fall of 1859, the deal reached its peak, and a large number of merchant ships sailed to Japan with Mexican dollars and left with Japanese gold coins.
Due to the large number, it is difficult to accurately count how many Japanese gold coins have been taken away. Japanese scholars have given a range between 100,000 and 20 million, which is between 0.63 tons of gold and 126 tons of gold. Even taking an intermediate value of 25 tons means a lot of wealth.
By the 1860s, the total amount of gold mined in the world was around 7,000 tons, and the annual output was only about 190 tons per year. Therefore, the value behind the gold that was taken away from Japan at that time was very large.
A few months later, Japan initiated measures to end the trade. Although the exchange rate between the Mexican dollar and the Japanese silver coin was unchanged at the time, and four Japanese silver coins could still be exchanged for one gold coin, the weight of the gold coin was adjusted to be one-third of the previous gold content. The gains from the above arbitrage trading have been greatly reduced, and the meaning has been lost.
For Japan, the best gold deal in history has had serious consequences, almost all of its years of overseas trade income. After that, the Japanese currency system carried out a great reconstruction, and many people who held large amounts of money savings suffered a lot.
(Article source: Gold headline)