Interest on Tokyo promissory notes rose by 20% in the autumn of 1919—exchange rates in Paris moved in the same month. Is the cause the same?
1. The Mystery
When you hear in today’s news that “both interest rates and exchange rates have moved,” don’t you think of one major event?
In the autumn of 1919 (Taisho 8), over 100 years ago, four sets of figures were moving in the same month.
The first is the interest on loans using Tokyo promissory notes (paper promising payment later). Interest is written in “hibu” (daily rate). It is a way of counting how many sen you pay for borrowing 100 yen for one day.
Converting the 2.53 sen in December to an annual rate, 2.53 × 365 ÷ 100 = approximately 9.2% per year (author’s calculation).
In the same three months, the interest on nationwide promissory note discounting (converting notes into cash before the due date) and the exchange rate figures for Paris and London also rose.
Is the fact that four things moved at the same time due to a single cause?
The clues to the answer were in the Bank of Japan’s chronology and the “direction” of the numbers in the table.
2. Clues
All four sets of figures are in the table in “Meiji Taisho Kokusei Soran” (1927) by Toyo Keizai Inc. When arranged by month, they look like this.
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Tokyo: Interest on promissory note loans (p.111): September 2.08 → December 2.53 sen
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Nationwide: Interest on promissory note discounting (p.127): September 2.27 → December 2.61 sen
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Exchange rate to Paris (p.166): September 3.65 → December 4.73 (how many francs per 1 yen)
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Exchange rate to London (p.162): September 27.4 → November 28.9 (how many pence per 1 yen)
The top two are “interest,” and the bottom two are “exchange rates.” Even though they both “rose,” the contents are different types of figures.
So, what was the Bank of Japan doing around that time?
3. Pitfalls
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Even if several numbers move in the same month, it does not necessarily mean one is the cause of the other. If you read them as ’cause’ just like that, you will be mistaken.
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If you search the table of contents of the Official Gazette, you will find a law from April 1918 titled ‘Regarding the Disposal of Old Korean Currency.’ However, this is a year and a half before the numbers moved. If you treat a rule that does not match the date and month as a ’cause,’ you will be mistaken.
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Also, pay attention to the direction of the exchange rate figures. The exchange rate to Paris moving from 3.65 to 4.73 means that ‘the number of francs that can be bought with 1 yen has increased.’ If you read it as ‘the number went up, so the yen went down,’ you will mistake the direction.
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There was also a pitfall in reading the chronology. The machine reading identified the official discount rate hike on October 6 as ‘1920.’ Looking at the original page, it is 1919. If the year is off by one, it looks like an event that happened ‘after’ the numbers moved.
4. The Truth (Answer and Verification Method)
Answer: The two interest rate figures and the two exchange rate figures moved at the same time for different reasons.
The two interest rate figures coincide with the months of the Bank of Japan’s interest rate hikes. The chronology in the ‘Materials’ volume of the ‘Centennial History of the Bank of Japan’ lists the following events in 1919.
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October 6: Official discount rate hike (commercial bill discount rate raised by 2 rin to 2 sen)
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November 19: Official discount rate hike (raised by 2 rin to 2 sen 2 rin)
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December 30: Tokyo call rate (short-term lending between banks) for overnight loans was 3 sen 3 rin 5 mo
It can be interpreted that in the months when the Bank of Japan raised its lending interest rates, the lending interest rates of commercial banks also rose in unison.
The two exchange rate figures are a different movement from the Bank of Japan’s interest rates. The increase in the number of francs and pence that could be bought with 1 yen is considered to be because European currencies were weakening after the war.
Verification Method:
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Used only the figures from the original text that were verified through machine reading consistency, cross-checking, and visual inspection (Verification mark: table for sale)
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The chronology had a line that read ‘1920’ due to machine reading. By visually checking the original pages (pp. 51–52), I confirmed it was an event from 1919.
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Judgment: The two interest rate figures showed a larger increase starting from the months of the official discount rate hikes (October/November). The two exchange rate figures had already started rising before September (July 3.28 → September 3.65).
5. How to Distinguish Now (To Avoid Being Deceived)
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If several numbers move in the same month, separate what each number represents one by one, and arrange the months they started moving to verify them yourself.
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To verify the story that ‘this event caused everything to move,’ we compare the date of the event with the month when each set of figures began to move.
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For exchange rate figures, the meaning of ‘up’ or ‘down’ reverses depending on which currency is set as the base of 1.
The explanation that ‘interest rates and exchange rates all moved for this reason’ often appears in get-rich-quick schemes today. If you line up the months one by one, you should be able to gauge whether there is only one reason.
Next time, we will look at the mystery of what happened to the interest rates that rose that autumn over the following six years.
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Source: National Diet Library Digital Collections, ‘Meiji Taisho Kokusei Soran’ (Toyo Keizai Inc., 1927, copyright expired), p. 111 ‘Tokyo Monthly Interest Rate Table’, p. 127 ‘National Monthly Interest Rate Table’, p. 162 ‘London Sight Exchange Rate Monthly Table’, p. 166 ‘Paris Sight Exchange Rate Monthly Table’
https://dl.ndl.go.jp/pid/1269537/1/96
Bank of Japan, ‘One Hundred Year History of the Bank of Japan’, Materials Section, Chronology, pp. 51–52
https://www.boj.or.jp/about/outline/history/hyakunen/hyakus.htm
Please read this next (previous free installment):
Short-term lending interest rates in Tokyo increased 2.53 times in August 1916—what happened?
https://note.com/investad/n/nce3ad0145f13
※ This article is an introduction to history and the figures of that time. It does not recommend current interest rates or the buying and selling of specific financial products.
© 2026 Invest@D Konjiki Yasha. Unauthorized reproduction of the text, diagrams, and tables is prohibited (citations are welcome if the source and URL are provided). The figures themselves are from publicly available materials from the National Diet Library (copyright expired) and can be used by anyone.