Merchants in Osaka and Edo thus began to organize storehouses where they would store a daimyō's rice in exchange for a fee, trading it for either coin or a form of receipt; essentially a precursor to paper money.
As the Edo period wore on, daimyōs grew poorer and began taking out more loans, increasing the social position of the rice brokers.
The merchants continued to abuse their power, encouraged by the ease of doing so and the rampant corruption which spread as high up as the wife of Shōgun Ashikaga Yoshimasa.
The various shops and warehouses that made up the central rice market were quickly sold for very low prices, and the city saw terrible violence and destruction in the ensuing years.
Thus, a number of towns served as waystations where merchants would act as middlemen, storing farmers’ goods and transporting them to major trade centers such as Osaka, for a price.
Thus, paying for hotels, inns, and food were complicated and difficult affairs for daimyōs traveling to or from Edo as mandated by the shogunate's sankin kōtai (alternate attendance) system.
This was probably the first paper money in Japan, but the concept was picked up quickly, and the credit of the brokers was good enough to warrant the kind of trust that such a system relies upon.
For a time, this worked quite well for both samurai and brokers, whose system developed into something much more akin to a modern bank; transactions began to be done entirely in paper, with the rice only nominally serving as reserve backing.
This, however, quickly led to the problem of samurai living beyond their means, spending more in order to maintain the kind of lifestyle expected of their status than they could hope to repay.
However, as the peace and stability caused the feudal system to break down, daimyōs became less and less able to pay back the loans, and an incredible volume of debts were simply rolled over or ignored.
The money supply the banks had created also grew out of control, becoming an essential aspect of the nation’s economy, causing serious economic consequences whenever it was altered.
At the beginning of the 19th century, in response to growing inflation, and to the power of the rice brokers, and the merchant class in general, the shogunate once again imposed a series of heavy regulations and restrictions.
The rice brokers, like other elements of the chōnin (townspeople) society in Edo, were frequent patrons of the kabuki theatre, Yoshiwara pleasure district, and other aspects of the urban culture of the time.