base of the economy. About 80% of the people were rice farmers.

[22] Rice production increased

steadily, but population remained stable, so prosperity increased. Rice paddies grew from 1.6
million chō in 1600 to 3 million by 1720.[16] Improved technology helped farmers control the all-
important flow of irrigation to their paddies. The daimyō operated several hundred castle towns,
which became loci of domestic trade.

Large-scale rice markets developed, centered on Edo and Ōsaka.[19] In the cities and towns,
guilds of merchants and artisans met the growing demand for goods and services. The merchants,
while low in status, prospered, especially those with official patronage.[18] Merchants invented
credit instruments to transfer money, currency came into common use, and the strengthening
credit market encouraged entrepreneurship.[23] The daimyō collected the taxes from the peasants
in the form of rice. Taxes were high, often at around 40%-50% of the harvest.[18] The rice was
sold at the fudasashi market in Edo. To raise money, the daimyō used forward contracts to sell
rice that was not even harvested yet. These contracts were similar to modern futures trading.

It was during the Edo period that Japan developed an advanced forest management policy.
Increased demand for timber resources for construction, shipbuilding and fuel had led to
widespread deforestation, which resulted in forest fires, floods and soil erosion. In response the
shōgun, beginning around 1666, instituted a policy to reduce logging and increase the planting of
trees. The policy mandated that only the shōgun and daimyō could authorize the use of wood. By
the 18th century, Japan had developed detailed scientific knowledge about silviculture and
plantation forestry.[24]

Artistic and intellectual development

Education

Terakoya, private educational school

The first shogun Ieyasu set up Confucian academies in his shinpan domains and other daimyos
followed suit in their own domains, establishing what's known as han schools (藩校, hankō).[12]
[18]
Within a generation, almost all samurai were literate, as their careers often required
knowledge of literary arts.[12] These academies were staffed mostly with other samurais, along
with some buddhist and shinto clergymen who were also learned in Neo-Confucianism and the
works of Zhu Xi.[12] Beyond kanji (Chinese characters), the Confucian classics, calligraphy, basic
arithmetics, and etiquette,[18] the samurai also learned various martial arts and military skills in
schools.[12]

The chōnin (urban merchants and artisans) patronized neighborhood schools called terakoya (寺
子屋, "temple schools").[12] Despite being located in temples, the terakoya curriculum consisted
of basic literacy and arithmetic, instead of literary arts or philosophy.[12] High rates of urban
literacy in Edo Japan contributed to the prevalence of novels and other literary forms.[18] In urban
areas, children are often taught by masterless samurai, while in rural areas priests from Buddhist
temples or Shinto shrines often did the teaching.[18] Unlike in the cities, in rural Japan, only
children of prominent farmers would receive education.[18]

In Edo, the shogunate set up several schools under its direct patronage, the most important being
the neo-Confucian Shōheikō (昌平黌) acting as a de facto elite school for its bureaucracy but
also creating a network of alumni from the whole country. Besides Shoheikō, other important
directly-run schools at the end of the shogunate included the Wagakukōdansho (和学講談所,
"Institute of Lectures of Japanese classics"), specialized in Japanese domestic history and
literature, influencing the rise of kokugaku, and the Igakukan (医学間, "Institute of medecine"),
focusing on Chinese medicine.[25]

One estimate of literacy in Edo Japan suggest that up to a third of males could read, along with a
sixth of women.[12] Another estimate states that 40% of men and 10% of women by the end of the
Edo period were literate.[26] Some historians partially credited Japan's high literacy rates for its
fast development after the Meiji Restoration.[18]

Philosophy and religion