He was born into a low-ranking samurai family in Kagoshima, Satsuma. The family was not well off, and as a boy he lost both parents in quick succession. Amid hardship he studied hard and chose to make his way as a domain official.
Around this time he entered a Satsuma office handling money and goods. He is said to have later been noticed by the lord Shimazu Nariakira, and he encountered Nariakira's ideas for promoting industry. It was his starting point as a finance expert.
After Nariakira's death he served as an aide to Shimazu Hisamitsu, who held real power. That year he accompanied Hisamitsu's journey to Kyoto and Edo, and the Namamugi Incident occurred on the way back. Close to the center of domain politics, he watched the turbulent times.
Under the new Meiji government he became governor of Hita Prefecture in Kyushu. Governing locally, he cracked down on counterfeit money and restored finances. His work won the notice of Okubo Toshimichi and others, and he was called to Tokyo to handle the new government's finances.
At the Finance Ministry he was central to the land tax reform. It ended rice-paid annual dues and made people pay tax in money according to land value. State revenue became stable, and the financial base of the modern state was laid.
He went to Europe for the Paris World's Fair and learned about finance and central banking from French finance minister Leon Say and others. Seeing how European nations protected the value of money, he came to believe Japan needed a central bank too.
When Okuma Shigenobu was ousted in the Political Crisis of 1881, he became finance minister. War spending on the Satsuma Rebellion had flooded the country with paper money, and prices had risen. Matsukata began a strict policy of reducing paper money and cutting spending.
He founded the Bank of Japan as a central bank to unify the issue of money. Cutting paper money lowered prices, but rice and silk prices fell too, and many farmers suffered and lost their land. This slump is called the Matsukata deflation.
The Bank of Japan began issuing notes convertible to silver, stabilizing the value of money. When the cabinet system was created that year, he became the first minister of finance in Ito Hirobumi's cabinet. Stable currency became the base supporting later industrial growth.
He became prime minister, but just after forming his cabinet came the Otsu Incident, in which a policeman slashed the visiting Russian crown prince. Struggling also with the Diet, the cabinet lasted about a year and a half. Dealing with parties was a major challenge.
In his second cabinet, using the indemnity from the Sino-Japanese War, he introduced the gold standard backing money with gold. Matching the system of most Western nations made foreign trade and borrowing easier.
As a genro he recommended prime ministers to the emperor, and that year he became Lord Keeper of the Privy Seal, assisting the emperor closely. Known for his many children, his sons included the businessman Matsukata Kojiro.
He died in Tokyo. Starting as the son of a low-ranking samurai, he contributed greatly to building Japan's modern monetary system through the land tax reform, founding the Bank of Japan and adopting the gold standard. With his death, Saionji Kinmochi became the only genro left.
Shimazu NariakiraShimazu HisamitsuŌkubo ToshimichiŌkuma ShigenobuItō HirobumiSaionji KinmochiSoejima TaneomiGoto Shojiro
Etō ShinpeiFukuzawa YukichiIwasaki YatarōMaejima HisokaEnomoto TakeakiGodai TomoatsuInoue KaoruItagaki Taisuke
People of the Meiji period ・ People by period
Based on facts found in textbooks and biographies. Uncertain points are marked as such.