The Samurai or Bushi class, in ruling the country, during a period of peace certainly lost some of their martial skills as there were no wars in which to hone their skills. More pointedly, the Tokugawa Bakufu wanted to de-fang the military class to ensure the ongoing suzerainty of their ruling elite.
Schools of swordsmanship were encouraged to teach philosophical and Confucian concepts as well as waza (techniques) to practitioners. As rulers however, other skills were very important. The growing national bureaucracy needed administrators. Many warriors had little or no martial training and were “warriors” only by virtue of inheritance. One such historical record paints an interesting glimpse into this time in Japanese history:
This is the story of Kwaji Toshiakira whom was born into a very low level samurai family. Good at math and a whiz with the soroban (abacus) Kwaji was quickly recognized for his talents and work ethic and rose through the ranks to become the Minister in charge of the Treasury. His success story is all the more poignant when viewed against his lowly birth. We appreciate Kwaji for another reason as well. Kwaji kept a personal diary that survived unadulterated to the present.
He recounts a story upon learning of his promotion that he could now afford to joyfully pursue a desire to train in martial arts and become a decent warrior. He wanted to go to a dojo and study yari (spear) and kenjutsu (sword fighting) so as to be truly worthy of his new position. A colleague however advised strongly against going to the dojo (training hall) warning that any damage to Kwaji’s fingers or hands will limit his usefulness with the soroban. The environment in which he existed did not require warrior skills. It was his skills as an administrator that was rewarded. This was the prevailing culture for over 270 years and martial traditions, try as they might the Bushi class could not truly maintain a combative edge in the absence of war.
The Tokugawa Bakufu (Tokugawa military government) was actually too successful at controlling the military class and keeping the country closed to the outside world. This would lead to their eventual downfall.
When the “Kurofune” (Commodore Perry’s Black Ships) arrived at Japan’s door a call to arms was not very practical. Antiquated weapons technology and tactics aside, most warriors had sold off their weapons and armor in the face of mounting poverty. Nor were they trained to respond to trained troops.
The Shinsengumi would emerge, not of bushi origins, the two leaders being farmers but in part in opposition to the ongoing effort to reduce Japan’s martial skills by converting warriors into administrators. It would be an error to believe that this organization maintained an older warrior tradition (koryu). Through assassinations and domestic terrorism more than ancient transmission of skills with the sword did this organization become a movement that once again would be identified with a Japanese warrior ethos. Note: More on Shinsengumi and this period of Japanese history later)
 The Tokugawa Shogunate lasted approximately from 1603 to the Meiji Reformation of 1868. Various epochs were named for families or locations.
 The Shinsengumi rose as a group dedicated to revering the Emperor, expelling the Western barbarians and eventually to overthrow the Tokugawa establishment.