Ieysu Tokugawa
All this was changed by Ieysu Tokugawa, the pivotal figure in Japanese history. In 1603 he established the Tokugawa Shogunate, the military government which finally gained control of the whole country. In an incredibly short period of time, Japanese society was re-engineered from chaos to rigid stability.
Society was divided into four classes: samurai, artisans, peasants and merchants. The activities of these classes were severely restricted. One of these restrictions was that only samurai could carry weapons. This gave social status to the samurai and made it much more difficult raise an army in a hurry by conscripting peasants and farmers. As a further encouragement to this stability, contact with the outside world was stopped and foreigners expelled. Firearms virtually disappeared altogether.
But these social changes also began the slow death of the samurai. They were tied to military careers in a society with less and less fighting to do. A general trend began to divert their energies into new channels. They became the guardians of the new order, more of a police than a military. Teaching and studying the martial arts were respectable activities in their own rights and the transformation from -jutsu do -do forms began.

Changes
There were many changes in the martial arts with reflected the changing society.

Reorganisation.
The early ryu had been run along family and clan lines. Now teachers began to choose their successors by ability rather than blood.

Specialisation.
Now that the schools were more independent, pupils and teachers could move between them. This meant that they no longer had to teach a bit of everything, they could specialise and excel in particular areas.

Less military emphasis.
Military techniques were changes to self-defence techniques. Iaido provides a good illustration of this. Although grounded in the brutal battlefield methods of iaijutsu, it adapted these for use in everyday situations. Cuts were added which are impossible to make in armour and great emphasis was put on the initial drawing of the sword to deal with surprise attacks.

Growth of unarmed methods.
The general loss of weapons makes unarmed combat much more important. These techniques were now gathered together began to dominate the martial arts in general.

Growth of non-lethal methods.
Civilians have to worry much more about the legal consequences of defending themselves. Joint locks were now practiced to restrain rather than cripple.

A weaponless society meant that it was logical to collect the unarmed techniques together for study. It was during this time that that the word "jujitsu" began to be used to refer to them.

Meiji Tenno
This stability lasted for over two hundred years but could not last forever. With nothing to do, the military became weaker and the civilian government became stronger. In 1853 the American navy arrived and suddenly the world got bigger. Keiki, the last shogun, was defeated in a civil war. The powers of the shogunate were finally absorbed by the emperor. In 1868 and alliance of samurai and merchants frustrated by lack of advancement attempted to seize power and failed. This failure cost them dearly and Emperor Meiji Tenno began to dismantle the samurai class entirely. There were many more rebellions, but the loss of the right to wear swords and the formation of a modern national army proved too much. Eventually, the entire feudal system was abolished and Japan was opened up to the world.
The samurai and everything associated with them had lost all power and respect. An imperial edict made it a criminal offence to practice the martial arts and they were bought to the point of extinction.