THE ADOPTIOI^ OF THE GOLD STAI^DAED IX JAPAK. 



The statements which follow regarding the adoption of the gold standard in Japan are from an oflBcial report upon this pubject 

 issued by the Japanese Government in 1899, entitled Eeport on the Adoption of the Gold Standard in Japan, by Count Matsukata 

 Masayoshi, His Imperial Japanese Majesty's minister of state for finance. The report occupies more than 400 printed pages, and its 

 complete reproduction is therefore impracticable. The statements w^hich follow are, however, as far as practicable, verbatim extracts, 

 with only such necessary condensations of the less important features as are required to render the statement a continuoas and fairly 

 complete history of the transaction. 



The detailed statement is prefaced by an official letter from Count Matsukata IMasayoshi, minister of finance, addressed to the 

 minister president of state, which gives in outline the history of the conditions leading up to the change in the standard of currency in 

 Japan and the methods by which the change was accomplished. In subsequent pages of the volume a brief statement is given of the 

 effect of the newly adopted system so far as tested at the date of the report (May 1899), and these statements are in this pre-sentation 

 placed in immediate conjunction with the outline history of the event itself, thus presenting in continuous form a condensed statement 

 of the cause, the action, and the effect, for the convenience of those who do not desire to study in detail the more elaborate statements 

 of facts which are presented in subsequent pages. 



The complete volume from which these extracts and condensations are taken is on file in the library of the Bureau of Statistics of 

 the Treasury Department, and may be consulted by those desiring additional details. 



OFFICIAL STATEMENT OF THE JAPANESE MINISTER OF FINANCE ACCOMPANYING THE REPORT UPON 



THE ADOPTION OF THE GOLD STANDARD. 



Depaktment of Finance, May 13, 32d Year of Meiji {1809). 

 To His Excellency Marquis Yamagata Aeitomo, 



His Imperial Japanese Majesty^ s Minister President of State. 



Your Excellency: I have the honor to present to j'our excellency herewith a report on the particulars relating to the 

 accomplishment of the monetary reform recently undertaken by the Government. To establish gold monometallism in place of a de 

 facto silver standard is indeed a thoroughgoing change, and the influence of that change on the future economy and finance of the 

 country will doubtless be great and far-reaching. The coinage lav/ (Law No. XVI of the 30th year of Meiji) which brought about this 

 great change went into operation on the 1st day of October, 1897, while at the same time the Government began the process of exchanging 

 and withdrawing from circulation 1-yen silver coins, which process was closed on July 31, of 1898. The disposal of the silver yen thus 

 withdrawn from circulation was also completed m December of the latter year. 



The coinage system in vogue at the time of the restoration (1868) was based on the system that was first established in the 6th year 

 of Keicho (1600 A.D.), and since that time, for more than two hundred and sixty years, no change had ever been introduced into the 

 system. Yet, owing to the growing financial distress, the Shogunate Government frequently resorted to recoinage as its invariable 

 relief measure, which in every case, excepting the solitary case of Kioho time (1715 A. D.-1734 A. D. ), brought out coins of lighter 

 w"eight and poorer quality. The coinage system was thus, though nominally kept intact, practically destroyed in the end through 

 successive debasement. Besides, some of the Daimios (feudal princes) often took the liberty of secretly coining money, while the 

 practice of issuing paper money for circulation within their separate jurisdictions had become well-nigh universal. In a word, the 

 currency system of the country at the end of the Shogunate period was in a most disordered condition. 



Soon after the restoration the Imperial Government saw the necessity of reorganizing the existing system of coinage on a sound 

 basis, and in May, 1871 (fourth year of Meiji), the new coinage law was promulgated, which opened the way for the final establishment 

 of the gold-standard system. This is a fact that must be particularly noted in order to clearly understand the monetary system of 

 modern Japan. However, the gold standard could not yet thus be at once established. In those daj's the universal medium of exchange 

 in the trade of the Far East was the Mexican dollar, and the Government thought the interest of foreign trade would best be served by 

 issuing, aside from the standard gold coins, the silver 1 yen (or trade dollar), equal in size and quality to the Mexican dollar, and by 

 making it legal tender only within the limits of the treaty ports. So the provision was made in the new coinage law of 1871 for the 

 couiage of the silver yen to be called Boyeki ichi yen gin (or trade silver clollai') . At the same time the disordered condition of finance, 

 especially the issuing of inconvertible paper money, drove gold coins out of the country with enormous rapidity. Under these 

 circumstances, situated as the country was m the midst of the silver countries of the East, it was found impossible to roaintain the gold 

 standard. These reasons, as well as the inconvenience of maintaining the two kinds of money — one for foreign and the other for home 

 trade — led the Government to issue Imperial ordinances Nos. XII and XIII in May, 1878 (eleventh year of Meiji), which made the 

 trade dollar legal tender throughout the country, side by side with the gold coins. From this time on the country no longer maintained 

 in reality a gold standard, but a gold and silver bimetallic system. This change must be regarded as one deviating step in the development 

 of our monetary system. 



The Government of that time should not, however, be too severely judged. The expenses of the revolutionary wars were very 

 heavy, and the financial need was most pressing. Almost the only resort of the Government was the issuing of paper money. Moreover, 

 when feudalism was abolished, in 1871 (fourth year of Meiji), the Imperial Government was obliged to take over all the paper money 

 which had been issued by different Daimios, and for the adjustment of this class of paper money the Imperial Government was again 

 obliged to issue further a large amount of paper currency. All these causes combined to raise "the amount or the inconvertible paper 

 money to an enormous figure. 



The credit of these notes was at first exceedingly bad. This was doubtless due largely to the lack of credit of the Imperial Government 

 itself, but also to the fact that the people could not free their minds of the sad experiences of the losses they had incurred on account of 

 the various inconvertible notes of feudal times. The new paper money was shunned by the people, even at a large discount, so much so 

 that the Government felt compelled to take steps to reduce its amount by exchanging it for the Government bonds, bearing 6 per cent 

 interest, which were issued under the Kinsatsu (literally gold note) exchange bond regulations. Through these measures, as well as 

 owing to the increase of the Government's credit, the hatred for paper money gradually wore off, the people finally even commg to prefer 

 it because of the convenience of handling. 



2265 



