1901.] COMMEECIAL JAPAK. 2267 



The total miinbor of 1-yon silver pieces that had been coined since the opening of the Government mint at Osaka amounted to 

 1G5,1.'W,710. Of this amount it is estimated that 99,508,740 yen were exported into foreign countries and never returned; 11,028,0;^^} ven 

 were taken aljroad at the time of the war with China (1894-1895); 5,732,027 yen were sent to Formosa after the ce&sion of that L-lanJ by 

 China and never 1)rought in for exchange. " 



Oil the other hand, tlie total amount exchanged for gold coins between October 1, 1897, and July 31, 1898, was 45,588,369 yen.*" 



Besides these, 460,904 yen had been recoined by the Government mint into subsidiary coins. 



These different sums amounted to 1G2,318,()73 yen, which still leaves 2,815,037 yen whose whereabouts can not be traced. Mo.st 

 probably they have been lost or worn out or Ijeen taken away by foreign visitors when leaving the country. 



To make an estimate of the amount of the silver yen which would jorobably come back from abroad for exchange was no easy 

 thing to do. Accordingly I had the most careful researches made as to the amounts of those coins circulating in Shanghai, Hongkong, 

 the Stniits Settlements, etc. It was made clear as the result of these researches that no inconsiderable part of them had either marks of 

 ])rivate stamp, which unfitted them for circulation at home, or had been recoined into Cliinese taels. Then, lx;.--ides, a large f)uantity 

 was being used as a medium of exchange in the Straits Settlements and neighboring islands, so that there was little prospect of their 

 coming back. In view of these facts I estimated that no more than 10,000,000 yen would come back for exchange. It was gratifying 

 that the result proved the almost literal correctness of that estimate. 



Besides these silver coins there existed the promissory notes of the mint for the payment of silver yen, which had been given in 

 exchange for silver bullion deposited at the mint by private parties. When silver coins were minte<l, these were to be hand.ed over in 

 exchange for those notes. Now the latter, which amounted altogether to 29,505,453 yen, were also all exchanged for gold coins. 



The total amount of silver thus retired by the Governuient reached the sum of 75,093,822 yen. Of these, 45,58S,369 yen came in 

 partly through exchange for gold coins, and partly as taxes"*or in other forms of public payment; the rest consisted of the promissory 

 notes of the Government mint. 



It should be noted that tlie period of ten months allotted to the work of exchanging the silver yen was a comparatively short one, 

 in view of the mapjnitude of the work to be accomplislied. The authorities were not, indeed, without sense of the risk they were 

 ru!iuing; for should there be a slight hitch in the management the whole thing might have proved a failure. Yet on the other hand, 

 if the time limit was much longer extended, it was feared that the return of the exported silver yen might become, in view of pos-sible 

 changes in the price of silver, unexpectedly great and thus embarrassing to the Government. It v>'as also feared that chances for 

 counterfeiting mij^ht perhaps be opened. For these reasons the time limit was made comparatively short, and exceptional care was 

 taken to facilitate the process of exchange. The central Government treasury, as well as the 447 Government treasuries and subtrexsuries 

 scattered all over the country, besides the Yokohama Specie Bank, which served as agency for the Bank of Japan, and its Kobe branch 

 ottice, were all directed to take charge of the work of exchange. Moreover, special permission v.'as given to the peoj>le during the time 

 allotted for exchange to pay taxes and make other public payments in silver yen. That no report has reached the authorities of any 

 which failed to get exchanged seems to prove that the whole work has been well accomplished. 



The Government had to find some proper method of disposal of these silver coins now suddenly brought in. They amounted, as 

 mentioned above, to the sum of 75,093,822 yen. This large sum was disposed of as follovrs: 27,567,012 yen were recoined into subsidiary 

 coins between the thirtieth and thirty-second fiscal years of Meiji (1897-1900); 40,786,662 yen were sold in Shanghai, Hongkong, and 

 elsewhere; 6,740,148 yen Avere taken over to Formosa, Korea, and elsewhere, and expended in those countries. The whole amount was 

 thus disposed of in just one year and three months after the new coinage law was x)romulgated. In thus disposing of the silver yen the 

 Government took every precaution to sell them as speedily and as dearly as possible. At first it was feared that, owing to the fall in the 

 price of silver, the Government would incur a loss of more than 10 per cent, but it was fortunate that the actual loss only amounted to 7 

 per cent, and that the sale was completed within a little over one year. The rate realized was even slightly higher than the average 

 price of silver bullion in London at the time. 



In disposing of these silver yen the Government incurred the loss of 5,397,581 yen, while the necessary expenses connected with 

 the process was 155,731 yen, the two sums together making 5,553,312 yen, which had to l^e defrayed by the Government. This was, 

 however, more than made good by the manufacture profit of the mint, amounting to 5,651,961 yen, which was obtained from the mint- 

 ing of subsidiary coins between the thirtieth and thirty-first fiscal years of Meiji (1897-1899). 



As thus narrated, the new coinage law has been successfully put into effective operation and the disposal of the silver yen com- 

 pleted, so that Jr.pan is now really a gold-standard country. I regret much, however, that I can not as yet present before your excel- 

 lency in the present report the practical proofs of the advantage which that change has conferred upon the country. In the first place 

 a suilicient time has not elapsed to test the real working of the new system, and in addition to the sudden industrial expan.-ion due to 

 t)ie fact of the victorious war with China, the partial failure of the rice crops, as well as the going into effect of the new tariff laws, all 

 combine to make the present financial condition of the country exceedingly complicated. Yet, judging from the condition of things 

 after October, 1897, I can not but think that at least a part of the object aimed at has been attained. One good effect of the coinage 

 reform is seen in the steadiness of the exchange value of money. While the prices of things have risen and fallen, according to the 

 economic laws of supply and demand, no part of these changes was due to the result of a change in the value of money. For these 

 reasons tlie industrial classes need be now no longer under constant apprehension of some unexpected changes in the value of money. 

 Trade with gold-standard countries has been greatly facilitated through the imvariable rate of foreign exchange, as may be seen from 

 the fact that since October, 1897, the rate of exchange on London has fluctuated only between 2s. O.lGlld. and 2s. 0.8071d. The trade 

 with silver countries has also shown much activity. The ex])orts to these countries have increased from some 54.200,000 yen in 1897 to 

 some 69,800,000 yen in 1898. The imports also have increased in the same period from 65,450,000 yen to 77,170,000 yen. The hoj^e of 

 inviting capital at a low rate of interest from gold-standard countries, in order to help on the industrial growth of the country, will 

 doubtless be realized before very long. These are, of course, but minor observations. Thai in the long run the advantages of th.e gold 

 standard will be deep and abiding, conducive to the healthy industrial growth of the country, scarcely seems to a<hnit of any doubt. 



On one point, however, particular care needs to be exercised. It is possible that the state of coinage in Formosa mav ai-t as a 

 disturbing factor in the successful working of gold monometallism in Japan. INIuch as it was desired to establish a pure and simjile gold 

 standard in the iiiland of Formosa, it was found impossible to do so in view of the great difficulty of changing the usi^ges and customs 

 of tJ'.e Chinese population in that island, and also because of the exceptionally close commercial relationship that is maintained lx?tween 

 Formosa and tlie mainland. For these reasons while gold is made the standard of value, yet for a limited period of time the silver 

 yen is to be allo\\ed to circulate as legal tender at a value fixed by the Government from time to time. 



There is no doubt that in order to lay the foundations of a national currency system firmly an<l lastingly it is highly de.<=irable to 

 supply enough hard money for ordinary tjansactions. It was for this reason that as soon as the Government took steps for the 

 sul;stitution of the convertible notes for the inconvertible paper money an increased appropriation was made for coining 10 and 20 sen 

 silver pieces, so that as fast as produced they were issued in exchange for the paper money of smaller denominations consisting of 50, 

 20, and 10 sen iiieces, the last-named 10-sen ]iieces being finally witlulrawn from c-ircnlation on the 30th of June, 1887. Tiie 50 and 20 

 sen pieces yet in circulation have been reduced now to an insignificant proportion. Besides, at the time the coinage law was 

 promulgated there were in circulation more than 66,000,000 yen of the 1-yen convertible notes of the Ban.k of Jupan, which were being 

 used by the people in their smaller daily transactions. The plan adopted by the Government was to make the further issue of 40,tHXUH)0 

 yen of various subsidiary coins, consisting of 50 sen and other smaller denominatior.s, and in exchange for these to retire the 1-yen silver 

 notes of the Bank of Japan. \\'hen the plan is realized the total amount of subsidiary coins in circulation, consisting of silver, nickel, 

 and copper pieces, will reach the sum of 81,820,000 yen, making about 2 yen per capita of the population. It seems to me that, in 

 view of the present economic condition of the country, this is just about what the people would neeCl. I'p to the end of March, 1899, 

 al)out 27,000,000 of these silver coins had been minted and made to circulate in place of 1-yen convertible notes, which are now l>eing 

 gradually withdrawn from circulation. It will not be long before the object aimed at by this meiisure will be fully attained. 



» Most probabiv those were taken over to the mainlnnd by the Chinese. 



bOf this amouiit 10,81G,4(j5 yen were sent back from abroad to be exchanged and the resc were in circulation at home. 



