2268 COMMERCIAL JAPAl^. [Decembkb, 



To recapitulate, it will be noted that there are four periods in the coinage history of modem Japan. The first period extends from 

 1868 (first year of IMeiji) to 1871, in which the beginning was made of the establishment of the new currency system by the promulgation 

 of the new coinage regulations of 1871. The main effort of the finance ministers of those days was directed to the adjustment of the 

 disordered condition of finance and coinage, created by the revolutionary state of affairs at the close of the Shogmiate regime. 



The second period extends from 1872 to 1879. This period Ls marked for the founding of the Government mint and the issue of 

 new coinage, but more marked for the enormous issues of inconvertible paper money, which brought about all the evils of mflation. 



The third period extends from 1880 to 1885, in which the efforts of the Government were directed to replacmg the mconvertible 

 paper money with the convertible notes, which prepared the way for the final inauguration of the gold-standard system, though for a 

 time it repufted in the establishment of a de facto silver standard. 



The fourth period extends from 1886 to 1898, in which the silver standard was changed into a gold monometallic system. 



It will be noted that the first, second, and third periods are marked by efforts directed to the adjustment of the coinage system, in 

 view of the condition of things at home, while the fourth period is marked by the attempt to adapt the national coinage system to the 

 conditions of things abroad, these conditions of things being chiefly characterized by sudden and great fluctuations in the price of silver, 

 endangering the safe economic growth of our country. 



In conclusion, I can not refrain from expressing my hum1>lest and deepest gratitude to His Majesty tne Emperor, that, owing to 

 his overruling gracious wisdom, the councils of his ministers on financial matters have, during these troublesome times, been invarial>ly 

 marked with wisdom and judgment, and the oflicials of all grades concerned have performed their duties well, so that there has taken 

 place thus far an orderly and progressive development in the financial affairs of the Empire. 



It is plain, however, that in order to strengthen the foundations of the gold-standard system now established it will be necessary 

 in the future not only to keep up but to increase the gold reserves of the Bank of Japan. It will also be necessary that efforts Vje 

 increasingly directed toward the development of the agricultural and industrial enterprises of the country, and the consequent growth 

 of foreign trade. In these efforts allow me to humbly assure your excellency that 1 shall not be found remiss, so that His Majesty's 

 gracious intentions may be as far as possible realized. 



I have etc. Couxt Matsukata ^Iasayoshi, 



His Imperial Japanese Majesty's Minister of State for Finance. 



EFFECT OF THE CHANGE IN STANDARD UPON ECONOMIC CONDITIONS IN JAPAN. 



Since the adoption of the gold standard our currency has been freed from constant fluctuations in its exchange rate, to which it 

 was subject before. Owing to this latter fact, moreover, the relations between the claims of the creditor and the liabilities of the debtor 

 became less subject to sudden and unexpected changes; business transactions were made safe; an improvement in credit took place in the 

 coninuinity at large; prices Ijecame more constant — in a word, the way was now opened for the steady and orderly growth of our 

 commerce and industry. 



Leaving out of account in this section the questions concerning the effect of the coinage reform on the foreign trade of the country, 

 it can be very clearly seen that since October, 1897, the prices of commodities have kept comparatively even; that while there have 

 been some changes, yet, wlien compared with the sudden and great changes wliich used to occur formerly, we must say that the 

 fluctuations were remarkably small. Besides, these small changes in the price of commodities can be amply explained by referring to 

 the partial failure of rice crof)s, to the sudden exjiansion of industry, and then to its as sudden depression, to a stringency in the money 

 market, as Avell as to some other causes. These changes in the price of commodities were due, therefore, to the natural working of the 

 economic law of supply and demand in the commodities themselves. If we notice the fact, moreover, that the amount of checks and 

 bills cleared at the cleai-ing houses iii'Tokyo and Osaka has remarkably increased during these recent months, notwithstanding the 

 fact tliat during this very time there prevailed much business stagnation everywhere, we can not but conclude that business transactions 

 on credit have come to prevail more widely and freely than before. 



The beneficial result of the coinage reform is seen in another direction. Since now that the capitalists of the gold-standard counlriea 

 have become assured that they will no longer be in constiint dangrer of suffering unexpected losses from investments made in this country, 

 on account of fluctuations in the j)rice of silver, they seem to show a growing tendency to make such investments at low rates of interest. 

 This tendency, if encouraged, will doubtless bring about a closer connection between "this country and the central money markets of the 

 world — a state of things which I believe we shall he aljle to see realized more and more fully as jears go on. 



So far as our trade witli gold-standard countries is concerned, our adoption of the gold standard, which made us use the same 

 standard of value as those countries, has proved to be a source of great benefit. This may l)e inferred from the fact that changes which 

 luivo since taken i)lace in the rate of foreign exchange have been Ijut very slight, and these all traceable to changes in tlie condition of 

 the foreign trade of the country, and not all traceable, as formerly, to sudden changes in the price of silver. For this reason there was 

 eliminated from our foreign trade much of that sjieculative element which wa.s caused ])y constant changes in the value of our currency, 

 BO tliat the way was at last oi)ened for the steady and natural development of the foreign trade of the country. Again, concerning our 

 coMimcrce with silver-standard countries, contrary to the gloomy prospects indulged in by some critics, our trade with tliose countries 

 has luit ceased to make a steady growth, and this in the face of certain events occurring in the interior of ('hina, our greatest customer 

 among the silver countries — events such as natural calamities and disturbances, which have greatly hindered the commercial activity 

 of that country. 



Since our coinage reform enabled us to avoid all the evil effects of fluctuations in the price of silver we stand now no longer, as 

 formerly was the case, under the necessity of making plans for iinancial matters with the currency constantly changing in value and 

 flomelimes suffering imexpected losses and evils in times when those Ihutuations are unusually violent. All those fears of miscalctilati<m 

 and losses have now become things of the i)ast. Most particularly in the last few years, wiien national expenditures for things bought 

 abroad, such as warships, etc., have greatly increased in amount, we have doubtless been able to avoid, on account of our coinage 

 reform, great losses on the part of the national treasury. Besides, since our adoption of tiie gold sUmdard, our Government bonds have 

 been sold in no small amount in the Euro{iean markei, .so that their names appear regularly in the price list of the London Sto<-k 

 lOxcliange. This fact at once converted our bonds into an international commodity and will, no doubt, lead to a closer relationship 

 between our home and tlie foreign money markets. 



The discussion also iiuotcs a report of the higher commission on agriculture, commerce, and industrv, which, after an elaborate 

 discnission of tlie effect of the monetary system, closes by saying: " We helieve that the beneficial effect o? our coinage reform on our 

 foreign trade lias already been great, and we do not notice any material evil in connection with it. Be.>^idcs, ouradoption of the gold 

 standard has nunle it easier for our country to enter into the economic community of the world at large, so that henceforth it will 

 become ))racticai>le for us to invite capital from other countries, where it is])lentiful, to b» invested in our country. This will doubtless 

 bo another of the benefits conferre<l upon tiie country by our coinage reform. We conclude, therefore, that the effect of the coiuago 

 reform upon our foreign traile has l)een beneficial, without a trace of evil." 



THE REPORT OP' THE HIGHER COMMISSION ON AGRICULTURE, COMMERCE, AND INDUSTRY ON THE 



ADOPTION OP^ THE GOLD STANDARD. 



A report of the higher commission on agrictilture, commerce, and industry, drawn in October, 1898, in rx^sponse to an inquiry 

 made by the minister of agriculture and commerce concerning the effect of coinage reform on the foreign trade of the country, is quoted 

 by the minister of finaiice in his report, as follows: 



In re]ilyingto the question ]iut before the present commi.csion wo boliovo it is well to say a few words in regard to the circumstances 

 iui<l(>r which the recent coinage reform w;»s eff< ctf?d. There is no doubt that in the case of any country the most imix»rtant question to 



