1901.] COMMERCIAL JAPAX. 2271 



THE NEW COINAGE REGULATIONS. 



The standard of unit of the new couiage shall be called yen, and all reckonings and calculations of money shall l>e made, v.'hether 

 large or small, by the addition of numerals to the unit yen. Amounts less than 1 yen shall be estimated in terms of sen, or one- 

 hundredth part of 1 yen, and rin, or one-tenth part of 1 sen. * * * 



LIMITATIONS IN THE CIRCULATION OF THE NEW COINAGE. 



The standard coins are to be of gold consisting of 20-yen, 10-yen, 5-yen, 2-yen, and 1-yen r>ieces, of which 1 yen shall be the 

 standard unit of value. These gold coins are all legal tender and may be used in monetary transactions to any amount. 



By the standard coin is meant the coin whose value is the standard oi' which the values of other coins are ba.sed. Hence there is 

 no need of limiting the amount in which they may be legally used in transaction. One yen gold is the standard unit of value, Ijecause 

 it is the standard on which the values of other coins are based. 



The silver coins, which consist of 50-sen, 20-sen, 10-sen, and 5-sen pieces, are issued as subsidiary money. They are legal tender 

 either in one kind or in different kind up to the amount of 10 yen only. 



The copper coins, which consist of 1 sen. one-half sen, and 1 rin, are also subsidiary money, and may be used as legal tender up 

 to the amount of 1 yen only. 



By the subsidiary money is meant the smaller coins issued to assist in the circulation of currency. Their legal value is fixed by 

 Government regulations. Hence the need of limiting the amount beyond which they may not be used in transactions. 



The 1-yen silver piece is to be coined during a limited period of time, particularly in response to the desires of indiviiluals both 

 Japanese and foreign, in order to facilitate trade at the treaty ports. This silver yen shall be legal tender at the treaty ports, .so that 

 they may be used in the payment of all customs duties and of taxes by the foreign residents, as well as in all monetary tran.sactions 

 between the Japanese and foreigners. This coin shall not be legal tender outside of the treaty ports limits, though, of course, it may 

 be freely used in transactions where parties concerned mutually consent to its use. 



The relative legal value of the silver yen and the gold yen at tlie treaty ports shall be 100 silver yen to 101 gold yen. 



Thus, while there was introduced at this early date a gold-standard system in Japan, at the same time a silver yen was al.so to be 

 coined as legal-tender money in the treaty ports. This was due to the fact that the ^Mexican silver dollar was at that time universally 

 used in the commerce of the Far East, so that the coining of the silver yen was considered a necessity. In February, 1875, by imperial 

 ordinance No. XXXV, the Government changed the name of the silver yen to boyeki gin, or trade dollar, and its weight from 416 grains 

 to 420 grains. * * * 



The chief motive in making this change was to drive off the Mexican dollar and replace it with the trade dollar, but it was found 

 out very soon that the attempt was a failure. The Government soon ceased to coin the trade dollar and returned again to coining the 

 silver yen. * * ■■■ 



All these different measures were, however, not sufficient to maintain gold monometallism in healthy growth. The issuing of a 

 large amount of inconvertible paper money drove specie, especially the gold coins, out of the country. This and the smallness of the 

 natural output of gold in Japan both constituted reasons which, in 1878, led Mr. Okuma Shigenobu (now Count), at that time minister 

 of finance, to advise the Government to adopt gold and silver bimetallism as a policy more conducive to the country's prosperity. The 

 Government, acting on his advice, by imperial ordinance No. XII, of May, 1878, sanctioned the free use of the silver yen and the trade 

 dollar as legal tender throughout the country. The silver-yen piece thus acquired the same legal value as one yen gold and the system 

 of coinage was changed from the gold standard to the gold and silver bimetallic system. 



The above statements, which are referred to at various places in the report as the history of the attempted adoption of the gold 

 standard and the transition to the gold and silver bimetallic system, are followed by a detailed statement of the issue, and, finally, the 

 overis.?ue by the Government of inconvertible paper intended originally purely as an emergency measure, the amount, however, being 

 increased from time to time until the quantity in circulation became very large, and to this was added a series of national-bank notes 

 which, while originally converted into specie, were afterwards permitted to be convertible into Government paper money, which, 

 however, was itself inconvertible, thus making the bank notes another kind of inconvertible paper money. The report continues: 



In this way rose, step by step, the amount of paper money issued by the Government, until by the end of January, 1878, it reached 

 to some 320,835,000 j'en. Besides these the Government got into the habit of making temporary issues from the paper-money reserve to 

 fill up temporarily the deficits in the revenue, this paper-money reserve being a large stock of unissued paper money kept for the 

 exchange of worn-out notes. And since after 1878 the amount thus issued averaged, as a rule, about 20,000,000 yen a year, this much 

 must also be regarded as added to the amount of paper money in circulation. 



JMoreover, after the introduction of the amendments in the national-bank regulations as mentioned above, the number of national 

 banks rapidly increased, which brought about an increase in the amount of bank notes, so that in April, 1880, it rose to 34,420,000 yen. 

 The issumg of so large an amount of inconvertible paj^er money naturally brought about results disastrous to the healthy financial devel- 

 opment of the country; prices rose enormously; the imports came to always exceed the exports; the specie daily left the country for 

 abroad; people contracted luxurious habits of life; business men ran wild in speculation. All these evils reached their climax iii the 

 years 1880 and 1881. The amount of inconvertible paper money in circulation reached its highest point in January, ISSO, as may be 

 seen from the figures given below, according to the returns on the last day of that month: 



Yen. 



Government paper money 113,831, 709 



Reserve paper money temporarily issued 22, 188, 116 



Notes of the national banks 34, 137, 652 



Total : 170, 157, 477 



At the beginning of the Meiji era there was a great difficulty in getting the Government paper money circulated, and at that time 

 its price very mucli depreciated. But with the return of peace and the increase of the credit of the new Government the credit of paper 

 money also increased. The amount issued, moreover, did not exceed the actual need of the country. For those reasons it came soon to 

 circulate at par with specie. Early in 1878, however, the Government issued quite suddenly another very large amount of paper money, 

 and from that time on its depreciation again commenced. 



At first the ratio between silver and paper was 1 yen of silver to 1 yen and 7 or 8 sen of paper, but at the close of that year it 

 became more than 1 yen and 21 sen of paper to 1 yen of silver. There seemed to be no end to depreciation, l^nfortunately, there 

 prevailed at that time among the authorities an erroneous opinion that these differences in the value of paper and of silver were due not 

 to the depreciaton of paper, but to the appreciation of silver. The Government, therefore, made various attempts to keep the price of 

 silver down. The authorites, indeed, drew up at this time a plan for the redemption of Government bonds and of paper money : but their 

 more serious efforts were directed toward preventing the rise of the price of silver. For instance, the Government prevailed upon the 

 First and Second National banks, and the Mitoui Bank, as well as some other banks, to sell out silver coin; opened places for trans^icting 

 the exchange of Mexican dollars; in February established the Yokohama Specie Bank, with the object of inviting the people to invest 

 hoarded coins, so that these coins might be supplied to the financial market. The Specie Bank was, moreover, to eng;\go in foreign 

 exchange in order to facilitate monetary circulation between Japan and foreign countries. The Government believed that, as in these 

 ways the supply of silver would be increased, its market price would necessarily come down. But, as a matter of -fact, the Yokohama 



