190i.] COMMERCIAL JAPAi7. 2275 



Bland Act, accordin{» to which the American Government was to buy silver in order to coin it into money, hoping in this way to stop its 

 depreciation. In 1890, again, thi.s Bland Act was replaced by the Sherman Act, which authorized the Government to preatly increase 

 the amount of its annual purchase of silver. These measures, however, did not have the least effect in checking the fall. The rate of 

 gold and silver, whicli was, on an average, 1 of gold to 18 of silver in 1879, became 1 of gold to over 19 of silver in 1885. After that 

 year the fall became still more marked, so that while the average rate in 1891 was 1 of gold to 20.92 of silver, it became in 1892 1 of gold 

 to 23.72 of silver, at last the fall reaching in 1893 the rate of 1 of gold to 26.49 of silver. 



Thus the prospects of silver became daily more gloomy. This led Austria-Hungary in 1892 to adopt a gold standard and the United 

 States to repeal the Sherman Act in 1893. Russia, too, though it had allowed the free coinage of silver for a time, Htopf>ed it again in 1893. 

 In li:94 Persia took the same course, while India placed a tariff of 5 per cent on all the imports of silver. In 1895 Chile and in 1896 

 Costa Rica both adopted a gold standard; Russia at the same time showing signs of taking the same course, and in 1894 the fall in the 

 price of silver reached as low a rate as 1 of gold to 32.56 of silver (being the average rate for the year). 



In 1895, however, silver showed signs of appreciation, the average rate for tliat year being 1 of gold to 31.60 of silver, and the rate 

 becoming, in 1896, 1 of gold to 30.66 of silver. Yet this appreciation was merely temporary, owing to certain obviou.^ clauses, one of v/hich 

 was an erroneous supposition that the Chinese indemnity would l)e paid in silver, while "the other was a wiflespread conjecture that the 

 silver party would win in the Presidential election of the United States. When, therefore, these suppositions were both proved to be 

 unfounded, in 1897 silver again began to fall, reaching at the lowest point to 1 of gold to 39.70 (or more) of silver, making the average 

 for the year 1 of gold to 34.34 of silver. * ^:- * y 



CIRCUMSTANCES WHICH CALLED FOR THE COINAGE REFORM OF JAPAN, AND THE RESULTS OF THE INVE.STIGATIONS CONDUCTED BY THE COINAGE 



INVESTIGATION COMMISSION. 



As was narrated in the previous section, the depreciation of the price of silver grew daily greater, and there seemed to be no end to 

 sudden fluctuations. In consequence, foreign countries were led one by one to adopt a gold standard. Under these circumstances Japan, 

 as ade facto silver-standard country (since the establishment of the convertible paper-money system in 1880), could not but suffer from 

 this depreciation. The constant fluctuations in the rate of exchange took away from foreign trade an unchanging standard of value and 

 prevented it from making normal and healthy growth. As a result the price of commodities ro.se rapidly, the spirit of speculation became 

 rampant, and, finally, the State expenditures began to increase on account of this depreciation; in a vv-oivl, there took place a general 

 derangement of the national economy. It was now feared that the further maintenance of a silver standard would be against the far- 

 reaching interest of the countrv. The finance minister of the time, Mr. \yatana()e Kunitake (now viscount) , presented a memorandum 

 on the 11th of September, 1893, advocating the necessity of conducting investigations in regard to the monetary pohcy of the country, 

 advising for that purpose the appointment of a commission. The following is the text of the memorandum: 



"The recent fluctuations in the ratio between gold and silver have exerted an extraordinary influence on the economic affairs of the 

 world, and the governments of all countries have been led to pay the greatest attention to the method of averting further calamities 

 from the same source. In July of last year the Austrian Government adopted a gold-standard in place of the silver-standard system, 

 while the International Monetary Congress, which was to meet in Brussels, with the avowed object of discussing measures of the price 

 of silver, has not been convened. These things have tended to assist the rapid depreciation of silver. In addition to these, the Indian 

 government suddenly stopped the free coinage of silver, and the American Government seems to be strongly inclined to repeal the 

 Sherman Act; in fact, the bill for that object is now under consideration in the United States Congress. It is thus inevitable that the 

 depreciation of silver will yet continue to increase. For these reasons the ratio between gold and silver is in a constant fluctuation, in 

 some cases bringing international trade almost to a standstill. It is but natural, therefore, that silver-using countries of the world should, 

 with a view to the protection of their national interest, take steps to conduct investigations concerning the question of coinage. Some 

 countries have already put into effect the results of such investigations. 



' ' The coinage system of our country was a gold standard, according to the new coinage regulations of 1871. However, when, in 1878, 

 the 1-yen silver coin, which had been coined for circulation within the limits of the treaty ports only, was made legal tender throughout 

 the country by Imperial ordinance No. XII of 1878, there came into vogue the double-standard system of gold and silver. But this has 

 been further changed, and we are living under a de facto silver-standard system. For this reason these fluctuations in the price of silver 

 exert an immense influence on the economy and flnance of the country. Moreover, since the Indian government has recently under- 

 "taken to reform its coinage, the people of all classes of our country have become excited with the liveliest anxiety as to the probable 

 future of silver coinage. Discussions on the subject are rife all over the country, and business men are in fear and trembling, not 

 knowing what course to take. For these reasons it se.^ms to me to be a mo.st proper course to take for the Government to appoint a 

 commission, composed of men experienced and learned in economic matters; to instruct that commission to conduct investigations as to 

 the causes and effects of recent fluctuations in the ratio between gold and silver, especially their effects on the past, present, and future 

 of our national economy; to make inquiries on the question whether there be need of reforming the coinage system of the country; if 

 so, what system to choose and what means to adopt toward effecting that reform. I look forward to the time -when the researclies of 

 such a commission will be completed, with hopes that the Government will then be able to pacify the present anxieties of the nation 

 at large, as well as to fix upon a line of monetary policy to pursue at this important junctui'e. I adjoin herewith the draft of the 

 Imperial ordinance respecting the appointment of the commission and of the estimate of the expenses connected with that conmiission. 

 These are now respectfully submitted for the consideration of the cabinet." 



The scheme embodied in the preceding memorandum was adopted by the Government, and the regulations concerning the coinage 

 investigation commission were promulgated by Imperial ordinance No. CXIII, on the 14th of October, 1893. 



According to these regulations the commission was appointed, and the first thing they did was to choose a subcommittee to make 

 preliminary researches, the result of which being reported to the commission, the latter held several meetings in which long and 

 exhaustive discussions took place. Finally, in July, 1896, the commission presented the report of its resolution to the mir ister of 

 finance. The main points in that report are as follows: 



(I) The resolution respecting item No. 1 of Article I of Imperial ordinance No. CXIII, 1893. 



On this subject the connnission accepted the result of the reseai'ches conducted by the subcommittee, and after further investigations 

 concerning the recent fluctuations in the ratio between gold and silver, as well as concerning the relative A-alue of gold and silver as 

 against commodities, gave the following nine points as the causes of recent fluctuations: 



a. Increase in the output of silver. 



b. Reduction in the expense of producing silver. 



c. The fact that there has been less demand for silver for coinage in proportion to its increased output. 



d. Decrease of the demand for silver for works of art. 



c. The fact that the amount of silver in existence, which is directly influenced by the laws of supply and demand, is comparatively 

 small, while the yearly sux>ply of silver is comparatively large. 



J. The fact that the rate of increase in the output of gold is less than the rate of increase in the output of silver. 



g. Increased demand for gold for coinage. 



/<. Increased demand for gold for works of art. 



i. Increase of the tendency to hoard gold. 



In regard to the general effect of the recent fluctuations the following resolutions were taken: First, as to their effect in silver 

 countries; second, in the gold countries, and, third, on the economic relations between gold and silver countries. 



First, as to their effects in silver countries: 



o. Increase of exports. 



b. Rise of the price of commodities. 



c. Reduction in the liabilities of debtors and of the taxpayers paying fixed rates. 



