1901.] COMMERCIAL JAPAN. 2295 



Novemljer, 1872. Under this acta bank \va.s allowed to issue notes, convertible in gold, having as their eecurities Government bonds to 

 60 per cent of the capital, whicli was to be not less than 50,000 yen.* As a natural con.sequence of the political cri.«i.a, the new Imperial 

 Government issued a large amount of inflated currency. The Government, in establishing these national banks, ha^l in view the 

 reduction of the amount of paper circulation by issuing the so-called gold redemption bonds, and with these bonds as the b-asi."- of 

 banking, to let the banks supply the vacancy thus created in circulation with their notes convertible in gold. But in this reffr>ect the 

 Government was disappointed. Within six years there were but four bank? organized under this act and they could ii?sue only alxjnt 

 1,420,000 yen of bank notes out of 15,000,000 yen, which were beforehand printed in New York. Even these were rapidly retired, as they 

 lost specie reserve on account of the constant efflux of bullion. 



So in 1876 the Government felt it necessary to introduce many important amendments to the national-bank act. Among many other 

 changes the bank notes were made legal tender for all payments, except for the payment of cu.sftom duty and interest on Government 

 bonds, and became convertible into Government paper money instead of standard gold. Besides, the amount of the bonds to \>e depof-itcd 

 in the treasury by the banks was increased from 60 to 80 per cent of the capital and the kind of bonds was made optional .so long as they 

 bore 4 per cent interest. The most important change, however, consisted in a gold reserve of 40 per cent of the capital being transformed 

 into a paper reserve of 20 per cent. 



These radical changes of the statute, combined Mith the issue of the Government loan to the amount of more than 174,000,000 yen 

 to pay off feudel pensioners in exchange for their hereditary rights, greatly facilitated the es-tablishment of national Ijanks. They 

 sprung up in rapid succession. Between 1876 and 1879 one hundred and fifty-three banks were organized in various districts of the 

 Empire, their total capital amounting to 48,816,100 yen. At last the organization of the banks became so prevalent that the bank art 

 was again amended, empowering the minister of finance to restrict, on the basis of population and taxation, the total amount of the 

 issue of the bank notes, which was fixed at 40,000,000 yen, as well as the number and capital of the national banks. Their legal term 

 of existence was also limited to twenty years. Although there were some failures among these national banks, most of them enjoyed 

 good, prosperous business. Side by side with these national banks there also sprung up ordinary banks, which are at present regulated 

 by the bank act of 1890. They are either individual, partnership, or joint-stock concerns. When the legal term of national banks 

 expires, they usually continue their business as ordinary banks. These now number 1,485, their paid-up capital amounting to 

 191,028,716 yen. 



ORGANIZATION OF THE BANK OF JAPAN. 



The rise of national banks in rapid succession increased the evil effects of an inflated currency. The price of all commodities and 

 rate of interest rose by leaps and bounds, while the Government bonds lost their value. The proper regulation of the currency became 

 the prime necessity of finance. To relieve this situation the Bank of Japan (Nippon Ginko) was organized in 1882. This was a part of 

 the broad scheme of Mr. Matsukata (now Count), then minister of finance. 



He sets forth in his memorandum the object of this institution as follows: 



(1) To promote the cooperation and assimilation of banks under a central bank; (2) to increase capital available to trade and 

 industry; (3) to reduce as well as to equalize the rate of interest; (4) to transfer to the bank various ser\-ices in the treasun.- when ita 

 business is firmly organized; (5) to discount foreign bills so as to regulate the influx and efflux of specie. 



At the same time national banks were ordered to give up their right of issue. 



In 1884 the convertible bank-note act was enacted, whereby it was aimed to replace both the Government and national-bank 

 notes with those of the Bank of Japan, so as to unify the currency system under this central institution. These objects were steadily 

 pursued. On October 10, 1882, the Bank of Japan commenced its business. In December of the same year it opened its branch 

 office at Osaka. Since then its business has grown to an enormous extent, and at present it has branch oflSces in Osaka, Moji, Xagoya, 

 and Hakodate, and subbranches in Otaru, Sapporo, Kyoto, and Taihoku (Formosa), besides many agencies for the management of 

 Government money. 



CAPITAL AND RESERVE OF THE BANK. 



At first the capital of the Bank of Japan was 10,000,000 yen. This was divided into 50,000 shares of 200 yen each. One-half of 

 this capital was subscribed by the Government with its surplus fund. This was afterwards transferred to the Crown property. The 

 expansion of business necessitated the increase of capital, and in 1887 it was increased to 20,000,000 yen, and again in 1895 to 30,000,000 

 yen. Its capital, which is all paid up, is divided into 150,000 shares. The shares are all registered, and their ownership is allowed only 

 to Japanese who have permission of the minister of finance to acquire it. The number of the shareholders now stands at 877. 



For some years a distinction was made between the shares owned by the Government <uid those owned by people in the rates of 

 dividend, but since 1887 all shares are equally treated. The profit is semiannually divided in the following way: Out of the net profit 

 6 per cent is declared as the first dividend, and then at least one-tenth of the rest is added to the reserve and another one-tenth is 

 distributed as the bonus of the bank officers. The second dividend is to be declared out of the remainder, gome part of which may be 

 carried to the reserve account. Since 1887 the sum of these two dividends varies between 10 per cent and 15 per cent per annum. 



The reserve fund can be paid out only to make up for the losses of the capital or to equalize the annual dividemls. This fund is 

 to be invested only in the purchase of gold, silver, or Government bonds, and the profit fi'om the same is carried to the gross income 

 of the bank. The latest account of this fund stands at 12,570,000 yen. The successive directors of the bank always endeavored to 

 increase the fund so as to strengthen its credit. 



THE BUILDING OF THE BANK. 



The bank now occupies a three-storied granite building, 110 feet by 115 feet. Its whole ground is about 3J aores. The plan of this 

 building w'as settled upon after a careful study of the Eujopean central banks. Strong rooms are built in its basement Electric light, 

 water supply, and other conveniences are all up to the latest improvements. In spite of comparatively low wages and cheap materials 

 in Japan, it cost some 1,150,000 yen. It was due to the energy of the late Governor Kawada that such a magnificent building was 

 projected. And it is also noticeable that the plan as well as the execution of this building is the work of a Japanese architect. Dr. 

 Tatsuno. 



«The present value of the Japanese gold yen in American currency is about 50 cents (S0.498.) 



