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To properly understand the economic and financial condition of Japan it is necessary to look back to the beginning of the present era, and trace the growth of the various causes which finally resulted in the situation of the present day. Before the restoration of his full power to the Emperor the country was under the de facto rule of the hereditary feudal chief Tokugawa, the Emperor having only nominal executive power. In those times the taxes were paid in rice, and the value of land and all other property was estimated at so many kokus of rice. Copper coinage was only used for the payment of dues upon land unproductive of rice, such as forest land, and for similar purposes. The feudal chiefs of each province subordinate to the supreme rule of Tokugawa owned much land, and received dues in rice from the people entrusted to their respective protection and government. They also issued paper-money each in his own locality.

When the Emperor had been restored to his full power, the financial state of the country was not at all an enviable one. There was no ready-money at the disposal of the new Government, and paper-money was of necessity issued to defray the expenses of administration. The taxes were still paid in rice, and as the price of rice varied very much there was no stability of the revenue. On the other hand, the leaders of the new Government were principally men who had been accustomed to regard war and the use of arms as a profession. These naturally had no great idea of economic and financial questions.

The feeling of the leaders of the nation before the Restoration was strongly anti-foreign, and the firing upon foreign