Page:Japan by the Japanese (1904).djvu/367
for the inconvertible. The Government, therefore, gave notice by Imperial Ordinance No. XIV., of June, 1885, that specie payment would be resumed after the 1st of January, 1886. Thus at last was overthrown the system of inconvertible paper money, together with all the evils resulting from that system.
Previous to this the Government saw that the notes of the national banks were also in need of adjustment, and through the Imperial Ordinance No. XIV., of May, 1883, certain amendments were introduced in the National Bank Regulations, the main point in those amendments being a method of conjoined redemption of the notes of all the banks. Thus, the redemption of the bank notes began to take place, as also that of the Government paper money. The circulation of both ceased altogether on the 31st of December, 1899.
While the evils of inconvertible paper currency were thus swept away, on the other hand, however, one effect of all these reforms was to make Japan a de facto silver standard country. This was, perhaps, an inevitable step the country had to take to arrive at last upon a sound financial footing. The authorities knew, of course, that, to ensure healthy financial development, Japan would have to enter sooner or later the international economic community, and that in order to do this she would have to adopt a gold standard. That the Government pursued a policy which led to the inevitable result of making Japan a de facto silver country was owing mainly to the great difficulty of at once accumulating a large gold reserve necessary for the establishment of gold monometallism. It was thought advisable, therefore, to leave the latter, as the second end to be aimed at, to some more favourable time.
The first cause of the recent rapid depreciation of silver we must attribute to Germany’s adoption of a gold standard in 1873, in consequence of which she began to sell silver. Among other main causes may be mentioned the limitation and final cessation of the coining of silver in the countries of the Latin Union, and the discovery of the rich silver-mines of North America. When, however, in 1893, India, the greatest silver country in Asia, took steps to reorganize her currency system, the sudden fall in the price in silver was exceptionally noticeable. At that time, Japan being a de facto silver country, the effect upon her of this sudden fall was very great. Fluctuations in foreign exchange now became exceeding frequent and unreliable. Business men lost a constant standard of value, and became compelled to pay constant attention to changes in the money market, so that foreign trade tended to become largely a matter of momentary speculation. It became more and more hopeless to expect to see the healthy growth of trade, both home and foreign. Thus was impressed