Page:Japan by the Japanese (1904).djvu/399

The modern system of banking in Japan dates from the promulgation of the National Bank Regulations in November, 1872. Before the Restoration—commercial circles being limited—it was natural that little progress should have been made in banking business, except that there were in operation some bank-like organs conducting the business connected with national taxes and acting as financial agents for feudal lords.

In November, 1872, there were promulgated the National Bank Regulations, based mainly upon the National Bank Act of the United States of America.

The regulations in their original form provided that the National Bank notes should be convertible in specie. But when the issue of Government loan bonds, amounting to 170,000,000 yen, for the capitalization of the hereditary feudal pensions was undertaken, the regulations were revised to the effect that the bank-notes should be issued on the security of Government loan bonds, and be convertible in Government paper money. This is called the ‘Revised National Bank Regulations of August, 1876.’ Under the revised regulations the bank-notes thus became inconvertible notes. The inevitable evil results of such a system did not, however, manifest themselves in any conspicuous manner for some years, because the amount of notes in circulation was kept within moderate limits. But with the increase of national banks—there being at one time 153 of them—and more especially with the sudden inflation of Government paper money to meet the expense of putting down the great Satsuma Rebellion of 1877, paper began to depreciate so rapidly and so disastrously that the Government by heroic efforts set about the adoption of a really convertible system. This arduous task was commenced by the revision of the National Bank Regulations in 1883, and was completed in