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prises, and in developing its natural resources; and, thirdly, to remedy the then unsystematic state of the money market there.
It is contemplated, however, to extend its operations to South China and to the islands of the Southern Pacific, and to make of it a truly useful commercial institution of those regions.
When the actual organization of the Bank was undertaken, it was deemed necessary to amend the law under which the Bank received its charter, so far as to authorize the issue by it of notes convertible in silver, against a reserve of silver bullion and of first-class securities, to the limit of £500,000 sterling.
In addition to conferring this privilege, it was provided that the Government should furnish £100,000 of the Bank’s capital, and that the dividends accruing on shares to this amount should, for the first five years of the Bank’s existence, be placed on the reserve account, in order thereby to add to the financial strength of the institution. Further, the Government lent to the Bank, free of interest, the sum of £200,000 in silver, to be used as a part of the reserve aforementioned, for the redemption of the notes which it was authorized to issue. The Bank was opened for business in September, 1899. Its branch and sub-branch offices now number eleven, and its business transactions become larger day by day.
It was no easy matter, at the outset in 1895, to determine what should be the standard of money and the system of currency for Formosa, for although it might have been said that a copper coinage was actually the standard there, it could not be claimed, according to the pronounced commercial usage, that copper in this sense had a legal existence. Mexican dollars, Spanish dollars, and the dollar coins of Hong Kong, were all in use as media of exchange, but only according to their relative value as silver bullion. Paper money was never used in the island.
Under the new Japanese administration the Colonial Government began to make its payments to the natives in Japanese silver coins (yens) and bank-notes, and thus the condition of the Formosan monetary system was suddenly disturbed by the influx of a new element. The natives were glad enough to receive the new silver pieces from Japan, and preferred them to all other coins then in circulation, but of the use of bank-notes the indigenous population possessed not the faintest idea. As a consequence, there soon came to be an appreciable difference in the relative price of silver to bank paper, by clever management on the part of the Bank of Japan; this tendency was overcome after a while, and the monetary situation in the island gradually came to be identical with that of the mother country, although at that period of the colony’s history no definite regulations regarding the currency had been laid down.