The Online Library of Liberty

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• Banking In Germany.
• Chapter I.: Non-issuing Credit Institutions.
• Chapter II.: German Banks of Issue.
• History of Banking In Austria-hungary.
• Chapter I.: The Austrian National Bank.
• Chapter II.: Austrian Joint-stock Banks and Banking Associations.
• Chapter III.: Hungarian Joint-stock Banks and Private Credit Institutions.
• Appendix to Banking In Germany and Austria-hungary.
• II.: Statistics of Banking In Austria-hungary.
• Banking In the Netherlands.
• Introduction.
• Chapter I.: Era of Exchange Banks.
• Chapter II.: Period From 1814. Modern Dutch Banking.
• Chapter III.: Period 1814-1863. the Netherlands Bank.
• Chapter IV.: The Netherlands Bank, 1864 to 1895.
• Chapter V.: Banks of Issue In the Dutch Colonies.
• Chapter VI.: “cashiers,” Joint-stock Banks, and Private Bankers.
• Banking In the Scandinavian Nations.
• Part I.: Banking In Denmark.
• Chapter I.: History Previous to the National Bank.
• Chapter II.: The National Bank During the First Half of the Nineteenth Century.
• Chapter III.: Private Banks.
• Part II.: Banking In Sweden.
• Part III.: Banking In Norway.
• Banking and Money In Japan.
• Part I.: The Banking System.
• Chapter I.: Common Banks.
• Chapter II.: The National Banks.
• Chapter III.: The Yokohama Specie Bank. ( Shiokinginko. )
• Chapter IV.: The Bank of Japan. ( Nippon Ginko )
• Chapter V.: Land Mortgage Banks.
• Part II.: The Currency of Japan.
• Chapter I.: The Old Coinage System.
• Chapter II.: The New Coinage Period.
• Chapter III.: The Paper Currency.
• Chapter IV.: Readjustment of the Public Debt.
• Chapter V.: The Future Money Standard.
• Appendices.
• Appendix D.: National Debt In Japan. (from the “british Economic Association Journal” of June, 1895.)
• Banking, Currency and Land Tenure In the Chinese Empire.
• I.: China’s Currencies.
• II.: Chinese Banking: Ancient and Modern.
• III.: Land Tenure and Taxation In China.

CHAPTER II.

THE NEW COINAGE PERIOD.

READJUSTMENT OF COINS AND NEW MINT, 1868-1891.

THE year 1868 saw the restoration, but the coinage system was still unsettled. Old coins were used for convenience’ sake, though they were not favored by the new régime, which was characterized by the domination of a revolutionary spirit. In February, the value of the Mexican dollar was fixed as equivalent to three bu, and in March, that of the onemon copper piece as equal to six pieces of iron. In April, all copper was ordered to be sent to the Osaka mint, and private dealings in it were prohibited. The values of old kobang and foreign coins were also fixed in detail. In May, the chiogin coins were demonetized and bought up by the Treasury. In August, the stamping machines bought from Hong-Kong, where they had become useless, arrived, and the intention to issue new coins became a fact. In November, Mr. Walters was hired for the construction of the mint establishment in Osaka, and by the next year the Imperial Mint was organized and presented samples of new coins. The old mints were thereupon abolished, and the old denomination was supplanted by the decimal system, chiefly through the influence of Count Okuma. The services of Englishmen to be employed in the new mint were contracted for through the Oriental Banking Corporation. Tempo coins, however, were still largely manufactured for the use of Yezo Island. For this purpose, and perhaps also to make them defenceless, cannons were purchased from Daimios. Complaints being made by the foreign diplomatic corps, the imitation of coins was prohibited, and the ichibu silver and nibu gold pieces were declared to be legal tender till the new coins came out. The gold, silver, and copper products of the mines were ordered to be sent to the mint for coinage, and private sales were prohibited. Mr. Kinder and his staff arrived, and soon commenced making new coins. Due notification of the issue was made to the foreign ministers, with the declaration that coins were to be 10, 5, and 2½ yen gold pieces, and 1 yen, 50-cent, 20-cent, 10-cent, and 5-cent silver pieces, with three kinds of copper coins, and that the standard was to be one silver yen. A law was promulgated under which the maker of counterfeit currency was to be hung and those who assisted him or who used the false coin decapitated. These penalties were, however, moderated later on.

In November, the one-yen silver piece was issued. In January of 1871, the free opening of the Osaka mint was made known to the foreign ministers. In February, the opening of the mint was celebrated in presence of the diplomatic corps.

THE GOLD STANDARD ADOPTED 1871.

In May, silver was demonetized and the gold standard was adopted, subsidiary silver coin being limited to ten yen and copper to one yen. The gold piece was nine-tenths fine, the twenty-yen piece weighing thirty-three and a third grammes. Still the old coins circulated, and the confusion was great. So an order was issued to exchange them into new coins at the rate of

The ratio to foreign coins was also fixed as follows: 10 gold yen equals £2 sterling, or 50 francs, or $10. In April, the Coinage Act was promulgated. The trade yen was also coined for the use of commerce and for customs duties at the rate of 100 silver yen to 101 gold yen. Mintage was fixed for gold yen at one per cent., and for silver yen at two per cent. If the fee of 5/1000 in case of gold and 10/1000 in case of silver were paid, abraded coins were recoined. The values of paper currency and old copper coins were fixed at:

FURTHER REVISIONS OF COINS.

In 1872, the Emperor visited the mint, and the form of one-yen gold and five-cent silver was modified. In November, the size and weight of coins were changed as follows:

In January, 1873, the form of the silver coins was modified, and in August two-cent copper pieces were struck, the form of other copper coins being also modified. In 1874, the form of the trade yen was amended, and the mintage charge was reduced to 1½ per cent. The exportation of copper coins was again permitted. The weight of one yen was increased and the new trade yen issued (decreased in weight in 1878); the size being 1.5 inches, the weight being 420 grains, the fineness being nine silver to one copper, and its marginal difference one grain, its fineness 2/1000 and the mintage charge 1½ per cent. In July, the amended Coinage Act was promulgated, and this remains in force at the present time. Details will be found at the end of this chapter in tabular form.

In 1876, the value of the trade yen was made equal to the gold yen, and the examiner of coins, in banks or exchange houses, was ordered to cut in pieces any imitation currency. In 1878, the use of the trade yen was extended to any payment, its weight being decreased to 416 grains, and the 420-grain trade yen was no longer coined. By Law No. 2, the defacement and melting of coins, and other acts to obstruct circulation, were prohibited. In 1883, the mint regulation was extensively revised, the main points in it being: 1. The mint in Osaka and its branch in Tokio to be open from 9 a. m. to 1 p. m. to the public, excepting on Sundays and other national holidays. 2. Bullion is not accepted except in the case of gold above 250 momme—1 momme equals 57.87 grains troy—of silver above 2500 momme, and of mixed alloy above 200 yen. 3. The expense of experimental melting is to be borne by the importer. 4. Coins for imported bullion can be obtained at the Bank of Japan, Tokio, or its branch office in Osaka, its agencies in Yokohama or Kobé (the Specie Bank branch office) after five to forty days, varying with the amount to be received. Those desiring to get the coin before the date can do so by paying a discount of four per cent. 5. The mintage charge for gold to be 7/1000 and for silver 10/1000. But if experimental melting be required, 1/1000 more must be paid. 6. If the abrasion of coins be above 35/1000 in case of gold and 5/1000 in case of silver, they will be exchanged at the main and branch offices of the Bank on the day following.

In 1884, the use of tempo was ordered to cease by the year 1886. In 1886, the legal term of the circulation of tempo sen was prolonged to the end of 1891. But, by Law No. 13 of 1890, the years of grace for coins the circulation of which has ceased were fixed at five years in general, and at three years in case of ten-cent paper money; so that tempo sen becomes defunct in December, 1896. In 1888, nickel coin was issued to supplant tempo and other old copper coins. In 1889, the coins found difficult to circulate were ordered to be exchanged at their full value if not light, and if light, at their intrinsic value, at the Bank of Japan. The Bank was also intrusted, in 1890, with the purchase of metals to be used by the mint.

Such are, in rough outline, the changes which have taken place in our coinage system. The development has been very remarkable, the country emerging from a most chaotic condition of its coinage to a sound system of currency within a comparatively few years. The new coins circulate not only throughout the country, but even in the Straits Settlements, Hong-Kong, China, Corea, and Formosa. Plans formed in Hong-Kong to keep them out are not likely to succeed, and in the Straits Settlements, Japanese coins are made supplementary to the British dollar, which might not have come into existence if the Japanese mint had been able to meet an overwhelming demand for coinage. At least once a year the work of the mint is examined by the Minister or Vice-Minister of the Treasury. Never has any irregularity or illegal deviation been discovered in the coinage, and the mint may be trusted as implicitly as that of Western countries.

THE VIRTUAL DISUSE OF GOLD.

Of the coins issued, the gold ones are seldom seen in daily transactions. Most of them were either exported or are hoarded by the wealthy class. This is, perhaps, the result of silver being the practical standard of the country, and, consequently, gold being more or less cheaper, as compared with silver, than abroad. How gold is cheaper than in London, and has been exported more than silver, may be seen from the following tables:

CIRCULATION OF COINS.

The full-value coins in actual use are of silver; the Bank of Japan notes, the Government paper money, and the national bank notes being all convertible into silver. But silver one-yen being bulky, the Bank of Japan notes are by far the most common currency of daily use, except for the purposes of foreign trade. Of the subsidiary silver coins, the ten-cent pieces are the most liked, the twenty-cent being too large and the five-cent too small. The nickel coin is handy and much in use. This was issued to take the place of tempo sen and other old copper coins, as already stated, and the material being very cheap, the profit of the mint is increased by the manufacture of nickels. However, the use of old coins has not quite ceased, being necessary in small transactions, especially in rural districts. The gradual rise of the unit of value may, however, in course of time let them die out, as happened in the case of English farthings. They are much more liked than the new one rin, which, being too small, does not circulate at all. A great deal of old coin has been melted down, as shown below, and much has been exported to China and Formosa. Still, much remains in circulation, although it is difficult to calculate how much, on account of the uncertainty of the original amount of issue.

COUNTERFEITING OF COINS.

Counterfeiting is not very common, but if it exists it is in the case of the one-yen and the nickel five-cent pieces. It is done very skillfully and perhaps with a regular plant of machinery on a large scale in the southern part of continental Asia, where a regular business of counterfeiting is said to be carried on. Not only our coins, but the Dutch, the Mexican, and the British dollars are extensively counterfeited. This industry must be put an end to by outside force, if the Government of the country is too low in practical morality or weak in administrative control to suppress it. Here in Japan even petty cases are immediately discovered, and the following provisions of the penal code are strictly applied:

1. Those counterfeiting or circulating counterfeits of the gold or silver coin or paper money of the realm are imprisoned for life, and those offering it are imprisoned, with light labor. 2. Those counterfeiting and putting in circulation foreign currency are imprisoned for a time, and those exchanging and using it are imprisoned, with hard labor, from two to five years. 3. The forgery and use of the notes issued by the banks are punished according to either of the preceding articles. Those who counterfeit and use counterfeits of the copper coins of the Empire are imprisoned, with light labor, and those who exchange and use them imprisoned, with hard labor, between one and three years. 4. If the coin is not placed in circulation, the penalty is lightened one degree, and if not actually struck, two degrees. 5. For those who deliberately enter the employment of a counterfeiter, a penalty is inflicted which is one degree less than that of the employer. 6. For those letting a building or rooms to counterfeiters the penalty is two degrees less. 7. Importers of prohibited coins are punished in the same way as counterfeiters. 8. For those who receive and use illegal coins, the penalty is lessened two degrees, and if not actually used, three degrees. 9. Those who repent and declare their offence before its execution, are pardoned. 10. Those who use bad coins after receiving them, without knowing them to be so, are fined in double the amount actually used.

Thus, if the external illegal traffic in false coins can be stopped, all trace of counterfeiting will practically cease to exist.