besides the transaction of foreign exchange. Count Matsukata proposed
as an important adjunct to the scheme that the Government should engage
in the direct exportation of rice and seaweed, and his memoranda on the
subject, dated November 1882 and February 1883, only adopted by the
Cabinet in June 1883,—a clear proof that there was no undue haste in any
of the steps taken in this pre-eminently momentous national affair,—took
in part the form given below. It should serve in its tone to explain with
what solicitude the Government of Tokio views all questions that hinge
upon the successful cultivation of Japan’s most valuable staple.
“Rice being the greatest of our national products, the abundance or
scarcity of its harvest and the fluctuations in its price naturally
affect to no small extent the financial condition of the country. As
to the contingency of a bad harvest, there is already in operation the
Law of Storing, and ... I shall confine myself to providing means of
disposing of surplus rice in a year of abundance. For should there occur
an extraordinary depreciation in the price of rice, it would not only
make it difficult to raise the revenues, but it would interfere with the
development of agricultural enterprises, affecting thereby the general
trade and commerce of the country. For this reason it seems to me that
the best means to prevent such a contingency would be to export rice to
foreign countries. It so happens, however, that work of this kind, owing
to shrinkage from rotting and other causes, and the time involved in
transport over wide seas, can hardly ever pay in private hands. If the
Government undertakes it these apprehensions need not be entertained.
When specie is as scarce as it is to-day, the Government must still
provide it for the payment of unavoidable expenses, such as the army and
navy, and it seems to me that every effort ought to be made to absorb
specie by enlarging the list of exported commodities. The export to
foreign countries of the surplus rice will be like killing two birds with
one stone, for it will provide specie for the Government and protect the
income of the farmer. There seems to be a growing increase in the demand
for Japanese rice in Western markets, owing to the gradual recognition
of its superior quality. As it is an urgent necessity to draw in specie,
let what has hitherto formed the Reserve Fund (of the Department of
Agriculture) be turned into capital for making yearly purchases of rice
in suitable quantities according to conditions of crop and market price,
in order that it may be sent abroad, and let the Finance Department be
charged with the duty of keeping accounts.”
The actual quantity of rice exported under this arrangement amounted to
some 6,000,000 bushels, and in selling the rice British and American
coins were taken in payment, and the various earnings were transferred
to Japan through the agency of the Yokohama Specie Bank in the form of
draft or of gold and silver bullion. Altogether the specie accumulated by
the Government, by its several measures, was in English money value about
£28,750,000 sterling, the total disbursements from this huge sum having
been £23,500,000, leaving a margin of £5,250,000 to be applied to the
redemption of paper money.
In this way and on the recommendations of Count Matsukata the needful
redemption was brought about, and at the close of 1885 the difference
between the value of silver and paper money had almost disappeared.
Notice was given by the Government, therefore, that on and from the 1st
of January 1886 specie payments would be resumed. The actual amount
of specie held at that time in the State coffers was of the value of
£4,500,000 sterling.
The adjustment of the paper currency thus accomplished prepared Japan to
reap the benefits of a scientific system of coinage. The rate of interest
fell,—commercial and industrial enterprises began to expand,—the volume
of the country’s foreign trade increased greatly. Count Matsukata had
rid his nation of one serious impediment to its progress, but in the
process Japan had become _de facto_ a silver standard country. Sooner
or later, as he well knew, she would have to enter the international
economic community, and to do this she would have to adopt a gold
standard.
Prior to 1873 the price of silver had not shown any great variations, the
ratio between gold and silver having been as a rule 1 of gold to 15½ of
silver. Count Matsukata attributed the immense fall which took place in
subsequent years to a number of causes, (_a_) the vastly increased annual
output of the metal, (_b_) the action of the German Government in selling
large quantities of silver when unifying the coinage of the Empire, (_c_)
the adoption of a gold standard by the United States of America, and
(_d_) the various limitations imposed on the coinage and in other forms
by Continental nations. None of the measures adopted were sufficient to
check the fall. In 1879 the ratio became 1 to 18,—in 1891 it was 1 to
20·92,—in 1892 it was 1 to 23·72,—and in 1893 it had become 1 to 26·49.
But this was eclipsed by the figures for 1897, which at one time were as
1 to 39·70 and the average for that year was but 1 to 34·35. In Japan the
consequences were most serious, for the price of commodities rose rapidly
and a spirit of speculation became rampant.
It is necessary to go back a little, to the period of Count Matsukata’s
initial efforts to pave the way for the introduction of a gold standard.
That his financial policy led at first to Japan becoming a silver
standard country was owing mainly to the immense difficulty of at once
accumulating a large gold reserve necessary for the establishment of gold
monometallism. It was deemed advisable to defer this essential, all but
vital, alteration to some more favourable time, but Count Matsukata never
relinquished for one moment the hope of being able to effect it. When it
is remembered that in April 1881, 1 yen in silver fetched on an average
1 yen and 79½ sen of paper, and at one time the proportions were as 1
to 1·815,—the lowest point ever reached,—and yet four years and a half
later paper and silver were on a par, the magnitude of Count Matsukata’s
achievement becomes apparent. The imperial ordinance authorising the Bank
of Japan to issue convertible notes was obeyed when, on the 9th of May
1885, the first of such notes were put into circulation, and the moment
was seized by Count Matsukata to urge on the Government, as Minister of
Finance, the advisability of taking the opportunity then presented for
redeeming the whole of the inconvertible paper, and of entrusting the
business of the exchange entirely to the Bank of Japan, to be effected
in the ordinary way of circulation, so that the reform might be quietly
and smoothly carried out. “If,” he concluded, “these suggestions shall
happily receive the August Sanction, not only will the Government be able
to accomplish its original purpose in regard to paper money, but the
credit of the Government at home and abroad will thereby be assured, the
national finance placed on a firm basis, and the future happiness of the
people greatly enhanced.”
In the year 1884 Mr Matsukata, as he then was, received the rank of
_Haku_, or Count, continuing to hold the portfolio of Finance until
1891, when he was appointed Prime Minister, but without relinquishing
his post at the _Okurasho_, and he only quitted it, after a service of
nearly twenty years in that department of State, when he resigned the
Premiership also in 1892.
In the office of Premier of the third administration since the
institution of Constitutional Government Count Matsukata had for one
of his colleagues Count Enomoto, who had represented his country at
the Courts of Russia and China, and had previously been Minister for
the Navy. He now held, in the Third Cabinet, the portfolio of Foreign
Affairs. Count Matsukata’s occupancy of the position of Prime Minister
lasted on this occasion from May 1891 to July 1892, there having been a
general election in February of that year which had resulted in a victory
for the opposition, followed by Cabinet disruption, and the advent of
Count Ito, as he was then, to a long lease of power.
At the period of the outbreak of war between Japan and China, Count
Matsukata was in private life, pondering his all-important scheme for the
permanent settlement of Japanese finance, but the successful floating
of the War Loan was in a measure ascribable to his influence, for the
nation had learned to couple his name with not a few judicious measures
of national finance that had given relief to commercial enterprises in
a very marked degree. And as the end of the campaign in Shantung and
Liaotung was seen to be approaching the Emperor expressly decreed the
Count’s assumption of the duties of Finance Minister, in order that
he might undertake the adjustment of the country’s finances on the
termination of the war. He remained in office long enough, with Marquis
Ito as Premier, to initiate a movement which in effect carried him a
great way towards the realisation of that cherished plan on which he had
expended so much mental labour and close application both when in and out
of office. He says that when India, the greatest silver country in Asia,
took steps in 1893 to reorganise her currency system, the sudden fall in
the price of silver had most noticeable effects in Japan, and the need
of the adoption of gold as the basis of her coinage was more and more
impressed on her financiers. The reform was, however, very difficult to
undertake. Quite unexpectedly, however, the receipt by Japan of a large
indemnity from China seemed to offer the long-desired opportunity.
“It occurred to me then,” wrote Count Matsukata afterwards, “that on
account of the unstable price of silver, as well as in view of the
possible adoption of a gold standard by our country, it would be greatly
to our advantage to receive payment of the indemnity in British, instead
of Chinese money. The Minister-president of State, Marquis Ito, acting on
my suggestion, negotiated with the Chinese authorities, which led to our
receiving the indemnity money in pounds sterling.”
In September 1896 Count Matsukata was appointed Minister-president, for
the second time in his career, and he forthwith directed his endeavours
to the realisation of his highest ambition. A bill was drawn up in
February of the ensuing year, to the passing of which through the Diet
there was in reality but little opposition. Some critics of the proposal
said that the fall in the price of silver would rather encourage trade
with gold countries, while the adoption of a gold standard by Japan would
tend to decrease the amount of her exports to those countries. Others
said that Japan, situated as she was in the midst of the silver countries
of the East, would be placed in a position of much disadvantage in her
trade with these countries if she adopted gold monometallism. Again,
some said that Japan could not produce a sufficient amount of gold to be
able to maintain permanently a gold standard system. This was not all.
It was by many urged that the silver yen coins exported to foreign lands
exceeded 100,000,000, and that if all these came back for exchange, as
might possibly be the case, the national treasury would have to suffer
an immense loss. Count Matsukata had no notion, however, of allowing
himself to be influenced by those dismal prophecies. His Cabinet stood
firm in its purpose, and in March 1897, after having been passed by
both Houses of Parliament, the bill received the Imperial sanction, and
was promulgated as Law No. XVI. on the 29th day of the same month. The
stability of Japanese finance during the nine years which have passed
since that Law came into force, and especially throughout the terrible
ordeal that it has lately undergone during the time that Japan has been
at war with one of the Great Powers of Europe, affords an incontestible
proof of the soundness of Count Matsukata’s judgment, and the nation is
indebted to him for the perseverance and fortitude that he displayed in
carrying his scheme, despite all opposition, to a successful conclusion.
No doubt every precaution that financial skill could suggest was taken by
the Government of which he was a member. One of the earlier instalments
of the indemnity was converted in London into gold bullion and conveyed
to Japan as fast as steam could transport it, to be minted into coins in
the Government mint. In buying bullion, too, care was taken to secure it
without much disturbance of the market or loss to the Government. The
gold thus turned into coins between July 1897, and April 1898, as a
reserve for the exchange of silver _yen_, amounted to roughly £7,500,000
sterling. The process of exchanging began on the 1st of October 1896, and
closed on the 31st of July 1898.
It is not a little instructive to learn to what degree the foreboding
as to the national treasury being swamped by the number of yen silver
coins that would come back for exchange, in which some critics indulged,
proved to lack solid foundation. The total number of one-yen pieces
coined at Osaka from the date of the opening of the Mint was 165,000,000.
Of these the number actually exchanged during the ten months specified
for gold coin was 45,500,000, including 10,750,000 sent back from
abroad for that purpose: the rest were in circulation in Japan. It is
estimated that 99,500,000 of yen coins were exported to foreign lands
and never returned. 11,000,000 of these coins were taken abroad at the
time of the China-Japan war,—5,750,000 were taken to Formosa after the
cession of that island to Japan by China and were never brought in for
exchange,—about 500,000 were recoined at Osaka into subsidiary coins,—and
about 2,750,000 could not be traced, and must have been lost or worn
out, or taken away by visitors to Japan, when leaving the country. Count
Matsukata was not moved by sinister prophecies, for one thing because he
had had the most careful inquiries made as to the numbers of these coins
circulating in Shanghai, Hong Kong, the Straits Settlements, etc.; and
it was found that no inconsiderable proportion of them either bore the
marks of some private stamp or “chop” which unfitted them for circulation
in the land of their origin, or had been turned into Chinese _taels_.
Then it was known that a fairly large quantity was in use as a medium
of exchange in the Straits Settlements and neighbouring islands, and
that there was but little prospect of any of these coming back to Japan.
Altogether Count Matsukata’s estimate of the number that would have to
be provided for was 10,000,000, and this was within a trifle of the true
number presented for exchange. The people were invited to pay taxes and
make other public settlements in Yen coins, a vast number of Government
treasuries and sub-offices were opened all over the country to facilitate
the work of exchanging the silver, and that no report was ever received
that any failed to get exchanged went to show that the process was
effectually completed.
The next thing was to dispose of the silver that had been brought in, and
a large part of it was recoined into subsidiary coins, a large proportion
sold in Hong Kong, Shanghai and elsewhere, and much sent to Korea. The
whole amount was disposed of in a year and a quarter after the new
coinage law was promulgated in Japan. The total expense incurred by the
State in effecting the change was roughly £500,000 sterling, but this was
more than made good by the Mint profit on the subsidiary coinage. As fast
as they could be produced the ten-_sen_, twenty-_sen_, and fifty-_sen_
pieces were put into circulation, in lieu of the paper money of small
denominations, and it is estimated that the sum-total of the subsidiary
coinage in actual circulation,—silver, nickel, and copper,—would be of
the value of 4s. _per capita_, if calculated in English money. This is
considered to be ample for the economic needs of the people to-day.
In October 1898 Count Matsukata was for the fourth time called
upon to take the portfolio of Finance, with Marshal Yamagata as
Minister-President, and in May 1899 he presented to the Premier a
masterly report on the financial progress of Japan, entitled the
“Adoption of the Gold Standard,” which was issued in book form, and it
was followed in March of the next year by a “Report on the Post-Bellum
financial administration of Japan, 1896-1900,” both affording emphatic
testimony to the Minister’s untiring zeal and industry.
In October 1900 Count Matsukata retired into private life, and in
the ensuing summer he visited London and the capitals of Europe. In
recognition of his long and valuable services to the State the Emperor
accords him as much consideration as if he were a Cabinet Minister
still. He has received the Grand Cordon of the Paulownia Imperialis,
and other decorations, and many foreign honours. He was twice Premier,
and fourteen years Finance Minister. His achievements include land-tax
reform, centralisation of fiscal administration, the redemption of the
paper money, the establishment of the Bank of Japan, post-bellum finance,
the adoption of the gold standard, the establishment of the Industrial
Bank,—and he has rendered many other services to his sovereign and his
countrymen of which it is needless to give details here. His part in the
Making of Japan has been most ably and conscientiously performed, and he
has won the respect and admiration of all classes of his fellow-subjects
of the Japanese Emperor.
XX
ADMIRAL VISCOUNT ENOMOTO
Born on the 25th of August 1836 at Yedo, Enomoto Buyo was sent by the
Tokugawa Government as a young naval officer to study in Holland, and he
was in Europe for several years, ultimately returning to Japan on board
the _Kai-yo Maru_, as she was named, a corvette built at Amsterdam to the
order of the Shogunate. With him returned several of the students who
had been despatched in 1862 and 1863 to Europe for purposes of study,
some sent by their clans, and some by the Bakufu. Ito Shunsuke and Inouye
Bunda, two of the number, had, as is elsewhere recorded, returned some
years previously, in consequence of trouble in their native province
of Choshiu. The _Kai-yo Maru_ reached Japan in 1866, and she was a
formidable addition to the fleet of six vessels already possessed by the
Shogun’s Government. Being a native of Yedo he was of course one of the
Bakufu supporters, and when the troubles of 1867 began, and which were to
culminate in the fall of the Tokugawa family from power, Admiral Enomoto
was loyal to his chief, Prince Keiki, and fought strenuously for his side
in the War of the Restoration.
[Illustration: ADMIRAL ENOMOTO]
When, on the result of the battle of Fushimi between the Tokugawa men
and the Imperialist regiments belonging to Satsuma and Choshiu becoming
known at Osaka, the Shogun recognised the impossibility of retrieving the
fortunes of the day, his retainers procured a small boat for him at an
adjacent wharf and he made his way to the vessels belonging to him,—three
in number,—lying off Tempo-san, at the mouth of the river Yodo, on which
the city of Osaka stands. He was quickly taken on board the _Kai-yo
Maru_, Admiral Enomoto’s flagship, and she was next seen entering Kobé
harbour with her consorts on the 26th January 1868, Prince Keiki being
on board. Lying in Kobé were three Satsuma steamers, and the _Kai-yo
Maru_ challenged them to combat by steaming round them and leading the
way to the open sea. The contest took place in “Awa Bay” as it is termed,
in reality the indentation of the coast facing Tokushima, the chief town
of Awa province, close to the southern extremity of the island of Awaji,
a few hours’ steam from Kobé. One of the Satsuma ships was sunk and
another took fire. The three ships under Admiral Enomoto, one of which
was the steam-yacht _Emperor_ which Queen Victoria had sent out as a
present to the Shogun some time before, escaped with slight damage, and
subsequently steamed to Yedo, where the Prince Tokugawa Keiki landed a
week after the battle. The _Emperor_ yacht was best known by her Japanese
name of _Banrio Maru_. Several of the clans at this period possessed
foreign-built steamers, and the chieftain Shimadzu Saburo of Satsuma had
purchased the _Fiery Cross_ in Yokohama as far back as 1862, as a present
for his nephew the _daimio_ of Kagoshima. She had been handed over to
her new owners in Yedo bay and navigated by them to the headquarters of
the clan. The ships belonging to the several territorial barons were
ultimately surrendered to the Central Government, after the Restoration,
as well as those belonging to the Shogunate, and formed the nucleus of
the splendid navy that Japan may now rightfully pride herself on having
established.
The eight ships which had been lying in Shinagawa waters, and which were
to have been given up to the Imperial Government when Yedo was finally
surrendered, suddenly left there, however, on October 4th, 1898, under
the command of Admiral Enomoto, and it became known that he had stolen
away to Hakodate. There, in conjunction with three other supporters of
the Shogun’s lost cause, he presently proclaimed the “Republic of Yeso,”
the other signatories being Otori Keisuke (subsequently pardoned, and at
a later date the faithful and energetic representative of Japan at the
Court of Korea) Matsudaira Taro,—a relative, as his name implied, though
in this case a distant one, of the Tokugawa family, and Arai Ikunosuke,
subsequently appointed to an office under the Colonisation Department in
Yeso, and in which he evinced no little talent as an organiser.
Admiral Enomoto declared that his reason for going to Hakodate with his
squadron was that he and his friends had resolved to guard the Northern
Gate for the Emperor, and to till the soil, as yet wholly uncultivated,
of the island of Yeso.
“Men who have the hearts of Samurai,” they pleaded, “cannot turn into
farmers or merchants, so it appeared to us that there was nothing for us
but to starve. And considering the untilled state of the island of Yeso
we petitioned the Government that we might remove thither, but all in
vain.” In sheer despair they had sailed north at their own risk, using
force only against the fortified places, Hakodate and Matsumai (now
Fukuyama). “The farmers and merchants are unmolested, going about their
business without fear, and are sympathising with us, so that already,”
they added, “we have brought some land under cultivation. We pray that
this portion of the Empire may be conferred upon our late lord, Tokugawa
Kamenosuké, and in that case we shall repay your beneficence by our
faithful guardianship of the Northern Gate.” The newly appointed head of
the Tokugawa clan, here alluded to as Kamenosuké, now Prince Tokugawa
Iyesato, President of the House of Peers, was ordered to go to Yeso and
restrain his clansmen, but it was asked that as this young prince was
then only a child of five years old, the ex-Shogun Keiki might be given
control. This, however, was refused, lest his prestige might still be
employed by his followers to incite others to rebellion and thus prolong
a useless struggle.
“Why should we quit this spot?” asked Enomoto afterwards, when told he
must surrender: “If his Majesty the Emperor will take pity on us and give
us a portion of this barren northern region, our men shall guard the gate
till death, whilst for the crime of having opposed the Imperial army, we
two [Matsudaira and himself] will gladly suffer capital punishment.”
It was not until the following spring that the newly formed Central
Government at Yedo found itself able to turn its attention seriously to
the subjugation of the little band of malcontents up north, and then the
Imperial fleet steamed away from the anchorage at the head of the bay,
off Shinagawa, intending to rendezvous at Hakodate where the rebels were
making a last stand. The chief hope of the Satsuma officers lay in their
recent acquisition, the _Stonewall_, to which had been given the Japanese
title of _Adzuma_. She had been employed in the American Civil War before
she came into Japanese hands, as one of the Federal Squadron in the
assault on Vicksburg.
The _Adzuma_ though of small tonnage, was an ironclad, and with her
mighty ram she presented a most sinister appearance. Altogether the
collective fleet made a very good beginning, and the Imperialists were
justly proud of it as marking an appreciable advance on the agglomeration
of war junks with which the nation’s sea-fighting had been done under the
old conditions.