In the other contributions polemics are kept more in the background. It would lead us too far now to go into their contents. It need not be said that there is not a single contributor from amongst the whole group of academical teachers belonging to the "Kathedersocialisten." In the beginning it almost looked as if foreign countries were to furnish the greatest number of authors. In course of time, however, this changed in favour of the home country. Even now, however, contributors from abroad constitute the relatively preponderating element. Quite in the foreground stands Switzerland, where Wolf, as is well known, has been a university teacher for many years. Men of that country, equipped with both practical and theoretical experience, have contributed to the journal. Among the first named we come across such names as Numa Droz (Berne), Milliet (Berne), Naef (Aarau), Schuler (Mollis). To these must be added Professors Pareto (Lausanne), G. Vogt, Meili (Zürich), G. Adler (formerly at Basle), Oncken (Berne). Austria is represented by the names of A. Peez, V. Mataja, E. Zenker (all of Vienna). Of other foreign countries let us mention: Scharling (Copenhagen), Steinmetz (Hague), Tille (Glasgow), Blondel (Lyons), Beloch (Rome), von Lilienfeld (St. Petersburg), Minzès (Sofia). Finally the German Empire comes forward with the following authors: G. Schanz (Würzburg), Sartorius von Waltershausen (Strassburg), Pierstorff and Schrader (Jena), Biermer (Greifswald), Kohler (Berlin), Barth, Ratzel, and Lamprecht (Leipsic), von Kirchenheim (Heidelberg), Haushofer (Munich), von der Borght (Aix-laChapelle), Schaefer (Hanover); Vierkandt (Brunswick); as well as other writers: V. D. Leyen, A. Zimmermann, Fuld, Graetzer, Münsterberg, F. Oppenheimer, etc. Schmoller's other "punitive professor "-Th. Reinhold, of Berlin-is in this volume unrepresented. In the work he published last year-Die Bewegenden Kräfte der Volkswirtschaft (The Moving Forces in Economics); Leipzig, 1898 -he approximates to Wolf's point of view in respect of a moderate programme for social legislation. In other respects, however, he adheres to such an utterly pessimistic Weltauschauung, amounting to submissive resignation, that the chances of his being impressed into a movement of "social optimism" are entirely nil.

The foregoing list of contributors should prove convincing that the buch der Staatswissenschaften, which he had reprinted, to be, in a certain sense, the summing up of his scientific work in general, we cannot expect to find anything strikingly new in this Grundriss, even supposing that this announcement should prove something more than a renewed prolongation of the "Bill of Exchange drawn on a long term of payment." To say the least, we shall be curious to know how Schmoller will settle the point with regard to his rectorial address, in which the "title of honour" of true scholarship is altogether denied to such constructive efforts. Besides, we are justified in demanding from the spokesman of the "historical method" a theory of Political Economy, founded on historically dogmatic investigations. But it is just dogmatic history in which our modern economic historians have generally been the weakest. To go by the above-mentioned utterances, we can fairly imagine how Schmoller in particular is equipped in that respect.

Zeitschrift für Socialwissenschaft means to create a powerful countercurrent, and has not yet spoken its last word. It should, however, be made clear that its contributors are composed of adherents to all kinds of views. But they all agree in the sincere wish to put a stop to the monopoly and tyranny of the "Historical School," and this, it must be admitted, is now in some measure accomplished. The Zeitschrift für Socialwissenschaft was received with sympathy by the general public, both learned and unlearned. Notwithstanding a sharp counter agitation against it, the new organ commands such a number of subscribers that it can well compare with older learned journals. For every one has grown tired of seeing light and shade in the field of political economy distributed simply according to the membership or non-membership of the Verein für Socialpolitik. To have courageously cleared the way on this occasion will always remain the lasting merit of the Zeitschrift für Socialwissenschaft.

AUGUST ONCKEN,

Correspondent of the

British Economic Association, Berne

LETTER FROM JAPAN.

I. THE ADOPTION OF THE GOLD STANDARD.

THE result of the war with China was not so beneficial as is usually supposed, except that the war-or more properly the indemnity-facilitated the realization of the gold standard. Although the majority of the Currency Commission were in favour of the gold standard, they saw with regret the insufficiency of the gold reserve, and concluded their report by advising the Government to do its best to hoard gold and to encourage in every way its influx. This however was not an easy task, for the chief fountain of the influx, viz., the state of the foreign trade, was not favourable to Japan, especially after the War, except in 1895, which was characterized by the prevalence among the people of the spirit of abstinence, natural while the war was raging. The table on the following page presents some relevant statistics.

But the Indemnity of 200,000,000 taels which was fixed to be paid by China by the treaty of peace signed in Simonoseki April 17th, 1895, followed by 500,000 taels more as the annual expense of the Japanese garrisons stationed in Wei-hai-wei, placed Japan in a very enviable position. Nor was this all. By the Convention of November 8th, of the same year, 30,000,000 taels more were added as compensation for the evacuation of Liautung Peninsula. In order to escape from loss due to the future depreciation of silver, and also to get hold of the material to be used in the alteration of the monetary standard, it appeared advisable to our financiers to compute these all in terms of gold. Accordingly China was asked to pay in England, and to convert the

1 See the letter from Japan, in the ECONOMIC JOURNAL for December 1894 and 1895.

payments into pounds sterling at the average price of silver in June, July, and August of 1895, which was 30-4429d. To this she agreed on October 6th, 1895, the three items being thus computed.

Of the total sum £22,496,045 received up to the end of March, 1897, £1,158,886 were devoted to Government payments in London; and of the rest £5,350,538 were transmitted to Japan in gold, £3,090,504 in silver, and £6,202,000 by means of exchange. The Government borrowed at home in notes from the Bank of Japan to the amount transmitted in gold and silver, the bank being enabled to replenish its metallic reserve to the same amount. It was calculated that the bank was to hold by March 31st, 1897, a gold reserve of 109,400,456 yen to cover its note circulation of 181,112,080 yen, thus holding, in addition to its silver reserve of 49,040,000 yen, a gold reserve covering about five-ninths of its total issue, which is by no means weak or insufficient. Encouraged by this prospect and urged by the necessity of the time, the Government brought forward the Coinage Bill in the House of Commons on March 3rd, 1897, of which the principal features were as follows:

(1.) The establishment of a genuine gold standard system with new gold coins of exactly one-half the weight of the existing gold coins, making easy the calculation of the new yen in lieu of the old, and

avoiding any disturbance of prices and existing relations between -creditor and debtor.

(2.) The recognition of free coinage of gold at the mint, the State bearing all the loss resulting from the natural abrasion of coins. (3.) The gradual withdrawal of the standard silver coins from circulation and the discontinuance of the free coinage of silver, the silver coins hitherto issued being gradually exchanged for gold, at the rate of one gold yen for one silver yen within a period of five full years, reckoned from the day on which their circulation is suspended by imperial ordinance.

In introducing the bill Count Matsukata, the Premier and Minister of Finance, made a long and elaborate speech, which was opposed by many influential members. Cardinal points of his argument were that silver is the falling metal causing the rise of prices, fluctuation of exchange, increase of the burden of gold payments, &c., and that to base the monetary standard on the falling metal is not consonant with the real and lasting national welfare of the country. He believed that the time had come to carry out his long cherished scheme, as Japan was in possession of a stock of gold, and if this opportunity were once lost, the time would never come again for the realization of the scheme. His speech was not left unchallenged, and many influential members spoke against him. The grounds of opposition were indeed many, but they could be classified under eight heads.

(1.) Apparently the most scientific was the opposition brought forward by the bimetallists. They argued that it would be a folly if not a disaster for Japan to abandon the hope of establishing international bimetallism, which the speaker had opposed as a plan never to be realized until national interests are lost sight of.

(2.) Next came those who upheld silver as more stable than gold, basing their argument on the less changes in the prices of commodities in silver-using countries. Among the countries quoted by them, China alone gave them satisfactory proofs, while in Mexico and Japan there were symptoms of rise of prices.

(3.) Inflationists opposed the change, fearing that the gold standard may cause low prices, bad time, and stagnancy in industry, quoting the case of England and other gold-using countries. However, low prices are to be aimed at if we look to lasting and universal benefit. The depression which prevailed in gold countries is not the result of the monetary standard, but of the gradual increase of international competition and improvement in means of production and transportation. Indeed, general well-being and progress cannot be attained unless prices are steady if not low, high prices being only a temporary benefit to be reaped by few producers and merchants, at the cost of the community at large.

(4.) Many held a view that gold would be too high a measure of value in Japan, where, although the unit of value is yen, to coin a one yen gold piece is a difficult task, the coin being too small for manipu

lation. In answer to this it must be noticed that the practical unit of value had already risen, this being proved by the increase in the use of five yen bank-notes. Even if one yen cannot be totally done away with, the work can be fulfilled by silver tokens the amount of which it is contemplated to greatly increase.

(5.) Then followed the most popular and convincing opposition from those who firmly believed that the extension of our trade and industry was the consequence of the fall of silver. This was true for a time; but with the gradual rise of prices as silver fell, this argument lost its validity, and not only the exportation decreased but was followed by the increase of importation. What they feared most was our commercial defeat in China by England and other gold-using countries. But geographical proximity, lower wages, and abundant coal will be still left in our favour, even if we start from the same basis. of gold standard. Moreover, to rely on such an advantage as the fall of silver, is not the best way to attain commercial supremacy in the oriental market.

(6.) Some contended that the amount of gold reserve was insufficient to carry out the scheme, especially at the time when the tendency of the foreign trade was on the side of increase of importation. But the vault of the bank of Japan was to hold 150,000,000 yen in gold covering five-sixths of its note circulation, and if the continual increase of import were unavoidable it will make no difference whether we upheld either gold or silver as the standard. The gap must be filled up any way, and if by the use of gold the rise of prices, and consequently the increase of importation, could be checked, so much the better if we adopt the gold standard.

(7.) One of the minor objections was the allegation that it was a mere device for borrowing abroad, and that Japan will be involved in the oscillation of hard and good times in her creditor countries. It is true that the influx of capital may be facilitated as the consequence of the change in the standard. But it is by no means the sole aim of the change, and the world-wide undulation cannot be avoided unless we shut our doors to the rest of the world, remaining a hermit nation, as we used to be before the restoration.

(8.) The last and the least objection was the fear of silver yen pieces which were exported to the amount of 112,000,000 yen, coming back, to be exchanged for gold coins, within five years after the suspension of their circulation. But most of them fell into Chinese hands and were "chopped" or so disfigured by stamps of moneydealers as not to be regarded as a coin, and therefore had no claim to be converted.

The bill was referred to a select committee of twenty-seven, of whom fifteen voted for, and nine against the bill. It was reported to the House on March 10th, 1897, when a hot discussion was carried on for two days. It passed the Commons (ayes 151, noes 96) without any amendment, and was on the order of the day in the Lords on the