18th of March. Here also almost the same fate awaited the bill, and it was promulgated on the 29th of March. The Coinage Act called forth many imperial ordinances, the most important of which was the one issued on the 1st of October, fixing the final date for suspension from circulation of silver one yen coins as the 1st April, 1898. To speak plainly, Government authorities themselves felt a little uneasy about the consequent fall of silver and the increase of importation of silver coins from China and Straits Settlements. Judging that almost all the available amount had been brought back, a law was passed on June 11th, 1898, shortening the time allowed for the exchange of silver yen coins. At the same time, in order to supply the new gold coins, the imperial mint at Osaka was busy at work. This was unavoidable because it was ordered to strike about 48,000,000 yen before the coming into force of the new Act in October 1897, viz. within an interval of about eight months. To this was added 26,000,000 yen more, and including 10,000,000 yen coined for importers of bullion, the total sum of new gold coins issued up to September, 1898, was over 85,000,000 yen. The next question which required a careful solution was how to deal with the stock of silver placed in the hands of the Government by exchange of one yen silver pieces. The calculation of silver yen at the end of July, 1898, stood thus :

To 38,648,297 yen of the amount exchanged for gold must be added 29,505,453 yen of silver bullion paid with gold yen on behalf of the mint, making the total a little over 75,000,000 yen. Of this about 15,830,000 yen sold at Hongkong, 17,546,000 yen at Shanghai, 7,400,000 yen to foreign banks, 6,200,000 sent to Formosa, 197,000 to Wei-haiwei, 330,000 yen to Corea, leaving the difference of 27,500,000 to be used for the manufacture of subsidiary coins, which was about 50 cents per capita, being inadequate to answer the demand called forth by industrial progress. Some loss ensued from the disposal of silver, but the sale was hurried on in order to avoid loss from the further fall of

silver. The import of silver which was threatened by the opponents of the scheme, to be innumerable, stopped somewhere at 10,000,000 yen. Thus Japan became a gold standard country almost without feeling anything like so great a change. Foreign exchange was steadied even before the carrying out of the law. The rate of exchange with London, which fluctuated between 25d. and 26d., oscillated with 24d. as the central point. In October, 1897, Government bonds were sold at London to the amount of 43,000,000 yen, which would have been a difficult task so long as the Japanese Government paid the coupon with silver. Government and importers were freed from incurring enormous losses in foreign payments. Trade with Europe and America became sure and trustworthy business. But how about the Chinese trade and rise of prices, are they not contrary to the prediction of gold monometallists? It is true that exports to gold countries decreased, but this is due to the break of war between the United States and Spain as regards Cuba. Also the exorbitant increase of import was caused by failure of rice crop, rise of prices, spirit of enterprise, and prospect of increase in customs duties by 1899. The same thing holds true with the import side of the trade with China. But the export to China did not decrease, confirming the words of the framers of the Coinage Act. It is clear, then, that the increase of importation is due to causes outside the change in the standard. Next, as to the prices, they underwent incessant enhancement. But this also is the result of excessive and sudden increase in the demand for commodities and labour called forth by the rapid progress of various works, both at the hand of the Government and private companies. The purchasing power of labouring classes as well as those who took part in the war, increased all at once, and general buoyancy, in some case profligacy, prevailed throughout the country. Such a state of things cannot fail to cause the rise of prices, and if it were not for the timely adoption of the gold standard, the rise would have been much greater, greater to the extent of the further fall of silver, viz., from 29d. to 25d. per ounce.

Here it may be convenient to shortly notice the currency of Formosa. In Formosa, as in China, there existed nothing like a fixed and uniform system of currency at the time she fell into the hands of the victor. But copper coins were mostly in use. Mexican Spanish dollars were also used, but not as coins, being weighed and stamped. After the occupation of the island by Japan, silver yen and bank notes were put into circulation, and with the view of improving the state of the currency, the chopped dollars were refused by the Government. At first the bank notes were not trusted by the natives and were at discount. Facilities were given for the conversion of notes into silver, and thus there was made no difference in the monetary system from that of the mother country. It was proclaimed in October, 1897, that although the legal standard is the same as in the mother country, silver yen coins, specially stamped by the Imperial Mint, should mostly be employed at the rate of 1,037 pieces per 1,000 gold yen, this being approximately the

rate then prevailing in Hongkong. After the carrying out of the Coinage Act, and by the Ministerial change in January, 1898, some alteration became necessary, and now things stand thus:

1. After July, 1898, unstamped silver yen pieces can be used for a time to unlimited amount.

2. The ratio between silver and gold to be fixed by the average 1 rate of four preceding months in Shanghai, Hongkong, and Formosa. 3. Mexican dollars and other foreign coins, as well as chopped ones, will not be received by the Government.

II. BANKING LEGISLATION.

A. National Banks.-In the last letter it was left in doubt whether the term of existence of national banks 2 were to be prolonged, or they were to be forced to give up their privilege of issuing paper money. After a hard fight the Government won the day, and laws to be observed by national banks at the expiration of their term were promulgated on the 7th March, 1896. The real advantage of the plan contemplated by the Government was discovered by intelligent bankers, and in order to enable national banks to transform themselves into private banks even before the end of their term, an Act was passed on the 21st March, 1896. By borrowing from the Bank of Japan necessary funds to redeem their bank notes, they continued in their profession as an unprivileged institution, without causing changes in their rights and liabilities. Thus they were free from the restriction of the old National Bank Act, and the notes they issued were rendered convertible into Bank of Japan notes. Also the Government borrowed from the Central Bank in 1889, 22,000,000 yen to be used for the redemption of paper money still in circulation. The Bank of Japan, therefore, is the only bank of issue, and all notes, whether issued by national banks or by Government, are in fact convertible into gold. This is the scheme usually called" consolidation of paper currency," originated long before, but accomplished only after many delays due to insurmountable difficulties. Out of 153 banks established, with 31,996,880 yen of note issue, since the national banking system was introduced from the United States of America, about twenty-seven years ago, only very few are left. At first the system seemed to be almost like an utter failure, but gradually the banks thrived. Now we have made good their ending and completed the conversion of their notes, which appears still bothering the thoughts of American financiers.3

B. Credit Foncier and Credit Agricole.-Improvement of land and other agricultural undertakings do not give large remuneration and

1 This rate is now fixed at 6 per cent. discount against gold, silver yen being valued at 94 cents.

2 Only five were left by the end of 1898 with 1,866,563 yen notes, all of which will cease to circulate by December, 1899.

3 For details, Banking and Currency in Japan in the History of the Banking of the World, published in New York, is recommended.

take long time to bear fruitful results. This is the reason why the tillers of soil need a capital of long term and comparatively low interest, which cannot be well supplied by ordinary banking corporations. Through the deficiency of proper institutions to lay out long credit, farmers are unable to improve their land or extend their cultivation. If they borrow from ordinary banks, they suffer from shortness and dearness of their debt, while the banks themselves are placed in an undesirable position of not being paid back in time or of taking over land which is not easily disposable. Thus gradually land mortgage became disliked by our bankers, though there exists good lands estimated nearly at 1,400,000,000 yen to be made the object of credit. In order to supply necessary funds to the agricultural class which form by far the majority of the nation, Credits Foncier and Agricole were established by laws promulgated in April, 1896. The former is the central bank with a capital of 10,000,000 yen, lending out on land. mortgages of 50 years' maximum duration, on credit to local corporations, and on debentures issued by Credit Agricole. However, on this bank various restrictions and control are imposed. As a set off, this bank has a privilege of issuing debentures up to ten times its paid up capital, and its debentures bear premium coupons which are not exactly lotteries but are very similar. Also within ten years after its establishment the Government secures yearly to its shareholders five per cent. dividend. Credit Agricole are set up in every prefecture, which number in all forty-seven, where they have a monopoly against its neighbouring banks. Their capital is to be over 200,000 yen, and shareholders must live and have a domicile within the locality, local public corporations also being allowed to own shares. The business consists in lending out on land mortgage of thirty years at the longest, on credit to small local bodies, and without any pledge to associations of more than twenty men in agriculture or industry with unlimited liability. The funds lent out must not be used otherwise. than in,

1. Cultivation, drainage, or improvement of land.

2. Making or improving farm roads.

3. Plantation of wood lands.

4. Purchase of seeds, manures, and other raw materials.

5. Purchase of implements, machines, boat, waggons and cattle for agricultural and industrial use.

6. Making or improving of buildings for the same use as above. 7. Any other improvement either in agriculture and industry.

As is clear from the above these institutions are framed on the basis of credit association, and are intended to supply funds to small holders and tenants. The privileges, though not so powerful as in the case of Credit Agricole, are not slight. For instance, the issue of

1 To ordinary corporations only one tenth of such an issue is allowed by the commercial code.

debentures is only five-fold of their capital, and they do not bear premium coupons. But in case their debentures do not fare well in the locality, they can request the Credit Foncier to take over them. The manner in which they are subsidised is little complicated. To begin with, the State gives a certain sum in proportion to the amount of arable land, but not exceeding 300,000 yen, to the prefecture, which becomes the shareholder of the Credit Agricole in its jurisdiction. During the first five years, the dividend is to be given up by the prefecture, so that the bank can divide it among ordinary shareholders. But during the next five years the dividend due to the prefecture must be paid into the reserve fund. After the lapse of ten years, the prefecture can demand the usual dividend, or transfer shares to local bodies of the district at its option. Both of these banks were born in the right time, when the nation was eager to subscribe shares, and to set up companies. Credit Foncier associations began their business in August, 1897, and are now one of the thriving establishments, especially since the Government subscribed to its debentures in order to lighten the suffering of cotton mills in Osaka. Credit Agricole associations sprung up one after another, and now they number more than forty-one, with an aggregate capital of over 25,000,000. Although it is premature to foretell their future, they can do no otherwise than benefit themselves as well as the agricultural class, unless they trespass or ignore the directions of the law. But one thing is missing to complete the work of ameliorating the condition of small proprietors and tenants. This is the lack of credit associations in the form of Raiffeisen or SchulzeDelitsch. Some institutions resembling these exist more or less, but in order to make them complete and extensively established, a bill was introduced to the Parliament which was lost by dissolution of the House. Until these associations are formed the Credit Agricole must be satisfied with associations of more than twenty men, formed by convenience and with a view to borrow from the bank.

(To be continued.)

J. SOYEDA,

Correspondent of the British Economic Association in Japan

RECENT PARLIAMENTARY PAPERS.

Report by Miss Collet on the Money Wages of Indoor Domestic Servants. [C. 9346.]

The Report is based on returns from 2,067 households, employing 5,453 women and 326 men. Part of this material has been already published in the Labour Gazette, as noticed in former numbers of the ECONOMIC JOURNAL. The narrowness of the statistical foundation is compensated by the stability of the averages based on it. The wages of female indoor servants are classified both according to age-periods and to the number of servants in the household. Averages having been obtained for each, the weights proper to each average are obtained from