The bills for the Coinage Law and sub sidiary laws, were introduced in the House of Representatives on 1 March 1897. The Coinage Law Bill was drafted on the basis of pure gold standard, laying it down that the weight of two fun (gram 0.75) of pure gold shall be the unit of the coinage an shall be called yen. As to the one-yen silver coin in circulation, it was proposed to withdraw it gradually by exchanging, according to the convenience of the government, and a six months' notice would be given in the form of an Imperial Ordinance, in case its circulation was to be stopped, while it would remain convertible for five years from the day after the promulgation of such ordinance. The reason why the weight of unit yen was fixed at 2 fun of pure gold was because of the following circumstances, The silver yen in circulation contained 6 mom me 4 fiats and fractions of pure silver, and thus the new gold coin would bring the ratio of gold and silver to 1 to 32 and fractions, which was comparatively a near approach to the average ratio at London since January of that year, which was 1 to 32 (slightly less), and which would, therefore, facilitate the set tlement of transactions in the transition from the silver to the gold standard system. Fur ther the old gold yen would correspond exactly to two new gold yen. These were the points in favor of the proposal, in keeping the old and new coins in circulation. Nevertheless objec tions raised to the Coinage Bill were not few. One of them was that the adoption of gold standard would prove a check to the growing export trade of the country with gold countries, for the fall of silver proved an encouragement to trade, which it would be as long as silver remained the standard. Another was that, as all the Oriental countries were using silver, the adoption of gold standard would greatly inter fere with this country's trade with them. The third was that the country would not be able to maintain a gold standard as it produced very little gold; the fourth that more than 100,000, 000 yen of the country's silver yen had found its way abroad, and the national treasury would have to incur staggering losses, should it be sent back here for conversion on the further fall of silver. Nor did these ex haust by any means the faults found with the proposed reform. But if the country was to achieve a healthy economic development, it was imperative that it push its way to join the inter national circle of common economics. To do so the economic basis of the country must be put on a system of coinage in common use throughout the world. By the end of 1896 the country had already received something over i22,400,000 in part settlement of dues from China, and could not afford to let pass the ex cellent opportunity to carry out the currency reform by the use of the money. It was no time to be overweighed by doubts. Fortunately the Diet shared the views of the government, and both the Representatives and Peers passed the coinage and other subsidiary bills with not a single amendment. The Imperial sanction was obtained on 29 March and the bills became laws to take effect from 1 October.
In putting the new Coinage Law into opera took pains to, think out plans to insure its success. They were: (1) To buy gold bullion with the proceeds of Chinese indemnity, to bring home to be struck into new gold coin; and to effect the exchange and withdrawal from circulation of one-yen silver and the oner yen silver certificates issued by the Mint, with part of the new gold coin thus minted. As the result of careful investigations a fairly ac curate estimate was obtained as to the amounts to be exchanged, namely, silver yen in circula tion at home 39,320,000 yen, 'that to be sent back from 10,000,000 yen, and silver btillion corresponding to the silver certificates of the Mint 30,000,000 yen, a total of 79,320,000 yen;. (3) to dispose of one-yen silver retired
from circulation and the redeemed silver bul lion, partly by minting them into subsidiary coin, and partly by seling them abroad, after dis, figuring it in the case of one-yen silver, so as to make, it legally unfit for circulation at home; (4.) to make an increased issue of sub sidiary silver coins, The gold piece which would correspond to one yen, if coined, would be so tiny and light As to make it inconvenient for daily transactions. For this reason no pro vision was made in the Coinage Law for the minting of one-yen gold piece. Yet in order to keep firm• the foundations of the currency system, and to • protect the masses from lows, the people must be supplied with hard money for, purposes of small daily transactions.. The one-yen convertible notes, then in circulation to the amount of over 60,000,000 yen were filling this need. It was proposed, therefore, to issue subsidiary coins of 50 sen and smaller denomi nations to the amount of 40,000,000 yen to take the place of one-yen convertible notes,. which were to be retired.
In pursuance of the plan summarized above, Matsukata set about carrying into effect of the gold standard system. Between January 1898 and November of the same year, he was out of office; but the execution of the plans was continued during the interval. On his re turn to office,. again as the Minister of Finance, he finally carried them to completion.
In putting. the Coinage Law into operation, the first step taken was to cause the Mint in-, cessantly to strike off the new gold coin out of the gold bullion bought with part of ceeds of the Chinese indemnity, which was brought home as rapidly as it was secured. The minting of the new coin was started in July 1897, when the bullion, began to arrive, and by April 1898, 74,455,735 yen worth was turned out. •Prepared with this new gold coin the ex-, change of old silver yen was commenced on 1 Oct. 1897, the day on which the Coinage. Law went into force.
Previous 'to this Matsukata had concluded that it was of advantage to the progress of the currency reform to stop the circulation of one-yen silver as early as possible. Con sequently on 18 Sept. 1897, the Imperial sanc tion was obtained for an Ordinance; which was forthwith proclaimed, limiting the period of its circulation to the first day of April 1898. Ac cording to the new Coinage Law, a term of five years was allowed for the exchange of one-yen silver, after it ceased to circulate. What turned out was, however, that the work had progressed with unexpected rapidity, so much so that there was no need to the five year term rest its course. In fact, there was not only no need of it, but some danger that, if the five year period was allowed to' remain, counter feit one-yen pieces might be imported from abroad. On. account of this, toward the end of 1897 he submitted to the Cabinet ,a draft of law for shortening the period in question; hut owing to the dissolution of the Imperial Diet, which then took place, the bill was never laid before the legislature. Marquis Inottye, who succeeded Matsukata in • the office of the Minister of Finance, also saw the. need of cut ting short the five year period, and a bill of that import was introduced in June 1898, in the. Diet, which was then sitting in an extraor dinary session, and was passed by the two Houses. The bill became law with the Imperial sanction and was promulgated on the .10th of the same month, announcing that the exchange period shall close on 31 July 1898. Thus was finished the task of exchanging one-yen silver.