Facts Connected with the Conversion of Paper By 1884 it was satisfactory to find that the amount of paper money in circula tion was much reduced, while the government's reserve fund in specie considerably increased. In view of these facts, the price of paper money gradually kept rising until if stood on a par with silver. Now came the opportunity to carry out the convertible note system, and the gov ernment decided to permit the Bank of Japan to issue a certain amount of convertible bank notes as a sort of experiment, prepardtory to the resumption of specie payments. The Con vertible Bank Ndte Regulations were promul gated in May 1884, and the Bank of Japan issued convertible notes for the first time in May of the following year, the amount reaching 3,000,000 yen at the end of that year.
Every preparation for the resumption of specie paying having been made, the govern ment began in January 1888 to pay specie for the government paper money, entrusting the business with the Bank of Japan.
Although the government commenced specie payment for the government paper money, the people 'rarely made the demand to have the ex change made. The reason was that the differ ence between paper and silver in value had already disappeared, and people generally pre ferred paper because of the convenience of handling.
As a result of the gradual redemption of both government paper money and National Bank notes, it was found on the last day of June that the amount of the former had been reduced more than 49,000,000 yen and that of the latter by 28,000,000 yen. The opportunity arrived to finally dispose of them all and place the currency system of the country on a sound basis. The government 'therefore decided to permit the Bank of Japan to issue convertible notes to the amount of 70,000,000 yen on the security of a conversion reserve, of which sum 21,000,M0 yen was to be issued by the Bank at its own will, 22,000,000 yen was to be supplied to the•overnment as a loan at interest of 2 per cent for redemption of the government money, and the remaining 27,000,000 yen was to be issued by the Bank after January 1889, grad ually in proportion as the National Bank notes would be redeemed. In view of this plan, the Convertible Bank Notes Regulations were amended in August 1889. The government, however, did not find it necessary to make the above-mentioned loan.
In March 1890, the government adopted a plan of setting apart as a redemption reserve the sum of 10,000,000 yen, out of the reserve fund, in order to accomplish the entire with drawal of the government paper money. In May of the same year the legal amount of notes to be issued on the security of the Reserve by the Bank of Japan was enlarged to 85,000,000 , • , .
yen, while at the saine'lime it proViiled' that the Bank should loan the government 22,.. 000,000 yen without interest. The Regulations; were duly amended to suit these changes, .and
in July of the same . year the government secured the above mentioned loan and added the amount to the Redemption Fund.
In these ways, both the 'government Money and the National Bank notes Were' finally.
all withdrawn•and the unifitatitni 'of - the paper currency, by means of the Bank of Japan con. vertible notes, was accomplished. The amount of, the government paper money which was re= deemed from January to the end of March 1890 was more than 48,000,000 yen: Of •hh; amount, 43,346,716 yen were exchanged with silver coins and 4,933,124 yen were redeemed by government bonds' and other means.* ' The amount of the bank notes which redeemed in the same period was more than 3,700,000 yen. The following table gives the particulars: Amount redeemed by the Batik of Japan by "rep means of the joint redemption Method .• 3:730,45t Withdrawn from circulation on acerntnt of • frauness dulent alterations or winding up of bust 33 '561 .. . ... , . „ ........ 3,7454,012, • , . These schemes of redemption were carried. out without a bitch, and in 1898 the law-vas promulgated announcing that the government paper money should tease to circulate after the 3d Dec. 1899. ..
With regard to the redemption. of.;the.'ne. tional bank motes, it steadily .pndgressed-by• means of thejoint' redemption method before mentioned, and. in 1896 it was announced that they should also cease to circulate on Dec. 1899.
TO briefly sum up.. In October were in circulation more than 154,000,000 inconvertible Paper ••nioney. It was redeemed • in the following ways': (1) The reserve-paper Timmy, 14,500,000 yen. This amount was'entirety' redeemed by the end of 1883 by means the. surplus funds obtained through effecting reform in the method of making receipts and disburse ments of the public revenue and also by other• means. (2) The government .paper money, 105;2 905,212 yen. Of this amount, 6509,956• yen were redeemed by the end of March' 1890, 13,640,000 yen by the surplus revenue, 43,346,716 yen with 8,853,240 yen by government bonds and other means. The remaining amount of 40,065,256 yen was with 10,000,000 yen, the balance of the Reserve Fund, and 22,000,000 loaned from the Bank .of Japan. The amount of 8,065,256 yen, which still remained unredeemed, was exchanged with silver coins of denominations below 5() sen out of the general revenue, as 'it consisted • of paper money of smaller denominations. In these ways, the whole amount Was adjusted within 'fiveyears after 1899, at the end of which the circulation of the paper money teased. (3) The national bank 'notes, 34,398,030 yen. Of this amount 3,764,013 yen were redeemed 'by the end of March 1890 by means of the joint redemption method and other means. The remaining amount of 32,634,017 yen was also redeemed by means of the joint redemption method within five years after 1899.