Expenditures of the Russo-Japanese war / by Gotaro Ogawa.

EFFECTS ON MONETARY CIRCULATION

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million yen. It was an increase in lending for private enterprises and in the issue of Treasury bills that kept up a steady
inflation of capital among the people, which attained the
total of 340,000,000 yen at the end of I906 and of 318,000,000
yen at the end of March, I907.
Thus, there was constant inflation of convertible notes and
a steady increase in the import of military supplies, naturally
tending to an outflow of specie abroad. This, of course, exposed our conversion system to increasing danger. It was
placed on a more steady basis subsequently by the importation of foreign capital and by other means calculated to check
the outflow of specie and to absorb more specie reserve into
the Treasury. Facts confirm the statement that the outflow
of specie was most marked in the early stages of the war.
The reserve, which stood at I17,000,000 yen in December,
1903, decreased to 68,000,000 yen in May, I904, so that in
only five months there was an outflow of specie to the amount
of 49,000,000 yen. If no proper measures had been taken
and specie had continued to go out of the country, the foundation of our currency system would have been shaken, or at
least monetary troubles would have resulted from a reduction
of currency. But the danger was duly averted by the various
efforts of the government, such as the importation of foreign
capital, the curtailment in the amount of credit to foreign
countries, and skilful use of foreign exchange. The money
raised by foreign loans was used as funds for foreign exchange
in the payment of credit abroad and for payment of interest
on bonds in foreign countries. Besides these and other
negative methods to prevent the outflow of specie, a positive
measure was also adopted of buying gold bullion abroad and
sending it to Japan in large amounts; silver bullion, too, was
imported as material for minting yen silver coins and subsidiary silver pieces. The amounts of gold and silver thus imported from June 2I, 1904, to March 25, 1907, were as follows:
Fund for purchase of gold bullion, ~I,I,957,267;
foreign coins, $5,370,366; total in Japanese money, 29,539,310 yen.
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