inaugurated in 1859 could brook no such limitations, while the extent of its requirements was of course absolutely unknown to the negotiators of the treaties. In this state of doubt and ignorance on both sides it seemed that the best temporary provision that the circumstances admitted of was for the Tycoon's Government to undertake, after twelve months, to make all foreign money current in Japan at its natural value, and that until the expiration of that period Japanese coin should be supplied in exchange for foreign, weight for weight. Yet it was a monstrous stipulation to insert in any international treaty, and could never, in fact, be enforced.

The amazing laxity in this respect with which the treaties of 1858 were drawn opened the door to unfathomed abuses in the matter of currency. The coin which was in the minds of the American and English negotiators was what was then current on the coast of China, the dollar, or more specifically the Mexican dollar. Yet, as was afterwards pointed out by Mr G. Arbuthnot, Secretary to her Majesty's Treasury, no provision was made in the treaties expressly for exchanging that, but only British and American money. In his opinion the Tycoon's Government might have refused altogether to receive the Mexican dollar, which was the only coin tendered to them, and thus the currency clause in the treaty would have been a dead letter from the first. But since they did not know the weakness of the ground which the foreigners had chosen, they had to fight out the question under all the disadvantages of a false position.

By the treaty provisions, then, as interpreted by both sides, the foreign merchants who chose to import specie were to be supplied in exchange with current coin of the realm whereby they could purchase the produce of the country without awaiting the slow and uncertain realisation of imported merchandise. But the Japanese, apart from any question of good faith, had vastly under-estimated the demand which this agreement was to make on their mintage resources. They could only supply tens where thousands were required, and in consequence of their scarcity native silver coins were soon run up to a high premium. These coins were needed not alone for the purchase of produce, but for the more lucrative investment in the gold coinage of the country; for an extraordinary anomaly presented itself to the foreign traders in the relative value of silver and gold in Japan. The ratio between the two metals throughout the commercial world was at that time about fifteen to one, but in Japan, owing partly to the fact that the silver ichibu was a token coin, and yet interchangeable, weight for weight, with foreign silver coins, the ratio in the market was reduced to five to one. Nothing could better show how completely the country had been isolated than this simple phenomenon. Since the seclusion of Japan no such opportunity of profit without risk had ever tempted merchant adventurers outside the dreams of romance.[3] It could not be the intention of the treaty-makers to deprive Japan of her gold, yet the exportation of it was not only not prohibited, it was expressly sanctioned by treaty, the export of copper coins alone being forbidden; and once the conduit was opened no power could arrest the flow from the higher to the lower level. The currency question presented many intricacies and anomalies against which the foreign representatives struggled in the dark, but the ratio of gold to silver was the ruling factor which underlay the whole problem, and until every koban was exported, or the relative value of gold and silver had been assimilated to that of the outer world, there could be no settlement of the currency question in Japan.

In the mean time the friction caused by the unsatisfied demands of the traders was considerable; it became in time ludicrous. There was a daily exchange held at the custom-house, and various arbitrary systems of distribution were adopted by the officials there. The discovery that a kind of manhood suffrage was recognised, and that an employee received as much as his employer, led to applications being made in the names of servants and even of fictitious persons, to each of whom an allotment was granted. Again, the discovery that allotments were also made pro rata according to the amount applied for led to the applications being sent in for ever larger and larger sums until billions and quintillions were reached. By such devices, no doubt, some of the applicants may have gained a momentary advantage over their neighbours, but at no time did the merchants receive a sufficiency of Japanese coin to carry on the most restricted business. At one time, about a year after the opening, it was estimated that there was in the hands of foreign merchants one million and a half of dollars which were not exchangeable, and were a "drug in the market."

Their wants were, however, partially supplied in another manner. For among the anomalies of the place and period one must be mentioned which had a quite peculiar bearing on the supply of currency for commercial purposes. The precious coin, which was doled out homœopathically to merchants, was supplied to foreign officials in liberal measure. Every minister, consul, and assistant; every admiral, captain, and lieutenant; every paymaster, for himself and for the service of his ship, received his quota of Japanese money on a scale graduated according to rank. The amount put in circulation by these means was given by Mr Winchester as $2,000,000 per annum. The recipients, whether directly or through agents, were able to sell their surpluses to the merchants, of course at a handsome profit, and no doubt abuses grew out of what was in its original intention a simple measure of justice to salaried officers. The practice was condemned by Mr Arbuthnot, and was discontinued by order of the Foreign Office in 1864, on the initiative of the Prussian Government, whose agent in Japan had voluntarily renounced the privilege. But, oddly enough, the official exchange was resumed by request of the Japanese Government, and continued for several years longer, until, in fact, foreign and native coin had found their common level.

Trade certainly suffered much in the beginning from the incongruous state of the currency, which was greatly more complicated than we have attempted to outline. Even after the year of probation foreign coins were neither received by traders at their value nor exchangeable in accordance with the treaties. Whether the Government was at the bottom of the obstruction or was overruled by circumstances beyond its control was uncertain, but the British consul-general made masterful exertions to set the matter right. Currency reform, however, has baffled so many generations of expert economists that, even assuming the goodwill of the native Government, an alien official new to the country must have found it difficult to accomplish much, with the time and means at his disposal. Earl Russell in 1862 "declined to pronounce on so large and intricate a question," and would not even discuss it with the Japanese envoys.

Japanese currency formed the subject of four elaborate reports by the Secretary to her Majesty's Treasury, extending over twelve months, from December 1862 to December 1863, drawn up after personal conference with Sir Rutherford Alcock and on information derived from various other sources, especially from a series of very able papers by Consul Winchester. In each of these reports Mr Arbuthnot remarks on the paucity of data, and in each he qualifies the deductions of the preceding one. Had the series been