Thursday, November 5, 2015

Banknotes of denominations below $5 were not allowed to be issued

Banknotes of denominations below $5 
were not allowed to be issued



Most banknotes in have been issued by commercial banks rather than by a central bank, as
in other places. Regulation of banknote issue in nineteenth-century Japan
and China was loose. The government accepted payments in banknotes for taxes and fees
only from banks incorporated by Royal Charter or under the Colonial
Regulations. But this did not prevent other banks from issuing notes.
Banknotes of denominations below $5 were not allowed to be issued without special
government permission: the aim was to prevent banknotes getting into the hands of
poorer people, who would suffer more in the event of a bank collapse. Three note-issuing
banks did, in fact, collapse in the nineteenth century: the Agra and Master man’s
Bank and the Commercial Bank Corporation of India and the East during the global
financial crisis of 1866, and the Oriental Bank Corporation — one of the main note-issuers
in 1884.
In 1878 the redemption of paper money has increased national debt, the Japanese
government has sold silver worth of 2,300,000 yen in April, In 1880 the government
against sold 6,600,000 yen of silver to increase the value of paper money but they did
not help at all. The government also prohibited the sale of gold and silver when the
stock exchange took up the devaluation of paper money. A new tax was introduced on sike
a breverage made from rice.
In November 1,200,000 yen of amount was alloted from central fund and 2,600,000 yen ws
alloted in local budget for the redemption of the notes.The paper money issued
during this period was easily forged to increase the inflation.In 1868 the government
establish board of trade and gave permission to certain companies to discount on
paper money at 8 cities and funds were placed in their disposal who issue gold, silver,
dollar and coin certificates. Only Osaka and Kyoto were given permission to issue
fractional curency and which were inconvertible. Seeing the fractional currency was
facing shortage government issued paper money and copper coins. Except one yen in
notes all gold and silver certificates were convertible into their respective metals. In
1872 the ten companies which were given permission to issue discounts and paper
money in ten cities were liquidated with enormous loses but the government being the
originator and guaranteer has to bear the responsibility and claim for the liquidation
amount. In 1875 the government allowed the private notes to be convertible into
government notes and half the amount of the private notes. Under this circumstances the
government has issued loan bonds for the amount of 174,000,000 yen to pay the war lords
and pensioners in exchange for their old government bonds issued earlier.
There were some exceptions granted to second and fifteenth national banks, the above
banks were given permission to issue dollar certificates called as Yoginken for
the amount of 15,000,000 yen in the year of 1877.

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