FINANCIAL CONDITIONS
that unless a sound programme were adopted and steadily pursued, the credit of the country would be seriously injured. The Government therefore determined to shape its policy in acordance with two distinct ends, first, reduction of the volume of fiduciary notes in circulation, and, secondly, accumulation of a specie reserve. The means chosen were simple.
By applying the pruning-knife boldly to administrative expenditures; by transferring certain charges from the treasury to the local communes; by suspending all grants in aid of provincial public works and private enterprises, and by a moderate increase of the tax on alcohol, an annual surplus of revenue, totalling 7,500,000 yen, was secured. This was employed in reducing the volume of the notes in circulation. Then, in order to amass a specie reserve, it was resolved that all officially conducted industrial and agricultural works should be sold—since their purpose of instruction and example seemed now to have been sufficiently achieved,—and that the proceeds, together with various securities held by the treasury and aggregating 26,000,000 yen in face value, should be used for purchasing gold and silver. The latter was a delicate and difficult operation. Had the Government entered the market openly as a seller of its own fiduciary notes for specie, its credit must have suffered. There were, also, ample reasons to doubt whether any available stores of precious metal remained in the country.
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