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Published online by Cambridge University Press: 03 February 2010
Its unique role, 1882–1889
Matsukata's deflationary policies were a double-edged sword: effective in curing the depreciations of paper currency and also instrumental in launching the Bank of Japan silver-convertible notes in 1885. On the other hand, they caused severe depression in some sectors of the economy. The consumer price index fell sharply from 41.8 (1934/36 = 100) in 1881 to 32.3 in 1884. The business of the Yokohama Specie Bank was threatened as the export trades, particularly silk, fell away. The Specie Bank incurred the unacceptable loss of ¥1.07 million, which led to a confrontation between the Bank and the Finance Ministry. The consequences of the political coup of 1881 eventually required the Specie Bank to accept, in early 1883, sweeping changes in its management. The government's intervention, enshrined in Article 49 of the Bank's regulations, ensured the dismissal of the founder-president of the Bank, Michita Nakamura, in June 1882. In March 1883, Matsukata's close friend, Rokuro Hara, the former president of the 100th National Bank, was brought in as the succeeding president of the Specie Bank. Thus the Bank, originally Okuma's brainchild, was effectively brought under the firm control of the Finance Ministry, or Masayoshi Matsukata.
Matsukata's assumption of overall control of the Finance Ministry, including the Specie Bank, underlined his determination to promote his banking plans. He aimed especially at redeeming the paper currency and in this, thanks to his sophisticated programme and favourable economic conditions, he was tremendously successful.
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