THE last two decades of the nineteenth century were noteworthy for the creation of a stable monetary system which, in spite of many difficulties, was able to withstand the stresses of the Russo-Japanese War. During the seventies Japanese finances had been disturbed by the political troubles incidental to the Restoration, and the banking experiments of that period yielded results that were hardly satisfactory. With the appointment of Count (later Prince) Matsukata as Minister of Finance in 1881 a determined and successful attempt was made to introduce order into the chaotic financial situation. It was decided to abandon the experiment in national banking, to establish a central banking system on the European model, to balance the budget and to restore parity between the silver yen and the notes.