Further light may be thrown on the situation by a survey of the monetary situation during the past two years and a half.
In the course of the first ten months of the China Incident, the Bank ac-
a legal maximum as low as commodated itself comfortably with 1.1000,000,000, or less than half the maximum of today and less than a third of the actual circulation end of last year. Then, in April, 1938, the first repercussions of the war were felt on the monetary situation and the maximum of note issue had to be raised to Y.1,700,000,000.
This new margin, however, soon proved to be too narrow and August, 1938, saw the note circulation nearing the Y.2,000,000,000 mark, compelling the Government to raise the legal limit once again in October to 2,200,000,000.
On December 30, 1938, the note issue again had passed this new maximum, however, and had reached the high mark of 2858000000, thus passing for the first time over the previous record of Y.2,659,000,000 which had been set more than ten years before during the financial panic of 1927.
July, 1939, was the signal for a certain regression in the ever-inflating trend of the note circulation, But This legal Maximum may be exceeded by the Bank if the Finance Minister agrees, but the "brakes" must be put in action within two weeks in the form of a tax of three per cent, on the excess issue which the Bank must pay the Government.
In fact, the legal maximum was passed as early as October last and the "brakes" were applied. But they did not stop the excess issue from reaching its present record level of more than Y.1,300,000,000. Meanwhile this return to normalcy lasted only a brief while and a new legal maximum of ¥.2,700,000,000 was decreed in October,
Text read from the printed page and cleaned; old type leaves the occasional error.