In the year 1874, when Japan was about to embark on an expedition to Formosa, to avenge the deaths of several of her sons at the hands of the savages whom China professed to be unable to control, the Count was made Vice-Minister of the Department of Finance, and began a series of fiscal reforms among which the conversion of the pensions granted to the lords and their retainers of the old regime into public loan bonds was one of the most important. The 7 per cent. Foreign Loan raised in 1873, and which was entirely redeemed in 1897, was devoted in the main to the supply of funds to those samurai who had of their own accord surrendered their hereditary pensions and who were at that time entering, in not a few instances, on a business career. In 1874 the Voluntarily Capitalised Pension Bonds were issued for granting relief in the form either of cash or bonds to the samurai in order that they might be enabled to carry on their commercial pursuits. In 1876, when the old hereditary pension system was entirely abolished, a systematised plan of compounding the pensions with capitalised pension bonds was at once instituted, it being the intention of the government that these bonds should be made the capital of National Banks, and that those banks should be authorised to issue notes. In this way it was believed that the poorer samurai would at once be placed in funds, while the economic market would be supplied with much wanted capital in the form of bank notes. As Count Matsukata has remarked, “it is needless to note that these ideas were based on an erroneous notion that capital and currency were interchangeable terms.”