The circulation of the notes was possible also because of the fact that the Central Government acknowledged it as money for a very short while. Especially during the last twenty years of the Manchu rule the Government was always suffering from the lack of funds, and the provincial administrations sent the notes issued by these banks in lieu of the contributions due from them. At first, of course, the central authorities were rather surprised at the readiness with which the provinces were willing to meet their obligations - especially in view of the fact that for several years previous, the ministry of finance was being inundated with petitions requesting it to intercede with the Throne for remissions of the dues from the several provinces. Although in many cases the provinces were actually unable to meet the tribute due to Peking, in a few cases the authorities were unwilling "to despatch more money or grain than they should. During the same period corruption and peculation were increasing in direct ratio to the weakening of the central authority.

When, all of a sudden, some of the provinces claimed to have met their full quota of indebtedness by dispatching the notes instead of silver - as has been customary for centuries previous - Peking was at first bewildered and unable to make out the meaning of the sudden transformation in the situation. At first it remonstrated with the Provincial Governments stating that it was against precedent to despatch paper as money. The provincial administrations in reply stated that the paper was convertible into the amount of silver mentioned on the face of it and that the paper was readily passing for money, both in and out of the provinces in which it was issued. This statement was only a half truth; these notes were generally accepted in trade, especially by merchants whose main purpose was to exchange it for cargo at the earliest possible moment. From the point of view of the merchants these notes were the medium by which they were able to exchange cargoes. Fundamentally money is purely a medium of exchange; convention demanded that the medium should have a certain intrinsic value although such did not usually affect the value of commodities which were being exchanged, in countries like China. At all events the dealers did certainly not take kindly to the note issues; but when they found that the intrinsic value of the paper did in no way influence the trade of exchange in commodities they rather took to them, in view of the convenience of handling it. But the paper was of no use in the interior beyond the ports and the chief cities. Anyhow, the argument of the provincial Governments that the merchants were freely taking it for money told with Peking. The Central Government had neither the occasion nor the acumen to enquire into the causes of the temporary popularity of the new paper money, or the reason why they were being accepted at all. The Government at Peking knew full well the real worth of these notes, especially as the provincial administrations have been complaining year after year of the utter scarcity of silver in their coffers.