I have already mentioned the causes that led to the issue of paper money in Szechuan; also that at one time this paper money was dishonoured in the same province. After a great deal of discussion it was arranged that the issue should be taken out of the hands of merchants and that the administration should issue paper money. There was always in this country a readiness on the part of the official staff to undertake the duties of merchants; the officials took up the management of paper in Szechuan when the amount due to the Government from the several guilds had not been paid at the time mentioned in the contract. Merchants were very willing to collect taxes on behalf of the Government, quite as much as the Government officials were anxious to act as bankers for the people. The Government treasury undertook to give the bank paper in one city, cashable, on demand, in another. The extensive use of paper money, especially in the earlier period of the history of this country, was mainly due to the extension of the banking operations by the Government.
Especially in the eleventh Century, the Government was a great bank and the officials were anxious to profit as much as possible from the banking operations of the Government. The situation became so intolerable that in the reign of Shen Tsung, Chang Fang-p'ing stated in the memorial to the Throne:
"To employ money as bribe, to engage the people to work for the state is to inflict injury on the administration. If I take, as an example, the seven district cities round the metropolis, they contain 67,000 families. They produce by their labour 152,000 piculs of rice and wheat and 4,700 pieces of silk, and give it to the Government. Such is the fruit of field and silk culture in the old way. The additional taxes in money yield to the state 113,000 strings of copper cash. When copper cash is wanting millet and silk stuff are given instead. The house tax amounting to 5,000 strings is, however, always collected in cash. Such is the old system of taxation transmitted to us from our ancestors during 2,000 years. Under the five dynasties which succeeded the Tang period, there was still no change in the system, but now personal service due to the state is rendered in money each year and the amount of cash collected is 75,300 strings. The system which has lasted so long is now thought to be unwise and it is proposed to distribute among the farmers 83,000 strings of cash with the intention of securing a profit of 16,600 strings. This amount, however, could not be collected, only 3,000 strings having been actually received. Another measure proposed by Wang An-shi was to withdraw the edict which forbade the export of copper cash. This was to encourage the sale of copper and allow it to become the property of foreign nations. This policy is a mistaken one, because the Imperial cash will be melted down in large quantities; few new cash will be made and a scarcity of copper currency will be felt. It is the duty of the state to provide currency in order to stimulate trade and promote the revenue in a legitimate way."