The circulation of the bank-notes in China is particularly interesting and has exercised a great deal of influence on foreign commerce. While those in charge of the banks issued paper with a view to obtain fresh capital without incurring interest charges, they left out of their calculation the chances of these same notes being returned to the banks as money. It is inevitable that when one pays out certain paper or an article as worth a certain amount, with a promise to buy it back when offered for the same price, he should take it back from a customer who offers the same back to him. At first the bank-notes were a great success, at least in the ports and in the principal cities of the Empire. But, at no time in the history of this country did the farmers and the people in the remote parts of the interior ever look upon anything else but silver or copper as money. The notes, therefore, circulated only among merchants and people in the ports and cities. In exchange for their deposits in the banks, and cargo sold through the banks, they obtained these notes which they took without question. So long as it was only the issuing of the notes there was little trouble. But after a while the banks received the same notes for deposits as also for cargo bought through them. At first this arrangement which was an inevitable corollary to the first steps of the banks, did not cause any inconvenience - although the banks would have preferred, for a time at least, to receive all money in silver and pay out all in paper. But the situation became serious, because these notes were of little value except among middlemen. The foreign banks would not accept them as money and insisted upon payment in silver; and to the farmer in the interior this paper had no value whatsoever. Thus not only the utility of the notes became considerably restricted; but a serious situation was developing, in that the issue of such notes had led to over-trading among the middlemen in the ports. The banks issued the notes without any reserve; and it is a notorious fact that Chinese banks would use their utter-most farthing if only the chances of profit were big - without any thought whatsoever of the possible risks. Before the issue of the notes, the merchants did business on the basis of the silver that was available in the market - which was the only money available. After the issue of the notes they did business not only for the total of the silver available but also for the total of the notes, which, for a time, had the same value as silver money. The volume of business done was justified, neither by the amount of the cash available nor by the demand, one-way or the other.