The main cause of the fall of the Mongol dynasty was the havoc caused by the irredeemable and depreciated currency, apart from the burden of heavy taxation. The first Ming Emperor who, as Hung Wu, was acclaimed by the people, was welcomed in the hope that he would bring about a better monetary situation. Although at first he repudiated all the paper money that was in circulation he very soon found himself confronted by great financial difficulties and was compelled, for a time at least, to continue with all its evils the currency system of his predecessors. Notes were issued by the Government, while at the same time steps were taken to place the country's finances on a sound basis. In the meanwhile, the trade of China was increasing, and more and more silver was filtering into the country every day. With the help of this adventitious circumstance the credit of the Government was reinstated, and in the course of a single reign the Government was able to resume specie payments - although, however, there was no confidence in paper.
The steps by which the first Emperor of the Mings established confidence in Government currency were rather crude. Having found in 1367 that he could not get on without paper money he decreed that the coins minted at the Government mints and the paper currency or Ming Ch'ao were both to circulate side by side at par; no discrimination was to be shown in favour of one or the other, as both were legal tender. However, no sooner were the Ch'ao notes issued than they followed in the wake of the previous paper issues; they were heavily discounted and were worth only 5 per cent, of their nominal value - which was no better than the value of the Pao-Ch'ao of Chih-Ta issued in 1310. All the efforts of the Emperor to regulate and maintain the value of paper proved unsuccessful. The people were for long accustomed only to paper money; and as the newly arrived silver led to their looking askance at paper, it was cursed as the cause of the failure of the paper currency and the depreciation of all the wealth they had. The populace became so discontented that the Emperor had to issue a decree prohibiting the use of silver as currency. But the subsequent acts of the Government, both during the reign of the first Emperor as also under the following reigns, did not add to the credit of paper money. The large importation of silver helped gradually to oust paper from its high pedestal, although silver was valued by weight and not as coin. In the following reigns of the Ming dynasty efforts were often made to re-establish paper currency; but practically everyone of them failed.