276 PROCEEDINGS OF THE AMERICAN ACADEMY. 



that at times and especially in the outlying provinces, where there 

 was a scarcity of copper money, iron money was also made use of as 

 a circulating medium. 



It is evident that at first there was no conception that the govern- 

 ment could maintain a purely credit currency. There was appar- 

 ently no thought of gain in the transaction. The alleged purpose was 

 to save merchants the expense of transporting the cumbrous copper or 

 iron money, which lay at the base of the currency. Nor had they 

 conceived of a demand note. The first notes were said to be for 

 "short terms." Another emission at a latter date was said to be for 

 twenty-two three-year terms redeemable at the end of 65 years. 

 Apparently, at the end of each three years, the notes could be presented 

 for redemption. It is said that this system was originally inaugurated 

 by merchants, who furnished a private currency of their own, on these 

 terms, and it is stated that after a few years the accumulation of 

 outstanding notes which had not been presented for redemption, for 

 the protection of which they had not maintained an adequate reserve, 

 proved too much for the merchants, and being unable to protect the 

 notes, they became bankrupt. Thereupon the government stepped 

 in, forbade the emission of notes by private citizens, itself emitted 

 notes on the same basis as that devised by the merchants and it is 

 asserted with the same result. It would seem as though the failure to 

 provide the funds for the redemption of these notes might better be at- 

 tributed to lack of business foresight than to inflation. The notes were 

 a convenience and so long as the people had confidence in them they 

 were not presented for redemption at the end of the terms. Statistics 

 are furnished from time to time which serve to show that this was the 

 case. There were for instance afloat in 1032 more than 1.256.340 kwan 

 of these 65 year notes. In 1072, Chaudoir says the 17th term of pay- 

 ment had arrived and only notes to the extent of 6540 kwan had been 

 redeemed. The final redemption was not far away. The government 

 was absolutely unable to procure enough metallic money to effect 

 this redemption. New notes were therefore prepared, running for 

 twenty-five terms of three years each, and holders of the old were 

 ordered to exchange them for the new, the option of a redemption 

 being, nominally at least, offered them. 



These three-year notes running from twenty-two to twenty-six 

 terms held the field for some time, but in the course of events experi- 

 ments were made with notes having other terms. We hear of one 

 year notes, of those having seven-year terms, of ten-year terms, and 

 of notes of forty-three one-year terms whose value was expressed in 



