To meet the increasing expenditure, an unexampled quantity of new money was put into circulation.  The state budget increased from 22,200,000 in A.D. 1000 to 150,800,000 in 1021.  The Kitan state coined a great deal of silver, and some of the tribute was paid to it in silver.  The greatly increased production of silver led to its being put into circulation in China itself.  And this provided a new field of speculation, through the variations in the rates for silver and for copper.  Speculation was also possible with the deposit certificates, which were issued in quantities by the state from the beginning of the eleventh century, and to which the first true paper money was soon added.  The paper money and the certificates were redeemable at a definite date, but at a reduction of at least 3 per cent of their value; this, too, yielded a certain revenue to the state.

The inflation that resulted from all these measures brought profit to the big merchants in spite of the fact that they had to supply directly or indirectly all non-agricultural taxes (in 1160 some 40,000,000 strings annually), especially the salt tax (50 per cent), wine tax (36 per cent), tea tax (7 per cent) and customs (7 per cent).  Although the official economic thinking remained Confucian, i.e. anti-business and pro-agrarian, we find in this time insight in price laws, for instance, that peace times and/or decrease of population induce deflation.  The government had always attempted to manipulate the prices by interference.  Already in much earlier times, again and again, attempts had been made to lower the prices by the so-called “ever-normal granaries” of the government which threw grain on the market when prices were too high and bought grain when prices were low.  But now, in addition to such measures, we also find others which exhibit a deeper insight:  in a period of starvation, the scholar and official Fan Chung-yen instead of officially reducing grain prices, raised the prices in his district considerably.  Although the population got angry, merchants started to import large amounts of grain; as soon as this happened, Fan (himself a big landowner) reduced the price again.  Similar results were achieved by others by just stimulating merchants to import grain into deficit areas.

With the social structure of medieval Europe, similar financial and fiscal developments which gave new chances to merchants, eventually led to industrial capitalism and industrial society.  In China, however, the gentry in their capacity of officials hindered the growth of independent trade, and permitted its existence only in association with themselves.  As they also represented landed property, it was in land that the newly-formed capital was invested.  Thus we see in the Sung period, and especially in the eleventh century, the greatest accumulation of estates that there had ever been up to then in China.