e and minting very expensive, iron coins were
introduced, silver became more and more common as means of exchange, and
paper money was issued. As the relative value of these moneys changed
with supply and demand, speculation became a flourishing business which
led to further enrichment of people in business. Even the government
became more money-minded: costs of operations and even of wars were
carefully calculated in order to achieve savings; financial specialists
were appointed by the government, just as clans appointed such men for
the efficient administration of their clan properties.

Yet no real capitalism or industrialism developed until towards the end
of this epoch, although at the end of the twelfth century almost all
conditions for such a development seemed to be given.

2 _Political situation in the tenth century_

The Chinese call the period from 906 to 960 the "period of the Five
Dynasties" (_Wu Tai_). This is not quite accurate. It is true that there
were five dynasties in rapid succession in North China; but at the same
time there were ten other dynasties in South China. The ten southern
dynasties, however, are regarded as not legitimate. The south was much
better off with its illegitimate dynasties than the north with the
legitimate ones. The dynasties in the south (we may dispense with giving
their names) were the realms of some of the military governors so often
mentioned above. These governors had already become independent at the
end of the T'ang epoch; they declared themselves kings or emperors and
ruled particular provinces in the south, the chief of which covered the
territory of the present provinces of Szechwan, Kwangtung and Chekiang.
In these territories there was comparative peace and economic
prosperity, since they were able to control their own affairs and were
no longer dependent on a corrupt central government. They also made
great cultural progress, and they did not lose their importance later
when they were annexed in the period of the Sung dynasty.

As an example of these states one may mention the small state of Ch'u in
the present province of Hunan. Here, Ma Yin, a former carpenter (died
931), had made himself a king. He controlled some of the main trade
routes, set up a clean administration, bought up all merchandise which
the merchants brought, but allowed them to export only local products,
mainly tea, iron and lead. This regulation gave him a personal income of
several millio