The question before .the Government and Chinese financiers to-day is how to make the banks really public institutions. So long as the best of the native banks continue to be proprietary and refrain from issuing paper money, the Government has no right to interfere in their managements. In passing, I might as well state that ever since the revolution of 1911 the question of unrestricted issue of bank-notes, without adequate reserves, has solved itself; because, practically all the banks that issued these notes are not in existence to-day. Strange as it may seem, there is not the least vestige of the large number of notes that were once in circulation and that proved uncashable during the crisis of 1911. To-day the difficulty in connection with paper money is entirely due to the issues of the Central and Provincial Governments -the present Central Government, however, is not really responsible for the issues made in its name during the tenure of Sun Yat-sen as President at Nanking. Even in this instance, efforts have been made during the present year to cancel as much of the issues as possible, with the limited resources of the Government; and most of the issues made by the provincial governments were forced upon the people. The latter were willing to cash the paper they had for even 25 per cent, of its face value; consequently several provinces have succeeded during 1914 in redeeming a fairly large proportion of their issues.* Such a procedure, of course, is neither moral nor just; nevertheless it has helped to simplify the position of currency and banking reform in this country.

The functions of banking being to facilitate commerce by minimizing the use of money, and to act as the connecting link between the public and the Government with regard to the circulation of money, the object of reform should be to take such steps as would help the banks to perform these functions with as much ease as possible. As far as facilitating commerce is concerned the banks in China have done their best, under the circumstances, with the unstable currency they had to depend upon. If the banks have not been able to perform this part of their function to the satisfaction of everybody, the fault lies with the unsatisfactory monetary situation. The native banks have also had to use as little money as possible in trade, because there was very little of it, in the right sense of the word, to use; instead they based all their operations in silver and sycee. The banks also did act as the medium between the Government and the public; unfortunately, however, they were obliged to do so with regard to the unsatisfactory issues of paper currency.

* The Government haS been receiving Salt Gabelle revenues in paper in some places, and destroying the paper thus obtained.