The speciality of these banks, especially in connection with facilitating the currency, would be to act as banks of issue. The privilege of issuing bank-notes would be the mark by which this bank would be specially distinguished from the ordinary native banks. Of course, this means that the bank would require a large working capital, supplied mainly by the existing banks; it follows naturally that this bank should place also as much of capital as possible in the hands of the existing banks. It does not mean, however, that the bank would have nothing to do with the public directly; it can open deposit accounts to all, and, with certain reservations, do the usual banking business. The bank-notes, however, would be exclusively those of the district banks, the principle underlying the issues to be mainly the economising of currency. In this connection, I should mention that Dr. Vissering is mistaken in his statement that from time immemorial it has been the custom of the Chinese banks to issue their own banknotes and that many have eventually succeeded in placing into circulation a not inconsiderable amount of their paper as a medium of circulation. A study of the history of banking in China shows that even as late as the reign of Hien Feng all paper money was mainly issued by the Government. After the reign of Hien Feng, some of the banking institutions adopted this practice. But as I have pointed out in the chapter on "Banking in China," the main offenders have been the provincial Government banks - which were practically state banks - although a few Chinese private banks also adopted this nefarious practice. At no time in their history have sound native banks ever issued paper money; and it must be said to their credit that they always looked with disfavour on paper currencies, especially when they knew that they were not backed up by reserves. Even to-day, excepting the Bank of China and the Bank of Communications, that are state institutions for all practical purposes, very few native banks - such of them as are in treaty ports and absolutely under the control of the Chinese - issue paper money. Dr. Vissering is evidently misinformed as regards the extent of such issues at present, although I quite agree with him in the statement that issue of paper by private institutions or persons should absolutely come to an end. The question of all paper money issued by banks has solved itself during the revolution; all the trouble to-day is due to the various Government issues. These are also now being redeemed. Therefore, the issue of paper money by the district banks at present need not be attended with great difficulties. Such issues should, however, be to the satisfaction, and consistent with the safety., of the public and the Government.
In order to formulate a plan, brief statements of the conditions in the neighbouring and analogous countries should be of great help. Hence, I will briefly refer to the paper currencies in the United States, India, Siam and Japan.