The working of the native banks was influenced considerably by the constitution or the method of their formation and the principles on which they had to be worked. Even to-day the Chinese have not grasped the principle of joint-stock business. In Europe and countries that have come under the influence of European laws and civilization, banks have gradually grown into joint-stock companies. But in the early decades of the nineteenth century, and anterior to it, banks were generally one-man institutions and, in most instances, family concerns. The credit of the individual who owned the bank, or had the management of it, was the credit of the bank itself. It so happens, however, that when banks were owned by individuals their credits were extremely good; and we see the survivals of such institutions even to-day in the Coutts' Bank in England and J. P. Morgan & Co., in New York. Such institutions, however, have became rarities, because for several reasons one-man banking is no longer possible in Europe, except under extremely rare conditions. For one thing business in the world has grown to be so large that rarely has an individual or family enough capital to start a bank of any magnitude, and able to cope with the business offered. The success and growth of modern industrial development are due to the fact of the ability of certain individuals to collect and utilize the public savings for the benefit of national or international commerce. At all times, of course, the control of the trade and banking institutions has rested with particular individuals. The difference between the situation in the past and that of the present is that while in former times the individual in control was his own master or had only one or two masters to whom he had to account for his stewardship, the position to-day is that the individual in control of a bank has a large body of shareholders to give account to. While the rapid industrial development in advanced countries has brought about a change in favour of joint-stock business, the paucity of business in China, the mutual distrust engendered by the lack of efficient Government and communications, have contributed to retain business in China on the old basis. Thus practically all business, including banking, is owned and is under the control of particular individuals. Especially banks have had to retain the old method of individual proprietorship, in order to command credit, with both foreigners and Chinese. There is also another reason why such a course has become a necessity. At a certain period after the beginning of active foreign trade with China, attempts were made to bring certain businesses under a sort of joint-stock control. The result invariably was a miserable failure, because of irresponsible and inefficient management, as also because there was no special individual to give account to. In Europe, there is adequate legislation to provide against delinquencies by managers of joint-stock concerns. In China there is no legislation of the kind and no means of enforcing the law. Thus after several unfortunate experiments native banking has remained even to-day individual concerns; in a few cases there are two or more partners but the largest number of partners known so far is four.* Under these conditions it is impossible that the business of a native bank could be ramified to even as small a degree as that of the smallest of joint-stock banks. The limitation of the number of partners in the business brings about a limitation in the amount of capital available for the business. Therefore, however rich the proprietor of a native bank may be, he has not the advantage of the foreign banks which in their very-nature are able to control a very large amount of capital. The foreign banks are able to open business practically anywhere their credit being altogether dependent upon the showing of the balance sheet; the native banks are dependent upon the credit of the proprietors which, in the very nature of things, can only be limited and restricted to a comparatively small area. Consequently the business of the native banks does not extend beyond a small radius. Individual credit being the main point at issue, inter-urban, inter-district and inter-provincial jealousies come into play and the scope of native banking becomes thus considerably restricted.

* There are half a dozen Chinese joint-stock banks working in China; but they have not achieved any great success, nor is their influence felt on the market.