The question of the native orders would also be regulated as a result of such an arrangement. Superficial observers have always made a mistake of lumping good and bad native banks together. When a reputable native bank gives an order, it is a point of honour to meet it, whether the person on whose behalf the order is given pays the amount or not. This class of banks always take particular care whom they deal with, and in case of loss they simply charge it to the debit account. Even those banks that have argued that they could not meet the native order, because the person on whose behalf they issued it had not paid them yet, knew in their heart of hearts that they were doing something not permissible in their business code of ethics; they, however, evaded responsibility only when they were embarrassed. As the arrangement in connection with the district bank would do away with such institutions and would not permit of any such institutions being started, the trade would not be troubled by the interminable questions of unpaid native orders. In short, the district banks would become a sort of bankers' guild with real powers; at the same time the system would permit of efficient control by the Government, without such control being felt irksome or arbitrary.
In time the native banks may also be induced to adopt a system of cheques, so that they may follow more in the lines of Western banking and also take a less measure of responsibility. In any case, for several decades to come, it is useless to take steps to oust the native order from trade. So far as foreigners are concerned the cheques would have to be marked, in any case, "good for payment" by the banks. That, of course, means, for all practical purposes, the same as the present native order system.
With the passing of the less reputable native banks, and the district banks having the fullest control over paper money, there would be no longer any trouble in connection with indiscriminate issues of bank-notes. As a matter of fact, the trouble at present -and that of very limited scope - is in connection with the Government currency notes; even these are being gradually withdrawn or disappearing. At present only the foreign banks and three or four Chinese banks issue bank-notes. When the paper issue of the district banks is in full swing, it would be extremely easy for China, first to stop the Bank of China and the Bank of Communications and other Chinese banks from issuing notes, and, next, inducing the foreign banks to stop their issues and accept the Chinese district bank-notes as the sole paper currency.