The special advantage of the district banks under my proposal is that they would act very successfuly as the collectors of taxes for the state, as also help to bring about a centralization of administration, very necessary for the successful reformation of the Government in China. It might be averred that a central bank should do this better, such bank being an institution more under the control of the Government. Such an argument, however, ignores the existing realities of the situation. For decades, attempts at centralization, especially of finance, have been unsuccessfully made; and the Manchu dynasty fell finally by trying to exercise financial control over the provinces. Even now the Central Government has found to its cost how jealously the provinces hold to their prerogatives of taxation and finance. It goes without saying that the provincial governments would rather allow an institution over which there is some local control to hold their money, than a bank exclusively controlled from Peking. This point is very important, especially as there is no properly organized central or provincial treasury. When a bank is a receiver of taxes there is bound to be better accounting, than when the present kind of government receives the taxes. Of course, a proper treasury organization is necessary for this country, as in the case of every country in the world; when such an organization is completed, the direct banks could look exclusively after commerce, receiving only monies temporarily not required by the administration. Even during the Manchu regime the provincial officials deposited large sums of monies with the native banks, partly for security, and partly to facilitate commerce. Such lending was promiscuous and was not undertaken on a proper business basis. Now, in putting all the monies in the district banks there would be no break of tradition and at the same time there would be greater security - the district bank lending out the same monies to the several native banks on a proper business basis. This practice would help centralization, because the jurisdiction of the district banks would be quite different to that of the provincial administrations; the area covered by such institutions might probably be bits of two or three provinces. The provincials would also have the satisfaction of using their monies as much as possible in or near their own localities. With such organization local commerce is bound to be better regulated and improved. Neither a central bank nor a state bank could perform these functions adequately. The district bank would thus be not only the banker of the state but also the bank of banks; in other words, it would enjoy the confidence of the Government as well as of the public.