In the early days of the existence of the native banks they served more the purpose of exchange shops than that of regular banking. As even until the early decades of the eighteenth century commodities like silk served the purpose of money, the main purpose of the native banks could have been nothing else but that of adjusting exchange. Up to the time of the introduction of foreign trade in China on a large scale, the native banks had very little diversity of functions. With the progress of foreign trade, however, their numbers increased. Not only were their duties diversified but their influence was also increasing. When all foreign trade was concentrated in the single port of Canton and all trade with China had to be done through a dozen or so of the hong merchants, the operations of the banks were immensely less than the volume of business done by them in later years. The principal business of facilitating the transmission of money from Canton to the distant provinces and from the interior to Canton was always done by the Shansi banks - the native banks in each particular locality doing the purely local business. But when Canton became the centre of foreign commerce the amount of money available to the native banks was immense. Ever since the beginning of foreign intercourse with China, Canton was the port through which foreign silver and foreign coins were introduced into the country. It so happened that for nearly 100 years since the East India Company got the charter of the monopoly of trade with this country, the balance always continued to be in favour of China. In those years there was neither credit nor any other means of settling the balance of trade but by paying actual silver, either in the shape of bullion or in the shape of coins. As China had no silver coins - and has no authorized one even to-day - the sums due to her on trade had to be paid to her in foreign coins and bullion. But bullion was unpopular because of the inequality of weight between the different pieces, as also the high value of each piece or bar of silver. The coins that came in large quantities were the Carolus or Spanish dollar, the Mexican dollar, the American silver dollar and the Indian Rupee. The Carolus and the Mexican were of about the same value, while the American dollar and the Indian Rupee were of less value than the two former. Coins of such perfect shape and size were a rarity in China, and so long as the alloy was not too great - in view of the fact the Chinese often sent the silver coins into the melting pot - they were even more readily accepted than silver bullion. The native banks were the only medium through which the foreign coins or silver could be circulated. It is notorious that although ostensibly the foreigner has no dealings with the Chinese bank, practically all his business is done actually with the native bank. This point I will explain when discussing the relation between native banking and foreign trade.