The most ancient and the most important of banking institutions in this country is the regularly constituted native bank. The whole progress of foreign trade is centred round the native bank; and this institution plays a far more important part in the commercial and political life of this country than any similarly constituted in other parts of the world. Although the system of cheques is an old institution in Europe it was never availed of except in rare instances until seventy or eighty years ago; as a matter of fact till the final adoption of the gold standard in 1870, cheques in commerce were as sparingly used as possible. In China, on the other hand, a system of cheques or giving orders to the bank to pay, was an institution in general practice for centuries -as a matter of fact quite as ancient as the issue of Government paper which first made its appearance in China in the ninth century a.d. The native banks were the institutions with the aid of which the circulation of cheques was rendered possible. Of course, one must bear in mind that while things in Europe have been moving fast China has remained more or less stationary. The Chinese cheque or the piece of paper known to foreigners as the "native order" has been known to have been operative for at least 400 years.

It is not known when the native banks at first originated in China. All that is known is that they were in existence when the Mings had still the capital at Nanking and were then doing a flourishing business. There is no doubt that in the early stages they were mainly doing Government business; that is, they helped the Shansi banks towards transporting and helping to adjust the amounts of Government revenue and expenditure. But in those times it was still quite customary for traders to take large sums of money into the interior to buy things; also traders used to bring themselves the monies realized on the sale of cargoes which they took into the interior.