These banks have played an all-important part in the progress of foreign trade; as a matter of fact but for their activity, in not a few cases extremely unwise and unhealthy, the total of foreign trade would have been much less than the volume to which it has progressed. After the increase in the number of the treaty ports these banks became the sole medium through which foreign trade was conducted, and have remained so even at present. Originally, of course, it was a precautionary measure on the part of the foreign merchant. When the foreigner was dealing exclusively with the hong merchants he knew where he stood - especially as there were only a dozen hong merchants. But when the foreigner had to deal with everyone that came to buy goods from him, he had to ask for some guarantees of the bona fides of the dealer. In foreign countries it is always the custom to give a bank reference with regard to the standing and stability of the merchant; the European and American merchant in this country in the early forties followed the rule at home in asking for a reference from a Chinese bank. A bank reference usually means that it is willing to give credit to the merchant it recommends as sound. The practice at home is usually for the banks to buy the shipping papers from the manufacturer, and collect the sum with interest from the merchant at the destination. In this country, of course, the foreign merchant has had little to do with the place to which his cargoes went. His business was complete when he had sold his cargo to a dealer in one of the ports. But the dealer objected to pay before the goods arrived at their proper destination. The dealer in the ports put it to the foreign merchant in the following manner: "I buy these goods from you for consumption in Szechuen, Honan or Shensi; as a matter of fact I do not get paid until the goods reach their destination; there is no doubt whatsoever that I will receive the price of these goods as soon as they are received by the buyer in the interior; hence it is only fair that you should give me time to send the goods inland and receive the money; it is understood that the moment I receive the money I will pay the stipulated price to you." The foreign merchant certainly saw the force of the argument of the Chinese dealer; at the same time he saw that it was none of his business to take risks. He told the Chinese dealer that he was quite willing to grant a certain period in order that his client might have the opportunity to receive the money from the real buyer to whom the goods were delivered. But he was certainly not willing to take any risks of non-payment or delays which might be caused unavoidably. The compromise was arrived at in such a manner that while the foreign merchant was sure of the money the native dealer would have time to collect it. It was arranged that the dealer give an order of a native bank cashable in five, ten, or twenty days, according to the nature of the goods sold to the dealer and the distance they had to go; and the foreign merchant treated this as money and handed over the goods. The arrangement between the native banker and the dealer was of little concern to the foreign merchant. The bank not only becomes the guarantor for the merchant but also agrees to pay the amount at the stipulated date, whatever may happen to the merchant or to the goods. It is needless to state, of course, that the native bank undertakes this business for a very good consideration.