The Presidency banks were formerly officially connected with the Government, who appointed directors to look after the national interests at the respective boards; but after the disasters consequent on the mismanagement of the old Bank of Bombay, and the attempt subsequently made to render the Government liable for the loss which the shareholders thereby sustained, the Government took steps to sever its connection with the banks, and proceeded to dispose of the shares which it held. The Presidency banks have still the custody of a portion of the

Government balances, and in other respects their functions are similar to those of the Bank of England. They act as the bankers of the other banks, allowing no interest on deposits, and their rates of discount and interest charged on loans regulate the value of money in their respective markets.

During the Indian shipping season, which extends from October to May, the resources of the exchange banks are employed in the purchase of bills drawn against shipments to Europe and America of various kinds of produce, such as cotton, jute, indigo, tea, silk, seeds, hides, rice, etc, and occasionally when exchange rules low, large quantities of gold are bought by the banks from the native dealers, and exported to Europe. Indian Government rupee securities, known here as 'enfaced paper,' being negotiable in the London market, are also frequently used as a means of remittance both homewards and outwards. Formerly a large proportion of the bills drawn in India were negotiated 'clean,' i. e., without any collateral security being attached; but since the commercial crisis of 1866-67, which brought down so many banks and firms connected with the Eastern trade, and more especially since the disastrous failure of Messrs. Gledstanes and Co. on the 3rd of September, 1872, by which nearly all the Anglo-Indian banks were heavy losers, much greater caution has been exercised by the banks in the selection of this class of paper, and except in a few special cases where the firms are known to be of undoubted wealth, 'clean' bills are looked upon with disfavour.

In these remarks we do not of course mean to include those bills which are drawn under the credits of the large accepting houses of the first rank, who are entirely distinct from the drawers of the bills. It is the practice of these houses only to issue their credits against securities deposited with them, and as bills drawn under their credits are readily discountable in the London market, they invariably command better rates of exchange when negotiated in the East. The remainder, and probably the largest proportion of the bills now remitted by the banks, is accompanied by shipping documents representing the produce against which they are drawn, and these documents are either delivered up on acceptance of the bill or are retained by the bank until the bill has been retired under discount, or paid at maturity. It is obvious that while giving every facility to the legitimate operations of commerce, this system acts as a great check upon the creation of mere accommodation paper, and also places the business of the banks upon a sounder and more satisfactory footing. There is little doubt that it was owing to the general adoption of this wholesome rule that the Anglo-Indian banks escaped the serious losses which were incurred by the London banks through the failure of Messrs. Alexander Collie & Co., who at one time were largely drawn upon from the East. We cannot here refrain from alluding to the very unsatisfactory results that have usually attended the liquidation of English firms engaged in the Eastern trade which have failed in recent years, as compared with the results of the winding-up of French houses similarly circumstanced. Considering the great fluctuations which are continually taking place in the value of Eastern produce, this circumstance would seem to demonstrate that our neighbours conduct their extensive business with more prudence if not with greater skill. The only important French failure which has occurred in the Eastern trade lately was that of Messrs. Chartron pere, fils, and Monier, of Lyons, who suspended in 1875 in consequence of the continuous and heavy fall which had taken place in silk, in which staple they were largely interested. The Anglo-Indian Banks were holders to a considerable extent of bills drawn upon this firm by houses in Shanghai and Hong Kong, against shipments of silk, some of the bills being 'clean,' while others were accompanied by the relative shipping documents. In order to avoid the bankruptcy of the firm, the wives of the partners voluntarily gave up their private fortunes, amounting to about £60,000, to the creditors, and the firm offered to pay in full with interest by instalments spreading over several years. Their offer was unanimously accepted, and the creditors recently had the satisfaction of receiving the full amount of their claims with interest at 5 per cent. - the payment of the last instalments having been anticipated. Such a result is most creditable to French commercial morality, and it is to be regretted that similar instances are so rarely to be met with on this side of the channel.

Soon after the termination of the Bombay cotton season in May the China tea, silk, and sugar season commences. The products of the Philippine Islands and Japan also begin to come forward about this time, and as the aggregate value of these exports is very considerable, large sums of money require to be provided by the banks to enable them to finance the business which springs up at the various shipping ports. These funds are usually laid down by shipments of Mexican dollars and bar-silver from London or San Francisco, and also by the sale of drafts drawn on Bombay and Calcutta. At times a strong demand exists in China for the means of remittance to India, chiefly on the part of the opium merchants, who thus arrange payment for their purchases of the drug in the Indian markets, and this enables the banks to place funds in China through India more expeditiously and frequently on more advantageous terms than could be done by the direct shipment of specie. The value of the opium imported annually by China may be estimated at from eight to ten millions sterling, and as this greatly exceeds the value of the imports of India from China, the latter country remains largely indebted to the former. It is this fact which accounts for China not requiring such large amounts of specie to be shipped from this side as the balance of trade between her and this country would seem to warrant, the difference being adjusted by remittances to India, which dependency is also our creditor. It sometimes happens that the banks provide themselves with more than sufficient funds in China to meet the requirements of the season, in which case bills on London become in' strong demand, and a sharp decline in exchange usually follows.