Dear Sr,—We have in our possession certain native bank orders or notes of the face value of Tls. 6,000 issued by the 'Toong Kew and Doon Foh Banks. 'These notes are payahile to bearer on demand and are equivalent to so much hard cash, and similar to notes issued by foreign Banks, When these notes wore presented a' fow months back, we were informed that payment of these had been stopped by an Order of the Mixed Court magistrate, consequent on an ex-parte application of one Vu Ya-ching, who gave these notes in payment for a lot of land purchased by him, in which he states there is a shortage in area. We petitioned the magistrate withdraw the Order, which he promised to do, but afterwards failed to carry: out his promise, and shortly afterwards he was deprived of his office. We thereupon petitioned the Taotai, who in his dispatch thereon stated that the Order stopping payment was made, consequent on a. fraudulent land transaction, but at the same time added that he would ask the Mixed Court magistrate to deal with the case. On' this dispatch we interviewed the magistrate who, however, flatly refused to take any steps in the matter, we believe, on account of the high rank and position of Vu Ya-ching, on whose application the Order' was made. The question is not whether Vu Ya-ching has been cheated or not, but whether, when once the notes have been put into cir culation, after being issued by a native bank, the Chinese magistrate has power, or authority, to stop their payment, which passes from hand to hand as the equivalent of so much hard cash. Wo submit that he has no more authority to stop payment of these notes than he would have to stop the payment of notes issued by a foreign bank. To leid otherwise would be to upset the very valuable decision given by both the Chinese magistrate, and the British Assessor, in a case decided 1a short while ago, known as the Gay Dah Bank case, which is practically on sll fours with the pro-sent case (enclosed is a copy of the judgment). Such a procedure displays an entire disregard for the provision of Banking law and custom upon the certainty and the maintenance of the integrity of which, commerce, to a largo extent, is based. (Wo enclose a translation of one of the banking regulations governing this case.)
These Orders are payable to bearer, and are of-the same nature as a foreign bank note, or cashier's order, the payment of which cannot be stopped, and must be paid, unless the Bank which issued them is unable to meet its on-gagements.
The Bank's position is that certain orders were issued by them; payable to bearer, and put into circulation. What happened between persons who dealt with th Orders, cannot affect their liability, and does not authorise them to stop payment; they are for. business purposes, and iti law and according to Banking custom oquivalet to cash so long as they have money to mest them, and they cannot be judges of apy dispute between persons dealing with these Orders, and not even an Order from the Mixed Court magistrate would justify their action, We think we have now placed you din possession of the relevant facts in von-, nection with the complaint we have to make against the banks. You will no doubt readily appreciate the importance of the principle involved, and we hope give us your assistance, in ing upon the performance by the banks of their duty to meet their obligations to pay without disputing their own Orders' The reputation at the present time on-joyed by the Native Bank Orders will suffer severely, if the public once become aware banks though having funds, may still stop payment of their own order to bearer, and with it the standing of all native banks in the commercial community.
We fear that there is no possibility of obtaining any redress through the medium of Chinese authority-s, chiefly. owing to the high rank and position of Vu Ya-ching, on whose ex-parte application the order was made. We have supplied Mr. W. D. Little with the full facts of the case, in order that it might be discussed at a meeting -of the Chamber of Commerce. He now writes to us that the: question cyme before their meeting on the 20th June, when the Committee, while fully realising that these Orders should be paid, were at prosent- unable to give any: opinion on the case, and suggested that we should submit the same to the eonsiderstion of the foreign banks.
We enclose translations of the characters on these Orders. We shall be: glad to hear that you can afford us some assistance in settling this matter.
Shap Yours faithfully, Dowpat1, Hansow:& McNett, E.: B. Sorrows, Eiq., Manager; Chartered Bank.
Text read from the printed page and cleaned; old type leaves the occasional error.