Native banks in Shanghai are classified understhree categories according to the size of their capital, the standing of their owners and the scope of business They handle. Those of the first-class banks are known.as "clearing banks," 7 identity them from. the smaller banks. They are styled in Chinese "Huei Hua," which means clearing. 'Those belonging to the second and third categories are "smaller banks' and "exchange shops," both of which are of minor importance and T shall leave them out of my present discussions.
'The "clearing banks" are members of the native Bankers' Clearing Association, which takes the place of a clearing house organiza tion in other countries. Any payment or receipt exceeding Tls. $00 and $500 is to. be cleared' daily in the. Association about four o'clock in the afternoon, This group of "clearing banks" forms the backbone in the financing of local and Inter-provincial trade of 'Native Bankers' Association There are-at present according to the latest statistics eighty "clearing Banks" in Shanghai, sixty-nine of which are located in the Intere national Settlement, and eleven in the Native City. They formed two guilds—the North City and the South City guilds, each having its member banks of its district, These two guilds are' combined through association knows as the Native Bankers! Association for th: purpose of being enabled to observe uniform set of regulations for common interest and to act cooperatively on identical policies.
Through alliance of financial strength with other member banks as a corporate body, the privileges ud advantages of membership the Association are by no means small, For illustration, in the event that a native bank happens to get into difficulties and is forced to close its doors, the Association, through directors, will come into nasistance on the following lines. They will appoint a committee to en-sage, with the ce-operation of the owners and manager of the indigent bank, a lawyer or a chartered countant to liquidate its affairs. If it has sufficient assets to cover liabilities, the Association will supply necessary funds to meet all validated claims, in order to enable the needy bank to realize its assets in a more advantageous manner—thus making a voluntary liquidation possible, instead of a compulsory bankruptey. If it were found that its assets are insufficient to meet all claims of its creditors, the Association will undertake to recoup whatever sum required from the owners in proportion to their holdings of shares, in conform with the constitution of an: bank—a private company of
Text read from the printed page and cleaned; old type leaves the occasional error.