A Chinese Editor on Note Issues and Independence The "China Times" in offering its congratulations on the opening of: the Central Bank makes bold, albeit apologetically, to set forth views which the editor disclaims as being his own-but claims that they fare the expectations of the public.
the first place, he says, the note issue and ordinary banking business should be entirely in: dependent of each other. In the tone case the reserve fund must be ible and kept religiously intact; in the other, the bank's capital must be continually in circulation. He confesses that many banks fight shy of the issuance of notes because embarking on this policy ties up so much money that might be more profitably used in other direetions.
In this the writer shows distinct advance on the theories propounded in the San Min Chu J. In the second lecture of that book Dr. Sun pays an unconscious tribute to the rectitude of foreign banking institutions. He says "Native bank notes (in Kuangtung) have always been valued below the foreign bank notes, but now even the native silver is worth less than foreign paper." And a little further on, he continues 'Thus the foreigner, at a very small expense, can print millions upon millions of paper dollars and can exchange these paper millions for millions of dollars' worth of our goods. Gentlemen, isn't this a frightful loss?"
Experience has taught Chinese bankers and people that "millions upon millions" of dollar notes without an adequate reserve fund to Justify their periment that brings dis to the people compelled to accept the notes at their face value, and, ultimately, to the bank issuing them. Hence Chinese banks, without ample reserves, wisely fight shy of notes. "And the writer goes on to expound that the reserve fond must not be used for the ordinary business of finance or confidence in the bank will soon be lost.
Clear Statement of Accounts The second point that national bank presupposes the fication of the national finances.
this is achieved a budget may be compiled and order brought out of the present financial chaos. The ample, are now carrying out partial] national bank now takes the place of the treasury. But the imperial treasury, in former days, received only a moiety of the country's income. No statement of accounts was possible under that system but now the nation expects a clear statement of income and expenditure which will render the iniquities of the former system impossible.
Thirdly, the operation of the national bank ought to go a long way towards stabilizing exchange Merchants, in the past, have suffer fed much from sudden fluctuations in the value of China's currency and the coinage of other nation: The resulting perturbation mercantile transactions has reacted on trade in a very damaging manner and the people have suffered without being able to understand the cause of their difficulties The bank should give its earnest attention to this matter and so fearn the gratitude of those who suffer from a cause beyond their comprehension.
Eschew Politics Lastly, the bank should be conducted on purely business principles and should have no trace of politics in its management. Thoueh the bank is a national institution it is doing a specialized piece of work and the introdueti polities into its admi would be deplorable. In the sixth year of the Republic (1917), when set of rules were issued governing the conduct of banks. a certain Japanese scholar argued strongly that a bank manager should be dissociated from polities but should te chosen by the board of Directors and, indeed, every employee should be appointed, promoted or dismissed on grounds having absolutely no connection with polities." If we take the Bank of England for an fexaniple, we will see that the
Text read from the printed page and cleaned; old type leaves the occasional error.