The daily morning journal and courier., 1905-10-09

more or less to do with international exchange by n2tive connections in San Francisco. New York. Manila, Singa- pore. the Straits Settlements and seve- raI points in India. The foreign banks do m immense exchange business, car " large loan contracts, and have the usual banking conn zctiGns in all parts of the world. Both systems depend much for their profits upon the intri- cate monetary system in China. The profits of both come very large from exchange.
 It is impossible to secure a correct idea of the banking business in China without an appreciation of the none
 tary situation, which I have discussed in ports upon monetary reform and exchange. It may ms rely be said in this connection that by reason of the many varieties of money ill circulation Chi na, because of the difficulties of trans
 pOrtatiOn and sl0wness of rtadjust- ment in financial transactions, inyOlv-
 ing the shipment of silver from one part of th3 empire to another, the exchange charges of banks act as a tax upon al- most every business transaction in
 China. Practically all of the foreign
 banks in China charge their customers not 10 exceed seven per cent. on over drafts. At the sanDa time the lowest interest offered depositOrs for deposits
 by the yaar is four psr cent, and in most places it is five per c:nt. or high er All ths foreign banks pay not less
 than two Der cent. tO depositoFs on
 their daily balances. On the other hand, drafts on the United States of
 tn cost six, seven and even eight per cent. of their face value for exchange.
 The intricacits Of the system by
 which exchange is charged must be ex-
 perienCed to be appreciated. The na-
 tive banks follow much the same sys-
 tenn, except that there is no limit to
 the rate of interest to be charged, and
 the result is that the rate is fixed by
 the necessities of the borrower, the na-
 ture of the security he Off:rs, and the
 proximity of the time to the Chinese
 new year, when all debts in China are
 supposed to be settled. if in no other
 way than by making a new one. Ten
 per cent. interest month is not at all unusual with native banks, but the se-
 curity is not always good and the loss- es from poor loans are large. Interest rates with the foreign banks are some what higher than they are in the Uni ted States or Europe to customers of corresponding merit, but are not un-
 reasonable. When, however, foreign
 banks lend money to Chinese through their compradores there is not much l more of limit with them than there is with native banks. It is quite prob
 able, however, that the compradore
 makes most of the additional profits.
 The compradore in banking, like the compradore in general business, Is the
 go-between acting between the bank
 and the Chinese His position is a
 guarantor on all business he does for
 the bank, and his profits and privileges correspond with his responsibilities. The foreign banks in China are gene rally organized abroad. The leading bank, the Hong Kong and Shanghai Banking corporation, is organized un- der the laws of Hong Kong. The Rus so- Chinese bank has 8 Russian charter, the International Banking corporation an American charter, the Charter
 Bank of India, Australia and China an
 English charter the Bank of Taiwan
 special imperial Japanese charter, Le
 Banque d'Indo-China a French char ter and so on. The Chinese banks
 have no more authority to do business than any other business house, but the
 government taxes them upon their de- posits, as a rule, the tax amounting to about ten per cent. of their capital stock; but from the nature of their business, which approaches that of pawnbroker, the tax is carried with comparative ease.
 The native banks also have 4he ad- vantage of cheap labor and cheap
 quarters compared with the foreign
 banks. Native help, of the sort em- ployed in the native banks, can be had at from five to fifteen dollars gold per month, while the quarters of the best native banks often are sQualid in ap- pearance. The foreign banks have splendid buildings, some of the finest architecture in China being that of buildings used for banking purposes.