On the other hand it occasionally turns out, and notably so last year (1876), that the amount required is underestimated, and before the season is half over, the banks are found to be impoverished. Last year, owing probably to the reports of a small China silk crop, and the continuous fall in silver which made buyers hesitate, the banks neglected shipping as much specie as usual to China, and when, in consequence of the failure of the silk crops in France and Italy, the value of that staple rose suddenly from 60 to 100 per cent., and it was, moreover, discovered that the China crop was larger than expected, it soon became evident that the banks were not rich enough in resources to deal with the enormous business that quickly sprung up. In Shanghai exchange on London rose rapidly from 5s. Id. in July to 5s. l1d. in September, while rates on India went up in the same proportion. Money also appeared to be scarce among the natives, and no relief could be expected from London, as silver would take about two months to arrive. Mercantile bills were offering in large numbers, but owing to the smallness of their specie reserves the banks were unable to purchase freely, and the merchant not being able to raise the funds he expected, experienced considerable difficulty in carrying through his engagements. At this juncture, when matters were rapidly drifting towards a dead-lock, the Chinaman came to the rescue in a manner which showed his great astuteness and business-like ability. He offered to buy the banks' drafts on London and India at the high rates of exchange then ruling on the understanding that the banks would repurchase them at a much lower rate two or three months hence. Some of the banks were glad to provide themselves with cash on these terms, the result to the Chinaman being that besides making a gain equal to interest at the rate of 30 per cent. per annum, he enabled the banks to purchase the bills of the merchants, who in their turn were enabled to go on buying silk, and the Chinaman thus secured a market for his produce which he might otherwise have missed. An instance of this kind shows that where their interests are concerned, the orientals are not surpassed in intelligence by any of the more civilised western nations, and our experience of India and the East generally tends to prove that whenever the European makes a mistake the native is not slow to profit by it.

In addition to the purchasing of bills of exchange, the receiving of deposits, and the granting of temporary advances on Government securities and merchandise, the Anglo-Indian banks have another equally important and profitable branch of business. This consists of the sale of drafts on their various branches and agencies, those on London being drawn chiefly on demand, and at six months' sight. A considerable proportion of the import trade of India and China is settled by remittances of bank bills from the East, and recently the facility offered by the banks of transmitting money by ' telegraphic transfer' has become greatly in favour. While, however, the merchant prefers the six months' sight draft or the telegraphic transfer, the private individual as well as the Government official chooses as a rule the demand draft as a means of remittance to his friends and relatives at home, and the aggregate amount of this description of drafts sold by the banks during the year is very large. It is difficult to arrive at even an approximate figure, but the total amount of ' family remittances' has been estimated at from three to four millions sterling per annum, and looking at the numerous class in India who remit their savings home, or bring them with them when they return, we do not consider the estimate an extravagant one. Lord George Hamilton in his speech on the last Indian Budget stated them to amount to "many millions," and ascribed to them an important influence on the Eastern exchanges.

The arrival of a heavy Indian and China mail, bringing as it frequently does during the busy season remittances to the extent of from one to two millions sterling, causes some commotion in the London discount market, and the bill brokers are seen actively chasing each other in and out of the different banks in their eagerness to secure the best bills, and for these, or ' pictures' as they are called, the finest rates are offered. Last year (1876) such was the plethora of money, and so great was the competition for first-class paper, that bankers' acceptances having six months to run were at one time readily taken as low as 1 3/8 per cent., whilst three months bills were discounted at 5/8 per cent. These, of course, may be regarded as exceptionally low rates, but they were none the less welcome to the Anglo-Indian banks, who were thereby enabled to convert their remittances into cash on unusually favorable terms.

As we have already stated, large numbers of bills received from the east, having collateral security attached, are not discountable in the open market, while many, especially those remitted from China, are drawn on French houses. These latter are either negotiated here, or are forwarded to the banks' agents in France for collection.

The French being now large importers of Eastern produce (it is estimated that about one half of the last China silk crop was bought on their account), it follows that the Anglo-Indian banks sometimes hold considerable amounts of bills on France, which, pro tanto, assist in adjusting the balance of our indebtedness to that country. In the purchase of such bills, and more or less in every branch of their business, the Anglo-Indian banks find a keen competitor in the Comptoir d'Escompte de Paris, which has had, for some years branches in India, China, and Japan, and conducts, in connection with its London establishment, an extensive exchange business with the East.

After the conclusion of the Franco-German War, the Deutsche Bank (of Berlin) also entered the field as a competitor, but its operations not having proved successful, its Eastern branches have recently been closed.