This article explains how banknotes issued by the Hongkong and Shanghai Banking Cooperation revolutionized traditional money markets in Shanghai during China's late-imperial era (1865–1911).1Drawing on local balance sheets and other primary sources, the article demonstrates that note issuance by British banks in China proper was a quantitatively modest but potent financial instrument that helped minimize branch dependence on metropolitan capital injection, on the one hand, and on China's intractable monetary system, on the other. Contrary to much of the received wisdom, the article argues that note issuance was a highly remunerative constituent of British overseas banking in Asia. It helped tap regional economies with little risk, but was equally significant as a touchstone for Chinese reformists. Not long after its inception in 1865, the British-run Hongkong and Shanghai Banking Corporation—then more informally known as the Hongkong Bank—had become synonymous throughout East Asia with managerial savvy, a powerful network of connections and financial innovation.2 Although Britain's share of the region's trade progressively declined by the turn of the twentieth century, no other European-owned bank operating in East Asia could achieve comparable growth rates, or rival the Hongkong Bank's leverage over indigenous sovereigns. In various capacities, the Bank [hereafter HSBC] came to play a significant role in the modernization of money markets and credit instruments throughout Asia before World War I. It assisted the Japanese government to turn the Yen into an Asia-wide currency and facilitated the country's swift adoption of the Gold Standard in 1897; 3 it was behind the issue of the first [End Page 109] banknotes in Siam, and served as adviser to successive Chinese governments on economic development—to name but few salient examples.4 Nonetheless, the public image of the Bank during the pre-war era was far from immune to controversy both at home and abroad. While consistently favored by Colonial Office policymakers and British diplomatic legations, HSBC drew criticism from British jingoists and Chinese anti-imperialist activists on two separate counts. In London and Hong Kong, the Bank often came under fire for what had been perceived as its intimate links with German firms in China, eventually forcing the Bank to accentuate its British identity and shed non-British directors.5 But if postwar realignments have long since relegated this line of criticism to historic obscurity, Chinese invectives proved more abiding. So much so, that even in post-Mao China one can still detect strains of antagonism toward HSBC among economic historians, who underscore some of the themes that have allegedly tainted the Bank's pre-war legacy. These often include its perceived critical role in financing the opium trade,6 in establishing a monopolistic banking Consortium to corner Chinese government loans,7 in extracting indemnity payments from China,8 in manipulating exchange rates in Shanghai,9 and last but not least in undermining the city's indigenous banking sector.10 [End Page 110] At the other end of spectrum, new work published in recent years mainly by Japanese scholars has helped us concretize the debate over the nature of foreign banking in China's Treaty Ports during the late Qing, often disabusing it of the abstractions of "high imperialism" and the European "scramble for concessions."11 Such scholarship has carried the field forward by relying on declassified local branch balance sheets and other firsthand archival material, rather than on lateral sources or press reports. This breakthrough owes much to Frank King, who had been commissioned to write the Bank's story in 1979 and, inter alia, supervised a complex operation to salvage branch records from a decrepit warehouse in Shanghai. First published in 1987, King's subsequent four-volume History of the Hongkong and Shanghai Banking Corporation [hereafter History] was hailed as a monumental achievement, winning praise from both...
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Open Access
Dec 18, 2015
Tomasz Bronisław Zieliński 
