Shanghai's Bund and Beyond: British Banks, Banknote Issuance, and Monetary Policy in China, 1842-1937

Yale Series in Economic and Financial History

by Niv Horesh

As China emerges as a global powerhouse, this timely book examines its economic past and the shaping of its financial institutions. The first comparative study of foreign banking in prewar China, the book surveys the impact of British overseas bank notes on China's economy before the outbreak of the Sino-Japanese War in 1937. Focusing on the two leading British banks in the region, it assesses the favorable and unfavorable effects of the British presence in China, with particular emphasis on Shanghai, and traces instructive links between the changing political climate and banknote circulation volumes.
Drawing on recently declassified archival materials, Niv Horesh revises previous assumptions about China's prewar economy, including the extent of foreign banknote circulation and the economic significance of the May Thirtieth Movement of 1925.

256 pages, Hardcover

First published June 23, 2009

Reviews

[Mega · Rating 4 out of 5]

Interesting take on Foreign banking in China

[Harry · Rating 5 out of 5]

It looks like this is the most obscure book in my shelves! I may come back and edit this later, I usually try to digest for a little while before writing anything out.

I did really enjoy this history book about the late imperial and early Republican eras in China, it’s a really tightly focused study on paper notes issued by British banks in that era, but because of the time and because it’s an interesting study, there’s are lot of relevant ideas here, I think it’s fascinating!

So, in the first place, I was looking for something like this ever since I saw a pbs documentary about how HSBC got in trouble for laundering Mexican narco money and then learned that HSBC is an acronym for the Hong Kong Shanghai banking corporation. And like I have a memory of a flight in Asia where the seat-back screen kept playing an HSBC ad showing some Chinese orchestra performers playing western classical pieces… anyway, just lots of cultural and historical signifiers tied up in that ad that stuck with me… So I was on the lookout for something that looked at the history of HSBC and phew, this book serves.

It’s not the core topic of this book, but in the course of background information it is shared that HSBC was one of a few British banks in Asia which succeeded the East India company, and HSBC was set up in large part to finance the trade of Bengali opium into China… so like doing drug deals has been their whole thing this whole time!

So with the British empire and the late Qing, China was a mess, and so the focus of this book with bank notes illustrates that really specifically and effectively. Because imperial China was so weak, money and currency was also unreliable, and these British banks were issuing their own paper money that ended up being more stable in this era and therefore valued and relied on. On the one hand, using good accounting practices and keeping corruption low relative to what else was going on, meant the bank notes were reliable, on the other hand British navy keeping cannons on everyone’s homes was also effective for setting guidelines.

One more idea here that I want to note down was that this was shown to be a very profitable technique for these banks and their ability to print the money in circulation allowed them to accrue a bunch of power. This made me think about crypto and why the big institutions started to jump in with investments a few years ago, because they could try for a similar play. The more coin you control, the more power you have, if people are putting faith in the deals being done with that coin.

Probably more edits in the future

First edit: I have some Hong Kong dollars still from a previous trip and they are HSBC bills, I didn’t realize Hong Kong money is still bank issues notes!