Foreign Banks after the Opening of China

Abstract

After the opening of China to trade with the west, foreign banks entered into the Chinese markets by establishing business relationships with foreign small and middle size trading companies. Therefore, the study of their operations, especially the foreign exchange business, should make it possible to understand the character of foreign trading companies. Although foreign banks were rivaled by large companies at the beginning, they maintained good relations with small and middle size firm from the start. Chapter one of this paper concerns when and where bank branches were established. The Financial Committee of the East India Company can be regarded as the herald of banking in China. In chapter two bank operations are discussed. The Hong Kong branch of the Oriental Bank started note issuance in 1846, and their notes were gradually accepted by the local community. The importance of East Asia, including Hong Kong, in banking is ascertained by note issuance and amounts of bullion and cash. In the area of deposits, the fact that the Hong Kong and Shanghai Bank showed strength tells of the development of limited corporations in Hong Kong and other treaty ports. The exchange business has also been examined as quantitatively as possible, allowing us to grasp the situation of foreign dxchange bills in Foochow and Hong Kong during the 1860's. Chapter three submits a new point of view concerning the Financial Panics of 1866, discussing the relationship between foreign banks and small and middle size companies using the example of Mackellar & Co. in Honkow. Although it is impossible to discover clearly the relationships between foreign banks and Chinese merchants, in chapter four the author detects a chronological change based on advertisements and articles contained in contemporary newspapers.