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Über dieses Buch

To provide an understanding of financial globalization from a historical point of view, this book sheds light on international banking in Asia before World War II. International banking facilitated the relationship between Asian economic development and international financial centres. Focusing on the origins of a wide variety of banks not just from Europe but beyond Europe, such as the United States and Asia, particularly Japan and China, this book comprehensively explores competition and collaboration among international banks in Asia. It clarifies international banking’s role of integrating the global market and the impact on both ends of the global economy—the international financial centres in the developed world and the developing economies in Asia. Economic development in Asia from the late nineteenth century to the 1930s as a part of the globalizing economy mirrors Asia’s current role as the global economic-growth powerhouse. This book focuses on the two key similarities between Asia’s past and present: intra-Asian relationships and the relationship between Asia and developed economies, namely, Europe, the United States, and Japan. Getting into the heart of the relationships, i.e., finance, this book presents a sophisticated and realistic image of the tangled network of international economic relations, distinguished from the conventional image of a one-sided advantage or disadvantage among involved nations.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction: The Development of International Banking in Asia

Abstract
To provide an understanding of financial globalisation from a historical viewpoint, this volume sheds light on international banking in Asia before the Second World War. International banking facilitated the relationship between Asian economic development and international financial centres. In this introductory chapter, Sect. 1 provides a summary of the history of intra-Asian trade. Section 2 conducts a literature review on the history of international banking. Section 3 reviews the chapters in this volume. Section 4 presents a historical perspective on the development of international banking in Asia derived from this volume. From the 1870s onward, intra-Asian trade grew faster than the trade of other regions or global trade. This provided plenty of opportunities for international banks in Asia. Until 1913, such banks were from industrialised nations such as the UK, France, Germany, and Japan. Although trade within Asia and the wide variety of nationalities of international banks providing trade finance in Asia were highly important, such finance heavily depended on pound sterling bills of exchange on London and the financial markets there. After the First World War, indigenous banks, especially from China, also started entry into international banking in Asia. However, British banks like HSBC kept their leadership in Asian international finance. This historical context is still reflected in current Asian international finance such as syndicated loans.
Ayumu Sugawara, Takeshi Nishimura

Chapter 2. International Financial Centres in Europe and Asia, 1900–2000

Abstract
This chapter is a first attempt at looking at international financial centres in Europe and Asia during the twentieth century. It has three main objectives. First, to identify the main financial centres in Europe and Asia based on their type of activities and degree of international influence. Second, to compare the changing nature of emerging and established financial centres during the twentieth century. And third, to consider the position of European and Asian financial centres within a global context, with reference, in particular, to the shifting centre of gravity of international finance. After providing some definitions of international financial centres, the chapter takes a snapshot of their position at two moments in the twentieth century: before 1914 and at the turn of the twentieth century in section three. It concludes with some broader reflections on the emergence, rise, decline and fall of international financial centres, suggesting that despite the shift in the balance of power towards the East, an increasingly multipolar financial world is likely to emerge in the medium term.
Youssef Cassis

Chapter 3. From Silver to Gold: The Currency Reforms in Asia Before 1914

Abstract
Standard silver prices began rapidly declining in the London silver market in the 1870s. Most countries and colonies that had previously adopted bimetallism or the silver standard were forced to reform their currency systems and adopt the gold standard. However, in Asia, local and regional merchants, as well as the local and regional government and most authorities, continued to use silver currency as a primary medium of exchange. Adopting the gold standard was less straightforward for Asian economies than for continental Europe. However, between the end of the nineteenth century and the beginning of the twentieth century, most colonies and countries in Asia adopted the gold-exchange standard. This reform contributed to expanding the international trade between Asia and the rest of the world and also promoted intra-Asian trade at the beginning of the twentieth century. In other words, the gold-exchange standard, which had both the function of the gold standard and a large amount of silver circulation, was one of the most important institutional fundamentals for the development of Asian economies at the beginning of the twentieth century.
Takeshi Nishimura

Chapter 4. British International Banking

Abstract
The origin of the British international banks can be traced back to the Bank of Australasia, the Bank of British North America, and the Colonial Bank established in British colonies such as Australia, Canada, and the West Indies in the 1830s. These banks were granted Royal Charter from the British government. Among the banking companies that entered Asia, the Oriental Bank Corporation was granted a Royal Charter for the first time only in 1851. This delay was attributable to opposition from the East India Company. After addressing the resistance of the East India Company, the greatest challenge for the British international banks in Asia was the decline in the silver price s from the late 1870s. Additionally, they had been forced to compete with international banks of other countries such as France, Germany, and Japan. In this chapter, we will focus on the British international banks that had entered Asia and provide insights into the banking business there. In particular, we will approach these issues by analyzing the internal accounting records of these banks. We will also examine the business activities of the banks in the New York financial market, which have not been examined hitherto.
Masashi Kitabayashi

Chapter 5. British Overseas Banks’ Activities in the London Financial Market Before the First World War from a View Point of Bill Transactions

Abstract
This chapter intends to shed light upon the activities of British overseas banks’ London offices in the period from the mid-nineteenth century to the eve of the First World War (1913). The main sources of sterling for their banking operations can be classified into the following activities: receiving fixed deposits in Britain; collecting bills from acceptors that their Asian branches purchased and sent to London; and selling bills to bill-brokers or discount houses. British overseas banks effectively invested the funds thus raised in the following ways: purchasing bills of exchange drawn by British exporters to Asia, and sending them for collection to Asian branches; purchasing Indian Council Bills and sending them to Indian branches; sending gold and silver bullion to Asian branches; undertaking or subscribing bonds that Asian countries floated in London; depositing money into corresponding banks as cash reserves for paying telegraphic transfer and money exchange; and lending call money or short-term money. They carefully avoided exchange and credit risk, and benefited ultimately from these operations. The chapter will focus on a variety of transactions between British overseas banks and the London clearing banks. At first, the businesses of British overseas bank London offices will be scrutinized. The role of bills on London through the mechanism of the multilateral trade system of settlements will be shown. Then, the structure and function of the London discount market, which played a substantial part of circulating bills among financial institutions in London, will be described empirically.
Toshio Suzuki

Chapter 6. A Case Study on British International Banks: The London Office of the Hongkong and Shanghai Banking Corporation, 1875–1889

Abstract
The years 1875–1889 saw changes caused by improved transportation, communication and the long-term declining trend in the value of silver that led to the rise of the Hongkong and Shanghai Banking Corporation (HSBC). The HSBC’s success could be attributed mainly to its adoption of the “on an even keel” policy. The London Office of the bank played an essential role in implementing this policy. In this chapter, I used chiefly the correspondence of David McLean, the manager of the London Office from 1875 to 1889, in examining the actualities of business activities in the London Office of HSBC. This chapter divides into four sections. Section 1 analyzes the finance trade business. Section 2 examines the relationship of HSBC and its correspondent banks. Section 3 considers the deposit-taking activities while Sect. 4 deals with cooperative relationship between British international banks. This research revealed that HSBC strengthened its financial networks in London in responding to changes in international payment system as well as the growth of its trade finance business. Moreover, it showed that the dynamics of competition and cooperation between international banks were significant in shaping the international payment system between Asia and the West and vice versa. By the middle of the 1880s, HSBC proved an unwavering position in international capital movement between East Asia and Britain.
Manhan Siu

Chapter 7. French International Banking: A Historical Survey

Abstract
This chapter aims to present a historical overview of French international banking, focusing mainly on its activities in Asia. French international banking was the incarnation of the performances of the Paris market and the French economy. Paris as a financial center was strong enough to attract capital from European centers, although Paris market could not develop essential functions, such as acceptances, to become a truly global market. The governance and decision-making structure was the core of the strategies of French international banks; their profit depended on branch networking and operation selection; and the latter indexes often urged change in governance at French banks. The French international banks could not maintain their branch networks, especially in Asia, and they had to rely on British banks and the London market. French banking overseas was inferior to British banking by size and access to the credit. On the other hand, the banking in the French colonial empire was in a certain degree successful, which accumulated a huge reserve out of its colonial business. Finally, the chapter would propose three subjects expected in the future on the historical study of the French international banking: the function of acceptance and discount market; a biographical study on the lower management of the banks, notably branch managers; and the local financial practices in Asia.
Kazuhiko Yago

Chapter 8. French Trade and Banking Footholds in Hankow/Wuhan Challenging British Hegemony up the Yangtze (1903–1920)

Abstract
French companies and banks (mainly Banque de l’Indochine) undertook to sustain the momentum launched by the French State, its diplomacy and various business lobbies in favour of the promotion of economic patriotism in China. The coalition of the Consulate, the branch Banque de l’Indochine and trade houses transformed Wuhan/Hankeou into a hub to draw regional commodities and to introduce French goods. Bankers there had to cross military and political events, to resist competition (HSBC, from Shanghai), and to take part to the development of the concession, in the midst of the Yang Ze Kiang valley. They had to get embedded into the connections of Chinese business (through the comprador and trade houses) to avoid the risk of asymmetry of information, to broaden their capital of knowledge about the business opportunities in the area, and to get used to the local uses of payment. Their intimacy with the few French trade houses having offshoots there favoured the development of substantial banking stuff, despite the dependence from the Shanghai marketplace and from the treasury funds of the Banque de l’Indochine branch downstream.
Hubert Bonin

Chapter 9. German International Banks in East Asia (1889–1913)

Abstract
In this paper, the development in and withdrawal from Asia of the Deutsche Bank and the development and characteristics of the Deutsch-Asiatische Bank (hereinafter, DAB), also in Asia, are analysed. On DBA, the analysis is based on the newly explored archival materials, which are original financial statements of the bank in 1906. DBA’s headquarter was established in Shanghai, which was an economic centre in Asia linked to the international market. On the other hand, due to its Articles of Association, the DBA’s overall corporate governance was determined in Berlin. During the steady development of the economic situation in Asia, the core banking operations of the DAB were foreign exchange business and trade-related lending to European trading companies, comprador capitalists, and local financial institutions, while in Shangdong Province, the German settlement in China, the DAB established close relationships with the railway and mining managements. As an outcome of business activities in 1906, the DAB generated almost all profits based mainly on foreign exchange revenue. In detail, the Shanghai, Tientsin, Berlin, Tingtau, Hong Kong and Yokohama offices earned profits. Thus, the role of the DBA was important not only from the perspective of the imperialism theory constrained by capital export but also from the perspective of establishing trade finance infrastructure.
Motoaki Akagawa

Chapter 10. American International Banking in Asia: The Case of IBC in China

Abstract
The purpose of this chapter is to explore the nature of the business conducted by the branches of an American international bank, the International Banking Corporation (hereafter IBC). Although IBC had the largest foreign branch network among the US banks before World War I and it mainly focused on Asia, it was the latest entrant among major international banks in the East. The literature on American international banking before World War I clarified why expansion of foreign branch networks was restricted by their institutional background. However, it does not clarify the branch level activities of the US international banks due to limited access to archival materials. Therefore, even though only partially, we try to fill the gap based on newly explored archival sources. Consequently, we clarify the roles of four branches of IBC within its branch network: London Branch was the key for acceptance; Beijing Branch supplied funds to Shanghai Branch; Tianjin Branch focused on foreign trade finance; and Guangzhou Branch conducting both exchange transactions and fund supplies to Hong Kong Branch. However, competing with other banks, especially with British ones, IBC lagged because it had a similar business model to them and it was also a latecomer.
Ayumu Sugawara

Chapter 11. Japanese International Banking

Abstract
After the opening of Japanese ports to Western countries in 1859, Japanese foreign trade and trade finance were dominated by Western merchants and banks along with Chinese merchants. The Japanese government encouraged Japanese merchants to conduct business directly with merchants on foreign soil and established government-related banks such as Yokohama Specie Bank, the Bank of Taiwan, and the Bank of Chosen to give foreign finance. Just before the First World War, Japanese merchants traded about a half of the Japanese international trade and Japanese banks also gave about a half of Japanese international trade finance. During the War, non-government-related banks such as Mitsui Bank and Mitsubishi Bank of which main customers were their zaibatsu affiliated trading companies such as Mitsui and Co. and Mitsubishi Corporation began foreign exchange business and foreign banks’ market share dropped significantly because of the wartime control by their home countries. In the 1920s, foreign banks regained some of their lost business but could not take as much share as before the War. After the Great Depression, however, the Japanese government introduced foreign exchange control to reduce trade deficits and activities of non-government-related banks were restricted; therefore, market shares of the Japanese government-related banks increased again.
Makoto Kasuya

Chapter 12. Chinese International Banking

Abstract
After China opened the five ports to foreign trade with the treaty of Nanjing in 1842, foreign banks initially intermediated financial transactions between China and abroad. Although the dominance of foreign banks continued in the twentieth century, as this chapter demonstrates, Chinese financial institutions also played the key roles. As European powers retreated from the financial market of China at the time of World War I, the modern banks led by the bankers who had studied abroad and worked for the foreign banks, such as Shanghai Commercial and Savings Bank and Bank of China, participated in international banking. Even before the opening of ports, the southern provinces of Guangdong and Fujian had been the basis for Chinese traders. Once the flow of goods and people to and from abroad increased from the mid-nineteenth century, the networks of remittance houses provided them with the necessary services. Against this local background, the modern banks including Bank of Canton and Bank of East Asia developed into the financial institutions to cater for Chinese businessmen. Examining the development of the Chinese international banks during the inter-war period, this chapter argues that Chinese traders and businessmen successfully mobilized the techniques and instruments that they had historically cultivated to cope with the new business opportunities.
Tomoko Shiroyama

Backmatter

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