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

Too often, historians concentrate only on political and social developments while, at their own risk, ignoring economic causation. Yale University Press is to be commended for its series on economic and financial history. However, to make a banking history palatable if not appealing to general historians of modern China, there must be a certain degree of coddling, or at least an honest attempt at readability. Lively coherence is sparse in Niv Horesh's study of the history of finance, in which the author focuses on British banking in China and the issuing of currency by the Hong Kong Shanghai Banking Corporation (HSBC) from 1842 to prewar 1937. To the author's credit, this brief work of 160 pages does provide much data as revisionist correction to earlier works that simplistically fit all foreign business in China before World War II into Marxist formulas. The British were labeled as imperialists attempting to keep China in a state of backward dependency.

Niv Horesh, in his dissertation written for Australian National University, provides a wealth of quantitative data gleaned from little-known bank archives in London. He shows persuasively that quasi-foreign bank currency issued mainly in Shanghai did not deter Chinese modernization and development. Rather, the HSBC was responding to Chinese demand for trustworthy paper currency during a rather long era when no central government had the necessary currency to meet this demand. The graphs, charts, and descriptions of the trade patterns that brought opium to China in return for silver to back the paper currency will be useful to other researchers. However, the historical foundation upon which these pieces of information need to rest is thin at best. The reader must rely on his own background knowledge to understand the economic decline of the Qing imperial government.

The late nineteenth-century rivalry between provincial gentry and central government to finance railroad development and the China Merchant Steamship Company might, perhaps, connect with British banks at Shanghai or Hong Kong. While the chapter "HSBC and its Note Issue in Shanghai" gives a time frame of 1866 to 1925, relevant historical conclusions would help to explain how small an area was under any central finance after the revolution of 1911. The huge indemnity owed to foreign treasuries for the wars China lost in the late Qing weighed heavily against China's revenues. Further, although the term "early-Republican era" is used, there is scant mention of the new provincial warlords who were milking local banks, overprinting unbacked scrip that was then forced on local businesses.

No wonder Chinese entrepreneurs needed the quasi-foreign paper currency from British banks backed in silver. Horesh provides charts that trace British and Chinese currency issuing that matched total liabilities. However, no relationship is drawn with contemporary political realities. In fact, the author cites the years from 1925 to 1937 as the late Republican era, even though the new Nationalist regime did not emerge until 1928 and did not lose the civil war until 1949. Yet another untouched aspect is the surging economic role of rapidly developing Japan.

Japan's economic imperialism in China—especially the role of its zaibatsu banks that were competing with both British and Chinese in trade and industry—requires some comparisons. Currency issuance would have been a good beginning. Although Horesh attempts to overcome the stereotypes of foreign imperialism as the evil master tethering China, he cites only old Trotskyite propaganda from Harold Isaac's Tragedy of the Chinese Revolution in his footnotes and bibliography.

While the author gives considerable attention to the anti-British strike and boycott of 1925-1926 and its effect on British banks and currency, the work could have been strengthened with a comparison of the larger ninth anti-Japanese boycott that arose during 1931. Prior to the Manchurian Incident, this Guomindang-promoted boycott of Japanese goods...