THE CHINESE ROOTS OF BANKING - HOW THE 1%  STARTS IN SHANGHAI

GO TO THE CHINA CURRICULUM AND FOLLOW THE TRAIL OF HOW THE 1% GOT THEIR START IN BANKING.

ROYALTY, BANKSTERS AND THE OPIUM DRUG SMUGGLING PIRATES 

The famous Shanghai waterfront, is called Wai Tan in Chinese, that indicates an embankment to control water. The characters wai and tan literally mean "outside" and "beach."  The polite translation might be "waterfront," but the  perhaps more accurate reading is "Outsider's Beach," or "Foreigner's Beach." 

The first European to urge the development of a base in China was Frederick Pigou of the East India Company. That was in 1756, almost a century before the actual establishment of a European settlement.

It is called The Bund in English. The buildings along the Bund are European origin. 

John Wharton MacLellan, whose Story of Shanghai from the Opening of the Port to Foreign Trade (1889) recalls (p. 16) that "Commerce was the beginning, middle and end of our life in China. If there were no trade, not a single man, except missionaries, would have come there at all." 
 

[OPIUM DRUG SMUGGLING PIRATES JARDIN MATHESON] The Shanghai Foreign Trade Building, built in 1920 for one of the most famous British companies operating in China. It was founded in 1832 by two Scotsmen in Canton, and it soon was shipping tea to England. 

In 1841 it was the first buyer of land in Hong Kong, and in 1844 it came to Shanghai. By the 1850s it was running steamships to India; by the 1870s it was building a railroad inland from Shanghai to Wuhan. In 1898 it helped establish Hong Kong's Star Ferry. Its headquarters were in Shanghai from 1912 until the forced move to Hong Kong after the Communist takeover. Since then, it's operated hotels, beginning with the Mandarin Oriental in Hong Kong in 1963. It also holds franchises for 7-11 and Pizza Hut. It quit the shipping business in 1984 and, with the Chinese takeover of Hong Kong, has moved its headquarters to Bermuda. 

Broadway Mansions hotel, built as an office and apartment building by the Shanghai Land Investment Company and opened in 1934 to a design by Bright Fraser.

Try to guess how did the Bayer logo get on the roof? 

Pictures Shanghai The Bund
Answer: Jardine Matheson and Company. The Bayer Company also was a big player in opium and "Heroin" was a trade name of the Bayer Company [1898].

 

PROPERTIES
ON THE BUND

No. 12 - The Hong Kong and Shanghai Bank (HSBC) Building; built 1923.

OPIUM DRUG SMUGGLING PIRATE
Astor House Hotel was the city's first Western hotel enjoyed guests: Charles Chaplin, Einstein, Russel together with many chinese politicians. 

No. 6: China's first modern bank by Michelle Qiao 8.22.12

The beauty of the Bund lies in the harmony of its buildings constructed in different styles at different times. No. 6 is the Bund's largest 19th century building and the cradle of the first modern Chinese bank.

The four-story pale gray building looks like a Gothic-style mansion with a Romanesque colonnade at the entrance. The original wood and red-brick structure is seen in photographs dating back to 1886 and it may be older. The red brick was covered when it appeared too old-fashioned.

It was built as the headquarters for the powerful American traders Russell & Co, one of the earliest and most famous "Shanghailanders" on the Bund, trading in opium, tea, silk, porcelain and other items.

The building was designed by British architects Morrison & Gratton.

"Russell & Co was an adventurous American company with a taste for high-risk, huge-profit business. When the building was constructed, the business was already going down and a bankruptcy was announced in 1891," says architectural historian Qian Zonghao from Tongji University. Two years later a kitchen fire on the fourth floor burned the top two floors before it was distinguished by firefighters in the international settlement.

In books and archives No. 6 is widely called the China Commercial Bank Building because the first Chinese modern bank was established there in May 1897. In English it was originally called the Imperial Bank of China and was renamed in 1913.

Shanghai became China's financial center in the 1870s. According to Tang Zhenchang's "The History of Shanghai" (1989), Shanghai controlled 80 percent of the country's foreign trade money. In addition to dominant British banks, other countries were busy launching their Bund banking branches in the 1890s, such as Japan's Bank of Taiwan and France's Banque de L'Indo-Chine, both to be introduced later in this column.

A total of 17 Chinese banks mushroomed on the Bund from 1897 to 1911.

The China Commercial Bank (Imperial Bank of China) was founded by legendary Qing Dynasty (1644-1911) minister Sheng Xuanhuai, who famously advocated use of Western technology to save the country from destitution. Sheng was also famous as the founder of the China Merchants Steam Navigation Co and the Imperial Telegraphy Administration, also on the Bund.

Because China lacked international banking experience at the time, Sheng modeled the China Commercial Bank on the Western banking system, especially that of the Hong Kong and Shanghai Bank Corp. He adapted the HSBC system and even hired Englishman A.M. Maitland, a former HSBC employee, as manager.

Founded with capital of five million taels of silver, the bank received deposits from local financial enterprises and the private savings of wealthy Chinese officials.

It extended loans to Chinese factories such as Hua Sing Flour Factory and Long Zhang Paper Making Factory.

Starting in 1898 the bank issued bills that were printed in London in English and Chinese, bearing dragon patterns and the signature of the British manager.

"In 1903 several Japanese in Osaka forged notes of the bank, resulting in panic withdrawals and the bank was almost closed," says Xin Jianrong, an expert on Shanghai's financial history at the Shanghai Archive Bureau.

"Investigation showed that the criminals were several jobless Japanese, who believed it easier to duplicate notes of a Chinese bank rather than those issued by a foreign bank. They were caught with the help of HSBC, which had lent money to cope with the withdrawals and feared financial chaos. It was the first case of forged notes in China."

As China's first modern-style bank, the Imperial Bank also experienced serious management problems. 
According to Ji Zhaojin's English-language "History of Modern Shanghai Banking" (2003), despite the organization of the bank, "both official and merchant," its business was not carried out on an equal footing between officials and merchants.

"Although the management system was Western in design, it constantly suffered traditional bureaucratic interference."

After the Revolution of 1911 ended the Qing Dynasty, the Imperial Bank of China was renamed the Commercial Bank of China.

The banking structure remained almost unchanged, but the decision-making power of the private shareholders increased while Qing officials disappeared. Sheng died in 1916.

"After the 1920s the bank was taken over by Shanghai gangster leader Du Yuesheng supported by Kuomintang leader Chiang Kai-shek," says expert Xin.

In 2006, the Gothic-style building that once housed China's first-attempt at modern finance was renovated into a sleek venue for fine dining and luxury shopping. The original interior was changed and no traces of the past remained.

"The walls were originally red brick, which along with some Gothic architraves, had all been covered by coatings during renovations," says Professor Qian Zonghao.

"But today we can still see that the designer from Morrison & Gratton had cudgeled brains to create a variety of different Gothic windows for different floors and the dormers, ranging from semi-circular arches, segmental arches, diminished arches and pointed arches."

This designer, with a fertile imagination, no doubt didn't know the 19th century building would survive until the 21st century having witnessed so many Bund stories inside and in front of the rainbow of Gothic arch windows.
.shanghaidaily.com/article/?id=509771

 

8.24.2012 SHANGHAI remains the world's sixth-most competitive financial center in 2012 after #1 New York, London, Tokyo, Hong Kong and Singapore. shanghaidaily.com/article/?id=509992

BRICS

New Development Bank
 

 

7/21/15 "BRICS" the new bank open for business today

The "New Development Bank" in Shanghai consists of BRICS nations of Brazil, Russia, India, China and South Africa. The BRICS economies have fueled more than half of the world’s economic growth over the past decade and are carrying out structural reforms to create balanced, sustainable growth in order to unlock domestic demand.  Economic ties have improved within the BRICS framework over the past six years since the bloc’s first summit. Trade among BRICS nations in 2013 totaled US$350 billion, 2.5 times the value six years ago. China is now the largest trading partner of Brazil, Russia and South Africa, and India’s second-largest trading partner. At the end of last year, China’s accumulative investment in the other four countries exceeded US$55 billion.  The five nations, with 42.6 percent of the world’s population and roughly a third of the world’s land area, have a combined GDP of about a fifth of the global total.

A BRICS bank was first suggested by economists Nicholas Stern and Joseph Stiglitz in 2011, and the five countries signed an agreement last year which said the bank’s purpose is to “mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.”
Stiglitz and Stern congratulated the bank on its launch and said they hoped it would help address some “central problems” of modern society concerning wealth distribution, climate change and environmental protection  The bank, headquartered in Shanghai, will have initial authorized capital of US$100 billion, and its initial subscribed capital of US$50 billion will be shared equally among the five founding members. In a statement issued yesterday, Jim Yong Kim, president of the World Bank Group, said he was committed to working closely with the bank and other multilateral institutions and offered to share knowledge and to co-finance infrastructure projects. “These types of partnerships will be essential to reach our common goals to end extreme poverty by 2030, boost shared prosperity, and to reduce inequalities,” Kim said.  The new bank, as well as the AIIB set up earlier this year, aims to address the world’s huge infrastructure needs, which are estimated to have an annual gap of US$1 trillion to US1.5 trillion in emerging markets and low-income countries.