Oriental Bank Corporation – HK’s first note issuing institution, 1847
HF: With thanks to moddsey for pointing out a couple of sources.
The banking industry began in Hong Kong in 1845 with the opening of a branch of the Oriental Banking Corporation, which had its headquarters in India. This Bank was also the first bank in Hong Kong to issue banknotes when in 1847 “it put in circulation $56,000 worth of bank notes to the great relief of the local trade.” (1) This act was authorised by the Hong Kong government.
However, the HK Museum of History says, “In 1846, the Oriental Bank Corporation issued Hong Kong’s first banknotes and bearers of the notes could exchange them for silver dollars. “(4)
The Bank was established in 1842 in Bombay with the name of Bank of Western India. In 1845 it moved its headquarters to London and changed its name to the Oriental Bank Corporation.
In 1884 the bank ran into severe difficulties as was reconstituted as the New Oriental Bank Corporation. With the growth of the Hongkong and ShanghaI Banking Corporation in Hong Kong the new bank failed to survive and closed down in 1892.
It is is also worth recording that in 1847, the British-funded Oriental Bank Corporation became the first foreign bank to open in Shanghai. By 1927, there were 35 foreign-funded banks operating in Shanghai. Through their activities, the banks eventually controlled the China trade, China’s financial system, customs revenue and national budget.
The bank opened a branch in Japan in 1864.
This chapter covers the Oriental Bank Corporation. Prior to the development of British banks operating in India and the Far East it was the East India Company that dominated international financial transactions both internally and externally. The Oriental Bank was the earliest British bank to challenge the East India Company and it did so successfully, becoming the largest bank in the region. Thus its collapse was both spectacular and a major blow to British banks in the Asia. What this chapter reveals is both the mistakes by management that led to the bank’s demise and the contribution made by monetary instability. The former involved excessive lending, especially in Ceylon. The latter was related to the collapse in the value of silver, on which Asian currencies were based, compared to gold, which was the basis of an increasing number of western currencies. The lessons learnt by British banks from the collapse of the Oriental bank made an important contribution to British banking stability in Asia in subsequent years.
The Rise and Decline of the Oriental Bank Corporation, 1842-1884, Toshio Suzuki
In the 1860s, the Oriental Bank Corporation became the first bank to begin issuing banknotes in Hong Kong, with denominations rising all the way up to $500. These first notes were not accepted by the treasury for payment of government due or taxes, although they were accepted by merchants, and the corporation was soon joined by modern giants HSBC and the Chartered Bank of China, Australia and India. (3)
This article was first posted on 20th December 2015.
- E. J. Eitel: Europe in China. The history of Hongkong from the beginning to the year 1882, p244, pub. London: Luzac | Hongkong: Kelly & Walsh, 1895
- wikipedia -The Oriental Bank Corporation
- The Hong Kong Museum of History – HK Currency exhibition, 2012
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