ABSTRACT
Thrown into turmoil by its unexpected defeat by Japanese naval forces in 1895 and by the Eight-Power Allied Expedition of 1900, China plunged deeply into debt due to war indemnities and postwar finances. In response to Chinese demands for postwar financing, many foreign banks that had been established in China in the preceding decades quickly expanded their businesses, opening new branches across China. Before the end of nineteenth century, a total of 21 foreign banks with 101 branches were operating in China.1 The Hongkong and Shanghai Banking Corporation increased its assets from 13,396,655 pounds in 1865 to 211,457,723 pounds in 1900, which was almost 16 times higher than the original assets, and the Chartered Bank of India, Australia, and China multiplied its assets from 103,003 pounds in 1854 to 16,218,964 pounds in 1903, which was 157 times the original capitaJ.2 Although the Shanghai branches of the two banks reflected only part of the total assets increase, the significance of foreign bank expansion was nevertheless apparent. Under the protection of extratenitoriality, foreign banks were able to issue bank notes, absorb large deposits, and manage the Maritime Customs Revenue and other Chinese government transfers. Some foreign banks also engaged in collecting information, receiving war indemnity, and even played critically important roles in representing their home governments in granting political loans to the Qing Court.
