ABSTRACT
The rise of a modern economy in Shanghai inevitably subjected traditional banks to structural adjustments and stimulated the emergence of integrated finance capitalism. By the beginning of the twentieth century, Shanghai had already developed into a modern city with a complete urban infrastructure of road, gas, water, electricity, postal services, and telephone communication. Contributing to the Shanghai metropolis were land development, investment firms, insurance companies, and all sorts of financial institutions that connected these public facilities. Financial consciousness was associated to scientific and technological developments and public utility services that penetrated the daily life of Shanghai citizens. In addition, political indemnity funds, industrial loans, and most international trade bills were remitted to Shanghai for final settlement. The silver reserve in the Shanghai treasury increased from 25.73 million tael in 1917 to 62.10 million tael in 1925. The short-term interest rate even dropped to 3 percent.' The emergence of integrated financial resources provided easy money to the markets. Such easy money again provided the excess funds needed to establish new banks and financial facilities. Free banking and easy money appeared in the second decade of the twentieth century.
