The Bank

Pardon the off-again, on-again posting - due to work commitments, I fear this season I shall not be able to entertain a daily post on the urban heritage of East Asia. However, I shall certainly keep trying!

March 3rd [I originally had April 3rd here, thanks to Madame Chiang for pointing out my mistake!] was actually the 141st anniverary of the founding of the Hong Kong and Shanghai Banking Corporation. It was the brainchild of a shipping man, Sir Thomas Sutherland, who had never had a banking account in his life.

Sir Thomas, who was the area manager of the Peninsular and Oriental (yes, the very same that was very controversially purchased by Dubai Ports World earlier this year), was a vexed man.
Hong Kong did not have a proper bank in its first quarter century or so as a British possession (or before that either). The main banking business, which was commercial lending, was offered by the big trading firms of Jardines, Dent's and Russell's. Great for them, but bad for the smaller firms that were trying to compete with them. So a company was to be formed called the Royal Bank of India and China. The problem was, these fellows that were forming this bank for Hong Kong were based in Calcutta, and thought that they could create the bank and only offer a small minority of shares to businesses actually in Hong Kong. This was a big mistake - because it really got Sir Thomas thinking.

On a trip back to Hong Kong on a steamer, the Scotsman was reading the colonial Blackwood's magazine. He read some articles about banking that made him think that it was be 'rather simple' to found a bank based on what he called 'Scottish principles' - thrift, hard-work and a canny eye for business and investment. He recounted later that after he arrived he spent all night writing a business plan, and the next day went to Hong Kong's best lawyer, Mr. Pollard, and told him: "Sir, you may make a business of this."

The local hongs, appreciating the threat the Raj-based bankers posed to their business, almost all signed on - and the shares were quickly oversubscribed. Financing the trade in opium was still big business as well as newer projects based in China. The Royal Bank of India and China, when its promoters arrived in Hong Kong, did not stand a chance. The company returned to India to die a quiet death.

So it was that a Scotsman whose only experience with finance was an overdrawn account with his compradore created one of the world's foremost financial institutions, based, then and now, to 'Scottish principles.'