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Keeping An Idea Alive: The Establishment of a Sino-American Bank, 1910–1920*

Published online by Cambridge University Press:  11 June 2012

Noel H. Pugach
Noel H. Pugach
Affiliation:
Associate Professor of History, University of New Mexico
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Abstract

As the twentieth century opened, numbers of American businessmen, spurred in part by the forceful persuasions of American diplomats, hoped to profit from the legendary China market by taking on Chinese partners. At the same time, groups of Chinese entrepreneurs, struck by the success and wealth of the United States, hoped to take advantage of American capital by launching joint ventures with the Americans. Such enterprises generally proved difficult to form, however, and once organized, tended to see the Americans predominate and the Chinese relegated to distinctly secondary roles. But there were exceptions, as Professor Pugach points out in this essay on the Chinese-American Bank of Commerce. While the founding of this firm provides ample proof that joint Sino-American companies had to overcome large hurdles to come into being, the formation of the bank suggests that mutual self-interest, ideal circumstances, and perhaps good luck could overcome the problems inherent in creating joint ventures in which both sides could share roughly equal positions.

Type
Research Article
Information
Business History Review , Volume 56 , Issue 2: East Asian Business History , Summer 1982 , pp. 265 - 293
Copyright
Copyright © The President and Fellows of Harvard College 1982

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References

1 The quotation is from Reinsch to Secretary of State, November 28, 1914, file 793.94/205, Record Group (RG) 59, Department of State, National Archives (hereafter cited, DSNA, with reference to RG 59, unless otherwise indicated).

2 In the Chinese government charter of April 1919, the Sino-American bank was styled the China Development Bank. During the summer of 1919, it was renamed the Commercial and Industrial Bank of China. But since that resembled the name of another bank, the joint venture, in 1920, was changed to the Chinese-American Bank of Commerce.

For a survey on this period in Chinese history, see Hsu, Immanuel C. Y., The Rise of Modern China, 2nd ed. (New York, 1975), 550–591.Google Scholar Also see Cohen, Warren I., America's Response to China: An Interpretative History of Sino-American Relations (New York, 1971)Google Scholar; Israel, Jerry, Progressivism and the Open Door: America and China, 1905–1921 (Pittsburgh, 1971)Google Scholar; Pugach, Noel H., Paul S. Reinsch: Open Door Diplomat in Action (Millwood, New York, 1979)Google Scholar; Reinsch, Paul S., An American Diplomat in China (Garden City, N.Y., 1922)Google Scholar; Varg, Paul, The Making of a Myth: The United States and China 1897–1912 (East Lansing, Mich., 1968).Google Scholar For studies on joint ventures during the 1910s, see Pugach, Noel H., “Standard Oil and Petroleum Development in Early Republican China,” Business History Review, LXV (Winter 1971), 452–473CrossRefGoogle Scholar; Pugach, Noel H., “American Shipping Promoters and the Shipping Crisis of 1914–1916: The Pacific & Eastern Steamship Company,” The American Neptune, XXXV (July 1975), 166–182.Google Scholar

3 Chu Li Chi was also referred to as Secretary, Associated Chambers of Commerce of China Coast River Ports. The identification of Chinese figures in the Sino-American bank is complicated by the fact that American officials and businessmen did not use a consistent form and transliterated Chinese names as they “heard” them. In order to simplify the problem for the reader who may wish to go back to the primary sources, I have generally used the spelling found in the documents. However, where there are several variations, I have utilized the spelling that most closely conforms to the Wade-Giles system. Thus I have spelled the bank's Chinese vice president as Hsu En-yuan, though Hsu Un-yuen and Hsu-Un-yuan are also found in the documents. To compound the problem, many Chinese had both public and private names. I have used the public name, but at points in the essay I have indicated the private name in parentheses. Throughout the text, I have adopted the Chinese practice of placing the surname first.

Secretary, Associated Chambers of Commerce of China Coast and River Ports to Chairman of the Associated Chambers of Commerce of Pacific Coast, March 15, 1911, in Wilder to Secretary of State April 15, 1911, file 893.516/2; Amos Wilder to Secretary of State, June 10, 1911, 893.516/7, June 21, 1911, 893.51675, DSNA; William Gracey to Secretary of State, May 12, 1911, 893, 616/4, DSNA; Chang Chien to Ch'en Lan-sheng, 1914, in Chang Ch'ien (se-an) chi-tzu chin-lu [Chang Ch'ien's Work as Collected by His Youngest Son]. I wish to thank Dr. Kai-Hwa Ger for locating this document and Professor Jonathan Porter for translating it for me. In his fine study, Samuel Chu does not mention the industrialist's involvement in Sino-American banking. See Chu, Samuel C., Reformer in Modern China; Chang Chien 1853–1926 (New York, 1965).Google Scholar

4 For studies on Chinese economic development during the period, see Allen, G. C. and Donnithorne, Audrey G., Western Enterprise in Far Eastern Economic Development: China and Japan (London, 1954)Google Scholar; Chang, John K., “Industrial Development of Mainland China 1912–1949,” Journal of Economic History, XXVII (March 1967), 56–81CrossRefGoogle Scholar; Feuerwerker, Albert, China's Early Modernization: Sheng Hsuan-Huai (1844–1916), and Mandarin Enterprise (Cambridge, Mass., 1958)CrossRefGoogle Scholar; Hou, Chi-ming, Foreign Investment and Economic Development in China 1840–1937 (Cambridge, Mass., 1965)CrossRefGoogle Scholar; Lee, Frederic E., Currency, Banking, and Finance in China (Washington, 1926)Google Scholar; Murphy, Rhoads, The Treaty Ports and China's Modernization: What Went Wrong? Michigan Papers in Chinese Studies, No. 7 (Ann Arbor, 1970).Google Scholar

5 “Memorandum on the Subject of a Proposal for a Chinese Bank to be Formed for Carrying on Business in China,” in Gracey to Secretary of State, May 12, 1911, 893.516/4, DSNA; Allen & Donnithorne, Western Enterprise in Far Eastern Economic Development, 105–106.

6 Paul S. Reinsch to Secretary of State, November 28, 1914, 793.94/205, DSNA. Michael Hunt shows how the Chinese tried to use American capital and political involvement to save their Manchurian provinces. Hunt, Michael, Frontier Defense and the Open Door: Manchuria in Chinese-American Relations, 1895–1911 (New Haven, 1973).Google Scholar

7 Wilder to Secretary of State, April 15, 1911, and enclosure, Chu Li Chi to Wilder, April 10, 1911, 893.516/2, DSNA; Wilder to Secretary of State, June 21, 1911, 893.516/5, DSNA; Heintzlman to Secretary of State, August 2, 1911, 893.51678, DSNA.

8 Interview, Reinsch and Chang Chien, November 25, 1913, Paul S. Reinsch Papers (hereafter Reinsch Papers), State Historical Society of Wisconsin, box 2; Reinsch, An American Diplomat, 70–76; Pugach, Paul S. Reinsch especially, 64–122, 133–137; Chang Chien to Ch'en Lan-sheng, 1914, Chang Ch'ien (Se-an) chi-tzu chin-lu.

9 New York Times, June 6, 7, and 23, 1915; Reinsch to Secretary of State, December 28, 1915, with enclosures, 893.516/40, DSNA; Straight to Thomas, June 21, 1915, James A. Thomas Papers (hereafter Thomas Papers), Duke University Library.

10 Reinsch to Secretary of State, December 28, 1915, 893.516/40 DSNA.

11 Reinsch to Secretary of State, December 28, 1915, and enclosures, 893.516/40, DSNA; Edwin Cunningham, “Sino-American Bank,” October 11, 1915, in 893.516/3m, DSNA; Pugach. Poul S. Reinsch, 165–184.

12 Pugach, Paul S. Reinsch, 165–184; Scheiber, Henry N., “World War I as Entrepreneurial Opportunity: Willard Straight and the American International Corporation,” Political Science Quarterly, LXXXIV (September 1969), 486–511CrossRefGoogle Scholar; Mazuzan, George T., “Our New Gold Goes Adventuring: The American International Corporation in China,” Pacific Historical Review, XLIII (May 1974), 212–232.CrossRefGoogle Scholar

13 Reinsch to Secretary of State, December 28, 1915, 893.516/40, DSNA; Straight to Thomas, September 14, 1915, Thomas Papers.

14 Reinsch, An American Diplomat, 221–222; Pugach, Paul S. Reinsch, 204–223; Reinsch to Secretary of State, January 10, 1917, 893.516/53, January 13, 1917, 893.516/48, April 22, 1919, 893.516/66, DSNA.

15 Reinsch to Albert Pontius (consul, Foochow), May 10, 1917, RG 84, Peking Post file 851 (1917), vol. 28, NA (National Archives); Reinsch to Abbott, April 8, 1918, RG 84, Pelting Post file 851.6 (1918), vol. 31, NA; A. W. Ferrin to Elliot Mears, October 14, 1917, RG 151 (Records of the Bureau of Foreign and Domestic Commerce), file 640 (China), Box 2961, NA; Hsu En-yuan to Reinsch, May 23, 1918, Reinsch Papers, box 5; untitled and undated memoranda, Reinsch Papers, boxes 5, 6; Reinsch to Secretary of State, November 1, 1918, 893.516/61, April 2, 1919, 893.516/63, April 22, 1919, 893.516/66, DSNA.

16 Hsu En-yuan to Reinsch, May 23, 1918, Reinsch Papers, box 5; Who's Who in China, 2nd ed. (Shanghai, 1920), 73–74; “Mr. Hsu En-yuan and the Chinese-American Bank,” Millard's Review of the Far Est, vol. 11 (December 27, 1919), 152–154.

17 “Memorandum of Interview on Ch ino-Ameri can Bank,” December 1918, Reinsch Papers, box 6; Reinsch to Secretary of State, March 10, 1919, 893.00/3040, April 22, 1919, 893.516/66, DSNA; Boorman, Howard L., Biographical Dictionary of Republican China, 4 vols. (New York, 1917), I, 409–413Google Scholar; Woodhead, H. G. W., ed., China Yearbook, 1921–22 (Peking & Tientsin, 1921), 894.Google Scholar

18 Reinsch to Secretary of State, April 22, 1919, and enclosures, 893.516/66, May 3, 1919, 893.516/73, May 12, 1919, 893.516/72, DSNA.

19 Reinsch to Secretary of State, April 22, 1919, 893.516/66, April 25, 1919, 893.516/64, May 3, 1919, 893.516/73, May 12, 1919, 893.516/72, DSNA. Reinsch, “Six Years of American Action in China,” (the original title of Reinsch's memoir of his diplomatic career in China, which was condensed and published as An American Diplomat in China), Reinsch Papers, box 15. The articles of incorporation may be found in Reinsch to Secretary of State, April 22, 1919, 893.516/66 DSNA and Lee, Currency, Banking, and Finance in China, 183–186. Lists of the Chinese subscribers are found in Reinsch to Secretary of State, September 6, 1919, 893.516/97, DSNA and with the Minutes of a Meeting of the Original Subscribers to the Capital Stock of the Commercial & Industrial Bank of China, December 5, 1919, RG 84, Peking Post file 851.6 (1920), vol. 27, NA.

20 Undated memorandum, “It is Proposed to Form a Sino-American Bank,” Reinsch Papers, box 6; Reinsch to Secretary of State, April 22, 1919, 893.516/66, DSNA; Reinsch to Albert Wiggin, May 9, 1919, RG 84, Peking Post file 851.6 (1919), vol. 30, NA; Reinsch, An American Diplomat, passim; Pugach, Paul S. Reinsch, passim.

21 Hsu En-yuan to C. L. L. Williams, May 1, 1919, RG 84, Peking Post file, 851.6 (1919), vol. 30, NA; Reinsch to Meyer, July 10, 1919, ibid.; Reinsch to Secretary of State, July 18, 1919, 893.516/79, DSNA; “Mr. Hsu En-yuan and the Chinese-American Bank,” Millard's Review, XI (December 27, 1919), 152–154.

22 Reinsch to Joseph Uihelin, February 6, 1919, Reinsch Papers, box 6; Arnold to Reinsch, May 3, 1919, ibid., Reinsch to Secretary of State, March 20, 1919, 893.516/62, April 2, 1919, 893.516/63, April 22, 1919, 893.516/66, April 25, 1919, 893.516/64, May 13, 1919, 893.516/65, DSNA; Phillips to American Legation, Peking, March 31, 1919, 893.516/62, DSNA; Reinsch to American Consulate, Shanghai, April 30, 1919, RG 84, Peking Post file 851.6 (1919), vol. 30; memorandum by Reinsch, May 14, 1919, ibid.

23 Reinsch to Secretary of State, May 13, 1919, 893.516/65, May 28, 1919, 893.516/68, DSNA; Polk to American Legation, Peking, May 20, 1919, 893.516/65a, DSNA; Reinsch to Wiggin, May 9, 1919, Reinsch Papers, box 6; Straight to Thomas, September 14, 1915, Thomas Papers.

24 Meyer to Reinsch, n.d. [July 1919], July 7, 1919, RG 84, Peking Post file, 851.6 (1919), vol. 30, NA: Bruce to Reinsch, August 1, 1919, RG 84, Peking Post file 851.6 (1920), vol. 27, NA; Reinsch to Secretary of State, July 12, 1919, 893.516/77, DSNA. Denby's Boston group was left out because Chase National would not work with it.

25 Reinsch to Secretary of State, July 9, 1919, 893.516/76, DSNA; Meyer to Reinsch, July 7, 1919, RG 84, Peking Post file 851.6 (1919), vol. 30. NA; Bruce to Reinsch, August 1, 1919, RG 84, Peking Post file 851.6 (1920), vol. 27, NA.

26 Reinsch to Secretary of State, July 1, 1919, 893.516/75, July 9, 1919, 893.516/76, July 14, 1919, 893.516/78, July 18, 1919, 893.516/79, DSNA; Hsu to C. L. L. Williams, May 1, 1919, RG 84, Peking Post file 851.6 (1919) vol. 30, NA; Hsu to Reinsch, July 14, 1919, ibid.

27 Phillips to American Legation, Peking, March 31, 1919, 893.516/62, DSNA; Reinsch to Secretary of State, April 21, 1919, 893.516/63, August 22, 1919, 893.516/89, DSNA.

28 Reinsch, “Six Years of American Action in China,” Reinsch Papers, box 15; Reinsch to Long, April 22, 1919, Reinsch Papers, box 6; Reinsch to Secretary of State, March 31, 1919, 893.516/69, July 9, 1919, 893.516/76, July 14, 1919, 893.516/78, DSNA; Polk to American Embassy, Paris May 23, 1919, 893.516/67a, DSNA.

29 Reinsch to Secretary of State, July 18, 1919, 893.516/88, two undated telegrams received August 15, 1919, 893.516/87 and August 18, 1919, 893.516/88, DSNA; Reinsch interview with President Hsu Shih-ch'ang, in Reinsch to Secretary of State, 893.516/3237, DSNA; Reinsch to Meyer, July 29, 1919, RG 84, Peking Post file 851.6 (1919), vol. 30, NA; Williams to Hsu, July 29, 1919, ibid.; Meyer to Reinsch, July 28, 1919, Reinsch Papers, box 7; Reinsch to Meyer, August 18, 1919, ibid.; Williams to Reinsch, n.d., ibid.

30 Reinsch to Secretary of State, July 31, 1919, 891.516/82, August 18, 1919, 893.516/89, DSNA; Lansing to American Legation, Peking, August 7, 1919, 893.516/82. August 22, 1919, 893.516/89, DSNA; William Nelson Cromwell to Secretary of State, September 15, 1919, 893.516/92, DSNA; Boaz Long to Sullivan & Cromwell, September 15, 1919, ibid.; Cromwell to Long, September 27, 1919, 893.516/93, DSNA.

31 Millard's Review, X (September 20, 1919), 101.

32 Reinsch to Secretary of State, September 10, 1919, 893.00/3225, DSNA; Hsu to Reinsch, October 21, 1919, Reinsch Papers, box 7; Pugach, Paul S. Reinsch, 279. See the extensive correspondence in the Reinsch Papers, box 8.

33 Thomas, James A., A Pioneer Tobacco Merchant in the Orient (Durham, 1928)Google Scholar; Cochran, Sherman G., “Big Business in China: Sino-American Rivalry in the Tobacco Industry, 1890–1930” (Ph.D. dissertation, Yale University, 1975)Google Scholar; “New Chinese-American Bank to Open in Shanghai Soon,” Millard's Review, XI February 21, 1920), 606; Thomas to Sturgis, October 14 and 22, 1919, Thomas Papers; Thomas to G. C Allen, 15, October 27, 1919, ibid.; Thomas to Yuille, October 15, 1919, ibid.

34 Thomas, A Pioneer Tobacco Merchant: John [sic] A. Thomas. “Selling and Civilization: Some Principles of an Open Sesame to Big Business Success in the East,” Asia, XXIII (December 1923), 896–899, 948–950; Cochran, “Big Business in China;” Thomas to Straight, July 20, 1915, Thomas Papers; Straight to Thomas November 1, 1915, ibid.; Thomas to Allen, October 15, 1919, ibid.; Thomas to Sturgis, November 4, 1919, ibid.; Thomas to Jeffress, December 1, 1919, ibid.

35 Hsu to Reinsch, February 9, 1920, Reinsch Papers, box 8.

36 Hsu En-yuan to Reinsch, October 21, 1919, Reinsch Papers, box 7; Crane to Secretary of State, September 1, 1920, 893.00/3545, DSNA. The memorandum of agreement of October 16, 1919, may be found in RG 84, Peking Post file 851.6 (1920), vol. 27, NA.

37 Sturgis to Thomas, October 31, 1919, Thomas Papers; Commercial and Financial Chronicle, CIX, December 13 and 20, 1919; Millard's Review, November 29, 1919.

38 Minutes of Meetings of the Original Subscribers to the Capital Stock of the Commercial & Industrial Bank of China, November 26 and December 5, 1919, RG 84, Peking Post file 851.6 (1920), vol. 27, NA. The Chinese government's Wine & Tobacco Administration, however, held 6,000 shares and its head was one of the Chinese directors of the bank. This was a major indication of the bank's ties to the Peking government. There were also several links between the Chinese-American Bank of Commerce and the Wine & Tobacco Administration. The PDC loan of 1919 was secured in part by the revenues of the Wine & Tobacco Administration and was arranged by Hsu En-yuan.

39 Minutes of a Meeting of the Shareholders of the Commercial & Industrial Bank of China, December 11, 1919, RG 84, Peking Post file 851.6 (1920), vol. 27, NA; Hsu En-yuan to Reinsch, February 9, 1920, Reinsch Papers, box 8; Tong, Hollington, “The New Chinese-American Bank,” Miliard's Review, (December 20, 1919), 105–110.Google Scholar The members of the board of directors were: Chien Neng-hsun, Hsu En-yuan, General Fu Liang-tsu, Chang Shou-ling (Director General of the Wine & Tobacco Administration), Chang Pi-ting (nephew of General Chang Hsun), Lu Hung-nien, James A. Thomas, Galen F. Stone, Edwad B. Bruce, Albert H. Wiggin, S. B. Stevenson. The five superintendents were: Li Shin, Sheng Un-yi, S. B. Stevenson, A. J. Carson, and E. W. Fennemann. See Nathan, Andrew, Peking Politics 1918–1923: Factionalism and the Failure of Constitutionalism (Berkeley, 1976), 82–85.Google Scholar Minutes of the meeting of the Board of Directors of the Commercial & Industrial Bank of China, December 11, 1919, RG 84, Peking Post file 851.6 (1920), vol. 27, NA.

40 Hsu to Reinsch, February 9, 1920, Reinsch Papers, box 8; Thomas to Sturgis, November 4 and 12, 1919, Thomas Papers; Sturgis to Thomas, October 31, 1919, ibid.; Thomas to Jeffress, December 1, 1919, ibid.

41 Reinsch to Secretary of State, March 10, 1919, 893.00/3040, DSNA; Denby to War Trade Board, June 24, 1919, 893.00/2826, DSNA; Robert Rankin to Reinsch, July 3, 1919, Reinsch Papers, box 7; editorial, “Our Trade with China,” San Francisco Chronicle, December 5, 1918; Chang, “Industrial Development of Mainland China, 1912–1949,” 56–71; Cheng, Yu-Kwei, Foreign Trade and Industrial Development of China: An Historical Analysis through 1948 (Westport, 1956)Google Scholar especially 7, 29–34; Cochran, “Big Business in China”; Hou, Foreign Investment and Economic Development in China.

42 Allen and Donnithorne, Western Enterprise in Far Eastern Economic Development, 105–106, 109, 111–112; Hou, Foreign Investment and Economic Development in China; Lee, Currency, Banking and Finance in China, passim; Murphy, The Treaty Ports and China's Modernization, 58–49; Andrew J. Nathan, Peking Politics, 82–85; Tamagna, Frank M., Banking and Finance in China (New York, 1942), 28, 31–48.Google Scholar

43 Edwin Cunningham to Secretary of State, March 28, 1919, RG 84, Peking Post file 851.6 (1919), vol. 30, NA; Commercial and Financial Chronicle, CVIII, April 5, 1918, CIX, October 25, 1919, December 27, 1919; New York Times, June 13, 1919; San Francisco Chronicle, September 22, October 26, November 25, 1918; Abrahams, Paul P., The Foreign Expansion of American Finance and its Relationship to the Foreign Economic Policies of the United States 1907–1921 (New York, 1976)Google Scholar; Lee, Currency, Banking and Finance in China; Phelps, Clyde W., The Foreign Expansion of American Banks: American Branch Banking Abroad (New York, 1976)Google Scholar; Tamagna, Banking and Finance in China, 29–30.

44 Memorandum, “It is Proposed to Form a Sino-American Bank,” Reinsch Papers, box 6; Reinsch to Wiggin, May 9, 1919, ibid.; Reinsch to Secretary of State, April 22, 1919, 893.516/66, DSNA; Meyer to Reinsch, July 7, 1919, RG 84, Peking Post file 851.6 (1919), vol. 30, NA; Bruce to Reinsch, August 1, 1919, Peking Post file 851.6 (1920), vol. 27, NA; Minutes of a Meeting of the Share-Holders of the Commercial & Industrial Bank of China, December 11, 1919, ibid.; Thomas to Allen, October 15, 1919, Thomas Papers: Commercial and Financial Chronicle, CIX, 3 (December 27, 1919); Cochran, “Big Business in China”; Phelps, The Foreign Expansion of American Banks, 153.