Monday, August 31, 2009 | By: Rudi Butt

Bank and Banknotes

Updated (partial) on 9/4/2012

The Oriental Bank Corporation 東藩滙理銀行 was the first bank to have opened in Hong Kong; it was also the first note issuing bank.

The bank was established in 1842 in Bombay under the name of Bank of Western India. In 1845, the bank moved its headquarters to London and have its name changed to Oriental Bank corporation. The Hong Kong operation also commenced in that year. The bank, by now the largest exchange bank in Asia,  succeeded in getting chartered in 1851 to allow competition with the East India Company's opium billing monopoly that was unpopular in the U.K. during that time.

In 1860s, the bank held a dominant position in India and China. However, it suffered much from the 'coffee disease' in Ceylon, which devastated the coffee plantations in that area, in which the company had invested heavily. In 1884, the bank ran into severe difficulties and was reconstituted as New Oriental Bank Corporation. With the growth of Hong Kong and Shanghai Banking Corporation and Standard Chartered Bank, the new bank failed to survive and closed down in 1892.

$5 bill issued in 1866
The bank was the first of many to issue banknotes in Hong Kong in denominations of $5 and under, but were not acceptable as legal tender although they were well-circulated. Banknote issuance was regulated in 1895, with the promulgation of Ordinance #2 of 1895, titled “An Ordinance to Regulate the Issue of Bank Notes”, dated March 20 of that year. The ordinance made lawful all banknotes which were in circulation on March 20, 1895; all issuing banks were to file written applications with the Colonial Treasury; however, these 'lawful' banknotes were still not acceptable as payments to the Colonial Treasury.

$5 bill; issue date: July 1, 1936
In 1911, the Mercantile Bank of India 有利銀行 was made an issuing bank, hence on banknotes became a legal tender in Hong Kong. The banknotes were in denominations of $5 and higher ones that can be divided by 5. The Ordinance #65 of 1911, dated December 29, was titled The Mercantile Bank Note Issue Ordinance.

The average amount of bank notes in circulation in Hong Kong during the month ending January 31, 1884:

BankAverage AmountSpecie in Reserve
Oriental Bank Corporation
Chartered Mercantile Bank of India, London, and China
Chartered Bank of India, Australia, and China
Hong Kong and Shanghai Banking Corporation

Unfortunately I was unable to read the numbers written for HSBC.

The London and China Telegraph, March 25, 1884


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