Abstract: The 1946 Outlook and the Reconstruction of the Hongkong and Shanghai Banking Corporation

Andrew Smith

Abstract

Since its creation in 1865, Hongkong and Shanghai Banking Corporation (HSBC) had been closely associated with British colonialism. Indeed, it was dependent on the naval, military, and political power of the British imperial state. The Second World War was a disaster for HSBC, as most of the bank's branches were in territories overrun by the Japanese. The war unleashed anti-Western nationalist forces, such as the movement that successfully blocked the efforts of the Dutch to re-establish control over present-day Indonesia. An observer might have predicted in 1945 that HSBC would not survive. However, the firm recovered and prospered in the postwar era, notwithstanding the problems caused by the Communist takeover of mainland China. This paper will argue that the bank's prosperity in the postwar period was due, in part, to the adoption of what contemporaries called the ''1946 outlook.'' The mentality as well as the balance sheet and physical assets of the bank were reconstructed. When the British regained control over Hong Kong and their other possessions in East Asia in 1945, they recognized that it would be impossible to restore all aspects of the prewar social and economic colonial order. China was now a British ally and member of the security council of the new United Nations, which meant that ethnic Chinese individuals living in British colonies could no longer be treated in the prewar fashion. Moreover, the new Labour government in Britain had somewhat more progressive ideas about colonial governance than its predecessors. The authorities in Hong Kong eliminated some of the most blatant forms of racial discrimination, such as the notorious regulation that had prohibited Chinese people from living in the most desirable area of the Crown Colony. HSBC adjusted its organizational culture in recognition of this changing environment. By the early 1950s, these changes were reflected in the lending practices of the bank, though its personnel practices changed at a slower rate.