Colonial Finance & Korean Banks 1870s-1950s


A review of Colonial Finance: Daiichi Bank and the Bank of Chōsen in Late Nineteenth and Early Twentieth Century Korea, Japan, and Manchuria, by Howard Hae Kahm.

Howard Kahm has written a fascinating dissertation that explores the incorporation of Korea into the global capitalist economy during the late nineteenth century, the fiscal and monetary considerations of its subsequent absorption into the Japanese empire from the 1910s through the 1940s, and the course of South Korean banking and finance during the uncertainties of the first fifteen years after liberation from Japanese rule. Kahm uses as his lens a narrative of the growth of the Daiichi Bank from its origins in Pusan in the 1870s, to its morphing into the Bank of Chōsen during the colonial period, to its final years before the creation of the Bank of Korea in 1950. Kahm understands the geography of the development of Korean colonial finance as the production of multiple and simultaneous cores and peripheries. Japanese financial and merchant centers such as Kobe and Ōsaka served as a core to the open ports of a nineteenth-century Chosŏn periphery and yet the open ports themselves were a core to another periphery in the Chosŏn interior. In the twentieth century, the expansion of the Bank of Chōsen into the northeastern provinces of China created still another core-periphery relationship, now composed of a metropolitan Korea tied to a peripheral Manchuria. Kahm ends this narrative with a convincing case for the persistence of the institutional and policy influence of the Bank of Chōsen beyond 1945, through the US occupation, the founding of the Bank of Korea during the First Republic, and on into the early years of the emergence of the developmentalist state during the Pak Chŏnghŭi era.

In his first chapter Kahm provides a general overview of the economic history of Japan-Korea relations during the late nineteenth and early twentieth century. Building upon Andre Schmid’s notion of a “Korea problem” in Japanese history, Kahm identifies a similar “Japan problem” in Korean histories of the period. Kahm understands his project as an effort to retrieve the interpenetrations of Japanese and Korean economic currents elided in the more nation-centered histories of the post-1945 period that have submerged the cross-national nature of intra-colonial economic relationships within the Japanese Empire.

The second chapter traces the 1878 founding of the Daiichi Bank in Pusan in the wake of the Kanghwa Treaty of 1876 that opened select Chosŏn ports to Japanese commerce. This was the beginning of what Kahm sees as the process whereby Chosŏn ports come to constitute a periphery to Japanese financial centers and the Chosŏn ports themselves function as cores to a periphery in the colonial interior. Kahm highlights the ambiguities of the institution serving as both a private commercial bank and something of a central bank to the Chosŏn government. He provides a particularly interesting narrative of the growing centrality of Daiichi in Chosŏn monetary policy. This is especially apparent in the early years of the twentieth century when the bank negotiated directly with the Japanese mint in Ōsaka, without involvement from the Korean government, to mint new Korean coins as part of an effort to reform the Korean monetary system.

In the third chapter, Kahm follows the negotiations between Japanese banks and colonial officials concerning the creation of a central bank. This process resulted in the creation of the Bank of Chōsen, an institution that consisted in no small part of employees from Daiichi, ranging from executives all the way down to custodial staff. Kahm’s analysis of macroeconomic dynamics in Japan and the impact of the growth of empire on the fortunes of the Bank of Chōsen throughout the colonial period goes quite some distance in remedying the “Japan problem” in Korean historiography and well illustrates the transnational nature of colonial finance.

It is in the fourth chapter that the formulation of multiple cores and peripheries truly comes to the fore. Kahm moves beyond what he sees as the simplistic binary of exploitation and resistance in Louise Young’s work on Manchukuo and builds upon Prasenjit Duara’s writings on authenticity and sovereignty to present the expansion of Bank of Chōsen investment, lending, and consumer banking into Manchuria as both 1) a process characterized by acceptance of and participation in the Japanese imperium and 2) an integral part of the creation of a financial and monetary periphery tied to a colonial Korean core. Here Kahm also details Bank of Chōsen involvement in the Southern Manchurian Railroad and the bank’s relationship with the warlord Zhang Zuolin.

The fifth chapter positions the preceding accounts of the Daiichi Bank and the Bank of Chōsen as a genealogy of the present-day Bank of Korea. Kahm thus wades into the debate between scholars such as Atul Kohli, who understands the post-war economic development of South Korea as an outgrowth of the colonial experience, and Stephen Haggard, Chung-in Moon, and David Kang, who see in the place of Kohli’s continuity a striking discontinuity not only between colonial Korea and the Republic of Korea but also between the economic policies of the First Republic and the developmentalism at the heart of the Pak Chŏnghŭi regime. On the basis of his account of the nimbleness with which it cultivated relations with Yŏ Un-hyŏng, the United States Military Government, and the government of Yi Sŭng-man, Kahm argues that the Bank of Chōsen was able to maintain considerable influence in South Korean finance and monetary policy from the fall of the Japanese Empire in 1945 to the creation of the Bank of Korea in 1950. The influence continued on into the 1960s and beyond, Kahm argues, as the Bank of Korea inherited much of the institutional features, personnel, and even the physical building of the Bank of Chōsen. Moreover, other Bank of Chōsen staff went on to become key figures in South Korean economic policy circles.

This dissertation is an important contribution to economic history of modern Korea, modern Japan, and to ongoing debates on the place of the colonial experience in both contemporary Korea and Japan. Its publication will be a well-grounded and a welcomed addition to the field.

Joshua Van Lieu
Assistant Professor of History
LaGrange College

Primary Sources

Chibang Migunjŏng charyojip 地方美軍政資料集
Despatches from the US Minister to Korea, 1882-1905
Foreign Relations of the United States 
Nihon jinbutsu jōhō taikei 日本人物情報大系
Shōwa zaiseishi shiryō 昭和財政史資料

Dissertation Information 

University of California, Los Angeles. 2012. 289 pp. Primary Advisor: John B. Duncan.

Image: Bank of Chōsen before 1945. From Japanese book “Showa History: History of Japanese colony” published by Mainichi Newspapers Company. Wikimedia Commons.

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