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Colonial Finance: Daiichi Bank and the Bank of Chosen in Late Nineteenth and Early Twentieth Century Korea, Japan, and Manchuria


After Choson Korea was forced to open its ports in 1876 by Japan, Korea was incorporated into a regional East Asian economy based on the unequal treaty system and predicated on a structure of core and periphery relationships between the industrialized and industrializing nations. As the first modern bank in Japan, Daiichi Bank was the first Japanese bank to establish operations in the Korean open ports. Daiichi was heavily dependent on its business in Korea for survival, but it ultimately thrived within the fierce competition of the time. Daiichi also demonstrated the inherent contradiction of functioning as the erstwhile Korean central bank as well as a private commercial bank.

After annexation in 1910, Daiichi Bank transferred nearly all of its operations into the Bank of Chosen. The internal Japanese debate over the establishment of a stand-alone central bank between the Bank of Japan, Ministry of Finance, and colonial government established the Bank of Chosen with a separate-but-equal yen currency which placed colonial Korea on the periphery and insulated Japan from the Korean economy. Also, the Bank of Chosen aggressively expanded into Manchuria to remedy the colonial contradictions of a perpetual trade imbalance, but it also reinforced a new core-periphery relationship between colonial Korea and the Manchuria. The post-WWI economic crash, the 1923 Kanto Earthquake, and the 1927 Showa Financial Crisis presented new challenges for the Bank of Chosen which was forced to rely on a government-sponsored rescue.

After 1945, the Bank of Chosen continued to play a pivotal role in the southern economy under American occupation authority. Despite the internal power struggle between the Bank of Chosen and the Ministry of Finance over the creation and independence of the South Korean central bank, the prominence and authority of the Bank of Chosen ensured continuity in the institution and personnel in the new Bank of Korea. The histories of Daiichi Bank, the Bank of Chosen, and the Bank of Korea thus demonstrate the continuity and contingent adaptations of these institutions with the demands of the state as they traversed late nineteenth and early twentieth century Korea, Japan, and Manchuria.

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