HSBC bank branches are everywhere in my home city of Rochester, N.Y. Many Rochesterians think of it as a Buffalo corporation, since its presence here is a result of acquisition of Marine Midland Bank of Buffalo. But actually HSBC originated in the Far East in order to finance the British opium trade with China—the biggest and worst drug cartel in human history.
Le Monde diplomatique described HSBC’s origins in its on-line English-language edition.
HSBC — formerly the Hongkong and Shanghai Banking Corporation … is today one of the world’s largest banking groups. But it began with maritime business and the opium trade. … …
Opium made up 70 percent of maritime freight from India to China, where it was sold to the Chinese by British compradores, despite all efforts by the Chinese authorities to stop it.
[Thomas] Sutherland understood that the time was right for a commercial bank. In 1865 he and a few others founded the Hongkong and Shanghai Banking Corporation. The board … included the remarkable Thomas Dent, founder of Dent & Co.
In 1839 a senior Chinese government official, Lin Zexu, known for his competence and moral standing, issued a warrant for Dent’s arrest in an attempt to close his warehouses, which infringed the Chinese ban on opium. That helped trigger the first opium war, which ended in August 1842 with the unequal treaty of Nanking.
After the second opium war (1856-60), the British and French imposed territorial concessions under foreign administration, the opening of Chinese ports to foreign trade and the legalization of the opium trade.
When Sutherland began the Hongkong and Shanghai Banking Corporation, the conflict had been over for five years. The Chinese characters in the transliteration of its name are auspicious, and can be understood to mean gathering wealth.
HSBC’s first wealth came from opium from India, and later Yunan in China. In 1920, bank subsidiaries were opened in Bangkok and Manila. When the People’s Republic of China was established in 1949, the bank refocused its activities in Hong Kong, but between 1980 and 1997 it set up in the US and Europe. It moved its headquarters from Hong Kong to London in 1993 prior to the 1997 transfer of sovereignty to China.
… … And in 2008 HSBC’s boss, Vincent Cheng, chairman of the Hongkong and Shanghai Banking Corporation and of HSBC Bank (China), was appointed to the National Committee of the 11th Chinese People’s Political Consultative Conference.
When HSBC executives were caught late last year financing the Mexican and other drug cartels, they were returning to the company’s historic roots. And they are almost as much above the law now as their corporate forebears were 150 years ago.
Click on HSBC: Chinese for making money for the full Le Monde article on HSBC’s history.
Click on Gangster Bankers: Too Big to Jail for Matt Taibbi’s article about HSBC in the current issue of Rolling Stone.
Click on How too-big-to-jail HSBC wriggled out of money laundering indictment for more on Treasure Islands, a web log devoted to money laundering and tax havens.