Bank of Chōsen

The Bank of Chōsen or Bank of Joseon (Japanese: 朝鮮銀行, Korean: 조선은행), known in 1909-1911 as the Bank of Korea (Japanese: 韓國銀行, romanized: Kankoku Ginkō, Korean: 한국은행, romanized: Hanguk Eunhaeng), was a colonial bank that served as bank of issue for Korea under Japanese rule as well as being a commercial bank, with significant operations beyond Korea. Formed in 1909 by transfer of the former Korean operations of Japan's Dai-Ichi Bank, it issued the Korean yen from 1910 to 1945. Its seat was initially established in Seoul (known at the time as Hanseong, then Keijō), relocated to Tokyo in May 1924, and subsequently relocated back to Keijō.

Bank of Chōsen
Head office in Seoul
Japanese name
Kanji	朝鮮銀行
Transcriptions Romanization Chōsen Ginkō
Korean name
Hangul	조선은행
Hanja	朝鮮銀行
Transcriptions Revised Romanization Joseon eunhaeng McCune–Reischauer Chosŏn ŭnhaeng

Following the division of Korea in 1945, the Bank of Chōsen was succeeded in North Korea by the Central Bank of the DPRK. In South Korea, it continued its activity and issued the South Korean won until 1950, when it was replaced by the Bank of Korea.

Establishment

Following the Japan–Korea Treaty of 1905 which reduced the Korean Empire to a Japanese protectorate, the dominant status which Dai-Ichi Bank had enjoyed in Korea since 1878 became a matter of debate in Japan. In August 1907, Japan's Resident-General Itō Hirobumi and Dai-Ichi Bank's head Shibusawa Eiichi agreed that Dai-Ichi's operations should be eventually transferred to a dedicated central bank for the territory. A debate ensued between Itō and the Japanese finance ministry, with the latter favoring the creation of a Korean branch of the Bank of Japan over that of a stand-alone colonial institution over which Tokyo would have less direct control. Eventually Itō's position won the debate, and the finance ministry rationalized the decision as preferable to preserve financial stability. The new Bank of Korea was created by Japanese law of July 1909, largely modelled on the Bank of Taiwan (est. 1898) but with a greater role for Itō in its governance than in the Taiwanese precedent. Dai-Ichi Bank kept its branches in Seoul and Busan but later in 1909 transferred all its other Korean branches and offices to the Bank of Korea, totalling 220 regular employees and 121 support staff in Chinnampo, Daegu, Gunsan, Hamhung, Incheon, Kaesong, Kyongsong, Masan, Mokpo, Pyongyang, Songjin, Wonsan, and across the Yalu River in Andong. The transfer also included central operations and the new building initially planned by Dai-Ichi Bank for itself in Seoul, then still under construction and which became the Bank of Korea's head office.

The Bank of Korea assumed responsibility for the Dai-Ichi Bank's notes in circulation, which totalled 12,000,000 yen, and Dai-Ichi Bank would further transfer to the Bank of Korea the 4,000,000 yen in specie reserves which backed its banknotes. The balance was converted by the Bank of Korea to a loan of 20 years without interest to the Dai-Ichi Bank. The new institution's first president was Ichihara Morihiro, a former mayor of Yokohama who had joined Dai-Ichi Bank in 1906 to run its Korean network and kept the position until his death in October 1915.

Japanese colonial era

Following the Japan–Korea Treaty of 1910 and full annexation, the Bank of Korea was renamed the Bank of Chōsen by Japanese law in March 1911. The bank remained a joint-stock company owned by a number of Japanese banks and companies, with a board appointed by the Governor-General of Chōsen. The monetary role of the Bank of Chōsen was modelled on that of the Bank of Japan, with the key difference that it was allowed to use BOJ banknotes as currency reserve alongside gold and silver.. It was responsible for issuing currency in Korea, regulated domestic prices, serviced international trade. Its banknotes had legal tender status in Korea and also in the Kwantung Leased Territory and the South Manchuria Railway Zone; they could be exchanged one-to-one with those of the Bank of Japan.

The total amount of the Bank of Chōsen's banknotes increased from 13.5 million yen at end-1909 to 20 million at end-1910 and 28.6 million in April 1912, then declined to 22.9 million by end-1914 and rose again to 34 million (end-1915), 47 million (end-1916) and 68 million (end-1917). This expansion reflected both economic growth in Korea and the bank's expansion into Northeast China and beyond. The Bank of Chōsen opened branches and offices in Mukden (July 1913), Dalian (August 1913), Changchun (September 1913), Siping (February 1914), Kaiyuan (September 1915), Harbin (July 1916), Yingkou (September 1916), Fujiadian (December 1916), Longjingzun (March 1917), Jilin (June 1917), Qingdao (October 1917), Lüshun, Liaoyang and Tieling (January 1918), Zhengjiatun (March 1918), Shanghai (April 1918), Manzhouli (September 1918), and Qiqihar (November 1918).

In addition to handling foreign exchange transactions between Japan, Korea, Manchuria, and China, it played a role as a commercial and trade bank by taking charge of deposits and loans in the region. In Korea alone, 9 million won in 1911 and 755 million won in 1944 were loaned, while commercial loans accounted for 60-70%. Also, the amount of deposits increased from 6 million won in 1911 to 583 million won in 1944. However, unlike the Bank of Japan, it was in a competitive position in loans and deposits with other banks.

It expanded its business as a general bank in Japan, Manchuria and China to promote foreign investment of Japanese capital. In other words, from mid-1910, while expanding loans in Japan and Manchuria, they participated in Japanese loans to China and allocated more than 50% of all loans to the region. At the end of 1924, the loan amount reached 80 million won in Joseon, 1.75 billion won in Japan, and 1.25 billion won in Manchuria.

By 1929, the Bank of Chōsen had 19 offices outside of Japan and its colonies, the second-largest such network among all Japanese banks, surpassed only by the Yokohama Specie Bank.

Postwar development and transition to the Bank of Korea

Despite the disruption associated with the surrender of Japan and division of Korea in 1945, the Bank of Chōsen did not itself undergo significant change in the late 1940s.

See also

• Chôsen Industrial Bank
• Korean Yen
• List of central banks

External links

• Bank of Korea, A Brief History of Korean Currency (404: 2013-04-16)