Stories to Awaken the World (hereafter as Stories) is a celebrated Ming dynasty collection of stories rewritten and compiled by Feng Menglong (1574–1646). In one tale, an official lauded for his honesty declared preemptively the prohibition of unauthorized private loans that exploited the populace, vowing to confiscate related promissory notes and impose severe punishments on the offenders.Footnote 1 Drawing from this account, historian Ray Huang (1918–2000) observed: “The author voiced grievances on behalf of impoverished farmers in a particular time and situation. In reality, this phenomenon is closely tied to the inability of commerce to break free from traditional customs, preventing the widespread development of the nation’s wealth. In other words, this is a comprehensive economic issue rather than an isolated ethical problem.”Footnote 2 Ray Huang’s interpretation underscores the perceived link between economic growth and the freedom of commerce. In sixteenth-century China, trade was constrained by what he termed “traditional customs,” such as compassion toward farmers oppressed by affluent moneylenders. Huang’s analysis suggests that removing such constraints was essential for the liberation of markets. Thus, the state’s efforts to regulate markets, epitomized by this attitude toward safeguarding the welfare of the rural populace, constituted a “comprehensive economic issue.”
The implication of Ray Huang’s assessment—that the state and the market are oppositional—finds strong resonance in the popular economic discourses in the U.S. since the 1970s.Footnote 3 However, this implicit definition of an unbridled market has been established as fictional. Karl Polanyi showed that the operation of the market system inherently requires a moderate level of state and societal supervision. Douglas North argued that the imperfections of the market necessitate gradual institutional safeguards. William Novak and Gautham Rao scrutinized the deep roots of economic regulation in early America, refuting typical historical depictions. Most recently, Jacob Soll has demonstrated that throughout the long tradition of political and economic thought in European history, “free” market meant that markets were set free by governmental intervention. Commercial exchanges had to be liberated and saved from the control of self-interested, wealthy merchants.Footnote 4 The newer scholarship of American capitalism also exemplifies the increasing interest toward understanding the interdependent relationship between state and market.Footnote 5
Unlike other historical fields, legal historians are poised to demythologize the state-market dichotomy by emphasizing a tripartite relationship. For over a century, legal scholarship has examined how states utilize law to establish and regulate markets.Footnote 6 This article adds breadth and depth to this scholarship by bringing non-Western cases, namely China, into the conversation. More importantly, the Chinese case presents an interpretive challenge: where to place “culture,” or “ethos,” in the state-law-market trifecta?Footnote 7 How should we understand, for example, the attitude of the official from Stories without essentializing it as mere anathema to capitalism? Anthropologist Mary Douglas (1921-2007) argued that the loose and baggy concept of “culture” must be broken down, and a causal relation between its constituent parts—social organization and thought style—identified, specified, and evidenced.Footnote 8 To unpack the nebulous notion of Confucianism, this article highlights one facet of the Neo-Confucian attitude toward economic transactions: the concept of benevolence (ren), particularly as expressed through compassion for the poor.
Using the case of early modern China, where the state’s legal system confronted the mighty resurgence of a money economy in the sixteenth and seventeenth centuries, this article argues that the Chinese state in this period, leveraging its legal apparatus, endeavored to curb monopolies, and ensure reciprocity in the marketplace, while also protecting the domain of private transactions. Disruptive elements, such as price gouging and hoarding, were punished so that commerce could flow, and wealth could circulate. The permeation of Confucian values in elite culture, in contrast to popular caricatures of an anti-commerce stance, served to enhance the uniformity of judicial interpretations, and eventually, the consistency and predictability of judicial decisions. Economic legislation, as a major tool of statecraft, and its social reception were indispensable for both market functionality and social stability.
In attempting an in-depth examination, this article zooms in on just one section of the Great Ming Code, titled “weijin quli.” These statutes aimed at, literally, “the prohibition of violating regulations to gain profit.”Footnote 9 For ease of reference, this article uses the term “usury statutes” or “usury law” as a shorthand for the legal injunctions under the title “weijin quli.” As the name of the statutes makes clear, “weijin quli” meant a specific set of illegal behaviors related to debt relations. The forbidden circumstances or activities of profit-making were kept up to date through sub-statutes. This focus on the legality of debt relations evokes the massive literature on usury in European history but in one sense: loan relations have long been regulated by laws issued by various governmental and religious authorities. In the European case, attacks on usury had complex bases, coming from a wide range of definitions with intertwining influences, including canon, civil, and Roman law.Footnote 10
In a global historical context, sixteenth- and seventeenth-century China echoes the timeline of change in the Western legal context. During the thirteenth century, some guidelines were formulated to separate licit from illicit interest in northern Europe, as transactions of the sort increasingly condemned continued unabated.Footnote 11 In retrospect, usury had been most vehemently attacked when commerce and money were viewed as particularly menacing. When commercialization was no longer a threatening novelty, Western Europe and Russia gradually relaxed usury laws by either abolishing any interest ceiling or adding exemptions to legal restrictions.Footnote 12 The late Ming experience of social and commercial fluidity, or even confusionFootnote 13 , points to a historical juncture when market issues were most prominent in the minds of state officials.
This study foregrounds the multi-dimensionality of law: as legislation, specialist interpretations, legal education, and popular knowledge. In turn, this treatment of law as both porous and specific renders a more pluralistic conception of the state, revising the overall framework for assessing the institutional environments of economic transactions. This article begins with a close reading of relevant statutes, followed by an examination of judicial interpretations by legal experts. It then studies the application of usury law by prefectural and local officials. Finally, it probes the non-elite understandings of the same issues as reflected in popular handbooks. In sum, these various facets of law coalesced to funnel state power into the realm of market transaction and competition that were also concrete sites of social contention.
Usury Legislation: Statutes and Sub-Statutes
Dynastic legal codes were the source of formal law in imperial China. The Great Ming Code (Da Ming Lü) was first promulgated in 1367.Footnote 14 Revision of the Code itself was prohibited. Instead, officials supplemented the statutes (lü) with sub-statutes (li), which resembled the statutes but could be revised regularly.Footnote 15 By the sixteenth century, the amalgamation of statutes and sub-statutes had crystallized into a model that provided the most up-to-date legal framework.Footnote 16 The statutory basis for the state to regulate economic matters was primarily found in the sections titled “real estate,” “taxes,” “granaries and treasuries,” “money and debts,” and “markets.”Footnote 17 The empirical core of this study—usury law (weijin quli)—was categorized under “money and debts.” The tenet of these statutes remained stable across the centuries since the first comprehensive legislation on the topic in the Tang dynasty (618-907).Footnote 18
Among the usury statutes and sub-statutes, only one out of six items referred to the interest rate, which was not to exceed three percent (san fen) on a monthly basis.Footnote 19 These monthly quotas were then multiplied by twelve (i.e., the number of months in a year) without compounding. Regardless of the loan duration, the combined interest was not to exceed the principal: this is sometimes called the rule of “one-principal and one-interest” (yi ben yi li). Any gain exceeding the permitted amount would count as “illicit gain” (zang). Depending on how much excess interest one obtained, different degrees of corporal punishment would be imposed, such as caning or flogging.Footnote 20
It is essential to recognize that definitions of “high interest rates” vary across legal frameworks and practices. Consequently, the determination of what constitutes “high” interest, the context in which it applies, and the objectives behind it resist generalizations. We know that in practice, many locations in China saw much higher interest rates than the ones specified in the law.Footnote 21 It is also unclear what these higher-than-legal rates can tell us about the specific motivations and responses of the people in question. Did the borrower see the rates as higher than they expected, or was it customary to complain about interest rates, especially in debt litigations where the debtor would need to justify their default on debts? Were the rates high enough that they cut significantly into the productivity and living standards of the debtor? How much more did the lender benefit than was deemed reasonable at the time? Such are the difficulties with interpreting interest rates in practice.Footnote 22
The above caveat is particularly important because any study of law inevitably raises questions about enforcement. Due to scant data, we cannot draw conclusions about a causal relationship between law on the books and actual debt practices in premodern China. Scholars have estimated that during the Ming period, interest rates showed a downward trend.Footnote 23 However, we do not know the extent to which this decrease in interest rates was an effect of the law or a byproduct of the maturation of the market economy. Geographically, lower interest rates may have been more common in the south than in the north.Footnote 24 The interest rates for monetary loans were generally lower compared to grain loans, and mortgage loans generally had lower interest rates compared to unsecured loans. Interest rates as high as seven, eight, or nine percent, and even annual rates double that or more existed in practice. There were also medium- to high-interest rates of about four, five, six percent per month, and low-interest rates of three percent, two percent, one and a half percent, and even one percent or lower.Footnote 25
The state may have been wary of too much focus on interest rates—only one of the usury statutes in the Ming Code discussed the matter. The other five specified what kinds of debt relationships were forbidden, and what kinds of measures for pursuing debts were illegal. Take government officials as an example. In addition to being punished according to the law of corruption, Ming officials were also subject to usury law.Footnote 26 The Ming Code sought to prevent the mixing of lending relations and formal governmental duties. For example, being accompanied by creditors or guarantors to one’s office was punishable by law.Footnote 27 Officials were not allowed to lend money in their own office. If they profited a great deal, such persons would also be charged with “corruption without subversion of the law” (bu wang fa), and any “illicit gains” (zang) could be returned to the individuals from whom they were taken. Debts could often be incurred by officials during visits to the capital as candidates, because high living expenses induced them to borrow from wealthy residents, who lent them money as a political investment.Footnote 28 Since the late fifteenth century, debt law was modified through “precedents on punishment” (wenxing tiaoli), which further expanded the scope of regulations.Footnote 29 Hongzhi and Jiajing editions added regulations of military officials, military households, and officials in charge of transporting state grain. The Wanli edition specified heavier punishment for imperial academy students (jiansheng). Profits from such lending were no longer deemed private debts to be returned to the original owner, but “illicit gains” to be confiscated into state coffers.Footnote 30
Despite the freedom to enter private contracts, only state representatives were authorized to enforce debt. Like the Tang Code, the Ming Code forbade commoners from being sold into slavery because of debt: if the lender agreed to accept payment for a debt in the form of the wife, concubine, or children of the debtor, they would be caned; if a creditor abducted any of these by force, they would be strangled.Footnote 31 If a wealthy and powerful lender did not bring a lawsuit to pursue what was owed, but used private debts to seize someone’s real estate or livestock, this lender would be subjected to caning.Footnote 32 In addition, the Ming Code required the fulfillment of private debts: the violation of debt agreements was punishable by law. When a breach of a debt contract amounted to at least 5,000 coins (5 guan), the severity of the penalty would be graded according to the outstanding debt amount. Further, the Code outlined incremental punishments for any delays or failures to make the debt payment.Footnote 33
In sum, the Ming Code regulated both sides of the debt relationship while highlighting the statuses of the people involved. Comprehensive in its scope, the law regulated the speed of gain, debt collection measures, and the obligation to honor debt payments. The letter of the law protected kinship relations and the freedom of commoners; it forbade venality in officials and the avarice that consumed assets unjustly. As shown in the following section, legal interpretations translated the statutes into actionable guidance for judicial reasoning, ensuring law’s engagement with social realities.
Legal Knowledge, Expertise, and Judicial Interpretations
While private lending thrived in the sixteenth century, the Ming state, unlike that of the Qing Dynasty (1644-1911) in the eighteenth century, had not yet established regional laws to regulate pawnshops or bolstered the state-run granary system to moderate rural interest rates.Footnote 34 Consequently, issues such as monopolies, exploitative loan practices, and unlawful debt collection were predominantly addressed by local courts during debt litigations. Therefore, legal interpretations of usury statutes were of critical importance.
A close examination of legal interpretations reveals how expertise, education, and professionalization transformed the application of law. Jurisprudence—the theory, knowledge, and science of law—became a key area of study and application by the sixteenth century. The expanding interest in practical legal knowledge in the Ming spurred growth in the production and dissemination of highly systematic legal texts. For example, Qiu Jun’s magnum opus Supplement to the Extended Meaning of the Great Learning (Daxue Yanyi Bu, 1488) devoted a large section to law and suggested reforms.Footnote 35 Legal education flourished, partially due to the inclusion of a “judicial judgment” (pan) test in the civil examinations, which officials of all levels of the imperial bureaucracy had to pass.Footnote 36 A few organizational reforms in the same period also strengthened the quality and consistency of judicial decisions. For example, the state established the case review system, emphasized frontline officials’ judicial performance, and created the unique position of prefectural judges (see below).Footnote 37
In addition to Confucian classics, commentaries written by prominent Ming jurists addressing a bureaucratic audience formed a shared curriculum for legal practitioners.Footnote 38 The vast majority of legal commentators were from the three central-level judicial agencies that played crucial roles in reviewing legal cases: the Board of Punishment, the Court of Judicial Review, and the Censorate.Footnote 39 These factors contributed to the unprecedented increase in the production and dissemination of commentaries on the Great Ming Code in sixteenth and seventeenth centuries.Footnote 40
The majority of Ming Dynasty legal annotation books were “private editions” (sike, jiake) and “commercial editions” (fangke). The latter began to dominate in terms of variety and total number by the sixteenth century, while the former—books edited, written, and published in the names of Ming officials or scholars—remained an important mode of traditional book production.Footnote 41 If a certain text was recognized as valuable by members of the judicial community, joint efforts in revising and compiling the work and sponsoring its publication were more likely. The reputation and authority of the commentaries was based on their perceived quality and value, and to some extent on the status of the reputed authors and editors. For example, it was recommended that prefectural judges (tuiguan) consult and follow Wang Kentang’s commentaries.Footnote 42 When the administrative assistants in the two capitals (Beijing and Nanjing) opened legal academies to study law, their reference texts were primarily such private edition legal commentaries.Footnote 43
Comprehensive commentaries that synthesized different legal interpretations were revered by legal officials; some were even treated as official interpretations. For example, the Collected Commentaries of the Great Ming Code with Regulations (Da Ming lü jijie fuli, hereafter as “Collected Commentaries”), which combined at least eight established commentaries, synthesized the strengths of various schools of thought.Footnote 44 Lei Menglin’s Trivial Words about Reading the Code (Dulü suoyan 1544), likely a result of collaborative efforts, was also used as an authoritative annotation to the Ming Code.Footnote 45 Prominent legal interpretations continued to be edited and reprinted during the Qing Dynasty (1644-1911), and continued to retain, even gain in, influence.Footnote 46 This continuation of authority across dynastic transitions attests to the inherent value of legal commentaries as works of jurisprudence, and suggests that the reason for their popularity and longevity was not their affiliation with the state or any imperial house.
In other words, statutes were living law. Legal commentaries interpreted the law according to the perceived intent of legislators, influencing the perspectives of those employed by central judicial bodies and those designated to try cases at regional and local courts. The three renowned and authoritative interpretations mentioned above—The Collected Commentaries, and the commentaries of Wang Kentang and Lei Menglin—all agreed on the spirit of usury law: promoting benevolence by preventing the exploitation of debtors. A closer examination of these commentaries unearths an exceptional attentiveness to the statutes, social realities, and the practical challenges in legal reasoning.
In the Collected Commentaries, the “collated annotation” (zuan zhu) remarked: “the law is strict with lenders and pawnbrokers to curb abuses by the powerful, and it is lenient with debtors who have difficulties repaying. The intention of the law is to control the strong and support the weak, and to anticipate future situations (like this).” In his commentary, Wang Kentang echoed by stressing that “the purpose of lending and pawning should be to give aid (xiangji), therefore if there is no limit to interest it would creating suffering (xiangbing).”Footnote 47 Lei Menglin’s commentary further deployed empathy to elucidate the intent of the legislation: “if someone [allowed a debtor to] mortgage his wife, concubines, or children, even if the transaction is voluntary, he [the creditor] will still be punished with whipping. This is because a wife, concubines, and children are naturally loved, and unless under extreme duress, one should never agree to mortgage them.”Footnote 48
Similar, if not identical, interpretations of debt law continued into the Qing dynasty in the seventeenth century, when the rise of private legal advisors was changing the landscape of the legal commentary tradition.Footnote 49 Early Qing legal expert Shen Zhiqi used different (and more verbose) language to express ideas analogous to Wang Kentang’s: “The authorities believe that lending and pawnbroking have their necessity and inevitability, they can ‘alleviate urgent needs, and there is a sense of mutual aid in profiting,’ while also recognizing that ‘there must be those who take advantage of people’s urgency to profit without limit, and there will inevitably be those who delay payment, violate contracts, and default on repayment; hence these restrictions were established.’”Footnote 50 Judicial experts across the centuries, similarly educated in Confucian classics, displayed fairly consistent methods of analysis and persuasion.
Other elite-produced texts also emphasized the likelihood of debtors’ duress. Writings by regional officials (who were also successful civil examination graduates) highlighted the exploitative nature of high-interest-rate lending, which had to be corrected in the marketplace.Footnote 51 Two categories of people, “powerful and imperious individuals” and “professional moneylenders” were portrayed as frequent and expected offenders. They were stigmatized in contemporary writings in a way resembling Shylock in The Merchant of Venice.
The notion of “powerful and imperious individuals” (hao min) referred to those who were inclined to coerce others into one-sided transactions. They were seen as overbearing and oppressive, often due to wealth, social status, or personal connections in a local community.Footnote 52 Jurist Shen Zhiqi’s phrase, “those who take advantage of people’s urgency and profit without limit,” was referring to this category. In late imperial China, the landed gentry was generally the only source of loans in rural areas. This monopoly often caused interest rates to soar and jeopardized the livelihood of farmers.Footnote 53 In urban areas, loans were often controlled by wealthy merchants and bureaucrats who parlayed political privileges into economic profits. Official writings often scolded such profiteers for their “unrestrained engagement in private lending” (da fang si zhai).Footnote 54
A unique set of activities could mar one not only as an “imperious individual,” but also as a professional moneylender. One such practice was “lending outside one’s home jurisdiction” (yuejing fangzhai). Provinces competed with one another when it came to issues like tax allocations and burdens of inter-regional subsidies.Footnote 55 Therefore, when regional merchant groups collaborated to exploit the capital market of a different territory, the disruption was seen as especially egregious. The admonition of a prefect of Nanning illustrates this attitude: “there are those moneylenders from other provinces who violate profit-seeking prohibitions (weijin quli). They ruthlessly exploit the locals. They seize people and livestock, take advantage of families with sick members or delayed funerals, and refuse to bury the dead. They would recklessly harass anyone. If things do not go as they wish, they seize properties or force debts even on the brink of death, causing the loss of life and depopulation in our area. This kind of harm to the people is extremely severe and must be thoroughly investigated…”Footnote 56 Late Qing sources from the nineteenth century recalled as widely celebrated events Ming period punishments of non-local moneylenders who charged high interest rates.Footnote 57
While based on observations of reality, interpretive lenses in elite writings reveal prevalent tropes of Confucian rhetoric. Perhaps, powerful moneylenders were truly ruthless and greedy “proto-capitalists.” But the specific way in which they were stigmatized—as antithesis to economic equity and benevolence not only unfolded the underlying goal of state regulations, but also provided savvy creditors with strategies to circumvent or mitigate punishment. Indeed, the legal cases and local sources to which we can now turn demonstrate that judicial officials as well as many litigants understood and practiced the interpreted law by legal scholars.
Debt Contracts and Litigation in the late Ming
Debt statutes served multiple functions in guiding private transactions: they validated the legality of private debt agreements, established state-enforced mechanisms to ensure debt payments, discouraged unlawful approaches to debt collection, and provided appropriate penalties for violations. In the subsequent Qing period, usury statutes appeared to have been used in civil disputes to ensure that, in historian Philip Huang’s words, “legitimate debts would be enforced in legitimate ways.”Footnote 58
Private debt contracts had long been valued as the overriding evidence in Chinese courts. For example, the Tang Code and the Song Penal Code required both private and public lenders of movable property to draw up a loan contract, and no state authorities were allowed to interfere with the process.Footnote 59 In the late Ming, the private sphere of transactions enjoyed such a high level of autonomy that some jurists deemed the explicit mention of contractual rights redundant.Footnote 60 According to “forms for drafting pleas in debt litigation” (qianzhai zhuangshi) from late Ming official handbooks (guan zhen shu), a typical loan required a middleman or guarantor, and a contract detailing the amount borrowed and interest rates agreed upon.Footnote 61 Guarantors not only had to facilitate and complete transactions, but were also responsible for conveying the demands of both parties in instances of deferment, repayment, or debt collection. In some cases, guarantors also repaid debts on behalf of the debtor, becoming impoverished as a result.Footnote 62
While the debt agreement itself was left to the parties to negotiate, only government officials had the power and obligation to enforce debt payments (see the “Usury Legislation: Statutes and Sub-Statutes” section). Consequently, usuary statutes provided legal mechanisms to enforce contracts. In instances of discord, typically classified as minor affairs (xi shi), debt disputes were usually first mediated within local communities.Footnote 63 Parties could select appropriate mediators from respected village elders, guarantors, kin, or intermediaries. Situated within the web of village social relations and likely versed in formal law, these figures constituted an integral network for resolving disputes.Footnote 64 In spite of such reconciliatory mechanisms, and the likelihood of being refused acceptance by the magistrates of local courts, debt cases were frequently brought to them, who were incentivized to facilitate mediation or resolve litigations quickly.Footnote 65
As mentioned in the “Legal knowledge, Expertise, and Judicial Interpretations” section, the late Ming judicial system entailed a unique position, the prefectural judge (tuiguan), which enhanced the quality of justice at local levels. The best source we have regarding decision-making by prefectural judges is “court opinions” or casebooks (pandu), where noteworthy examples of judicial decisions were selected by the judges themselves to showcase their legal skills.Footnote 66 Reading judicial interpretations and casebooks in tandem allows more accurate assessment of law in practice.
Methods of analysis and persuasion in classical education enhanced not only the uniformity and practicality of legal commentaries, but also those of the rulings by judicial officials. Despite regional variations and individual differences, Ming prefectural judges demonstrated a remarkable consistency in their decisions regarding similar circumstances.Footnote 67 Therefore, one well-known casebook can elucidate how debt law might have been applied in an appellate court. We can consider prefectural judge Yan Junyan (1580-1660) as an example. His Court Opinions Drafted at Mengshui Studio (Mengshuizhai Cundu) was one of the most widely circulated and discussed casebooks from the late Ming. It selected cases from Yan’s tenure as a prefectural judge in Guangzhou (1628–1633).
Among the 1315 cases in Court Opinions, a mere 23 cases focused primarily on debt issues.Footnote 68 In these cases, creditors and debtors were treated first and foremost as two parties in a voluntary contract. When no written agreement was presented as proof, that is, when the validity of both parties’ claims remained unverified, Judge Yan opted for a reconciliatory solution, selecting a payment amount midway between the two claims—a typical recourse in civil suits when written contracts are lacking. Excessive pursuit of profit and deliberate evasion of debts were both punished: behavior that was interpreted as exploitative on either side would likely result in beating as a disciplinary measure and deterrent. Sympathy toward impoverished debtors was evident; some part of the debt they owed could be waived based on an assessment of their financial capacities. This suggests both a desire to conclude lawsuits quickly by recognizing the insolvency of the debtor, and a decision to hold creditors to higher standards of moral culpability.
Crucially, Yan’s judgment toward creditors reveals the subtlety of “applied” values such as benevolence. He did not encourage or presume selfless financial generosity. On the contrary, munificent altruism was treated with suspicion. His seemingly discretionary analytical moves also strictly heeded current legislation. For example, as stipulated by the Ming Code, Yan scrutinized loans involving officials with extra care and suspicion. Similarly, he probed loans or debt lawsuits involving government students with vigilance. In the cases where debt was taken by mortgaging land or houses, Yan emphasized the value and personal significance of the real estate. This not only upheld contemporary legislative concern with the over-concentration of landownership, but also took note of the popular sentiment that saw incurring debt as a most undesirable outcome, which was associated with the subsequent sale of landed assets or unwilling entry into bond-servitude.Footnote 69
Compared to prefectural judges, application of debt law by Ming period local magistrates—the lowest level of the state judicial system—left relatively scant evidence.Footnote 70 But we can still gauge the influence of expert legal knowledge. Seventeenth-century magistrate Huang Liuhong, for instance, evinced proficient knowledge of both the statutes and the leading judicial interpretations. In his manual for fellow magistrates, Huang repeated the language in the Code regarding appropriate interest rates, the treatment of excessive gains, and corporal punishment of offenders, all without citing the Code explicitly.Footnote 71 His words also confirmed prefectural judge Yan Junyan’s inclination that in debt cases, generosity should be extended to the poor when justifiable and feasible:
“Debts must be established with a formal document…relatives such as children and brothers may be asked to collect the debt on someone else’s behalf… If the debt agreement is clear and the signatory can be proven, and the interest collected is excessive, it should naturally be reduced to a reasonable principal sum. However, if both the principal and interest are overdue, the law has a provision for repayment over many years, even up to double the original amount. The legal precedent is a three percent interest rate, and exceeding this is a violation. The excess interest is considered embezzlement and is to be turned over to the government, with the violator facing punishment by flogging or caning. However, if the debtor is truly impoverished and unable to make the repayment, the lender should be gently persuaded to show mercy and forgive some of the debt, which would be a kind and virtuous thing to do.”Footnote 72
Furthermore, judicial review processes in late imperial China ensured that the responsible application of law was not dependent on the performance of any individual. The prefectural judge position was abolished in the early Qing, but the application of usury law in judicial review can be seen in a variety of other sources, such as the “leading cases” (cheng’an).Footnote 73 For example, in Longnan County, Jiangxi province, Ou Deshun owed Huang Kuihui interest in the form of grain equivalent to 3 liang of silver. Through the intermediary Huang Shuwan, an agreement was made between creditor and debtor that Ou, his wife, and their young son would be given as servants in settlement of the debt. Tragically, the child died under the care of Huang Kuihui. In response, Ou filed a lawsuit at the local court. However, the defendant bribed the magistrate with 24 liang of silver to evade punishment. The matter later escalated to the governor’s office, and eventually, in 1707, to the Board of Punishment. Magistrate Zheng, who had overseen the original debt case and accepted the bribe, was sentenced to beating and exile in accordance with the law of corruption. Furthermore, the Board, citing usury statutes determined that Huang Kuihui’s acceptance of a debtor’s wife and child as payment was unlawful and should be punished. Middleman Huang Shuwan, who knowingly facilitated these illicit acts, was sentenced to caning. Ou and his wife were liberated from bondage, their status as commoners rightfully restored.Footnote 74 Even when debt was not the primary issue at stake—it rarely was in cases reviewed by a central governmental agency—usuary statutes would still be applied when violations occurred.
Beyond state officials, knowledge about usury law in late imperial China was disseminated through an elaborate web of popular legal education.Footnote 75 Litigation masters (song shi) operated in the interstices of state and local power, facilitating the use of formal judicial mechanisms by nonspecialists.Footnote 76 The popular print material they were associated with, the Litigation Masters’ Handbooks or “Secret Book of Litigation Lawyers” (songshi miben), mediated between the world of potential litigants and that of the judicial decision-making. By the fifteenth and sixteenth centuries, the rise of litigation masters and the circulation of a large number of litigation handbooks suggest a widespread need for legal services at all levels of society.Footnote 77
Ordinary persons relied on the service of a legal specialist to persuasively express the gist of the case while conforming to the stylistic requirements of legal writing.Footnote 78 Litigation masters often chose to cite language directly from the Ming Code to draw attention to the seriousness of a lawsuit, persuading the judge to accept the case.Footnote 79 Usury statutes were referenced succinctly in these texts, and one can locate phrases specifically intended as a response to the potential accusations of usury, such as “lending has definite interest rates, a humble person like me dare not compound (lei) it; each property has its owner (yezhu), this humble one dares not swallow (tun) it.”Footnote 80 Some Ming handbooks even included comprehensive lists of phrases relating to debt that one could use in writing plaints for either side of a dispute. Echoing the tone of judicial interpretations, most of these emphasized deceit, greed, and cruelty in debt relations.Footnote 81
Transmission of popular legal knowledge in the late Ming benefited from the early modern publishing boom. The language and techniques of the so-called “hidden” world, such as the pettifoggers’, originated from the Ming Code. In turn, terminologies from popular texts also penetrated the so-called “open” world, which included novels, the daily-use encyclopedias (riyong leishu), and other practical reference books used widely in society.Footnote 82 Fairly specialized legal concepts, such as “to calculate with compound interests” (lei suan, die suan) could be found not only in the litigation masters’ handbooks, but also in vernacular literature.Footnote 83 This reveals the extent to which popular legal knowledge was based on precise imitation or dialogue with formal law.
In addition, popular and elite culture in the late Ming intersected in their beliefs in an eventual supernatural judgment of debt disputes. Even if the earthly judicial system failed to punish exploitative behaviors, the offenders would not be able to escape ultimate justice. For example, if no one dared to challenge a “powerful and imperious individual” for unjust gains during his lifetime, such profiteering would need to be repaid after death.Footnote 84 Mercantile culture demonstrated similar leanings.Footnote 85 Even merchant handbooks, where one might expect to find only the most practical advice, cited supernatural intervention as the reason for keeping interest rates low. The author of Essentials for Travelers, for example, tells his reader that although a merchant or tradesman may occasionally charge interest rates of seven to eight percent, the rule should be rates of two to three percent. The author of Solutions for Merchants suggests the same number, which was the legal norm at the time. However, the basis given for this advice was not the Ming Code, but perceived offence against Heaven.Footnote 86
It is observed that traditional Chinese societies boasted “no sharp divisions between personal morality and the political values of the state. Everyone shared the same ethical discourse and relied on a common set of standards.”Footnote 87 More specifically, for example, Shiga Shūzō argued that the obligation to repay debt (qianzhai huanqian), although an unwritten law (bu cheng wen), is a basic and widely recognized principle in the Chinese sense of justice.Footnote 88 However, are we witnessing a popular sense of fairness held by average Chinese since time immemorial, or were such widespread notions of fairness a result of the promulgation of statutes, or both? A probe into the world of usury law shows that legal punishment for failing to repay debts had been present in state legal codes since the early medieval period. Therefore, obligation to repay debt, with a long history of statutory basis, was in fact written law (cheng wen fa) as well.Footnote 89 This orchestration between written and unwritten law, legislation and interpretation, legal cases and popular sentiment was thus simultaneously a root cause and a symptom of the effectiveness of late Ming legal normativity. Law, as the state’s effect in society, steered the development of a sophisticated and regulated institutional environment for economic transactions.
Conclusion
Late Ming legislation and judicial officials protected the voluntary and reciprocal nature of market exchange as a means of maintaining social stability. Even during periods of Chinese history marked by a pronounced statist agenda—the eighteenth century for example—governmental “intervention” or “non-intervention” were absent as terms in the discourse of the day.Footnote 90 This suggests that Chinese officialdom perceived no autonomous set of machinery called “the market” to be tweaked and controlled. What was to be regulated were specific actions in the marketplace. The administration was not concerned with prohibiting economic profit or commercial power. Loans could be inherently benevolent according to Confucian values. Only when accumulated interest exceeded the debtor’s capacity to pay might the relationship turn into a mutually detrimental (and potentially illegal) one.Footnote 91
Contrary to what Ray Huang’s comment on Stories implies, the late Ming equivalent of our modern concept of “the market”, which is both a physical location of exchange and an abstract principle, was liberated by Confucian values, rather than from them. Ming legal system improved the navigability of the private debt market. Parties to transactions could learn about state law, preempt conflict, and find legal and extralegal solutions to potential conflicts. Combined with the comparative economic freedom available in late imperial China, including various ways of diversifying income, avoiding risk, and seizing opportunity, economic transactions were likely less risky than they were in places with less well-designed legal institutions.Footnote 92
The methods of market regulation examined in this article were unique to a large agrarian empire with a high level of commercialization. However, this study shows that despite China’s ideological and cultural idiosyncrasies, law is ever constitutive of state-market relations. Contrary to the myth of an unfettered market, a functional economy requires a legally protected and engaged society. But the specific ideology or cultural factors that assembled the tripartite relationship need to be singled out and scrutinized. The elite in late Ming China, much like their counterparts in the rest of the world, shared curriculum, vocabularies, assumptions, and dispositions anterior to technical procedures and mastery. These, perhaps, were the “spirit” in the legal machine.Footnote 93 The case of China also suggests a larger analytical framework regardless of specific cultural contexts: that economic justice and market efficiency are not antithetical but often aligned, perhaps even interdependent. They can be understood to hinge on a shared set of values and demand comparable external oversight.
Acknowledgements
I am grateful to Frédéric Constant, Will Hanley, and Nancy Park for their thoughtful readings of earlier drafts of this article. A preliminary version of this research was presented at the biennial conference of the International Society for Chinese Law and History (ISCLH), where I benefited greatly from the insights of my panel’s chair and discussant, Ming-te Pan and Pengsheng Chiu. I also wish to thank Sarah Schneewind and the anonymous reviewer for their generous and constructive suggestions.
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