How Modernist Financial Discourse Reinvented Shanxi Piaohao and North China

As an insider, Li Hongling directly blamed piaohao for not transforming into Western-style banks; however, he was not the inventor of the modernist financial discourse that persisted throughout the twentieth century. The universal validity of financial modernism was first created by Liang Qichao several years before Li's autobiography.Footnote ¹¹

On November 6, 1912, Liang Qichao, a prominent theorist of Chinese modernity with first-hand experience in the West, delivered a speech at the annual meeting of piaohao merchants in Pingyao County, one of the three birthplaces of piaohao. Starting from a modernist progressive view, Liang's speech began with accolades for piaohao's remarkable achievements: “I always remind my fellow Westerners about Shanxi piaohao whenever they dismiss Chinese commerce and trade for the lack of entrepreneurial spirit.” He then compared piaohao with the proto-banks of southern Italy and England three centuries earlier. Liang pitied piaohao for being “too conservative to reform into modern banks” over the previous two decades, rendering them no longer on par with the World's financial centers in London and New York. Nevertheless, he concluded that it was never too late for piaohao to reform into modern banks, which was the only alternative to being eclipsed by foreign banks during the nineteenth century.Footnote ¹²

Although Liang invented a binary opposition between traditional Chinese banking firms and Western banks and foreclosed any futures of piaohao besides such transformation, he was a relatively mild proponent of modernist financial discourse compared to piaohao's actual participants. When Li Hongling published his autobiography in 1917, he conveniently built on Liang's modernist discourse, going a step further by internalizing it through another enduring binary opposition: piaohao managers stationed in southern treaty ports advocating modern banking reforms versus northern hinterland owners clinging to the family business. In hindsight, Li ascribed piaohao's failure to conservative owners and investors rejecting financial Westernization because they had not stepped out of the interior since 1842. In contrast, forward-looking branch managers, such as him, who had worked in coastal cities like Tianjin, Shanghai, and Hankou for decades, could have saved piaohao if the owners had listened to their suggestions.Footnote ¹³

Li's narrative of piaohao's fin-de-siècle decline has become the standard interpretation because it was the only account left by a participant during that time. Nationalist scholars and government officials during the Republican era (1912–1949) followed this modernist interpretation eagerly and regularly. The story of piaohao as obsolete family firms became the epitome of all premodern economic problems left by the collapsed Qing dynasty, which the Republican government strove to fix, at least in discourse.

Two representative texts were produced during this time. A Genealogical Sketch of Shanxi Piaohao was written in 1937 by Chen Qitian, a British-educated and bilingual sociology and economics professor and the Dean of the Law School at Yenching University. And A Chronology of Shanxi Piaohao, edited by the renowned historian Wei Juxian, who was commissioned by the Minister of Finance H. H. Kung, a native of Taigu County (another of the three birthplaces of piaohao), was published in 1944. Both works relied heavily on Western socio-scientific methodologies that were avant-garde in China, such as year-long fieldwork in Shanxi Province, interviewing former employees and apprentices of piaohao with meticulously crafted questions and surveys. Both works included statistics on annual remittance transactions based on extant piaohao ledgers, a curated bibliography of fifty-odd contemporary Chinese, English, and Japanese scholarly works, and a compilation of piaohao-related primary sources, including business and family letters.Footnote ¹⁴

It is unsurprising that both Chen and Wei embraced Li Hongling's modernist financial discourse and attributed the decline of piaohao to the rejection of modern banks at the turn of the twentieth century.Footnote ¹⁵ Chen went further, saying “The reason for my research on piaohao is to reveal the defectiveness of China's premodern economic institutions [jiushi jingji zhidu 舊式經濟制度] and thus propose modern reforms.” He commented in the epilogue that “it is time for piaohao to disappear because of their ultraconservative personnel. They would become the biggest hindrance to modern economics in Republican China if they existed today.”Footnote ¹⁶

During the early communist years (1949–1976), scholars in mainland China continued to rely on the systematic compilation of primary sources and socio-scientific methods but strove to redefine piaohao within a Marxist framework, which only led to the rise of a new and enduring binary opposition between proto-capitalist banks and feudalist family institutions. They either acclaimed piaohao as indigenous “proto-banks” (yuanchu yinhang 原初銀行) appearing independently before the arrival of Western banks but exploited afterwards, or blamed piaohao for failing to emulate Western banks because of defective family institutions and feudal connections with the Qing dynasty.Footnote ¹⁷ Ironically, this Marxist binary opposition did not rescue the history of piaohao from modernist financial discourse. Scholarly obsession with the teleological question of “Why did piaohao fail to transform into modern banks?” only reinforced modernist comparisons with Western banks.

Neither did the 1970s’ search for non-Western particularism in nineteenth-century China rescue the history of piaohao and Shanxi Province from modernist financial discourse. Countering Western-centrism was frequently translated into singling out treaty-port cities, such as Shanghai, Wuhan, and Tianjin from vast rural areas in the nineteenth century, which only reinforced the binary relationship between China's northern interior as traditional, irrational, and family-oriented and the south and southeast coastal areas as modern, capitalistic, and market-oriented.Footnote ¹⁸

It was not until recently that scholars began building on the emerging field of the local history of the global countryside, focusing almost exclusively on the supposedly backward northern Chinese interior before the twentieth century. Many works revealed that financial markets in Shanxi Province and China's northern interior were more sophisticated and integrated than as presented in the modernist financial discourse over the past century.Footnote ¹⁹ Some research has shown that before piaohao rose to prominence in the nineteenth century, speedy credit instruments in copper notes and paper money were already widely circulated in Shanxi Province and the Qing northern borderlands.Footnote ²⁰

How Shanxi Piaohao from North China Connected the Qing Empire

Since the modernist financial discourse became interwoven with the history of piaohao in the 1900s, the latter has been treated either as China's banking “subaltern” or as proto-modern banks. However, it is anachronistic to apply this modernist discourse to the history of piaohao, because it was invented by scholars of piaohao and did not align with the actual historical trajectory of piaohao development. As inland family banking firms, not only did they never fade under the influence of Western imperialism, but they also adapted to new roles in mediating between agricultural production in the interior and intensified treaty-port trade in coastal areas after the 1860s. In fact, the influence of Western financial imperialism on piaohao was limited and must be reappraised. Colonial banks, such as the Hong Kong and Shanghai Banking Corporation (HSBC), typically had minimal practical access to the interior and therefore either worked closely with piaohao or depended solely on their expansive financial networks to make profits.

The history of piaohao's interregional remittance business dates to the early 1800s, during the White Lotus Rebellion (1796–1804) in northern China, which caused increasing difficulty in the overland transportation of silver ingots between Shanxi and Kiakhta. Legend has it that Lei Lüetai, the branch manager of a Pingyao-based dyestuff firm, first devised an in-house credit instrument to replace the physical transfer of silver ingots, which proved to be a success among Shanxi merchants and beyond. In the 1820s, under the aegis of manager Lei, Rishengchang successfully spun off from the dye firm and concentrated solely on the remittances business.Footnote ²¹

In the early years after piaohao's emergence, their primary sources of revenue came from two domains. First, they earned a commission to provide remittance drafts for merchants conducting long-distance overland trade in tea, silk, cotton, dyestuffs, and tung oil. Second, they catered to remittance demands from the local gentry by purchasing nominal official titles from the cash-depleted Qing state. Regardless of whether financial services were extended to traders or gentry, the average amount of piaohao remittances per transaction before 1860 ranged from Tls. 100 to 1,000.Footnote ²² For example, around 1850, the Zhangjiakou branch of Rishengchang piaohao sent a letter to its Kaifeng branch, stating: “We are informed that you have remitted Tls. 1,000 to us for a firm called Xingshengde, another Tls. 1,200 for Yongshunxiang, and Tls. 500 for Yuxingchang.”Footnote ²³ Meanwhile, Rishengchang's Beijing branch helped twelve local gentry from various provinces purchase their desired nominal official or scholarly titles, and the commissions totaled Tls. 1,341–about Tls. 110 per case on average.Footnote ²⁴

Given the purchasing power of silver taels in the mid-nineteenth century, piaohao remittance banking in its early years can be considered an enormous success.Footnote ²⁵ Nevertheless, only after piaohao began to play a new role in accelerating inter-regional capital flow and facilitating global commodity transactions between the northern interior and southern treaty ports after the 1860s did the average amount of remittances handled by piaohao soar to Tls. 1,000–10,000 per transaction.

Although the Treaty of Nanking (1842) ushered in a new era of foreign trade in China, it was not until the Treaty of Tientsin (1858) and the First Convention of Peking (1860) that the Shanxi piaohao began to play an active role in the new global trade order in China. Under these treaties, foreign merchants were allowed to travel to the interior and a fixed rate of 2½ percent ad valorem replaced the previously fluctuating inland transit duties.Footnote ²⁶ As the new global trade order gradually became institutionalized in China, British, American, and Russian mercantile firms plunged into upcountry purchases of tea and silk, and set up agencies in treaty ports such as Shanghai, Hankou, and Fuzhou.Footnote ²⁷

The expansionist role played by piaohao and their remittance business in facilitating interregional monetary flows and global trade is reflected in three aspects. First, piaohao's remittance business provided speedy credit instruments between the interior and coastal areas, thus neither foreign merchants nor Chinese compradors needed to travel across mountains and rivers to close trade deals. In particular, all parties participating in the import-export cash-crop trade in China, ranging from foreign mercantile firms, compradors from treaty ports, cash crop growers, and buyers from the interior to Chinese distributors of foreign goods, depended heavily on piaohao's remittance services. Foreign firms did not deal directly with Chinese growers in the countryside. Instead, they hired dialect-speaking Chinese compradors to make purchases on their behalf, who in turn relied on piaohao's remittance drafts to deal with Chinese growers and buyers of cash crops. At the other end of the spectrum, Chinese distributors of foreign goods from the interior used remittance drafts to obtain imports from compradors.Footnote ²⁸

The unprecedented expansion of Shanxi piaohao's remittance business at various treaty ports after 1860 demonstrated that, as family banking firms from the northern interior, piaohao's empire-wide financial network nonetheless pushed the boundaries between northern and southern China. In Shanghai, fewer than ten piaohao operated in the late 1850s, but this number soared to twenty-three by 1876.Footnote ²⁹ Rishengchang's business letters provides a glimpse of the size and scale of its remittances following China's incorporation into the new world trade system. In the early 1890s, the Shanghai branch remitted Tls. 16,065 and Tls. 22,081 on behalf of the prestigious silk and cloth chain store Ruifuxiang at its headquarters in Beijing.Footnote ³⁰ In Hankou, piaohao's remittance business thrived due to the expansion of the Sino-Russian tea trade. No piaohao had operated there before its opening as a treaty port in 1858. Then, in 1866, an amendment to the Treaty of Tientsin abolished the coastal trade duty imposed on Chinese produce, including tea, shipped to Tianjin for export through Kiakhta, so that goods sent from any Chinese inland port to Kiakhta were now considered direct exports.Footnote ³¹ Thus, Hankou became a new starting point for Sino-Russian trade. By 1881, twenty-two piaohao sprang up, providing remittances and overdrafts for Chinese middlemen traveling between Hankou and trading posts upstream of the Yangtze River to make purchases on behalf of Russian businessmen.Footnote ³² In 1906, Rishengnchang's Hankou branch processed more than Tls. 600,000 of remittances for tea purchases sent to Shashi and cashed remittance drafts worth Tls. 513,536 and Tls. 508,129 from Shashi and Changsha, respectively.Footnote ³³

The institutionalization of a new global trade order also accounted for piaohao's successful foray into the financial markets of the northern borderlands after the 1860s. Since 1727, Zhangjiakou—Kalgan in Russian and Dongkou (eastern gateway) in Chinese—served as a transit hub connecting Siberia and Mongolia to northern China. Nevertheless, exchanging silver ingots and other currencies was strictly prohibited until after Zhangjiakou was designated as a treaty port in 1860.Footnote ³⁴ Within Shanxi merchants’ sphere of influence for over a century, Zhangjiakou would not be missed by piaohao and their remittance banking. In February 1861, Rishengchang's Pingyao headquarters proposed setting up a new outlet to facilitate the tea trade between southern tea-growing towns and Siberia.Footnote ³⁵ Piaohao's financial presence increased again after 1866, when Zhangjiakou became the final domestic stop on the new Hankou-Kiakhta route for tea export.Footnote ³⁶ The expansion of the treaty system into the interior and the flourishing piaohao remittance business complemented each other. By the end of the 1890s, fifteen piaohao ran businesses in Zhangjiakou, and in 1906, these outlets handled over two million taels of remittances sent from Tianjin.Footnote ³⁷

The second aspect of piaohao's expansionist role in facilitating interregional monetary flows and global trade is that it served as the lender of last resort for qianzhuang (local cash shops) in treaty ports—an indirect yet leading role in sustaining the treaty system after 1860. In major treaty ports, the financial business of qianzhuang, which operated on a much smaller scale and lacked empire-wide financial networks, survived on capital injections from piaohao. During the 1870s in Shanghai, most of the twenty-odd operating piaohao funded local qianzhuang through short- or long-term credit.Footnote ³⁸ In 1883, a financial crisis hit the market and many qianzhuang, which participated in silk speculation, became insolvent. In the aftermath of the crisis, a local newspaper concluded that before the crisis, piaohao had lent two to three million silver taels to qianzhuang.Footnote ³⁹ In Hankou, piaohao's role as a financial pillar in the local market can be seen in newspaper reports on bad debts incurred by bankrupt qianzhuang. In April 1878, Shenbao reported that Zhengchang qianzhuang went out of business owing between Tls. 60,000 to 70,000 to Yuanfengjiu and Xiechengqian piaohao.Footnote ⁴⁰ In 1900, many local qianzhuang shut down their firms after the infamous Shanghai Rubber Share Crisis, which caused mounting defaults on short-term loans of eight million silver taels that piaohao had lent.Footnote ⁴¹ In 1906, Mizuno Kōkichi, a Japanese consul in Hankou, observed that representatives of twenty-odd Shanxi piaohao regularly sat in on daily qianzhuang meetings and had the final say in exchange and interest rates, albeit as “outsiders” to the local community.Footnote ⁴²

The third aspect of piaohao's expansionist role in facilitating interregional monetary flows and global trade is that they carved out a niche in treaty ports after the arrival of colonial banks. Contrary to the modernist financial discourse portraying piaohao as the “banking subaltern” outstripped by Western counterparts, piaohao's role in connecting the interior and the coast was reinforced through the cultivation of symbiotic business relations with colonial banks.Footnote ⁴³

In Xiamen and Canton, colonial banks such as HSBC soon competed against piaohao to remit money to Hong Kong and Southeast Asian cities.Footnote ⁴⁴ However, the businesses of piaohao and Western banks, for the most part, neither overlapped nor conflicted because they targeted different clients and markets. Colonial banks primarily funded China-based Western mercantile firms involved in the opium trade with India, supplying and circulating bills of exchange in Asia and issuing large loans to the Qing state, which urgently needed money to pay off war indemnities and finance modern projects after the 1870s.Footnote ⁴⁵ On the other hand, piaohao primarily financed inter-regional trade within the Qing Empire.

Beyond a few southeastern coastal cities, colonial banks relied heavily or entirely on piaohao's extensive financial networks in the treaty ports and the interior. Most colonial banks were literally “on the edge,” with limited geographic scope, and most expatriate bankers were reluctant to step out of treaty ports during their four- to five-year tenures in China. By 1895, the HSBC operated only six branches and agencies in China: Shanghai, Fuzhou, Hankou, Xiamen, Tianjin, and Beijing. The last two were intended to facilitate the bank's contacts with senior Qing officials rather than finance treaty-port trade.Footnote ⁴⁶ In contrast, the thirty-odd Shanxi piaohao operated in at least forty localities, ranging from treaty ports to remote inland border towns.

Not only did piaohao mediate between Chinese middlemen and colonial banks, they also directly engaged with the latter in the ever-expanding Sino-Western trade. In the 1890s, Rishengchang handled remittances ranging from 10,000 to 60,000 silver dollars (approximately Tls. 7,000–42,000) sent from Chinese firms in Shanghai and Guangzhou to the Hong Kong outlets of the Comptoir Nationale d'Escompte de Paris, the Chartered Bank of India, Australia and China, and HSBC.Footnote ⁴⁷ In Hankou, Baichuantong piaohao kept close financial contacts with HSBC, the Chartered Bank of India, Australia and China, and the Russo-Chinese Bank; representatives of these colonial banks sat in on meetings convened three times per month by piaohao and consulted on exchange rates between silver taels and foreign dollars.Footnote ⁴⁸

Most piaohao were meticulous recorders of exchange rates among various foreign silver dollars and domestic ingots because they either directly speculated on currency exchanges or funded Chinese compradors who did so.Footnote ⁴⁹ Dadetong and Dadeheng piaohao followed conversion rates between British sterling pounds and Shanghai standard taels daily from the 1890s, and Rishengchang kept detailed records of exchange rates between Carolus dollars and Pingyao silver taels.Footnote ⁵⁰ In January 1872, David Mclean (1833–1908), the Shanghai branch manager of HSBC from 1865 to 1872, sent a personal letter to his friend W. H. Vacher. He disclosed that he obtained up-to-date first-hand financial information from Shanxi piaohao to manipulate exchanges and establish direct financial contact with them.Footnote ⁵¹ Although Mclean did not elaborate on the types of financial transactions taking place between HSBC and piaohao, it is clear that piaohao had fostered direct and complementary relationships with colonial banks in treaty ports and beyond since the early 1870s, and colonial banks relied on piaohao's insider expertise in speculation and investment, especially in northern China.

Piaohao's Family-Centered Capitalist and Non-Capitalist Histories

In 1895, the Treaty of Shimonoseki forced the Qing dynasty to pay 200 million taels of silver reparations to Japan. To secure long-term liabilities to repay the indemnity, the Qing had no alternative but to embark on modernizing reforms in centralizing taxation and subsequently tightening the private financial sector that had dominated public finance for centuries. Piaohao, shouldering quasi-public fiscal responsibilities to collect and transfer taxes to the Qing since 1850, were soon deprived of their banking privileges and consequently operated on a much smaller scale. Applying modernist financial discourse to piaohao and viewing them as rational profit-maximizing institutions places 1895 as the watershed moment when these changes foreshadowed piaohao's decline. However, this approach mistakenly forecloses the non-banking histories of piaohao within which bankers and managers, as members of socio-cultural units rather than the “rational economic man,” seamlessly coordinated their banking decisions with modern changes in late imperial China.

On the one hand, the Treaty of Shimonoseki triggered the Qing centralizing reforms in private and public finance that caused the “decline” of piaohao in the realm of taxation transfer and collection. On the other hand, the treaty legalized foreign industries in treaty ports, which forced the Qing to acquiesce to the de facto legalization of Chinese-owned manufacturing enterprises, which subsequently boomed.Footnote ⁵² When remittance banking was at a low ebb, many piaohao owners and managers ventured into modern industries, such as silk filatures, match companies, coal mines, and lithography printing.

For example, the Chang family in Yuci County had been engaged in Sino-Russian trade since the 1720s, thriving for over a century. The family's financial accomplishments were demonstrated by some fifty mansions totaling over 6.5 million square feet.Footnote ⁵³ No later than 1879, Dadeyu and Dadechuan piaohao spun off from their family's namesake tea and cloth firms, each boasting the ability to handle remittances of over Tls. 40,000 at a time, comparable to the size and scope of Rishengchang, the flagship piaohao.Footnote ⁵⁴ Although these two piaohao shuttered their remittance banking operations in 1912 and 1913, this by no means symbolized the decline of the family or the failure of inland merchants to keep up with modern changes.

Just a year after the Qing loosened the ban on private enterprises, the Chang family jumped on the modern industry bandwagon. In 1896, Chang Liying (1873–1923), a cousin of Dadeyu piaohao's owner, established the Dunyihe Silk Filature (Dunyihe cansang ju) in Yuci County and traveled to Beijing and Tianjin in search of silk-reeling professionals and machinery.Footnote ⁵⁵ Liying recruited dozens of family members and successfully spun the first batch of silk fabric, which was quickly sold out in nearby counties. Later, Liying vertically integrated his enterprise by investing in hundreds of mulberry trees planted on-site and a fixed-temperature cocoon-raising house equipped with barometers. This was the biggest commitment Liying made to modern industrialization, requiring twice the start-up cost of renting a house preferred by most filatures as late as the 1930s.Footnote ⁵⁶

In 1921, the nephews of Chang Liying—Zanchun (1872–1941) and Xuchun (1873–1949)—invested 25,000 yuan in the Fanhua Lithography Printing House based in Taiyuan, Shanxi. Zanchun's son, Fengzhu (1900–?), an engineer who graduated from Shanxi Preparatory School for Japanese Polytechnics, provided technical support. The House not only catered to the family's demand by publishing the 500-page Genealogy of the Chang Family but also dedicated itself to commercial profits and fulfilled orders on professional books, study guides, and leisure readings placed by clients such as the Bureau of Agriculture and Mining of Shanxi Province.Footnote ⁵⁷ The House only stopped operating during the communist collectivization movements in 1956.

Similarly, the Qu family in Qi County had been at the forefront of dynamic changes in the interior and coast since the 1860s. When remittance banking for treaty ports became lucrative, the family consecutively opened Sanjinyuan, Baichuantong, Changshengchuan, and Cunyigong piaohao. Although all piaohao had shut down by 1918, the prosperity of the Qu as a family and social unit continued.Footnote ⁵⁸ Not only did former owners and managers of the family demonstrate exceptional business acumen in meeting new economic challenges but they also leveraged their financial influence in the nationalist coal mine rights activism in the 1900s.

In 1905, the Pekin Syndicate Limited (Fugongsi in Chinese), an Anglo-Italian joint coal and iron company, defied Shanxi governor Zhang Renjun's order suspending its proposal to open a new coal mine in Pingding County in Shanxi, where local people had already been mining. Under the aegis of the British Minister Sir John Jordan, the Syndicate pressured Zhang to revoke the suspension. The Shanxi gentry, primarily merchants and scholars, were outraged and soon mobilized fellow compatriots to reclaim coal mining rights from the Syndicate.Footnote ⁵⁹

Qu Benqiao, a wealthy owner and manager of piaohao, soon became a leading activist in the movement. While the provincial government was futilely negotiating with the Syndicate, Benqiao and his fellow businessmen had already established a joint-stock company to take over the mines once the negotiations were concluded. In the spring of 1907, they established the Baojin (literally “protecting Shanxi”) Coal Mining Company with limited liability, and Qu Benqiao was its first chief manager.Footnote ⁶⁰

In January 1908, the Shanxi Bureau of Trade, on behalf of Shanxi's provincial governor, sealed the deal with the Pekin Syndicate and reclaimed coal mining rights, but undertook to pay 2,750,000 taels of silver for redemption, with half of the amount (Tls. 1,375,000) paid in cash one month later.Footnote ⁶¹ How could the new Bureau of Trade find the money within a month? It was Qu Benqiao who lent Tls. 1,100,000 from the paid-in capital of the Baojin Company. For the remaining portion, Benqiao turned to other piaohao owners, who agreed to fill the gap, reflecting his creditworthiness in the banking community.Footnote ⁶² Emperor Guangxu rewarded Benqiao with a fourth-ranking honorary title in the aftermath of his leadership in the reclamation.Footnote ⁶³

One may wonder what material gains Qu Benqiao made from the fourth-ranking title awarded from a declining empire. No extant sources answer this question; perhaps the answer is none. Yet Qu's seemingly altruistic contribution to coal mining rights redemption smoothly segues from the capitalist history of bankers and businessmen as “rational economic men” into the non-capitalist histories of piaohao as social and cultural units.Footnote ⁶⁴

In the nineteenth century, Qing dynasty merchants simply could not evade the influence of Confucianism, which permeated all commercial sectors, from tax brokers of Confucian lineage in Shandong Province and Changlu salt merchants in Tianjin to Hakka book traders in rural Fujian.Footnote ⁶⁵ Regardless of how wealthy merchants and bankers might have been in late imperial China, another world was superimposed on them: wealth and power derived from sources outside of agriculture and commerce. “[A]t the top … were the court and the imperial officials, the top of an elite that included a much larger group of degree-holding gentry and of merchants who could buy their way into elite status.”Footnote ⁶⁶

Under these circumstances, managing banking firms was just a façade for first-generation piaohao bankers who exerted financial and commercial leverage over their progeny by goading them into transforming from shady merchants into scholar-gentry.Footnote ⁶⁷ Thanks to the relatively fluid status system, offering possibilities of moving up towards (nominal) officialdom and academia, many descendants of piaohao became avid readers of Confucian classics, generous donors to charity, and proponents of girls’ education. Some earned juren and jinshi (provincial- and metropolitan-level civil service examination degrees), attended modern military academies in Japan, or simply wandered about, enjoying the empire's spectacular landscape.

For piaohao, success in banking and commerce was an indispensable yet modest link in the chain of long-term social and cultural prestige for their families, as shown by the Genealogy of the Chang Family. In accordance with the Confucian discourse on ideal relations between commerce and scholarship, Genealogy highlighted the family's success in education rather than in banking and commerce over two centuries. Not until 1885 did the first family member break the glass ceiling; however, passing a county-level examination in Yuci County. This indicates that money preceded scholarship but never transcended it.

Nevertheless, Genealogy excelled at appropriating Confucian ethics to justify and glorify the commercial activities of the family's forerunners. Chang Huaiyu, who engaged in the Qing–Russian trade of the 1800s, was extolled as a living example of Zigong (a merchant-turned-disciple of Confucius).Footnote ⁶⁸ Chang Yi (1822–1886), a merchant sojourning in Zhangjiakou, was praised for the practical realization of Confucian filial piety when he reluctantly suspended his scholarly pursuits and helped his father's family business in remote towns.Footnote ⁶⁹

As earlier generations were often “forced” to quit Confucian learning in this way, they strived to compensate for the lives of their progeny. When Chang Yi's 常懌 younger brother, Chang Yi 常怡 (a homophone), was admitted to the county's Confucian Academy, the older brother was overjoyed and barred his younger brother from all menial housework.Footnote ⁷⁰ Liren (1844–1897), an elder cousin of the founder of Dunyihe Silk Filature, was addicted to a neo-Confucian classic entitled The Minor Learning of Master Zhu Xi (Zhuzi xiaoxue) as a teenager, but could not afford to realize his scholarly dream in real life. After the 1860s, he supervised the family's inter-regional trade in Yingkou, Changtu (northern Liaoning), Zhangjiakou, Tianjin, Beijing, Wuhan, and Huhhot. Achieving financial security in mid-life, Liren invested in the best teachers to educate his children and prioritized imperial examination degrees over commerce.Footnote ⁷¹

The hard work of Confucian scholarship eventually paid off. The prologue to the Chang family Genealogy boasts a long list of academic achievements of this degree-thirsty merchant family, striving to live up to the family motto of “Confucian merchant-scholars” (rugu 儒賈). Immediately before the abolition of the Civil Service Examination in 1905, the family nurtured one jinshi, five juren, and a dozen xiucai (county-level examination degree holders).Footnote ⁷²

Yet, the family was never fettered by its self-appointed identity as Confucian scholar-merchants. Owing to generations of family members sojourning to treaty ports and beyond, the family had made innovations in commerce, industry, and education. Before the abolition of the examination, mathematics was already part of the curriculum of the family's Duchu (“reinforcing the human nature”) Academy, where Chang Linshu, the only jinshi degree holder, served as the principal. In 1904, the family established the Zhichi (shame-awareness) Girls’ Academy, where literature, mathematics, and the cultivation of good virtues were taught to girls from the family and the entire village. In 1906, English became a mandatory subject.Footnote ⁷³

Meanwhile, younger generations of the Chang family transcended their century-old Confucian calling by majoring in modern science and nature. Two cousins of Chang Zanchun graduated from the Division of Western Studies at Imperial Shanxi University (the brainchild of British missionary Timothy Richard (1845–1919)) with degrees in mining and metallurgy. Chang Yanchun (1899–?), under the heavy influence of his father's silk enterprise, earned a degree in natural sciences from Peking Normal University.Footnote ⁷⁴ Other bachelor's degrees earned by the family members ranged from mechanical engineering and printing technology to law and political sciences.Footnote ⁷⁵

Despite being born into families in inland China, the most ambitious descendants, like their counterparts from coastal provinces such as Jiangsu and Guangdong, traveled to Japan for modern scholarship. A cousin of Zanchun obtained a bachelor's degree in law from the Meiji University, and a nephew attended the Kobe Higher Commercial School (Kōbe Kōtō shōgyō gakkō).Footnote ⁷⁶ A grandnephew held a diploma from Seijo Academy (Seijō gakkō)—Japan's prestigious military preparatory school with notable nationalist alumni such as Cai E (class of 1903).Footnote ⁷⁷

Besides exchanging wealth for knowledge, the family members and managers of piaohao eagerly accumulated symbolic capital from late imperial China. They invested in honorary official titles and gilded epitaphs, funded disaster relief, and organized local militias during troubled times. Almost all of the sixty-odd family members honored in the Genealogy of the Chang Family held either nominal official or scholarly titles (and sometimes both) purchased by themselves or their descendants. Chang Weifeng, a merchant sojourning in Zhangjiakou, donated Tls. 300—almost half the cost of the newly constructed Confucian Academy in Pingyao—to the court during the 1840s, earning a fifth-ranking title in return.Footnote ⁷⁸ Li Zhenshi of Pingyao County, the owner of the wealthiest Rishengchang piaohao, donated two official titles for himself and a fourth-ranking title for his father. His son later purchased him an additional fifth-ranking title.Footnote ⁷⁹

Merchants benefitted from the social power earned through charity since the trend towards commercialization and monetization began in the late Ming period. They were indoctrinated to redistribute wealth to mitigate social conflicts in a Confucian society, turning it upside down and earning symbolic capital through their public-spirited alliance with local scholar-gentry.Footnote ⁸⁰ From 1877 to 1879, the merchant-bankers of piaohao put this ideal into practice during an unprecedented drought-turned-famine in Shanxi with casualties of 9.5 million people.Footnote ⁸¹ The Chang family led disaster relief, setting up soup kitchens and shelters for refugees from adjacent counties, and donating over Tls. 40,000.Footnote ⁸² In Pingyao, the owners and managers of Rishengchang and Weitaihou donated some Tls. 40,000 and Tls. 8,400, respectively, while the rest of the piaohao community donated over Tls. 27,000.Footnote ⁸³

During the Boxer Uprising in 1900, Chang Lijiao, the family's first juren degree holder, led a corps of militias to construct defensive fortifications for the village. Before long, the family contributed over Tls. 2,000 to reinforce Lijiao's defensive works. During the Xinhai Revolution in 1911, when defeated Qing soldiers ransacked the village, Lijiao again assumed the militia's leadership and guaranteed the family and village a peaceful transition to the new Republic.Footnote ⁸⁴

While most piaohao family members strived to prolong family prosperity and reputation, some retreated to a world of self-indulgence. Modernist financial discourse tended to interpret these individual choices as decadent and retrogressive and attributed such activities to the decline of piaohao. Yet this was precisely when non-capitalist family histories counter the “solely” legitimate future of Chinese banking firms reforming into Western banks.

In 1895, Chang Lifang, Chang Zanchun's uncle, took a county-level examination but failed to score well. Interested in neither commerce nor Confucianism, he immersed himself in studying stone and bronze inscriptions, ink-wash painting, and calligraphy, and visited almost all the famous mountains and rivers of the empire.Footnote ⁸⁵ Even the most ambitious young men in the Chang family desired some leisure. In 1887, the family's jinshi and juren degree holders founded a poetry club called Fanhua, which inspired the namesake printing house in 1921. Members of the club met regularly to compose poems on designated topics while sipping the newly picked tea of the year. A printed four-volume Anthology of Poems was dedicated to this literary creation.Footnote ⁸⁶

Ironically, the modernist binary opposition of piaohao as pre-modern family firms versus modern banks obscured the fact that piaohao, as socioeconomic units, successfully refashioned themselves into either Western-style banks or sought-after modern banking experts when their remittance business contracted at the turn of the twentieth century.

In 1916, Weifenghou piaohao successfully reformed into a modern limited-liability bank, the Weifeng Commercial Bank. Relying primarily on the startup capital injected by Yuan Shikai's brother, the bank soon turned out to be short lived. Yuan Shikai lost power and died in 1916, and the bank shut its doors in 1921. Nevertheless, Weifenghou's quick transformation rebuts the modernist antithesis between inland family banking firms and capitalist financial institutions.Footnote ⁸⁷

Experience in remittance banking enabled some senior employees of piaohao to move upwards to high-ranking positions in modern banks in Republican China. Before 1916, Fan Chunnian (1878–1951) had been working for Weitaihou for years. His banking career began when he was invited to join the modern Provincial Bank of Guangxi because of his expertise in remittances.Footnote ⁸⁸ In 1934, Fan rose to national prominence after landing a senior managerial job with the Central Bank of China. He also served as chief researcher on Shanxi piaohao for the Monthly of the Central Bank of China (Zhongyang Yinhang Yuebao), the Bank's flagship journal.Footnote ⁸⁹

Descendants of piaohao owners and managers not only upheld their families’ banking tradition but also kept pace with the new credentials required for modern banking in the twentieth century. In 1924, Chang Fengzhao, a grandson of the founder of Dadeyu piaohao, graduated from the School for Modern Bookkeeping in Beijing and headed the Accounting Department at the Provincial Bank of Shanxi.Footnote ⁹⁰ In the 1930s, Li Binting, the second son of Li Hongling (an advocate of modernist financial discourse), worked in the Central Bank of China's Jinan branch. Li Hongling, who passed away in 1918, would have been overjoyed by this news because his filial son had finally completed his father's unfinished modern dream—although he also debunked his father's myth of a formidable boundary between family banking firms and financial modernization.Footnote ⁹¹