Money and trade, hinterland and coast, empire and nation-state: an unusual history of Shanxi piaohao, 1820-1930

Piaohao were owned and operated by merchants from inland Shanxi province. Before the 1820s, Shanxi merchants had been engaging in tea and fur trade among Russia, Mongolia and the Qing empire for about a century. They gradually built extensive financial networks and accumulated capital, which prepared them well for future banking business. After the 1820s when domestic rebellions often blocked trade routes in the interior, Shanxi merchants found that moving silver ingots became unsafe and time‐consuming than ever, and they thus responded by opening piaohao that provided remittance service for themselves and other inter‐regional traders. In the 1850s, piaohao began to remit fiscal revenues on behalf of various Qing provincial authorities, when the Taiping Rebellion disrupted the overland shipment of provincial tax quotas in the form of silver ingots. After 1895, the Qing court aimed at reclaiming financial sovereignty from private banking firms, and piaohao thus shrank in size and scope. ❧ My dissertation makes three major contributions. First, I delineate China’s transformation from agrarian empire to modern nation‐state through the prism of private banking firms. The gradual disappearance of piaohao during the early twentieth century was usually ascribed to their reliance on government remittance business. I argue instead that decline came because of the Qing’s accelerated transition from empire to nation‐state after 1895. Piaohao’s unique business relationship with the Qing—serving it without being regulated—was only possible when the agrarian empire placed a low priority on financial sovereignty. After 1895, however, the Qing court started to centralize its financial administration to meet the needs of a modern nation‐state, prioritized the development of modern banks, and thus downplayed native banking firms. From that point, piaohao were deprived of the right to handle government remittances, because they refused to transform into modern banks and rejected the state’s modern financial intervention. ❧ Second, I rewrite the hundred‐year financial history of China after the 1820s from the unprecedented inland perspective. So far scholars of China’s financial history have rarely traveled beyond the urban‐coastal areas such as Shanghai and Hankou to explore financial institutions and networks in late imperial China. In contrast, I underline that as inland financiers, Shanxi piaohao’s remittance service made distinct contributions to the expansion and intensification of treaty‐port trade after the 1860s. In particular, piaohao linked northern inland trading towns to eastern coastal cities, financed local cash shops in treaty ports, and accelerated monetary flow across the empire. Furthermore, I reappraise the influence of western financial imperialism over China. Contrary to the common belief that western banks such as the Hongkong and Shanghai Banking Corporation (HSBC) suppressed the development of piaohao after the 1840s, piaohao’s role as the linchpin of Chinese financial market was reinforced upon the arrival of colonial banks, whose financial activities were confined in coastal regions and thus depended heavily on piaohao’s extensive financial networks in the interior. ❧ Third, I counter the problematic use of financial modernist discourse to interpret Chinese banking history after the nineteenth century. Previous scholars strictly viewed piaohao within the framework of comparison to western‐style modern banks, against which they were helpless to compete. In contrast, I demonstrate that merchants of Shanxi piaohao were first and foremost inter‐regional traders rather than bankers, and piaohao did not “decline” merely because they did not choose to transform into modern banks after 1895. Rather, most piaohao of the late nineteenth century invested their capital in other more profitable industrial opportunities, while others transitioned out of finance into social charity and scholarship.