In the 19th century, Pingyao became the banking capital of China.
In the 19th century, Pingyao became the leading banking centre in China. The main bank was the Ri Sheng Chang bank which was founded in 1823 when the manager of the local dye works, who had a branch in distant Beijing, had difficulty in transferring money between the two. There was a system of armed escort agencies for transferring money physically, but robberies were frequent and thus the idea of arose of replacing the physical transport with a letter of transfer. His new enterprise really took off when he recruited Lei Lutai, who was the head of the local casino at the time and something of a rolling stone, and under his dynamic leadership they set up a business, which eventually had 35 branches – in some accounts over 100 branches – even one in faraway Tibet.
The actual bank is one of the main attractions in Pingyao. From the outside it is not particularly impressive – little different from other town houses.
Inside there is a courtyard not unlike that of ordinary town houses – indeed one suspects that this was originally a wealthy townhouse. To one side was the cashier’s office while to the other side was the messengers of where messages will receive from the branches throughout the country
This is the cashier’s office where cash – a Chinese term meaning money – was actually given out.
Here a model cashier is sorting through some of the cash of the period.
Facing it was the messenger room where messengers brought in intelligence from all over the country. Staff included a secretary who had done well in the Imperial examinations and two or three message recording clerks: they checked the correspondence between banks and transmitted instructions and market information from the central bank to the branches.. Letters were originally sent through a private postage service and later through the post office.
This is a map of the bank. Entry is through the top right-hand corner into a courtyard with the cashier to one side (room 2) faced by the messenger room (5). At the far end was the Central Hall (7) which then led through to a second inner courtyard with the Back Hall (13) at the far end.
However the bank later expanded and there is a second courtyard in the top left-hand corner which mirrors the first courtyard, and is today the exit route from the bank.
However the main activities took place in the accountant’s office adjacent. The success of the bank appears to be based on the development of various secret codes and hidden writing, which enabled letters of transfer to be conducted securely. And it was here that the codes were concocted and interpreted.
This important office had one head accountant and two or three assistants who supervised both the main bank and its branches. It settled accounts and was responsible for the flow of money in and out. The staff calculated the accounts and at the end of the year drew up statements which were reported to the shareholders, and the accountants were also in charge of profit sharing.
The central hall is where important visitors were entertained. Here the staff met with important customers; four to five business clerks were in charge of savings, loans and remittances. They were familiar with values in the markets and the fluctuations in the money market and in remittance fees. They gathered information from the customers and helped make policies. We were told that part of the entertainment was a generous offering of opium under the influence of which customers were encouraged to do business on terms which were advantageous to the banks.
Beyond the central hall was the inner courtyard with the Back Hall at one end. This was where the bank manager and some of the staff actually lived.
To one side there was a large kitchen where the staff ate meals: traditional Pingyao foods benefited from some of the cook’s delicious recipes. It was set up as a family kitchen with a stove and cooking utensils and furnished with storage cabinets for sauces and flavourings.
Looking back, it is surprising how small the bank was. If this was a head office of a bank with somewhere between 30 and 100 branches – the number seems to differ between the various authorities – then one would have expected rather larger premises to accommodate all the staff who would be needed to decipher all the incoming message and to prepare and write the drafts, the ‘tickets’ they were called – that would be valid when presented in a distant branch. Was some of the work done off-site perhaps? Or does this reflect the small scale of banking in 19th-century China?
But in the early decades of the 20th century the bank collapsed, together with much of traditional China. New banking empires were rising in the east, along the coast in Shanghai and Hong Kong, where new trading and new ideas were arriving from Europe and America. But Pingyao gives a fascinating glimpse into the state of banking in China In their late imperial history.
On to How Pingyao was governed
8th December 2014