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qianzhuang 錢莊, private banks

Nov 24, 2015 © Ulrich Theobald

See also Shanxi Banks (piaohao).

From the Ming period 明 (1368-1644) on private bank companies emerged, called qianzhuang 錢莊, qiansi 錢肆, qianpu 錢鋪, yinhao 銀號, duihuan qianzhuang 兌換錢莊, qiandian 錢店, qianzhuo 錢桌 or duidian 兌店 (exchange office). The larger banks operated deposits, made loans to merchants, cared for remittances, and changed money, but some of them also issued bank notes (yinqianpiao 銀錢票). The early banks were operated in single (duzi 獨資) or joint (hehuo 合伙) proprietorship, many of them as sideline business of merchants families, and a few also by the investment of state officials or members of the landowning gentry.

The core business of many early banks was moneychanging which was highly necessary in the bimetallic monetary system of China, with the two currencies of silver ingots (yinliang 銀兩) and copper cash (tongyian 銅錢), and foreign silver dollars (yinyuan 銀元, yangqian 洋錢) in addition. Remittances were carried out through a large network of partner institutes, whose owners often hailed from the same region, yet most banks only operated locally. The oldest known banking institution of Beijing, mentioned in 1667, was the bankers' guild hall (yinhao huiguan 銀號會館), with a shrine called Zhengyisi 正已祠, the first one in Shanghai was the Qianye gongsuo 錢業公所, founded in 1736.

During the Jiaqing reign 嘉慶 (1796-1820) of the Qing period 清 (1644-1911), an central banking institute was founded in Tianjin, the Yinhao gongsuo 銀號公所. There were 106 financial institutions founded in the last quarter of the eighteenth century. Qianzhuang were typical banking institutions of the lower Yangtze region and the great market towns of southeast China. In northern China, yinhao or qianpu operated financial business in Beijing, Tianjin, Shenyang, Jinan and Zhengzhou. All these terms were known in Xuzhou, Hankou, Chongqing and Chengdu. From the mid-19th century on some banks began issuing shares, and increasingly made short-term loans to the local government, or invested state funds. In the second half of the century, foreign banks (yanghang 洋行, waishang yinhang 外商銀行) invested in China, and began granting short-term loans to Chinese banks money (called zhekuan 拆款, interbank loans) they needed to finance international mercantile operations and the early industrial firms of China. This was necessary because the financial volume of qianzhuang banks was normally not more than 70,000 liang (tael).

The traditional Chinese banks served as intermediaries between foreign banks and local merchants or the government. The banknotes of the Chinese banks, zhuangpiao 莊票, were the most common means of payment in the Shanghai credit business. The larger Chinese banks of Shanghai were called huihuazhuang 匯劃莊 "credit banks" (also called da tonghang 大同行 or ruyuan qianzhuang 入園錢莊), the smaller ones fei huihuazhuang 非匯劃莊 "non-credit banks" (or xiao tonghang 小同行). The former were members of the head office of the monetary business (qianye zonggong suo 錢業總公所) and had the right to issue and to accept silver bills (yinpiao 銀票) and cash bills (qianpiao 錢票). Besides, they operated deposits, discountable notes (tiexian 貼現) and issued their own bank notes (zhuangpiao) and bills of exchange (huipiao 匯票). The smaller banks were again divided into four classes (yuan 元, heng 亨, li 利 and zhen 貞, a kind of numeration). The former two classes operated as assayers and changers of money (tiaoda qianzhuang 挑打錢莊), the latter as pure changers of cash (lingdui qianzhuang 零兌錢莊). Around 1890 the larger banks developed a daily clearance management (gongdan zhidu 公單制度), by which the banks met in the afternoon in a clearing house (huihua zonghui 匯劃總會) and cleared their holdings of letters of exchange and notes, thus settling the claims and liabilities of their accounts.

There were several financial crashes during which traditional Chinese banks closed, the largest in 1883, 1910 and 1911. By and by the traditional qianzhuang banks were replaced by modern banks, particularly those residing in Shanghai. In 1933 the Republican government replaced the ancient silver liang (tael) by the Yuan coin (fei liang gai yuan 廢兩改元), and at the same time cleared all bills denominated in the ancient currency. The last qianzhuang banks were closed down in 1952.

Sources:
Huang Da 黃達, Liu Hongru 劉鴻儒, Zhang Xiao 張肖, ed. (1990). Zhongguo jinrong baike quanshu 中國金融百科全書 (Beijing: Jingji guanli chubanshe), Vol. 1, 228.
Kang Guohong 康國宏 (1997). "Qianzhuang 錢莊", in Men Kui 門巋, Zhang Yanjin 張燕瑾 (ed.), Zhonghua guocui da cidian 中華國粹大辭典 (Hong Kong: Guoji wenhua chuban gongsi), 102.
Yao Enquan 姚恩權 (1993). "Qianzhuang 錢莊", in Shi Quanchang 石泉長, ed. Zhonghua baike yaolan 中華百科要覽 (Shenyang: Liaoning renmin chubanshe), 86.
Zhang Guohui 張國輝 (1992). "Qianzhuang 錢莊", in Zhongguo da baike quanshu 中國大百科全書, Zhongguo lishi 中國歷史 (Beijing/Shanghai: Zhongguo da baike quanshu chubanshe), Vol. 2, 775.
Zhang Guohui 張國輝 (1992). "Qianzhuang 錢莊", in Zhongguo da baike quanshu 中國大百科全書, Jingjixue 經濟學, Vol. 2, 729.
Zhao Yulin 趙玉林, Wang Huazhong 王化中, ed. (1990). Jingjixue cidian 經濟學辭典 (Beijing: Zhongguo jingji chubanshe), 702.

Further reading:
McElderry, Andrea Lee (1976). Shanghai Old-Style Banks (Ch'ien-Chuang) 1800-1935 (Ann Arbor: University of Michigan Press).