Qianzhuang () were local independent Chinese banks in the early modern period, as distinguished from the nationwide bank networks headquartered in Shanxi province called the "Shanxi banks" or piaohao. These banks first sprung up during the Ming dynasty but greatly expanded during the Qing dynasty. Unlike the Shanxi banks, the qianzhuang tended to have much more risky business practices.
These institutions first appeared in the Yangzi Delta region, in Shanghai, Ningbo, and Shaoxing, in the mid-eighteenth century. In 1776, several of these banks in Shanghai organised themselves into the banking guild known as the Qianye Gongsuo.Zhongguo Renmin Yinhang, Shanghai fenghang, Jinrong Yanjiu Suo (Institute of Financial Studies, Shanghai Branch, People's Bank of China), ed., Shanghai qianzhuang shi liao (上海钱庄史料: "Historical Materials of Shanghai qianzhuang"), 1961, Shanghai (reprint, Shanghai, 1978), p.11. In contrast to piaohao, most qianzhuang were local commercial banks conducting local money exchange, issuing cash notes, and exchanging bills and notes. Qianzhuang maintained close relationships with Chinese merchants, and grew with the expansion of China's foreign trade. When Western banks first entered China, they issued "chop loans" (彩票, caipiao) to the qianzhuang, who would then lend this money to Chinese merchants who used it to purchase goods from foreign firms. During the latter half of the 19th century the qianzhuang were intermediaries between Chinese merchants and foreign banks. Unlike the Shanxi banks, the qianzhuang survived the Xinhai Revolution because of their close relationships with foreign banks.
It is estimated that there were around 10,000 qianzhuang in China in the early 1890s.Tang Chuanshi and Huang Hanmin, "Shilun 1927 nian yiqian de Zhongguo yinhangye", Zhongguo jindai jingjishi yanjiu ziliao 4 (1986): 59. There were several financial crashes which occurred in China during which a large number of qianzhuang closed; the largest of these occurred in the years 1883, 1910, and 1911. By and by the traditional qianzhuang banks were being replaced by modern credit banks in China, particularly those residing in Shanghai. This would continue to happen well into the Republican period. The last qianzhuang banks were nationalised in 1952 by the government of the People's Republic of China.Ji Zhaojin (2002) A history of modern Shanghai banking. M.E. Sharpe, Armonk. Chapter 9. Socialist Transformation, 1949-1952.
During the 1990s qianzhuang made a come back in mainland China; these new qianzhuang are informal financial companies which are often operating just within the edges of what is legal. The government attitude towards these new qianzhuang isn't that much different from their attitude in the 1950s.
Regional names for private banks in China
Qianzhuang had a variety of regional names across China. The name qianzhuang was typically used for banks and bank-like institutions in the region around the lower Yangtze river. The terms yinhao and qianpu were more typically used in Northern China especially in cities like Beijing, Tianjin, Shenyang, Jinan, and Zhengzhou. In southern China qianzhuang was also often called qianju or qiandian (both of which could be translated as "money store"). Meanwhile, all terms were used in the cities of Xuzhou, Hankou, Chongqing, and Chengdu. In Hankou alone the qianzhuang were referred to by a long list of aliases including qianpu, qianzhuo, qiantan, yinju, yinlou, yinpu, and yin lufang in the local archives.
Structure of the qianzhuang
The basic organisational structure of the qianzhuang was based on a system known as the "Eight Butlers structure". The most important and powerful staff member of a qianzhuang was the manager who was responsible for most decisions that were made by the bank such as dealing with daily trifles, business transactions, and the transfer of staff members. Because of the power the manager held the shareholders had to make sure that they'd always hire the most qualified individual for the task, as this job required a great deal of trust and the selection process had to be done as carefully as possible to ensure that the most qualified manager headed the operation. Some shareholders would appoint supervisors to supervise these managers to make sure that they always had the best interest of the shareholders in mind and could report anything to the shareholders at any time.
Many qianzhuang also hired several associates to assist the manager, and the number of staff from each position as low as apprentice to as high as manager was never certain, as all employees are shifted according to both the scale and the focus of the business. Staff members of a qianzhuang were either hired directly by the shareholders or were recommended by managers. It is only natural that such an organisational structure can not only maintain the authority of the management, but could also implement policies and guidelines effectively. This structure also allowed for there to be plenty of flexibly so the qianzhuang were highly adaptable to changing circumstances. There were not only checks and balances between the same level of authority, but there were also a number of supervisory constraints between the upper and lower levels of the staff; this was done as a way to enhance the ability of qianzhuang enterprises to withstand more risks.
This could lead to misconduct or embezzlement; thus the intervals of internal auditing and dividend distributing were synchronized afterwards. The western double-entry method was slowly adapted to replace the traditional ones. Usually around of the net earnings went to owners of the business, and the remaining profits went to employees, but the chief manager would still decide how to distribute the bonus packages. Normally, the chief manager would take 20% to 30% of the total bonus; the others shared the rest based on both performance and their status within the company hierarchy.
Between the years of 1926 and 1927 a large percentage of the qianzhuang of Hankou shifted their structures of ownership; nominally these qianzhuang held an unlimited liability, but many of them evolved from sole-proprietorship to partnerships.
The creation of the "armpit partnership" model allowed for those who wished to avoid any attention by the authorities to join the very lucrative qianzhuang business. A united voice of "armpit partners" also had the power to protect their pecuniary interests from being funnelled to the dominating partners. This model of "armpit partnerships" would serve a defensive mechanism (or a modus vivendi), enticing the Hankou qianzhuang to make more business allies under political gauntlets.
Hankou
The Hankou qianzhuang guilds were established sometime before or in the year 1894 as mediators for the Hankou qianzhuang as the high number of qianzhuang made the scene overcrowded. In Hankou two separate guilds for the qianzhuang coexisted simultaneously. One concerned itself only with Confucian rituals and ritualistic events while the other handled all mundane issues.
Between the years 1938 and 1945 the city of Hankou was occupied by the Japanese during the Second Sino-Japanese War (which would later become a theatre of World War II), the Hankou qianzhuang guild managed to continue operating despite the foreign occupation. Many local qianzhuang chose to collaborate with the Japanese during the occupation; dozens of these qianzhuang were facing jeopardy following the surrender of Japan in 1945.
Shanghai
In the treaty port city of Shanghai the qianzhuang were all members of a two guilds organised by them based on their location in the city. The guilds responsible for the Shanghai qianzhuang operated as two geographical bodies parallel to each other; the one for northern Shanghai was called the Bei Huiguan (北會館, "Northern guild hall") and the one for southern Shanghai was called the Nan Gongsuo (南公所, "Southern industry office"). These two guilds handled things like the draft-exchange business practiced among their members separately. There was another guild body named the Neiyuan (內園, "inner garden") which coordinated the south–north draft-exchange as a joint agency of both Shanghai qianzhuang guilds.
National guild
In 1947 the Shanghai qianzhuang guild invited the guilds from the cities of Hangzhou, Ningbo, Nanjing, Hankou, Chongqing, Beiping, and Tianjin to form a national Chinese qianzhuang guild. This national guild would gain members from 38 other cities in October of the same year as it began to expand; one of the reasons why more cities started joining this national qianzhuang guild was as a defense against the uncontrollable hyperinflation which had struck China during the 1940s following the end of World War II.
The national qianzhuang guild served as a loose coalition and existed for five years before undergoing the same fate as all qianzhuang in China. Some of the efforts of this national Chinese guild include establishing a joint reserve for the issuance of new banknotes by both commercial banks and qianzhuang; however, this proposal never came to fruition due to the chaos of the Chinese Civil War.
History
Imperial China
The earliest qianzhuang were established during the Ming dynasty. These early private banks would be operate either as a single proprietorship known as duzi (獨資) or as a joint proprietorship known as hehuo (合伙). Most qianzhuang tended to be small proprietorships which had unlimited liability, these local banks were often sparsely aligned along family and linguistic ties and they were rarely patronised by the local government authorities. A large number of these early ventures were simply a business that some merchants families kept on the side and a few of them were also seen as an investment of government officials or those who belonged to the landowning gentry. The larger qianzhuang would change money, operate deposits, make loans to traders, care for remittances, and in some cases issue their own scrip known as Zhuangpiao (莊票) and Yinqianpiao (銀錢票, "silver money notes"). Larger qianzhuang would issue company scrip against individual deposits, this scrip was also accepted by proximate shops but to cash these out would take around 10–15 days after it was given to the shop, this was because couriers would have to liaise with the issuing shop in order to rule out fraudulent Zhuangpiao notes.