Rishengchang
The Rishengchang Piaohao (
The draft bank is now a museum and in 2006 was included on the List of Major National Historical and Cultural Sites (6-484).
Rishengchang and Piaohao
Rishengchang, the first draft bank or
In the next thirty years, eleven piaohao were established in Shanxi province, including
All piaohao were organised as
Lei Lutai, the first general manager of the Rishengchang, died at his desk in 1849.[5] Though his son was an employee at the bank, Lei had named another employee, Cheng Qingpan, to be his successor.[5]
Cheng Qingpan and two subsequent general managers loaned prudently, and the Rishengchang prospered greatly under their management.[5] In 1880, the capital shareholders of the bank, at the request of Li, had created a wholly new class of non‐voting capital shares, which were named fugu ('attached shares'), for managers.[5] These shares would let the managers of the bank reinvest their dividends back into the Rishengchang without gaining votes in the decision-making process.[5]
Following the death of Li Zhenshi in 1891, his nephew and adopted son, Li Wudian, interested all of Zhenshi's capital shares. Under the ownership of Li Wudian, the Rishengchang would continue to be led by very competent general managers.[5] Unlike Li Zhenshi, Li Wudian hoped to influence the lending policies of the Rishengchang.[5]
During the grand assessment day of 1910 (Xuantong 2), Li Wudian had created another class of shares known as the konggu (literally translated as 'empty shares') and awarded himself 1.7 of these.[5] The new konggu had full voting rights during grand assessment days and unlike the capital shares, did not require any investments in silver.[5] By creating these new voting shares, Li Wudian had made himself the absolute leader of the Rishengchang and could outvote all the other shareholders.[5]
Using his newly created konggu, Li Wudian was able to vote himself into the position of vice-president of the Rishengchang and gave himself one expertise share; this move gave him a position equal to that of general manager and during the expertise shareholder meetings he had equal voting rights.[5] Li Wudian was both the top insider as well as the controlling shareholder of the Rishengchang. None of the other managers of the Rishengchang had the courage to go against and criticise Li Wudian's lending-related decisions, as he could fire anyone. Furthermore, he controlled their expertise share allotment as well as the retirement benefits that they would receive.[5] When the general manager of the Rishengchang dared oppose the decisions that Li had made, contradictory orders would only add to the general confusion that plagued the bank under his reign.[5]
In 1911 and 1912, the performance of the Rishengchang would greatly deteriorate, causing the bank to operate at a net loss. The diminishing returns caused the brothers of Li Wudian to exchange their capital shares in silver.[5] This made the management desperate and Li Wudian had to find new sources to borrow capital from.[5]
In 1914, the branch manager of the
The reorganised Rishengchang, which only had a single equity class, would continue to operate until 1932, when the bank was forced to permanently close its doors at the height of the global economic Great Depression.[5]
Rishengchang Code Rule
In 1824, Rishengchang set up a branch in Taiyuan. The main business was cheques or drafts, which were called tickets in Chinese. At that time, Taiyuan was the base camp of Shanxi businessmen's distribution and maintenance of goods. In order to work efficiently, Rishengchang introduced the world's most advanced printing technology at that time—the watermark method. Rishengchang used this method to produce and print the tickets. Additionally, each ticket was stamped with a seal in the key parts. Of course, the amounts and recipients of the tickets were strictly controlled.
When the Shanxi traders went to other provinces and the frontier border transaction station, they always brought the drafts written by the professional official in Taiyuan Rishengchang using an ink brush. The handwriting had to be simultaneously bulletined and sent to the other 51 branches of Rishengchang. Specifically, the drafts were executed with codes, using Chinese writing to replace numbers and regularly changing the password method to prevent disclosure of confidential information.
References
- ^ Huang Jianhui, Shanxi piaohao shi (Taiyuan: Shanxi jingji chubanshe, 1992), pp. 36-39.
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- ^ Shanxi Provincial Academy of Social Sciences, ed., Shanxi piaohao shiliao (山西票号史料) (Taiyuan: Shanxi jingji chubanshe, 1992), pp. 36-39.
- ^ R. O. Hall, Chapters and Documents on Chinese National Banking (Shanghai: Shangwu yinshuguan, 1917), p. 3.
- ^ a b c d e f g h i j k l m n o p q r s t Randall Morck (University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governance Institute; Asian Bureau of Finance and Economic Research) & Fan Yang (University of Saskatchewan) (12 April 2010). "The Shanxi Banks". Academia.edu. Retrieved 31 October 2019.
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