Project No. 46

Researcher

Project summary

Bankruptcy is an economic phenomenon while in terms of law it constitutes a procedure that means a compulsory clearance to bankrupted enterprises. During the late Qing and early Republican period, many traditional financial enterprises went bankrupt, both qianzhuang 钱庄 which were engaged in debit and credit management, and piaohao 票号, which specialized on money remittance. This development shook financial markets and deeply affected local societies. There were two waves of bankruptcy, the first around 1883 and the second around 1910. For this reason, the period investigated by the proposed project roughly covers the time between 1880 and 1910. Regionally the project will concentrate on the northern and eastern China, the regions in which traditional financial institutions flourished. The project will focus on specific bankruptcy cases of qianzhuang and piaohao in order to study management and mechanisms of bankruptcy and to show how the financial market dealt with these and standardized procedures during the period under review.

State of the field

While there is a rather large amount of research on qianzhuang and piaohao, a special investigation on bankruptcy and on its relationship with the financial markets and especially its influence on the financial markets is direly lacking.

Relevance of the topic and research questions

The project pursues the following research questions: First it will focus on the causes for bankruptcy of qianzhuang and piaohao and will look into non-economic causes - like political and military elements as well as monetary factors and the influence of developments of the market economy. Special attention will be paid to the influence of the financial markets. Secondly the project will explore how cases of bankruptcy influenced the financial markets and local societies. Thirdly the project will investigate the specific processes and methods of bankruptcy clearance from the late Qing to the early Republican era. It specifically will ask why some enterprises were eliminated while others managed to revive through the clearance. Fourthly the project will analyze the roles of the government and the Chamber of Commerce in the process and how these institutions contributed to relieve the bankruptcy crisis and keep the market running healthily. The project finally will summarize the historical features and the restrictive factors of bankruptcy mechanisms during the period under review.

Sources

The main group of sources to be investigated is periodicals of the late Qing and the early Republican era, such as the Shenbao (申报), the Dagongbao (大公报), the Qing Government gazette (Zhengfu guanbao 政府官报), the Monetary Monthly (Qianye yuebao 钱业月报), Banking weekly (Yinhang zhoubao 银行周报) etc. In addition, archival material, such as government documents of the late Qing, of the chamber of commerce (Shanghui dang'an 商会档案) and documents of the qiangzhuang and piaohao themselves (Qianzhuang shiliao 钱庄史料, Piaohao shiliao 票号史料) will be used. Additional information will be collected from local gazetteers (difangzhi 地方志), biographies etc.

Methods

The project will use case-studies in order to analyze specific bankrupt cases as for example the bankruptcies of Fukang Qianzhuang(owned by Hu Xueyan who is a famous tycoon in late qing dynasty,bankrupted in 1883), Yishanyuan Piaohao(established by Li Jingchu who is the nephew of Li Hongzhang,bankrupted in 1911), Yuanfengrun Piaohao(was one of the most destructive and influential bankruptcies in 1910 crisis) and Rishengchang Piaohao(the first piaohao of China, which bankrupted in 1914,and left fairly intact materials on its clearance)etc. The project pursues a multidisciplinary approach and applies theoretical insights from the fields of economics, finance, bankruptcy and sociology.

Expected results

The project is expected to suggest that bankruptcy mechanism of qianzhuang and piaohao during the late Qing and early Republican period constitute a transition from traditional bankruptcy customs to modern bankruptcy norms. The analysis of the modernization of bankruptcy procedures of the traditional financial institutes will contribute to our understanding of the gradual standardization and the normalization of the operation of China's financial markets.