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Shanxi Merchants

In the early days of Ming Dynasty or the 14th century Shanxi merchants began to trade grain and salt as a result of taking advantage of enormous military demands of the northern frontier and implementation of the law acting on salt trading regulations and they succeeded in field operation and gradually came to fame. In the following 200 - 300 years their influence continuously reached out to more and more fields throughout the ancient land. With multi-layered management they even explored markets overseas. At one time Shanxi merchants were well known both at home and abroad and became one of the most important merchant groups in the Ming-Qing period.

In the reign of the Emperor Daoguang in Qing Dynasty, or the 19th century, Shanxi merchants created a form of currency transferring system, called “piaohao”, or draft banks, and later this financial exchange network extending in all directions. Merging commercial and financial capital, Shanxi merchants hold strongly a leading position in the field of finance for nearly a century. But in the late days of the Qing Dynasty, Shanxi merchants fell into a decline when faced with the tremendous changes in the political and economic fields of the last dynasty in Chinese history.


From the early Ming Dynasty to the middle Qing Dynasty, Shanxi merchants with their carriages loaded with grain and salt went straight northward seeking for a living of their own and bringing about prosperity for the border areas as well. After developing into a steady marketing position there Shanxi merchants turned to stride southward and reached out to the trading ports in the south targeting at a larger market.

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    In the early reign of the Emperor Daoguang of the Qing Dynasty, or the early 19th century, Shanxi merchants, to meet the needs of such business activities as commodity circulation and capital allocation,  created the first form of Chinese draft bank or piaohao in Pingyao county, which offered easy transmitting currency. By the middle period of the reign of the Emperor Guangxu, the draft banks run by Shanxi merchants reached peak in number with a record of up to 30 banks and more than 400 branches. They spread all over the country and beyond, involving 85 important towns and cities at home as well as some overseas cities in Mongolia, Korea and Japan. Thus a network of finance exchange was formed extending in all directions and presiding over the circle of finance in China for more than a hundred years.


    Today, the assembly halls, which survived from wind and rain in different parts of China, and the grand courtyards scattering in the middle area of Shanxi have lost their past splendour and stood there still. But in fact they are not silent; rather, they are telling the highlights of their past and the truth of thrift. They are wondering how such a great undertaking came to end for all at once and how the draft bank stopped developing and failed to eliminate the difference with bank.

    The courtyards, deep in breadth, stand there still and lonely. Looking back to the rise and fall of Shanxi merchants in a long period spanning 500 years, we cannot help ruminating over what they have left to us.