Arts & Events

The Shanxi merchants depicted in Christina Yao’s epic film, Empire of Silver, were powerful players in Chinese history. By the end of the 19ths century, their wealth and influence rivaled that of the ruling Ming and Qing dynasties. Shanxi province, the setting for Empire of Silver, has been called “the Wall Street of China.” 

Like the “too big to fail” tenants of modern Wall Street, Shanxi’s bankers quietly dominated elements of the national economy by offering loans to bolster government spending and helping to finance wars. Shanxi’s merchants also reaped revenue by offering to bail out local towns and cities by covering their imperial taxes — for a price. 

The term for these merchant-run enterprises was “piaohao.” In addition to managing funds through deposits and loans, they derived much of their power from the invention of a system of codes that allowed for the transfer of wealth “on paper.” 

Previously, when it became necessary to move gold and silver from one city to another, a “wire transfer” would require a costly convoy of horse-drawn carts guarded by scores of well-armed soldiers. (There is a scene in Empire of Silver where such a delivery ends with a parade through city streets to reassure worried investors. It is only when the carts are securely inside the walls of the recipient bank that it is revealed the silver-boxes are actually filled with nothing but stones. That could be the filmmaker’s wry metaphor for our contemporary economic system.) 

The Shanxi merchants also came up with the concept of profit sharing, which helped to promote cohesion and loyalty. Unlike modern banks, the piaohao were guided by Confucian principles that stressed fair treatment and high standards of morality. The meant that investors and families were kept at a distance and banned from interfering with the operations of the piaohao. The Confucian edicts were so rigorous that piaohao managers were only allowed to see their families for six months after each three years of service. Making the commitment even more like a monastery than a Wall Street enterprise, Shanxi’s “masters of the universe” were forbidden to take concubines or visit brothels. 

One of the themes of Empire of Silver is the conflict between two competing philosophies, the traditional moral code of Confucius and the manipulative ideology of Legalism. Ironically, the film presents the son as the embodiment of traditional Confucian values while the father is the master of manipulation. It is Lord Kang who looks at the spreading misery of disease striking down the population and realizes he can make a killing by monopolizing the salt trade — and hoarding the salt to derive maximum profit. By contrast, the younger Kang, motivated by compassion and honor, makes the decision to pay back holders of worthless certificates of credit by digging up a patch of his family’s buried gold and silver. 

The Boxer Rebellion, the rise of the Nationalists and the Allied invasion all combined to undermine the authority and power of the piaohao, which either transformed into Western-style banks or closed their doors forever. 

Still, the legacy of “moral banking” has managed to persist as director Christina Yao attests with this remarkable story: 

“There was an Englishman in the 1960s who got a large sum of money deposited into his account in Hong Kong,” Yao recounts. “He wasn’t sure what that was about so he looked into it and found out that his grandfather was in business with a merchant from this same Shanxi school and the business failed. 

“That merchant, on his deathbed, said to his family that if ever the family is able to resurrect its glory, they have to return the money. So, two generations later, they return the money. 

“What’s important is that it’s not just that the grandfather was loyal to his code, but two generations after him also were loyal to that code. That is something that we don’t have anymore.”