Money and Banking on the Edge of Empire: The General Store on the American and Qing Frontiers

In China, general stores were the scrappy underbelly of the market economy, dealing grains, cloth, and, of course, opium in markets where larger concerns did not deign to tread. They reclaimed this role after reform and opening, with zahuodian (杂货店) cropping up all over the country to deal in consumer goods where the profits were too thin to interest state enterprises or large corporations. But despite these storied histories, one key function of the general store has gone overlooked: the role they played in frontier or otherwise marginal financial markets. This paper investigates the financial function of general stores. It explores their issuance of loans, their acceptance of deposits, and—most intriguingly their role in calibrating local money supply with local demand. To this end, general stores issued scrip that served as money, and allowed account transfers that functioned much as a modern day checking deposit. In conducting this analysis, this paper draws on a number of primary sources. It looks at the archives of general stores in the United States, largely from 19th century California. Its Chinese sources come from the recently published Jinshang Shiliao Jicheng (晋商史料集成), or “Collected historical materials of Shanxi merchants.” This collection includes general store ledgers from “Shanxi merchants”—that is, merchants whose lineages were based in China’s Shanxi province—that were active in the 19th and early 20th centuries. Shanxi merchants operated the overland trade routes that connected Inner Asia and Russia to the Chinese heartland. By comparing US and Chinese general stores, this paper not only reveals much about the historical development of finance in smaller markets, but also about the nature of finance itself. It suggests that banking and paper money do not perforce arise out of state institutions, but can also be created by small-scale, private actors in response to market demand.