Social actors, cultural capital, and the state: The standardization of bank accounting classification and terminology in early twentieth-century China

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Accounting, Organizations and Society 33 (2008) 73–102 www.elsevier.com/locate/aos

Social actors, cultural capital, and the state: The standardization of bank accounting classification and terminology in early twentieth-century China Yin Xu b

a,*

, Xiaoqun Xu

b

a Department of Accounting, Old Dominion University, Norfolk, VA 23529, USA Department of History, Christopher Newport University, Newport News, VA 23606, USA

Abstract In 1920 the Shanghai Bankers Association launched an initiative to standardize Chinese bank accounting classification and terminology, which in 1924 led to the first standard terminology that was gradually adopted by all Chinese banks. This paper examines that neglected experience by employing a framework informed by Pierre Bourdieu’s theory of practice. We delineate the relations among foreign banks, Chinese modern banks, and native banks in the field of Chinese banking; explore the habitus of modern bankers that motivated the standardization initiative; and analyze how the initiative accrued cultural capital and social legitimacy to modern bankers and how social actors’ interaction with the state determined the interaction among them, resulting in the domination of modern banks in the field and the domination of the state over the field. Ó 2006 Elsevier Ltd. All rights reserved.

Introduction In the early decades of the twentieth century, western style accounting methods were gaining considerable ground in China. They were adopted in modern banks, large companies and government institutions (Chen, 1998; Gao, 1985; Gardella, 1992; Xu & Xu, 2003). One of the earliest

*

Corresponding author. Tel.: +1 757 683 3554. E-mail address: [email protected] (Y. Xu).

and largest Chinese modern banks, the Bank of Communications, for example, switched to western style accounting in 1917 (JYS, 1987, p. 1456). At the same time, many small Chinese enterprises, including native banks called ‘‘qian zhuang’’ (lit. ‘‘money shop’’), continued to operate with traditional bookkeeping methods, the more sophisticated variety of which was close to western style accounting (Gardella, 1992, pp. 323–332; Lin, 1992). Nationwide, a standard or uniform accounting terminology, let alone accounting rules and principles, did not exist among all business

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enterprises, modern banks, companies and government institutions that used western style accounting. In 1920 a movement was launched by the Shanghai Bankers Association (SBA) to standardize bank accounting classification and terminology in the country, resulting by 1924 in the first such terminology to be gradually adopted among Chinese modern banks and later native banks. This critical development in the history of accounting and of banking in China has not received the scholarly attention it deserves, despite a growing Chinese and English language literature on the subject (for banking, see Chen, 1998; Cheng, 2003; Dong, 2000; Ji, 2003; Sheehan, 2003; Sun, 2003; Wu, 2002; Ye & Pan, 2001; for accounting, see Chen, 1998; Gao, 1985; Gardella, 1992; Lin, 1992; Xu & Xu, 2003).1 To fill the gap in the scholarship, this paper will examine how a uniform bank accounting classification and terminology came into being in early twentieth-century China, providing an analysis of the cultural capital that certain social actors possessed and the role that the state played in the process. The consideration of what type of capital was available to the actors is essential to an understanding of the field of Chinese banking and its transformation. A decisive step in this evolution was taken with the intervention of the state, which contributed to legitimate the capital certain actors possessed. Although the role of the state in the rise of accountancy is a familiar issue in the literature on the history of accounting, especially the professionalization of accountancy (e.g., Chua & Poullaos, 1993, 1998; de Beelde, 2002; Hao, 1999; Macdonald, 1995; Uche, 2002; Walker, 1995; Willmott, 1986; Xu & Xu, 2003), we hope the case here is refreshing in that contrary to what one might expect, the driving force for uniform bank accounting terminology was not the professional group—Chinese accountants and their organizations—that was in theory the best technically equipped, but a group of individuals prone to act because of their particular social characteristics—Chinese modern bankers and their organization.

1 Cheng’s work on Chinese banking mentioned it in passing (Cheng, 2003, pp. 193–194).

Another contribution we hope to make is that in analyzing the standardization of Chinese bank accounting terminology, we employ the concepts ‘‘habitus,’’ ‘‘field,’’ and ‘‘capital’’ that Pierre Bourdieu developed. Although there have been criticisms of Bourdieu’s theory of practice from scholars of linguistics, cultural studies, sociology and philosophy, his theoretical constructs have been widely influential and provided useful analytical tools in many disciplines far beyond sociology. Not surprisingly, a number of recent studies in accounting research have utilized Bourdieu’s theory. Kurunma¨ki (1999) used Bourdieu’s concepts of ‘‘field’’ and ‘‘capital’’ to interpret how various social actors with differently valued capitals in health care (politicians, government planners, physicians and hospital administrators) competed for power and control. Ramirez (2001) used those same concepts to analyze the social closure attempted by accounting practitioners in France. Applying Bourdieu’s notions of ‘‘symbolic capital’’ and ‘‘cultural good,’’ Neu, Friesen, and Everett (2003) produced an insightful analysis of the externally and internally legitimating functions of the ethics discourses in the Canadian accounting profession. In a similar vein, this paper offers an historical study of the standardization of Chinese bank accounting terminology that is underpinned by Bourdieu’s theory. As will be shown, the standardization of bank accounting classification and terminology in early twentieth-century China was not merely a matter of developing accounting techniques; it also involved power relations between certain social actors, that is, Chinese modern bankers (modern bankers hereafter) and Chinese native bankers (native bankers hereafter) under particular political, economic, social and cultural conditions. We will explore how the uniform bank accounting classification and terminology came to pass in the field of Chinese banking where social actors competed, using their respective capitals; how economic capital interacted with cultural and social capitals, and how the interaction resulted in changes in power relations in the field. Specifically, we will reveal that when western accounting concepts were translated into the Chinese language and adopted as standard terminology in bank accounting—seemingly a purely technical development—substantial cultural

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capital was accrued or transferred by and between the social actors in Chinese banking, which, among other variables, impacted on their respective economic capitals and financial powers. We will illuminate how modern bankers interacted with the state, and what they were able to achieve when the Chinese state was weak and unresponsive in the early 1920s and when there was a relatively strong and interventionist state after 1927. To present the story and analysis, the rest of the paper is organized as follows. The second section lays out the theoretical framework we apply from Bourdieu to this study, particularly the concepts of habitus, field, and capital. The third section provides an historical overview of Chinese banking as a field in which three groups of social actors— foreign bankers, modern bankers, and native bankers coexisted and competed. The fourth section examines the life experiences of modern bankers which inculcated certain predispositions that constituted their habitus. The fifth section traces the founding and agenda of the Shanghai Bankers Association (SBA), which manifested a conscious pursuit of social capital by modern bankers. The sixth section details the SBA’s efforts to establish a uniform bank accounting terminology that was enabled by modern bankers’ cultural capital on the one hand and was to accrue their symbolic capital on the other. The seventh section offers a brief overview of the uniform bank accounting classification and terminology approved by modern banks in 1924 and examines responses to it in the field of Chinese banking, especially the resistance by native banks. The eighth section illustrates the interaction between the Chinese state and the field of Chinese banking that led to the adoption of the standardized terminology by native banks in 1936–1937. The conclusion summarizes our findings and highlights the usefulness of Bourdieu’s theory to this case study.2

2

This study is mainly based on three types of sources with regard to the early twentieth century: (1) Chinese and English language primary sources on Chinese modern banks and native banks; (2) English language primary sources on the uniform accounting movement in the US; and (3) secondary sources on Chinese banking and accounting and on uniform costing and accounting systems and ideas in European countries.

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Habitus, field, and capital A starting point of Bourdieu’s theory is to transcend the dichotomy between two intellectual orientations in social theories, which he called subjectivism and objectivism. In brief, subjectivism ‘‘seeks to grasp the way the world appears to the individuals who are situated within it,’’ while objectivism, such as structuralism, ‘‘seeks to construct the objective relations which structure practices and representations’’ (Bourdieu, 1991, p. 11). To Bourdieu, both approaches are useful but flawed: subjectivism fails to take into account the close connection between the objective structures of a culture and the specific tendencies, activities, values and dispositions of individuals; and objectivism fails to give sufficient consideration to intentionality and individuality or agency (Bourdieu, 1990). To move beyond subjectivism and objectivism and avoid the pitfalls of either, Bourdieu proposes the concept of habitus. This refers to a set of dispositions that predispose agents to act and react in certain ways in various situations. Habitus is formed or produced through long processes of inculcation in conditions of existence, including socialization and formal education. It is internalized as second nature, but with an ability to generate ‘‘meaningful practices and meaning-giving perceptions’’ adapted to specific situations (Bourdieu, 1990, p. 53). Habitus is both a structuring structure, in that it organizes practices and the perception of practices, and a structured structure, in that the principle that organizes the perception of the social world is itself the product of internalization of the social world (Bourdieu, 1984, pp. 170– 173, 1990, pp. 53–56). Thus habitus is ‘‘systems of durable, transposable dispositions,’’ ‘‘as principles which generate and organize practices and representations that can be objectively adapted to their outcomes without presupposing a conscious aiming at ends or an express mastery of the operations necessary in order to attain them’’ (Bourdieu, 1990, p. 53). In other words, the habitus ‘‘generates strategies which can be objectively consistent with the objective interests of their authors without having been expressly designed to that end’’ (Bourdieu, 1993b, p. 76). Moreover, ‘‘all the

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practices and products of a given agent are objectively harmonized among themselves, without any deliberate pursuit of coherence, and objectively orchestrated, without any conscious concentration, with those of all members of the same class’’ (Bourdieu, 1984, pp. 172–173). In this perspective, the practice or action of social actors is not necessarily, and usually is not, a self-consciously calculated move, but is preconditioned or predisposed by their habitus, even though the practice or action actually results in profit of one kind or another. Habitus does not function and practices do not take place in a vacuum, but in a set of social contexts or social spaces. All social spaces are conceptualized as fields, such as economic, political, educational, cultural, etc. and may be further divided into narrower fields (the cultural field, for example, may include linguistic, literary, artistic, musical, and scientific fields). Fields outside politics and economy have their own laws of functioning, independent of the political and economic fields. Each field is a structured space and its structure is determined by the relations between positions that social actors or agents occupy. As such, a field is never a leveled playing ground, but a social space where actors or agents are situated in different positions and endowed with different resources, powers or capitals and where certain power relations among agents and the domination of some over others obtain. In other words, the structure of a field is essentially one of unequal distribution of capital; and its effect was the appropriation by dominant agents of profits and of the power to impose the laws of functioning of the field most favorable to the distribution of capital and its reproduction. At the same time, however, domination is to be understood not as a conspiracy, but as the result and functioning of the structure. ‘‘Domination is not the direct and simple action exercised by a set of agents (‘the dominant class’) invested with powers of coercion. Rather, it is the indirect effect of a complex set of actions engendered within the network of intersecting constraints which each of the dominants, thus dominated by the structure of the field through which domination is exerted, endures on behalf of all the others’’ (Bourdieu, 1998, p. 34). Moreover, power relations in a field are not static, but

dynamic. A change in agents’ positions and relations with each other necessarily entails a change in the field’s structure (Bourdieu, 1990). The resources or capitals available to social actors in a field are conceptualized in different categories, such as economic capital, cultural capital, and social capital; and the volume of capital, the composition of capital, and the change between the two properties vary in different fields (Bourdieu, 1984, p. 114). Economic capital that is most easily recognized underlies other forms of capital that are often misrecognized, but economic capital does not necessarily correspond to other forms of capital that particular agents possess in particular fields. Moreover, one kind of capital can convert to another, such as cultural capital being one of the conditions for access to control of economic capital, and conversely economic capital being transmitted through generations in forms of cultural capital. Such conversions are important conditions or mechanisms for the reproduction of capital, social structure, and domination (Bourdieu, 1986, 1990, 1993b, 1998). Social capital means resources acquired through possessing a durable network of more or less institutionalized relationships or membership of a group. The volume of the social capital possessed by a given agent depends on the size of his network and on the volume of the capital possessed by each of those to whom he is connected. As such, social capital is never completely independent of economic and cultural capitals and it exerts a multiplier effect on those capitals. The network of relationships is the product of investment strategies aimed at transforming contingent relations into necessary and elective relationships implying durable obligations. The relationships may exist in material and/or symbolic exchanges that maintain and reproduce them, and may also be socially instituted with a common name (a party, a school, a family, a club, etc.) and a set of instituting acts (ceremonies, parties, meetings, resolutions, pledges, etc.) designed to form and inform those who undergo them (Bourdieu, 1986). Cultural capital refers to various kinds of cultural knowledge, competences, and dispositions. Cultural capital exists in three forms: (1) as longlasting dispositions of the mind and body, such

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as proficiency in a dominant language, ability to ‘‘consume’’ a piece of sculpture or a piece of music, competence in commenting on or participating in certain sports, etc. (the embodied state); (2) as cultural products, such as books, paintings, music records, concerts, fashion shows, etc. (the objectified state); and (3) as objectification, i.e., academic qualifications, such as diplomas, certificates, degrees, etc. (the institutionalized state) (Bourdieu, 1986). ‘‘Because the appropriation of cultural products presupposes dispositions and competences which are not distributed universally (although they have the appearance of innateness), these products are subject to exclusive appropriation, material or symbolic, and functioning as cultural capital (objectified and internalized), they yield a profit in distinction, proportionate to the rarity of the means required to appropriate them, and a profit in legitimacy, the profit par excellence, which consists in the fact of feeling justified in being (what one is), being what it is right to be’’ (Bourdieu, 1984, p. 228, 1993a). To Bourdieu, cultural capital is as important a category as economic capital in understanding the social world. Linguistic capital is considered a form or subset of cultural capital. This refers to an agent’s competence in a particular linguistic environment or market, which accrues authority, prestige, legitimacy, etc. Bourdieu shows how the process of a language being established as national language, while other languages are reduced to the status of dialects, for example, is not socially neutral, but one that legitimates a dominant language and de-legitimates alternative languages (Bourdieu, 1991). ‘‘Because any language that can command attention is an ‘authorized language,’ invested with the authority of a group, the things it designates are not simply expressed but also authorized and legitimated’’ (Bourdieu, 1994, p. 166). While the legitimacy of the dominant language accrues power to the group who possesses competence in that language, it is the social conditions under which the legitimacy is established that need be examined in a given social space. According to Bourdieu, ‘‘the effects of domination which accompany the unification of the [linguistic] market are always exerted through a whole set of specific institutions and mechanisms, of which the specifically linguistic

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policy of the state and even the overt interventions of pressure groups form only the most superficial aspect’’ (Bourdieu, 1991, p. 50). All linguistic interactions therefore are micro-markets dominated by an overall structure; and given the power relations in a linguistic market, producers of linguistic products (or possessors of linguistic competences) are not equal (Bourdieu, 1993b, pp. 80–81). It is worth noting that what Bourdieu mostly refers to as linguistic capital is not the ability to speak several languages, but are different levels of proficiency in one single language, especially the recognized official or national language. This point has immediate relevance to the case presented below about competition between classical and vernacular Chinese languages associated with different social groups. Linguistic capital, among other forms of capital, also functions as symbolic capital or symbolic power, in the sense of accumulated prestige, celebrity, consecration, honor, recognition or legitimacy. In Bourdieu’s words, ‘‘the weight of different agents depends on their symbolic capital, i.e., on the recognition, institutionalized or not, that they receive from a group’’ (Bourdieu, 1991, p. 72). Any property or any form of capital, when it is perceived as such and given value by social agents, may be conceived as symbolic capital (Bourdieu, 1998, p. 47). Again, for linguistic capital to function as symbolic capital presupposes certain social conditions, institutions, and mechanisms that allow agents possessing those capitals to be recognized or misrecognized as such. Words can have symbolic efficacy only because the person subject to it recognizes the person who exercises it as authorized to do so, or because the former has contributed to the establishment of the symbolic efficacy by submitting to it (Bourdieu, 1990, 1991, p. 116). As we shall see in our case, such recognition does not always come about voluntarily—the subjection of native bankers to the authorized status of bank accounting terminology advanced by modern bankers largely resulted from the function of the state. The state plays a critical role in the transformations of capitals and power relations in various fields, as it controls the most important field and forms of capital. The social conditions,

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institutions, and mechanisms to be examined in understanding linguistic and symbolic capitals under most circumstances would necessarily include the role of the state. Bourdieu regards the government bureaucracy as a field where agents (political professionals and bureaucrats) occupy different positions and master a ‘‘cultural literacy’’ in its structures, institutions, discourses, regulations, rules, etc. At the same time, the state may be conceptualized as an entity vis-a`-vis society or all other fields, and as such, the state represents the concentration of different species of capitals—economic capital (unified taxation), informational capital (census, surveys, archives, maps, budgets, etc.), symbolic capital (recognized authority), and military capital or instruments of coercion (armed forces and police). The historical emergence of the modern state culminated in the concentration of different forms of capital; and the legitimacy or symbolic power of the state is more important than the coercive power in its functioning.3 Bourdieu writes: Concentration of the different species of capital (which proceeds hand in hand with the construction of the corresponding fields) leads indeed to the emergence of a specific, properly statist capital (capital e´tatique) which enables the state to exercise power over the different fields and over the different particular species of capital, and especially over the rates of conversion between them (and thereby over the relations of force between their respective holders) (Bourdieu, 1998, pp. 41–42). That is to say, whenever the state intervenes in or exercises power over a particular field, the action is bound to make a difference in the power relations among agents and their relative capitals in that field. Agents in all other fields, therefore, try to interact with the state, either competing

3 Bourdieu used the examples in the European history. Because his analysis depends probably on the role the state plays in the society in which he lived, Bourdieu downplays other modes of legitimating than the officialisation by a strong and centralized power. But his point applies to other historical contexts, and certainly to the Chinese context in our case.

for influence on the state and its policies or trying to resist or deflect them, for their own benefits—to maintain or accrue their own capitals, which constitutes an important dimension of the dynamics in various fields. The above exposition of the most important concepts in Bourdieu’s theory of practice is unavoidably cursory, but will suffice for the purpose of this study.4 In light of those concepts, the Chinese banking industry in the early twentieth century can be usefully conceived as a field, where social actors or groups therein—foreign bankers, modern bankers, and native bankers—competed for capital, power, and market share, even though they functionally supplemented each other to varying degrees over time. The concept of habitus will be used to explain the behavior of modern bankers and native bankers in their responses to the changing economic, social and political conditions they encountered and to the issue of uniform bank accounting terminology. The concept of capital, in its economic, social, cultural, linguistic and symbolic forms, will serve as analytical tools for understanding the origins, development and outcome of the movement for uniform bank accounting classification and terminology. Linguistic and symbolic capitals are concepts especially relevant to this study. We shall see how the uniformity initiative would privilege modern bankers’ linguistic competence in foreign languages (and the vernacular Chinese language) over native bankers’ linguistic competence, as uniform bank accounting terminology was translated from the English lan4 Michel de Certeau opines that Bourdieu’s concept of habitus has to be assumed to be immobile memory in order to reproduce the social structure in practices and that the concept allows the circular movement of the theory: from structures to habitus to strategies (which are adjusted to situations) to situations (which are particular states of structures) to structures (de Certeau, 1984, pp. 50–60); and Liu also sees tautology in some of Bourdieu’s discussions about the value of linguistic capital and symbolic capital (Liu, 1999, pp. 33–34). These readings of Bourdieu’s theory, not in its entirety, are debatable. Works that provide more systematic and critical review of Bourdieu include Calhoun, LiPuma, and Postone (1993), Swartz (1997), Shusterman (1999), and Webb, Schirato, and Danaher (2002). These works attest to the fact that Bourdieu’s complex and profoundly insightful theory has a great deal to offer.

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guage into the vernacular Chinese vocabularies, and as native bankers were forced to adopt the new terminology and abandon their accounting concepts and terms rooted in the classical Chinese language and tradition. And one vital aspect of this development is that the Chinese state played a decisive role in establishing the legitimacy of the uniform bank accounting terminology nationwide and therefore accruing modern bankers’ linguistic and symbolic capitals while subjecting modern bankers and their economic capital to the demands of the state.

The field of Chinese banking Why did the Shanghai Bankers Association, as opposed to a professional accounting association, lead the movement for uniform bank accounting terminology? For one thing, the Chinese accounting profession was immature in the late 1910s and early 1920s. The Chinese government did not officially recognize the accounting profession until September 1918 with the Provisional Regulations on Accountants. The official recognition did not lead to a rapid growth of the profession, partly because government regulation required formal training in business schools for licensed accountants, while unregulated traditional bookkeeping did not require its practitioners to have school training. In other words, the higher entrance cost for wouldbe western-style accountants slowed the growth of the profession. By 1926 there were only 183 licensed Chinese accountants in the country, of whom fiftythree were in Shanghai. The Chinese accountants’ professional organization in Shanghai, the Institute of Chartered Accountants of Shanghai (ICAS), did not officially come into being until 1925, years after the movement for uniform bank accounting terminology was launched. Besides, after it was founded, the ICAS was busy addressing other issues more closely related to the interests of the accounting profession (Xu & Xu, 2003). That is why the Chinese accounting profession as a whole and its organization did not play the leading role in this movement, even though some individual accountants were involved in the standardization of bank accounting terminology at a technical level.

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In contrast, Chinese bankers were one step ahead of the accounting profession as promoters of modern banking and economic development. Modern Chinese banking was born in Shanghai with the establishment of foreign banks and their branches after the city became a treaty port in 1844. The first foreign bank established in China was a branch of the Oriental Banking Corporation that was opened in Shanghai in 1847. It was followed by the Chartered Bank of India, Australia, and China in 1858, the Hong Kong and Shanghai Banking Corporation in 1865, the Deutsch-Asiatische Bank in 1889, the Yokohama Specie Bank in 1893, the Russo-Chinese Bank (later Russo-Asiatic Bank) in 1895, the Banque de l’Indochine in 1898, Banque Belge pour l’Etranger in 1902, and Nederlandsche Handel-Maatschappij in 1903 (Ji, 2003, pp. 42–53, 70–74, 77–78). Between 1847 and 1911 twenty-six foreign banks established branches in Shanghai and one (the Deutsch-Asiatische Bank) headquartered there. In the 1910s and 1920s there was a further expansion of foreign banks in China, especially from Japan and the United States (Sheng, 1988, pp. 7–10, 13–14). When foreign banks were operating in China between 1847 and 1897, two types of traditional Chinese finance and credit institutions, ‘‘ticket stores’’ (piaohao), and ‘‘money shop’’ (qianzhuang), were also active. Ticket stores dealt in promissory notes and credit papers (tickets) and originated in Shanxi Province in northern China. Money shops originally dealt in copper coins and were native to Shanghai.5 These Chinese institutions coexisted with foreign banks for over fifty years because they performed functions in different spheres, each taking about a one-third share of the financial market in China. Foreign banks monopolized the financing of trade between China and other countries; ‘‘ticket stores’’ specialized in inter-provincial remittance and some government services; and ‘‘money shops’’ mainly functioned as local commercial banks doing such business as money exchange, issuance of promissory notes, 5 Another variety of money shops was called ‘‘silver shop’’ (yinhao) referring to shops that initially dealt in silver (yin) or jewelry and originated in Guangzhou, a treaty port in southern China and Tianjin, a treaty port in northern China.

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and making short-term loans (Cheng, 2003, pp. 10–20). The balance of power in the field of Chinese banking started to shift around the turn of the twentieth century. With the first Chinese modern bank, the Great Qing Bank, established by the Qing government in 1897, the era of modern banks began. By 1911, when the Qing dynasty was overthrown, ten modern banks or bank branches had been established in Shanghai. By 1920 another nineteen had been added and by 1935 there were seventy-three Chinese banks in operation in the city (Xu, 2001, pp. 28–30; cf. Ji, 2003, p. 129). In 1922 forty-eight Chinese banks (either public or private) employed 5226 people. Twenty-one of those banks or their branches were located in Shanghai and employed 1953 people, not including the employees of the Bank of Communications Shanghai Branch that employed a total of 1200 people in Beijing and Shanghai (YZ, September 15, 1922, pp. 3–4). The total cash position of all Chinese modern banks in Shanghai increased from T38,630,000 and ¥17,500,000 in 1915 to T53,612,000 and ¥64,800,000 in 1925 (NCH, October 15, 1935, p. 125).6 The development of modern banks in Shanghai was accompanied by the decline of traditional ‘‘ticket stores.’’ Ill-adapted to the changing social–economic environment, they all but disappeared by the 1910s, as their functions and market shares were taken over by the emerging modern banks. On the other hand, Chinese money shops, now exclusively known as native banks, managed to continue their operations, supplementing foreign and modern banks’ functions and occupying an important position in the trade between China and world market and a decent share of the financial market in the country (Cheng, 2003, pp. 6 ‘‘T’’ means silver tael and ‘‘¥’’ means yuan or silver dollar. Those were the two major Chinese currencies in use at the time. After 1933 silver dollar would become the only standard currency (see ‘‘Conclusion’’). Per the exchange rate set by the government in 1933, 1 yuan equals 0.715 tael (Ji, 2003, p. 184). The exchange rate between British sterling and silver tael fluctuated during the period under study. To give an idea of the range, we cite the following: 1 tael equals £1.11 and 1/2 in 1912; £4.4 in 1920; £1.2 in 1930; and £1.4 and 1/2 in 1934 (NCH, October 23, 1935, p. 170).

37–38; CWR, June 30, 1923, pp. 31–32; Du, 1991, 72–79, 159–181; Ji, 2003, Chap. 2–4; McElderry, 1976, pp. 10–12; Rawski, 1989, pp. 128– 145). Native banks were able to survive the advent of foreign banks and modern banks in no small part because of native bankers’ cultural capital and social capital. The cultural capital partly lay in their knowledge of Chinese social-cultural practices, traditional book-keeping methods and related terminology based on the classical Chinese language. The social capital partly lay in their native place based personal ties and business networks and partly in some of their time-honored business practices rooted in Chinese culture and tradition. The practices included relying on personal trust in borrowers instead of investigating their credit history when deciding on a loan, flexible business hours (virtually no weekends and holidays) and friendly personal services, and willingness to deal with small businesses and lowprofit customers. These human relationship (renqing) oriented practices were appreciated in Chinese business circles and contributed to enhance their symbolic capital. As late as 1927 the Native Bankers Monthly of the Shanghai Native Bankers Guild was able to claim that the practices mentioned above were the reasons why Chinese merchants were willing to deal with native banks instead of modern banks (QY, 5, 7 (June 1927), p. 19–23). Thus in the field of Chinese banking a triangular relationship existed among three players—foreign banks, modern banks, and native banks. The relationship was cooperative to a degree, but nonetheless competitive. Modern banks were newcomers, and foreign banks and native banks attempted to retain their established positions in the field. The following statistics illustrate the relative economic capitals and financial powers of the three groups. In 1921, when the movement for uniform bank accounting terminology was under way, modern banks held deposits in the amount of ¥534.4 million, while foreign banks held ¥429.1 million and native banks, ¥329.7 million (Rawski, 1989, p. 392), reflecting a rough equilibrium among the three groups. Although the numbers cited above do not show foreign banks as dominant, the advantages they

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enjoyed lay elsewhere. First, established in China’s foreign concessions and protected by extraterritoriality, foreign banks attracted deposits from the rich Chinese who sought security for their money from the vagaries of Chinese political turmoil, in exchange for very low or no interest at all, which meant a larger profit margin for foreign banks. Second, foreign banks handled the debts the Chinese government paid to the foreign powers—the debt payment was guaranteed by custom duties, salt tax, and railway receipts, the three main revenue sources of the Chinese central government. Third, foreign banks wielded influence in the Chinese financial market with its short-term loans on which native banks had relied to operate since the nineteenth century,7 and with its manipulation of exchange rates between Chinese currencies that were based on silver and foreign currencies that were based on gold (Cheng, 2003, pp. 72–73). A significant aspect of the changing relations in the field of Chinese banking was, therefore, that both modern and native banks began to compete with foreign banks and consciously challenge their domination in the field. ‘‘The desire to be able to compete with foreign banks was one of the most important reasons for the emergence of modern Chinese banks’’ (Cheng, 2003, p. 75). Not surprisingly, native bankers shared modern bankers’ nationalistic sentiments. As a result, the earlier cooperation between native banks and foreign banks was gradually replaced by cooperation between native banks and modern banks. At the same time native banks were increasingly overshadowed by the expansion of modern banks. It is against this background of competition between Chinese and foreign banks and between Chinese modern and native banks that the movement for a uniform bank accounting classification and terminology took place.8

7 Historically, foreign banks and firms relied on Chinese native banks to penetrate the market in the Chinese interior where barriers of language, customs and local connections hampered foreign access. 8 Although we will not mention foreign banks very much hereafter, the competition between foreign banks and all Chinese banks remained part of the background of the story unfolded in this paper.

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The habitus of Chinese modern bankers One aspect of the competition between modern banks and foreign banks was the fact that modern banks were established after the western model. To be able to compete with foreign banks, modern banks had to adopt similar business rules, procedures and techniques, including accounting methods. The efforts at bringing about a uniform accounting terminology were part of a general strategy of keeping abreast of business practices in the West. In fact, the trend towards uniform accounting terminology or standardization in accounting practices was not a unique and isolated phenomenon in China. In the late nineteenth and early twentieth century, for instance, there was an international movement to standardize accounting methods in the mineral industry, and after 1915 the movement became largely American (Vent & Milne, 1989). In Britain the movement for uniform costing in the printing industry was launched at the very beginning of the twentieth century by the British Federation of Master Printers (Walker & Mitchell, 1997). By 1923 interest in uniform cost accounting in wider industrial circles was expressed by the Institute of Cost and Works Accountants (Most, 1961, pp. 40–42). In France ideas about uniform accounts in balance sheets and standardization in accounting were proposed and explored between 1880 and 1914 (Lemarchand, 1995; Standish, 1990, pp. 339–340). It may be noted that there was a difference between uniform costing systems and uniform accounting systems, as the former concerned internal reporting and the latter, financial and integrated system of accounts. Yet, the fact that both kinds of systems were moving towards standardization and uniformity would suggest that a wider phenomenon was taking place. One aspect, and an explanation, of the phenomenon were government efforts to regulate industries. In the late nineteenth century Britain, for instance, the crash of the City of Glasgow Bank due to fraudulent accounting practices precipitated the legislative struggles to regulate banks and companies, leading to the Company Act of 1879. Such legislation was aimed at correcting the absence of independent auditing and

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unregulated disclosure in the financial statements of banks (Walker, 1996, 1998). In early twentieth-century America, lawmakers and government regulators regarded the lack of uniformity as the underlying source of fraud and irregularities in accounting practices and identified the establishment of a uniform standard as the solution. Calls for uniform accounting within particular industries were especially common (e.g., Manning, 1919; Pasley, 1920; Union, 1920). Although the movement was opposed by some accounting professionals and business leaders, there appeared to be little controversy over uniform accounting terminology as opposed to uniform accounting rules and principles (Preinreich, 1933).9 The Special Committee on Accounting Terminology of the American Institute of Accountants (AIA) was able to claim that ‘‘It is superfluous to speak of the need for greater uniformity in accounting terminology, for this is admitted on all sides and is dwelt upon by practically all the recognized authorities on accounting matters’’ (Terminology Department, 1922a, p. 467).10 The western experience of developing uniformity in accounting practices is relevant here for an understanding of Chinese modern bankers’ habitus. As students of western-style banking and accounting, Chinese modern bankers were 9 The opponents’ argument was that professional judgment was the essential quality and function of accountants in an uncertain business environment and that uniform accounting rules and principles was not the solution to all problems in accounting practices (see May, 1950; cf. Merino & Coe, 1978; Previts & Merino, 1998, pp. 228–234). 10 The movements toward uniformity went beyond the 1920s and none of those movements in Europe and America went forward smoothly or achieved results quickly. False starts, detours, and setbacks were common. In Germany the Goring Plan was adopted in 1937 and influenced the French formulation of the Plan Comptable General in 1941 (Lafferty, 1975, p. 51; Standish, 1990). Originated in the late nineteenth century, standardization in accounting in France resulted in the Plan Comptable Ge´ne´ral by 1947 and became increasingly mandatory between 1959 and 1962, and even then it still did not constitute accounting standards as defined by the UK accountancy profession; and in the UK, national accounting principles were issued no earlier than 1942 (Lafferty, 1975, pp. 9, 12, 230– 231). The uniform cost accounting in Britain did not come to full fruition until after the Second World War (Most, 1961, pp. 46–48).

concerned about the validity of financial statements because their financial interests were at stake, just like financiers elsewhere. For instance, American bankers were credited with the trend towards truthful accounting practices because they were first to demand valid financial statements from borrowers (Marsh, 1922). As the US Federal Reserve Board noted in issuing the document ‘‘Uniform Accounting,’’ in 1917, ‘‘bankers, through their associations and otherwise,’’ played an important role in bringing about uniformity in financial statements (Uniform Accounting, 1917). These words would apply equally to the Chinese situation. To understand the habitus of modern bankers, however, an elaboration is in order. The growth of Chinese modern banks was accompanied by the rise of a new generation of Chinese financiers. They were trained in and familiar with western banking and accounting practices, were active in promoting the Chinese banking industry and economic development, and were instrumental in the movement for uniform bank accounting terminology. To comprehend their habitus, we will take a brief look at the family background, life, educational experience and career patterns of some leading modern bankers (mostly in Shanghai). Zhang Jiaao (1888–1979) was born in Banshan, Jiangsu, and studied French at the Institute of Modern Languages in Shanghai before going to Japan to study finance and economics at Keio University. He became the deputy manager of the Bank of China Shanghai Branch in 1913 (MRD, p. 962). Chen Guangfu (1881–1976), the founder of the Shanghai Commercial and Savings Bank, was born into a merchant family in Zhenjiang, Jiangsu. He went to the US in 1904 and studied at Simpson College in Iowa, Ohio Wesleyan University, and finally at the Wharton School, University of Pennsylvania till 1909. He worked for the Jiangsu Bank first, and then founded his own bank in 1915 (MRD, p. 1020). Qian Yongming (1885–1958) was born in Shanghai. He went to Japan in 1903 to study finance at Kobe Commercial College and graduated in 1908. In 1917 he entered the Bank of Communications Shanghai Branch as a deputy manager and became the

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general manager in 1919 (MRD, p. 1532). Li Ming (1887–1966) was born into a silver merchant family in Shaoxing, Zhejiang, and enrolled in an American missionary college in the provincial capital Hangzhou in 1902. He went to Japan in 1905 and majored in banking and commerce at Yamaguchi Commercial College. He began to work for the Zhejiang Industrial Bank in 1912 and became the deputy manager of the bank’s Shanghai branch in 1913 and the general manager in 1916 (MRD, p. 248). Wu Dingchang (1884–1950), a native of Wuxing, Zhejiang, went to Japan in 1903 to study commerce till 1910. He served in various governmental and banking positions before becoming the general manager of the Salt Industry Bank in 1917 (MRD, p. 365). Two of the leading modern bankers in Shanghai, Song Hangzhang (1872–1968) and Ye Jinggui (1874–1949), being about ten years senior to the modern bankers above mentioned, did not have formal education in the West or Japan, but they were familiar with western banking and commercial practices and were proficient in English. Song studied English at the Shanghai Chinese-Western School and worked at the Shanghai Telegraph Bureau. He began his banking career in the Imperial Bank of China in 1898 and in 1906 became the manager of the Shanghai Branch of the Great Qing Bank which became the Bank of China in 1912 (MRD, p. 448). Ye, a native of Hangzhou, Zhejiang, studied English, mathematics, and other western subjects in Beijing for five years before obtained a jinshi degree in 1903.11 He began to work as the manager at the National Commercial Bank in 1909. In 1911 he was appointed the general supervisor of the Great Qing Bank, and became the chairman of the National Commercial Bank (based in Shanghai) in 1915 (MRD, pp. 1258–1259). Significantly, Ye’s treasurer and manager at the bank, Xu Jiqing, was a graduate from Yamaguchi Commercial College in Japan.

11

Under the traditional civil service examination that tested Confucian classics and existed until 1905, jinshi was the highest degree whose holders were eligible for official appointments.

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The brief biographical survey shows that the leading Chinese modern bankers shared several common traits in their conditions of existence that produced their habitus. First, they were all born and grew up in or near Shanghai, the most westernized Chinese city that was sandwiched between Zhejiang and Jiangsu, two coastal provinces that were economically more developed in China. Second, they all received their higher education in Japan and the West or at least possessed English language proficiency and knowledge of western banking and commercial practices. Although the majority of leading Chinese bankers were educated in Japan, the western influence was unmistakable since Japan’s banking and accounting practices too were modeled on western lines.12 Third, they were at the same time familiar with Chinese cultural tradition because they were trained in Chinese classics at least in their elementary and secondary education, and grew up in Chinese business circles. Hence, they were able to combine western knowledge with Chinese business traditions as their cultural capital. The traditions included the following: an emphasis on native-place ties, which led to institutional loyalty and solidarity; the idea of serving society, which enhanced the public image of the bank; identification of individual interest with group interest, which reinforced loyalty to the bank one was working for; cultivation of moral character, which was in line with banking business ethics; and a nationalistic sentiment, which sought a China that was wealthy and strong (Cheng, 2003, pp. 225–238). In contrast, while sharing those traditional practices (McElderry, 1976, 1986), most native bankers did not have sufficient knowledge of, training in and familiarity with western-style practices and foreign languages. This was a huge and critical difference in native

12

As early as 1872 the Japanese government employed Alexander Allan Shand, a former manager of the Chartered Mercantile Bank Yokohama Branch to be an adviser. Shand wrote a textbook, Detailed Accounts of Bank Bookkeeping, in five volumes, which was quickly translated into Japanese and published in December 1873. In 1874–1879, with his book and other materials, Shand trained 341 Japanese students who would become bank officers and government officials (Tamaki, 1995, p. 34).

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bankers’ conditions of existence which formed their different habitus from modern bankers. Simply put, the conditions of existence that produced the habitus of modern bankers predisposed them to act and react in the field of Chinese banking. The Chinese financiers were looking up to western models on the one hand, and making their own judgment and taking their own initiatives on the other. They apparently believed that a uniform accounting terminology was scientific and effective, the path to modern banking and bank accounting. The Bankers Weekly, the publication of modern bankers in Shanghai, was punctuated with articles advocating uniformity in accounting methods, terminology and book formats, all in the name of achieving better, more scientific accounting results (e.g., YZ, March 20, 1923, pp. 8–12; July 3, 1923, p. 26; October 4, 1923, pp. 11–12). While some writers noted the difficulty in achieving uniformity in accounting beyond uniform terminology, no one questioned the desirability of uniformity (YZ, July 31, 1923, pp. 21–22; October 9, 1923, pp. 26–28). Importantly, all the discussions on improving bank accounting methods (including the standardization of the terminology) were explicitly based on European and American models. Modern bankers did not feel it necessary to justify the adoption of western-style accounting methods and terminology and took it for granted that such changes would lead to more scientific and truthful accounting results. Before looking at how modern bankers tackled the issue of bank accounting terminology, however, we shall examine their efforts at enhancing their social capital through building a formal organization, one that would play an instrumental role in the uniformity initiative.

Bank of Communications Shanghai Branch, Chen Guangfu of the Shanghai Commercial and Savings Bank, Li Ming of the Zhejiang Industrial Bank, and Ye Jinggui of the National Commercial Bank and Wu Dingchang of the Salt Industry Bank. Soon Xie Zhiting of the Chungfoo Union Bank also joined. The luncheon meetings were occasions where the bankers would discuss business and the financial situation in the city and the country. It was at such meetings that they discussed and then pursued a joint venture, the Shanghai Public Warehouse, where companies could store their inventories as collateral for loans from the seven banks (SYGN, 1921, p. 1). The association of those bankers would have remained informal had it not been for an intervention from the state. In 1915 the Ministry of Finance issued the Regulations for Bankers Associations requiring the establishment of bankers associations in the various cities where modern banks and native banks (including silver shops) operated. The regulations stated that ‘‘bankers associations were authorized by the Ministry and local officials to take care of banking-related public affairs’’ (ZG, August 29, 1915). This, in effect, delegated to local elites certain public functions that the state recognized as important but was unable to perform itself.13 It thus created a new space for modern bankers to play a public role in the field of Chinese banking, which would allow an expansion of their social capital, symbolic power, and ultimately economic capital. The boundary of that space was not clearly defined, or rather, was to be defined by actions of bankers themselves. Modern bankers did not hesitate to take the legitimating opportunity to expand their social capital and assert themselves in a more public and proactive fashion. In response to the said reg-

Social capital and the rise of the SBA The Shanghai Bankers Association (SBA) originated from informal luncheon meetings of modern bankers which started in 1915. These meetings were the occasion to enhance the participants’ social capital. Initiated by Zhang Jiaao of the Bank of China Shanghai Branch, the daily luncheon meetings included Qian Yongming of the

13

This was not the only time the Chinese state delegated public functions to local elite. In January 1914, the Ministry of Justice and Ministry of Industry and Commerce issued the Regulations on Commercial Dispute Arbitration Offices, which required chambers of commerce in the country to set up such offices, at their own expenses, to arbitrate local commercial disputes (see ZG, January 30, 1914).

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ulations, Zhang Jiaao and his fellow bankers decided to turn their informal gathering into a formal association and publish a professional journal. The Bankers Weekly was launched in 1917, with Xu Cangshui and Xu Yongzuo, two leading accountants in Shanghai, as chief editor and editor, respectively (Xu Yongzuo would become chief editor after Xu Cangshui died in late 1925). The SBA was officially founded on July 8, 1918, with twelve institutional members (SYGN, 1921, p. 1– 2; Xu, 1925, p. 2; YZ, October 22, 1928, pp. 15– 16). The number of member banks would reach twenty-six in 1926 (NCH, February 20, 1926, p. 334). In the few years since its founding, the SBA proved to be one of the most influential organizations of the Chinese business class in Shanghai, in the same league as the Shanghai General Chamber of Commerce (established in 1902) and the Shanghai Native Bankers Guild (1911). While having many business and personal ties with the other two organizations (Bergere, 1992, pp. 23–26), the SBA was established with its own purpose and functions. The by-laws of the SBA adopted in July 1918 provided that its members were limited to banks that were invested with complete Chinese capital and had been in business for three years, which emphasized Chinese national identity and solid financial footing of the participating institutions. The stated missions of the association included: To unite member banks in researching banking business and economic issues; for member banks to assist each other in promoting the development of banking enterprise; and to solve problems in banking business (Xu, 1925; YZ, July 16, 1918, pp. 17–20, ‘‘Fulu’’ [attachment]). Thus, besides its role in improving the banking industry as a whole, the SBA was founded to help its members accumulate social capital and enhance their symbolic capital through the prestige of the organization. To augment the social and political influence of Chinese banking circles and to push for financial reform more effectively, the SBA initiated the founding of the Federation of Bankers Associations (FBA), in the same fashion as the National Federation of Chambers of Commerce. In December 1920 at the invitation of the SBA, delegates from bankers associations in Beijing, Tianjin,

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Hankou, Hangzhou, Ji’nan, Bengbu, and Guangzhou arrived in Shanghai to found the FBA. The newly founded Federation immediately petitioned the Ministry of Finance to rationalize government debts and unify Chinese currencies.14 In subsequent years the FBA addressed the central government on various issues, often initiated by the SBA, including a set of rules on banking business practices in Shanghai, a public reserve fund to deal with financial crises, the founding of the Shanghai Clearing House, a joint loan for building the Shanghai Mint, and last but not the least, the standardization of bank accounting terminology (SYGN, 1921, pp. 25–37; Xu, 1925, pp. 2–32, 129–32; YZ, April 15, 1924, pp. 1–8). When the SBA and the FBA addressed issues of financial and monetary reforms to the central government, they found a limited response. The factional strives and civil wars among Chinese warlords after the death in 1916 of Yuan Shikai, the first president of the Republic, prevented the effective functioning of a central government. In other words, the concentration of all forms of capital for the Chinese state was far from completion. In spite of repeated announcements by the government about financial and monetary reforms, no actions followed. It did not help that the regional satrapies under warlords were hostile to any attempts at centralizing national finance and unifying Chinese currencies. All this would explain why the state appeared little interested in promoting the accounting profession and standardizing accounting methods and terminology—what would be the point of verifying the financial data of businesses through disclosure when the state was incapable of collecting national revenue in the country? It was this situation which prompted modern bankers to be assertive in advocating change. What Xu Cangshui wrote, in arguing for the founding of a national federation of bankers associations, exhibits both a sense of elite

14 At the time China saw a variety of currencies in circulation, including silver ingots, silver coins, copper coins, paper banknotes issued by Chinese and foreign banks, all having local and regional variations.

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responsibility as well as frustration in the face of a weak Chinese state: With regard to financial affairs, in view of the dismal political conditions, we can expect little of the state on the one hand, and on the other hand, we hope public associations that have a stake in these matters would pull their resources and wisdoms together to make concerted efforts. In all fields, what we are able to do should neither wait to be forced to by the state, nor is it necessary to rely on the state. If we neither take initiative to reform nor push the government to take action, while blaming everything on the politics that was off the right track and on the people who were naı¨ve and uneducated, and never trying to carry out partial and gradual reform, then it is not that we are unable to do anything, but that we are unwilling (YZ, July 6, 1920, p. 28). Here the ‘‘we’’ and the ‘‘public associations’’ Xu referred to represented unmistakably the selfconscious Chinese elites, and Chinese modern bankers and their organizations in particular, as opposed to the ‘‘uneducated’’ common people and the ‘‘dismal’’ state. As agents in the field of Chinese banking, modern bankers considered that it would be up to them to address issues in the financial sector and advance their individual and group interests, which, in their view, coincided with the public interests of national economic development. At the same time, when the state was unable to confer them symbolic power—what a modernizing state would normally do by fostering the banking industry—modern bankers acted on their own to seek further public recognition of their professional authority through various projects. Such was the circumstance under which the SBA was motivated to tackle the issue of uniform bank accounting classification and terminology.

Cultural capital and the standardization initiative When the SBA felt compelled to deal with uniformity in accounting terminology, Chinese busi-

nesses had not addressed the issue of uniformity in accounting rules and principles at the national level, nor even within the banking industry. What the SBA tried to deal with was a uniform accounting terminology in bank accounting only—a firstlevel issue of uniformity with a limited scope. Nevertheless, the initiative was the important first step in the direction of instituting more uniform accounting practices in China. The confusion and inconsistency in Chinese accounting terminology stemmed from the problem inherent in the practice of translation. The theory of translation has long established that exact equivalency of words in any two languages rarely, if ever, exists and that translation is always a matter of finding approximate signifiers in a target language for the signified in a source language, negotiated by an exchange in power relations— one language makes sacrifice to achieve some level of commensurability with the other. It follows that mistranslation and misunderstanding often occurs, as in the translation of accounting concepts, especially when a translated concept appears in a target language with a different legal and cultural context (Evans, 2004; Liu, 1999). In the case of Chinese accounting terminology, the problem of translation was compounded by the circumstances under which western-style banking and accounting were introduced into China as new techniques. When the bank accounting terms used in modern banks were translated from foreign sources into Chinese, both the sources and the translations were widely diverse, since foreign merchants and financiers were from several different countries. Some terms were translated directly from western languages, and others were secondhand translations through the Japanese language (one good example was the translation of ‘‘debit’’ and ‘‘credit’’ as shown in ‘‘Responses in the field to the BACT’’). Some Chinese translations were rough equivalents of terminologies long used in native banks, and others were entirely new concepts. Most critically, all modern banks, let alone native banks and other Chinese businesses, were not using the same terminology in their banking transactions and accounting activities, resulting in no small amount of confusion and inconsistency (SYGN, 1921, pp. 43–44). According to a Chinese

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accountant, prior to the 1920s ‘‘each province had its way of keeping accounts, each firm had its own peculiar method and each person was at his liberty to use any invented accounting term’’ (CWR, March 14, 1925, p. 37). Apart from other issues, the inconsistency in bank accounting classification and terminology was commonly perceived to be a problem that hampered the growth of the Chinese banking industry and the establishment of sound Chinese accounting practices. That is why no one in the Chinese accounting profession and business circles, including banking enterprises, openly opposed, as a matter of principle, uniformity and consistency in accounting terminology. Precisely because what was to be standardized was bank accounting terminology, i.e., words in a language, the initiative carried larger implications for all actors in the field of Chinese banking, in terms of the cultural, linguistic and symbolic capitals they possessed. For all practical purposes, the standard to which the Chinese accounting practices were to conform was western. To have a uniform Chinese accounting terminology involved standardizing Chinese vocabularies in accounting and harmonizing Chinese and western accounting terminology. In taking up the task, Chinese modern bankers (and the accountants they employed) were best prepared because their training abroad equipped them with professional knowledge of western accounting practices and linguistic competence in English, which were cultural capital as well as professional assets in their own right. They, therefore, emerged as the ‘‘natural leaders’’ in the endeavor. In late 1919 three members of the SBA, Xie Zhiting of the Chongfoo Union Bank, Zhu Chengzhang of the Shanghai Commercial and Savings Bank, and Xu Jiqing of the National Commercial Bank, proposed to deal with the issue of bank accounting terminology. The association responded favorably. On January 31, 1920, the Research Committee on Bank Accounting Terminology was appointed with sixteen members. Xu Jiqing, the Japan-educated manager of the National Commercial Bank, served as the chair (SYGN, 1921, p. 44; Xu, 1926, p. 166). After meeting twenty-three times within the year, the committee collected more than sixty accounting terms

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(SYGN, 1921, p. 44). By early 1921 a booklet entitled ‘‘Research on Bank Accounting Classification and Terminology’’ had been drafted and was distributed among modern banks in the country (Xu, 1926, p. 166). The second annual meeting of the Federation of Bankers’ Associations in 1921 adopted a proposal submitted by the SBA. It called for all bankers associations in various cities to form committees charged with studying the draft bank accounting terminology and to discuss and vote on the document through correspondence so that it could be officially adopted at the annual meeting the following year (Xu, 1926, p. 166). Apparently, this fast-track approach was not practical and the matter was not acted on by all bankers associations. At the third FBA annual meeting in 1922 the SBA submitted another motion on the issue, upon which the meeting passed a resolution requiring all bankers associations to study the draft terminology and submit, within six months, their written opinions to the SBA for consideration. The SBA would then make a report to the next annual meeting. Subsequently, the bankers associations in Jinan, Tianjin, and Hankou submitted detailed suggestions on revising the draft. Based on the opinions from the three associations and the original draft, the SBA submitted a review report to the fourth FBA annual meeting in 1923. The annual meeting decided that a committee of accounting experts from Beijing, Shanghai, Tianjin and Hankou be convened by the Beijing Bankers Association to finalize the classification and terminology based on the SBA draft and the suggestions from the three other associations (Xu, 1926). In September 1923 seventeen accounting experts including Xie Lingfu and Cheng Zizheng from Shanghai, recommended by the four bankers associations and controllers from various banks, convened in Beijing. After working on the document for one week, the committee approved the final version of the ‘‘Bank Accounting Classification and Terminology (BACT)’’ (for its text, see Xu, 1926, pp. 167–195; YKKM, 1924). While modern bankers constituted the leading force in the uniformity initiative, Chinese accountants played a technical role in hammering out the

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uniform accounting terminology.15 The fifth FBA annual meeting held in April 1924 adopted the document and officially called on member bankers associations to see that all banks use the classification and terminology in their accounting practices (Xu, 1926, pp. 166–167; YZ, April 8, 1924, p. 2; April 29, 1924, p. 7).16 Looking over the making of the BACT, it is clear that the SBA was the most vigorous driving force throughout the whole endeavor from 1920 to 1924. But the SBA was able to push its agenda through to conclusion because other bankers associations too were receptive to the project of a uniform bank accounting classification and terminology. In other words, a consensus on this issue was reached in modern banking circles. Since the SBA tried to establish a uniform Chinese accounting terminology based on the English language, each and every term in the BACT the FBA adopted in 1924 was accompanied by an English translation. This strategy was significant in several respects. English terms were used to define and standardize the meaning of Chinese terms that might have diverse usages, and were also intended to facilitate the business transactions of those banks that dealt with foreign banks, firms and customers (which was explicitly noted in the ‘‘Guide to the Usage’’ of the document). More important than the technical considerations, however, were the actual effects of adopting the Chinese translation from English. The Chinese terminology with an English reference showed for-

15 Probably with some exaggeration, a Chinese accountant later claimed that some Chinese accountants ‘‘recommended to the Bankers Association a uniform accounting terminology for all banks in China’’ (CWR March 14, 1925, p. 37). In fact, the accountants were more likely commissioned by the SBA to do the technical job of compiling the terms. In any case, had the SBA not wanted a uniform bank accounting terminology, little would have come out of what the accountants had to offer. 16 The process of drafting, getting feedback, revising, and finally adopting the uniform classification and terminology was very much like the process envisioned and carried out by the Special Committee on Accounting Terminology of the American Institute of Accountants for the same purpose. An interesting coincidence is that the committee in the US also started its work in 1920 and continued into the 1930s (Preinreich, 1933; Terminology Department, 1922a–e, 1923a–e).

eign banks that Chinese modern banks had come of age and were on an equal footing with them. It also drastically devalued the linguistic competence of native bankers in the classical Chinese language on which their trade jargons and its social legitimacy were based. The full meaning of the latter effect and its symbolic ramifications should be made clear: the Chinese terminology translated from English was in the written vernacular Chinese or colloquial Chinese (baihua wen), as opposed to the classical Chinese (wenyan wen) that native banks were using in their account books. At that time, writing in the vernacular Chinese for the sake of raising the educational level of the population, especially underprivileged groups, was a movement championed by many Chinese intellectuals, typically Westerneducated, as one of the most important ways to modernize Chinese society (Chow, 1980; Schwarcz, 1986). Given their habitus, modern bankers joined the movement with ease in undertaking the project of standardizing bank accounting terminology.17 The consequence, even if not intended, was a sharper contrast between the new terms that modern bankers adopted and the traditional ones that native bankers were using. By virtue of possessing the linguistic competence and professional knowledge in western-style banking and accounting, and by adopting accounting terminology in the vernacular Chinese translated from English, modern bankers were associated with Chinese modernity. In contrast, the native bankers were perceived to be backward and archaic through their use of the old language. In other words, native bankers did not lose ground against modern bankers because they were short of linguistic capital, since they knew the classical Chinese. But they did lose ground because modern bankers showed greater ability and creativity in the use of the linguistic capital they possessed, utilizing the English language and choosing at the same time the vernacular Chinese to convey their ideas. In short, the publication of the uniform 17 In a sense the choice was a continuation of the linguistic practices of modern bankers and accountants. All pieces published in the Bankers’ Weekly, for example, were written in the vernacular Chinese.

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terminology (and eventually its adoption enforced by the state) would transform the linguistic market in which native bankers’ linguistic capital would devalue drastically. The uniform bank accounting terminology, which was certified, endorsed and authorized by English terms and expressed in the vernacular Chinese words, thus represented the accruement of modern bankers’ cultural capital and contributed to their further empowerment.

Responses in the field to the BACT The publication of the BACT met with mixed responses. To contextualize the responses, we will provide a brief overview of the document and then examine the responses as criticisms of the newlystandardized terminology itself and those relating to adopting the terminology. The BACT was divided into three parts. Listed under ‘‘Liabilities’’ were fifty-eight terms, under ‘‘Assets’’ were fifty-four, and under ‘‘Profit and Loss’’ were twenty-one. Each term was followed by an English translation, a Chinese definition and an explanation of usage (see ‘‘Appendix’’ for the English translations). This list of one hundred and thirty-three terms was obviously much shorter than western equivalents, such as the Special Committee on Accounting Terminology of the AIA in 1922.18 A comparison between the two lists shows many similarities, but also certain differences. Certain Chinese terms were defined and explained correctly in Chinese, but were paired with English terms that were not normally then in use in the United States. For example, one finds the term ‘‘Furniture and Fixtures’’ under ‘‘Profit and Loss’’ (YKKM, 1924, p. 49). What this really meant was depreciation expenses of fixed assets as stated in its Chinese definition, but was incorrectly expressed in English. Similarly, ‘‘Preliminary Expenses Written Off’’ under the same category really meant amortization expenses of organizational cost and was defined as such in Chinese, 18 The Special Committee compiled over 5000 terms to be defined in 1922 and the number eventually reached about 7000 (Preinreich, 1933, p. 113; Terminology Department, 1922a, p. 468).

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but the English translation was unclear (Dong, 2000, p. 50). As it turned out, the linguistic competence in English of the uniform terminology promoters, assumed by themselves and the public, was rather limited, but enough to trump those who knew no foreign languages. In addition, certain classifications of accounts were different between the BACT and prevailing practices in the West. Take the treatment of land depreciation for example. Under the BACT classification, land and buildings were combined to form one asset account ‘‘Land and Buildings.’’ At the same time, the liability account ‘‘Land and Building Sinking Fund’’ was obviously used for depreciation of both land and buildings. But in the United States at least, land was subject to neither depreciation nor appreciation whereas buildings were depreciated. Some conservative accounting policies in the West did not even take into consideration appreciation in land value (Bliss, 1924, p. 296). Consequently, the separation of the two items seemed to be essential in western accounting practices to reflect the book value of assets (Bennett, 1922, p. 376). The Chinese termcoiners did not conceive the issue in the same fashion. Many accounting terms used in the West were missing in the BACT. For example, among the terms issued by the Special Committee on Accounting Terminology of the AIA was ‘‘Intangible Assets.’’ This was defined as ‘‘patents, copyrights, secret processes and formulae, goodwill, trade-marks, trade-brands, franchises and other like property’’ (Terminology Department, 1923b, p. 466). Yet, the term was nowhere to be found in the BACT. The absence of the term was probably due to the nature of bank accounting. A bank, unlike a manufacturing firm or a retail company, usually did not possess those intangibles listed in the definition. At the same time, it would seem that as Chinese accounting terminology moved from cruder categories toward finer classifications with clearer definitions, the terminology was classified in broader categories than its Western counterpart in some areas, and narrower in others. An example of the latter case was the term ‘‘Surplus Undivided,’’ which was usually not a separate classification in American accounting. These comparisons

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illustrate that Chinese bankers and accountants were learning western style accounting classifications and terminologies and establishing Chinese counterparts accordingly, but that the process was problematical. Some problems in the BACT stemmed from the circumstances under which China found herself in the 1920s. For one thing, there were many different Chinese currencies—various paper notes printed and coins minted by a number of regional authorities and foreign and Chinese banks. In Shanghai alone no fewer than six kinds of silver coins were in circulation and ten banks issued their own paper notes (Wu, 2002, p. 192; Yu & Dai, 1996, pp. 293– 381). Various kinds of low quality copper coins were especially ubiquitous in Shanghai (NCH, April 30, 1921, p. 335–336; March 17, 1926, p. 13) which westerners in China called ‘‘the light weight copper evil’’ (NCH, July 1, 1922, p. 7). The Shanghai Bankers Association and the successive committees under the FBA working on the BACT failed to take this fact into account before the document was issued. In September 1925, Li Dingmo, a contributor to the Bankers Weekly, pointed out the confusion among the definitions of three terms in the document (YZ, September 15, 1925, pp. 25–29). Under category ‘‘Liabilities,’’ No. 52 was the term ‘‘Exchange,’’ and under the category ‘‘Assets,’’ Nos. 28 and 29 were ‘‘Foreign Coins’’ and ‘‘Miscellaneous Coins’’ (see ‘‘Appendix’’). Actually, ‘‘foreign coins’’ meant foreign currencies either in coins or paper notes, and ‘‘miscellaneous coins’’ meant various Chinese currencies in circulation either in coins or paper notes. In other words, the English translations were again off the mark. But that was not Li’s point. Li had a larger issue in mind. The definition of ‘‘exchange’’ stated that ‘‘banks paying and receiving with one currency for another are called exchange. Surplus in this classification, when receiving, should be listed as assets and, when paying, should be listed as liabilities’’ (Dong, 2000, p. 21). The usage of the term read that ‘‘when various currencies are exchanged, whether cashing or transferring, the payment and the receipt should be dealt with under this classification’’ (YKKM, 1924, p. 21). At the same time, ‘‘foreign coins [cur-

rencies]’’ was defined as ‘‘foreign currencies that banks buy,’’ but the definition of ‘‘various coins [currencies]’’ read that ‘‘various domestic currencies besides the main currency that banks buy are called miscellaneous currencies’’ (YKKM, 1924, p. 34). As Li pointed out, both the definition of the term ‘‘exchange’’ and the explanation of its usage failed to indicate whether ‘‘paying or receiving with one currency for another’’ and ‘‘various currencies’’ referred to exchange between Chinese and foreign currencies or between foreign currencies or between various Chinese currencies. Li proposed to use ‘‘exchange of main national currency’’ instead of ‘‘exchange,’’ and ‘‘domestic secondary currencies’’ instead of ‘‘miscellaneous currencies,’’ as standard terms. The definition of the former should state that exchange of main national currency for various foreign or domestic currencies would be called ‘‘exchange of main national currency.’’ The definition of the latter should state that various domestic currencies other than main national currency would be called ‘‘domestic secondary currencies’’ (YZ, September 15, 1925, p. 29). Li further noted that although a uniform accounting system beyond a uniform terminology had been suggested, it was not certain when such a system would come into being; but the correction of those ill-defined terms could be easily done (YZ, September 15, 1925, p. 28). It is not clear from available sources whether the FBA took notice of and acted on the issue Li raised. As the problems identified above suggest, Chinese modern bankers were dealing with a complex financial situation because of a combination of China’s long history as a commercially developed pre-industrial society and her contemporary condition as a semi-colonial country with a weak central government in the early 1920s. The field of Chinese banking and its structure was framed by this historical juncture, and the initiatives to standardize a bank accounting terminology by modern bankers took place in that context. The publication of the BACT was the first step in establishing some uniformity in accounting practices and it did not immediately end the inconsistency in bank accounting terminology. One

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ongoing issue was whether all modern banks would actually use the terms provided by the BACT. When the BACT was finalized in April 1924, the FBA called on all modern banks—members of bankers associations in different cities—to use the adopted BACT, starting July 1, 1924. Yet, a study conducted in April 1925 found that not all banks were using the same terms in their financial statements. For ‘‘authorized capital,’’ four variations were used—‘‘capital stock,’’ ‘‘capital fund,’’ ‘‘legal capital fund,’’ and ‘‘authorized capital stock.’’ For ‘‘legal reserve,’’ two terms were used—‘‘reserve’’ and ‘‘surplus accumulated.’’ For ‘‘call loans secured,’’ six other different terms were used (YZ, April 21, 1925, pp. 9–11). The situation is hardly surprising, since the BACT introduced many terms that accounting staff in most banks were unfamiliar with. Besides, the often-cited Chinese conservatism (e.g., YZ, October 9, 1923, pp. 28) may also explain the slow pace at which the BACT was adopted by all banks.19 How did foreign banks, as players in the field of Chinese banking, react to the initiative launched by Chinese modern banks? No primary and secondary sources available to this study indicate any involvement of foreign banks in the matter. It may be assumed that foreign banks were aware of the initiative, but did not treat it as an issue important enough to respond to. At a technical level, a Chinese bank accounting classification and terminology harmonized under English terms would probably facilitate the business dealings between foreign banks and Chinese banks,

19 A comparison with other countries would suggest that a degree of discrepancy in accounting classification and terminology would probably always exist. Besides European cases cited earlier (‘‘The field of Chinese banking’’), when uniformity was the talk in the American accounting field in 1923, it was found that the balance-sheets of seventeen prominent corporations listed main groups of assets in eight different sequences, and of liabilities in six different orders (Peloubet, 1923, p. 336). As late as the 1930s, a descriptive study of the balance-sheets of 587 industrial corporations that had stocks listed in the New York Stock Exchange revealed wide discrepancies among those documents in format, classification, and terminology, to say nothing of accounting rules and principles (Fjeld, 1936a, 1936b).

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which would be a positive development from the perspective of foreign banks. If the development would also enhance Chinese banks’ competitiveness, there was little foreign banks could do about it. As far as modern bankers were concerned, however, the biggest issue was to have native banks, where traditional Chinese bookkeeping methods continued to prevail, adopt the uniform accounting classification and terminology and indeed western-style accounting methods generally. If it was difficult for accounting personnel in modern banks to get used to the uniform accounting terminology, the inertia in switching to western accounting methods and the new accounting terminology in native banks was substantial. But the issue of whether to make the switch had much more at stake than inconvenience for native bankers. Given their different habitus and positions in the field, native bankers had reason to be wary of the demands for them to change their practices. First of all, since native banks were family-invested and managed proprietorships with unlimited liability, their owners objected to the idea of transparency about their financial conditions—such matters were traditionally and understandably regarded as family secrets. They were not prepared to change their traditional business practices and open their account books to the public just for the sake of being ‘‘modern.’’ Moreover, the issue involved surrendering native bankers’ cultural capital. With the adoption of western-style accounting methods and the uniform bank accounting terminology, native bankers’ competence in traditional accounting methods and related terminology based on the classical Chinese language would devalue drastically, if not entirely. Besides those concerns on the part of native bankers, which were not openly articulated in the public discourse, there was also a question of whether it was practically beneficial to adopt western-style accounting methods, which did arise in the public discourse. An article published in 1922 in the Native Bankers Monthly argued that to improve and reform native bookkeeping did not necessarily mean switching to western style accounting. The author asserted that western style

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accounting methods were over-elaborate, labor/ time consuming, and therefore it was not the time for native banks to switch to such methods (QY, 2, 10, pp. 3–7). There were proposals on standardizing native bookkeeping methods, but not on switching to western-style accounting (e.g., QY, 10, 2, pp. 33–41; 10, 3, pp. 39–52). By 1926 the tone in the Native Bankers Monthly had changed somewhat on the issue, but a complete switching to western style accounting was still resisted. Qin Runqing, the chairman of the Shanghai Native Bankers Guild, stated that all modern banks adopted western style accounting because it was more rigorous than native bookkeeping, but that native banks did not adopt western style accounting because it also had disadvantages, such as narrow classifications, minute procedures, and multiple books and forms, all of which would cost more labor and money but would not guarantee error-free results. Instead of switching to western style accounting, Qin proposed to adopt selective aspects of it to supplement and improve native bookkeeping methods (QY, 6, 11, pp. 1–3). To fully grasp the issue, let us consider the linguistic and formulaic expressions of native banks’ tradition-bound practices. At the time the following aspects of native bookkeeping were still in use: the format of account books with top-to-bottom writing and right-to-left columns (instead of left-to-right writing and top-to-bottom columns in western-style accounts); the cash-based categories of payment and receipt (instead of debit and credit); the ‘‘four-column system’’ (instead of double-entry system); numbers written in Chinese characters instead of Arabic numerals; and affixing on books such seals as ‘‘error,’’ ‘‘entry,’’ or ‘‘balance’’ (YZ, January 16, 1934, pp. 2–3), in addition to a host of colorful terms and jargon to name various categories and practices in bookkeeping and accounting that only the initiated would understand (see below). Xu Yongzuo, a leading accounting professional in Shanghai and the editor of the Bankers Weekly, held the view that the above-mentioned traditional practices were still useful. He argued that Chinese bookkeeping was in effect similar to the ‘‘cash journal method’’ that was used in modern banks. The Chinese variation was simple and convenient:

payment and receipt would be recorded as a decrease and an increase, respectively, in books, unlike a double-entry system where these transactions would be entered in opposite categories— payment would be entered as a credit and receipt as a debit in cash account (YZ, February 20, 1934, pp. 1–6). One of Xu’s arguments is especially noteworthy because it involved native bankers’ linguistic competence in the Chinese language and therefore their linguistic capital vis-a`-vis those who might claim linguistic competence and capital in Japanese and English languages. Chinese words ‘‘jie’’ and ‘‘dai’’ indicating ‘‘debit’’ and ‘‘credit’’, respectively, said Xu, were taken from Japanese kanji translations of the two western concepts.20 In the Japanese language, those two words did mean ‘‘borrow’’ and ‘‘lend,’’ but in the traditional Chinese language both ‘‘jie’’ and ‘‘dai’’ could mean either ‘‘borrow’’ or ‘‘lend.’’ Hence, the two words as ‘‘debit’’ and ‘‘credit’’ did not make sense in the Chinese language except that they were simply used as labels in bookkeeping and accounting. The other Chinese words used in Chinese bookkeeping, ‘‘shou (receipt)’’ and ‘‘fu (payment),’’ would work equally well as labels and would be more consistent with their common usage (YZ, February 20, 1934, pp. 1–6). ‘‘Bookkeeping as a social science is based on the history, customs, and habits of various countries and should be suitable to the time and place of their societies;’’ concluded Xu, ‘‘Westerners cannot dismiss Chinese bookkeeping as irrational no more than the Chinese can dismiss Western bookkeeping as irrational’’ (YZ, February 20, 1934, p. 4).21

20

Kanji is Chinese characters used by the Japanese in writing some concepts in their language. The written form of kanji was the same as in the Chinese language but has different pronunciation in the Japanese language. When Chinese began to translate Western concepts, they borrowed back kanji that the Japanese had borrowed from the Chinese language to express concepts and ideas from the West. Concepts and ideas from the west (for a scholarly treatment of the topic, see Liu, 1995). 21 Notably, another Chinese accountant also argued in a piece published in the Native Bankers Monthly that the native bookkeeping methods need not be completely abandoned and certain aspects could be improved (QY, 10, 3 (April 1930), pp. 2–4).

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Pan Xulun, also a leading Chinese accountant in Shanghai with a Ph.D. from Columbia University, disagreed. First of all, Pan was opposed to distinguishing between Chinese and Western accounting methods and preferred to distinguish between single entry and double-entry bookkeeping, or cash-based and assets-based bookkeeping, or bookkeeping that could measure or compute profit and loss and one that could not. Secondly, Pan considered that the use of top-to-bottom writing and right-to-left columns was impractical because as businesses were becoming larger and more complex, account books would need more columns for entries, which the Chinese-style book format was unable to accommodate. Third, he argued that bookkeeping based on cash payment and receipt was convenient with cash transactions, but would become more complicated and difficult than double-entry, debit–credit bookkeeping with non-cash transactions and transfers. Xu’s proposal to use ‘‘receipt’’ and ‘‘payment’’ instead of ‘‘debit’’ and ‘‘credit’’ did not change the fact that ‘‘cash’’ really meant the cash value of assets under various classifications, and the use of ‘‘receipt’’ and ‘‘payment’’ would not make things easier or more scientific (YZ, January 30, 1934, pp. 7–10). The debate between Xu and Pan illustrates a typical divide in twentieth-century China between those who wanted to modernize China by adopting western ways and those who wanted the same thing but were more ambivalent about dismissing all things Chinese and embracing all things western. Xu’s point about the relative accuracy of Chinese words ‘‘receipt’’ and ‘‘payment’’ and borrowed words ‘‘debit’’ and ‘‘credit’’ was not without merit at a technical level,22 and his argument about the relative rationality of Chinese and western methods were imbued with symbolic import and political implications. Pan was careful not to turn the debate into a discussion about choosing between ‘‘Chinese’’ and ‘‘Western,’’ but

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between ‘‘effective’’ and ‘‘ineffective.’’23 By so doing Pan was able to circumvent the nationalistic sensitivity of the issue and undercut any symbolic capital that native bankers might gain from identification with a nationalist cause. At the same time the cultural capital that modern bankers possessed in the form of foreign language proficiency and professional knowledge of western style accounting could be transformed into symbolic capital, as western style accounting methods were identified with science, efficiency, effectiveness—with China’s modernization. By contrast, native methods were associated with backwardness.

The state and the field of Chinese banking The debate would have remained a purely discursive exercise had the political situation in the country not changed. What needs to be emphasized here is that the whole project of standardizing bank accounting classification and terminology was devised and pursued by bankers associations in China without any involvement whatsoever from the state. The weakness and inaction of the Chinese central government at the time was a mixed blessing. On the one hand, by default it ceded much social space to bankers associations to act and shape the way in which banking and accounting were to be conducted. On the other hand, state inaction also meant that there would be no political-legal authorities to enforce the uniform bank accounting classification and terminology. The FBA and local bankers associations could only rely on moral persuasion, that is, on their symbolic power, to persuade all modern banks to conform to the new terminology. But that symbolic power was not sufficient to sway all social actors in Chinese banking—little could be done about native banks that continued to ignore the new classification and terminology, and indeed western style accounting itself. In the field of Chinese banking, social actors could only

22

In fact in the 1920s some modern banks continued to use ‘‘receipt’’ and ‘‘payment’’ in double-entry bookkeeping. A contributor to the Bankers Weekly argued against such use and called for uniform use of ‘‘debit’’ and ‘‘credit’’ instead (YZ, April 10, 1923, pp. 11–12).

23 A similar divide and related strategies were seen in the struggle between western-style Chinese doctors and Chinese practitioners of native medicine in the 1920s and 1930s (Xu, 2001, pp. 190–214).

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do so much with the forms of capital they possessed, and they did not have the political-legal means to enforce a particular set of accounting techniques and terms. Native banks would probably have eventually lost the competition between modern banking and accounting practices and native varieties, but they did not show signs of giving up their own practices, which embodied their cultural capital, until the Chinese state reasserted itself to cause a major shift in the power relations in the field. In 1927–1928 China’s political conditions changed dramatically. After a military campaign known as the Northern Expedition started in 1926, the Guomindang (GMD) or the Nationalist Party ended warlord satrapies and unified most of the country. With a vision of a corporate state (borrowed from Mussolini’s Italy) and a nationalist agenda of gaining independence from foreign powers, the newly-established GMD central government was anxious to assert its political authority and regulatory power over the financial sector and the accounting profession, as well as other industries and professions (Cheng, 2003, pp. 97– 101; Coble, 1980; Ji, 2003, pp. 164–194; Sheehan, 2003; Xu, 2001, pp. 79–156). Under the Regulations on Industrial and Commercial Trade Associations issued by the GMD government, for example, the Shanghai Bankers Association was reorganized in October 1931 to become the Shanghai Banking Trade Association, a supposedly less elitist organization that was open to all banking staff, not only bank managers and chairmen (SYZX, 1937, p. 736). While all industries including modern banks felt the heavy hand of the GMD state, native banks faced mounting pressures because of their esoteric business practices and accounting methods. The government demanded reliable financial reports and data from banking and other industries in order to enforce banking and commercial regulations and tax laws. To be in compliance, native banks would have to open their books and disclose their accounts in a language and a format that a government official could understand. Yet, most native banks remained reluctant to disclose their financial condition to outsiders. In 1930 the Shanghai Native Bankers Guild considered five

motions regarding the improvement of native banks. It adopted four motions but pointedly decided to take no action on the fifth—for all native banks to publish year-end balance sheets (YZ, July 8, 1930, p. 1).24 Before long, however, native banks were caught by circumstances beyond their control. The first event that affected native banks’ fortunes was currency reform carried out by the GMD government after many years of debate. The reform had silver tael abolished as the monetary standard and silver dollars adopted as the national monetary base. Since a large part of native banks’ operation was in the business of exchanging between silver tael and silver dollars and between silver and copper coins, the reform would completely undercut that business. Native banks opposed the reform, while modern banks strongly supported it, and the argument for the reform prevailed. In March 1933 a decree from the Ministry of Finance made the reform official. Compelled by a government order, native banks exchanged their reserves of silver tael for silver dollars at a rate specified by the decree, and the Shanghai Native Bankers Guild closed the daily silver interest market (Du, 1991, p. 232; Ji, 2003, pp. 183–185). At the same time, the Shanghai Clearing House was promoted by the Shanghai Bankers Association and established in 1933. The new institution further removed from native banks the business of settlement of mutual claims and accounts (Wu, 2002, p. 284). Before native banks were able to recover from the said developments, a crisis struck. The Silver Purchase Act of 1934 in the United States led to a rapid outflow of silver from China, precipitating a financial crisis that swept through the Chinese business world in 1934–1935 and hit native banking circles especially hard.25 Having exhausted all other recourses, native banks pleaded to the central government for financial assistance. By June

24

At least one larger and financially sound native bank began at the end of 1932 to publish its annual financial statement, which was so rare and therefore newsworthy that the Bankers Weekly carried the statement (YZ, February 14, 1933, pp. 1–2). 25 Within four months, from July to October 1934, ¥207 million worth of silver moved out of China (Cheng, 2003, p. 98).

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1935 the government intervened by issuing ¥25 million financial bonds, but with conditions. Native banks had to use collaterals to receive the bond and then use the bond to borrow cash from modern banks. Native banks that borrowed money were also required to submit monthly balance sheets to a Native Banking Supervisory Committee mandated by the government and headed by a Deputy Minister of Finance and composed mostly of modern bankers. At the same time those native banks that defaulted customers or suspended their business were investigated and liquidated by the government (Wu, 2002, pp. 290–297). In the wake of these events, one contributor to the China Weekly Review observed prophetically: ‘‘The native banks, as a result of the occurrences of the past few months, have suffered a great setback in their prestige and credit. . . We have reasons to believe that as the time goes on, the important position occupied by the native banks in the money market will be gradually supplanted by the modern banks’’ (CWR, March 18, 1935, p. 400). Indeed, as many native banks went out of business, the remainder was consolidated into larger and fewer entities. In the process native banks lost much financial leverage, and a large share of business in the financial market was transferred into the hands of modern banks. The latter also came under increasing government control and supervision (McElderry, 1976, pp. 177–178; Wu, 2002, pp. 283–308; Ye & Pan, 2001, p. 287). As for accounting methods, since native banks that survived the crisis were now under the scrutiny of the supervisory committee composed of government officials and modern bankers, they were no longer in a position to keep their financial status secret and were forced to share their financial data via western style financial statements based on the double entry system. In the course of 1936 the Shanghai Native Bankers Guild undertook a project to have all native banks switch from traditional accounting methods to western style methods, and by January 1937 native banks in Shanghai had officially switched to western style accounting. Significantly, when the switch took place among native banks, the SBAs handiwork—the unified bank accounting classification and terminology—was duly adopted. The public

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notice from the Shanghai Native Bankers Guild to its member native banks about the change contained a list of new accounting terms—thirty-one terms under the heading ‘‘Liabilities,’’ thirty-six under ‘‘Assets,’’ and fifteen under ‘‘Profit and Loss’’—all taken from the BACT (SQS, 1960, pp. 473–475). That native banks used fewer terms from the uniform terminology seems to indicate that the accounting classification in native banks was broader than in modern banks and the scope of native banks’ business was more limited. What cannot be over-emphasized is that many Chinese expressions traditionally used in native banks to refer to books, ledgers, forms and business practices, symbolizing linguistic competence and social legitimacy, were all abandoned to conform to the standard terminology used in modern banks. For example, different phrases that referred to the same thing—‘‘riliu (daily flow),’’ ‘‘liushui (flowing water),’’ ‘‘gunchun (rolling surplus),’’ and ‘‘huizong (gathering total)’’—were unified as ‘‘riji (daily ledger).’’ Similarly, ‘‘qingbu (clear book),’’ and ‘‘tunqing (copy clear)’’ were now called ‘‘zongqing (general ledger).’’ Some euphemistic jargon that would confound those outside native banking circles were changed into the uniform bank accounting terminology. The term ‘‘caiyuan (source of fortune),’’ for instance, was changed to ‘‘zibenjin (capital).’’ The category ‘‘wanshang (ten-thousand merchants)’’ was divided into three new categories indicating what they were—‘‘wanglai kuanxiang (current account),’’ ‘‘tongye wanglai kuanxiang (current account with local counterparts),’’ and ‘‘waibu tongye wanglai kuanxiang (current account with out-port counterparts).’’ In the same vein, ‘‘kechun xinyi (deposit trust and friendship)’’ was changed to ‘‘huoqi chunkuan (current account deposit),’’ ‘‘liyou yougui (where interest belongs)’’ to ‘‘dingqi fangkuan (fixed term loans),’’ and ‘‘hepu huanzhu (what is gone returns)’’ to ‘‘cuishou kuanxiang (overdue account and bills)’’ (SQS, 1960, p. 476). Those Chinese expressions were confounding to a layman because they were traditionally designed as euphemism—to refer to business transactions in propitious terms. The linguistic capital that native bankers possessed had been valuable in the linguistic market where they operated, that is, in Chinese

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business circles, which were now increasingly taken over by modern banks. As traditional and colorful, if imprecise, expressions in native banks’ accounting books were cast aside for a straightforward and standard terminology, a turning point in the development of Chinese bank accounting was reached. At one level, the changes signaled that native banks now officially moved towards transparency and disclosed their business transactions and financial conditions to the public (at least to the government and financial institutions in the country), which had been inconceivable in earlier times. At the same time, native bankers now had to learn new terminology and do business like newcomers in the banking industry and as followers of modern banks. Native banks became an inferior, less significant type of banking institution. At a deeper level, the change may be considered as a sharp devaluation of cultural capital possessed by native bankers. The linguistic competence in the classical Chinese language repertoire that native bankers possessed in categorizing and conducting their business operations were de-legitimated, and denied recognition, by modern banks, the state and eventually by the public, and thus deprived them of a large portion of their cultural capital. As the linguistic market for the classical Chinese shrank in the face of the vernacular Chinese, backed by foreign languages, the cultural capital of native bankers was devalued. Further, native bankers’ symbolic association with Chinese culture and tradition in the public imagination was all but gone, and their defense against criticism on grounds of that symbolic association was no longer plausible. Conversely and proportionally, modern bankers achieved domination in Chinese banking symbolically and substantively. They were able to set the standards and coin the language by which native bankers were compelled to categorize and conduct their business and communicate their financial data. The native bankers had to acknowledge, recognize and therefore contribute to the dominant position modern bankers came to occupy. Yet, if the absence of an effective central government in the early 1920s was a mixed blessing for modern bankers, so was the presence of a relatively more effective central government after 1927

and especially after 1935. The GMD state chose to favor modern banks over native banks as the main pillars of China’s banking industry and used the former to supervise the latter in 1935 and thereafter, because the cultural capital that modern banks possessed marked them as the vanguard of China’s modernization. In turn, the state recognition of modern banks’ accounting practices, accounting classification and terminology was the most powerful force in enhancing their symbolic capital. At the same time, however, the scheme of ‘‘controlled economy’’ that the GMD state pursued called for tighter control over the entire Chinese banking industry including modern banks (Cheng, 2003, pp. 89–92; Coble, 1980; Sheehan, 2003). It is not accidental that the GMD state made efforts to control the accounting profession through its party organization and a new set of regulations, which disqualified any one who committed political offenses against the state (Xu & Xu, 2003, pp. 146–148). The state’s all-knowing and all-controlling agenda necessarily included keeping financial resources available and financial data verifiable through accounting and auditing. The scheme of supervising and controlling modern banks and controlling native banks through modern banks was part of that overall strategy. The events of 1935–1937, therefore, may be regarded as a milestone both in the establishment of a uniform bank accounting classification and terminology and in the state supervision and control of the banking industry in early twentieth-century China. Thus the field of Chinese banking was a very different place in 1937 compared to 1920, due to the initiative of modern bankers and the action of the GMD state. Indeed, financial statistics indicate that modern banks were successful in expanding their business and market share at the expense of both foreign banks and native banks from the mid 1920s to the mid 1930s. In 1936 modern banks possessed total assets of ¥6.9 billion (81% of the financial market), native banks, ¥757.8 million (9%), and foreign banks, ¥909.6 million (11%). This represented the remarkable growth of the modern banks (Cheng, 2003, p. 78). Although a direct connection or conversion between cultural capital and economic capital possessed by those institutions is not easy to pinpoint, the expansion

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of modern banks from the 1920s to the mid 1930s might well be attributed in part to the shift in the possession of cultural capital among the three groups. It is intriguing to speculate how the field would have configured, had the Japanese invasion of China in July 1937 not taken place, as the war wreaked havoc on the Chinese economy and disrupted the development of Chinese banking. One thing we know for certain is that the uniform bank accounting classification and terminology survived and remained the norm of the Chinese banking industry.

Conclusion The Chinese experience examined here is instructive both empirically and theoretically. Using concepts borrowed from Bourdieu’s theory of practice, we are able to reveal that the standardization of Chinese bank accounting classification and terminology resulted from the functioning of social actors’ habitus and cultural capital in the field of Chinese banking, and that it also resulted from the interaction between the social actors in Chinese banking and between those social actors and the Chinese state. As a triangular relationship among foreign banks, modern banks and native banks obtained in that field, the significant shift in the power relations between modern banks and native banks, or a reconfiguration of the field, inevitably impacted on the power balance between foreign banks and Chinese banks, both modern and native. Modern bankers took the initiative to standardize bank accounting terminology with their technical expertise and linguistic proficiency, in the hope of modernizing and therefore strengthening all Chinese banking institutions in terms of economic capital and financial power, even if native banks were weakened in the process. That was exactly what happened after modern bankers launched the drive for a uniform bank accounting terminology. The first dimension of the process may be summarized as follows. Modern bankers’ habitus motivated them, and their cultural capital (including linguistic capital as a subset) allowed them, to launch the standardization initiative. Their

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cultural capital appreciated when the uniform accounting terminology and western style accounting that they had championed were recognized and adopted as the norm in the Chinese banking industry and, more importantly, recognized and enforced by the state. When their cultural capital was recognized and associated with science and modernization, it was also transformed into symbolic capital, which lent them social legitimacy. Both cultural and symbolic capitals were then transformed into material profits (larger market shares). At the same time and by the same token, the cultural capital of native bankers, and their economic capital, were devalued and reduced. The second dimension worth mentioning was that the social actors in the field of Chinese banking not only interacted with each other, but also with the state that stood above the field. When the country was disunited and the state was weak (without a concentration of all forms of capital) in 1912–1927, the social actors were able to act without intervention from the state. When the state became relatively strong and active, however, the social actors’ behavior and their interaction with the state were different. What prompted native bankers to adopt the uniform accounting terminology was not the action of modern bankers but the financial crisis in native banking circles and the intervention of the state. The action of the state was therefore the decisive element in the transformation of modern bankers’ cultural capital into symbolic capital and of both kinds of their capital into financial power and domination in the field. The process well illustrates Bourdieu’s point about the state exercising power over fields, species of capitals, and the rate of conversion between them. It is important to realize that the competition between modern bankers and native bankers and the domination the former achieved over the latter did not necessarily come from a well-thought-out plan or an ill will among modern bankers towards native bankers. As noted earlier, the two groups supplemented and cooperated with each other functionally to varying degrees over time. Rather the competition resulted from the habitus of modern bankers (an intentionality without intention) and from the structure of the field of Chinese

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banking and their respective positions and relations with each other that were subject to the changing dynamics in the field. Bourdieu’s theory of practice allows us to understand in a coherent fashion this phenomenon. An historical irony is that as the result of the events in 1935–1937, modern banks became more dominant in the field but also more dominated by the state. As native bankers saw their cultural capital devalued and financial power weakened, modern bankers too lost the relatively autonomous position they had held in Chinese banking. Ultimately the victor was the Chinese state which exercised more systematic supervision and control over modern banks and through them supervised and controlled native banks. The condition for modern banks achieving domination in the field of Chinese banking was domination by the Chinese state over that field—the culmination of concentration of capital in all forms. Such, then, was the paradoxical logic and dynamics of the state-society interaction and the interaction among social actors in the field of Chinese banking.

16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.

Appendix. English terms in the ‘‘Bank Accounting Classification and Terminology’’ issued by the Federation of Bankers Association, 1924.

Liabilities 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Authorized Capital Legal Reserve Special Reserve Reserve for Dividends Reserve for Bad and Doubtful Accounts Land and Building Sinking Fund Furniture and Fixtures Sinking Fund Surplus Undivided Dividends Dividends Payable Fixed Deposits Current Accounts Special Current Account Deposits at Call Sundry Creditors (Temporary Deposits)

38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54.

Banks’ Orders (Cashiers’ Orders) Savings Deposits Trust Deposits Local Banks Deposits Overdrafts on Local Banks Out-Port Banks Deposits Overdrafts on Out-Port Banks Foreign Banks or Correspondents Deposits Overdrafts on Foreign Banks or Correspondents Certified Checks Letter of Credit Drafts Issued and Telegraphic Transfers Drafts and Telegraphic Transfers Payable Drafts Payable with Terms Bills and Accounts Payable with Terms Forward Sales Contracts on Currencies Forward Sales Contract on Stocks, and Bonds, etc. Items Received for Collections Loans due to Others Re-Discount (or Bills Rediscounted) Funds Received for Participation in Loans Made through Us Margin (Security) deposited with the Bank (and other Guaranty Funds) Interest Payable Employees’ Savings Fund Employees’ Bonus Employees’ Pension Fund Employees’ Insurance Fund (Self-Donation) Reserve for Employees’ Insurance Fund Notes-Issuing (or Bank-Notes Issued) Other Banks’ Notes-Issuing (or Other Banks’ Notes Issued by Us) Reserve on Hand for Other Banks NotesIssued (through Us) Securities Reserved for Other Banks NotesIssued through Us Bonds, Debentures, etc. Head Office and Branches Account (A&L) Branches and Sub-Branches Account (A&L) Agencies (A&L) Exchange (A&L) Profit and Loss for the Previous Period (A&L) Total Profit and Loss for the First Period of the Year (A&L)

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55. Total Profit and Loss for the First Period of the Previous Year (A&L) 56. Total Profit and Loss for the Second Period of the Previous Year (A&L) 57. Total Profit and Loss for the Previous Year (A&L) 58. Branches and Sub-Branches Total Profit and Loss for the Previous Year (A&L) Assets 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.

Capital Uncalled Fixed Loans Unsecured Fixed Loans Secured Call Loans Secured Loans at Call Overdrafts on Current Account Unsecured (Current Account Overdrawn) Overdrafts on Current Account Secured (Current Account Overdrawn) Bills Discounted Documentary Bills (Loans Secured by Documentary Bills) Deposits with Local Banks Overdrafts by Local Banks Deposits with Out-Port Banks Overdrafts by Out-Port Banks Deposits with Foreign Banks or Correspondents Overdrafts by Foreign Banks or Correspondents Drafts and Telegraphic Transfers Purchased Foreign Drafts and Telegraphic Transfer Purchased Inward Bills (or Drafts Receivable with Terms) Loans made on behalf of Customers or Other Banks Sundry Debtors (Temporary Loans) Items Remitted for Collection (Bills Sent for Collection) Overdue Account and Bills Bills and Accounts Receivable Forward Purchase Contract on Currencies Forward Purchase Contract on Stocks & Bonds, etc. Bonds, Stocks, Debentures, etc. for Investment

99

27. Bullion Transaction 28. Foreign Coins [currencies] 29. Miscellaneous Coins [various Chinese currencies] 30. Land and Building 31. Banks’ furniture & Fixtures 32. Overdue Charges for Safe Custody on Securities arising from Loans 33. Forfeited Securities arising from Loans 34. Bankers’ Association Endowment Fund 35. Joint Reserve at the Bankers’ Association 36. Preliminary Expenses 37. Margin and Guaranty Fund Deposited with Other Banks 38. Interest Receivable 39. Reserve for Bank Notes Issued (or in Circulation) 40. Reserve for Other Banks Notes Issued (through Us) 41. Reserve for Bonds, Debentures, etc. 42. Cost of Printing Notes 43. Cash in Transit 44. Cash [Items No. 45 through No. 54 are the same as the items No. 49 through No. 58 under ‘‘Liabilities’’] Profit and loss 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Interest Discount Charges for Remittances, Transfers, etc. Commissions Safe Custody Charges (Charges for Safe Keeping) Profit and Loss on Buying and Selling Stocks, Bonds (Investments) Profit and Loss on Exchange Profit and Loss on Bullion Transactions Profit and Loss on Buying and Selling Foreign Coins [currencies] Profit and Loss on Buying and Selling Miscellaneous Coins [various Chinese currencies] Profit and Loss from Warehouses or Godowns Miscellaneous Profit and Loss Premises (Appropriation for Land and Building Sinking Fund)

100

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