A Shanxi merchant named Lei Lutai founded Rishengchang, the first banking firm in China that handled inter-city and inter-regional remittance and cashing service, in 1823 in Pingyao. The founding of Rishengchang had not just contributed considerably to the commercial activities of Shanxi merchants but exerted a far-reaching influence upon the development of China’s financial industry.
The business of Rishengchang was to remit and cash money for clients, that is, when you handed in your sycee silvers, you got a note warranting that you could cash your silvers at a different place, eliminating the need to carry heavy silver ingots by yourself. It was precisely because of this service that these shops were called piaohao (banking note shop). And Rishengchang, the first to do this kind of business, can be still found standing on the West Street of Pingyao, a county in central Shanxi with neither a large area nor a big population.
Shanxi merchants were the first batch of traders who had their ownership and management separated in Chinese finance history. No matter where your goods were transported, they could be arranged through a national network of commercial institutions set up by Shanxi merchants. At that time none other than Shanxi merchants could accomplish this. This near network management system laid a foundation for the birth of piaohao. If we could say that these factors had an indirect effect on the emergence of Shanxi piaohao, then the need of financial capital by Shanxi merchants, particularly after the two key stages of pawning and lending, made the piaohao’s final birth in Shanxi.
These banking firms both received deposits and cash checks---a sign manifesting the earliest characteristic of a modern bank. So it can be said that Shanxi piaohao is the frontrunner of the modern credit system in China.