The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China (review)

It is well known that the First Industrial Revolution (1760–1830) was characterized by technological, organizational, and socioeconomic changes and spread to much of Western Europe during the first half of the nineteenth century. The Second Industrial Revolution followed (1871–1914). Not so well known is what happened in Qing China during the century immediately following the First Industrial Revolution (1830–1930), when industrial development wrought the same changes in Zigong of China's Sichuan Province. Madeleine Zelin reveals for the first time these changes in her exhaustive study of The Merchants of Zigong. As Zelin states in the preface, her book "recounts the one-hundred-year rise and decline of China's first privately owned high-capital, high-throughput industrial enterprises—the salt manufacturing firms that emerged in the mid-Qing dynasty" (p. xiii).

According to Zelin, the technology of salt production distinguished Sichuan from other salt regions in China. China derived its salt from seawater, salt lakes, gypsum mines, salt-saturated earth, brine wells, and saline rock, but only Sichuan, Yunnan, and Gansu produced well salt, and only Sichuan and Yunnan produced salt from saline rock (p. 14). In the case of salt manufacturing in Zigong, deep drilling of black-brine wells and gas evaporation of salt pans were two major technological innovations that contributed to Zigong's rise in the nineteenth century. During the last decade of the nineteenth century, the discovery of the rock-salt stratum led to the inauguration of solution mining of rock salt and ultimately the use of steam-driven pumps early in the twentieth century, hence mechanization and greater efficiency of salt production.

Organizationally, one of the most important developments was the use of lineage trust as the basic institutional framework for organizing salt manufacturing activities. Traditionally, the lineage trust served as a mechanism to preserve family property, ensure the education of talented youths, and provide income from which to maintain an ancestral hall and perform ritual functions connected with the ancestral cult. The Zigong salt merchants, however, "turned the lineage trust into an analogue of the business corporation that evolved in the West during its early modern period."¹ For half a century "the lineage trust was the structure within which business property was built up, diversified, and preserved against the ravages of the tax collector, the creditor, and individual family members. It was also the organization through which early concepts of limited liability and vertical integration were perfected, making it one of the most advanced business institutions of the late imperial period" (p. 84).

As Zelin shows, the economic interests of the large lineage trusts were based on a two-tiered management system. At the apex was a main office with overall supervisory control over the operation of each subsidiary business. Coordination between the main office and its specialized agencies and the activities of individual production units was achieved through a classic, multidivisional structure. Below the main supervisory bodies at each lineage trust was a separate management structure for each furnace, well, wholesale company, and pipe (pp. 88–89). Moreover, some of the large lineages managed to achieve vertical integration as they controlled wells, furnaces, pipes, wholesale outlets, and agricultural land.

The expansion of salt manufacturing brought about important changes in Zigong economy and society. The manufacture and sale of salt evaporation pans, the processing and sale of bamboo and timber, and the rearing of buffalo as work animals at the wells were some of the industries that developed as the saltyard expanded (p. 271). In addition, the salt industry was the single largest employer of labor outside of agriculture in early modern Sichuan. By the early twentieth century, Zigong was home to almost a million permanent and transient residents during the course of a year with a total primary workforce of between 70,000 and 100,000 men (p. 120). Many workers found opportunities to defend their interests by means of...