Trust in Troubled Times: Money, Banks, and State-Society Relations in Republican Tianjin (review)

Trust is central to many studies of Chinese business, which focus on the role of trust in the interpersonal relationships of kinship, identity, and networks. Brett Sheehan's Trust in Troubled Times shifts the focus beyond personal trust between individuals to impersonal trust vested in institutions, and in particular, to trust in banks and their issued paper currency in Republican China. Centered on the northern treaty port of Tianjin, the second-largest financial, industrial, and trade center after Shanghai, Sheehan's history of modern banking in China breaks new ground in combining a narrative history of banks and banking with an innovative look at state-society relations.

Its innovativeness lies in the explicit use of the "new institutionalism" in economics and sociology and the extensive archival documentation to examine the complex relationships between the city's commercial, political, and social elite. Sheehan explores the critical role that financial institutions played in the economic life of the city through a study of nine financial crises between 1916 and 1937. Seven were bank runs, and the other two were associated with events far from Tianjin, the Japanese attack on Shanghai in 1932 and the American silver purchases that created a silver shortage and balance of payments crisis in China between 1934 and 1935.

Sheehan defines a financial crisis as "a suspension of impersonal trust" (p. 5), a shift from trust in to distrust of producers/regulators of money or the reluctance of the network of common users to accept the token as money. The need to maintain trust in the issued currency involved difficult choices for bankers, government officials, and business elites. Each had a vested interest in maintaining trust. Banks made a profit from the issue of currency, and a financial crisis could spell bankruptcy; governments needed loans for state projects, but abuse of bank resources would undermine the banks; and the business elite required a stable commercial environment in which to prosper that often required them to take on a guardianship role to guarantee the value of money. A large part of the study revolves around analyzing the negotiated strategies among and between bankers, government officials, and the local elite as they strove to maintain the confidence of the public users of bank currencies.

The book is organized chronologically into six chapters and told through the experiences of Bian Baimei, the Tianjin manager of the Bank of China. Although not a biography of Bian, we follow the roller coaster ride of the bank from crisis to crisis and Bian's effort to maintain professionalism in bank practices, often told in his own words as recorded in his diary. Without the diary, the narrative would lose much of its force and vividness. Sheehan used both an original and a printed version of the diary, yet this reviewer is troubled that the author does not discuss the dangers and limitations of diaries and personal recollections as a source for history, nor does he explain why the printed version at times is cited in preference to the original.

The book also engages the ongoing debate in Chinese business studies about the primacy of networks over hierarchies in Chinese culture. Personal networks were important in the career of Bian and other bank managers. In time they distanced themselves from the original patron-client networks of their youth, but in turn situated themselves in new networks of professionals organized for collective action. "Common age, education background and native place assisted cooperation among professional bankers, but their networks also reflected the new institutional environment produced by the banks themselves" (p. 182). In short, banks and bankers "were not prisoners of their environment" (p. 182), as the cultural thesis often suggests. Networks and hierarchies interacted dynamically in shaping the competitive rules of the game for modern Chinese business.

Although the contours of Tianjin's history are known to China specialists, the study is richly populated...