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

Abstract

Reviewed by: The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China Peter C. Perdue (bio) The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China. By Madeleine Zelin . New York: Columbia University Press, 2005. Pp. xxiv+406. $45. The Merchants of Zigong is the most detailed study we have of merchant-led industrial production in early modern China. In rich detail, Madeleine Zelin examines a little-known but fascinating production process: salt brine operations in two towns deep in the interior of Sichuan province in central China. Here, merchant capitalists constructed an elaborate network to deliver salt to far-flung markets. Salt brine from deep wells ran through a roller-coaster assembly of bamboo pipes to boiling pans fueled by natural gas, which reduced the brine to salt. An elaborate marketing network sent the salt to consumers in Sichuan and neighboring provinces. As a "fossil fuel" industry based on gas instead of coal, salt production required large-scale capital investment. Using official documents, archival sources, and oral histories, Zelin reconstructs the dramatic rise and fall of this industry from the early nineteenth to the mid-twentieth century. Her book has many important implications for studying connections between technology and business culture. Rather than constructing a detailed narrative, Zelin focuses on discrete themes: production technology, finance, labor relations, management structures, and the search for markets. Until the twentieth century, merchants worked with little interference from the state. They raised capital through partnerships, pawnshops, and native banks, and signed contracts with landowners, but also enforced their contracts in official courts. In Zelin's words, "Contract, courts, and custom worked together to support capital investment on a scale rarely seen in China prior to the twentieth century" (p. 49). Zelin challenges old ideas about the relationship of the Qing state to business. Even though they controlled licenses for salt production, officials did not obstruct the growth of the industry in Sichuan and they generally supported merchant property rights. Merchants reinvested profits in the industry, not in land, and they innovated in realms of technology and finance. In response to growing markets, they expanded management beyond kin networks. A mobile, free labor force streamed into the region, learned specialized skills, and submitted to hierarchical management control, but also created mutual-aid organizations to defend its interests, and sometimes, though rarely, went on strike. This industrial structure looks surprisingly modern by standards of the eighteenth- and nineteenth-century West, where most businesses still relied on family partnerships. The Chinese merchant partnerships also expanded their portfolios, by inviting outside investors to share risks, selling shares in salt production, [End Page 626] renting brine and gas rights, and sharing profits. Vertical integration of the industry progressed along with contrary trends toward fragmentation. The discovery of a new rock salt stratum deep in the earth led to new technologies for exploiting salt deposits, fostering wider-mouth wells and the spread of steam-powered pumps in the twentieth century. An industrial engineering discipline began to grow. Other industries, like evaporation-pan making, lumber and bamboo harvesting, and cultivation of buffalo power grew up around the wells. Such technological interdependence could have stimulated broader economic change. But ultimately, politics killed the industry. Warlords squeezed the merchants for taxes and disrupted markets with their wars. By the 1930s, economic depression caused the collapse of the old firms and production in general. Zelin's insightful analysis demonstrates the great potential of classical Chinese merchant culture for generating significant technological and organizational innovation, but also shows its vulnerability. Salt capitalists prospered under the benign neglect of the high Qing, but could not fend off the violent politics of the twentieth century. Their experience supports the paradoxical point that the greatest innovation often occurs in remote frontiers, where established interests are weak. This was as true in Sichuan as it was in Manchester. Yet we still must ask why the rest of interior China changed so little during the nineteenth century. Mainly it was because the Qing state failed to invest in the infrastructure of modern economic growth. For better or worse, it placed its funds in military defense and not in rural roads or mass education. Exceptional cases like Zigong show that...