Social Actors, Cultural Capital, And the State the Standardization of Bank Accounting Classification and Terminology in Early Twentieth Century China 2008 Accounting, Organizations

8/9/2019 Social Actors, Cultural Capital, And the State the Standardization of Bank Accounting Classification and Terminology…

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Social actors, cultural capital, and the state:The standardization of bank accounting classification

and terminology in early twentieth-century China

Yin Xu a,*, Xiaoqun Xu b

a Department of Accounting, Old Dominion University, Norfolk, VA 23529, USAb 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 classifica-tion and terminology, which in 1924 led to the first standard terminology that was gradually adopted by all Chinesebanks. This paper examines that neglected experience by employing a framework informed by Pierre Bourdieu’s theoryof 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 analyzehow the initiative accrued cultural capital and social legitimacy to modern bankers and how social actors’ interactionwith the state determined the interaction among them, resulting in the domination of modern banks in the field and thedomination of the state over the field. 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 adoptedin modern banks, large companies and govern-ment institutions (Chen, 1998; Gao, 1985; Gard-ella, 1992; Xu & Xu, 2003). One of the earliest

and largest Chinese modern banks, the Bank of Communications, for example, switched to wes-tern style accounting in 1917 (JYS, 1987, p.1456). At the same time, many small Chinese

enterprises, including native banks called ‘‘qianzhuang ’’ (lit. ‘‘money shop’’), continued to operatewith traditional bookkeeping methods, the moresophisticated variety of which was close to westernstyle accounting (Gardella, 1992, pp. 323–332; Lin,1992). Nationwide, a standard or uniformaccounting terminology, let alone accounting rulesand principles, did not exist among all business

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Accounting, Organizations and Society 33 (2008) 73–102

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enterprises, modern banks, companies and govern-ment institutions that used western style account-ing. In 1920 a movement was launched by the

Shanghai Bankers Association (SBA) to standard-ize bank accounting classification and terminologyin the country, resulting by 1924 in the first suchterminology to be gradually adopted among Chi-nese modern banks and later native banks. Thiscritical development in the history of accountingand of banking in China has not received thescholarly attention it deserves, despite a growingChinese and English language literature on thesubject (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 schol-arship, this paper will examine how a uniformbank accounting classification and terminologycame into being in early twentieth-century China,providing an analysis of the cultural capital thatcertain social actors possessed and the role thatthe state played in the process. The considerationof what type of capital was available to the actorsis essential to an understanding of the field of Chi-nese banking and its transformation. A decisive

step in this evolution was taken with the interven-tion of the state, which contributed to legitimatethe capital certain actors possessed. Although therole of the state in the rise of accountancy is afamiliar 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 inthat contrary to what one might expect, the driv-

ing force for uniform bank accounting terminol-ogy was not the professional group—Chineseaccountants and their organizations—that was intheory the best technically equipped, but a groupof individuals prone to act because of their partic-ular social characteristics—Chinese modern bank-ers and their organization.

Another contribution we hope to make is that inanalyzing the standardization of Chinese bankaccounting terminology, we employ the concepts

‘‘habitus,’’ ‘‘field,’’ and ‘‘capital’’ that Pierre Bour-dieu developed. Although there have been criticismsof Bourdieu’s theory of practice from scholars of linguistics, cultural studies, sociology and philoso-phy, his theoretical constructs have been widelyinfluential and provided useful analytical tools inmany disciplines far beyond sociology. Not surpris-ingly, a number of recent studies in accountingresearch have utilized Bourdieu’s theory. Kurun-mäki (1999) used Bourdieu’s concepts of ‘‘field’’and ‘‘capital’’ to interpret how various social actorswith differently valued capitals in health care (poli-

ticians, government planners, physicians and hospi-tal administrators) competed for power andcontrol. Ramirez (2001) used those same conceptsto analyze the social closure attempted by account-ing practitioners in France. Applying Bourdieu’snotions of ‘‘symbolic capital’’ and ‘‘cultural good,’’Neu, Friesen, and Everett (2003) produced aninsightful analysis of the externally and internallylegitimating functions of the ethics discourses inthe Canadian accounting profession. In a similarvein, this paper offers an historical study of the stan-

dardization of Chinese bank accounting terminol-ogy that is underpinned by Bourdieu’s theory.

As will be shown, the standardization of bankaccounting classification and terminology in earlytwentieth-century China was not merely a matterof developing accounting techniques; it alsoinvolved power relations between certain socialactors, that is, Chinese modern bankers (modernbankers hereafter) and Chinese native bankers(native bankers hereafter) under particular politi-cal, economic, social and cultural conditions. We

will explore how the uniform bank accounting clas-sification and terminology came to pass in the fieldof Chinese banking where social actors competed,using their respective capitals; how economic capi-tal interacted with cultural and social capitals, andhow the interaction resulted in changes in powerrelations in the field. Specifically, we will reveal thatwhen western accounting concepts were translatedinto the Chinese language and adopted as standardterminology in bank accounting—seemingly apurely technical development—substantial cultural

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

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capital was accrued or transferred by and betweenthe social actors in Chinese banking, which, amongother variables, impacted on their respective eco-

nomic capitals and financial powers. We will illu-minate how modern bankers interacted with thestate, and what they were able to achieve whenthe Chinese state was weak and unresponsive inthe early 1920s and when there was a relativelystrong and interventionist state after 1927.

To present the story and analysis, the rest of thepaper is organized as follows. The second sectionlays out the theoretical framework we apply fromBourdieu to this study, particularly the concepts of habitus, field, and capital. The third section pro-vides an historical overview of Chinese banking

as a field in which three groups of social actors— foreign bankers, modern bankers, and nativebankers coexisted and competed. The fourth sec-tion examines the life experiences of modern bank-ers which inculcated certain predispositions thatconstituted their habitus. The fifth section tracesthe founding and agenda of the Shanghai BankersAssociation (SBA), which manifested a consciouspursuit of social capital by modern bankers. Thesixth section details the SBA’s efforts to establisha uniform bank accounting terminology that was

enabled by modern bankers’ cultural capital onthe one hand and was to accrue their symbolic cap-ital on the other. The seventh section offers a brief overview of the uniform bank accounting classifi-cation and terminology approved by modernbanks in 1924 and examines responses to it inthe field of Chinese banking, especially the resis-tance by native banks. The eighth section illus-trates the interaction between the Chinese stateand the field of Chinese banking that led to theadoption of the standardized terminology by

native banks in 1936–1937. The conclusion sum-marizes our findings and highlights the usefulnessof Bourdieu’s theory to this case study.2

Habitus, field, and capital

A starting point of Bourdieu’s theory is to tran-

scend the dichotomy between two intellectual ori-entations in social theories, which he calledsubjectivism and objectivism. In brief, subjectivism‘‘seeks to grasp the way the world appears to theindividuals who are situated within it,’’ whileobjectivism, such as structuralism, ‘‘seeks to con-struct the objective relations which structure prac-tices and representations’’ (Bourdieu, 1991, p. 11).To Bourdieu, both approaches are useful butflawed: subjectivism fails to take into account theclose connection between the objective structuresof a culture and the specific tendencies, activities,

values and dispositions of individuals; and objec-tivism fails to give sufficient consideration to inten-tionality and individuality or agency (Bourdieu,1990).

To move beyond subjectivism and objectivismand avoid the pitfalls of either, Bourdieu proposesthe concept of habitus. This refers to a set of dispo-sitions that predispose agents to act and react incertain ways in various situations. Habitus isformed or produced through long processes of inculcation in conditions of existence, including

socialization and formal education. It is internal-ized as second nature, but with an ability to gener-ate ‘‘meaningful practices and meaning-givingperceptions’’ adapted to specific situations (Bour-dieu, 1990, p. 53). Habitus is both a structuringstructure, in that it organizes practices and the per-ception of practices, and a structured structure, inthat the principle that organizes the perception of the social world is itself the product of internaliza-tion of the social world (Bourdieu, 1984, pp. 170– 173, 1990, pp. 53–56). Thus habitus is ‘‘systems of

durable, transposable dispositions,’’ ‘‘as principleswhich generate and organize practices and repre-sentations that can be objectively adapted to theiroutcomes without presupposing a conscious aim-ing at ends or an express mastery of the operationsnecessary in order to attain them’’ (Bourdieu,1990, p. 53). In other words, the habitus ‘‘gener-ates strategies which can be objectively consistentwith the objective interests of their authors with-out having been expressly designed to that end’’(Bourdieu, 1993b, p. 76). Moreover, ‘‘all the

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

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practices and products of a given agent are objec-tively harmonized among themselves, without anydeliberate pursuit of coherence, and objectively

orchestrated, without any conscious concentra-tion, 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 neces-sarily, and usually is not, a self-consciously calcu-lated move, but is preconditioned or predisposedby their habitus, even though the practice or actionactually results in profit of one kind or another.

Habitus does not function and practices do nottake place in a vacuum, but in a set of social con-texts or social spaces. All social spaces are concep-tualized as fields, such as economic, political,

educational, cultural, etc. and may be furtherdivided into narrower fields (the cultural field,for example, may include linguistic, literary, artis-tic, musical, and scientific fields). Fields outsidepolitics and economy have their own laws of func-tioning, independent of the political and economicfields. Each field is a structured space and its struc-ture is determined by the relations between posi-tions that social actors or agents occupy. Assuch, a field is never a leveled playing ground,but a social space where actors or agents are situ-

ated in different positions and endowed with differ-ent resources, powers or capitals and where certainpower relations among agents and the dominationof some over others obtain. In other words, thestructure of a field is essentially one of unequal dis-tribution of capital; and its effect was the appropri-ation by dominant agents of profits and of thepower to impose the laws of functioning of thefield most favorable to the distribution of capitaland its reproduction. At the same time, however,domination is to be understood not as a conspir-

acy, but as the result and functioning of the struc-ture. ‘‘Domination is not the direct and simpleaction exercised by a set of agents (‘the dominantclass’) invested with powers of coercion. Rather,it is the indirect effect of a complex set of actionsengendered within the network of intersecting con-straints which each of the dominants, thus domi-nated by the structure of the field through whichdomination is exerted, endures on behalf of allthe others’’ (Bourdieu, 1998, p. 34). Moreover,power relations in a field are not static, but

dynamic. A change in agents’ positions and rela-tions with each other necessarily entails a changein the field’s structure (Bourdieu, 1990).

The resources or capitals available to socialactors in a field are conceptualized in different cat-egories, such as economic capital, cultural capital,and social capital; and the volume of capital, thecomposition of capital, and the change betweenthe two properties vary in different fields (Bour-dieu, 1984, p. 114). Economic capital that is mosteasily recognized underlies other forms of capitalthat are often misrecognized, but economic capitaldoes not necessarily correspond to other forms of capital that particular agents possess in particularfields. Moreover, one kind of capital can convert

to another, such as cultural capital being one of the conditions for access to control of economiccapital, and conversely economic capital beingtransmitted through generations in forms of cul-tural capital. Such conversions are important con-ditions or mechanisms for the reproduction of capital, social structure, and domination (Bour-dieu, 1986, 1990, 1993b, 1998).

Social capital means resources acquired throughpossessing a durable network of more or less insti-tutionalized relationships or membership of a

group. The volume of the social capital possessedby a given agent depends on the size of his networkand on the volume of the capital possessed by eachof those to whom he is connected. As such, socialcapital is never completely independent of eco-nomic and cultural capitals and it exerts a multi-plier effect on those capitals. The network of relationships is the product of investment strate-gies aimed at transforming contingent relationsinto necessary and elective relationships implyingdurable obligations. The relationships may exist

in material and/or symbolic exchanges that main-tain and reproduce them, and may also be sociallyinstituted 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 whoundergo them (Bourdieu, 1986).

Cultural capital refers to various kinds of cul-tural knowledge, competences, and dispositions.Cultural capital exists in three forms: (1) as long-lasting 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 cul-tural products, such as books, paintings, musicrecords, concerts, fashion shows, etc. (the objecti-fied state); and (3) as objectification, i.e., academicqualifications, such as diplomas, certificates,degrees, etc. (the institutionalized state) (Bourdieu,1986). ‘‘Because the appropriation of culturalproducts presupposes dispositions and compe-tences which are not distributed universally(although they have the appearance of innateness),these products are subject to exclusive appropria-tion, material or symbolic, and functioning as cul-

tural capital (objectified and internalized), theyyield a profit in distinction, proportionate to therarity of the means required to appropriate them,and a profit in legitimacy, the profit par excellence,which consists in the fact of feeling justified inbeing (what one is), being what it is right to be’’(Bourdieu, 1984, p. 228, 1993a). To Bourdieu, cul-tural capital is as important a category as eco-nomic capital in understanding the social world.

Linguistic capital is considered a form or subsetof cultural capital. This refers to an agent’s compe-

tence in a particular linguistic environment or mar-ket, which accrues authority, prestige, legitimacy,etc. Bourdieu shows how the process of a languagebeing established as national language, while otherlanguages are reduced to the status of dialects, forexample, is not socially neutral, but one that legi-timates a dominant language and de-legitimatesalternative languages (Bourdieu, 1991). ‘‘Becauseany language that can command attention is an‘authorized language,’ invested with the authorityof 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 groupwho possesses competence in that language, it isthe social conditions under which the legitimacyis established that need be examined in a givensocial space. According to Bourdieu, ‘‘the effectsof domination which accompany the unificationof the [linguistic] market are always exertedthrough a whole set of specific institutions andmechanisms, of which the specifically linguistic

policy of the state and even the overt interventionsof pressure groups form only the most superficialaspect’’ (Bourdieu, 1991, p. 50). All linguistic inter-

actions therefore are micro-markets dominated byan overall structure; and given the power relationsin a linguistic market, producers of linguistic prod-ucts (or possessors of linguistic competences) arenot equal (Bourdieu, 1993b, pp. 80–81). It is worthnoting that what Bourdieu mostly refers to as lin-guistic capital is not the ability to speak severallanguages, but are different levels of proficiencyin one single language, especially the recognizedofficial or national language. This point has imme-diate relevance to the case presented below aboutcompetition between classical and vernacular Chi-

nese languages associated with different socialgroups.

Linguistic capital, among other forms of capi-tal, also functions as symbolic capital or symbolicpower, in the sense of accumulated prestige, celeb-rity, consecration, honor, recognition or legiti-macy. 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 socialagents, may be conceived as symbolic capital(Bourdieu, 1998, p. 47). Again, for linguistic capi-tal to function as symbolic capital presupposes cer-tain social conditions, institutions, andmechanisms that allow agents possessing thosecapitals to be recognized or misrecognized as such.Words can have symbolic efficacy only because theperson subject to it recognizes the person whoexercises it as authorized to do so, or because theformer has contributed to the establishment of

the symbolic efficacy by submitting to it (Bour-dieu, 1990, 1991, p. 116). As we shall see in ourcase, such recognition does not always come aboutvoluntarily—the subjection of native bankers tothe authorized status of bank accounting terminol-ogy advanced by modern bankers largely resultedfrom the function of the state.

The state plays a critical role in the transfor-mations of capitals and power relations in vari-ous fields, as it controls the most importantfield and forms of capital. The social conditions,



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institutions, and mechanisms to be examined inunderstanding linguistic and symbolic capitalsunder most circumstances would necessarily

include the role of the state. Bourdieu regardsthe government bureaucracy as a field whereagents (political professionals and bureaucrats)occupy different positions and master a ‘‘culturalliteracy’’ in its structures, institutions, discourses,regulations, rules, etc. At the same time, the statemay be conceptualized as an entity vis-à-vis soci-ety or all other fields, and as such, the state rep-resents 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 historicalemergence of the modern state culminated in theconcentration of different forms of capital; andthe legitimacy or symbolic power of the state ismore important than the coercive power in itsfunctioning.3 Bourdieu writes:

Concentration of the different species of cap-ital (which proceeds hand in hand with theconstruction of the corresponding fields)leads indeed to the emergence of a specific,properly statist capital (capital é tatique)which enables the state to exercise powerover the different fields and over the differentparticular species of capital, and especiallyover the rates of conversion between them(and thereby over the relations of forcebetween their respective holders) (Bourdieu,1998, pp. 41–42).

That is to say, whenever the state intervenes inor exercises power over a particular field, the

action is bound to make a difference in the powerrelations among agents and their relative capitalsin that field. Agents in all other fields, therefore,try to interact with the state, either competing

for influence on the state and its policies or tryingto resist or deflect them, for their own benefits—tomaintain or accrue their own capitals, which con-

stitutes an important dimension of the dynamicsin various fields.The above exposition of the most important

concepts in Bourdieu’s theory of practice isunavoidably cursory, but will suffice for the pur-pose of this study.4 In light of those concepts,the Chinese banking industry in the early twentiethcentury can be usefully conceived as a field, wheresocial actors or groups therein—foreign bankers,modern bankers, and native bankers—competedfor capital, power, and market share, even thoughthey functionally supplemented each other to vary-

ing degrees over time. The concept of habitus willbe used to explain the behavior of modern bankersand native bankers in their responses to the chang-ing economic, social and political conditions theyencountered and to the issue of uniform bankaccounting terminology. The concept of capital,in its economic, social, cultural, linguistic and sym-bolic forms, will serve as analytical tools forunderstanding the origins, development and out-come of the movement for uniform bank account-ing classification and terminology. Linguistic and

symbolic capitals are concepts especially relevantto this study. We shall see how the uniformity ini-tiative would privilege modern bankers’ linguisticcompetence in foreign languages (and the vernacu-lar Chinese language) over native bankers’ linguis-tic competence, as uniform bank accountingterminology was translated from the English lan-

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

4 Michel de Certeau opines that Bourdieu’s concept of habitus has to be assumed to be immobile memory in orderto reproduce the social structure in practices and that the

concept allows the circular movement of the theory: fromstructures to habitus to strategies (which are adjusted tosituations) to situations (which are particular states of struc-tures) to structures (de Certeau, 1984, pp. 50–60); and Liu alsosees tautology in some of Bourdieu’s discussions about thevalue 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 criticalreview of Bourdieu include Calhoun, LiPuma, and Postone(1993), Swartz (1997), Shusterman (1999), and Webb, Schirato,and Danaher (2002). These works attest to the fact thatBourdieu’s complex and profoundly insightful theory has agreat deal to offer.



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guage into the vernacular Chinese vocabularies,and as native bankers were forced to adopt thenew terminology and abandon their accounting

concepts and terms rooted in the classical Chineselanguage and tradition. And one vital aspect of this development is that the Chinese state playeda decisive role in establishing the legitimacy of the uniform bank accounting terminology nation-wide and therefore accruing modern bankers’ lin-guistic and symbolic capitals while subjectingmodern bankers and their economic capital tothe demands of the state.

The field of Chinese banking

Why did the Shanghai Bankers Association, asopposed to a professional accounting association,lead the movement for uniform bank accountingterminology? For one thing, the Chinese account-ing profession was immature in the late 1910s andearly 1920s. The Chinese government did not offi-cially recognize the accounting profession until Sep-tember 1918 with the Provisional Regulations onAccountants. The official recognition did not leadto a rapid growth of the profession, partly because

government regulation required formal training inbusiness schools for licensed accountants, whileunregulated traditional bookkeeping did notrequire its practitioners to have school training. Inother words, the higher entrance cost for would-be western-style accountants slowed the growth of the profession. By 1926 there were only 183 licensedChinese accountants in the country, of whom fifty-three were in Shanghai. The Chinese accountants’professional organization in Shanghai, the Instituteof Chartered Accountants of Shanghai (ICAS), did

not officially come into being until 1925, years afterthe movement for uniform bank accounting termi-nology was launched. Besides, after it was founded,the ICAS was busy addressing other issues moreclosely related to the interests of the accountingprofession (Xu & Xu, 2003). That is why theChinese accounting profession as a whole and itsorganization did not play the leading role in thismovement, even though some individual accoun-tants were involved in the standardization of bankaccounting terminology at a technical level.

In contrast, Chinese bankers were one stepahead of the accounting profession as promotersof modern banking and economic development.

Modern Chinese banking was born in Shanghaiwith the establishment of foreign banks and theirbranches after the city became a treaty port in1844. The first foreign bank established in Chinawas a branch of the Oriental Banking Corporationthat was opened in Shanghai in 1847. It was fol-lowed by the Chartered Bank of India, Australia,and China in 1858, the Hong Kong and ShanghaiBanking Corporation in 1865, the Deutsch-Asiati-sche Bank in 1889, the Yokohama Specie Bank in1893, the Russo-Chinese Bank (later Russo-Asi-atic Bank) in 1895, the Banque de l’Indochine in

1898, Banque Belge pour l’Etranger in 1902, andNederlandsche Handel-Maatschappij in 1903 (Ji,2003, pp. 42–53, 70–74, 77–78). Between 1847and 1911 twenty-six foreign banks establishedbranches in Shanghai and one (the Deutsch-Asiati-sche Bank) headquartered there. In the 1910s and1920s there was a further expansion of foreignbanks in China, especially from Japan and theUnited States (Sheng, 1988, pp. 7–10, 13–14).

When foreign banks were operating in Chinabetween 1847 and 1897, two types of traditional

Chinese finance and credit institutions, ‘‘ticketstores’’ ( piaohao), and ‘‘money shop’’ (qianzhu-ang ), were also active. Ticket stores dealt in prom-issory notes and credit papers (tickets) andoriginated in Shanxi Province in northern China.Money shops originally dealt in copper coins andwere native to Shanghai.5 These Chinese institu-tions coexisted with foreign banks for over fiftyyears because they performed functions in differentspheres, each taking about a one-third share of thefinancial market in China. Foreign banks monop-

olized the financing of trade between China andother countries; ‘‘ticket stores’’ specialized ininter-provincial remittance and some governmentservices; and ‘‘money shops’’ mainly functionedas local commercial banks doing such business asmoney 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 southernChina 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 thetwentieth century. With the first Chinese modernbank, the Great Qing Bank, established by theQing government in 1897, the era of modern banksbegan. By 1911, when the Qing dynasty was over-thrown, ten modern banks or bank branches hadbeen established in Shanghai. By 1920 anothernineteen had been added and by 1935 there wereseventy-three Chinese banks in operation in thecity (Xu, 2001, pp. 28–30; cf. Ji, 2003, p. 129). In1922 forty-eight Chinese banks (either public orprivate) employed 5226 people. Twenty-one of

those banks or their branches were located inShanghai and employed 1953 people, not includ-ing the employees of the Bank of CommunicationsShanghai Branch that employed a total of 1200people in Beijing and Shanghai (YZ, September15, 1922, pp. 3–4). The total cash position of allChinese modern banks in Shanghai increased fromT38,630,000 and ¥17,500,000 in 1915 toT53,612,000 and ¥64,800,000 in 1925 (NCH, Octo-ber 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 changingsocial–economic environment, they all but disap-peared by the 1910s, as their functions and marketshares were taken over by the emerging modernbanks. On the other hand, Chinese money shops,now exclusively known as native banks, managedto continue their operations, supplementing for-eign and modern banks’ functions and occupyingan important position in the trade between Chinaand world market and a decent share of the

financial market in the country (Cheng, 2003, pp.

37–38; CWR, June 30, 1923, pp. 31–32; Du,1991, 72–79, 159–181; Ji, 2003, Chap. 2–4; McEl-derry, 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 partbecause of native bankers’ cultural capital andsocial capital. The cultural capital partly lay intheir knowledge of Chinese social-cultural prac-tices, traditional book-keeping methods andrelated terminology based on the classical Chineselanguage. The social capital partly lay in theirnative place based personal ties and business net-works and partly in some of their time-honoredbusiness practices rooted in Chinese culture and

tradition. The practices included relying on per-sonal trust in borrowers instead of investigatingtheir credit history when deciding on a loan, flexi-ble business hours (virtually no weekends and hol-idays) and friendly personal services, andwillingness to deal with small businesses and low-profit customers. These human relationship (renq-ing ) oriented practices were appreciated in Chinesebusiness circles and contributed to enhance theirsymbolic capital. As late as 1927 the Native Bank-ers Monthly of the Shanghai Native Bankers Guild

was able to claim that the practices mentionedabove were the reasons why Chinese merchantswere 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 triangu-lar relationship existed among three players—for-eign banks, modern banks, and native banks.The relationship was cooperative to a degree, butnonetheless competitive. Modern banks were new-comers, and foreign banks and native banksattempted to retain their established positions in

the field. The following statistics illustrate the rel-ative economic capitals and financial powers of the three groups. In 1921, when the movementfor uniform bank accounting terminology wasunder way, modern banks held deposits in theamount of ¥534.4 million, while foreign banksheld ¥429.1 million and native banks, ¥329.7 mil-lion (Rawski, 1989, p. 392), reflecting a roughequilibrium among the three groups.

Although the numbers cited above do not showforeign banks as dominant, the advantages they

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 standardcurrency (see ‘‘Conclusion’’). Per the exchange rate set by thegovernment in 1933, 1 yuan equals 0.715 tael (Ji, 2003, p. 184).The exchange rate between British sterling and silver taelfluctuated during the period under study. To give an idea of therange, 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).



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enjoyed lay elsewhere. First, established in China’sforeign concessions and protected by extraterrito-riality, foreign banks attracted deposits from the

rich Chinese who sought security for their moneyfrom the vagaries of Chinese political turmoil, inexchange for very low or no interest at all, whichmeant a larger profit margin for foreign banks.Second, foreign banks handled the debts the Chi-nese government paid to the foreign powers—thedebt payment was guaranteed by custom duties,salt tax, and railway receipts, the three main reve-nue sources of the Chinese central government.Third, foreign banks wielded influence in the Chi-nese financial market with its short-term loans onwhich native banks had relied to operate since

the nineteenth century,7 and with its manipulationof exchange rates between Chinese currencies thatwere based on silver and foreign currencies thatwere based on gold (Cheng, 2003, pp. 72–73).

A significant aspect of the changing relations inthe field of Chinese banking was, therefore, thatboth modern and native banks began to competewith foreign banks and consciously challenge theirdomination in the field. ‘‘The desire to be able tocompete with foreign banks was one of the mostimportant reasons for the emergence of modern

Chinese banks’’ (Cheng, 2003, p. 75). Not surpris-ingly, native bankers shared modern bankers’nationalistic sentiments. As a result, the earliercooperation between native banks and foreignbanks was gradually replaced by cooperationbetween native banks and modern banks. At thesame time native banks were increasingly over-shadowed by the expansion of modern banks. Itis against this background of competition betweenChinese and foreign banks and between Chinesemodern and native banks that the movement for

a uniform bank accounting classification and ter-minology took place.8

The habitus of Chinese modern bankers

One aspect of the competition between modern

banks and foreign banks was the fact that modernbanks were established after the western model. Tobe able to compete with foreign banks, modernbanks had to adopt similar business rules, proce-dures and techniques, including accounting meth-ods. The efforts at bringing about a uniformaccounting terminology were part of a generalstrategy of keeping abreast of business practicesin the West.

In fact, the trend towards uniform accountingterminology or standardization in accountingpractices was not a unique and isolated phenome-

non in China. In the late nineteenth and earlytwentieth century, for instance, there was an inter-national movement to standardize accountingmethods in the mineral industry, and after 1915the movement became largely American (Vent &Milne, 1989). In Britain the movement for uniformcosting in the printing industry was launched atthe very beginning of the twentieth century bythe British Federation of Master Printers (Walker& Mitchell, 1997). By 1923 interest in uniform costaccounting in wider industrial circles was

expressed by the Institute of Cost and WorksAccountants (Most, 1961, pp. 40–42). In Franceideas about uniform accounts in balance sheetsand standardization in accounting were proposedand explored between 1880 and 1914 (Lemarc-hand, 1995; Standish, 1990, pp. 339–340). It maybe noted that there was a difference between uni-form costing systems and uniform accounting sys-tems, as the former concerned internal reportingand the latter, financial and integrated system of accounts. Yet, the fact that both kinds of systems

were moving towards standardization and unifor-mity would suggest that a wider phenomenonwas taking place. One aspect, and an explanation,of the phenomenon were government efforts toregulate industries. In the late nineteenth centuryBritain, for instance, the crash of the City of Glas-gow Bank due to fraudulent accounting practicesprecipitated the legislative struggles to regulatebanks and companies, leading to the CompanyAct of 1879. Such legislation was aimed at correct-ing the absence of independent auditing and

7 Historically, foreign banks and firms relied on Chinesenative banks to penetrate the market in the Chinese interiorwhere barriers of language, customs and local connectionshampered foreign access.8 Although we will not mention foreign banks very much

hereafter, the competition between foreign banks and allChinese banks remained part of the background of the storyunfolded in this paper.



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unregulated disclosure in the financial statementsof banks (Walker, 1996, 1998). In early twenti-eth-century America, lawmakers and government

regulators regarded the lack of uniformity as theunderlying source of fraud and irregularities inaccounting practices and identified the establish-ment of a uniform standard as the solution. Callsfor uniform accounting within particular indus-tries were especially common (e.g., Manning,1919; Pasley, 1920; Union, 1920). Although themovement was opposed by some accounting pro-fessionals and business leaders, there appeared tobe little controversy over uniform accounting ter-minology as opposed to uniform accounting rulesand principles (Preinreich, 1933).9 The Special

Committee on Accounting Terminology of theAmerican Institute of Accountants (AIA) was ableto claim that ‘‘It is superfluous to speak of the needfor greater uniformity in accounting terminology,for this is admitted on all sides and is dwelt uponby practically all the recognized authorities onaccounting matters’’ (Terminology Department,1922a, p. 467).10

The western experience of developing unifor-mity in accounting practices is relevant here foran understanding of Chinese modern bankers’

habitus. As students of western-style bankingand accounting, Chinese modern bankers were

concerned about the validity of financial state-ments because their financial interests were atstake, just like financiers elsewhere. For instance,

American bankers were credited with the trendtowards truthful accounting practices because theywere first to demand valid financial statementsfrom borrowers (Marsh, 1922). As the US FederalReserve Board noted in issuing the document‘‘Uniform Accounting,’’ in 1917, ‘‘bankers,through their associations and otherwise,’’ playedan important role in bringing about uniformityin financial statements (Uniform Accounting,1917). These words would apply equally to theChinese 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 famil-iar with western banking and accounting practices,were active in promoting the Chinese bankingindustry and economic development, and wereinstrumental in the movement for uniform bankaccounting terminology. To comprehend theirhabitus, we will take a brief look at the familybackground, 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 toJapan to study finance and economics at KeioUniversity. He became the deputy manager of the Bank of China Shanghai Branch in 1913(MRD, p. 962). Chen Guangfu (1881–1976), thefounder of the Shanghai Commercial and SavingsBank, was born into a merchant family in Zhenji-

ang, Jiangsu. He went to the US in 1904 and stud-ied at Simpson College in Iowa, Ohio WesleyanUniversity, and finally at the Wharton School,University of Pennsylvania till 1909. He workedfor the Jiangsu Bank first, and then founded hisown bank in 1915 (MRD, p. 1020). Qian Yong-ming (1885–1958) was born in Shanghai. He wentto Japan in 1903 to study finance at Kobe Com-mercial College and graduated in 1908. In 1917he entered the Bank of Communications ShanghaiBranch as a deputy manager and became the

9 The opponents’ argument was that professional judgmentwas the essential quality and function of accountants in anuncertain business environment and that uniform accountingrules and principles was not the solution to all problems inaccounting 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 wentforward smoothly or achieved results quickly. False starts,

detours, and setbacks were common. In Germany the GoringPlan was adopted in 1937 and influenced the French formula-tion 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 PlanComptable Général by 1947 and became increasingly manda-tory between 1959 and 1962, and even then it still did notconstitute accounting standards as defined by the UK accoun-tancy profession; and in the UK, national accounting principleswere issued no earlier than 1942 (Lafferty, 1975, pp. 9, 12, 230– 231). The uniform cost accounting in Britain did not come tofull fruition until after the Second World War (Most, 1961, pp.46–48).



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general manager in 1919 (MRD, p. 1532). Li Ming(1887–1966) was born into a silver merchantfamily in Shaoxing, Zhejiang, and enrolled in an

American missionary college in the provincial cap-ital Hangzhou in 1902. He went to Japan in 1905and majored in banking and commerce at Yamag-uchi Commercial College. He began to work forthe Zhejiang Industrial Bank in 1912 and becamethe deputy manager of the bank’s Shanghai branchin 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 studycommerce till 1910. He served in various govern-mental and banking positions before becomingthe general manager of the Salt Industry Bank in

1917 (MRD, p. 365).Two of the leading modern bankers in Shang-

hai, Song Hangzhang (1872–1968) and Ye Jinggui(1874–1949), being about ten years senior to themodern bankers above mentioned, did not haveformal education in the West or Japan, but theywere familiar with western banking and commer-cial practices and were proficient in English. Songstudied English at the Shanghai Chinese-WesternSchool and worked at the Shanghai TelegraphBureau. He began his banking career in the Impe-

rial Bank of China in 1898 and in 1906 becamethe manager of the Shanghai Branch of the GreatQing Bank which became the Bank of China in1912 (MRD, p. 448). Ye, a native of Hangzhou,Zhejiang, studied English, mathematics, andother western subjects in Beijing for five yearsbefore obtained a jinshi degree in 1903.11 Hebegan to work as the manager at the NationalCommercial Bank in 1909. In 1911 he wasappointed the general supervisor of the GreatQing 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 Jiq-ing, was a graduate from Yamaguchi CommercialCollege in Japan.

The brief biographical survey shows that theleading Chinese modern bankers shared severalcommon traits in their conditions of existence that

produced their habitus. First, they were all bornand grew up in or near Shanghai, the most west-ernized Chinese city that was sandwiched betweenZhejiang and Jiangsu, two coastal provinces thatwere economically more developed in China. Sec-ond, they all received their higher education inJapan and the West or at least possessed Englishlanguage proficiency and knowledge of westernbanking and commercial practices. Although themajority of leading Chinese bankers were educatedin Japan, the western influence was unmistakablesince Japan’s banking and accounting practices

too were modeled on western lines.12 Third, theywere at the same time familiar with Chinese cul-tural tradition because they were trained in Chi-nese classics at least in their elementary andsecondary education, and grew up in Chinese busi-ness circles. Hence, they were able to combine wes-tern knowledge with Chinese business traditions astheir cultural capital. The traditions included thefollowing: an emphasis on native-place ties, whichled to institutional loyalty and solidarity; the ideaof serving society, which enhanced the public

image of the bank; identification of individualinterest with group interest, which reinforced loy-alty to the bank one was working for; cultivationof moral character, which was in line with bankingbusiness ethics; and a nationalistic sentiment,which sought a China that was wealthy and strong(Cheng, 2003, pp. 225–238). In contrast, whilesharing those traditional practices (McElderry,1976, 1986), most native bankers did not have suf-ficient knowledge of, training in and familiaritywith western-style practices and foreign languages.

This was a huge and critical difference in native

11 Under the traditional civil service examination that testedConfucian classics and existed until 1905, jinshi was the highestdegree whose holders were eligible for official appointments.

12 As early as 1872 the Japanese government employedAlexander Allan Shand, a former manager of the CharteredMercantile Bank Yokohama Branch to be an adviser. Shandwrote a textbook, Detailed Accounts of Bank Bookkeeping , infive volumes, which was quickly translated into Japanese andpublished in December 1873. In 1874–1879, with his book andother materials, Shand trained 341 Japanese students whowould become bank officers and government officials (Tamaki,1995, p. 34).



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bankers’ conditions of existence which formedtheir different habitus from modern bankers.

Simply put, the conditions of existence that pro-

duced the habitus of modern bankers predisposedthem to act and react in the field of Chinese bank-ing. The Chinese financiers were looking up towestern models on the one hand, and making theirown judgment and taking their own initiatives onthe other. They apparently believed that a uniformaccounting terminology was scientific and effec-tive, the path to modern banking and bankaccounting. The Bankers Weekly, the publicationof modern bankers in Shanghai, was punctuatedwith articles advocating uniformity in accountingmethods, terminology and book formats, all in

the name of achieving better, more scientificaccounting 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 inachieving uniformity in accounting beyond uni-form terminology, no one questioned the desirabil-ity of uniformity (YZ, July 31, 1923, pp. 21–22;October 9, 1923, pp. 26–28). Importantly, all thediscussions on improving bank accounting meth-ods (including the standardization of the terminol-ogy) were explicitly based on European and

American models. Modern bankers did not feel itnecessary to justify the adoption of western-styleaccounting methods and terminology and took itfor granted that such changes would lead to morescientific and truthful accounting results. Beforelooking at how modern bankers tackled the issueof bank accounting terminology, however, weshall examine their efforts at enhancing their socialcapital through building a formal organization,one that would play an instrumental role in theuniformity initiative.

Social capital and the rise of the SBA

The Shanghai Bankers Association (SBA) orig-inated from informal luncheon meetings of mod-ern bankers which started in 1915. Thesemeetings were the occasion to enhance the partic-ipants’ social capital. Initiated by Zhang Jiaao of the Bank of China Shanghai Branch, the daily lun-cheon meetings included Qian Yongming of the

Bank of Communications Shanghai Branch, ChenGuangfu of the Shanghai Commercial and SavingsBank, Li Ming of the Zhejiang Industrial Bank,

and Ye Jinggui of the National Commercial Bankand Wu Dingchang of the Salt Industry Bank. SoonXie Zhiting of the Chungfoo Union Bank also

joined. The luncheon meetings were occasionswhere the bankers would discuss business andthe financial situation in the city and the country.It was at such meetings that they discussed andthen pursued a joint venture, the Shanghai PublicWarehouse, where companies could store theirinventories as collateral for loans from the sevenbanks (SYGN, 1921, p. 1).

The association of those bankers would have

remained informal had it not been for an interven-tion from the state. In 1915 the Ministry of Finance issued the Regulations for Bankers Asso-ciations requiring the establishment of bankersassociations in the various cities where modernbanks and native banks (including silver shops)operated. The regulations stated that ‘‘bankersassociations were authorized by the Ministry andlocal officials to take care of banking-related pub-lic affairs’’ (ZG, August 29, 1915). This, in effect,delegated to local elites certain public functions

that the state recognized as important but wasunable to perform itself.13 It thus created a newspace for modern bankers to play a public role inthe field of Chinese banking, which would allowan expansion of their social capital, symbolicpower, and ultimately economic capital. Theboundary of that space was not clearly defined,or rather, was to be defined by actions of bankersthemselves.

Modern bankers did not hesitate to take thelegitimating opportunity to expand their social

capital and assert themselves in a more publicand proactive fashion. In response to the said reg-

13 This was not the only time the Chinese state delegatedpublic functions to local elite. In January 1914, the Ministry of Justice and Ministry of Industry and Commerce issued theRegulations on Commercial Dispute Arbitration Offices, whichrequired chambers of commerce in the country to set up suchoffices, at their own expenses, to arbitrate local commercialdisputes (see ZG, January 30, 1914).



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ulations, Zhang Jiaao and his fellow bankersdecided to turn their informal gathering into a for-mal association and publish a professional journal.

The Bankers Weekly was launched in 1917, withXu Cangshui and Xu Yongzuo, two leadingaccountants in Shanghai, as chief editor and edi-tor, respectively (Xu Yongzuo would become chief editor after Xu Cangshui died in late 1925). TheSBA was officially founded on July 8, 1918, withtwelve institutional members (SYGN, 1921, p. 1– 2; Xu, 1925, p. 2; YZ, October 22, 1928, pp. 15– 16). The number of member banks would reachtwenty-six in 1926 (NCH, February 20, 1926, p.334). In the few years since its founding, theSBA proved to be one of the most influential orga-

nizations of the Chinese business class in Shang-hai, in the same league as the Shanghai GeneralChamber of Commerce (established in 1902) andthe Shanghai Native Bankers Guild (1911).

While having many business and personal tieswith the other two organizations (Bergere, 1992,pp. 23–26), the SBA was established with its ownpurpose and functions. The by-laws of the SBAadopted in July 1918 provided that its memberswere limited to banks that were invested with com-plete Chinese capital and had been in business for

three years, which emphasized Chinese nationalidentity and solid financial footing of the partici-pating institutions. The stated missions of theassociation included: To unite member banks inresearching banking business and economic issues;for member banks to assist each other in promot-ing the development of banking enterprise; and tosolve problems in banking business (Xu, 1925; YZ,July 16, 1918, pp. 17–20, ‘‘Fulu’’ [attachment]).Thus, besides its role in improving the bankingindustry as a whole, the SBA was founded to help

its members accumulate social capital and enhancetheir symbolic capital through the prestige of theorganization.

To augment the social and political influence of Chinese banking circles and to push for financialreform more effectively, the SBA initiated thefounding of the Federation of Bankers Associa-tions (FBA), in the same fashion as the NationalFederation of Chambers of Commerce. In Decem-ber 1920 at the invitation of the SBA, delegatesfrom bankers associations in Beijing, Tianjin,

Hankou, Hangzhou, Ji’nan, Bengbu, and Guangz-hou arrived in Shanghai to found the FBA. Thenewly founded Federation immediately petitioned

the Ministry of Finance to rationalize governmentdebts and unify Chinese currencies.14 In subse-quent years the FBA addressed the central govern-ment on various issues, often initiated by the SBA,including a set of rules on banking business prac-tices in Shanghai, a public reserve fund to dealwith financial crises, the founding of the ShanghaiClearing House, a joint loan for building theShanghai Mint, and last but not the least, the stan-dardization 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 gov-ernment, they found a limited response. The fac-tional strives and civil wars among Chinesewarlords after the death in 1916 of Yuan Shikai,the first president of the Republic, prevented theeffective functioning of a central government. Inother words, the concentration of all forms of cap-ital for the Chinese state was far from completion.In spite of repeated announcements by the govern-ment about financial and monetary reforms, no

actions followed. It did not help that the regionalsatrapies under warlords were hostile to anyattempts at centralizing national finance and uni-fying Chinese currencies. All this would explainwhy the state appeared little interested in promot-ing the accounting profession and standardizingaccounting methods and terminology—whatwould be the point of verifying the financial dataof businesses through disclosure when the statewas incapable of collecting national revenue inthe country? It was this situation which prompted

modern bankers to be assertive in advocatingchange. What Xu Cangshui wrote, in arguingfor 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, paperbanknotes issued by Chinese and foreign banks, all havinglocal and regional variations.



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responsibility as well as frustration in the face of aweak Chinese state:

With regard to financial affairs, in view of the

dismal political conditions, we can expect lit-tle of the state on the one hand, and on theother hand, we hope public associations thathave a stake in these matters would pull theirresources and wisdoms together to makeconcerted efforts. In all fields, what we areable to do should neither wait to be forcedto by the state, nor is it necessary to relyon the state. If we neither take initiative toreform nor push the government to takeaction, while blaming everything on the pol-

itics that was off the right track and on thepeople who were naı̈ve and uneducated,and never trying to carry out partial andgradual reform, then it is not that we areunable to do anything, but that we areunwilling (YZ, July 6, 1920, p. 28).

Here the ‘‘we’’ and the ‘‘public associations’’Xu referred to represented unmistakably the self-conscious Chinese elites, and Chinese modernbankers and their organizations in particular, asopposed to the ‘‘uneducated’’ common people

and the ‘‘dismal’’ state. As agents in the field of Chinese banking, modern bankers considered thatit would be up to them to address issues in thefinancial sector and advance their individual andgroup interests, which, in their view, coincidedwith the public interests of national economicdevelopment. At the same time, when the statewas unable to confer them symbolic power—whata modernizing state would normally do by foster-ing the banking industry—modern bankers actedon their own to seek further public recognition

of their professional authority through variousprojects. Such was the circumstance under whichthe SBA was motivated to tackle the issue of uniform bank accounting classification andterminology.

Cultural capital and the standardization initiative

When the SBA felt compelled to deal with uni-formity in accounting terminology, Chinese busi-

nesses had not addressed the issue of uniformityin accounting rules and principles at the nationallevel, nor even within the banking industry. What

the SBA tried to deal with was a uniform account-ing terminology in bank accounting only—a first-level issue of uniformity with a limited scope.Nevertheless, the initiative was the important firststep in the direction of instituting more uniformaccounting practices in China.

The confusion and inconsistency in Chineseaccounting terminology stemmed from the prob-lem inherent in the practice of translation. The the-ory of translation has long established that exactequivalency of words in any two languages rarely,if ever, exists and that translation is always a mat-

ter of finding approximate signifiers in a target lan-guage for the signified in a source language,negotiated by an exchange in power relations— one language makes sacrifice to achieve some levelof commensurability with the other. It follows thatmistranslation and misunderstanding often occurs,as in the translation of accounting concepts, espe-cially when a translated concept appears in a targetlanguage with a different legal and cultural context(Evans, 2004; Liu, 1999).

In the case of Chinese accounting terminology,

the problem of translation was compounded bythe circumstances under which western-style bank-ing and accounting were introduced into China asnew techniques. When the bank accounting termsused in modern banks were translated from for-eign sources into Chinese, both the sources andthe translations were widely diverse, since foreignmerchants and financiers were from several differ-ent countries. Some terms were translated directlyfrom western languages, and others were second-hand translations through the Japanese language

(one good example was the translation of ‘‘debit’’and ‘‘credit’’ as shown in ‘‘Responses in the fieldto the BACT’’). Some Chinese translations wererough equivalents of terminologies long used innative banks, and others were entirely new con-cepts. Most critically, all modern banks, let alonenative banks and other Chinese businesses, werenot using the same terminology in their bankingtransactions and accounting activities, resultingin 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 hadits way of keeping accounts, each firm had its ownpeculiar 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 classificationand terminology was commonly perceived to be aproblem that hampered the growth of the Chinesebanking industry and the establishment of soundChinese accounting practices. That is why no onein the Chinese accounting profession and businesscircles, including banking enterprises, openlyopposed, as a matter of principle, uniformity andconsistency in accounting terminology.

Precisely because what was to be standardized

was bank accounting terminology, i.e., words ina language, the initiative carried larger implica-tions for all actors in the field of Chinese banking,in terms of the cultural, linguistic and symboliccapitals they possessed. For all practical purposes,the standard to which the Chinese accountingpractices were to conform was western. To havea uniform Chinese accounting terminologyinvolved standardizing Chinese vocabularies inaccounting and harmonizing Chinese and westernaccounting terminology. In taking up the task,

Chinese modern bankers (and the accountantsthey employed) were best prepared because theirtraining abroad equipped them with professionalknowledge of western accounting practices andlinguistic competence in English, which were cul-tural capital as well as professional assets in theirown right. They, therefore, emerged as the ‘‘natu-ral leaders’’ in the endeavor.

In late 1919 three members of the SBA, XieZhiting of the Chongfoo Union Bank, ZhuChengzhang of the Shanghai Commercial and

Savings Bank, and Xu Jiqing of the NationalCommercial Bank, proposed to deal with the issueof bank accounting terminology. The associationresponded favorably. On January 31, 1920, theResearch Committee on Bank Accounting Termi-nology was appointed with sixteen members. XuJiqing, the Japan-educated manager of theNational Commercial Bank, served as the chair(SYGN, 1921, p. 44; Xu, 1926, p. 166). After meet-ing twenty-three times within the year, the com-mittee collected more than sixty accounting terms

(SYGN, 1921, p. 44). By early 1921 a booklet enti-tled ‘‘Research on Bank Accounting Classificationand Terminology’’ had been drafted and was dis-

tributed among modern banks in the country(Xu, 1926, p. 166). The second annual meeting of the Federation of Bankers’ Associations in 1921adopted a proposal submitted by the SBA. Itcalled for all bankers associations in various citiesto form committees charged with studying thedraft bank accounting terminology and to discussand vote on the document through correspon-dence so that it could be officially adopted at theannual meeting the following year (Xu, 1926, p.166). Apparently, this fast-track approach wasnot 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, uponwhich the meeting passed a resolution requiringall bankers associations to study the draft termi-nology and submit, within six months, their writ-ten opinions to the SBA for consideration. TheSBA would then make a report to the next annualmeeting. Subsequently, the bankers associations inJinan, Tianjin, and Hankou submitted detailedsuggestions on revising the draft. Based on the

opinions from the three associations and the origi-nal draft, the SBA submitted a review report tothe fourth FBA annual meeting in 1923. Theannual meeting decided that a committee of accounting experts from Beijing, Shanghai, Tian-

jin and Hankou be convened by the Beijing Bank-ers Association to finalize the classification andterminology based on the SBA draft and the sug-gestions from the three other associations (Xu,1926).

In September 1923 seventeen accounting

experts including Xie Lingfu and Cheng Zizhengfrom Shanghai, recommended by the four bankersassociations and controllers from various banks,convened in Beijing. After working on the docu-ment for one week, the committee approved thefinal version of the ‘‘Bank Accounting Classifica-tion and Terminology (BACT)’’ (for its text, seeXu, 1926, pp. 167–195; YKKM, 1924). Whilemodern bankers constituted the leading force inthe uniformity initiative, Chinese accountantsplayed a technical role in hammering out the



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uniform accounting terminology.15 The fifth FBAannual meeting held in April 1924 adopted thedocument and officially called on member bankers

associations to see that all banks use the classifica-tion 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 isclear that the SBA was the most vigorous drivingforce throughout the whole endeavor from 1920to 1924. But the SBA was able to push its agendathrough to conclusion because other bankers asso-ciations too were receptive to the project of auniform bank accounting classification and termi-nology. In other words, a consensus on this issue

was reached in modern banking circles.Since the SBA tried to establish a uniform Chi-

nese accounting terminology based on the Englishlanguage, each and every term in the BACT theFBA adopted in 1924 was accompanied by anEnglish translation. This strategy was significantin several respects. English terms were used todefine and standardize the meaning of Chineseterms that might have diverse usages, and werealso intended to facilitate the business transactionsof those banks that dealt with foreign banks, firms

and customers (which was explicitly noted in the‘‘Guide to the Usage’’ of the document). Moreimportant than the technical considerations, how-ever, were the actual effects of adopting the Chi-nese translation from English. The Chineseterminology with an English reference showed for-

eign banks that Chinese modern banks had comeof age and were on an equal footing with them.It also drastically devalued the linguistic compe-

tence of native bankers in the classical Chinese lan-guage on which their trade jargons and its sociallegitimacy were based.

The full meaning of the latter effect and its sym-bolic ramifications should be made clear: the Chi-nese terminology translated from English was inthe written vernacular Chinese or colloquial Chi-nese (baihua wen), as opposed to the classical Chi-nese (wenyan wen) that native banks were using intheir account books. At that time, writing in thevernacular Chinese for the sake of raising the edu-cational level of the population, especially under-

privileged groups, was a movement championedby many Chinese intellectuals, typically Western-educated, as one of the most important ways tomodernize Chinese society (Chow, 1980; Schw-arcz, 1986). Given their habitus, modern bankers

joined the movement with ease in undertakingthe project of standardizing bank accounting ter-minology.17 The consequence, even if notintended, was a sharper contrast between thenew terms that modern bankers adopted and thetraditional ones that native bankers were using.

By virtue of possessing the linguistic competenceand professional knowledge in western-style bank-ing and accounting, and by adopting accountingterminology in the vernacular Chinese translatedfrom English, modern bankers were associatedwith Chinese modernity. In contrast, the nativebankers were perceived to be backward andarchaic through their use of the old language. Inother words, native bankers did not lose groundagainst modern bankers because they were shortof linguistic capital, since they knew the classical

Chinese. But they did lose ground because modernbankers showed greater ability and creativity inthe use of the linguistic capital they possessed, uti-lizing the English language and choosing at thesame time the vernacular Chinese to convey theirideas. In short, the publication of the uniform

15 Probably with some exaggeration, a Chinese accountantlater claimed that some Chinese accountants ‘‘recommended tothe Bankers Association a uniform accounting terminology for

all banks in China’’ (CWR March 14, 1925, p. 37). In fact, theaccountants were more likely commissioned by the SBA to dothe technical job of compiling the terms. In any case, had theSBA not wanted a uniform bank accounting terminology, littlewould 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 wasvery much like the process envisioned and carried out by theSpecial Committee on Accounting Terminology of the Amer-ican Institute of Accountants for the same purpose. Aninteresting coincidence is that the committee in the US alsostarted its work in 1920 and continued into the 1930s (Preinr-eich, 1933; Terminology Department, 1922a–e, 1923a–e).

17 In a sense the choice was a continuation of the linguisticpractices of modern bankers and accountants. All piecespublished in the Bankers’ Weekly, for example, were writtenin the vernacular Chinese.



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terminology (and eventually its adoption enforcedby the state) would transform the linguistic marketin which native bankers’ linguistic capital would

devalue drastically. The uniform bank accountingterminology, which was certified, endorsed andauthorized by English terms and expressed in thevernacular Chinese words, thus represented theaccruement of modern bankers’ cultural capitaland contributed to their further empowerment.

Responses in the field to the BACT

The publication of the BACT met with mixedresponses. To contextualize the responses, we will

provide a brief overview of the document and thenexamine the responses as criticisms of the newly-standardized terminology itself and those relatingto adopting the terminology.

The BACT was divided into three parts. Listedunder ‘‘Liabilities’’ were fifty-eight terms, under‘‘Assets’’ were fifty-four, and under ‘‘Profit andLoss’’ were twenty-one. Each term was followedby an English translation, a Chinese definitionand an explanation of usage (see ‘‘Appendix’’ forthe English translations). This list of one hundred

and thirty-three terms was obviously much shorterthan western equivalents, such as the Special Com-mittee on Accounting Terminology of the AIA in1922.18 A comparison between the two lists showsmany similarities, but also certain differences.

Certain Chinese terms were defined andexplained correctly in Chinese, but were pairedwith English terms that were not normally thenin use in the United States. For example, one findsthe term ‘‘Furniture and Fixtures’’ under ‘‘Profitand Loss’’ (YKKM, 1924, p. 49). What this really

meant was depreciation expenses of fixed assets asstated in its Chinese definition, but was incorrectlyexpressed in English. Similarly, ‘‘PreliminaryExpenses Written Off’’ under the same categoryreally meant amortization expenses of organiza-tional cost and was defined as such in Chinese,

but the English translation was unclear (Dong,2000, p. 50). As it turned out, the linguistic compe-tence in English of the uniform terminology pro-

moters, assumed by themselves and the public,was rather limited, but enough to trump thosewho knew no foreign languages.

In addition, certain classifications of accountswere different between the BACT and prevailingpractices in the West. Take the treatment of landdepreciation for example. Under the BACT classi-fication, land and buildings were combined toform one asset account ‘‘Land and Buildings.’’At the same time, the liability account ‘‘Landand Building Sinking Fund’’ was obviously usedfor depreciation of both land and buildings. But

in the United States at least, land was subject toneither depreciation nor appreciation whereasbuildings were depreciated. Some conservativeaccounting policies in the West did not even takeinto consideration appreciation in land value(Bliss, 1924, p. 296). Consequently, the separationof the two items seemed to be essential in westernaccounting practices to reflect the book value of assets (Bennett, 1922, p. 376). The Chinese term-coiners did not conceive the issue in the samefashion.

Many accounting terms used in the West weremissing in the BACT. For example, among theterms issued by the Special Committee onAccounting Terminology of the AIA was ‘‘Intan-gible Assets.’’ This was defined as ‘‘patents, copy-rights, secret processes and formulae, goodwill,trade-marks, trade-brands, franchises and otherlike property’’ (Terminology Department, 1923b,p. 466). Yet, the term was nowhere to be foundin the BACT. The absence of the term was proba-bly due to the nature of bank accounting. A bank,

unlike a manufacturing firm or a retail company,usually did not possess those intangibles listed inthe definition. At the same time, it would seem thatas Chinese accounting terminology moved fromcruder categories toward finer classifications withclearer definitions, the terminology was classifiedin broader categories than its Western counterpartin some areas, and narrower in others. An exampleof the latter case was the term ‘‘Surplus Undi-vided,’’ which was usually not a separate classifica-tion in American accounting. These comparisons

18 The Special Committee compiled over 5000 terms to bedefined in 1922 and the number eventually reached about 7000(Preinreich, 1933, p. 113; Terminology Department, 1922a, p.468).


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illustrate that Chinese bankers and accountantswere learning western style accounting classifica-tions and terminologies and establishing Chinese

counterparts accordingly, but that the processwas problematical.Some problems in the BACT stemmed from the

circumstances under which China found herself inthe 1920s. For one thing, there were many differentChinese currencies—various paper notes printedand coins minted by a number of regional author-ities and foreign and Chinese banks. In Shanghaialone no fewer than six kinds of silver coins werein circulation and ten banks issued their own papernotes (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 lightweight copper evil’’ (NCH, July 1, 1922, p. 7).The Shanghai Bankers Association and the succes-sive committees under the FBA working on theBACT failed to take this fact into account beforethe document was issued.

In September 1925, Li Dingmo, a contributorto the Bankers Weekly, pointed out the confusionamong the definitions of three terms in the docu-

ment (YZ, September 15, 1925, pp. 25–29). Undercategory ‘‘Liabilities,’’ No. 52 was the term‘‘Exchange,’’ and under the category ‘‘Assets,’’Nos. 28 and 29 were ‘‘Foreign Coins’’ and ‘‘Mis-cellaneous Coins’’ (see ‘‘Appendix’’). Actually,‘‘foreign coins’’ meant foreign currencies either incoins or paper notes, and ‘‘miscellaneous coins’’meant various Chinese currencies in circulationeither 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 receiv-ing with one currency for another are calledexchange. Surplus in this classification, whenreceiving, should be listed as assets and, when pay-ing, should be listed as liabilities’’ (Dong, 2000, p.21). The usage of the term read that ‘‘when variouscurrencies are exchanged, whether cashing ortransferring, the payment and the receipt shouldbe dealt with under this classification’’ (YKKM,1924, p. 21). At the same time, ‘‘foreign coins [cur-

rencies]’’ was defined as ‘‘foreign currencies thatbanks buy,’’ but the definition of ‘‘various coins[currencies]’’ read that ‘‘various domestic curren-

cies besides the main currency that banks buy arecalled miscellaneous currencies’’ (YKKM, 1924,p. 34).

As Li pointed out, both the definition of theterm ‘‘exchange’’ and the explanation of its usagefailed to indicate whether ‘‘paying or receivingwith one currency for another’’ and ‘‘various cur-rencies’’ referred to exchange between Chineseand foreign currencies or between foreign curren-cies or between various Chinese currencies. Li pro-posed to use ‘‘exchange of main nationalcurrency’’ instead of ‘‘exchange,’’ and ‘‘domestic

secondary currencies’’ instead of ‘‘miscellaneouscurrencies,’’ as standard terms. The definition of the former should state that exchange of mainnational currency for various foreign or domesticcurrencies would be called ‘‘exchange of mainnational currency.’’ The definition of the lattershould state that various domestic currencies otherthan main national currency would be called‘‘domestic secondary currencies’’ (YZ, September15, 1925, p. 29). Li further noted that although auniform accounting system beyond a uniform ter-

minology had been suggested, it was not certainwhen such a system would come into being; butthe correction of those ill-defined terms could beeasily done (YZ, September 15, 1925, p. 28). It isnot clear from available sources whether theFBA took notice of and acted on the issue Liraised.

As the problems identified above suggest, Chi-nese modern bankers were dealing with a complexfinancial situation because of a combination of China’s long history as a commercially developed

pre-industrial society and her contemporary condi-tion as a semi-colonial country with a weak centralgovernment in the early 1920s. The field of Chinesebanking and its structure was framed by this his-torical juncture, and the initiatives to standardizea bank accounting terminology by modern bank-ers took place in that context.

The publication of the BACT was the first stepin establishing some uniformity in accountingpractices and it did not immediately end the incon-sistency in bank accounting terminology. One


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ongoing issue was whether all modern bankswould actually use the terms provided by theBACT. When the BACT was finalized in April

1924, the FBA called on all modern banks—mem-bers of bankers associations in different cities—touse the adopted BACT, starting July 1, 1924.Yet, a study conducted in April 1925 found thatnot all banks were using the same terms in theirfinancial statements. For ‘‘authorized capital,’’four variations were used—‘‘capital stock,’’ ‘‘capi-tal fund,’’ ‘‘legal capital fund,’’ and ‘‘authorizedcapital stock.’’ For ‘‘legal reserve,’’ two terms wereused—‘‘reserve’’ and ‘‘surplus accumulated.’’ For‘‘call loans secured,’’ six other different terms wereused (YZ, April 21, 1925, pp. 9–11). The situation

is hardly surprising, since the BACT introducedmany terms that accounting staff in most bankswere unfamiliar with. Besides, the often-cited Chi-nese conservatism (e.g., YZ, October 9, 1923, pp.28) may also explain the slow pace at which theBACT was adopted by all banks.19

How did foreign banks, as players in the fieldof Chinese banking, react to the initiative launchedby Chinese modern banks? No primary andsecondary sources available to this study indicateany involvement of foreign banks in the matter.

It may be assumed that foreign banks wereaware of the initiative, but did not treat it asan issue important enough to respond to. At atechnical level, a Chinese bank accounting classifi-cation and terminology harmonized under Englishterms would probably facilitate the businessdealings between foreign banks and Chinese banks,

which would be a positive development from theperspective of foreign banks. If the developmentwould also enhance Chinese banks’ competitive-

ness, there was little foreign banks could do aboutit.As far as modern bankers were concerned,

however, the biggest issue was to have nativebanks, where traditional Chinese bookkeepingmethods continued to prevail, adopt the uniformaccounting classification and terminology andindeed western-style accounting methods gener-ally. If it was difficult for accounting personnelin modern banks to get used to the uniformaccounting terminology, the inertia in switchingto western accounting methods and the new

accounting terminology in native banks was sub-stantial. But the issue of whether to make theswitch had much more at stake than inconve-nience for native bankers. Given their differenthabitus and positions in the field, native bankershad reason to be wary of the demands for themto change their practices. First of all, since nativebanks were family-invested and managed propri-etorships with unlimited liability, their ownersobjected to the idea of transparency about theirfinancial conditions—such matters were tradition-

ally and understandably regarded as familysecrets. They were not prepared to change theirtraditional business practices and open theiraccount books to the public just for the sake of being ‘‘modern.’’ Moreover, the issue involvedsurrendering native bankers’ cultural capital.With the adoption of western-style accountingmethods and the uniform bank accounting termi-nology, native bankers’ competence in traditionalaccounting methods and related terminologybased on the classical Chinese language would

devalue drastically, if not entirely.Besides those concerns on the part of nativebankers, which were not openly articulated in thepublic discourse, there was also a question of whether it was practically beneficial to adopt wes-tern-style accounting methods, which did arise inthe public discourse. An article published in 1922in the Native Bankers Monthly argued that toimprove and reform native bookkeeping did notnecessarily mean switching to western styleaccounting. The a

Documents

Social Actors, Cultural Capital, And the State the Standardization of Bank Accounting Classification and Terminology in Early Twentieth Century China 2008 Accounting, Organizations