The Banks of Pingyao

A few weeks ago, I wrote a story about my time in the quaint Chinese city Pingyao. This week, The New York Times did a feature on Pingyao, the collapse of its ancient banking system, and any relevance those banks' collapse have on today's crisis.

From The New York Times:

PINGYAO, China: It was a time of new wealth, a gilded age in which entire families came into fortunes overnight.

To move the money, businessmen here in this city in northern China opened banks, the first in the nation's history. Soon branches sprang up across the country, and they began making loans. Money flowed this way and that.

Then, as quickly as it started, the entire system crumbled. The banks shut down and the city fell into ruin.

So went the history of China's first banking capital, which bloomed here in dusty Shanxi Province in the mid-19th century, during the Qing dynasty. With the global economy now reeling from the banking crisis that began in the United States, and as the explosive economic growth of China begins to slow, the rise and fall of Pingyao could be read by some as a cautionary tale.

But the present-day financial crisis has reinforced the sense of nostalgia surrounding Pingyao, which with its 33-feet-tall Ming dynasty walls is one of the best-preserved medieval towns in the country.

"The banks tell a history of Chinese financial development, like how China started to transform from feudalism to capitalism," said Ruan Yisan, a retired professor from the architecture department of Tongji University in Shanghai who has been instrumental in the restoration of Pingyao.

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China's old banks sound pretty insane. Housing opium dens, prostitutes, and ma jiang parlors, they must've been pretty happening places.

Unlike today's banks though, it doesn't sound as though Pingyao's fell due to egregious business practices. Instead the chaos that ensued after the end of the Ming Dynasty was responsible for the city's collapse and subsequent falling off of the map.

Pingyao's had a reawakening in the form of tourism over the past few years though. The city now is a mini-tourist theme park with western restaurants, cafes, boutiques, and expensive guesthouses lining its streets. It's spot on the the backpacker trail is well established. Residents of the place have certainly gained many new fortunes.

But the people of Pingyao have been in this situation before.

The saying known around Pingyao that the author put at the end of the article is pretty haunting:

"Wealth does not last for more than three generations."

As leisure tourism cools down during the financial crisis, it's certainly possible that the people of Pingyao will once again have to get reacquainted with this idea of losing their wealth.