The Inner Source Of The Decline Of Shanxi Draft Bank

Shanxi Draft Bank is the third developing climax of Shanxi merchants followingsalt and tea industries. After Lei Lvtai and his ho st Li Daquan opening the first ShanxiDraft Bank Ri Sheng Chang, Shanxi Draft Banks mushroomed in the middle area ofShanxi Province, and spread to the whole country. They were once as many as25, withbranch Banks in95cities among China. It was regarded as the countryside grandfatherof the modern bank. But with the three failures of bank reorganization in the late Qingand early Ming Dynasty, Shanxi Draft Banks gradually went bankrupt or downsized tobanking firms or account departments, and finally reached the end of its life and quit thehistoric stage.The thesis, mainly focusing on the trust of Shanxi Draft Bank, taking historic factsas basis while assisted by theoretical study and comprehensive analysis method,constructs a theory of trust network to generalize the function of Shanxi Draft Bank andthe construction of the trust relationship within them, and finally concludes that thebreakage of the trust network is the inner source of the decline of Shanxi Draft Bank.The construction of the trust network didn’t accomplish in an action. The constructionof the relationship within the shops followed an order. It was constructed step by stepwith the establish of the relationship within the family of the capitalists, betweencapitalists and the shopkeepers, among the Draft bank, the manager and the workers;externally, shops established the trust relationship with their business friends, and thenofficials and the government. The strong trust network promoted the development of theDraft Bank. The branch banks expand rapidly throughout the various commercialcenters and played a vital role as Interchanging the World. Being strategizing, thehost and shopkeeper had the boldness to win at thousands of miles away. But at the endof the Qing Dynasty, because of the war, the oppression of the two mountains, the tradecompetition and partly due to the imbalance of financial function, Shanxi Draft Bankdeclined in a quick speed. We could see that its decline began in the breakage of thetrust relationship among the shops and its friend shops and the government, whichcaused the external breakage of the trust network. Meanwhile, Shanxi Draft Bank didn’tself-amend. Facing the reconstruction of the Banks, all the shop-keepers begin to waitand see with the considerations of gain and loss, and finally they miss the chance. Theinner trust relationship of the draft banks, which is the centre of the trust network, beganto break up, too. The trust relationship among the capitalist family, between capitalists and barkeepers, between banks and managers and workers were damaged to a certaindegree. At this time, the trust network of the Draft Bank was torn in pieces and could nolonger be repaired.In the modern society, the occurrence of the dishonesty incident and confidencecrisis require urgent attention. The establish of the trust network of the Shanxi DraftBank can help us a lot to solve the urgent problems, such as the confidence crisisexisted in the modern society, the construction of the trust network and so on. Thebreakage of the trust network, which caused the decline of Shanxi Draft Bank not onlyhelp us realize the importance of the trust network, but also taught us a lesson that weshould take efforts in different levels to construct and maintain the trust networkestablished in the new era.