Over the past two generations a fundamental change has taken place in the scholarly understanding of the commercial world of late imperial China. Lasting from the Song (960–1279) to the end of the Qing dynasty (1644–1911), this millennium of Chinese history had long been judged a period of decline, its initial economic breakthroughs never fulfilling their promise. The commercial and technological innovations of the eleventh and twelfth centuries were thought to have given way to economic stagnation and cultural conservatism, as the enterprising peasantry and merchants of south China lost out to the prerogatives of Confucian scholar-officials and their state-sponsored culture in the Ming (1368–1644) and Qing dynasties. Tested by a highly competitive examination regime and thereafter sheltered by a host of privileges, these scholar-officials acquired and retained an unrivalled hegemony that was cultural, political, and, some would add, economic. When China suffered a severe economic downturn during the nineteenth and twentieth centuries, the once-admired stability of the Qing regime was criticized for its backwardness, and the late imperial economy of these scholar-officials’ rule was condemned for its stagnation.

Chapter 4 develops the analysis of Chapter 3 by exploring how some wealthy Huizhou merchants carved out a dangerous approach to dealing with the government’s salt monopoly. Ingeniously adapting a strategy similar to that tried with their ancestral halls, they sought to place themselves inside an authorized institution of the state, the salt monopoly, and then turned the humble salt certificate into a financial instrument to their great advantage. By tricking the court’s incompetent representatives, Huizhou salt merchants were able not just to create great fortunes at government expense, but also from 1617 turn the government’s massive debt to them into a set of highly lucrative hereditary salt monopoly appointments for them and their sons. This chapter also deals with the private, secular variants of pawnshops that Huizhou merchants increasingly set up in the much of east China and the Yangzi Valley from the sixteenth century onward. It describes a reduction of the reported interest rate, both for individuals and for merchants, over the course of the dynasty, from 50 percent down to 20 percent, as more and more ordinary people relied on short-term infusions of capital for their living needs.