Fudian Bank

Historical Evolution of Century-old Fudian Bank

Yunnan Fudian Bank (1912-1932)

Yunnan Fudian Bank was established on February 9, 1912 (the first year of the Republic of China). It is the newly established currency issuing bank and financial management institution of the Yunnan military government after the success of the Chongjiu Uprising in Yunnan. The capital was 1 million yuan, disbursed by the Financial Division of the local government at that time. Headquartered at the west entrance of Weiyuan Street in Kunming, it had 79 employees. Huang Fengxiang, former head of Yunnan Public Money Bureau, was the first general manager and Xie Yongjia was the assistant manager. The bank has positions and departments such as chief auditor, account manager, chief bookkeeper, bank room, box office and bank counter management. The bank has more than 50 branches, offices and exchange offices in Gejiu, Simao, Zhaotong, Tengchong, Shimonoseki, Hong Kong, Shanghai and Guiyang. 

The business of Yunnan Fudian Bank includes currency issuance, deposit business and exchange business, of which currency issuance is the main business of Fudian Bank. The Yunnan military government, which was established after the Chongjiu Uprising, took over the mint. After the establishment of Fudian Bank, it supervised the production of silver coins and was responsible for the exchange of silver coins and paper currency. After the silver coins were put on the market, the silver gradually disappeared in the Yunnan market. At the same time, due to the good reputation of Fudian Bank at that time and its smooth exchange business, Yunnan became the region in China that completed that situation that "China's monetary system began to scrap silver coins and switch to silver dollars" earlier. Under the privilege granted by the local government to issue paper currency, Fudian Bank began to issue paper currency in February 1912. The good performance of Fudian Bank harmed the interests and ambitions of the French colonial bank-Crédit Agricole Corporate and Investment Bank at that time. Crédit Agricole Corporate and Investment Bank used its capital advantage to operate Yunnan's financial market and hype Yunnan currency. In addition, the domestic political situation was turbulent and civil wars occurred frequently. Yunnan local government frequently borrowed money from Fudian Bank for combat readiness, resulting in serious inflation in Yunnan. At that time, Fudian Bank's business was mainly focused on currency issuance, while other businesses were not well carried out and its ability to resist shocks was weak. Under the heavy pressure of the financial crisis, Fudian Bank finally closed down in June 1932. 

Yunnan Fudian New Bank (1932-1950)

Fudian New Bank was established on July 1, 1932 and was officially opened on September 1. Li Peiyan was the first president of Fudian New Bank. Successive presidents are Li Peiyan, Miao Jiaming, Zhang Zhibao and Xu Shengzu. In the beginning, there were 50 employees, and then the number increased to 247. The internal organization included three departments, namely, business, treasury and accounting. Under the departments, there were also institutions such as deposit, loan, exchange, cashier, treasury, filing and accounting. It was a quasi-modern bank with relatively advanced concepts in China at that time. 

Like Fudian Bank, Fudian New Bank was directly under the jurisdiction of the provincial government and performed the functions of provincial banks. The failure of Fudian Bank was due to the government's excessive debts. In 1934, Fudian New Bank proposed the "Three-point Law" to Long Yun, Chairman of Yunnan Province, and Lu Han, who was in charge of finance: "(I) Fudian New Bank will not act as an agent for the provincial treasury; (II) The provincial government will not borrow money from Fudian New Bank; (III) Long Yun and Lu Han will not open accounts in Fudian New Bank". This innovative method has drawn a clear line between banking, finance and government, and has better solved the problem of mutual interference between finance and banking that has plagued China's modern finance for nearly a century. 

After 1934, Fudian New Bank took back the right to deposit and remit national tax funds such as customs, postal services and salt services from Crédit Agricole Corporate and Investment Bank. From July 1934, Fudian New Bank began to handle the "documentary remittance" of large tin exports from Gejiu Tin Merchants. It worked hard and finally returned to the top position in Yunnan finance. At the beginning of 1935, Fudian New Bank completed the restructuring of the new Yunnan currency, which became the earliest modern credit currency in China earlier than the "legal currency" of Nanjing National Government. At the same time, Fudian New Bank provided unrestricted exchange between new Yunnan currency and pounds. The restructuring of new Yunnan currency finally freed Yunnan's financial system from the shackles of silver and showed strong vitality. Since then, the well-funded Fudian New Bank had started to invest in industrial and mining enterprises. By the time it closed down in 1950, Fudian New Bank had directly invested or participated in 55 enterprises, thus gradually changing Yunnan's single and crude industrial appearance before the war. In addition to its investment in industrial and mining undertakings, Fudian New Bank had also launched loans to rural undertakings. 

After the peaceful liberation of Yunnan, on March 8, 1950, Fudian New Bank was taken over by the People's Bank of China, thus ending Fudian New Bank.