Yutaihou Draft Bank Museum

Yutaihou Draft Bank Museum

Pingyao is the birthplace of Shanxi merchants' culture. The draft bank culture embodies the essence of Shanxi merchants' culture and elevated it to a higher level and status. Understanding modern Chinese history or studying modern Chinese economic history without knowledge of Shanxi draft bank culture would be a major omission. It would also be a shortcoming in building a socialist market economy with Chinese characteristics. It is no exaggeration to say that the draft banks created by the people of Pingyao and their related culture are an important part of world cultural heritage and an inexhaustible treasure trove of outstanding traditional culture.

Pingyao's draft banks provide a multifaceted, multilevel, and multidimensional portrayal of China's socioeconomic and political landscape during the late Qing Dynasty and early Republican period. If Rishengchang, the first draft bank, set an example with innovation and management, and Xietongqing emphasized respecting talent and knowledge, each writing their own glorious history, then the Yutaihou Draft Bank Museum aims to convey this message: the key to success lies in three elements—strategy, management, and talent. It was precisely because the Yutaihou financiers adhered to these three elements that they also wrote a century of glory and history.

1. The Yutaihou Draft Bank was the second-largest draft bank in China after Rishengchang. It was established in the sixth year of the Daoguang reign during the Qing Dynasty (1826). The financier was from the Hou family of Beijia, Jiexiu. The founding general manager was Mao Hong, a vigorous and capable leader. The head office was located just a wall away from Rishengchang. Under the leadership of the financier and Manager Mao, four other merchant firms—Yufenghou, Yushengchang, Tianchengheng, and Xintaihou—were reorganized and operated as draft banks. For a time, Pingyao saw the grand debut of the so-called "Five YU Banks," breaking Rishengchang's monopoly. This led to fierce competition between the two major draft bank factions. From then on, China's draft bank industry rapidly expanded from Pingyao to Qixian and Taigu, and from Shanxi to the rest of the country.

2. Among the development of various draft banks, the history of Yutaihou and the other Five YU Banks is worth in-depth understanding and study. Based on extensive historical research, we believe the success of the YU Banks first lies in their strategic success. The strategies of the YU Banks focused on the following four aspects:

— Adopting a coalition strategy, the Five YU Banks made their joint debut

— Upholding a self-strengthening strategy, the Five YU Banks solidified their foundations

— Pursuing an expansion strategy, the Five YU Banks achieved great ambitions

— Mastering the art of adaptability, the Five YU Banks developed through indirect routes

3. Let’s first look at how the Five YU Banks adopted the coalition strategy to make their joint debut.

The birth of Rishengchang undoubtedly provided significant inspiration to the Hou financiers of Jiexiu and other financiers. A single shop specializing in deposits, loans, and remittances across regions could thrive and generate substantial profits. In terms of capital, I am no less than the Li financiers of Dapu, and in capability, I am not inferior to them either. If they can do it, why shouldn’t I? Of course, that’s one aspect. The more important point is that Mao Hong, having worked at Rishengchang before joining Yutaihou, knew every detail of its establishment and operations intimately. As the creator of the draft bank concept, Mao Hong did not believe he couldn’t run a draft bank or that he was any worse than Lei Lütai. Therefore, it was a meeting of minds between the financier and the manager to establish a draft bank.

The problem was that wishes couldn’t replace reality. When the Hou financier and Manager Mao decided to establish a draft bank, they realized it wouldn’t be easy. Although the Hou family owned numerous shops, none could rival the predecessor of Rishengchang, Xiyucheng. As you may know, before becoming a draft bank, Xiyucheng, a paint shop, was already a major national business with branches in Beijing, Tianjin, Hankou, Chengdu, and other places, concentrating capital and possessing rich experience in circulation and settlements. Unfortunately, among the Hou family’s over 200 businesses, none were like that. Moreover, the Hou family’s capital, though substantial, was spread across multiple industries. Additionally, there was a lack of talent, and running a draft bank was no simple task.

Hard work pays off.

After careful consideration, the Hou financier and Manager Mao, drawing inspiration from the coalition strategy proposed by Su Qin during the Spring and Autumn and Warring States periods, resolved to establish several draft banks and form a broad alliance to compete with Rishengchang and capture the remittance market.

Undoubtedly, the reference to and application of the coalition strategy in Chinese history by Yutaihou and its affiliated banks was highly successful. It also tells us that after China’s accession to the WTO, facing foreign commercial, financial, and scientific giants, our existing industries must also engage in necessary alliances and collaborations. Only in this way can we remain invincible in fierce competition.

4. The development of the Five YU Banks successfully implemented a self-strengthening strategy.

Under the leadership of Manager Mao, the Five YU Banks started from the ground up, laying solid foundations and developing themselves. For example, they established methods to protect capital and ensure sustainability, gradually expanding their capital base. They pooled protective funds for partners who held human-capital shares, ensuring shared benefits for the entire management team, which maximized motivation and unity. They treated customers sincerely, much like treating them as gods today, balancing the interests and resolving conflicts between both parties. Additionally, they allowed cross-shareholding among the Five YU Banks to seek integrated development. From the ledgers and dividend records of Yutaihou, Tianchengheng, and Yufenghou, evidence of such shareholding can be found. All these measures played a significant role in the management and competition among the Five YU Banks.

5. Another important strategy of the Five YU Banks was the expansion strategy, which included the expansion of capital, geographic reach, and business scope.

At the beginning of the Five YU Banks’ establishment, although they were known as five draft banks, their actual capital totaled only about 300,000 taels, on par with Rishengchang. By the mid-period, it increased to 650,000 taels, twice that of Rishengchang, and by the later period, it reached nearly 1.4 million taels, four times that of Rishengchang.

The proactive expansion of capital created a solid material foundation for the development of the Five YU Banks.

In terms of geographic expansion, the Five YU Banks competed with Rishengchang using various strategies. In major cities such as Beijing, Tianjin, Shanghai, Hankou, and Chengdu, the Five YU Banks established branches, competing with Rishengchang at a 5:1 ratio. In remote cities in the northeast, southeast, northwest, and southwest, the Five YU Banks added 33 new branch locations, maintaining an absolute advantage.

In terms of business scope, the Five YU Banks actively expanded their operations, from the general services of draft banks—such as donations, commercial trade, and remittances—to tax payments, military salaries, coordinated funding, and remittance settlements. They participated in all areas within the scope of draft bank operations.

Expansion is a powerful driver of development and market adaptation. In our socialist market economy, we must not overlook the necessity of necessary expansion when conditions are ripe.

6. Among the Five YU Banks’ development strategies, skillfully handling various relationships, adapting flexibly, and seeking opportunities for development were crucial.

After their establishment, the Five YU Banks faced various internal and external contradictions, such as the relationship between self-development and public welfare, the financier-manager relationship, inter-bank relationships, and the strategy of pursuing what others abandon and abandoning what others pursue. They adopted proactive and prudent policies to properly handle these relationships, quickly gaining greater room for development.

From the financiers to the general managers, they actively participated in social welfare activities, significantly enhancing the visibility and social influence of the Five YU Banks. During the Xianfeng era, amid social unrest and financial strain, the Five YU Banks, from financiers to branch managers, donated generously. In the third year of the Guangxu reign, during a severe drought in Shanxi, the Five YU Banks donated silver, grain, and relief supplies. Soon after, figures like Fan Ningjin and Fan Youzhi became leading figures in Pingyao’s business community. The Five YU Banks’ efforts in public welfare quickly translated into enhanced social status and increased business.

From the successful implementation of these four major strategies by the Five YU Banks, it is clear that for a business to establish itself in society—or remain invincible—while many factors are involved, the most important is having a complete and scientific strategic mindset. With the right strategy, a business can grow from weak to strong, from small to large. Otherwise, it will achieve nothing.

7. Ladies and gentlemen, after our brief introduction to the front courtyard, we will now enter the second courtyard through this street gate. This street gate, a common and customary architectural feature in ancient Pingyao residences and shops, does not have particularly outstanding features. What I’d like to tell you is that the courtyard gates in Pingyao come in two types: four-pillar and six-pillar. The four-pillar type adds two pillars inward or outward, while the six-pillar type adds two pillars both inward and outward. The number of pillars only affects the grandeur, nothing more. Above the pillars, the horizontal plaques often bear auspicious phrases in various calligraphic styles. Here, the outer plaque reads “Refining Metals and Ceramics,” while the inner one reads “Testing One’s Strategy.” The former reflects the intention to cultivate talent, while the latter shows the ambition to compete with the best in the world. Well, we have now arrived at the second courtyard of the former Yutaihou site.

8. Ticket shops made business operations their core activity. The Five United Shops adopted various approaches in management, including innovative, conventional, and flexible strategies, achieving remarkable success in their business performance.

First, let’s look at innovative management: Innovation is the lifeblood of a business and the prerequisite and guarantee for its development. From the moment they entered the remittance market, the Five United Shops placed great emphasis on innovative management.

In the past, Rishengchang only offered two methods for remittances across regions: direct (shunhui) and reverse (nihui). Mao Hong, leading the Five United Shops, pioneered the reverse-remittance method, combining outbound loans with remittance services, creating better conditions for clients and greatly facilitating their needs. This attracted a surge of customers, and business flourished day by day.

For clients with uncertain creditworthiness, the Five United Shops were the first to adopt the mortgage loan approach, minimizing financial risks as much as possible. As is well known, financial risk has been the biggest challenge for ticket shops since their predecessors—the early banks. Various ticket shops implemented a series of preventive measures, and the Five United Shops became one of the most successful groups in mitigating financial risks. At the same time, they were also the first to adopt telegraphic transfers, using methods such as fee discounts for extended periods and period discounts for fees. They promoted foreign language learning, and a series of innovative approaches led to the continuous growth of their business.

9. Conventional business remained a major part of the Five United Shops’ operations. In attracting deposits, they catered to both large and small clients, handling both major accounts and retail deposits, resulting in a capital adequacy ratio higher than that of most other ticket shops.

When issuing loans, they prioritized sectors such as tea, silk, textiles, foreign goods, while also actively lending to businesses dealing with grain, oil, and leather goods. Although regular low-risk loans might impact profits, the stability of returns was an undeniable fact.

In terms of remittances, besides pursuing volume, they emphasized “careful calculation,” avoiding blind remittance activities. The shrewd Weitaihou and the people of the Five United Shops focused on long-term benefits in every aspect, thus becoming a formidable force in the national ticket shop industry that commanded respect. On the partition screen in this room, three rare and precious calligraphic works are preserved. Two of these were written by Liu Chunlin, the top imperial scholar of the last Qing dynasty examination. One is a regulated verse of 56 characters, and the other is a lyric poem of 110 characters. These were created around the summer-autumn transition of the second year of the Xuantong era. The regulated verse reflects on the autumn scenery and laments the brevity of life, while the lyric poem describes the scenery of southern China and mourns the priceless beauty of spring. These can be considered deeply emotional works by Liu Chunlin.

It’s worth mentioning how the calligraphy of the newly crowned top scholar ended up at the former site of the Weitaihou ticket shop. Legend has it that Yang Songling, then the manager of the Beijing branch, had a close personal relationship with Liu Chunlin. Before returning to the shop from Beijing, he obtained these two treasures and placed them on the partition screen of Weitaihou. Though there are no extraordinary tales here, the fact that an ordinary merchant shop in Pingyao could preserve such calligraphy is indeed thought-provoking.

10. The Five United Shops’ adherence to flexible management in their operations is in line with their strategic thinking. Here, flexible management can be understood as adaptable business practices.

The Five United Shops took a big-picture approach while also focusing on the details, adopting unique methods. For example, strategies now familiar to us, such as fee reductions and promotional sales, were common business tactics used by the Five United Shops over 100 years ago. They believed in “having a foundation being better than having none,” staying active and diligent, and handling every business task earnestly. They didn’t seek the highest profits but aimed for steady gains, embodying the orthodox business philosophy of Shanxi merchants.

In terms of networking, the Five United Shops stood out even more within the ticket shop industry. The floating account book of Xintaihou ticket shop serves as a fresh example. Take a closer look—just one individual, Rong Zhongtang Lu, deposited 70,000 taels of silver with the Five United Shops. Of course, the records clearly state that it wasn’t Rong Zhongtang himself but his steward who handled the deposit. Regardless, having such large deposits benefited the shop’s capital flow and disbursement. Moreover, maintaining close relationships with high-ranking Qing officials, such as a first-rank minister, naturally enhanced their social standing.

The Five United Shops had a wide network of influential friends, from Mao Hong of Weitaihou to Wang Zuomei of Weishengchang, Li Hongling of Weifenghou, and colleagues from Tianchengheng and Xintaihou. Each had their own strategies, interacting with figures ranging from nobles and regional governors to county magistrates and provincial governors. They made friends everywhere they went, building connections across the land.

In their operations, the Five United Shops consistently adhered to pragmatism. When old systems were no longer suitable, they adjusted them promptly—a concept called “changing the tune rather than following rigid rules.” This set them apart significantly from other ticket shops. To this day, when people in Pingyao talk about Weitaihou and its Five United Shops, they often associate Mao Hong with Weitaihou, saying that Weitaihou remained unchanged for nearly a century thanks to the guiding spirit of Mao Hong. This, too, is no small feat.

11. In the central hall—also the business hall—of Weitaihou, you’ve gained further insight into the shop’s operations. However, there’s still more to discover about this central hall. It served not only as a place for receiving clients and conducting business discussions but also as a space for direct conversations with major clients. Consequently, the furniture and decorations here were of higher quality. For instance, the high-end furniture made of rosewood and red sandalwood, the mahjong tables prepared for clients, the rosewood inlays, and the floor-standing mirrors—all treasures—reflect the grandeur and influence of the ticket shop at the time, leaving visitors lingering in admiration.

12. Upon leaving the central hall and looking back at its plaques and roof couplets: “Presenting Virtuous Scholars”

“Long Sleeves Dance Well, Trade Thrives by Following Principles”

“Roaming the Vast Seas, Trade Endures with Virtue”

We can easily discern a unique spiritual realm of the Weitaihou people. That is, valuing people as the foundation—talent being the top priority. No treasure is more precious than people. With the right people, success can be achieved in trade or any endeavor.

13. Passing through the backyard leads to what used to be the kitchen and kitchen staff quarters in traditional residences or old shops.

The plaques and roof couplets in the east wing courtyard are also worth appreciating. Legend has it that this couplet was spontaneously composed by Mao Hong and written down by a colleague. The plaque reads:

“A Grand Sight”

“Even Children in Shanxi Know the Sun”

“The Mountain Exists, Yet Confucius Never Claimed to Be a Teacher”

Here, “Grand Sight” refers to the courtesy name of Hou Xingyu, the patriarch of the Hou family of financiers. The couplet is based on an anecdote. It is said that Confucius once traveled to Shanxi to teach but never actually reached the region. On one occasion, he encountered two children arguing about “when the sun is bigger.” Each child presented their own reasoning. The great scholar Confucius was momentarily speechless and turned to leave without teaching in Shanxi. However, some say the couplet also reflects Mao Hong’s disdain for the “Rishengchang” ticket shop, which was filled with references to the sun. Even children know things that don’t warrant special attention. No wonder Mao Hong later went on to establish five major ticket shops in a grand entrepreneurial move.

14. Now, moving forward, you’ll reach the three-courtyard layout typical of traditional Pingyao residences or old shops—commonly referred to as the living quarters. The spacious main room, or cave dwelling, naturally served as the residence of the household head. Thus, the eastern main room was always the office and living quarters of the general manager of Weitaihou. The interior is roughly arranged as it originally was. Some items have been lost to the public and couldn’t be recovered, so some adjustments had to be made. The western side of the main room displays numerous physical materials, offering a comprehensive introduction to the lineage of the Hou family and the story of Manager Mao.

Hou, the financier, was a renowned wealthy merchant celebrated across Shanxi and a distinguished financial investor who innovated and propelled the development of China’s ticket shop industry.

The Hou family’s rise began with Hou Xingyu. His son, Hou Peiyu, started making significant investments in establishing ticket shops. The family reached its peak during the generation of Yinchang but gradually declined afterward.

The success of the Hou family can be attributed to:

1. Assessing the situation wisely and continuously innovating;

2. Transitioning from agriculture to commerce, implementing parallel development in business and finance;

3. Appoint the virtuous and capable, and gather talents far and wide;

4. Integrity as the foundation, and profit through righteousness.

As the founder of the Wulianhao group, Mao Hong initially served as general manager, later invested in money shops, becoming both a shareholder and manager. The business continued through his descendants to his grandson’s generation, who independently operated the “Yongtaiqing” and “Yongtaiyu” money shops. He was an exceptional management and business talent, as well as a shrewd financial investor. His success had many reasons, but the most important was his “ingenious strategy and wisdom,” along with keen calculation and superior intellect. For historical evaluations of him, please see the epitaph preserved in this museum.

It is also necessary to introduce to everyone that in this exhibition room, the epitaph of Li Jianshi, the financial backer of Rishengchang, is specially displayed. Interestingly, the two major financial backers of competing money shops—Hou and Li—were not only business rivals but also related by marriage through their children. Similarly, the Mao and Li families were connected by marriage. People often vividly recount how Mao Hong left Rishengchang, but in reality, things were not quite as dramatic as described. Those wishing to understand more deeply are encouraged to delve further into relevant historical materials.

15. As the former site of the third courtyard of Weitaihou Money Shop, this museum focuses on introducing the financial backers and general managers of Weitaihou, while also showcasing ten outstanding figures from Weitaihou and its five allied money shops in the east and west guest rooms. They are Fan Ningjin, Zhou Chengye, Wang Zuomei, Fan Youzhi, Hou Wubin, Xing Guofan, Mao Honghan, Zhang Shilin, Li Hongling, and Hao Deng’ao.

It was precisely because Weitaihou and its five allied money shops gathered such a large number of outstanding talents that the four major strategies could be realized. It was thanks to these talents that the business developed unique characteristics and thrived. And it was because of these talents that Weitaihou and its five allied money shops maintained their dominant position in the money shop industry for nearly a century. Li Hongling, as one of the outstanding representatives of the talents of the five allied money shops, demonstrated foresight and successively served as manager in the branch offices in the three major cities of Beijing, Shanghai, and Hankou. During his tenure, he repeatedly proposed reform ideas for the prosperity and development of the money shops. Although these suggestions were not adopted by the shop owners, they were understood and embraced by the broader community of money shop employees, creating a social impact far beyond the confines of the money shops themselves. It can be affirmed that these ideas still hold significant social and historical value, as well as practical relevance today.

Weitaihou succeeded, and its experiences and lessons have been left behind as a valuable cultural heritage. Let us learn from history, revive our strength, and make our endeavors even better, achieving greater accomplishments that do justice to those who came before us.

“Ingenious Strategy and Wisdom”

“Forming Alliances to Challenge the Feudal Lords, Climbing the Ladder to Success”

“Uniting Vertically to Restrain the Qin State, Surpassing the Wind with Foresight”

A grand scene reminiscent of the Seven Warring States vying for supremacy during the Spring and Autumn and Warring States periods, and over a century of money shops competing across China—how strikingly similar history can be. Yet, as long as their wisdom and strategies align with the tide of history, they will forever remain invincible.

Address: South side of West Street, inside Pingyao Ancient City

Type: Museum

Recommended visiting time: About 1 hour

Phone: 0354-5687926

Opening hours:

The ancient city is open all day. The attraction’s opening hours are typically: Monday–Sunday, peak season (March 1 – November 30) 8:00–18:30; off-season (December 1 – end of February next year) 8:00–17:30

Ticket information:

No separate ticket required. Included in the Pingyao Ancient City admission ticket.