Centralizing Broker Registration in the Qing

In the beginning, Qing attempts to make the brokerage licensing system uniform and centralized faced the same problem as their Ming counterparts: state laws could not be directly implemented as long as legitimate taxation was taking place through highly irregular and localized state–broker arrangements.Footnote ¹⁷ The first step toward establishing meaningful control over these local institutions was taken in 1687 when the Kangxi emperor announced an empire-wide system of yahang registration, making local officials directly responsible for monitoring the yahang in their jurisdiction.Footnote ¹⁸ Uniform systems of registration and audit brought the central state back into the picture of broker regulation; Beijing's nominal control over local market agents was made even more substantial in 1733 when the Yongzheng emperor decreed that, henceforth, the central state would supervise the issue of all brokerage licenses.Footnote ¹⁹ With this maneuver, the central bureaucracy removed these market agents from the jurisdiction of the empire's local governments.

The Qing assertion of imperial control over yahang licenses marked the centralization of an empire-wide system for checking the power of local brokers operating throughout the empire. Under these centralizing reforms, the authority of brokers was officially recognized at the same time that it was strictly constrained. The only power given to yahang was the right to collect a “thousandth tax” (lijin 厘金 or 釐金) on each transaction to compensate them for the imperial licensing fee that they submitted annually to the state. The purpose of brokers was to benefit the merchants who sought their services while, at the same time, unobtrusively maintaining the interests of the empire by ensuring obedience to the law in the market. With one move, the empire's diverse local forms of commercial taxation and market regulation were made obsolete. For almost a millennium, control over these offices had been a purely local matter. Under the new framework, yahang became imperially-recognized agents of taxation and market regulation who operated within the economy and beyond the reach of local government.

Drawing a Line between State and Market

The next and final step in the creation of the Qing market system was to target the privilege of yahang. In 1740, the Qianlong emperor declared his intention to bar workers in the empire's yamen from service as licensed brokers.Footnote ²² Any yamen employee found operating a yahang license would be punished with a hundred strokes and three years’ exile, with additional provisions for any crimes or malfeasance committed during the offender's tenure. When the Qing legal code was amended to include this new policy, a punishment of one hundred strokes and expulsion from office under the law on “miscarriage of justice” was further fixed for any officials who allowed or failed to prevent any abuse of the yahang system.Footnote ²³ In 1743, the Qianlong emperor followed up on the Qing policy of separation between official privilege and the yahang system by further prohibiting individuals protected by official titles from taking advantage of the market through yahang offices.Footnote ²⁴

The Dimensions of the Qing Market System

The laws forbidding individuals of special status from obtaining yahang licenses completed the Qing market system, which operated on a distinct set of principles. Goods travelling from one area of the empire for sale in another market would be taxed by the brokers operating in the city of sale, who should be licensed for proper supervision. Producers and sellers of local products were exempt from commercial taxes, and thus were not permitted to own brokerage licenses. The yamen responsible for licensing and overseeing these brokers was expressly forbidden from using yahang for their own procurements or taxation above the statutory rate. Individuals with any connection to the bureaucracy or the wider world of title-holding individuals were legally barred from holding yahang licenses. The line between the administrative power of the local government, the social status and official privileges of literati, and the economic role of yahang was clearly drawn by a Qing administration eager to cordon off market activity from interference by privileged groups.Footnote ²⁵

These divisions between brokered trades and non-brokered trades, markets with brokers and markets without brokers, and individuals qualified or not qualified to operate as licensed brokers were motivated by a concern that this system of taxation might be made into an instrument of monopoly or extortion at the local level. Rather than policing the market directly, the Qing committed itself to policing the behaviors and powers of key caretakers within the market whose duties were linked to highly circumscribed authority. By placing the burden of market operation on market actors and removing the market space entirely from the local administrative framework, the Qing made a strong bid to preserve the sanctity of the market space as a place of unhindered economic exchange by destroying its administrative profile entirely.

Economic Intermediaries in Chongqing's Court and Market

This system did not provide explicit legal guarantees about the execution of contracts and transactions. Rather, it incorporated the complexities of all the empire's markets into a framework of responsibility centered on the concept of economic agency. To prevent undue influence of the local state and its agents in the market, merchants were left to determine which terms were agreeable to transacting parties, while the state remained agnostic and demanded only accountability for a small amount of taxes, obedience to important directives, prevention of crime, and faithfulness to economic arrangements. This emphasis on holding those with the most access to local privileges most responsible for problems in exchange led to distinct institutions of dispute resolution. In what remains of this article, I will provide anecdotal evidence from cases preserved in the magisterial archive of one late imperial trading center – Chongqing – to demonstrate how these principles worked in action.

The city of Chongqing produced very little in the Qing dynasty. It was a rocky peninsula perched at the intersection of two rivers – the Yangzi, which ran east–west and connected China's fertile and forested southwest (where Chongqing was located) to the well-developed east coast, and the Jialing, which connected Chongqing to the many north–south waterways connecting the surrounding region.Footnote ²⁹ The city and its hinterland had been almost completely depopulated over the course of several wars and rebellions in the seventeenth century, but by the eighteenth had already emerged as an important node in long-distance commerce. Merchants from all over the empire ran their ships to Chongqing or established shops for one or two decades to deal in the pelts, medicinal materials, lumber, and valuable forest commodities from the larger southwest. In this city, the long-distance nature of trade and the tumultuous past of the region meant that few people dealing with one another had deep personal connections, in spite of the fact that a great deal rested on the average transaction. The following sections are devoted to sketching out how brokers and courts were used together to solve the serious problems of coordination and trust in Chongqing.

Brokers as Defendants

The commitment of the Qing state to defend merchants who had been taken advantage of by licensed brokers addressed one dimension of risk that was inherent to trans-local trade: the relative security of local merchants compared to ones operating in an unfamiliar market. The state offered a disincentive for cheating by promising detention, legal fees, and court scrutiny of brokers who attempted to profit at the expense of travelling merchants. This commitment to police local market agents was the key to maintaining Qing jurisdictional policies, which mandated that commercial affairs be tried at the local level. This allowed the merchants of the empire to conduct business in urban centers far from their own homes while still possessing some guarantee that, if things went wrong, someone could be held accountable for seeking a resolution on their behalf.

The Ba county archives from Chongqing's court of first instance provide hundreds of examples of brokers brought to court to answer for their own economic behaviors, as well as the actions of the parties that they represented. This evidence is crucial in understanding the nature of dispute resolution for commercial affairs, since – as remarked by several scholars and as noted in the introduction – any of the contract enforcement problems encountered by merchants fell outside of the realm of law.Footnote ³⁰ The most straightforward application of the principles described above that can be found in the Ba county case records are lawsuits in which brokers were sued as defendants. As mentioned above, whenever a broker was suspected of a transgression, it was the right of the wounded party to have him brought before the court, which was bound to pursue the matter and punish any “treacherous broker” (jianya 奸牙) that took advantage of the system.

The 1781 case of Yang Donglai 楊東來 versus Wang Fanglan 王芳蘭 is an example of the classic “treacherous broker” case provided for in Qing law. Yang was a merchant from Shaanxi who came to sell a large shipment of ginger in Chongqing. Yang submitted his ginger to the brokerage owned by Wang Fanglan for storage and sale, but later accused Wang of plotting to embezzle the entire amount of money gained from the sale of the ginger, thus “cheating me, a lonely stranger from afar (qiyi yigu 欺蟻異孤)” and “taking me for a weak and tasty morsel to snack on.”Footnote ³¹ In his suit, Yang argued that Wang had taken advantage of his difficult position as a stranger in the rough and wild commercial center of Chongqing and had left him in an untenable position: “trapped, and unable to return home (xianyi bude huiji 陷蟻不得回籍).” The magistrate permitted the case and issued a summons for the involved parties, but the case was settled before a trial was ever held.

The magistrate's swift and unquestioning approval was the expected reaction, given the responsibility of local officials to oversee licensed brokers. For just as surely as yahang could provide convenience and credibility by employing the officials’ local knowledge and connections to match buyers with sellers, they could use the same resources for profit at the expense of others. When yahang abused their positions to cheat these lone, helpless strangers in the big city, magistrates were compelled not only by a sense of fairness and by the laws on brokerage, but also by the statutes that dictated punishment for allowing abuse in the yahang system to flourish, to take up the case and aid the victim. Unlike many other commercial disputes, cases against yahang accused of cheating were regularly accepted by the court.

In addition to the classic “treacherous broker” case, yahang were also brought to court to stand in for the default of parties for whom they had provided guarantees. In these cases, it was not the evil intentions of the broker that warranted his inclusion in a legal suit, but rather the simple conviction that a broker was liable for the decisions that he made in mediating the transactions of others. One example of such a case was brought to the court by Zhao Xincheng 趙信成, a merchant from Shanxi who brought a large shipment of straw hats to Chongqing for sale. Zhao came to the court after his broker Li Yuyan 李與言 made a suspicious investment in his son's money shop while still claiming to Zhao that the money for his grass hats had yet to be repaid by the customer who bought them. Zhao concluded that Li's investment suggested embezzlement and lamented ever having run into the “evil plots of this father-son pair to trick me out of my tiny profits, by pretending to buy my goods while in fact stealing the money and drawing out the fraud, leaving me unable to return home.”Footnote ³² The magistrate agreed to summon the broker to court.

When Li Yuyan was called upon to explain himself, he insisted that he and the plaintiff had been doing business with one another for over twenty years and that the delay in repaying Zhao was not due to any kind of treachery, but rather the logistical complication presented by the fact that the purchaser of the hats was from Luzhou, ninety miles from Chongqing. The magistrate found that this was grounds for some delay, since the collection of the debt presented some difficulty, and gave Li half a month to pay Zhao, on the condition that Li first obtain a guarantor. But after the deadline, Li was held accountable for paying back Zhao regardless of the fact that the customer from Luzhou did not make restitution within the allotted time. In cases such as this, even when the broker himself could be considered as much a victim as the plaintiff, the intermediary was liable for the transaction that he had arranged, for the reason that it was a risk undertaken based on information provided by the yahang, and that the broker could more easily demand satisfaction from his customer.

Both types of cases illustrated above – those involving the personal failures of the broker, and those designed to hold the broker accountable for the others he had guaranteed – were necessary to the function of the Qing market system. Brokers were, of course, held directly responsible for their own dealings. Courts were furthermore able to extend the responsibility of wayward businessmen to the brokers who represented them in order to keep merchants who had been victimized from being indefinitely stranded in the city. In both of the cases mentioned above and the many others like them, the presiding official upheld his commitment to act on behalf of the merchants who claimed to have been defrauded. When the tables were turned, magistrates could also come to the aid of brokers themselves, in a further extension of the Qing complex of legal practices surrounding the institution of brokerage.

Brokers as Plaintiffs

The same logic that made brokers liable for the transactions they took part in also empowered them to seek satisfaction from others in court. Since brokers assumed responsibility for their merchant customers, they could be forced to settle out-of-pocket for the malfeasance of others (as briefly outlined above). Their willingness to do so was integral to the function of the system of licensed brokerage. The court's recognition of this meant that magistrates also consistently aided brokers in their attempts to recover funds that had been lost in the name of settling with one customer while another remained delinquent.Footnote ³³

This logic is clear in the 1805 case of Mao Dashun 毛大順 versus Li Chugao 李楚高. The plaintiff Mao operated a cotton brokerage in the city. He reported that, three years before in 1802, Li Chugao came to his brokerage and bought some of the cotton that had been stored at Mao's brokerage by another customer. The purchase price of 400 taels was agreed upon, and Li took delivery of the goods but continued to delay payment for three years, forcing Mao to “borrow in order to represent him in returning the debt, and pay 100 taels in interest every year.” The loan that Mao took out to repay his customers had pushed him to the edge of insolvency.

After repeated failed attempts to collect, Mao was forced to make a plea to the magistrate, reasoning that “brokers are in the business of representing customers in purchase and sale. If, like in this case, purchasers don't pay for goods, then the sellers pursue me to the brink of life – what can I do?”Footnote ³⁴ He pleaded with the magistrate to “wield court authority in strictly handling this treacherous behavior.” The magistrate issued a summons immediately following Mao's request, in recognition of the court's responsibility to maintain the integrity of the brokerage system. The case was resolved before trial.

Brokers could even bring suit on behalf of the wronged parties for whom they had contracted even without first having paid out a settlement. This is demonstrated in the 1765 bankruptcy case of Zhang Tianxu 張天敘. Zhang had bought goods through Shen Hanshi 沈漢石, a broker from Zhejiang who operated a shop in Chongqing. Shen delivered the goods, but then Zhang sold off his store and house, declaring that his business was insolvent and settling with his creditors at a reduced rate. Shen discovered that Zhang still owned property within the city walls and had invested his ill-gotten gains secretly in another business as a silent partner. Shen had tried to bring suit against Zhang four years earlier, and accused the defendant of bribing yamen workers to bury the case.

In the interim, while this dispute dragged on, Shen had remained responsible for the debts brokered on Zhang's behalf. The broker protested in his suit that “it's now been four years, and I haven't been repaid any amount. I have been trapped in an impossible situation: all of my customers are pressing for fulfillment of their obligations, and I am on the verge of financial ruin. How can such a wicked villain impoverish a broker, pushing him to the very brink of death? Neither human decency (renqing 人情) nor the law of the land (wangfa 王法) can operate in these conditions.”Footnote ³⁵ The magistrate recognized the difficult position that the broker was placed in and issued a summons to bring Zhang to court.

Whether owing or owed, whether on account of their own actions or on behalf of others, yahang were frequent visitors to the courts of Chongqing. They were convenient figures in which to invest the power and responsibility of litigation: local, knowledgeable about their trade, and both party and witness to the transactions they brokered. They were also the ones in the best position to pursue a legal case, being accountable to both parties in each transaction and, by definition, local to the jurisdiction in which the exchange had taken place. Since brokers were able to act as agents on both sides of a transaction, they were compelled to bear the majority of the immediate cost of bad information. In order to keep brokers motivated to bear such responsibility, the court supported their efforts to recover funds that had been paid out on behalf of others.

Transitive Responsibility and Cases without Court

Fewer than half of cases involving intermediaries went to trial after being permitted. Given how hard some of these plaintiffs worked to earn a summons (sometimes even submitting multiple plaints after previously being rejected, as in the case of Xiao Lisheng), how can this complete lack of interest in the rest of the court process be explained? In some instances, cases did not make it to court because the yamen runners were unable to capture defendants who had already fled, and the summons would then be left open on the case docket for later use if the fugitives ever returned.Footnote ⁴⁶ If and when the whereabouts of defendants were later discovered, the warrants could be invoked and the yamen runners asked to bring them before the court on standing charges. In the majority of cases, however, the summons never led to a court trial even though no such obstacle existed. The common reason why many such cases never went to court was that the summons itself – and not the verdict – was the object of the suit, and resolution could be pursued using non-court means with dependable efficacy as soon as the court announced its commitment to enforcing the responsibility of an economic agent.

The struggle in cases about agency and transitive responsibility was not to get the court to countenance a specific settlement. Rather, the key to gaining the upper hand in a dispute involving any kind of economic intermediary depended on getting the magistrate to acknowledge that an individual was responsible for negotiating a settlement. In many cases, these arguments took place over the course of filing suits and counter-suits. Most often, nothing more was required to induce a delinquent agent to enter into a settlement process than the knowledge that the magistrate had summoned the case, finding sufficient merit in the plaintiff's suit to warrant a trial. In cases where several counter-suits were filed and where disputes made it all the way to court, the importance of establishing the nature of one's role in a transaction and one's relationship to a plaintiff is clear.

An illuminating example of the struggle to define relationships between litigants is found in the 1869 case of Huo Rongtai 霍榮泰 versus his nephew Huo Delong 霍德龍 and Chen Dengrong 陳登榮. The case began when Huo Rongtai accused the two defendants of embezzling the profits from some goods that he had stored at Hongxing brokerage (Hongxing hang 鴻興行), where Huo Delong worked together with Chen:

In response to this suit, the magistrate agreed to summon the case after a physical exam substantiated Huo's claim about his injuries.

In the meanwhile, Chen filed a counter-suit disputing his alleged connection with the plaintiff. He explained that Huo's nephew, the co-defendant, was, indeed, an apprentice in the same brokerage where he was employed. But, added Chen, “Huo and his uncle were very close, and whether or not money is owed from their trade with one another has nothing to do with me, as I was not involved.” Rather, he reported, when the relationship between the two relatives soured, Huo Rongtai showed up at the brokerage and asked Chen where his nephew could be found. When Chen replied that he was ignorant of the whereabouts of the younger Huo, the plaintiff flew into a rage and “summoned together several toughs to rough me up, holding me against my will and humiliating me cruelly.”Footnote ⁴⁸ He even included details about the intervention of his neighbors in the fight, and protested that “Truly, I was not his intermediary in the sale of his goods at the brokerage (yi mai huo zai xingyi shi wei jingshou 伊賣貨在行蟻實未經手).” He concluded by reporting that the neighbors gathered in the mediation all found Huo at fault for roughing up Chen, and that Huo had promised to drop the issue before unexpectedly bringing the case to court.

Next, Huo Delong filed his own account of the disagreement. In the account of the younger Huo:

He, too, listed a series of witnesses and claimed to have taken the issue into mediation, and declared that the mediators had found that “I was not the intermediary for the exchange, and thus it has nothing to do with me.”

In response to these counter-suits, the magistrate simply commanded the defendants to await testimony. When a court date was finally arranged, each of the defendants continued to avow ignorance of the plaintiff's transactions, instead only agreeing that they had fought with Huo Delong when he came to collect after the brokerage had closed its doors. The witnesses gathered in court testified only that they had seen a fight, and had intervened to stop the affray, and the plaintiff Huo continued to insist that he had been cheated and beaten by the two defendants. Finding on the side of the plaintiff, but keenly aware of his ignorance of what had actually occurred, the magistrate ordered the defendants taken into custody and commanded them to “go out and settle things … figure out how much is owed, and pay it.”Footnote ⁵⁰

Chen Wenhua 陳文華, the elder brother of Chen Derong, protested the verdict in court, avowing that his brother had nothing to do either with the consignment or the brawl that had ensued from Huo's attempt to collect. After the court was dismissed, he filed a new counter-suit claiming that his brother had been framed and that “when the Hongxing brokerage closed its doors and stopped business, my brother was let off, but even then Huo Rongtai forged a fake receipt and threatened him with it. They submitted to mediation and settled the affair, and this spring when Huo and his nephew fought, my brother was not on the scene.”Footnote ⁵¹ Furthermore, Chen argued, after the court verdict Huo had refused further attempts at mediation. He begged the magistrate for another trial to clear up the issue. The magistrate's response was: “Respect the court verdict. There is no need to cause trouble through unnecessary suits.” With this, the case ended.

The one responsibility of the court in this case was determining the question of which of the defendants had acted as Huo's agent and then placing them under the burden of supervision by yamen runners until they could come to terms with the plaintiff. The magistrate had no stake in the nature of the settlement, nor even an interest in monitoring the settlement process. The mere fact of having placed both defendants under the obligation to settle was enough. Any attempt by the defendants to flaunt or confuse the settlement process could lead to further intervention by the court, continued custody, and even physical punishment for disobeying the magistrate's verdict. As long as the plaintiff was not satisfied by the cooperation of the defendants, the court was at his disposal to threaten them with further sanctions. Under these conditions, there was little need for the magistrate to demand reports about the outcome of the negotiation of a settlement, and, indeed, few of them remain on the record. The magistrate's work was finished before the real work of solving the issue had begun.