The Chinese cornerstone of modern banking : the Canton guaranty system and the origins of bank deposit insurance 1780-1933

This is a study of the Chinese idea that inspired the first bank deposit insurance statute, New York’s Safety Fund law of 1829. It examines the origins of financial collective responsibility in China through to its use by the Imperial Household Department in the management of businesses monopolized for the benefit of the Qing court. Collective liability among members of the hong merchant guild of Canton, China for the foreign debts of guild members, enforced 1780-1842 (the “Canton Guaranty System”), was taken by New York as its example. The study examines the evolution and regulatory practice of the Canton Guaranty System (itself a component of the “Canton System”). The study examines the history of the New York Safety Fund and other American state guaranty funds through to the adoption of national bank deposit insurance in the United States in 1933. The eighty year history of deposit insurance in t he United States, and the history of bank deposit insurance as it has expanded worldwide, are briefly sketched. The study argues that the Canton experience, never previously examined, anticipates certain major problems with modern bank deposit insurance. It offers some lessons drawn from the Chinese prehistory of bank deposit insurance.LEI Universiteit LeidenColonial and Global Histor