Between 1917 and 1923, Bank of China witnessed a contest for its leadership between the shareholders and the political groups. The struggle related to the vital condition of the bank focused on adoption of the new and the old regulations.
The Old Regulation (the Regulation for Bank of China issued in the second year of the Republic of China) was published on April 15, 1913 by the Ministry of Finance, stipulating that Bank of China should be a joint stock limited company with its president and vice president being appointed by the government. In 1917, after the failure of Zhang Xun's restoration, Vice President Feng Guozhang became the acting president of the Republic of China, delegating Duan Qirui to organize a new cabinet with Liang Qichao as the Finance Minister. Liang Qichao then appointed Wang Kemin and Zhang Jia'ao as the president and vice president of Bank of China respectively. Zhang Jia'ao held that for the further development of Bank of China, a powerful board of shareholders must be established by enlarging the commercial shares in order to help the president and vice president to exercise their duties over a long term without frequent replacements due to government instability. Therefore, Zhang Jia'ao set about revising the regulation for Bank of China and then submitted it to the President for approval. Later, the New Regulation came into force by a presidential decree.
Under the provisions of the New Regulation (the Regulation for Bank of China in the sixth year of the Republic of China), once the combined official and commercial equity reached 10 million shares, the board of shareholders and the board of directors of Bank of China would be established. It specified that the director, regardless of a holder of state-owned shares or commercial shares, should be elected by the board of shareholders, while the government could only appoint two persons among the directors as the president and the vice president of the bank. It also stated that the commercial equity interests shall be expanded to commercialize the Bank of China shareholding as soon as possible to eliminate the strict division between state-owned shares and commercial shares and allow government shares to be sold to ordinary people. Such provisions of the New Regulation enabled a transfer of the real power of appointments of president and vice president from the government to major shareholders, thus reducing the possibility of governmental interference in the bank operation.
After the announcement of the New Regulation, with the establishment of the board of shareholders and increase of commercial shares, the market price of Bank of China stock continued rising. As Bank of China's financial strength was enhanced, all the new warlords and politicians were trying to seize the bank as their own a cash cow.
A prelude to the regulation dispute was opened by the Anfu clique warlords trying to brew restoration of the Old Regulation to control Bank of China.
In March 1918, Prime Minister Duan Qirui instigated his trusted followers Xu Shuzheng, Wang Yitang (both were Anhui clique warlord politicians) and others to set up a club at Anfu Hutong in Beijing, where they bought politicians in to fake election results. Such a political group was known as "Anfu clique" in the history.
On August 11, 1918, a new congress was set up in Beijing with the majority of seats in both Senate and House of Representatives occupied by the Anfu clique. The clique for many times conspired to resume the Old Regulation for Bank of China but failed. On April 28, 1919, by illegal practices such as false report of attendance and three readings for such Old Regulation in very short time, the Anfu clique forced adoption of the restoration proposal and submitted to the Senate for advisory. On June 14, the Senate decided to adopt the above proposal to restore the Old Regulation.
When the news of restoration of the Old Regulation came to Bank of China, the entire bank was shocked. Bank of China vice-president Zhang Jia'ao wrote in his essay at that day, "...Such restoration of the Old Regulation is indeed critical for the survival of Bank of China, and more seriously, for the success of Chinese modern financial institutions. We must strive to fight. I have requested the shareholders to gather to protest, asking the government to maintain the New Regulation; at the same time, I have telegraphed the national chamber of commerce to respond and support." All of a sudden, Shareholders' Associations were founded in major areas including Shanghai, Beijing, Tianjin, Hankou, Fuzhou, Guangzhou, Kaifeng, Jiangxi, Shandong and Hong Kong, declaring opposition against the Senate's resolution by means of announcements and public telegrams. More than ten provincial and municipal commercial chambers in Shanghai, Hankou, Tianjin, Hangzhou, Nanjing, Changsha and Anqing, etc. also opposed the resolution by public telegrams. Moreover, commercial shareholders of Bank of China received extensive assistance. The military and political personages in Guangdong and Guangxi Provinces including Cen Chunxuan, Wu Tingfang, Tang Jiyao, Lu Rongting and Sun Yat-sen all came forward to assist the Bank of China through telegram statement: "Do not think that common people are necessarily to be bullied. We expect the Government, in consideration of the public opinion, to maintain current status of Bank of China ..." So far the regulation dispute relating to Bank of China actually evolved into a nationwide struggle against the dictatorship of the Anhui warlords.
The Anfu clique would have considered it a complete success when the restoration proposal of the Old Regulation was approved by the House and the Senate. However, in view of the North-South negotiation almost breakdown and the turbulent political situation, the government realized that improper treatment of the regulation dispute of Bank of China would certainly lead to catastrophe. Within two days, the government received 20 objection letters. After repeated discussions by the two disputed parties, it was decided to partially revise the New Regulation by increasing the share capital of Bank of China up to 30 million shares in order to include members of the Anfu clique as shareholders, while the remaining provisions shall not change.
Anfu clique did not give up and continued to make troubles without restraint. At the general meeting of shareholders of Bank of China in 1920, they put out a requirement to amend the Articles of Association to the financial authority but failed. At the venue, members from the Anfu clique looked for every opportunity to rock the boat - they gathered at the ballot box to hinder voting. Later, with the defeat of Anhui cliques in the Zhili-Anhui war, the newly-established Beijing government ordered to arrest ringleaders of the Anfu clique, radically reducing the power of that political group. The following years still witnessed such cases that some members from the Anfu clique, in their personal capacity, disrupted the meeting of board of shareholders of Bank of China. Such incidents did not cease until 1923. Finally, the seven-year regulation dispute ended.
During the battle of the regulation dispute, the commercial shareholders of Bank of China made their utmost efforts to fight for a relatively independent space for the bank and reduce the impact of frequent political turmoil on Bank of China, thus ensuring the rapid development of Bank of China in the subsequent period.
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