The Economic Crisis Of Shen-hsin Textile Co. In 1930s And The Coping Measures

Chiang Kai-shek, having received financial assistance from the Shanghai Capitalists, established the Nanjing National Government in 1927, after April 12 Tragedy and Ninghan (Nanjing and Wuhan) Split. Hence, he forged a close relationship with the Shanghai Capitalists. Financial shortage is a long-term problem of Nanjing government. In order to solve this problem, Nanjing government issued a lot of bonds, and the main buyers are the Shanghai Capitalists. Besides, Nanjing government obtained a lot of taxes, loans and overdrafts from the Shanghai Capitalists. So the Shanghai Capitalists became an important economic pillar of Chiang Kai-shek regime. In return, Chiang Kai-shek regime gave some benefits to them, such as implementing some polices helpful for economic development, or snaring them into the government. But Chiang Kai-shek's huge needs of military expenditure aroused discontent of the Shanghai Capitalists. So sometimes there were conflicts between them. The relation between the two was very complex, existing both cooperation and conflicts; while there were both consistence and contradiction between the banks and enterprises of the Shanghai Capitalists. In fact, the complex relationship was a result of the game among Nanjing government, bank and enterprises on their self-interest. Under the different background this kind of complex relation showed characteristics of different phases. Taking Shen-hsin Textile Co. as an example, this paper discusses the relationship among Nanjing government, enterprises and banks, through the three representative events of this company under the background of economic crisis in the 1930s.This thesis is composed of three parts:introduction, main body and the conclusion.The introduction part discusses the reason why I chose this topic, the significance of the research, the materials applied in the paper and the related academic research.The main body comprises four chapters. Chapter one briefly introduces Chinese cotton textile crisis and the difficulties encountered by Shen-hsin Textile Co., under the background of world economic crisis in 1930s, together with China's national crisis, natural disasters and other reasons.Chapter two describes that Shen-hsin Textile Co. encountered difficulties of turnover of capital in the cotton crisis. Rong Zongjing turned to the Nanjing National Government, but the Ministry of Industries wanted to annex his company. Facing the crisis of nationalization, Rong Zongjing ran in all directions for help, making full use of fellow relations, the close relationship with banks and the internal sectarian strife of the national government. Finally he pulled through the crisis.Chapter three firstly summarizes the event that Shen-hsin No.7 Mill was illegally auctioned by HSBC because it couldn't discharge its debts duly and the responds of all parties. Then the paper analyses the reasons why all parties assisted Shen-hsin. in this event, not only nationalism was reflected, but also the close interests between banks and enterprises, as well as the close relationship between the Nanjing government and the Shanghai Capitalists were embodied.Chapter four briefly introduces the shutdown and resumption of Shen-hsin No.2 Mill and Shen-hsin No.5 Mill, which showed a new trend that during the economic crisis banks made use of the debt relationship to gradually permeate to the enterprise management, and the fact that t.v. Soong intended to snatch Shen-hsin, which reflected his ideology of control economics.The last part is a conclusion that during the coping with economic crisis of Shen-hsin Textile Co. in 1930s, the complex relationship among government, enterprises and banks was reflected. During the economic crisis and control economics of Nanjing National Government, banks and enterprises made an alliance. Meanwhile there appeared new characteristics in the loans to cotton textile from banks, which is the industrialization of bank capital.