China's richest merchant tried to corner the silk market — the market cornered him

By 1882, Hu Xueyan was the wealthiest businessman in the Qing dynasty — a banker, salt trader, arms procurer and pharmaceutical manufacturer who had financed General Zuo Zongtang's north-western campaigns and arranged 15.95 million taels of silver in foreign loans through HSBC. The Qing court had given him a red-topped hat, second-rank official status, and the right to ride a horse inside the Forbidden City. His banking house, Fukang, had branches across the lower Yangtze.

That year Hu decided to corner the Chinese raw-silk market. He bought heavily, warehousing thousands of bales across Shanghai and Hangzhou to force foreign silk buyers — mainly French and British — to pay his price. The strategy was not new: Chinese silk guilds had tried collective price-setting before. What was new was the scale. A single merchant was attempting to hold an entire export commodity off the market.

The foreign buyers refused to meet his price and waited. Meanwhile, European silk production was rising and Japanese silk was entering the market. Hu held his inventory through 1882 and into 1883, financing the position with deposits from his own bank. When silk prices fell instead of rising, he was forced to sell at a loss. The losses — estimated at over 10 million taels — triggered a run on Fukang Bank. Depositors who knew Hu's political patron Zuo Zongtang was dying (the general passed in September 1885) had already been withdrawing funds. By December 1883, Fukang collapsed.

The Qing court, which had benefited from Hu's loans for two decades, seized his assets and ordered his arrest. Hu died impoverished in 1885. His pharmaceutical company, Hu Qing Yu Tang, survived and still operates in Hangzhou — the one piece of his empire built on a different principle.