January 23, 1934

[This report was given by Comrade Mao Tse-tung at the Second National Congress
of Workers' and Peasants' Representatives held in Juichin, Kiangsi Province
in January 1934.]


Only the Kuomintang warlords who have brought the areas under their own rule
to the brink of bankruptcy have the utter shamelessness to spread the rumour,
day in day out, that the Red areas are in a state of total collapse. The
imperialists and the Kuomintang are bent on wrecking the Red areas, the work
of economic construction now in progress there, and the welfare of the millions
of workers and peasants who have achieved liberation. For this purpose, they
have pursued a ruthless policy of economic blockade, in addition to organizing
forces for military campaigns of "encirclement and suppression". But, leading
the broad masses and the Red Army, we have not only smashed one enemy
"encirclement and suppression" campaign after another, but have also been
doing all the essential work of economic construction within our power in
order to defeat this vicious economic blockade. In this respect, too, we
have scored one success after another.

The principle governing our economic policy is to proceed with all the essential
work of economic construction within our power and concentrate our economic
resources on the war effort, and at the same time to improve the life of
the people as much as possible, consolidate the worker-peasant alliance in
the economic field, ensure proletarian leadership of the peasantry, and strive
to secure leadership by the state sector of the economy over the private
sector, thus creating the prerequisites for our future advance to socialism.

The focus of our economic construction is to increase agricultural and industrial
production, expand our trade with the outside, and develop the co-operatives.

Agriculture in the Red areas is obviously making progress. As compared with
1932, the 1933 agricultural output was 15 per cent higher in southern Kiangsi
and western Fukien and 20 per cent higher in the Fukien-Chekiang-Kiangsi
border area. The Szechuan-Shensi border area has had a good harvest. After
a Red area is established, farm output often declines in the first year or
two.[1] But it picks up again as the peasant masses work
with greater enthusiasm after the land is redistributed and ownership is
settled, and after we have given encouragement to production. Today in some
places farm output has reached and even exceeded the pre-revolution level.
In others, not only has land that lay waste during the revolutionary uprisings
been reclaimed, but new land has been brought under cultivation. In many
places mutual-aid groups and ploughing teams [2] have
been organized to adjust the use of labour power in the villages, and
co-operatives have been organized to overcome the shortage of draught oxen.
Moreover, the women are taking part in production in great numbers. None
of this could have happened in the Kuomintang days. With the land in the
hands of the landlords, the peasants then were neither willing to improve
it nor did they possess the means to do so. Only since we have distributed
the land to the peasants and encouraged and rewarded production has their
labour enthusiasm blossomed forth and great success in production been achieved.
It should be pointed out that in the present conditions agriculture occupies
first place in our economic construction; it is by agriculture that we solve
both the most important problem of food, and the problem of raw materials
such as cotton, hemp, sugar-cane and bamboo, which are needed for the making
of clothes, sugar, paper and other necessities. The care of forests and the
increase of livestock are also an important part of agriculture. Within the
framework of small-scale peasant economy it is permissible and indeed necessary
to draw up suitable plans for the output of certain important agricultural
products and to mobilize the peasants to strive for their fulfilment. We
should pay closer attention and devote greater efforts to this. We must actively
lead the peasants in solving such difficult and essential problems in production
as labour power, draught oxen, fertilizer, seed and irrigation. In this
connection our fundamental task is to adjust the use of labour power in an
organized way and to encourage women to do farm work. The necessary measures
to solve the problem of labour power are organizing mutual-aid groups and
ploughing teams and mobilizing and encouraging the whole rural population
to help during the busy spring and summer ploughing seasons. Another big
problem is that quite a large proportion (about 25 per cent) of the peasants
are short of draught oxen. We must attend to organizing draught oxen
co-operatives, encouraging the peasants without oxen to buy them for their
common use through voluntary subscription to shares. Irrigation, which is
the lifeblood of agriculture, also merits close attention. Of course, we
cannot as yet bring up the question of state or collective farming, but it
is urgently necessary to set up small experimental farms, agricultural research
schools and exhibitions of farm produce in various places to stimulate the
development of agriculture.

The enemy blockade has made it difficult for us to market goods outside our
areas. There has been a decline in production in many handicraft industries
in the Red areas, notably tobacco-curing and paper-making. But the difficulties
of sending goods out are not entirely insurmountable. We have an extensive
market of our own because of the mass demand in our areas. We should
systematically restore and develop handicrafts and also certain industries,
firstly to supply our own needs and secondly for trade with the outside.
In the last two years, and especially since the first half of 1933, many
handicrafts and a few industries have begun to look up because of the attention
we have begun to devote to them and the gradual development of producers'
co-operatives by the people. The most significant fields are tobacco, paper,
wolfram, camphor, farm implements and fertilizers (such as lime). Moreover,
in our present circumstances we should not neglect the manufacture of our
own cotton cloth, medicines and sugar. In the Fukien-Chekiang-Kiangsi border
area, some industries have been set up which were previously non-existent,
such as paper-making, cloth-making and sugar-refining, and they are doing
well. To relieve the shortage of salt, people have begun to extract it from
nitre. It requires proper planning to keep industry going. With a scattered
handicraft industry, detailed and comprehensive planning is of course impossible.
But fairly detailed production plans are absolutely essential for certain
important enterprises, and first and foremost for state and co-operative
enterprises. Every one of our state and co-operative industrial enterprises
must pay attention from the very beginning to making accurate estimates of
raw material output and marketing prospects in both the enemy areas and our
own.

At the present time, it is particularly necessary for us to organize private
external trading according to plan and for the state to handle certain essential
commodities directly, for instance, the import of salt and cotton cloth,
the export of grain and wolfram, and the adjustment of grain supply within
our own areas. Such work was first undertaken in the Fukien-Chekiang-Kiangsi
border area and was started in the Central Area in the spring of 1933. With
the establishment of the Bureau of External Trade and other agencies, initial
successes have been achieved in this connection.

Our economy is made up of three sectors, state enterprise, cooperative enterprise
and private enterprise.

At present, state enterprise is limited to what is possible and essential.
State-operated industry and commerce have begun to grow and they have boundless
prospects.

As regards the private sector of the economy, we shall not hamper it, indeed
we shall promote and encourage it, so long as it does not transgress the
legal limits set by our government. For the development of private enterprise
is essential to the interests of the state and the people at the present
stage. Needless to say, private enterprise is now preponderant and will
inevitably continue to occupy a dominant position for a considerable time.
Today, private undertakings in the Red areas are small in scale.

Co-operative enterprise is growing rapidly. There are altogether 1,423
co-operatives of various kinds, with a total capital of over 300,000 yuan,
according to the September 1933 figures for seventeen counties in Kiangsi
and Fukien. Consumers' co-operatives and grain co-operatives head the list,
with producers' co-operatives coming next. Credit co-operatives have just
started functioning. When the co-operative and the state enterprises become
co-ordinated and grow over a long period of time, they will become a tremendous
force in our economy and will gradually prevail and assume leadership over
the private sector. Therefore, the greatest possible development of state
enterprise and the extensive development of co-operative enterprise must
go hand in hand with encouraging the development of private enterprise.

With the support of the masses, we have issued economic construction bonds
to the value of three million yuan in order to develop state enterprise and
assist the co-operatives. Such reliance on the strength of the masses is
the only possible way to solve the problem of funds for economic construction
at this time.

To increase our revenue by developing the economy is a basic principle of
our financial policy; it has already brought tangible results in the
Fukien-Chekiang-Kiangsi border area and is beginning to do so in the Central
Area, too. It is the duty of our financial and economic organizations to
apply this principle conscientiously. In this connection, we should make
quite sure that the issuing of notes by the state bank is based primarily
on the needs of economic development, and only secondarily on purely fiscal
needs.

Thrift should be the guiding principle in our government expenditure. It
should be made clear to all government workers that corruption and waste
are very great crimes. Our campaigns against corruption and waste have already
achieved some results, but further efforts are required. Our system of accounting
must be guided by the principle of saving every copper for the war effort,
for the revolutionary cause and for our economic construction. Our methods
of spending state revenue must be strictly different from those of the
Kuomintang.

At a time when the country is plunged in economic disaster, when hundreds
of millions of people are suffering the terrible hardships of hunger and
cold, the people's government in our areas is staunchly pressing ahead with
economic construction for the sake of the revolutionary war and in the interests
of the nation, regardless of all the difficulties. The situation is perfectly
clear--only by defeating imperialism and the Kuomintang and by undertaking
planned, organized economic construction can we deliver the people of the
whole of China from unprecedented disaster.

  NOTES
1. There was usually a decline in farm output in the
  first year or two after the establishment of a Red area, chiefly because
  landownership was not yet settled and the new economic order was not fully
  established during land redistribution, so that the peasants could not yet
  set their minds fully on production.
2. Mutual-aid groups and ploughing teams, based on individual
farming, were formed by peasants in the Red areas to facilitate production
through a better organization of labour power. On the principle of voluntary
participation and mutual benefit, the members did an equal amount of work
for each other, or if one could not give another as much help as he received
he made up the difference in cash. Apart from helping each other, the teams
gave preferential treatment to the families of Red Army soldiers and worked
for bereaved old folk without any pay except for meals during the work. As
these measures of mutual aid were of great help to production and were carried
out on a reasonable basis they won the warm support of the masses.


Transcription by the Maoist Documentation Project.