December 1942

[This is a report delivered by Comrade Mao Tse-tung at a conference of senior
cadres of the Shensi-Kansu-Niagsia Border Region. The years 1941 and 1942
were the hardest for the Liberated Areas in the war of Resistance Against
Japan. The savage attacks by the Japanese invaders and the encirclement and
blockade by the Kuomintang created enormous financial difficulties for the
Liberated Areas. Comrade Mao Tse-tung pointed out that in order to overcome
these difficulties it was necessary for the Party to exert itself in leading
the people in developing agriculture and other branches of production, and
he called upon the government and other organizations, the schools and the
army in the Liberated Areas to produce as much as possible for their own
support. Comrade Mao Tse-tung's 'Economic and Financial Problems' and his
articles 'Spread the Campaigns to Reduce Rent, Increase Production and Support
the Government and Cherish the people’ in the Base Areas' and 'Get
Organized!' formed the Party's basic programme for leading the production
campaign in the Liberated Areas. Comrade Mao Tse-tung here severely criticizes
the mistaken notion of concentrating on public revenue and expenditure
to the neglect of economic development, and the wrong working style of making
demands on the people without mobilizing and helping them to develop production
and surmount difficulties, and he set forth the Party's correct policy of
"developing the economy and ensuring supplies". With this policy great successes
were achieved in the production campaign which was unfolded in the
Shensi-Kansu-Ningsia Border Region and in the Liberated Areas behind the
enemy lines. It not only enabled the armed forces and the people of the Liberated
Areas successfully to tide over the most difficult period of the war, but
also provided the Party with a rich store of experience for guiding economic
construction in later years. The first Chapter of this report was published
in the 'Selected Works of Mao Tse-tung',
Volume 3, pp. 111-116.]


  1. A BASIC SUMMARY OF OUR PAST WORK


The general policy guiding our economic and financial work is to develop
the economy and ensure supplies. But many of our comrades place one-sided
stress on public finance and do not understand the importance of the economy
as a whole; engrossed in matters of revenue and expenditure as such they
cannot find solutions to any problem hard as they try. The reason is that
an outmoded and conservative notion is doing mischief in their minds. They
do not know that while a good or a bad financial policy affects the economy,
it is the economy that determines finance. Without a well-based economy it
is impossible to solve financial difficulties, and without a growing economy
it is impossible to attain financial sufficiency. The financial problem in
the Shensi-Kansu-Ningsia Border Region is that of supplying funds for the
living and operating expenses of tens of thousands of troops and civilian
personnel, in other words, the problem of supplying funds for waging the
war. These funds come partly from taxes paid by the people and partly from
production carried on by the tens of thousands of troops and civilian personnel
themselves. We shall simply be resigning ourselves to extinction unless we
develop both the private and the public sectors of the economy. Financial
difficulties can be overcome only by down-to-earth and effective economic
development. To neglect economic development and the opening up of sources
of finance, and instead to hope for the solution of financial difficulties
by curtailing indispensable expenditures, is a conservative notion which
cannot solve any problem.

In the last five years we have passed through several stages. Our
worst difficulties occurred in 1940 and 1941, when, the Kuomintang created
friction by its two anti-Communist drives. For a time we had a very acute
scarcity of clothing, cooking oil, paper and vegetables, of footwear for
our soldiers and of winter bedding for our civilian personnel. The Kuomintang
tried to strangle us by cutting off the funds due to us and imposing an economic
blockade; we were indeed in dire straits. But we pulled through. Not only
did the people of the Border Region provide us with grain but, in particular,
we resolutely built up the public sector of our economy with our own hands.
The government established many industries to meet the needs of the Border
Region, the troops engaged in an extensive production campaign and expanded
agriculture, industry and commerce to supply their own needs, and the tens
of thousands of people in the various organizations and schools also developed
similar economic activities for their own support. This self-supporting economy,
which has been developed by the troops and the various organizations and
schools, is a special product of the special conditions of today. It would
be unreasonable and incomprehensible in other historical conditions, but
it is perfectly reasonable and necessary at present. It is by such means
that we have been overcoming our difficulties. Do not these indisputable
historical facts prove the truth that supplies can be ensured only through
economic development? While we still face many difficulties, the foundation
of the public sector of our economy has already been laid. In another year,
by the end of 1943, this foundation will be even firmer.

Developing the economy is the correct line, but development does not mean
reckless or ill-founded expansion. Some comrades who disregard the specific
conditions here and now are setting up an empty clamour for development,
for example, they are demanding the establishment of heavy industry and putting
forward plans for huge salt and armament industries, all of which
are unrealistic and unacceptable. The Party's line is the correct line for
development; it opposes outmoded and conservative notions on the one hand
and grandiose, empty and unrealistic plans on the other. This is the
Party’s struggle on two fronts in financial and economic work.

While we must develop the public sector of our economy we should not forget
the importance of help from the people. They have given us grain, 90,000
tan in 1940, 200,000 in 1941 and 160,000 in 19421
[1], thus ensuring food
for our troops and civilian personnel. Up to the end of 1941, the grain output
of the public sector of our agriculture was meagre and we relied on the people
for grain. We must urge the army to produce more grain, but for a time we
shall still have to rely mainly on the people. Although the Shensi-Kansu-Ningsia
Border Region is in the rear and has not suffered direct war damage it has
only 1,500,000 inhabitants, a small population for so large an area, and
the provision of such large quantities of grain is not easy. Besides, the
people transport salt for us or pay a salt transport levy, and in 1941 they
purchased five million yuan worth of government bonds; all of which
represents no small burden. To meet the needs of the War of Resistance and
national reconstruction, the people must shoulder such burdens, the necessity
of which they very well realize. When the government is in very great
difficulties, it is necessary to ask the people to bear a heavier burden,
and they understand that too. But while taking from the people we must at
the same time help them to replenish and expand their economy. That is to
say, appropriate steps and methods must be adopted to help the people develop
their agriculture, animal husbandry, handicrafts, salt industry and commerce,
so that they gain at the same time as they give and, moreover, gain more
than they give; only thus can we sustain a long war against Japan.

Disregarding the needs of the war, some comrades insist that the government
should adopt a policy of "benevolence". This is a mistake. For unless we
win the war against Japan such "benevolence" will mean nothing to the people
and will benefit only the Japanese imperialists. Conversely, although the
people have to carry rather heavy burdens for the time being, things will
get better for them as the difficulties confronting the government and the
troops are overcome, the War of Resistance is sustained and the enemy is
defeated; and this is where the true benevolence of the revolutionary government
lies.

Another mistake is "draining the pond to catch the fish", that is, making
endless demands on the people, disregarding their hardships and considering
only the needs of the government and the army. That is a Kuomintang mode
of thinking which we must never adopt. Although we have temporarily added
to the people's burden, we have immediately set to work building the public
sector of our economy. In the years 1941 and 1942 the army, the government
and other organizations and the schools met most of their needs by their
own efforts. This is a wonderful achievement without precedent in Chinese
history, and it contributes to the material basis of our invincibility. The
greater our self-supporting economic activities, the more we shall be able
to lighten the people's tax burdens. In the first stage from 1937 to 1939
we took very little from them; during this stage they were able to build
up considerable strength. In the second stage, from 1940 to
1942, the burden on the people was increased. The third stage will
begin in 1943. In the next two years, 1943 and 1944, if the public
sector of our economy continues to grow and if all or most of our troops
in the Shensi-Kansu-Ningsia Border Region are in a position to engage in
farming, then by the end of 1944 the people's burden will again be lightened,
and they will again be able to build up strength. This is a possibility which
we should prepare to turn into actuality.

We must refute all one-sided views and advance the correct slogan of our
Party, "Develop the economy and ensure supplies." With regard to the relation
between public and private interests, our slogans are "Give consideration
to both public and private interests" and "Give consideration to both troops
and civilians." We consider only such slogans to be correct. We can guarantee
our financial needs only by expanding both the public and the private sectors
of our economy in a realistic and practical way. Even in difficult times
we must take care to set a limit to taxation so that the burdens, though
heavy, will not hurt the people. And as soon as we can, we should lighten
the burdens so that the people can build up strength.

The Kuomintang die-hards regard construction in the Border region as a hopeless
undertaking and the difficulties here as insurmountable; they are expecting
the Border Region to collapse any day. It is not worth arguing with such
people; they will never see the day of our "collapse" and we shall unquestionably
grow more and more prosperous. They do not understand that under the leadership
of the Communist Party and the Border Region revolutionary government the
masses always give their support to the Party and government. And the Party
and the government will always find ways to get over economic and financial
difficulties, however serious. In fact we have already pulled through some
of our recent difficulties and will soon overcome others. We encountered
difficulties many times greater in the past and surmounted them all.
With intense fighting going on every day, our base areas in northland and
central China are now facing much greater difficulties than the
Shensi-Kansu-Ningsia Border Region, but we have already held out for
five and a half years in these areas and can certainly continue to do so
till victory. For us, there is no ground for pessimism; we can conquer any
difficulty.

After the present conference of senior cadres of the Shensi-Kansu-Ningsia
Border Region we shall put into effect the policy of "better troops and simpler
administrations"[2].
It must be carried out strictly, thoroughly and universally, and not
perfunctorily, superficially, or partially. In carrying it out we must attain
the five objectives of simplification, unification, efficiency, economy and
opposition to bureaucracy. These five objectives have a very important bearing
on our economic and financial work. Simplification will reduce nonproductive
expenditures and increase our income from production, it will not only have
a direct and healthy effect on our finance but will lighten the people's
burdens and benefit them economically. In our economic and financial set-up,
we must overcome such evils as disunity, assertion of independence, lack
of co-ordination, and must establish a working system which is unified and
responsive to direction and which permits the full application of our policies
and regulations. With the establishment of such a unified system working
efficiency will rise. All our organizations, and particularly those engaged
in economic and financial work, must pay attention to thrift. By practicing
thrift we can cut out a great deal of unnecessary and wasteful expenditure,
which amounts possibly to tens of millions of yuan. Finally, people engaged
in economic and financial work must overcome surviving bureaucratic practices,
some of which, such as corruption and graft, over-elaborate organization,
meaningless "standardization" and red tape, are very serious. If we fully
attain these five objectives in the Party the government and the army, our
policy of "better troops and simpler administration" will achieve its purpose,
our difficulties surely be overcome, and we shall silence the gibes about
our approaching "collapse".

Below, we shall discuss separately various objectives of financial and economic
work, concretely summarize experience in past work, and put forward the general
policies for work that should be carried out in 1943.

  2. ON THE DEVELOPMENT OF AGRICULTURE


The general strategy for economic and financial work in the Border Region
is to develop the economy and ensure supplies. This being the case, the first
and most important questions are:  ‘How has our economic work
been done in the past?’, ‘What are the successes?', 'What are the
shortcomings?’, and, ‘What should be our strategy henceforth?'
.

The economy of the Border Region is divided into the two large sectors, the
public and the private. The private sector of our economy consists of all
agriculture, industry, and commerce undertaken by private individuals. The
public sector of our economy consists of the agriculture, industry, and commerce,
undertaken by the government, troops, official organizations and schools.
The functions and relationship of these two sectors are such that the private
sector provides the livelihood of the 1,400,000 people of the Border Region.
At the same time through taxation, it assists the government and troops,
and supports the sacred cause of the War of Resistance and the reconstruction
of the country. The public sector provides the bulk of the living and operating
expenses of several tens of thousands of Party members, government-workers
and soldiers, thus reducing the amount taken from the people and building
up their resources so that these can be obtained in future urgent need. The
principles used here are 'Give consideration to both public and private
interests' and 'Give consideration to both troops and civilians' .

If our Party and government do not pay attention to mobilizing the people
and helping them to develop agriculture, industry, and commerce, their life
cannot be improved, and the needs of the War of Resistance cannot be met.
As a result there will be trouble between the troops and the people. And
if we cannot settle the minds of the troops and the people, it is pointless
to consider anything else. Therefore the most important task is for the Party
and the government to concentrate great efforts on building up the people's
economy.

However, relaying on the taxes handed over by the people alone cannot meet
the needs of the War of Resistance and the reconstruction of the country.
This is particularly true of the Border Region where the area is large and
the population sparse, and where there has long been a large contradiction
between the taxes paid by the people and the expenditure of the government.
Therefore, we must also concentrate great efforts on managing the public
sector of the economy. This is an extremely great responsibility borne by
our government, troops, official organizations and schools. In the past few
years we have had great successes in this work. In 1943 we must achieve even
greater successes so as directly to meet the needs of the War of Resistance
and the reconstruction of the country. The more the public sector of the
economy grows, the more the burden carried by the people can be reduced.
This is another way of building up the resources of the people. And the
instrument which unites and reconciles the private and public sectors is
the currency.

The Private sector comprises agriculture, animal husbandry, handicrafts,
cooperative undertakings, the salt industry, and commerce. Here I shall first
deal with agriculture.

The agriculture of the Border Region was depressed during the period of the
land revolution. At that time there was much uncultivated land in Yan'an,
Ansai, Bao’an, Ganquan, Huachi and the three eastern counties, etc.
On the border between Huachi and Bao’an, there was an area called
Erjiachuan, which was more than 200 li long, yet only twenty or thirty
households lived there. As early as the Tongzhi period (1862-74 ) there was
no one living in Wuyasi and Zhangjiacha in Bao’an county. Fucunchuan
in Ganquan county, and Jinpenwan and Machichuan in Yan'an county had for
the most part ceased to be cultivated. Cotton-planting had ceased throughout
the Border region. The decline in animal husbandry was very great. Only
400,000-500, 000 head of sheep remained and 100,000 oxen and donkeys. Textiles,
the transport of salt, and other subsidiary undertakings had all been disrupted
in the same way. In particular the textile industry had almost completely
disappeared. By 1938, only 70,000 packs of eating salt were exported. All
this shows how depressed the agriculture of the Border Region was at that
time. Agriculture was only speedily restored and developed after the Central
Red Army came to the Border Region and civil war ceased, after the local
bandits were cleaned up and the peasants were given security, after the 'left'
economic policy was corrected and a mild taxation policy was adopted, and
after the Party and government's call for the development of agriculture
had greatly raised the enthusiasm of the peasants for production.

Table 1.1 gives the statistics for livestock, cotton-planting and opening
up of uncultivated lands in the past four years.


Table 1.1 Agricultural activity 1939-42


Year
Area of new land opened (mu)
Area of cotton planted (mu)
Livestock


Oxen
Donkeys
Sheep


1,002,774
3,767
150,892
124,935 1
1,171,366


698,989
15,177
193,238
135,054
1,723,037


390,087
39,087
202 914
137,001
1,724,203


281,413
94,405
--
--
--


Total
2,373,263
--
--
--
--


Explanation:

(1) The statistics for the livestock of Jiaxian and Mizhi counties have not
been included; the 1939 figures for livestock include the 1940 total for
seven of the counties.

(2) The figure for the area of new land cultivated is for the amount of new
land opened each year. The figures for cotton planted and for livestock are
the annual totals for the whole of the Border Region.

These statistics show that year by year the cultivated land of the Border
Region has expanded, the acreage of cotton planted has grown, and the amount
of livestock has increased. Moreover. the real totals are more than those
shown in the statistical table. As a result much of the formerly uncultivated
land has become productive. For example, there are now more than a hundred
households in Erjiachuan and all the land of the area has been cultivated.
Wuyasi and Zhangjiacha are now both fully inhabited. In the past, all eleven
districts in Yan'an county had unused land. At preset only Jinpen and Liulin
districts, half the Central district and one township in Yaodian district
have uncultivated land. In 1939, there were only about 300,000 mu
of ploughed land in Yan’an. In 1942, there were 699,538 mu. There
used to be a lot of uncultivated land in the counties of Ansai, Anding, Yanchuan,
and Yanchang. Now there is very little. Before 1940 the Border Region bought
grain from Luochuan county and east of the yellow River. Now, not only, is
it unnecessary to buy grain from outside, there is even some surplus grain
which is exported to the region of Yulin. Some people have moved here from
other areas, livestock has increased, but we do not feel a shortage of grain.
In the light of all these facts there is no longer any doubt that the Border
Region can be self-supporting in grain.

Cotton-growing has not only again reached its pre-revolutionary peak, but
has also developed. For example, the districts of Yongping, Yongsheng and
Yuju in Yanchuan county did not previously grow cotton. Now they have all
started growing it. The same is true of Yan'an. The profit from cotton is
greater than the profit from grain. The return from 1 mu of cotton
is on average 700 yuan or more, whereas if grain were planted the
return would only be 200 yuan. The ratio is thus 3:1. In 1939, the area planted
to cotton was only just over 3,700 mu. In 1942 it was more than 94,000
mu, and the quantity produced reached 1,400,000 jin. This was
a great achievement. However the amount needed by the Border Region is 3
million jin. This is our future task.

The increase in livestock has also been very rapid. For example, in 1937
there were only about 8,000 sheep in Yan'an. Now there are more than 60,000.
In 1937 there were only 70,000 sheep in Huachi, now there are more than 120,000.
Before the land revolution, there were only five flocks of sheep in Zhangjiahe
of Third township, Dongyang district, Yanchuan county. (There was no grazing
land and there could only be thirty to fifty head in each flock. ) Now there
are thirteen flocks. Oxen and donkeys have increased by almost two-thirds
since the time of the civil war. As a result in 1940 and 1941 we were able
to export 500,000 packs of salt. If it were not for the increase in oxen
and donkeys, this salt would have been very difficult to move out.

However, the development of agriculture has not been even Those areas with
relatively all-round development and rather more successes include the counties
under direct administration and the Longdong sub-region, in particular Yan'an,
Ansai, Ganquan, Huachi, Quzi and the three eastern counties. This is because
they have a lot of land, few people, and the climate is quite good. These
counties also have the biggest share in the subsidiary work of salt transport
and at the same time, the largest amount of public expenditure. The area
that has not developed is the special military area [Jingbeiqu], because
it has a large population and the land is limited. There is no possibility
of enlarging the ploughed area. They have had some success there in the gradual
restoration of household spinning and weaving work. Moreover, there has been
some emigration to the Yan'an area, which has eased the distribution of
population and land.

The speed of development has also varied. Development was faster before 1940,
particularly in the years 1939 and 1940. In these two years 1,700,000
mu of new land were opened up. In 1940, the number of sheep increased
by nearly 600,000, and oxen and donkeys by over 50,000. But in 1941 and 1942
only about 600,000 mu of land were opened up. This is only one-third
of the previous two years. There were fewer sheep in 1941 over 1940, and
the number of oxen and donkeys only increased by 10,000 (in reality there
was a reduction). However, in these two years cotton-growing and textiles
both developed.

The above outlines the development of agriculture in the Border Region. Now
I want to say a few words about how this development took place.

Before the civil war ended, agriculture was in decline. Afterwards it developed.
How did this development come about? Apart from the arrival of the Central
Red Army, the cleaning up of the local bandits, and the realization of peace
so that the peasants could live and work securely, there were the following
six reasons.

(1) The 'left' mistakes in economic policy were corrected and the policies
to build up the resources of the people were implemented. Although the peasants
had obtained a share of land, they were afraid to develop production because
of the 'left' economic policy. In addition, because agriculture was disrupted
both before and after the revolution, the base was very weak and hindered
growth. The Central Committee corrected the left policy and thus put an end
to the peasants' tendency to fear developing production. The peasants were
then willing to buy more implements, and the rich peasants dared to take
on tenants [an huozi] and long-term labourers [au changgong]. The milder
policies restored confidence and helped the extension of production. At the
same time the high price for grain and the great profit in subsidiary
undertakings stimulated the peasants' zeal to produce, and made agriculture
develop rapidly. This laid the basis for the levy of 200,000 tan of
grain tax and 26 million jin of hay tax in 1941.

(2) Calls were made for the development of production. The Production
Mobilization Conference for cadres held by the Central Committee (1939),
the Second Party Congress of the Border Region (1939), the first meeting
of the Border Region Council (1941) and the first agricultural exhibition,
all called for the development of production. These calls played a major
role in promoting growth. They first aroused the cadres, and then through
them penetrated deeply to the masses, mobilizing men, women, old, young,
and even loafers [er liuzi] to take part in production. They increased the
labour force, and finally destroyed the peasants' fear of developing production.
Thus the amount of new land opened up in 1939 was more than 1 million
mu, and real imports of livestock were also greatest in that year.

(3) The immigration policy. A major reason for the enlargement of cultivated
land by 2,350,000 mu in the past four years has been that those
regions with large amounts of land have absorbed large numbers of immigrants,
and increased their population. For example, in 1937 Yan'an (including
Yan’an city) only had a population of 34,000. Now its population is
roughly 70,000. Because of this, cultivated land in this county has increased
from around 300,000 mu to roughly 700,000 mu. In 1936 Ansai
only had a population of about 20,000. Now it has a population of more than
40,000. Ganquan originally had about 8,000 people. Now it has more than 14,000.
In 1938 Yanchang only had a population of 25,000. Now it has more than 32,000.
Yanchuan had the least amount of uncultivated land, but between 1938 and
the present its population has increased by over 10,000. Huachi only had
a population of 35,000 in 1938. Now it has a population of more than 40,000.
Other places such as Bao’an, Anding, Jingbian, and the counties of the
Longdong and Guanzhong sub-regions have also increased their population.
These immigrants came mostly from Hengshan, Yulin, Shenmu, and Fugu, and
secondly from the special military area. They all came voluntarily and were
not organized by the government, They were willing to come because there
was land and they were treated well. The various counties organized the existing
householders to give help with grain tools, and cave houses, etc. At the
same time the rich peasants took on tenants, which also helped the immigrants.
The increase in immigrants not only enlarged the area cultivated, but also
increased livestock, and stimulated commerce. Therefore the immigrants were
one of the factors in the development of agriculture.

(4) The policy of incentives. Immigrants do not pay grain tax for three years,
and their other obligations are reduced. If some of the peasants’ planting
cotton do not make as much profit as those planting grain, the government
pays compensation. If livestock is purchased from outside the Border Region,
there is a reduction in grain tax by a fixed amount in the first year. In
addition, there were the rewards to labour heroes given at the two agricultural
exhibitions, which also brought about great results. For example, Wu Manyou
and Mao Kehu of Yan’an and Due Fafu of Ganquan were rewarded at the
first agricultural exhibition. Now they have become very good, rich peasants.
They all pay more than 5 tan of grain tax (in the Border Region 1
tan is 300 jin). Moreover, they have encouraged other peasant
householders in the villages to develop production. All these things have
promoted the development of agriculture, in particular of grain and cotton.

(5) The reduction in the wastage of labour power, and the better adjustment
in the use of labour power. Because we were busy fighting during the civil-war
period, we did not pay attention to production and the land was neglected.
After peace was established, there were frequent exercises and guard duties
by the self-defence army [ziweijun] and many kinds of meetings. Therefore,
each month each able-bodied man missed at least three working-days. Later
this kind of wastage was reduced. Furthermore, before 1941 not much grain
tax was collected, there was little tax grain transport duty, and the amount
of work missed was comparatively limited. In recent years in rural areas,
contract-labour teams [zhagong] and exchange-labour teams [biangong] have
developed and made better adjustment in the use of labour power. We have
mobilized loafers to take part in production. The number of women joining-in
production has also increased. All these things have helped the development
of Border Region agriculture.

(6) The policy of agricultural credit. Formerly there was no agricultural
credit but this was offset by the mild taxation policy. Now that grain tax
has increased and particularly as 80 per-cent of peasant households must
pay it, those households (roughly one-third) lacking oxen, agricultural,
tools, and food grain must be helped with credit. Moreover, a supply of credit
is very necessary for certain kinds of agriculture that must be developed
(like cotton-planting), for agricultural subsidiaries (like spinning and
weaving), and for certain regions which need more development. Although only
4 million yuan credit was given in 1942, of which merely 1,500,000
yuan was for oxen, over 2,600 oxen and nearly 5,000 agriculture
implements were bought and cotton-planting also expanded. It cannot be denied
that this was a great help. But because finances are limited and we can only
lend according to the government's financial strength, we still cannot provide
enough credit to match the needs of the peasant households. However, a little
is always better than nothing, and it does give some help.

The above are several of the major factors in the development of agriculture;
below I shall discuss several major lessons to be drawn from our work.

(1) Act according to the conditions of the area and the season. Agricultural
regions and seasons are different and methods of development are also different.
For example, there is no uncultivated land in the special military area (apart
from a small amount in Qingjian). The cultivated land area cannot be enlarged.
Sheep-herding is limited by the pasture lands available. There is also a
lack of pack-animals for the transport of salt. The policy of rent reduction
has not yet been thoroughly implemented. Because of these things, grain
production has not increased in those areas, and with the exception of spinning
and weaving, subsidiary undertakings have not developed. Although improved
techniques such as more frequent hoeing of weeds, greater use of manure,
and more deep ploughing were introduced there long ago, we should still carry
out more investigation of the situation, and at the right time do our utmost
to increase production. However, if we were to employ these improved techniques
in areas where land is plentiful population sparse, and working methods
primitive, they would not be very effective because they all need an increase
in labour power. From the point of view of the peasants of the latter kind
of area, deep ploughing is not as good as planting more land. Applying more
manure is not as good as opening up more uncultivated land. Planting more
land is especially good in areas with low rainfall. Therefore, in these areas
the call to improve agricultural methods is in general ineffective at the
present time. To really increase production in these regions the most important
thing for the moment is to rely on opening up unused land. If in the six
years from 1937 to 1942 the increase in ploughed land was roughly 3 million
mu then the amount harvested in 1942 was at least 500,000 tan
more than in 1936, which is equivalent to 250,000 tan of hulled grain
(each tan is 300 jin). If we estimate the grain production
of the Border Region in 1942 to be 1,500,000 tan of hulled grain,
then over six years, the increase in grain production through the increase
of ploughed land is approximately one-sixth of the total. Some of this increase
in cultivated land is new land opened up by immigrants, and some is expansion
of land farmed by the original households. All this shows us that in directing
agriculture, we must adopt different methods in different regions. In one
region we should make deep ploughing the key, and in another enlarging the
area ploughed. We must also make distinctions with respect to timing. At
a time when there is unused land that can be cultivated, we should mainly
encourage the opening up of new land. When uncultivated land has been exhausted,
then we must turn to encouraging deep ploughing. We must not only make these
distinctions between large regions, we must also make them within a county,
a district and sometimes even within a township. For example, if certain
villages in a township have rather a lot of unused land, we should encourage
the opening up of unused land there. If in other villages there is little
or no unused land, we should encourage deep ploughing. While there is still
uncultivated land in a township, we should encourage the opening up of land.
When all the lands have been opened up, we should encourage deep ploughing.
Although we have had some successes in the past few years in our work, much
has been too empty and generalized. Many of our comrades still do not know
how to investigate objective circumstances minutely, nor do they know how
to put forward concrete proposals to provide the conditions for increasing
production in different regions, and, at different times. Slogans put forward
in the past for deep ploughing, opening new lands, water conservancy, and
increasing production by 400,000 tan or 200,000 tan, in reality
contained much subjectivism. Many peasants were not interested or influenced
by them. From this we may conclude that in future we must carry out deep,
factual investigation, and solve problems in terms of concrete times, places,
and conditions.

(2) As yet the peasants in a large number of areas still pay heavy rents
and heavy interest rates, and the policy of reducing these has not been
thoroughly implemented. On the one hand peasants must bear the burden of
paying rent and interest to the landlords, and on the other they must pay
grain tax and money tax to the government. They get too little for themselves,
which dampens their enthusiasm to produce. Thus there is no possibility of
increasing production. From this we may conclude that we must conscientiously
implement the decrees to reduce rent and interest rates.

(3) As a result of the increase in Braid tax, and the newly levied hay tax,
sheep tax, and salt-transport requirement, the peasants' enthusiasm for
production has diminished. In the two years 1941 and 1942 the peasants paid
a large amount of grain tax, hay tax and salt tax, and during these years
they expanded the area of ploughed land by only 600, 000 mu, merely
60 per cent of the increase in 1939. Livestock did not increase in 1941,
and sheep even declined (of course epidemics had some effect). Immigration
also dropped. In 1942 only 4, 843, households came. Moreover, 3,527 old
households moved out, the reason mainly being that they feared further burdens.
Another reason was that the amount of grain tax collected increased progressively
according to the amount harvested and not according to the area of land worked.
This method, although rational in terms of sharing the burden equally, hindered
the growth of investment in agriculture. It lowered the peasants' enthusiasm
to invest in the land because for the same land a good harvest meant paying
out a lot and a poor harvest meant paying out little or even nothing. If
taxation was based on the area of land worked, this point could be corrected.
The enthusiasm of the middle and rich peasants could be raised, and there
would be no detriment to the poor peasants. From this we may conclude that
there must be limits to the grain tax and hay tax, and at the same time we
must improve the methods of taxation so as to promote agricultural production.

(4) Policies should be thoroughly implemented. For example, we stipulated
that for three years we would not take grain tax from new immigrants or from
those planting cotton, but in fact we have 'welcomed' grain tax from immigrants,
and we have levied one-half of the grain tax for land planted to cotton.
We originally stipulated that when livestock was bought from areas outside
the Border Region we would reduce grain tax by a definite amount for the
first year, but this has also not yet been implemented. In addition regulations
for giving rewards for increased production have not been fully carried out.
All these things not only affect the authority of the government but also
diminish the enthusiasm of the peasants. From this we may conclude that
henceforward everything pertaining to the decrees announced by the government
must be resolutely implemented.

(5) More equitable adjustment in the use of labour power and other methods
helpful to peasants, such as exchange-labour teams, contract-labour teams
and so forth, have a strong influence on agricultural growth. However, with
the exception of some counties like Yan'an, we have still not done enough
to organize and promote them. There are certainly many comrades among the
county cadres who are actively striving to put ideas to the people, and who
have originated many good methods for mobilizing the masses to develop
production. They have created many model examples. However, many other comrades
are not like this. They lack the spirit of factual investigation and enthusiastic
effort. They lack creativity. They feel that there is no work that they can
do for agriculture, or they do not know how to set-to. Therefore they only
raise empty slogans like 'spring ploughing' or 'autumn harvest'. They remain
passive, and let the peasants do things as they like. The government simply
keeps a record of what is done. But in fact there are many things to be done.
Many good methods can be thought up. For example, during spring ploughing
in 1942 some of the peasants in Yan'an felt very discouraged. Instances of
moving out, splitting up the family, and selling livestock in preparation
for reducing production occurred. From the point of view of the comrades
who lack enthusiasm and creativity, these phenomena would be insoluble and
it would be best to accept fate and let such bad things happen. But the comrades
from Yan'an were not like this. They were neither passive nor bureaucratic
They were able to grasp the key to the problem and adopt active methods.
They overcame the difficulties. At that time, the Party and government did
much propaganda work, and gave help with grain, cave houses, and agricultural
tools. Afterwards not only did production not decline, but cultivated land
increase by 80,000 mu. This example proved that there is much
work in agriculture that ran and should be done by the local Party committees
and the local government. Moreover, so long as they grasp the key
points and find a method, then when they act they can be effective. From
this we may conclude that cadres must be active to overcome difficulties,
they must unite with the masses, and according to the needs of the masses
create vigorous methods to solve their problems. They definitely cannot be
passive and bureaucratic.

In order to give our comrades a clear-cut standpoint on this extremely important
question of uniting closely with the masses and conscientiously solving their
difficulties, I here specially reproduce for reference the reports of the
comrades of Yan'an county on how they handled the problem of opening up unused
land, how they handled the problem of refugees, and how they handled the
problem of loafers.

What follows is the original report.


  HOW WAS YAN'AN COUNTY'S PLAN TO OPEN UP 80,000 MU OF UNUSED LAND IN
  1942 COMPLETED?


(1) We relied on the labour power of immigrant refugees to open up uncultivated
land.

There were 25,428 refugees in the period of 1940 to 1942. On the basis of
five of them equalling one labour power, there were 5,086 labour powers.
Each labour power can open up 10 mu of new land in one year,
giving a total of 50,860 mu. (Ten mu is the average
figure for the land opened up by refugees in the past three years. In 1942
the land opened up by each labour power was more than this. )

(2) We relied on the labour power of original households and animals to open
up unused land, totaling 29,399 mu.

The original households had 10,616 labour powers. The work could be done
with each labour power opening up less than 3 mu.

(3) However, the organization of labour power is a major task. This year
we adopted methods of collective labour, such as contract-labour teams and
exchange-labour teams. We also organized women and loafers to take
part in production.

Altogether we organized 487 contract-labour teams. We also drew 4,939 good
labour powers into collective labour (exchange-labour teams). This was almost
one-third of the total number of labour powers (according to statistics for
this spring, there were 15,702 labour powers in the whole county), which
meant that out of every three people one took part in collective labour.
The method of Contract labour was to form a group of eight to ten good workers
from a village and establish a foreman [gongtou]. Then they opened up new
land and hoed weeds either for themselves or for others. Sometimes the foreman
took part in physical labour, in which case he received pay valued at two
labour days per day worked. If he did not take part, he only received pay
valued at one labour day per day. Those forming contract-labour teams were
either entirely from the local village, or came from outside, or were organized
with people from outside the village together with peasant from the village.

The peasants were very pleased that we organized loafers to take part in
production. It increased their enthusiasm for work.

More and more women joined in production each year. In particular refugee
women took part in opening up uncultivated land, and even more of them in
hoeing. There were thirty-nine in Liulin district this year. The refugee
women of Third township in Chuankou district did not have any hoes. They
went to the mountains and waited until others were tired and resting, then
they took up the hoes and began opening-up land. When the others had finished
their rest they handed back the hoes and waited again.

(4) We relied on production plans for each peasant household. In 1942, this
county laid emphasis on determining production plans for each peasant household
based on discussions with that household and with its agreement. The government
printed a standard form to record plans including such things as opening
up new lands, hoeing weeds, and so forth. When a plan was determined, it
was posted up in the home of each family so that afterwards the government
could examine the production plan of each household according to the form.
When determining peasant household plans we had to pay attention to the following
points:

  i) The production circumstances of the previous year.

  ii) The conditions for the increase of production in the current year.

  iii) The amount of labour power (human and animal).

  iv) Obtaining the agreement of the man concerned.

  v) The need for constant examination and supervision of work.


(5) The effect of agricultural credit was important, in particular the 100,000
yuan credit given to refugees for agricultural tools. When
the refugees arrived they did not have a thing. To open up unused land, first
a mattock was needed to clear away the scrub and then a hoe to break the
land. After agricultural credit was issued and the problem of tools was solved
the refugees' desire to open up new land was very strong. In six days they
were able to open up 3 mu. In 1942 agricultural credit was
given rather late. The earlier credit is given the sooner more land can be
opened up. (Note: do not violate the agricultural season.)

(6) During spring ploughing, mobilization work had to be reduced as much
as possible. The peasants were allowed the time to open up new land and to
take part in production.

(7) The government had a tight grasp on the work of opening-up unused land.
Only three months were available for this. With a hundred-day plan, each
day opening up 800 mu, it was necessary to have a labour force
of 1,600. This was one-tenth of the laborer force of the whole county. By
19 April we had only opened up 15,000 mu. This was still far
short of completing the task, and already two-thirds of the time had gone.
Therefore beginning on 20 April, after a rainfall, there was a twenty-day
assault. In the twenty days more than 50 per cent of the whole task was
completed. Between 10 March and 19 April, 15,000 mu of land
was opened up. This was 18.7 per cent of the work. In the twenty day assault,
46,442 mu of land was opened up, which was 58 per cent of the
work.

In the assault the best districts were the following:

Luilin district: the ratio of new land opened up during the period
of assault to that opened up before was 1,294.4:100.

Yaodian district: the ratio was 1,184.4:100.

Chuankou district: the ratio was 432.1:100.

Altogether the county government held two meetings of district heads to inspect
the work, and issued three directives. The cadres of the county government
went down to the districts and townships more than three times.

The districts checked up on the work of the townships up to seven or eight
times in some cases, and three times at the very least. The townships also
checked up many times on the work of the villages.

The tight grasp of the leadership and the strict check-ups played a decisive
role in the completion of the task.

  HOW TO SOLVE THE PROBLEM OF REFUGEES TAKING PART IN PRODUCTION


  (1) [Table 1.2 refers to] Statistics on the flow of refugees into
Yan'an county in recent years.

Putting it simply, the number of households more than doubled, and the number
of people just about doubled.

The refugees who came settled mainly in Chuankou, Liulin, Jinpen. and Yaodian
districts. In these districts there was a lot of unused land.


Table 1.2 The flow of refugees into Yan’an county
(Yan'an City excluded), 1938-42


Year

Households

Number of people




1,200




1,976



1,137

6,090



5,040

14,207



1,050

6,237


Total

8,009

29,704


Comparison with 1937


Households

Number of people



7, 703

32, 705


Increase during 5 years

8, 009

29,704


Percentage increase

103.9%

90.8%


(2) Statistics on how the government helped the refugees solve problems
in production after they had come (Table 1.3).

(3) The methods for solving refugees' difficulties in production were:

(i) There was a lot of land. We proposed that the ownership of publicly-owned
uncultivated land should go to those who opened it up. If the owner of
privately-owned unused land did not open it up, we let refugees do so. The
three-year exemption from tax was an incentive.

Table 1.3 Allocation of State aid to refugees, 1940-42





Total


Allocation of land (in mu)

10,220.00

3,451.00

6,335.00

20,006.00


Grain (in tan)

669.9

495.00

458.48

1,623.38


Seeds (in tan)

40.18

8.2

47.37

95.75


Agricultural tools (items)

424.00

2,133.00

427.00

2,984.00


Oxen

979.00

82.00

212.00

1,273.00


Notes:

(a) In 1942, 13,555 jin of sweet potatoes [yangyu] were given
up the refugees in addition, and on 273 occasions they were helped with oxen.

(b) Agricultural tools were ploughshares, rakes and hoes.

(ii ) The problem of a place to live. In the beginning they lived in old
cave houses or broken-down cave houses. Many of the others who came afterwards
were joining friends, relatives, or people of other social relationships.
They lived in the cave houses of those friends or relatives. Having settled
down, they dug out their own cave house. In other cases one person came in
the first year and dug out the cave house. In second year the family came
and moved into the house.

(iii) We made arrangements among the peasants for grain to eat. We proposed
that if 1 tou of grain was borrowed before spring, after autumn
1 tou and 3 sheng should be repaid. This was
a profit of 30 per cent. It encouraged the original households to lend grain
and the government guaranteed repayment. Another method was to urge the original
households to hire help [diao fenzi], to take on share-cropping tenants
[an zhuangjia] and to contract short-term labour [lan gong] from among the
refugees. Conditions were decided voluntarily by both sides. Allowing
the original households to exploit a little was not a problem because
when the refugees first came they did not have a thing. Although they were
exploited, we could not let them starve.

Statistics for this year (1942) [are shown in Table 1.4].

Table 1.4 Households reliant upon employers for
food grain in 1942


Hired help [diao fenzi]

359 households


Share-cropping tenants
[an zhuangjia]

466 households


Short-term contract labour
[lan gong]

184 households


Total

1,009 households


These households relied on their employers for food grain. However, the hired
helpers [diao fenzi] could only get supplies for themselves. Hired farmhands
and short-term contract labourers were able to get food grain for their family
members as well. There were 650 households of the latter kind. At a rate
of three people per household, this was altogether 1,950 persons. If we add
on the 359 hired helpers, the full total was 2,309 people relaying on their
employers for grain. If they had asked for aid from the government, at a
rate of 5 tou per man per year the amount of grain needed would
have been 1,154.5 tou. What a large amount this would have
been! Therefore on the basis of mutual agreement between employer and employee,
the hiring of farmhands, helpers, and short-term contract labourers solved
many great problems. It not only solved the problem of food grains. It also
enlarged production and increased the supply of grain. Taking each household
as one labour power, there were 1,009 labour powers altogether. One labour
power could produce 2 tan of grain, so in total they could
increase grain production by 2,018 tan. After consumption this
still left a surplus of 863.5 tan. By the following year these
people were in a position to carry out production by themselves.

(iv ) The peasants were urged to help the refugees with seed and land
to work. Seed was repaid after autumn, and a rent paid for land with the
government as guarantor.

(v) The institution of credit for agricultural implements for refugees was
very effective in solving the problem of supplying tools to open up new lands.
If arrangements for any problem (food grain, supply of agricultural implements,
etc.) were not good, the opening up of unused lands could have been
impeded. Therefore it was necessary to solve each problem rapidly and at
the correct time. A delay of one day reduces the amount of land opened up.

(vi) As for the problem of burdens on the refugees, we resolutely carried
out the decisions of the government of the Border Region on treating them
well. For three years we made no demands on them, and instead the
government helped them solve all kinds of difficulties. This year the government
cadres of the county, districts, and townships saved 10 tan
of grain for issue to the refugees. While solving the problem of grain for
refugees to eat, Third township in Central district made great efforts to
reduce their burdens.

(4) Why did the refugees want to come to Yan'an?

(i) We have really solved the difficulties of referees. The solution of the
refugee food-grain problem in 1940 had a particularly wide influence. In
Chuankou district alone 300 tan of grain was supplied. Therefore
many more refugees came in the year 1941.

(ii) Although government calls had a great impact, the effect of the
refugees themselves telling their own friends, relations and other social
acquaintances of the good treatment they received was even greater. We found
that very few refugees who came to us had refugee certificates issued by
Suide sub-region. This was because they feared that after having accepted
settling-in funds or registration cards from there, they would not be free
or they would become public property. They preferred to get money through
their own personal relationships.

(5) Opinions concerning future immigrant refugees:

(i) Get more to come by encouraging refugees to use their social connections.

(ii) The government at county and district levels should conscientiously
solve problems for them.

(iii) The government of the Border Region should issue some grain and funds
to help them, with repayment after autumn.

(iv) Persist in carrying out the decisions to treat refugees favourably.


  HOW TO MOBILIZE LOAFERS TO TAKE PART IN PRODUCTION


(1) Statistical summary [given in Table 1.5].


Table 1.5 Mobilization of loafers, 1937-42


Year

Original number of loafers

Number joining in production

Number not yet taking part in production



1,629


1,330



1,246










Note:

The chief reason for the increase in loafers in 1942 was that in 1941 Jinpenwan
was taken from Gulin county and placed under the administration of this county.
According to statistics, that district had forty-three idlers.

(i) In Panlong district, a certain spirit medium beat his 'three mountains'
knife[3] into a hoe.
He told the masses he would not swindle people again and would work hard
in future.

(ii) At Lijiaqu in Third township of Chuankou district, Hui San and Gao Wu
were each given the task of opening up 6 mu of uncultivated
land this spring. They completed this and even exceeded it by 2
mu. At Tianujiagelao in Fourth township, Yang Yingcheng was
given the job of opening up 6 mu. He opened up 9
mu.

(iii) In Liulin district this year, seven men were reformed and joined in
production. In Wuyang district twelve men were investigated. After a struggle,
nine of them took part in production. In Fengfu district there were eight
men. At Ganguyi in Yaodian district eight men were organized in two groups
to go to Zhangjiakou to open up new land.

(iv) At Nanyigou of Third township in Fengfu district, Bai Fenyu was a shaman
before 1936. By 1941 he had an ox and hired a man. He had 200 sheep and had
become the village head. He paid 10.2 tan grain tax, 200
jin salt tax, and 50(1 jin hay tax. This year he has got another
ox and hired a helper. He has expanded production and his prospects are very
good.

(v) Because the government mobilized them to take part in production, the
loafers of Panlong district said: 'If things go wrong this year government
men will be even more strict with us'. For example, Li Dejin from Lijiabian
in Fourth township used to smoke opium. This year he has opened up 6
mu of new land and also stopped smoking. In the whole district
there were twenty-seven loafers. They have written guarantees that they will
do well in production, and as a result twenty of them are very good.

(vi) At Liujiaping in Mudan district there is a man (name unknown) with extremely
bright prospects now that the government has mobilized him to join-in production.
Later he sought out one of the government personnel and treated him very
w ell saying "The government was right to get us to take part in production'.
Gao Yucheng from the same district used to be a It at en He did not farm
and he did not cut firewood. Winter and summer, wearing a ragged old
cotton-padded jacket he would curl up on the cold Rang. Each day he would
smoke one-fifth of an ounce [er qian] of opium. His wife and children cried
from cold and hunger. After the revolution and educated by the government,
he has become the production director of Fourth township. Everybody praises
his method of work. He is a labour hero. Moreover he keeps a close watch
on loafers. He forces then to make production plans. Every five days he goes
up into the hills to supervise them. Under his direction Liu Guai and Yan
Fenghe have each planted 24 mu of land this year.

(2) Our methods of mobilization are:

(i) Doing propaganda, educational, and persuasive work to get them to take
part in production. Having got some grain in their prospects improve.

(ii) The government gives them definite production tasks, such as opening
up uncultivated land (see examples above) . They are inspected at regular
intervals. Moreover special people in the villages are designated to supervise
their production.

(iii) Urging the masses to struggle against them, and to force them to join
production. This year in the two villages, Jinpenhe and Yunshansi in Third
township, Panlong district, production competitions were organized. In this
situation, Chang Degong, a loafer in Jinpenhe, was forced by the villagers
to go up into the hills to open up new land. He has opened up 3 mu.
At the moment he is preparing to plant 15 mu.

(iv) Organizing the loafers in collective labour. The loafers are concentrated
in the district town and organized into tea. Is to open up new land. After
they Bet rid of the opium-smoking habit, they can go home. The land opened
up and farmed is given to whoever does the work.

(v) The government solved some of the loafers' production difficulties.

(3) Results.

The masses were very pleased that the government made the loafers take part
in production. The masses opposed them very much because they did no work
at all, paid no grain tax, and caused trouble every time there was mobilization
work. As for the loafers themselves, after they obtained some real results
from production, they realized that the government was acting for their
betterment. The above examples clarify this point. As for those who were
extremely stubborn and refused to change, some even running away when the
government tried to mobilize them, on their return they joined in a little
light productive labour. In this county no loafers have become bandits.

We have not referred to this report of the leading comrades of the Party
and government of Yan'an county without purpose. The spirit of the comrades
of Yan'an county is entirely the spirit of Bolsheviks. Their attitude is
enthusiastic, and there is not the slightest passivity in their thoughts
and in their actions. They are not at all afraid of difficulties, and are
able vigorously and firmly to overcome them all. Look how responsible they
are towards their work: 'In 1942 agricultural credit was given rather late.
The earlier credit is given the sooner more land can be opened up!' 'It was
a necessary to solve each problem rapidly and at the correct time: A delay
of one day reduces the amount of land opened up!' 'Determine the production
plans of each peasant household.' 'The tight grasp of the leadership and
the strict check-ups played a decisive role in the completion of the task.'
How vastly different and hoar much better is this spirit than that of those
timid people who draw back, full of sighs when they meet difficulties, and
of those who are not conscientious in their work and try to get by and neglect
things! Imbued with such spirit, there is not one thing that the comrades
of Yantan did not handle realistically and practically. They have a full
understanding of the feelings, needs, and concrete circumstances of all the
people of Yan'an county. They are completely united with the masses. They
carry out extremely good investigation and research, and thus they have learned
the Marxist art of leading the massed. They are entirely without subjectivism,
sectarianism, and the Party 'eight-legged essay'. How does this compare with
those subjectivists who do not solve problems according to the demands of
the masses but according to their own subjective imagination? And with those
bureaucrats who do no investigation and research work at all end, though
they work for many years, have no idea of whet is going on beneath them?
In there not a world of difference between them? We hope all the comrades
of the Border Region will have this spirit of the comrades of Yan'an, this
attitude towards their work, this one-ness with the masses, this willingness
to carry out investigation work, and thus also learn the Marxist art of leading
the masses to overcome difficulties so as to make our work successful whatever
is undertaken. Quite a few of the comrades of the various counties of the
Border Region are like or more or less like the comrades of Yan'an. We hope
that the model experience of these comrades can quickly spread to all counties,
districts, and townships.

The above is a summary of agricultural work in the Border Region in the past.
What follows are the tasks for the year 1943.

The major demand on agriculture is to increase the production of grain and
cotton (subsidiary undertakings will be discussed elsewhere). In the light
of the present need for grain and cotton and also in order to strive for
some grain and cotton for export it is still necessary for us to mobilize
the peasant masses to increase the production of hulled grain by 200,000
tan and to increase the production of cotton by 1,600,000 jin.
Is there any hope that this can be achieved? In the six years between 1937
and 1942, it is estimated that roughly 3 million mu of uncultivated
land was opened up and the production of grain increased by 500,000
tan. Well then, is it possible in the next few years once again on
the basis of opening up new land and other methods to increase the production
of grain by 400, 000 tan equivalent to 200, 000 tan of hulled grain?
In the years between 1939 and 1942 the land planted to cotton exceeded 90,000
mu and the raw cotton produced reached 1,100,000 jin. Well
then in the next few years is it possible to increase the land planted to
cotton by more than 100, 000 mu, and the cotton produced by more than,
60,000 jin?

We consider that all this is entirely possible.

If the peasants are able to increase the production of hulled grain by 20,000
tan then even if they hand over 200,000 tan of grain
tax as in 1941, they will still only have to give the government the amount
of increase. They themselves will be able to keep an amount equal to the
entire previous harvest. As for cotton, even if in future we levy some in
tax, the peasants will still be able to keep the largest part of the harvest,
and e problem of cotton cloth supply for the Border Region can be solved.

What are the policies which will effectively attain the above targets and
not remain just empty words? According to our past experience the following
eight policies must be implemented: (1) the reduction of rent and the reduction
of interest rates, (2) an increase in the opening up of uncultivated land,
(3) an increase in the planting of cotton; (4) not violating the agricultural
seasons; (5) better adjustment in the use of labour power: (6) an increase
in agricultural credit; (7) improvement in technical skill; (8) implementing
progressive taxation. In what follows I shall deal with each of these eight
points separately.

Our first agricultural policy is the reduction of rent and the reduction
of interest rates. Approximately one-half of the 1,400,000 people of the
Border Region have received a share of land. The remainder have not yet done
so, such as those in the Suide-Mizhi special military area, Longdong sub-region,
Fuxian county and many places in Sanbian sub-region and so forth. In these
regions we should carry out the reduction of rent and interest rates in
accordance with government decrees. This is an extremely important policy
for increasing the peasants' enthusiasm for production. After rent and interest
rates have been reduced, the peasants' burdens from the landlords are less
and the amount they can keep themselves is increased. Thus their enthusiasm
for production is greatly raised and they can produce more. The Northwest
Bureau [Xibei Ju] has already made concrete arrangements with the Border
Region Government over this policy and I will not speak more of it here.

Our second agricultural policy is to increase the amount of uncultivated
land opened up. Peasants in areas where there is a lot of uncultivated land
consider that deep ploughing is not as good as opening up new land. We should
therefore organize the peasants in the counties, districts, and townships
where such land exists to develop it as a means of increasing the production
of grain. Besides land freshly cultivated by the original households, we
must mainly rely on encouraging immigrants to come and develop unused land.
At present the conditions are right for getting immigrants. The various counties
should do a large amount of organizational work. According to circumstances
they should determine specific tasks for the new and old households separately.
Like Yan'an county they should make specific sowing and planting plans for
each household. Such plans should include both the opening up of new land
and the planting of cultivated land. For 1943 the planned increase in production
of grain for the entire Border Region has been fixed as 80,000
tan of hulled grain. This should be achieved through the people
and the troops opening new lands and improving agricultural methods.

Our third agricultural policy is to increase the planting of cotton. The
entire Border Region needs 3 million jin of cotton. If on average
each mu of land can yield a net total of 20
jin of raw cotton, we only need 150,000 mu of
land for cotton. If each mu can only yield a net total of 15
jin or even less, we shall need 200,000 mu. We
should prepare our cotton-land according to the latter estimates. But because
households planting cotton for the first time lack experience and faith,
even if we expand the area planted to cotton, the harvest will not live up
to expectations. Therefore it is not possible to attain the full target for
cotton production in a single year and we should increase cotton land by
56,000 mu in 1943. Together with the previous 94,000
mu, the total will be 150,000 mu making it possible
to increase production to 2,250,000 jin. There is no problem
over land and seed for planting this area of cotton, but there is a great
shortage of cotton-ginning equipment. If each ginning machine can gin 60
jin of cotton per day on average, we need 300 machines in order
to be able to gin 3 million jin of cotton in half a year. In
1943 there will be 2,250,000 jin of cotton to be ginned. For
this we need more than 200 machines. However, at present there are only a
hundred or so broken and old machines of which only fifty can be used every
day. If we attempt to gin 2 million jin of cotton on fifty
machines we will need two whole years. Therefore solving the problem of ginning
the cotton is a vitally necessary part of the policy of expanding the planting
of cotton. A further point is that up to the present the peasants of the
Border Region have still not learned to press cotton-seed oil. With 2 million
jin cotton we will also get 4 million of cotton seed. Each
100 jin can produce 12 jin of cotton-seed oil.
If we can solve the problem of pressing the oil, then the returns to the
peasants growing cotton will increase. Their enthusiasm for growing cotton
will also rise. In relation to the above needs, in 1943 the government should
do the following work to expand the planting of cotton: (1) Allocate
the planting of cotton to peasant households with suitable land so as to
make a total of 150,000 mu. Help the households planting cotton
with seed, manure and techniques. Those who have difficulties with draught
animals and implements should be given credit. (2) Construct cotton-ginning
machines and spare parts, and supply them to the peasants planting cotton.
Help them to repair old machines. At the same time organize them to buy
cotton-ginning machines from outside areas, helping with credit. In these
ways solve the problem of ginning the cotton. (3) Do research into methods
of pressing cotton-seed oil so that the peasants planting cotton will be
able to extract 480,000 jin of oil from the 4 million
jin of seed (each jin is worth 15 yuan,
a total value of 7,200,000 yuan). (4) Organize joint public and private
cotton cooperatives to undertake work such as cotton-ginning, making up into
bundles, selling, pressing oil and so forth. (5) Give rewards to peasants
good at growing cotton and introduce good methods of planting cotton and
ginning so as to increase the enthusiasm of the peasants growing cotton and
to raise the amount and quality of the cotton.

Our fourth agricultural poling is not to violate the agricultural seasons.
That is, in busy agricultural seasons we should allow the peasants to cease
all meetings and mobilization work which is not related to agriculture. Under
the present circumstances in the Shaan-Kan-Ning Border Region, in busy
agricultural seasons we should stop all meetings and mobilization of the
peasant masses outside of their agricultural work, so as to economize on
labour and animal power, and let it all be used for agricultural production.
Essential meetings and mobilization should be carried out during gaps in
the work. The previous mistake of holding too many meetings and too much
mobilization must be corrected.

Our fifth agricultural policy is better adjustment in the use of labour power.
To this end there are the following methods: incentives to immigrants, mutual-aid
labour, mobilization of women, mobilization of loafers, emphasizing support
for families with kin serving as soldiers in the War of Resistance, granting
leave of absence to take part in the War of Resistance, granting leave of
absence to take part in production, obtaining help from the troops, and so
forth. All of these assist in adjusting the use of labour power.

As regards incentives to immigrants, we must rely on cooperation between
the government and the people. The methods to be employed are as follows.
(1) the Party and government of the Suide-Mizhi special military area should
be responsible for organizing immigrants with a total of 5,000 labour powers
to go to the directly administered counties to open up unused land. However,
the basic principle must be voluntary participation, and all kinds of propaganda
and organizational work should be done. (2) The government should set aside
some grain for lending to immigrants who need help. It should also provide
credit for agricultural implements and fully carry out preferential treatment
by waiving grain tax for three years. (3) The old households should be encouraged
to help the new households by lending grain, giving up some cultivated land,
lending out cave houses, and so forth. In these loans the peasant doing the
lending should be permitted to charge some interest, with the rate freely
decided by the two parties. (4) Peasant households with a good basis should
be organized to take on the poorest immigrants as tenants [huozhong]. The
amount of rent should not be excessively low, so that the old households
will be happy to take them on. (5) Immigrants from outside should be encouraged
to come by old households who have contact with outside areas. Each county
in the frontier areas should have a special person responsible for their
reception. He should tell them about regions where there is land to be opened
up so that they can go there and settle down. For example recently 600 refugees
from Henan came to Longdong sub-region; they should be welcomed in this way.

Mutual-aid labour means that within one village or among several villages
the peasant households not only plough and plant their land independently
but in busy seasons also carry out mutual aid. For example, on a voluntary
basis five, six seven or eight households can become one group. Those that
have labour power can supply labour power. Those that have animal power can
supply animal power. Those that have a lot can supply a lot, those that have
little can supply a little. In rotation and collectively they can plough
hoe, and harvest for each household in the group, and they can settle accounts
in autumn. Work can be repaid by equal amounts of work. Those who supply
more can receive supplementary wages from those who supply less, according
to the wage rate of the village. This method is called mutual-aid labour.
The mutual-aid cooperatives and ploughing teams previously set up throughout
the Kiangsi Soviet were all organized according to this method. In villages
with a large population, several small teams can join together into a mutual-aid
cooperative. The teams have a team head and a deputy head. Cooperatives have
a cooperative head and a deputy cooperative head. Adjustment in the use of
labour can also take place between cooperatives. These, then are the labour
cooperatives of the peasant masses. They are extremely effective. Not only
do they mean that peasant households which lack labour power can plant, hoe
and harvest at the correct time, but also those households which do not lack
labour power can, through collective labour, get even more profit from their
planting, hoeing and harvesting. This method is entirely beneficial and has
no drawbacks. We should promote it widely. The system of exchange-labour
teams which some areas in the Border Region have already implemented is the
same method. Each county should strive to organize mutual-aid cooperatives
and greatly expand collective labour by the peasants. Apart from this, there
are contract-labour teams. These are also welcomed by the peasants of the
Border Region. The method is not one of mutual aid but a kind of hired-labour
organization for the busy agricultural seasons. Several people or even more
form a group and collectively work for the people who hire them. When they
have finished working for one household they go to another. It is another
method of adjusting the use of labour power. All areas should help those
who come from outside to do contract labour by helping them to find work
to do and so forth.

As for mobilizing women to take part in production, although many of the
women of the Border Region have bound feet, they are still a large labour
force second only to the men. They can take part in various kinds of
supplementary agricultural work such as planting vegetables, sowing seeds,
hoeing weeds, feeding livestock, taking food to the fields, drawing water,
and gathering the harvest, etc. There are also some who can take part in
basic labour. They have generally done these things in the past. In future
we should spread propaganda and encouragement widely, stimulating their
enthusiasm for labour so as to raise agricultural production. Comrades in
the leading organs of Party and mass organizations for women have as yet
not found the orientation for their work. They feel there is nothing that
they can do. In fact their first task should be that of looking into and
helping the women of the Border Region to play a wider role in productive
labour, so that all those women who can take part in labour go to the production
front and together with the men solve the great problem of how to increase
production. There are sill a large number of women in the Border Region who
have not untied their bound feet. This is a great hindrance to labour and
production. We should use the two methods propaganda and compulsion so that
within a few years we make them untie their bound feet. Henceforth no one
is permitted to bind the feet of young girls, no matter who they are.

As for mobilizing loafers to take part in productive labors, we have already
had some remarkable successes over the past few years. After the various
counties did this work, the number of loafers greatly decreased. However,
in those regions where they still exist we should use both persuasion and
compulsion to mobilize all of them to go to the production front during 1943.
The experience of Yan'an county in this work is good, Bolshevik experience.
Mobilizing loafers to take part in production not only increases the labour
force but also reduces the number of bad people doing bad things. It is supported
by the people and strengthens social peace.

When emphasizing support for families with members working in the War of
Resistance, we have in the past put support for families with civilian personnel
in first place and support for families with kin serving as soldiers in the
War of Resistance second. This is entirely wrong. Now we should reverse this
and put support for families with kin serving as soldiers in the War of
Resistance first. The system of substitute cultivation [daigengzhi] should
first be applied conscientiously for those family dependents of soldiers
in the army resisting Japan who lack labour power (making no distinction
between our own army and friendly armies). Secondly it should be applied
to those dependants of workers in the Party and government who truly lack
labour power. In those areas where labour cooperatives [exchange-labour teams]
have been successfully organized, the solution of this problem can be entrusted
to the cooperative.

Granting leave of absence to take part in production means that in the busy
agricultural seasons Party and government officials in the Border Region
whose families have difficulties are each year permitted to return home on
two occasions, each time for several days, so that they can take part in
family based agricultural production. The primary and secondary school of
the Border Region should also stop classes in the busy agricultural seasons,
letting the students and local teachers return home to help production. This
is another method of adjusting the use of labour.

The armed forces assisting in production means that each busy agricultural
season the troops of the Border Region spend several days helping the peasants
in the areas around where they are stationed with the ploughing, hoeing and
harvesting. Moreover they do not receive any payment (they eat their own
food). On the one hand this can help adjust the use of labour power, and
on the other hand it can strengthen the relationship between the army and
the people. The political work departments of the army should plan this work.

If all the above seven ways of adjusting the use of labour power are well
implemented, they will be of great help to agricultural production in the
Border Region. Among them the most important is the mutual-aid cooperative,
which should be realized generally throughout the whole Border Region.

Our sixth agricultural policy is to increase agricultural credit. In 1942
the government issued credit for draught animals, cotton-planting, water
conservancy work and so forth. This was greatly appreciated by the peasants
and helped some of them to overcome their difficulties. One-third of the
peasants of the Border Region lack draught animals and agricultural implements.
This is an extremely: important problem. If we want agriculture to develop,
helping this huge number of peasant masses to solve their difficulties is
a very important policy. One way of doing this is to increase agricultural
credit. In 1942 under the sponsorship of the Border Region Bank, 1,580,000
yuan of credit for draught animals and agricultural implements
was issued to 8,025 peasant households in the seven counties, Yan'an, Ganquan,
Fuxian, Ansai, Zichang, Gulin and Zhidan. Together with capital of more than
1,030,000 yuan amassed by the peasants themselves, this bought
2,672 draught animals, and 4,980 pieces of agricultural equipment. Over 100,000
mu of new land was opened up and grain production increased
by an estimated 26,000 odd tan. In addition, the three counties
Yanchang, Yanchuan and Gulin issued 1,530 yuan of credit for
planting cotton and for cotton-seedlings. The area planted to cotton grew
by over 51,000 'a and could produce an estimated increase of 870,000 Jin
of cotton. In view of the achievements through agricultural credit in 1942,
a further 17 million yuan should be lent in 1943 in addition
to re-lending the 3,110,000 yuan. Of this, 14 million
yuan should be credit for agricultural implements and draught
animals and 3 million yuan should be for planting cotton. Based
on the experience in issuing credit in 1942, methods for credit in 1943 Should
pay attention to the following points:

(1) Credit should be given in those regions which have a lot of unused land
to new and old immigrants and old households of poor peasants who have
labour-power but lack implements, draught animals and grain, and to peasant
households which have planted a lot of land but have no money with which
to hire labour for hoeing.

(2) After trials by the Commodities Bureau [Wuzi Ju]. we should introduce
loans in kind, buying draught animals and suitable implants from outside
or assisting peasant households themselves to purchase them. Only in this
way can we truly increase the draught animals and agricultural implements
in the Border Region. Otherwise the peasants can only buy implements and
animals from the rich peasants and landlords of the Border Region with their
Border Region currency. This merely has the function of adjusting the ownership
of animals and tools within the Border Region and does not increase the total
stock of animals and implements.

(3) Agricultural credit for next year has already been increased. We should
also alter the policy used this year of concentrating issue of credit in
the counties around Yan'an. We should issue a suitable amount to the Sui-Mi,
Longdong, Sanbian, and Guanzhong sub-regions. But this should not
be done on an egalitarian basis. Instead it should be issued in a planned
way to those counties, districts and peasant households where there is a
lot of unused land, where the need for funds is greatest, and where there
can be profitable production.

(4) The organization for issuing credit must be improved. That is to
say, credit must be issued through district and township governments,
and cooperatives which have the trust of the masses. Therefore the cadres
of the districts and townships must be made to recognize the great significance
of agricultural credit in the development of agriculture. They must not look
upon it as a disaster-relief system. They may not adopt a policy of egalitarian
distribution nor an irresponsible attitude.

(5) The formalities for issuing credit must be simple. Use the local methods
for giving credit with which the peasants are already familiar. There is
no need for formalities such as the 'letter of request for credit', etc.

(6) Of the total agricultural credit of 20,110,000 yuan set
aside 8 million yuan specially as credit for cotton and wheat
seedlings, The households which borrow this can repay in kind after the cotton
and wheat harvest. Although these funds are specified as funds for cotton
and wheat seedlings, the peasants should be able to use them freely. Such
credit is of mutual benefit to public and private interests. The
government gets repayment in kind and the peasants can reduce exploitation
through paying high interest rates on loans.

(7) The issue of credit should not violate the agricultural seasons. The
Finance Department [Caiting] and the Border- Region Bank should make
rapid plans so as to issue half of the entire total of credit before
the end of the lunar year this year, that is about 10 million
yuan.

Our seventh agricultural policy is to improve agricultural techniques. Improving
techniques means carrying out research into things that are feasible, starting
from the existing agricultural techniques and the peasants' production skills
in the Border Region. The aim is to help the peasants improve the mayor processes
in the production of grain and cotton and to increase production. Some
improvements are very possible. We have already had quite a lot of experience.
It is wrong to lack faith and enthusiasm on this point. However, there is
no basis for boasting of the possibility of great improvement, or for considering
that we can realize modernized, large-scale agricultural techniques in the
Border Region.

How should we implement this policy? We consider that the following things
should be done:

(1) We should build effective water conservancy projects. Jingbian provides
an example. In Yangquiaopan, Changcheng district, Jingbian county there are
25,000 mu of land that can be irrigated. They have already
irrigated 5,000 mu. In 1943 they want to carry out further
construction. According to the Jingbian comrades, 1 mu of dry
land only yields 1 tou of hulled grain. However 1
mu of irrigated land can be planted three times per year. The
first planting is spring wheat which yields 8 tou, equal to
4 tou of hulled grain. The second planting is black beans,
yielding 4 tou equal to 2 tou of hulled grain.
The final planting is turnips, yielding 2,000 jin. Each
is worth 0.3 yuan and the total value is 600 yuan.
On the basis of each tou of hulled grain being worthy of
150 yuan, this is the equivalent of 4 tou of
hulled grain. These three things give a total equivalent of 1 tan
of hulled grain. This is ten times the yield of dry land Therefore
the peasants of Jingbian often proudly say, 'Plant wheat first and then black
beans. The black bean forest contains turnips too.' The major problems in
constructing irrigated land are those of the distribution of land rights,
of mobilizing manpower, of organizational leadership, and of building ditches
and dykes. If one of these four is not right then nothing can be achieved.
In 1942 the comrades of Jingbian led the peasants to construct six dykes
in Tuwan and Yangquiaopan. etc. After the dykes they built ditches, channeling
in the water to irrigate the land. First of all they solved the question
of land rights by dividing the new irrigated land between landlords and peasants
at ratios of 70 per cent to 30 per cent, 60 per cent to 40 per cent, or half
and half. This aroused the enthusiasm of the peasant masses. According to
the comrades from Jingbian: 'So long as the problem of land rights is solved,
it is easy to call on the peasants. For example, we constructed ten irrigated
areas. Over a hundred new households came in addition to the existing 200
peasant households and of these more than thirty came from other districts.'
They also say: 'Government funds are very important in the construction of
irrigated land. However we must mainly rely on the organization of manpower
and on unutilized capital. In Jingbian we built 5,000 mu of
irrigated land in 1942. Altogether we used 28,560 labour days, which is an
average of 5.7 per mu. The total funds were 858,000
yuan. Of this 210,000 yuan came from public funds
and 648,000 yuan from unutilized capital absorbed. Of course
a large proportion of these resources was made up by the ordinary folk giving
their labour instead of cash.'

As regards organization and leadership, the Jingbian comrades Say:

'We adopted the following two methods of leadership when building irrigated
Land. First we organized water conservancy committees of three to five men
from good peasants in the locality. These were responsible for balancing
equitably the use of labour, tools, and so forth. However, it was often difficult
for them to solve problems of property rights and water-use rights, hindering
the implementation of water-conservation work. Therefore it was necessary
to have a second method whereby the government delegated cadres to assist
in leadership and to solve difficult disputes among the masses. Cadres from
the Water Conservancy Bureau [shuili Ju] and a further three
delegated by the county government took partial control of construction at
the ten sites.'

The comrades of Jingbian have also decided that in 1943 they will continue
by constructing 4,000 mu of irrigated land in Yangquiaopan.
However since there were originally only sixty households there and in 1942
only about forty new households came in, the total of a hundred or sixty
households still leaves a problem of labour power. They have therefore decided
to appeal for a hundred households to come in 1943. At present they have
already begun to dig out cave houses and to prepare dwellings. 'Settling
a hundred immigrant households is a heavy task. Since most of them came from
Hengshan and many will be refugees, they will need a lot of credit if we
are to succeed. If the immigrants arrive, together with the labour power
already in the area there will be no difficulty in constructing, 4,000
mu in 1943.' As well as this the comrades of Jingbian have
also built a kind of ' water-logged land' [Shuimandi]. Water-logged
lands are 'large pieces of flat land surrounded on three sides by high mountains
and on the fourth side by a deep gully [tian qou]. Some
are 2,000 to 3,000 mu and some are 200 to 300
mu. The soil of such land is very good but on top of it is
piled sand and gravel which obstructs the seedlings and spoils the quality
of the soil'. The method of constructing water-logged land is 'to build a
solid dyke along the side of the gully on top of which sand willows
[shaliu] and pea-trees [ningtiozi] (in
winter this supplies food for the sheep) are planted. This dyke prevents
the water that runs off the mountains during the course of the year from
flowing away through the gully. It all lies on the land. The mud is very
thick. It is extremely fertile and has a high water-content. It is very good
for planting crops. Furthermore, each year the area expands and the mountain
gullies become flat land. Thus the productive area is increased'. The yield
of this water-logged land is more than double that of dry land. 'Five
mu of dry land yields 1 tan of grain but 5
mu of water-logged land can yield 2 or 3 tan. The comrades
of Jingbian only discovered how to build this water-logged land during the
mobilization for the spring ploughing in 1942. Therefore it has as
yet only been tried out in two places totaling 1,000 mu. They
are preparing to construct such lands in a good many places in 1943 and the
total area will be over 13,000 mu. They say 'In the entire
county from 50,000 to 60,000 mu of water-logged land can be
built'. I have given the example of Jingbian in detail to prove that the
case for building water conservancy works is far from hopeless. Conditions
for doing so exist in several places. In particular the conscientious and
practical spirit of the comrades of Jingbian provides an effective model
for the various counties. Although the water-conservancy conditions in other
counties cannot be the same as those in Jingbian, by relying on the leadership
of the Party and government and the efforts of the people some water conservancy
can be started in those places where conditions are really right. In 1943
the government should set aside 2 million yuan as funds
for carrying aft water conservancy works in the Yangquiaopan area of Jingbian,
the Huluhe area of Fuxian and so forth.

(2) We should popularize the use of superior-quality seeds. If we have good
seeds we can get a bigger harvest even without increasing labour and manure.
For example the Guanghua agricultural station has already successfully tried
out the 'Wolf's tail' seed. It has a high yield, is resistant to insects
and birds, and can be planted anywhere. There? sweet-potato yield is also
higher than average. We should encourage the peasants to plant them. First
each county should select one or two districts and order some peasants to
carry out tests. If they find the soil and climate suitable, then such seeds
can be popularized so as to increase production.

(3) We should encourage the opening up of new land and the turning over of
the earth during autumn, as this can reduce insect pests and promote the
aeration of the soil. It can also conserve the water content and increase
the harvest of the following year.

(4) After popularizing the organization of mutual-aid cooperatives we should
encourage the peasants to increase the number of times they hoe weeds. The
purpose of hoeing weeds is not only to get rid of weeds and to help the seedling,
but also to conserve water and resist drought. If we increase the number
of times we undertake hoeing, we can increase the amount of harvest even
if we do not use much manure.

(5) In the summer and winter of 1943 the five sub-regions should separately
hold exhibitions organized by the Reconstruction Department
[Jianting] and five special offices [zhuanshu]. In
the light of the experience of the two previous agricultural exhibitions
in the Border Region, we should improve the layout, introduce and promote
the achievements of model-peasants, and popularize an agricultural production
movement in the labour style and skills of Wu Manyou. In 1943 the agricultural
exhibition of the sub-regions should include the achievements of the troops,
the official organizations and schools in agricultural production. This will
encourage their agricultural production and will also promote unity between
the troops and the people.

(6) In 1943 the Liberian Daily and Border Region Masses
Dally should widely promote the Wu Manyou production movement so
that many more Wu Manyous will be created within the five sub-regions.

(7) The primary and secondary schools of the Border Region should
run general agricultural knowledge classes and edit textbooks for winter-study
containing practical information on Border Region agriculture with the aim
of improving agriculture and increasing production.

(8) the Reconstruction Department should call a meeting of experts to
get down to research on the 'willow-root' water which flows from
the hilltops, so as to deal with it in a scientific manner and to
prevent people from contracting 'limping sickness' after drinking it. If
this problem can be salved then much fertile land in the neighborhood
of the hills can be put under the plough and become good arable land.

Our eighth agricultural policy is to implement progressive agricultural taxation.

In the past agricultural taxation was in the form of national salvation grain
tax. Although it was levied on progressive principles, the amount levied
each year was not standard. The amount levied per family varied from year
to year. In 1941 there were cases of taxes being apportioned out [tanpai].
Although an assessment method [pinquizhi] was instituted in 1942
as being more equitable, there were still inequalities . The most important
failing was that the amount of tax was not fixed. This dampened the enthusiasm
of the peasants for production. We propose that in 1943 the government should
examine and register the land held by the people, and thereby construct a
simple progressive agricultural tax. The amount of tax should be decided
according to the amount of land, its quality, and so forth. In this way the
peasant will be able to calculate the amount of tax themselves according
to the amount and quality of the land they farm. Once the peasants can do
this, they can work out the ratio between income and expenditure for the
family for the entire year. They can then set-to and produce with greater
enthusiasm for production. This will guarantee an increase in the production
of grain. Moreover, inequalities will not arise when the government levies
the tax. After carrying out the preparatory work in 1943, we can implement
progressive taxation in 1944. Counties where preparation is completed early,
can carry it out on a trial basis in 1943.

Reduction of rent and of interest rates, an increase in opening up new lands,
popularizing the planting of cotton, not violating agricultural seasons,
better adjustment in the use of labour power, an increase in agricultural
credit, improvements of agricultural techniques, and preparation for implementing
a progressive tax — these eight items are the effective agricultural
policies which we can and meat carry out in 1943. With the exception of the
progressive tax for which we can make preparations and which can be tried
out in a few counties, the other seven items should be implemented immediately.
Many of them should commence during the winter of 1942. Otherwise the time
will be lost and they will become empty words.

The above is a summary of our work as regards agriculture in the private
sector and our strategy for 1943. What follows is a discussion of closely
related agricultural subsidiary undertakings such as animal husbandry and
handicrafts.

  3. ON THE DEVELOPMENT OF ANIMAL HUSBANDRY


The three major subsidiary undertakings of the peasants of the Boarder Region
are animal husbandry, salt transport. and textiles. It is well known that
the breeding of cows and donkeys plays a decisive role in agriculture and
salt transport. The breeding of sheep is closely related to the supply of
bedding and clothing. Last year the peasants of the Border Region harvested
more than 1 million jin of wool. Including sheep exported the
estimated value was more than 20 million yuan which is proof
of the importance of sheep. The greatest enemies of livestock are the many
diseases and the lack of fodder. If we do not solve these two problems, there
can be no development. In the first place the destructive power of disease
is very great. For example in the Spring of 1941, more than 20,000 Sheep
died in an epidemic in Jingbian. In 1942 more than 16,000 died at the same
cause in Dingbian. In the summer of 1941, more than 500 cows died of cattle
plague in Yan'an. In the summer and autumn of 1942, 574 cows died in Zhidan.
This shows how disease is the great enemy of the livestock of the Border
Region. Secondly. the lack of fodder also greatly hinders the raising of
livestock. In the spring of 1941 when 20,000 sheep died in Jingbian, most
of the 30,000 lambs also died. Besides the epidemic, an important factor
was the lack of fodder. At the same time over 2,000 cows and horses died
of hunger there. Another keenly-felt difficulty in recent years is the lack
of fodder supplies on salt-transport routes, which greatly hinders the transport
of salt.

Our task is to protect livestock and increase breeding. In order to attain
these goals we should implement the following policies.

Prevention of disease.  The important thing here is for the county
and district governments to call meetings of local veterinarians and old
experienced peasants to do research into simple methods of preventing and
curing animal diseases, and to encourage the use of these methods among peasant
families with livestock. This is a very simple thing to effect. Secondly,
the Reconstruction Department should order its agricultural station to increase
veterinary equipment, to do research into animal diseases in the Border Region,
to produce large amounts of serum and vaccine, arid to propagate and implement
effective methods of prevention and cure.

Popularize the planting of grass for animal pasture.   Most of
the animals of the Border Region are put out to pasture. Where the pasture
is not good, disease easily arises. Therefore we should widely promote the
planting of alfalfa [musu], particularly on and near the salt-transport
routes. This will benefit both the transport of salt and the development
of animal husbandry. In 1942 the government originally planned to plant 30,000
mu of alfalfa, but ultimately only 23,000 mu
were planted because there were not enough seeds. In 1943 the county governments
should transport more seeds from Guanzhong and issue them to the peasants
in areas where planting is planned. They should also encourage the peasants
to buy some themselves. In addition they should mobilize the peasants to
cut large quantities of grass in the autumn and to store it up for winter
use. This will not only avoid illness induced by animals eating cold grass
but also stop the peasants from selling animals because of lack of winter
fodder. We should look to the experience of Jingbian in this respect. Warned
by the great loss of livestock in the spring of 1941, the comrades in Jingbian
have done much work in tine past two years. They have appealed to the peasants
to plant alfalfa, create fields for pasture, cut autumn grass, plant willow
trees, and dig up grass roots as means of providing fodder. First of all
their called upon the peasants to plant over 2,000
mu of alfalfa in 1942. Most of the seed was issued by the
government, and the peasants were very enthusiastic. They are once again
preparing to issue some credit for seeds to the peasants in 1943, and they
are specially calling upon the peasants themselves to prepare seeds. As a
way of encouraging them to plant large amounts of alfalfa, they are giving
rewards to those who do very well. Secondly, they prepared more than 4,000
mu of pasture fields in 1942. The grass on this pasture land
is mainly reed grass [luwei]. This flourishes in the ponds
and large marshes in the desert land bordering an Mongolia. Each mu
yields more than 500 jin. The pasture fields that existed
before the revolution were later destroyed and the cows and sheep wandered
around at will. Now they are mobilizing the masses to restore them. It does
not take a lot of labour, and cutting the grasses after autumn prepares for
winter use. Thirdly, in the mountainous areas of Jingbian there is a lot
of reed grass, white grass [baicao]. bing grass [bingcao], desert
bushes, and so forth. These are of great help for the livestock, if they
are harvested in autumn. In 1941 the masses were organized to gather 5 million
jin. In 1942 they again mobilized each man to cut 100
jin. As yet they have not worked out the latter total. Fourthly,
they encouraged the masses to plant willow-trees, sand-willows, and pea-trees.
The leaves and twigs can be fed to camels and sheep which is another way
of providing fodder. At the same time this supplies fuel which pleases the
masses The duty of the government is to supply seeds and encourage planting.
Fifthly, in Jingbian the animals eat both the leaves and the roots of the
white grass and bing grass. During spring ploughing the strongest men in
Jingbian plough the land in the morning, dig-up roots in the afternoons,
and feed the livestock in the evening. The woman and children spend the whole
day digging-up roots. Each person can clean-up more than 100
jin, and this plays an important part in this supply of fodder.
However, the government must make good arrangements since,
as there are many people digging, there are arguments over land rights. The
landless refugees make it even more difficult. According to the Jingbian
comrades:

  'With these methods we solved many problems for the people. Of course the
  grass grew well in 1942 because there was a good rainfall. However, animal
  husbandry also developed because of the above five methods for providing
  fodder. In 1942 over 60,000 lambs survived throughout the county and there
  were very few deaths. With the exception of a few areas, there was a great
  reduction in the loss through disease of fully-grown sheep, and cows, donkeys,
  horses and so forth. Excluding sheep, the livestock of Jingbian requires
  30 million jin of fodder per year. We can get at least 10 million
  jin with the above five methods.


Fodder is a life-and-death question for livestock. We hope that the comrades
in the various counties will make a plan for fodder in 1943.

Ban the slaughter and export of female animals.   The slaughter
of all cattle is forbidden and old cattle can only be killed after inspection.

Improve animal breeds.  We should investigate experience in
cross-breeding, select good breeds of donkeys and sheep, and popularize them
among the people. This should be done first of all in Ganquan and Yan'an
and then spread to other counties. Besides this the government should purchase
tanyang sheep from Yanchi. These should be issued for breeding
to peasant families with many sheep. Each tanyang ram can be
mated with twenty ewes. The wool of this sheep is extremely fine and
soft, and each sheep yields 2 jin per year.

If we can conscientiously implement the above methods. there can be even
greater expansion of livestock in the Border Region. I hope the Reconstruction
Department and the comrades in the various counties will pay attention to
this.

  4. ON THE DEVELOPMENT OF HANDICRAFTS


Handicrafts in the Border Region exist in two forms. The majority are subsidiary
family undertakings and a proportion are independent handicrafts. The largest
is the spinning and weaving undertaken by women. However. for many years
past a large proportion of local yarn and local cloth has been displaced
by foreign yarn and foreign cloth. Only recently. because of our encouragement,
has there been some resurgence. Even so the peasants of the Border Region
still want to take their surplus products, skins , and salt-transport trade
to outside regions in exchange for large amounts of foreign yarn and foreign
cloth. Their own spinning and weaving industry is still far from sufficient
to supply their own needs. I shall therefore take textiles as the key popular
handicraft for discussion here. In addition I shall deal with silk and
oil-pressing, ignoring others for the moment.


  SPINNING AND WEAVING


The people, the troops, and official personnel need 250,000 bolts of coarse
cloth per year (each bolt is 2 feet 4 inches wide and 100 feet long [Chinese
measurement].) Of this, the amount required by the troops and official personnel
is roughly 50,000 bolts, and that by the people 200,000 bolts. What is the
present supply? The seven publicly-run textile mills produce approximately
11,000 bolts per year. The seven large and small textile cooperatives run
by the people produce roughly 18,000 bolts per year. There are no statistics
for the amount of local cloth produced by the women at home, but it is estimated
to be around 30,000 bolts per year. Public and private annual production
totals 100,000 bolts, 150,000 bolts less than the amount needed. That is
easy to say, we can already supply 40 per cent of our needs, which is a great
achievement. But we are still 60 per cent short, and meeting this is our
future task. This task is very great. and we shall need several years to
complete it. But it can be done if we rely on, improve and expand the existing
textile enterprises run by the government and by the people. If we have the
raw cotton, we can in a planned way encourage the women to spin yarn and
to weave cloth made half of local yarn and half of foreign yarn. Gradually
we can reduce the import of foreign yarn, until eventually we reach the position
where we use only our own yarn to weave cloth. In this way we can solve the
problem.

As regards weaving, the responsibility rests first with the publicly-run
mills. In 1942 publicly-run textile mills were capable of producing 11,000
bolts of cloth. This could supply almost half of the needs of the troops
and official personnel. In a few more years we can be completely self-sufficient.
Second, we must encourage women to weave cloth as a popular industry. In
the Suide sub-region the women can already produce more than 30, 000 bolts
per year. However, the widths and lengths are not uniform. The people do
not like to buy it. They still prefer imported cloth. If improvements can
be made, there are good prospects for increasing the production of cloth.
Third, the people's cooperatives can already produce 18,000 bolts per year.
This can be further developed. We must rely on the combination of these three
forms to provide the cloth required by the Border Region. However in the
first place the greatest problem is the supply of yarn. At 12
jin of yarn per bolt, we need 3 million jin to
weave 250,000 bolts of coarse cloth entirely from local yarn. If we use a
mixture of half local yarn and half foreign yarn, we will need 1,500,000
jin of local yarn and 150,000 bundles of foreign yarn. At present
the cloth woven by publicly-run mills and the people's cooperatives is made
from this mixture of half local and half foreign yarn. However, there is
still not enough local yarn. We must greatly expand the amount of spinning
done by the people, and improve the quality of the yarn. Therefore it is
extremely important for the Border Region to gradually expand handicraft
spinning and weaving among the people, to increase the quantity, and too
improve the quality.

How should we gradually solve these problems? In the light of past experience,
we propose the following methods.

(1) First we should reorganize and expand spinning and weaving among the
people in the counties of the Suide special military area. The way to do
this is, under the direction of the special office of the military area,
to unite the efforts of the commodities Bureau and the Daguang Yarn Factory
of 359 Brigade, issuing raw cotton to women and ordering them to produce
more local yarn to supply the yarn needs of the publicly-run cloth factories.
This method was effectively implemented in 1942. It should be continued and
expanded in 1943. Apart from supplying yarn to the publicly-run cloth factories,
the people of the special military area may weave cloth themselves. The
Commodities Bureau can determine measurements and quality, and guarantee
a market. That is, the cloth can be purchased by the Commodities Bureau either
for its own use or for selling among the people. Next, the government should
invest 1 million yuan in order to increase the quantity of
local yarn. Based on the experience of the Southern District Cooperative
of Yan'an county which organized spinning by women in 800 households, lending
funds to 3,000 households in Yan'an and Ansai will increase the number of
spinning-machines in the two counties by 3,000 in 1943. Organizing spinning
by women in 1,000 households in Qingyang and Quzi counties will increase
the number of spinning-machines by 1,000. These credit funds can be handled
by the Commodities Bureau, which can issue raw cotton and spinning-machines.
It can purchase the local yarn produced to supply the needs of the publicly-run
factories. Next, in order to increase cloth production the government should
invest a further 1 million yuan either as loans or as share
capital in the existing cloth-weaving cooperatives run by the people as a
means of expanding their undertakings.

Here we should consider the plan for Yan'an county. In their Plan for
Production and Construction in 1943, the comrades in Yan'an say:

In 1943 we shall increase the number of women able to spin and weave by 40,000.
Estimating that they will be able to spin 18 jin of yarn each
in a year (11/2 jin per month ), this gives a total of 72,000
jin. In addition, there were already 1,000 women able to spin
in 1942. Each year one of these can spin 20 jin, giving a total
of 20,000 jin. The two groups can together spin 92,000
jin, which can be woven into 8,363.6 bolts of cloth. However,
this is still 4,886.4 bolts short of our needs. He plan to solve this problem
within two or three years, and to achieve complete self-sufficiency. The
population of this county is 64,000 (excluding the city of Yan'an). Of these,
42,000 are adults. Each adult needs one-quarter of a bolt of coarse cloth
per year (a suit of plain clothes requires 11 feet of cloth and half a suit
of padded clothes requires 14 feet of cloth, a total of 25 feet; each bolt
of coarse cloth is 100 feet long). Their total requirement is therefore 10,500
bolts. The 22,000 young people each need half the quantity of cloth required
by an adult. A bolt of cloth is enough for eight and their total requirement
is 2,750 bolts. The annual requirement for the whole county is thus 13,250
bolts.

The 92,000 jin of yarn spun in 1943 will be woven into 8,366.6
bolts of coarse cloth. This requires 56 looms (each loom can weave 150 bolts
of coarse cloth per year ) . In 1942 there were twelve looms in the villages
and factories of this county. Thus we must expand the number in the village
by forty-four during 1943 using the cooperative structure. There are three
methods for doing this. The first is investment (i) in incentive awards to
encourage women to spin, 50,000 yuan (ii) in producing 5,000
jin of raw cotton at 100 yuan per
jin, 500,000 yuan, and (iii) in expenses for
spinning and weaving-equipment, 1,000 spinning-wheels at 100
yuan each, 100,000 yuan, and 44 looms at 1,000
yuan each, 44,000 yuan. The total required for
the above items is 694,000 yuan. Second, looms in the villages
should be set up by the peasants organizing themselves into partnerships.
The government can help them overcome their difficulties by training skilled
workers, or by investing capital for looms and so forth. Third, for every
2 jin of raw cotton issued, 1 jin of yarn should
be collected. The cotton cloth woven in the villages may be used by the peasants
themselves. The Gaodan Yarn Spinning Factory should play the leading role
in encouraging women to spin, and in training workers.

This plan by the comrades in Yan'an is really worth looking at. If the people
of Yan'an, who lack experience of spinning and weaving, are able with the
encouragement of the Party and government to become fully self-sufficient
in yarn and cloth within two or three years, other counties without experience
should also be able to solve the problem within a similar or slightly longer
period. We hope that the comrades in the various counties will all make such
a plan. As for the various counties where the peasants have experience, such
as the special military area, the problem should be solved even more easily.
According to the calculations of the comrades in Yan'an, adults make up
two-thirds of the population and children one-third. One bolt of cloth is
enough for four Adults or eight children. Therefore, the yearly cloth requirement
for the 1,400,000 population of the Border Region is not 200,000 bolts but
337,500. According to the opinions of the comrades in Yan'an a large quantity
like this can be provided within two or three years. In sum, by relying on
the masses setting-to and on the leadership of the Party and the government
any difficulty can be overcome.

(2) The Reconstruction Department should do research into the people's
experiences in spinning in order to improve the quality of local yarn so
as to prepare to produce Border Region cloth entirely from local yarn, gradually
reducing and ultimately stopping the import of foreign yarn. If the quality
of yarn cannot be improved then we cannot suspend dealings in foreign yarn.

(3) Improve the woolen goods made by the publicly-run factories. Using woolen
goods in place of some of the cotton clothing and bedding used by the army
is a way of reducing the consumption of cotton cloth.

(4) In 1943 official personnel should set a personal example and wear local
cloth without exception. At the same time they should encourage the people
to use more local cloth and less foreign cloth. According to the situation
in the development of local cloth, the Commodities Bureau can gradually limit
the import of foreign cloth.

The above methods will help us gradually to solve the great problem of
self-sufficiency in cotton cloth. Although it can only be done gradually,
it is nevertheless entirely possible. We must resolutely implement all methods
for doing so.


  COTTON - SEED OIL


In 1942 the peasants of the counties planting cotton harvested around 3 million
jin of cotton seeds capable of giving 360,000
jin of oil, and, with the expansion in cotton-planting, from
5 to 6 million Jin of seed can be obtained next year which
can further increase the quantity of oil. We should prevent all this being
wasted. Cotton-seed oil is edible but the peasants of the Border Region are
still not accustomed to it. If the government does not promote it, they will
not extract the oil. Therefore the government of the Border Region should
invest 300,000 yuan and, through the governments of the counties
where cotton is planted. encourage the peasants to experiment with pressing
cotton-seed oil. After the experiments succeed, it can be widely promoted.
The oil can be bought by the government. This will not only provide edible
oil but also at present oil prices of 30 yuan per
jin give the peasants an income of 10,800,000
yuan from 360,000 jin of oil.


  SILK


In the counties of Suide, Qingjian, Anding, Yanchuan, Gulin and so forth
many peasants rear silkworms. It is a relatively large subsidiary undertaking.
For example, in Anding alone there were 3,585 peasant households rearing
silkworms during 1942. They harvested 23.662 jin of silkworm
cocoons, at a value of 600,000 yuan.

Our sewing and repair industry needs silk thread and our woolen-blanket industry
needs silk edging. We. can also use silk thread for the woof when weaving
cotton cloth as a means of reducing the import of foreign yearn. Therefore,
we should develop the silk production of the Border Region. The way to do
this is for the government to issue 300,000 yuan in credit
to the peasant families to expand the rearing of silkworms. Credit should
be given especially to those peasant households which have a good record
in rearing silkworms. Moreover, the commodities Bureau should buy the peasants'
silk through the local cooperatives and order woven-silk articles from the
peasants in order to promote the expansion of the silk industry.

The total investment in the above three undertakings, spinning and weaving,
oil-pressing, and silk, is 2,600,000 yuan (yarn spinning 1
million, cloth-weaving 1 million, oil-pressing 300,000 and silk 300,000).
Although these funds are not great, they can stimulate the people to progress
a little in solving the urgent needs of the moment. In 1943 when we have
even more experience, we should consider increasing the amount of capital.
Spinning and weaving are particularly important. Unless the people set-to
and the public sector helps, the problem cannot be solved as a whole.

Here I have only taken up spinning and weaving, oil-pressing, and silk. Other
items have not been mentioned. The counties can according to actual
circumstances, do research into handicrafts which are related to the people's
economy and which need stimulus from the Party and the government, and they
can make their own plans.

  5. ON THE DEVELOPMENT OF COOPERATIVES


There were already cooperatives in the Border Region during the civil-war
period. Since the War of Resistance began, the Border Region government has
continued to promote them, and after five-and-a-half years of hard effort
they have gradually expanded.

In the four years from 1937 to 1941 the number of consumer cooperatives increased
from 130 to 155 and the number of cooperative members from 57,847 to 140,218.
The share capital grew from 55,525 yuan to 693,071
yuan. The value of sales increased from 261,189
yuan to more than 6,008,000 yuan. Profits rose
from 4,800 yuan to over 1,020,000 yuan and the
public accumulation fund [gongjijin] increased from 3,500
yuan to over 173,000 yuan.

If we compare the October 1942 Statistics for the nineteen county capitals
with those of 1941, the number of cooperative members has increased from
97,297 to 115,899. The share capital has risen abruptly from over 712,900
yuan to more than 6 million yuan and the profit
has also grown from 858,000 yuan to more than 3,398,000
yuan.

The largest amount of share capital owned by individual members of
consumer cooperatives is around 10,000 yuan and the
lowest is around 4 or 5 yuan,

The distribution of consumer cooperatives at the end of 1941 was as follows:
Yan'an, twenty-eight; Ansai, twelve; Yanchang, eight; Gulin, eight; Dingbian,
eight; Qingyang, Huachi, Quzi and Yanchuan, seven each; Anding, Fuxian and
Wuqi, six each; Ganquan, Jingbian and Heshui, five each; Yan'an city and
Mizhi, four each; and Suide, two. There are still no statistics for the other
counties.

Turning to producer cooperatives, ten were established In 1939 with the support
of the government and the assistance of the northwest office of the Chinese
Industrial cooperative [Gonghe]. Thereafter some consumer cooperatives
with large amounts of capital also ran producer cooperatives. By October
1942 the number of producer cooperatives had increased from ten to fifty.
The number of employees engaged in production had increased from 199 to 563.
Share capital had grown from 11,130 yuan to 2,491,600
yuan and the total value of monthly production from 60,000
yuan to over 2,300,000 yuan.

According to this year's statistics the distribution of producer cooperatives
is as follows: Suide, sixteen; Yan'an, seven; Gulin, five; Yanchang, five;
Yanchuan, five; Ganquan, three; Ansai, three; Jingbian, two; Qingyang, one;
Jiaxian, one; Mizhi, one; Anding, one.

Among the fifty producer cooperatives there are twenty-seven large and small
textile cooperatives, thirteen in Suide, four in Yan'an, two in Gulin, and
one each in Ganquan, Fuxian, Yanchang, Yanchuan, Ansai, Anding, Jiaxian and
Mizhi. Altogether they employ 497 people and their share capital is 1,700,000
yuan. Six have twenty-five or more employees, the rest ranging
from three to over ten. If these twenty-seven cooperatives were working at
full capacity, they could produce 30,000 bolts of cloth annually. At the
moment they are only producing around 22,000 bolts, 6,000 woven blankets,
4,152 dozen woolen towels, and 8,400 dozen pairs of woven socks.

There are five dyeing cooperatives, two in Yanchuan, two in Suide and one
in Yanchang. They employ a total of thirteen people, their share capital
is 128,000 yuan and each year they can dye over 7,000 bolts
of cloth. There are five producer cooperatives pressing cottonseed oil. Of
these, two are in Gulin, two in Jingbian, and one in Yanchang. They employ
a total of nineteen people, their share capital 245,000
yuan, and each year they can press l0,000 jin of
cottonseed oil. There are nine flour mills, two each in Ansai, Ganquan, Yanchang,
Yanchuan and one in Gulin. They employ a total of twenty-four people and
their share capital is 262,000 yuan There are four blanket-making
cooperatives, two in Yan'an, one in Qingyang, and one in Suide. They employ
a total of forty-two people and their share capital is 152,000
yuan. Each year they can produce 7,600 blankets. There
is one pottery cooperative in Yan'an county. It employs seven men, its share
capital is 3,000 yuan and each year it produces six kilnloads
of pottery.

The above statistics show us that both consumer and producer cooperatives
have expanded greatly in terms of membership, share capital, profit and
undertakings. However this development has been uneven. In the past five
years it has gone through three stages. Moreover, qualitative development
only began to advance rapidly during 1942. Before 1939, cooperatives everywhere
were based upon share capital from the government with the addition of some
share capital assessed from the masses. At this time their nature was basically
that of publicly-run enterprises and for the most part they became shops
publicly-run by the county and district governments. Cooperative enterprise
was not facing the masses, but was chiefly facing the government. It was
providing funds for the government and all decisions were taken by the
government. This was the first stage. After 1939, the slogan 'Popularize
the Cooperatives' was put forward. However, most places still used the old
method of assessing share capital from the masses to carry out this so-called
'popularization'. Thus the masses still regarded the cooperatives as a burden,
assessed upon them and not as something of their own. Cooperative personnel
were still the same official personnel. They ordered the masses to do substitute
farm work on their land on their behalf. The masses could not see the great
benefits to the cooperatives for themselves and, on the contrary, considered
that the cooperatives increased the labour burden they had to bear. After
1940, the duty of all the local governments to achieve self-sufficiency in
production was increased. Thereafter the large shareholders in many cooperatives
were not the people but government organs. It was thus even more difficult
for the cooperatives to give due consideration to the interests of the masses.
This was the second stage. It was only in January 1942 that the Reconstruction
Department put forward the strategy of 'overcome the desire to monopolize
everything, implement the policy of the people in control and officials as
helpers', based on the experience of the Southern District Cooperative of
Yan'an county. It was only by implementing this strategy that cooperatives
everywhere did away with the method of levying shares by assessment, and
gradually built up close relations with the masses and experience in being
concerned for the interests of the masses. Thus, in merely ten months the
share capital has risen sharply by more than 5 million yuan
and undertakings have also expanded. This has played a great role in organizing
the economic strength of the people, reducing middleman exploitation, and
developing the people's economy. This is the third stage. It is only in this
stage that the cooperatives of the Border Region have in general begun to
follow the right path.

The above outlines the path of development of most cooperatives. However,
there have been exceptions. For example the Southern District Cooperative
of Yan'an county got on to the right path some what earlier. Through several
years of hard experience, this cooperative has become a model cooperative
truly supported by the people. During 1942, cooperatives from the counties
of Suide, Anding, Ansai, Ganquan, Yanchang, Wuqi, etc. have advanced by studying
this model cooperative.

What, then, are the special features of the Southern District Cooperative?
It has the following good points. (1) It has smashed dogmatism and formalism
in cooperatives, and it does not cling to old ways and regulations. The Southern
District Cooperative began as a consumer cooperative. However, its undertakings
have extended into every aspect of the economic life of all the people of
Southern district. It does not just manage consumer undertakings but handles
supply and distribution, transport, production and credit. It has organized
six producer-cooperatives for textiles, oil-pressing, blanket manufacture
and so forth, and one transport team with more than a hundred animals. It
has become a comprehensive cooperative. It does not concentrate on the percentage
of income that should be devoted to the cooperative's own public accumulation
fund and public welfare fund [gongjijin], but strives to share out its profits
to the members. It does not place a limit on the share dividend and each
member receive a return on his shares regardless of the number held. It does
not limit the right of members to dispose of their shares and each member
has the freedom to withdraw his shareholding at any time. Nor does it limit
the nature of the membership. People from all social strata can join. (Since
Yan'an is an area that has gone through land revolution, allowing people
from all classes to join is no hindrance to the leadership of the cooperative
by the Communist Party.) They can also belong to the organs of the cooperative.
Moreover, it is not necessary to have ready cash to become a shareholder.
Before the cooperative won complete confidence among the masses, it permitted
them to become shareholders. using government bonds [gongzhaiquan] and
savings bonds [chuxupiao]. In this way the share capital was increased.
When the cooperative came to have the confidence of the masses and the masses
wanted to take out Shares but had no money, it allowed them to use any articles
of value such as grain, livestock, eggs and firewood to buy shares. Therefore,
all the people praise it.

(2) It has smashed formalism in cooperatives, and conscientiously carried
out the policy of facing the masses and working for the benefit of the people.
It has therefore gradually came to be loved and respected by the masses.
For example, every year during spring ploughing, it makes early arrangements
to transport shovels from Hancheng and other places, selling them to the
peasants at a price lower than the market price. It organizes various productive
enterprises, which not only absorb unemployed workers, take on apprentices,
and employ the family dependents of working personnel, but also expand profits,
guarantee the supply of daily necessities to the people of the area and increase
the income of the people. The Southern District Cooperative has organized
more than 800 women to spin yarn. Each month they can spin 1,400
jin. This has increased the monthly income by 70,000
yuan. The managerial policy of the consumer cooperative is
to fully ensure the supply of necessary commodities for the people, not only
letting them make fewer trips for their purchases but also charging prices
cheaper than those found in shops of large towns.

(3) It uses the policy of benefiting both the public and the private sectors
as the bridge between the economic activity of the government and the economic
activity of the people. On the one hand it carries out the financial and
economic policies of the government and on the other it adjusts the burdens
of the people so as to make those burdens more acceptable, raises their income,
and increases their enthusiasm. For example, in 1941 when the government
was mobilizing for the salt-transport levy, the Southern District Cooperative
got the people of the district to hand over a money substitute, and its transport
team transported salt for the government on behalf of the people. Before
the government collects the tax grain, the cooperative mobilizes the people
to pay it to the cooperative itself in accordance with the amount of tax
collected in the previous year. The cooperative guarantees to pay the tax
grain for the current year on behalf of the cooperative members and also
accepts the grain handed over as share capital paid in by people to join
cooperative. Thus on the one hand the cooperative acts on behalf of the
government, ensuring the payment of tax grain using it to make a profit before
it is finally paid over. On the other hand the people not only pay their
tax grain but also get some share capital. As a result some households with
surplus grain have even wished to pay two years' worth of tax grain to the
cooperative. No matter what the increase in tax grain the following year,
the cooperative undertakes to pay the difference. More than forty households
in the district have done this. In this way the burdens of the peasants have
been fixed, their income has increased, and their enthusiasm for production
has also been raised. Another example was when the government of the county
and district wanted the people to pay educational expenses and expenses for
the guard posts of the self-defense army. The cooperative again paid these
for the people from its profits. In this way the government was saved the
trouble of collecting the expenses and the people were not burdened with
the payment. The government policies of encouraging immigration and assisting
refugees can also be carried out by the cooperative (it can give credit to
the refugees and immigrants and so forth). In these ways the interests of
the government, the cooperatives, and the people, the interests of the individual
and the collective are closely united.

(4) It changes the organizational structure of the cooperative according
to the wishes of the people. It does not hold congresses of all file cooperative
members, but allows the members to elect delegates from each village. It
does not use the method of assessment for raising share capital, but rallies
groups of activist cooperative members to go and encourage the people to
take out shares. It does not limit the share capital of the cooperative members,
and it divides the profit according to shares held. However, in solving the
cooperative's problems it does not consider the number of shares owned. Each
shareholder has equal rights.

The above are the features of the Southern District Cooperative. As a Consumer
cooperative, its characteristics conform to the basic spirit of consumer
cooperatives and grow from the life, culture, economy, and politics of the
people of the Border Region. As a producer cooperative while not a cooperative
of the producers themselves but enterprise where shareholders hire labour,
its present structure is a means of absorbing unused rural capital to develop
handicrafts and corresponds to existing conditions in the Border Region where
handicrafts are not developed and handicraft workers are few.

Since 1936 the Southern District Cooperative has gone through six to seven
years of trial and hard struggle. Now it has grown from 160 members to include
more than 90 per cent of the households of the Southern district. The number
of voluntary members is 1,112. The amount of share capital has risen from
159 yuan to 2 million yuan. It has grown from
one cooperative to sixteen cooperatives. The net profit has risen from several
tens of yuan to 1,620,000 yuan for the first
ten months of 1942. It has developed the agricultural, industrial and commercial
enterprises of the people of the district and looked after their economic
welfare, becoming the economic heart of the people of Southern district.

In the large but under-populated Border Region where the economy is almost
entirely a small-scale peasant economy, it is necessary to rely upon truly
popularized cooperatives to play a pivotal role in implementing the economic
policies of the government and in organizing and encouraging the people to
develop the economy. Thus the road of the Southern District Cooperative is
the road for all the cooperatives of the Border Region. A movement to develop
cooperatives in the style of the Southern District Cooperative is a major
item of work for expanding the economy of the people of the Border Region.

For this reason, the Party and government should carry out the following
work in cooperatives throughout the Border Region:

(1) The Reconstruction Department should be responsible for studying the
experience of the Southern District Cooperative and for compiling a small
handbook as educational material for the fourth section [ke] of
all county governments and for the personnel of all cooperatives. Furthermore,
we should use the opportunity presented by holding meetings in Yan'an to
take working cadres from all parts of the Border Region on a tour of the
Southern District Cooperative.

(2) All the enterprises run by the Commodities Bureau should help successful
consumer and producer cooperatives with supplies and distribution. They should
sell commodities to the consumer cooperatives, and supply raw material to,
and guarantee the purchase of products from, the producer cooperatives. The
government should issue 3 million yuan to the Commodities Bureau
in 1943 to help in adjusting the cooperatives' supplies and distribution.

(3) In order to stimulate cooperatives the government must clearly stipulate
and conscientiously carry out a reduction in the cooperatives' tax burden.

(4) The Border Region Government and the governments of all the counties
should seek out students educated to the upper primary school or higher level
for training as accountants or managers so as to ease the difficulties of
all cooperatives over these.

(5) The personnel of the cooperatives must implement the policy of
'popularization' and adopt the wages system, doing away with the system of
substitute cultivation for cooperative personnel. They must improve cooperative
organization and simplify administration. They must make them into proper
enterprises and not official organs. They must reduce the working personnel
and reduce expenditure.

In order to ensure that everyone fully understands the history of the development
of the Southern District Cooperative, we have specially invited its director,
Comrades Liu Jianzhang, to write a report which now follows.


  THE HISTORY OF THE
  YAN'AN SOUTHERN DISTRICT COOPERATIVE


  First Period


On 2 December 1936, we began to propagandize the people to buy shares. At
that time each share was worth 0.30 yuan in soviet currency.
After twenty days there were 160 members with 533 shares giving a total value
of 159.90 Yuan.

Wang Tianjin was elected director, Liu Jianzhang accountant, and Li Shengzhang
buyer.

Dividends were paid quarterly and the gross profit for the first quarter
was 199.44 yuan.

Expenditures were made up of payments to the three personnel 9
yuan, food 45 yuan, stationery 3.50
yuan, woolen socks and gloves to support the front 13
yuan, help for the dependable of troops of the War of Resistance
15 yuan, support for the small school 8 yuan
and public welfare fund 10 yuan. After expenses, the dividend
per share was 0.18 yuan, and the total dividend 95.94
yuan.

On the occasion of this dividend, we held a cooperative members' congress
attended by all. At this melting we reported on the work done by the cooperative,
shared out the dividend, and gave the members dinner. The meeting produced
great results. The members themselves proposed that since the cooperative
was helping the dependents of soldiers in the War of Resistance, assisting
the small school, and supporting the front with woolen socks and gloves and
so forth on their behalf, everyone should buy more shares. This was the first
period.


  Second Period


Wang Shengming became treasurer. I planned a large increase in the share
capital. Director Wang was not satisfied. He argued that an increase in share
capital should be carried out when the situation demanded it. I wanted to
take the matter to county government for discussion and later we went to
see Liu Shichang, head of the national economy department [guomin
jingjibi] of the county government. Department head Liu permitted an
increase in share capital. Since Wang Tianjin disagreed with everyone, the
county government moved him to another post.

In March 1937, Liu Jianzhang was elected director, Wang Shengming accountant,
and Li Shengzhang remained as buyer. Once again there were three people.
On one hand we managed the business and on the other we increased the share
capital. The date for the second payment of dividend was 2 June, 1937. The
total of new shares issued was 2,697, which together with the previous issue
made a total of 3,230 with a value of 969 yuan at the maintained
rate of 0.30 yuan per share. The sum of 3,657
yuan was handled in turnover [guoliushui] during
the three months and the gross profit was 276 yuan. Expenditures
included support for the small school 6 yuan, support for the
dependents of soldiers in the War of Resistance 12 yuan, donation
to the appeal for support for the front 20 yuan, public welfare
fund 10 yuan, three months' food 53 yuan, staff
payments 13.50 yuan, and office expenses 3.50
yuan. After expenses the dividend per share was 0.05
yuan, a combined total of 161.50 yuan. As before,
a congress of cooperative members was held when the dividend was paid. Two-thirds
of the members attended. We reported on the activities of the Cooperative.
At that time we had bought 3 tan of grain on behalf of the
troops and had also acted as an agent in the purchase of all the charcoal
and firewood used by the reception centre of the Northwest Military Committee
[xibei Jun-wei]. All income from this business was in soviet notes, but the
ordinary people did not agree. They asked the cooperative to request goods
as a pledge when acting as a purchasing agent. On the one hand they should
give some goods and on the other we could accept some soviet notes. At this
time the cadres of the cooperative worked hard and patiently to bring about
agreement between the people and the troops. After this we built up relations
between the army and the people. If the soviet notes held by the people could
not be used to buy things in other places, the cooperative could buy them.
When this was announced, the members gained a greater understanding of the
cooperative and stated that 'the cooperative was able to act on their behalf.'


  Third Period


Beginning in June 1937 we again planned to increase the number of cadres.
Sun Shenghua was promoted to be a buyer. He worked for one month, every day
acting as buying agent for the troops which he found very troublesome. He
said he wanted to stop working. Despite repeated attempts at persuasion and
education, he was determined not to work for the cooperative and so he left.
Li Shenghai became buyer. We planned to open a fire wood shop at Goumenshang.
The cooperative put up 200 yuan capital and it became an
independent unit. Li Shengzhang was director of the shop with his wife as
cook and Li Shenghai as assistant. In three months the gross profit was 400
yuan.

The current account for the running of the cooperative and the shop was 7,175.60
yuan and the gross profit 538.70 yuan. Three
yuan in soviet currency was equivalent to one
yuan in national currency [baipiao], giving a converted value
of 175 yuan [yang yuan]. When cooperative members
took out shares, 1 yuan in Soviet currency was taken as equivalent
to 1 yuan in national currency. We donated 25
yuan for the front and 10 yuan to help the small
school. The director for women's affairs of the district was robbed by local
bandits and new bedding for her cost 4.50 yuan. The public
welfare fund was 12 yuan. Losses on forged notes came to 8.50
yuan, payments to staff 45 yuan, food 90
yuan, and office expenses 7.50 yuan. New shares
issued numbered 2,130, making a total of 5,360 with value of 1,596
yuan. Dividend per share was 0.02 yuan.

During this period, the porters in Ansai county, Bao'an county, and our own
district organized a salt-transport cooperative. They pooled their capital
and formed a partnership setting up a salt-transport team with a total of
twelve donkeys, horses and mules. Together with more than one hundred
privately-owned animals, they regularly went to Yanchi to transport salt
which was sold through the cooperative. This also encouraged porters from
other counties to invest 320 yuan in the shop. During this
period the soviet currency used to buy shares was converted entirely into
national currency.

We reported to the September cooperative members' meeting. Everyone expressed
the opinion that making the soviet notes worth 1 yuan in national
currency instead of 0.30 yuan had increased the trust of the
members. We proposed an increase in the share capital, made a census of the
population and surveyed the conditions of the people's economy. The three
townships of the district had 432 households with a population of 1,733.
There were 222 ox-drawn implements and 323 oxen, 125 donkeys and 270 sheep.
The total value of the people's economy for the whole district was 220,000
yuan, including livestock, land, houses and all assets. Excluding
grains, the average annual expenditure per head on clothing, agricultural
implements, salt, matches, etc. was 40 yuan, making a total
of 69,320 yuan. We proposed to the meeting that each person
should increase his share capital to 20 yuan so that we could
provide daily necessities for the people. The members agreed to increase
the share capital and to lengthen the accounting periods from quarterly to
half-yearly.


  Fourth Period


The fourth period ran from September 1937 to February 1938. The original
value of 0.30 yuan per share was raised to 0.50
yuan. The total number of shares was 5,360 valued at 2,680
yuan. The current account was 22,875 yuan and
the gross profit 1,732.30 yuan. Outgoing were the public
accumulation fund 110 yuan, the public welfare fund 68
yuan, woollen socks and gloves to support the front 245
yuan, support for the dependents of troops in the War of Resistance
18 yuan, support for the small school 12
yuan, payments to cooperative personnel and hired labour 310.50
yuan, food 90 yuan, entertainment expenses 38.50
yuan, office expenses 61.50 yuan, incentives
for personnel 60 yuan and repairs 285 yuan. After
expenses the dividend per share was 0.08 yuan and the total
dividend was 428.80 yuan. Although the cooperative members'
meeting for the previous period had proposed raising the share capital per
person to 20 yuan, this had only been partly realized because
of difficulties in the people's economy. This time the meeting planned to
establish a credit cooperative with share capital of 1,000
yuan. People could come to this cooperative for short-term
loans for marriages and funerals without paying interest. As soon as this
slogan was put forward, the members said they would guarantee the raising
of all share capital. The aim was to provide assistance. We also planned
to open a restaurant in Liulin.


  Fifth Period


This ran from March to August 1938. First of all we increased the number
of cadres, recruiting Wang Yaoming, Mao Keye, Li Shenghai, Huang Baozhong,
etc. Within three months we raised 1,060 yuan share capital
for the credit cooperative and in addition increased other share capital
by 110 yuan. Including previous share capital the total was
3,890 yuan. The current account for the six months was 42,500
yuan and the gross profit was 3,633 yuan. Expenses
were woolen socks for troops at the front 185 yuan, relief
appeal donations 22 yuan, incentives 80 yuan,
repairs 230 yuan, meetings and entertainment 85.60
yuan, office expenses 189 yuan, payments and
salaries (twenty-four people) 864 yuan, and food 900
yuan. After expenses the dividend per share was 0.10
yuan and the total dividend 778 yuan. When the
dividend was distributed we held a meeting of cooperative members' group
leaders. We Planned to accumulate 500 yuan to buy ploughshares.
Each plowshare cost 0.25 yuan so we could buy 2,000. We also
planned to expand with an oil-pressing shop [youfang], a flour-mill
[fengfang], and a public welfare centre [gongyixin]
so as to establish commercial relations in Yan'an city. On this
occasion none of the group leaders disagreed.


  Sixth Period


This ran from September 1938 to February 1939. We changed the share value
from 0.50 yuan to 1 yuan, and we increased share
capital by 4,510 yuan making a new total of 8,200
yuan. The current account for the six months was 49,860
yuan and the gross profit 4,118 yuan. Expenses
included support for dependents of troops in the War of Resistance 34
yuan, the public accumulation fund 654 yuan,
the public welfare fund 10 yuan, incentives 131
yuan, entertainment 180 yuan, miscellaneous expenses
116 yuan, salaries and payments to personnel (thirty people)
867 yuan and food 1,116 yuan. During this period
all plans were realized. We bought 2,000 shovels in Hancheng. Each shovel
was worth 0.50 yuan and the market-price was 0 90
yuan. We sold them to cooperative members at 0.60
yuan each, a saving of 0.30 yuan and a total
saving of 600 yuan. The oil-pressing shop and flour-mill were
established. In this period we still paid a dividend on a half-yearly basis.
There was a total of 850 cooperative members.


  Seventh Period


This ran from March to August 1939. We started planning to do business in
partnership with private individuals. In the area there were some people
who wanted to go into business but feared that the government would increase
taxation on them. So they invested their money together with the cooperative
as individual shareholders in a joint venture. First we set up business in
partnership with private individuals in Sanshilipu including a noodle shop
and a restaurant. The cooperative put up 200 yuan and the
individuals 800 yuan. Through this partnership business we
solved many problems for the people. We made rule allowing the freedom to
invest or withdraw share capital from the cooperative. This lasted until
the end of the year when the government, reaffirming the principles of
cooperatives pointed out that the cooperative had developed the private economy
and this was not allowed. So this business was broken off.

In the same year we expanded share capital by 860 yuan, making
a new total of 9,016 yuan. Cooperative members numbered 960.

The current account was 57,600 yuan and the gross profit was
4,778.60 yuan.

After deducting the public accumulation fund, welfare fund and other expenses,
the net dividend was 0.10 yuan per share and the total dividend
901.60 yuan.

In the course of paying out this dividend, many difficulties arose. On one
hand the expansion of share capital was slow and the rise in commodity prices
high, making it difficult for the cooperative to operate. On the other hand,
the people reckoned there was no increased profit for the individual, and
were unwilling to invest in more shares. We tried again and again to propagandize
and persuade them but they remained unwilling to invest more. I myself reckoned
that unless we formed partnerships with private individuals, the cooperative
could not develop, and that we should do business in such partnerships without
government approval. I put this forward for discussion at a management meeting
and it was agreed that it should be done.

  Eighth period


In September 1939 we again went into partnership with individuals to set
up the Xinghua Branch Cooperative at Sanshilipu, the Limin Cooperative at
Goumenshang, the Minsheng Herbalist at Liulin, and the Lihe Cooperative at
Nanzhuanghe. Using the cover of being joint public and private ventures;
they attracted over 100,000 yuan of capital from private investors.
The people working in the branches got personal shares. We drew up contracts.
There was still complete freedom in making investments and withdrawals and
the cooperative did not lay down any restrictions. Subsequently when the
county government learned about this, it wanted to see the contracts. After
seeing them, it approved the formation of partnerships. The original cooperative
was changed into the head cooperative of the district, and the various townships
set up branch cooperatives. Excluding the branch cooperatives, the head
cooperative again increased share capital by 2,629 yuan, making
a new total of 11,645 yuan. The current account for the head
and branch cooperatives together was 158,350 yuan and the gross
profit 18,250 yuan. Expenses were 8,895.13
yuan and the net profit was 9,354.07 yuan. The
dividend per share was 0.10 yuan, including the branch
cooperatives. Having set up branch cooperatives, the head cooperative was
strong enough to establish productive undertakings. In 1940 in partnership
with the Guanghua Store, we bought mules and set up a transport team, benefiting
from cooperation with private individuals. The original capital of the transport
team was 5,000 yuan. By the end of the year, it had expanded
to have 160 mules and was regularly transporting salt goods. We also set
up a textile mill and a leather-workshop. The West District Cooperative and
the Xinmin Cooperative at Dufuchuan collectively set up a transshipment warehouse
and two felt-workshops at Qilipu. At first shares were taken out on an individual
basis so that there could be several cooperative members within one family.
Later this became troublesome, so they were combined, taking the household
as the unit. Each family became one cooperative member, and there was a total
of 853 members.

After the membership had been combined in this way households had 300-500
yuan to 1,000 yuan invested. At the same time,
small merchants and porters from other counties had also joined the branch
cooperatives with share capital of 10,000 yuan. In particular
the porters who came frequently from the counties of Luochuan, Fuxian, Ansai,
Bao'an and Sanbian invested in the cooperative. When the dividend was paid
in the ninth month we held a meeting of members' representatives and reported
on the reasons for the expansion of the cooperative. After examination we
put forward the general aims for future work. First we wanted to increase
shares by 30,000 yuan and we asked the representatives to guarantee
that this would be done. Secondly, we planned to accept local products and
to sell them on behalf of the people, to supply the people with all daily
necessities, and to take responsibility for buying goods from other areas.
Thirdly, the salt, matches, and ploughshares needed by the people of the
district would not be bought from outside but would be supplied by the
cooperative. We reckoned that the 7,135 people of the district consumed 2
qian of a salt per head per day and 4.5 jin per
head per year, making an annual total of 32,107.5 jin. At a
price per jin 1 yuan below the market-price, we could save
over 32,100 yuan. Each family used five packs of matches per
year, a total of 8,675 packs for the whole district. At a price per pack
5 yuan below the market-price, we could save 43,375
yuan. The district used 1,500 ploughshares per year. At 15
yuan below the market-price we could save 22,500
yuan. The total saving for these three items could be 98,050
yuan. The district population's annual consumption of cotton
cloth for making clothes was 7,000 bolts. Each bolt required 25
jin of raw cotton, a total requirement of 17,515
jin. The total value was 3,500,O00 yuan. If the
yarn was spun by the people, they could earn half of it, that is, 1,750,000
yuan. We reported on our plans to the members at this meeting.
After approval by the members, we increased the number of machines for spinning
and weaving by peasant women.

  Ninth period


In August 1941 we increased share capital in the form of shares taken out
as government bonds for national salvation [jiuguo gongzhai].
The government mobilized the people to buy government bonds for national
salvation. The amount of bonds to be taken out by the people was added on
to their share capital. The dividend on this share capital was paid towards
the government bonds of 33,000 yuan. In this difficult situation
for the people, we helped them ease their burdens and raised their faith
in our ability to do so.

The now share capital was 33.070 yuan. Combined with the old,
this gave a total of 44,715 yuan for the head cooperative.
The share capital for the various branch cooperatives was 120,000
yuan and for the transport team it was 80,000
yuan The combined total was thus 244.715 yuan
and the membership was 1,018. The current account for the head and branch
cooperatives together was 1,161,840.70 yuan and the gross profit
was 284,317.40 yuan. Expenses were 138,849.30
yuan and the net profit was 145,469 yuan. The
dividend per share of 1 yuan was 0.70 yuan. When
issuing the dividend we proposed that each dividend of 0.70
yuan could be valued at 1 yuan if invested as
share capital. This increased members' trust and a lot of the dividend was
added on to the share capital. People taking out additional share could use
local products, firewood and grain as money, calculating the value higher
than market price. For example, each jin of grass was valued
0.20 yuan higher than the market-price. This was true of all
investment in kind and it also increased the people's trust.


  Tenth period


In 1942 we set up a sock-weaving factory. When we began propagandizing for
share capital, we made each share worth 20 yuan and presented
the members with a pair of socks. Afterwards, with the increase in the cost
of raw cotton, we raised the value of each share to 40
yuan. The total share capital was 30,000
yuan. We set up the sock-weaving factory and it now has six
machines. In Yan'an city we set up the Yunhe transshipment warehouse with
420,000 yuan share capital. At Songshulin we set up a branch
cooperative with share capital of 340,000 yuan. The surplus
accumulated by the transport team increased its capital to 750,000
yuan. The head and branch cooperatives expanded their share
capital by 1,232,000 yuan, making a new total 2,520,000
yuan. The membership was 1,112 (each member represented one
household). The largest investor had shares to the value of 5,000
yuan. There were nineteen units of the cooperative within the
boundaries of the district (including production, transport, and consumption).
Apart from the cooperatives, there was no other private commerce. Southern
district is 60 li long and 40 li broad. It has
1,544 households with 7,128 people. Altogether there are 1,469 oxen, 635
donkeys, 60 horses, 22 mules, and 4,445 sheep. Arable land covers 54,408
mu The wheat harvest was 872.5 tan. The harvest
of coarse grains was 9,084.16 tan, equivalent to 5,662.43
tan of hulled grain. The output from subsidiary undertakings
was equivalent to 334.25 tan of hulled grain. The full total
was 6,869.18 tan. In 1942 we paid 2,480 tan of
grain tax leaving 4,389.18 tan. The average amount of grain
per head was 0.6 tan. Animal fodder totalled 1,500
tan.

This spring the government mobilized to get 34,000 yuan for
educational expenses and for sentry fees for the self-defence army, 8,000
yuan for share capital for production at Gaomaowan, and 20,000
yuan for bank savings bonds. The total was 62,000
yuan to be raised in three parts. Each time each household
would have to attend a meeting for collection and loose the work of one of
its members. This would happen three times and each time the work of 1,500
would be lost. The work of each person was valued at 30
yuan so the total loss of earnings would be 135,000
yuan. Added to the 62,000 yuan the full burden
on the people would have been 197,000 yuan. Therefore the
cooperative paid the 62,000 yuan, on behalf of the people,
saving the 135,000 yuan which would have been lost. We helped
the people's production at a particularly busy agricultural time. We also
handed over 1,050 packs of salt each worth 240 yuan as salt
tax on behalf of the people. The total value of this was 252,000
yuan. Reducing the amount of work time lost by the people
influenced their attitude towards the cooperative, and we increased share
capital by 420,000 yuan. We plan to pay next year's salt tax
on their behalf.

We organized 600 peasant women to do spinning. Each day each person spun
2 liang of yarn. The total of raw cotton spun each day was 75
jin and the people should get half of it. Each
jin of yarn was reckoned as worth 150 yuan. The
profit per day was 5,250 yuan and the profit for the year was
1,890,000 yuan. This year they spun 5,000 jin
of raw cotton. In the first half of the year cotton was low-priced. Combining
both halves each jin cost 70 yuan. The people
earned 2,500 jin of raw cotton, equal to 175,000
yuan. The cooperative arranged advances of 20,000
yuan for spinning-wheels. After deducting this 20,000
yuan, the people earned 155,000 yuan. Now we
are expanding the amount of spinning done by women. In the past there was
no spinning done in Southern district. Now large numbers of women are taking
part, but there are problems of raw materials. Finally, this year we sold
20,000 jin of charcoal for the people at 2
yuan per jin. The people got 400,000
yuan.

The above facts relate what the cooperative has done. We have not divided
out the dividend so far this year on account of the floods. The cooperative
has lost 58 buildings with a value of 400,000 yuan, equipment
worth 300,000 yuan, goods worth 400,000 yuan,
and the Fuchang Storehouse at a value of 200,000 yuan. Total
losses were 1,300,000 yuan. The Government later helped us
borrow 500,000 yuan and we went to Dingbian county three times
to sell goods making a gross profit of 300,000 yuan. At present
we again have repair expenses of 240,000 yuan and we are expanding
share capital.

As regards the organization of the cooperative, each village elects one or
two representatives. Cooperative affairs are handled by the twelveman management
committee held on the sixth day of each month. All questions concerning
management and cadres are determined at the management committee meetings.


  supplementary notes:


(1) At present the cooperative has 135 buildings and fifty-five stone-built
cave houses worth 2,890,000 yuan at current values, liquid
capital of 1,500,000 yuan, and equipment and livestock worth
1,020,000 yuan.

(2) The experience and lessons of the cooperative are explained in the page
on the Southern District Cooperative in the volume Materials on Yan'an's
economic Construction.

13 December 1942

 The above document leaves a gap of two years between the eighth and
ninth periods, and there seem to be some omissions. Inquiries were made and
the following report came back:


  CONCERNING THE PROBLEM OF PERIODIZATION OF THE SOUTHERN DISTRICT COOPERATIVE


Operations began in December 1936 and the first meeting of all cooperative
members was held after three months. Altogether three such meetings were
held at three-monthly intervals. Then they were changed to once every six
months and a further three meetings were held. After the sixth meeting, there
was a gap of eight months and then the first meeting of representatives was
held (at the end of 1939). Afterwards the second meeting of representatives
was held in July 1940, and the third in August 1941. We planned to hold the
fourth meeting in July this year but because of floods it was difficult to
draw up the accounts so we extended the period. Before 1939 the period between
meetings was short and all the members attended. This was because our scope
and membership were both small. Later, meetings of representatives were held
once a year because our membership was too large, our undertakings had expanded
and drawing up accounts was not easy.

In our previous report we omitted to refer to the second representative meeting
of July 1940 and so the eighth period was lengthened into two years.

The previous report was made without proper drafting. If there are still
questions on this material please instruct for further reports

Wang Pi'nian'
Liu Jianzhang
15 December


 Below is the report of the comrades of the Yan'an county Party Committee
on the Southern District Cooperative. It is reproduced here for study.


  THE EXPERIENCE OF THE LIULIN DISTRICT
  (i.e. YAN'AN SOUTHERN DISTRICT)
  COOPERATIVE


Looking at the process of development of the Liulin District Cooperative
we can see:

(1) Cooperative operations are not limited to consumption but are also related
to production, credit and transport, making them a coherent whole. The head
cooperative and its branches make a total of sixteen.

On the production side there is the textile-mill, the leather-workshop, the
felt-workshop, the oil-pressing shop, and the flour-mill.

On the transport side there is the transport team with over a hundred animals.
The cooperative's capital investment is 500,000 yuan.

Because the Liulin District Cooperative operates by uniting several economic
functions together, its scope is wide, its capital is large, its activities
are big, its development is fast, and it has solved many problems in the
supply of daily commodities for the people. Other cooperatives in this county
are limited to consumption. Compared to a cooperative which also carries
out production and transport, their capital and scope are small and their
development retarded.

(2) The policy for management of cooperatives by the people was put forward
by adopting the experience of Liulin. This cooperative's share capital expanded,
absorbed the capital of small merchants and drew them into take part in the
work. All the work of the cooperative was discussed and decided by the
cooperative members. The people were deeply involved with the cooperative.
They did not consider it to be run by officials but by themselves.

(3) The cooperative solves problems in the supply of daily necessities for
the masses, such as bolts of cloth, salt, matches, ploughshares, etc. at
lower than market-price. Taking matches and salt alone, the annual savings
for the people was more then 80,000 yuan. Naturally the people
wish to buy things at the cooperative. The cooperative can supply the entire
needs of the people of Liulin district in these four daily necessities.

(4) The cooperative helps the masses out of urgent difficulties such as those
created by marriages or funerals by allowing them to borrow funds temporarily,
either giving credit against bolts of cloth or taking something as a pledge.
It sets a time limit for repayment. This fills the role of a credit cooperative,
solving major difficulties for the people. Because the cooperative does this
at a time of urgent need when no help can be found elsewhere, it creates
trust among the people, who consider the cooperative really helps them.

(5) The cooperative has a variety of ways of expanding share capital:

(i) Buying shares with ready cash.

(ii) Taking out shares in return for goods: a chicken, a pair of shoes, some
sheepskins, some hemp ropes can all be exchanged for shares at equivalent
value.

(iii) Absorbing the capital of small merchants.

(iv) Helping the masses pay burdens from the government and making this a
way of taking out shares. After the government issues its demand, the cooperative
turns them into a call for buying shares (to the same amount) and itself
pays the taxes. For example, in 1942 the people of the district had to pay
250,000 yuan to the government as a cash substitute for tax
salt. This was treated as share capital and paid to the cooperative. The
cooperative paid the salt tax to the government, making a profit from the
handling of the cash. The people also got a dividend. Government bonds, education
costs, sentry costs, and so forth were collected in this way and paid by
the cooperative. The government was paid, the cooperative's share capital
increased and its operations expanded. The people profited and they had less
troubles. They also received dividends as shareholders.

(v) Increasing share capital through making timely responses to the needs
of the moment of the people. For example, when they wanted to expand spinning
and weaving, they put forward the slogan of raising share capital to do so.
In 1941 the cooperative experimented with paying tax grain for the people.
For each tan of the previous year's grain tax the people bought shares for
cash. The cooperative used the cash to expand its operations. In the following
year when the grain tax was allocated among the people, it was paid by the
cooperative from the profits it had obtained. This was done for forty or
so households, for whom paying grain tax was almost like not paying. They
became share holders in the cooperative, able to get a dividend every year.
They were very happy, their enthusiasm for production increased and they
got even more grain.

(vi) Paying a dividend on taking out shares. People taking out shares for
40 yuan were issued a pair of socks valued at 20
yuan. In this way the people were encouraged to buy shares.

(6) The cooperative is in a very good geographical position since it is in
Liulin district which is close to the large commercial market in Yan'an.
Liulin has much forest land. Many people sell timber and charcoal, which
raises their income and thus there is a lot of liquid capital in the villages
which can be absorbed in the purchase of shares. At the same time, being
near a market, the turnover of capital is very quick. These are objective
factors.

(7) The scope of the cooperative's activities is very wide. It has established
relations with the Border Region Bank, the Guanghua Store and the various
official organizations in Yan'an. Sometimes it can borrow capital or do a
lot of work for the official organizations and the cooperative has been able
to develop through this mutual help.

(8) The cadres have not been transferred much and they pay attention to
investigation and research. Director Liu has not been transferred to other
work since he was appointed. He has been able to concentrate exclusively
on his work, research and on thinking of ways of doing things. At the same
time, he also pays great attention in investigating objective conditions.
For example, he often investigate such things as the annual consumption per
individual bolts of cotton, salt, matches and so forth so as to solve the
people' s problems.

Here is an example to show the relationship between the cooperative and the
people. In 1941 the peasant Bai Da of Lufengpo in Liulin district had to
hand over 60 yuan for nations salvation grain tax. Beforehand
he paid it to the cooperative as share capital. At the appointed time the
cooperative paid the government on his behalf. Later the dividend was add
to the original capital of 60 yuan bringing it up to 200
yuan. He bought four ploughshares from the cooperative and
saved 15 yuan on each (that is, they were sold at 15
yuan less than the market-price), making a total saving of
60 yuan. He bought five packs of matches saving 5
yuan on each, a total of 25 yuan. At the end
the twelfth lunar month in 1941, he bought goods worth 1000
yuan at the cooperative but only paid 500
yuan saving 500 yuan. Subsequently, the market
prices of these goods rose by 550 yuan. Including the previous
purchases of ploughshares and matches he saved a total of 635
yuan. Originally he had to pay 60 yuan in grain
tax, now it has become share capital of 200 yuan and he saved
635 yuan on the purchase of goods. This has really made the
cooperative belong to the people, facilitating their dealings and looking
after their interests. There are many examples like this.


  The Cooperative Situation throughout the County


Table 5.1 Number of cooperatives in Yan'an county,
1941 and July 1942





Branch cooperatives


District cooperatives


Total


Table 5.2 Capital (in yuan) invested in cooperatives
in Yan'an county, 1941 and 1942 (half year)



(for half year)


District cooperatives

264,207.56

312,207.56


Branch cooperatives

193,340.00

978,507.14


Total

457,547.56

1,290,714.70


Within six months capital increased by 833,167.14 yuan. The
fastest increase in capital was in the branch cooperatives, which are directly
organized by the people with the support of the district cooperatives. Therefore
the people are very enthusiastic about taking shares.

The average taken from 1,290,000 yuan works out 20
yuan per head of the population of the county. This is not
much, so the role of the cooperatives in the entire county is still a minor
one.

Important experience

(1) Persist in the policy of management by the people and non-interference
by the government. We inspected the cooperatives in July this year and called
for an increase in share capital. Substantial capital should be held by the
co-operatives .

(2) Cooperative cadres should not be lightly transferred to other posts.
Let them be settled in their posts, concentrating on their work. Guarantee
their livelihood. Cooperatives should adopt the method of assigning personal
shares [da Shenfen]. That is, each member of the cooperative's personnel
should be equivalent to a number of shares depending on his ability and work.
For example, if someone is made equivalent to shares of 5,000
yuan, he is paid the interest due on shares of 5,000
yuan at the time of settling accounts. This becomes his salary
and he does not receive any other income.

(3) Enlarging the scope of cooperative undertakings should not be limited
to consumption alone but should include production, transport, credit and
so forth. This is an inevitable trend in cooperative development henceforth.
That is to say, we must run comprehensive cooperatives.

(4) Concentrate on making a good job of one or two cooperatives and gaining
experience. Gradually expand to other areas. For example, we are preparing
to turn the Songshulin Cooperative of Jinpen district into a second Liulin
Cooperative.

These are opinions on our future work.

  6. ON THE DEVELOPMENT OF THE SALT INDUSTRY


Salt is the great resource of the Border Region. It is the mainstay which
balances imports and exports, stabilizes the currency, and regulates commodity
prices. A large proportion the people rely on salt [as a form of] exchange
for goods from outside. A relatively large proportion of the troops and working
personnel rely on salt for their livelihood or to supplement their livelihood.
Salt is also a major source of government financial revenue. Therefore salt
plays an extremely important role in the Border Region. Since the War of
Resistance began the supply of salt from the sea has been cut off and the
supply from the Huai area and from Shanxi has been reduced. The southwest
relies on salt from Sichuan and the northwest and the eastern areas on salt
from Ningsia and Qinghai. Salt from a Border Region has thus come to occupy
an important position and the transport and sale of salt increases annually.
In 1983 our salt exports were only 70,000 packs (each pack is 150 and each
jin is 24 liang.). In 1939 there was a sudden
increase to 190,000 packs. In 1940, the figure was 230,000 packs and in 1941
there was another abrupt increase to 299,068 packs. By September 1942 the
total was 155,790 packs and it is estimated that another 70,000-80,000 packs
can be sold in the last three months making a total of 230,000-240,000 packs.
These statistics reflect two important facts: the first is the external demand,
and the second is our hard work. Some comrades cannot see that external demand
is determined by the war of Resistance and that within certain limits salt
can be sold. Therefore they propose that things should follow their own course
and that there is no need for the Party and government to interfere. Other
comrades merely ascribe the yearly increase in the sale of salt to external
demand and do not recognize that the leadership of the Party and government
is a great factor in that increase. We began to pay attention to the salt
industry in autumn 1940. As well as the objective factor of the external
salt famine and depletion of salt stocks which made 1941 salt sales particularly
good, the abrupt increase from 230,000 packs in 1940 to 299,000 packs in
1941 was also due to the subjective factor that we implemented the policy
of supervising transport in that year. Apart from the fact that external
demand was not as urgent as in 1941, the sudden drop to 230,000-240,000 packs
in 1942 from the previous year's 299,000 was due to our abandonment of the
policy of supervising transport (putting an end to the many plans made by
the people for transporting salt). If we do not learn a lesson from this,
we shall repeat past mistakes in future work. Certainly there were defects
in the salt-industry work for 1941. The original plan to transport 600,000
packs was too big. The Border Region still does not have such a great transport
capacity. The achievement in producing 700,000 packs of salt was good but
the quality [of the salt] was too poor. Supervision of transport was correct
but it was unnecessary to mobilize everyone everywhere. There were also many
abuses in the organization and method of mobilization which did not accord
with the actual situation. All these things were shortcomings and mistakes
in our work in 1941. Nevertheless, adopting a policy of active development
of the salt industry was entirely correct. Belittling, misunderstanding and
even opposing this policy is entirely wrong.

What should be done in 1943? First we must determine a policy for active
development. In the current situation in the Border Region, we certainly
cannot adopt a negative approach towards salt which is a major factor in
solving financial problems (the publicly-run salt industry and the salt tax
), in balancing imports and exports, and in stabilizing the currency and
commodity prices. Therefore we must enlarge the already established Salt
Company into the main force for allying public and private salt industry
and for expanding public and private production, transport and sales. And
we must improve the quality of salt produced so as to promote sales. We must
restore transport supervision and organize all possible transport capacity
among the people to expand salt transport. We must draw in porters from outside
areas to transport and sell more. We must build roads, and arrange for inns,
warehouses and fodder to help transport. The Salt Company should gradually
gain control of outside sales in order to avoid the anarchic situation produced
by lack of public and private coordination. These are our general policies
for the active development of the salt industry in 1943, Concrete arrangements
should be as follows:

(1) Expand the Salt Company and increase its capital. Under the direction
of the Commodities Bureau raise share capital from the various official
organizations, the troops and privet individuals. Develop salt transport,
expand salt sales. Regulate salt prices. Guarantee that the company transports
40,000 pack in 1943, and with this salt as a basis buy as much salt from
the people as possible to carry out partial unification of salt sales to
outside areas. Afterwards, depending on the situation gradually achieve complete
unification so as to prevent outside manipulation and guarantee the interests
of the government and the people.

(2) In 1943, plan to produce 400,000 packs of salt and to transport
300,000-360,000 packs. Moreover strive to exceed this. As regards production,
continue the policy of supervision by officials and production by the people.
Ensure that the salt is mostly or entirely top-quality and do not allow inferior
quality to be produced again. As regards transport; plan for the Salt Company
system to transport 400,000 packs, draw in porters from outside to move 50,000
packs, and organize the manpower and animal power of the Border Region to
move 210,000-260,000 packs, making a total of 300,000-360,000 packs.

(3 ) The organization of the manpower and animal power of the Border Region
to transport 210,000-260,000 packs is immense, arduous and meticulous piece
of organizational and mass work. It should be directed by the Reconstruction
Department and supervised by the government at various levels, the Party
committees at each level having the responsibility for checking up and helping.
Mobilization to transport salt must have a degree of coercion but it certainly
must avoid commandism which causes damage. We must chiefly adopt the policy
of unit propaganda and persuasion. The organization to transport salt must
take the forms of transport cooperatives and transport teams. Propagandize
the masses to buy shares voluntarily. Some can provide manpower and some
can provide draught animal. Some can provide both. Some can provide running
costs and some, in special circumstances, can be exempted from providing
anything. We can organize transport teams among people who have rich experience
in portering, together with the necessary animals. The Party and government
at county, district and township level should actively direct the rational,
fair and health, organization of these transport teams. They should set off
smoothly, do the necessary work along the way and ensure the safety of the
personnel and animals. On return pay attention to the distribution of the
cooperative's profits and guarantee the interests of the people involved
and of all the cooperative members. Salt transport must not violate the
agricultural season. We must strengthen the organization of labour mutual-aid
cooperatives (exchange labour) so that after the transport team has set off,
the cooperative members do not lose agricultural production through lack
of manpower and animal power. As regards the salt-transport organizations
(cooperatives and teams) of the Sui-Mi special military area and the three
eastern counties, we should allow the masses greater freedom and reduce coercion.
The transport cooperatives and teams of all places must be built up on a
basis of benefiting the cooperative members. The duties of the Party and
government lie in making these benefits increase daily, otherwise we will
certainly be defeated. The Reconstruction Department, the sub-regions and
counties should teach the people through the most successful examples of
salt transport by the masses. They should propagandize them widely for imitation
so as to be certain that the plan for salt-transport in 1943 will be completed
and will also bring large direct benefits for the people.

(4) The enterprises of the Commodities Bureau and the people's cooperatives
in all places must closely coordinate with the people's transport cooperatives
and teams, and strive to ensure that the animals used by the people to transport
salt are able to transport other goods on their return journey. Only then
can the people's salt-transport undertaking expand and the whole of salt
transport develop, and only then will the whole salt-transport plan be completed.

(5) The key sector in developing the salt industry is transport, and the
major condition for transport is communications. In 1943 the government should
allocate 2 million yuan under the direction of the Reconstruction
Department for the building of two cart-roads between Yan'an and Dingbian,
and Dingbian and Qingyang, and for repairing the road from Yan'an to Fuxian.
Furthermore the Commodities Bureau should set up inns with stables and
trans-shipment warehouses along the main salt transport routes, and dig
water-storage holes in places lacking water. The Reconstruction Department
and Commodities Bureau together should plant alfalfa widely along the routes
and also provide fodder in other ways. So long as there are roads, inns,
grass and water, transport costs can be greatly cut, the volume of transport
can be greatly increased, and the three forms of transport - porters from
outside, people from the area and the Salt Company - can all develop. Plans
to improve the means of transport should also be directed by the Reconstruction
Department. Carts and handcarts should be built according to road conditions
in order to increase salt transport. Provided the roads are well built. it
is much better for the government to use more carts and the people to use
more handcarts than to use pack-animals.

(6) In 1943 the salt tax is fixed as 100,000 packs. Those who live near will
provide transport, those who live far away will provide a substitute, and
some will provide a mixture of both. However, the salt tax and the development
of the salt industry are two different matters. So long as we can definitely
export 300,000-360,000 packs, it does not matter whether we accept actual
salt or substitute payments for salt tax.

If we can complete our plans for planting cotton and spinning and weaving
in 1943, we can reduce our imports of raw cotton, cotton yarn and cotton
cloth. If we can export 300,000-360,000 packs of salt in 1943 at an average
value of 10 yuan Border Region currency per
jin (each donkey pack is 150 jin) our income
will be between 450 million yuan and 540 million
yuan. Thus by reducing one and increasing the other, the Border
Region's problem of balancing imports and exports will be entirely solved.
The following material reflects the people's experience in the transport
of salt during 1941.


  A RECORD OF LU ZHONGCAI'S LONG MARCH


Report on the first experiences in salt transport of Chengguan district,
Fuxian county, as told by the deputy leader of Chengguan district, Lu Zhongcai.
Supplemented by Wang Yuxian and Kong Zhaoqing. Recorded by Gao Kelin, 13
August 1941.

(l) For the first salt transport, Chengguan district should have provided
fifty pack animals. In fact it provided twenty-eight. The reason the plan
was not fulfilled was the lack of animals (at the very most we could mobilize
forty ). Some animals were hidden away and not kept at home. The district
government did not handle things firmly as it was busy with grain loans and
government bonds.

(2) We set off on 18 July and returned home on 11 August, a total of twenty-five
days. It took twelve days to get from Fuxian to Dingbian, one day to get
to Yanchi and load up, and twelve days to return. The longest stage was 90
li. The route, stage names and conditions during each stage
was as follows:

(i) From Fuxian to Zhangcunyi, 50 li. Five gullies and the
road was difficult. Good water and grass.

(ii) Zhangcunyi to Lannipo, altogether five stages, each 70 li.
Road good. Cut grass to feed the animals.

(iii) Lannipo to Lijiabian. 20 li of mountains and 40
li of gullies. Road difficult. Fodder no good.

(iv) Lijiabian to Lujiajiao. 30 li of gullies and 5
li of mountains. Most difficult to travel. Fodder no good .

(v) Lujiajiao to Luanshitouchuan. Travelling in gullies. There were military
stations. Fodder was sold (each 100 jin of mountain grass 30
yuan of valley grass 50 yuan, and wheat hay 40
yuan.).

(vi) Luanshitouchuan to Sanlimiao, 80 li. There were military
stations. Dry grass cost 50 yuan for 100 jin.
Forty li of mountains, very precipitous. Difficult to travel.
Water difficult ( Salt water not drinkable). Saw a salt-porter whose donkey
had fallen to its death.

(vii) Sanlimiao to Liangzhuang, 80 li.

(viii) Liangzhuang to Dingbian 90 li. There were military stations.
Fodder 50 to 100 yuan per 100 jin. No water.

(ix ) Dingbian to Yanchi, 40 li. One day there and back. Sandy
road difficult to travel.

(3) Difficulties along the route were:

(i) During three of the five stages from Zhangcunyi to Lannipo, locusts [zhameng]
were biting. It was best for men and animals to travel in the evening.

(ii) During the two stages from Sanlimiao to Liangzhuang and thence to Dingbian
there was no water. Men and animals were thirsty.

(iii) There were a lot of thieves at Dingbian. Animals, money, clothing and
tools often taken.

(iv) Beyond Luanshitouchuan since salt-transport animals from various counties
converge there are often several thousands or hundreds of animals travelling
together. Thus there are problems of inn space, fodder, water, and especially
of room to rest animals. Things can easily go wrong and cause trouble.

(4) Life on the road:

Chengguan district sent twenty-eight animals and fourteen men. Along the
way we cooked for ourselves. Each meal required 7 sheng of millet, roughly
25 jin. Everyone felt that 'We eat more when we have set out'.
Inn charges ranged from 3 yuan at the lowest to 8
yuan at the most. It depended entirely on whether you had a
good or bad relationship with the manager of the inn. When travelling we
sang and told stories, many of them about Duke Xiang seeking a wife. Everyone
was very happy and no one felt burdened. Animal fodder was cut in rotation.
It was plentiful and could not all be eaten up. The masses along the route
were very good, and there was no problem in getting grain and fodder, though
we chiefly relied on ourselves. Sometimes there were quarrels, mainly because
the animals had eaten someone's crops. Only in one place did the manager
of an inn give us bad grain.

(5} Points that arose during the journey:

Good :

(i) None of the animals had any illness. Those from the first and third townships
were thin when we set off but returned fat. This was because of the care
of the porters, and careful feeding.

(ii) None of the porters had any illness. Everyone was very fit and in good
spirits. No one grew thinner. They just got a little sunburned.

(iii) Nothing was left behind along the way and the animals did not eat people's
crops. This was mainly because deputy district head Lu Zhongcai's was an
old porter. He was experienced, responsible, and meticulous. Everyone else
was very active and thus we were successful.

Bad:

(i) Du Hai, head of the village council of the First administrative village
of the Third township, sold good donkey and bought a bad one to go. As a
result the donkey was exhausted, did not carry pack and we wasted 165
yuan in travel expenses. The township also sent another bad
animal (it had bad loins) and Jianjuntaicun of Fourth township sent donkey
with a bad leg. Neither carried salt and each wasted 165
yuan in travel expenses. Furthermore, the same village sent
a donkey with a rotten saddle with the result that its back was hurt through
the pressure of its load. The head of Second township had two donkeys. He
sent a bad one with a pod saddle and frame. This caused a lot of bother along
the way. The district-level government did not make a careful inspection
of these matters before we set out. Some were known about but not corrected.
As a result only twenty-five of the twenty-eight donkeys carried salt. The
other three travelled without loads, not contributing one bit to the value
of salt carried and wasting from 500 to 600 yuan in travel
costs. All in, the total loss was over 1,500 yuan. This is
a valuable warning for district and township cadres.

(ii) The head of the village council of Jianjuntaicun in Fourth township
did not obey deputy district head Lu Zhongcai's instructions. He did not
bring good fodder for the animals (oats [yumai] and broad beans
[candou]) and instead used kaoliang and other poor substitutes.
As a result the animals from that township sometimes lay down when travailing
because of their poor fodder. We are preparing to struggle against that village
head and punish him.

(iii) The porter Yang Wanbao from Fourth township was a real troublemaker
on the way. He pretended to be ill and skulked off home. He created wild
rumours, 'two people had died, deputy district head Lu and a man called Wang...
There was nothing to eat along the way... The donkeys' backs had all been
ruined under their loads... The inns could not sell grain...' so that many
people back in the town felt unhappy. The district head did not pay sufficient
attention to this. In future he should be alert.

(iv) Some families sent bad donkeys which carried less, only about 110
jin. One family from Jianjuntaicun in Fourth district changed
their donkey's halter for a bad one when they sent it off. They anticipated
the donkey would die and had made up their minds to write everything off.
The donkey from the head of Second township was only 10 li
from home on the way back when it lay down. He was unwilling to send a good
donkey to take over. He defaulted on his responsibility as he thought the
donkey would surely die and could not return. So he did not come and take
over.

(v) Twelve donkeys carried too much and 40 to 50 jin were given
to a donkey without a load. When we got to the tax inspection office at
Sunkeyaoxian they confiscated 50 jin of salt and one sack (value
20 yuan) because we had no certificate.

(6) Costs, losses and gains:

(i) Average expenses per donkey were: 2 tou of beans value
60 yuan; each man had 1.5 tou of grain and as
each man looked after two donkeys this equaled 0.75 tou per
donkey with a value of 35 yuan; travelling costs were 70
yuan. The total 165 yuan. In addition there was
salt capital [yanben] of 20 yuan. The average cost per donkey
was thus 185 yuan.

(ii) On average each donkey from First township carried 130
jin, and from Second, Third and Fourth townships 110
jin. At present market prices of 200 yuan per
100 jin salt, each load was worth from 220 to 260
yuan.

(iii) At current prices, after expenses are deducted, earnings per donkey
load ranged from 35 to 75 yuan.

Notes: (a) If each donkey were able to carry 150 jin, the
guaranteed income per donkey at current prices would be above 100
yuan.

(b) Reports on amounts carried were given by the porters who were certainly
holding something in reserve—most donkeys here can carry 150
jin.

(c) At the same time the principle is clear that so long as you have good
donkeys you can earn more. The worse the donkeys the less you earn, and you
can even make a loss.

(7) Experience and lessons:

(i) The victorious return of this salt-transport team from Chengguan district,
Fuxian, proves that the Party and government's plans, estimates and methods
for salt transport are entirely correct. The doubts, lack of trust and
considerations that it would be a burden by various comrades are all erroneous
and shallow outlooks.

(ii) We smashed the fears of some cadres and masses about going to Sanbian
for salt ( 'men and animals will die... they will go and not return'). On
the contrary the animals carrying salt returned fatter, and the men were
healthier and merely a little sunburned.

(iii) We proved that salt transport can earn money, and smashed the inaccurate
reckless talk that we 'certainly would lose capital', 'each donkey would
lose 100 yuan., and 'it is the greatest burden ever imposed
it the Border Region'.

(iv) We showed that certain cadres at district and township level, particularly
at township level, did not do their work responsibly (they did not inspect
carefully ), were prepared to cover-up things that were wrong (village and
township heads could send poor animals and were not investigated), were corrupt
(used poor kaoliang instead of beans ), and had become tails following behind
the masses.

(v) The cadres played a decisive role. Deputy district head Lu Zhongcai was
experienced, lively and responsible. Each time we reached a place or something
happened, he held a discussion meeting of the porters — he even discussed
how much salt each donkey should carry. As a result neither men nor animals
came to any harm and on the contrary ended up stronger and in better spirits
than when they set out.

Lessons:

(i) The district and township cadres did not pay attention to and investigate
at the right time the troublemaker from Fourth township, Yang Wanbao who
skulked off home and created rumours. They did not talk to him and did not
report to higher levels. As a result a rumour spread among the people of
the district that two people had died - deputy district head Lu and somebody
Wang - and that three donkeys had died. This made people very uneasy.

(ii) There were problems along the way (some stages were hard going, one
or two had many locusts, and two had little water) but they could be overcome.
On bad roads we had to be more careful. Where there were locusts we travelled
in the evening. Where there was little water we drank more on getting up
in the morning and carried water with us. With patience all difficulties
could be overcome.

(iii ) The better the donkeys, the more we can earn. If we could earn 75
yuan for each donkey that carried I30 jin this
time, we can earn 115 yuan for donkeys carrying 150
jin, The worse the donkeys the less we can earn, and we can
even make a loss. For example, Chengguan district sent three poor donkeys
(one with bad loins, one with bad legs, and one was exhausted). As a result
they did not carry salt. Each donkey wasted 165 yuan in travailing
expenses and the total loss including porters was over 1,000
yuan. At the same time this showed that work must be done carefully
and you cannot muddle through. If the district and township had carefully
inspected the donkeys sent this time, worked conscientiously, and not given
any favours, we, would not have made these losses since everyone would have
known about the poor donkeys.

(iv) If we had not stayed at inns along the way and let the animals out to
pasture not buying hay, we could have saved over 50 yuan per
donkey. What we save becomes earnings.

(v) We must pay more attention to the national laws. Because we were not
careful we had 50 jin of salt and one sack confiscated. This
was an unnecessary loss. ( This report was published in the Liberation
Daily 14, 15 September 1941.)

  7. ON THE DEVELOPMENT OF SELF-SUPPORTING INDUSTRY


The agriculture, animal husbandry, handicraft industry, cooperatives and
salt industry discussed above are all economic undertakings by the people.
The Party and government give guidance and help within the bounds of possibility
and need so that these things can develop and the requirements of the people
can be met. At the same time, the portion handed over to the government by
the people in the form of taxes ensures a part of the government's needs
(for example, grain tax, salt tax and other taxes ) and the portion handed
over in the form of trade ensures another part of the government's needs
(for example, raw cotton, cotton yarn, cotton cloth, wool, etc.). Their basic
nature is that of undertakings run by the people. Only in the case of the
salt industry, where 40,000 packs of salt are transported and sold under
the control of the government's Salt Company and the 5,000 or so packs are
consumed directly by government personnel, does a part (about one-seventh
of the whole) belong to the public sector of the economy.

As a whole the undertakings of the public Sector of the economy consist of
the following three kinds: (1) the salt industry, industry and commerce run
by the government; (2) the agriculture, industry and commerce run by the
army; and (3) the agriculture, industry and commerce of the official organization
of the Party and government. These all directly ensure the supply of the
living and other expenses of the Party, government and army personnel. According
to accounts for 1942 and the budget for 1943, the amount supplied in this
way exceeds the amount handed over by the people in the form of taxes (including
the grain tax ) . Therefore publicly-run economic undertaking have become
the greater of the two large sources ensuring financial supplies. Their
importance cannot be overstated.

The reasons we pay attention to publicly-run economic construction are both
historical and contemporary. During the civil war, the Party Central established
some publicly-run industry and commerce in the Jiangxi Soviet in order to
meet the need of the war. At that time, we initiated the growing of vegetable
and raising of pigs by the various official organizations and schools so
as to make up for the lack of provisions. Only the army did not have experience
in production. Also, since the peasants of Jiangxi were comparatively rich
and numerous, it was not yet necessary for us ourselves to set-to to provide
grain. These are historical reasons. Since the War of Resistance began, we
have found ourselves in a very special situation. At first the Kuomintang
provided a very small amount of ratio for our arms. Subsequently, it cut
them off entirely. The Border Region was blockaded, leaving us no alternative,
but to become self-supporting in supplying the needs of the War of Resistance.
These are contemporary reasons.

After the War of Resistance began, attention was turned to publicly-run economic
construction in 1938. Since we could not cover the costs of our army we began
a production movement. However, at that time we only ordered some of the
troops to take part in production, growing vegetables, raising pigs, cutting
wood, making shoes and so forth on a trial basis. The aim was simply to rely
on this as a way of improving the livelihood of the soldiers. We still did
not plan to rely on it as a way of providing general finance and supplies.
Later we saw how successful the soldiers were in this experiment. They could
do a lot of productive work during their rests from training, and their living
standards really improved. After this happened there was a reduction in the
instances of desertion. On seeing this success, we applied the experience
widely among the troops garrisoned in the Border Region. An order was issued
from the Garrison Office [liushouchu] calling on the troops to learn
from this example. But we still aimed at improving livelihood and not at
meeting general needs. At that time, the government started to pay
attention to setting up several small factories but the official organizations
and schools were not even called on to grow vegetables and raise pigs. In
1939, the Kuomintang issued the Methods to Restrict the Activities
of Alien Parties and relations between the Kuomintang and the Communist
Party worsened. The number of official organizations and schools in the Border
Region also increased. Although there was a small amount of subsidy for expenses
from outside, it was already far from sufficient. We were facing a serious
situation in finance and supplies. For these reasons we were forced to devise
a movement for all-round mobilization to become economically self-supporting.
We then raised the following questions at the congress for cadre mobilization.
Do you want to starve to death? Shall we disband? Or shall we set-to ourselves?
No one approved of starving to death, and no one approved of disbanding.
Let us set-to ourselves — this was our answer. We pointed out this simple
principle: in the final analysis, how did ancient man survive if not by getting
down to it himself? Why is it that we, the sons and grandsons of these ancient
men, do not even have this spark of intelligence? We also pointed out: it
is very common for an exploited peasant household in a feudal society with
three or four or even seven or eight mouths to feed to rely on the production
of only one labour power. Such a family must not only support itself but
must also pay 50 to 80 per cent of its income in rent and taxes to others.
Why are we not as good as such a family? Our army is made up entirely of
labour power, there are no women, no old and young. Nor is there the burden
of rent and taxes. How could hunger arise? We have these powerful organs
of government. Why cannot they provide their own clothing, food, housing
and equipment? We reflected for a while on the reasons why ancient man and
today's poor peasant were able to survive, and moreover to live better than
wild animals. Without doubt it was because each had a pair of hands, and
extended their hands using tools. We again considered ourselves. In fact
each of us has a pair of hands, and we can extend them with tools. This period
of reflection was very important. Thereafter our problems were immediately
solved. In sum we affirmed that we were able to overcome economic difficulties.
Our response to all problems in this respect were the three words 'set-to
ourselves'. This time the tasks we set were no longer the same as those of
1938. We no longer wanted merely to improve our livelihood, but also wanted
to meet some of our general needs. The scope of mobilization was not limited
to the army and we called on all forces, official organizations and schools
to carry out production. We implemented a call for a large-scale production
movement. The Song of Opening up New Land was a new song from
that period, and so was The Production Chorus. This call not
only mobilized the several tens of thousands of personnel in the Party,
government, army and schools, but also mobilized the common folk of the Border
Region. In that year the common folk opened up over 1 million
mu of new land. This call also reached all over north
China. Many units of the Eighth Route Army at the battlefront also carried
out production during breaks in the fighting. This was the first stage of
our movement for production self-sufficiency. This stage included the three
whole years of 1938, 1939 and 1940. During this stage the government's
industrial construction advanced and the army, official organizations and
schools developed agricultural production.

From 1941 until this Senior Cadres' Conference (December 1942) has been the
second stage. The foundation for self-supporting production had already been
firmly laid. During these two years, personnel increased and many people
unable to find enough to eat outside came to the Border Region seeking food.
The 359 Brigade also came to strengthen defences along the Yellow River.
The troops have grown in number and support from outside has completely
ceased. There are only two sources for the government's living and operating
expenses, the people and the government itself. As a result of two years'
hard work the proportion of the total amount coming from the government itself
is greater then that coming from the people. Experience during this stage
makes us feel grateful to those people who blockaded us. For the blockade
as well as having its negative drawbacks also brought about a positive side,
which was to encourage us to be determined to set-to ourselves. As a result
we achieved our goal of overcoming difficulties and trained experience in
running economic enterprises. The old saying 'hardship and distress help
you to success' is something we have come to understand entirely and consciously.

During the first of the two stages we have gone through, the troops, official
organizations and schools placed emphasis on agriculture and the government
developed industry. During the second stage we stressed commerce in order
to provide for the critical needs of the moment. With the exception of those
troops, official organizations and schools which persisted in the policy
of putting agriculture in a prime position, the rest developed business skills
and did not place such heavy emphasis on agriculture as in the first stage.
However, the government, troops, official organizations and schools all developed
industry and handicrafts. After this Senior Cadres' Conference we will enter
a new stage of development. In the new stage our economic base will already
be rather firm and our experience fairly wide. He should put agriculture
in first place, industry, handicrafts, transport and animal husbandry in
second place, and commerce in third place. Since commerce can only help in
an emergency, we cannot and should not attempt to lay a long-lasting foundation
upon it.

Distinctions between the government, the army, and the official organizations
and schools in the public sector of the economy can only be made in terms
of management and not in terms of an economic nature. Therefore in the following
discussion on self-supporting industry we shall treat the industry run by
all three as a whole, and when discussing the self-supporting economy of
the army and the official organizations and schools, we shall again look
at their industrial production separately. However, since industry run by
the government is the largest part of all publicly-run industry (government
textile mills produce 56 per cent of the 22,000 bolts of cloth produced annually
by all publicly-run textile mills; the output of government paper factories
is 70 per cent of all publicly-run paper production; the output of government
soap factories is 70 per cent of all Border Region soap production), it is
rational to deal with all self-supporting industry alongside that run by
the government.

Why should unified, self-supporting industry be run in such a dispersed way?
The main reason is that the labour force is divided among the various branches
of the Party, government and army. If it were centralized, we would destroy
their activism. For example, we encouraged 359 Brigade to set up the Daguang
Textile Mill and did not order it to combine with a government mill because
most of the several hundred employees at the mill were selected from the
officers and men of 359 Brigade. They work to produce the bedding and clothing
requirements of the Brigade and their enthusiasm is high. If we centralized,
we would destroy this enthusiasm. Another important reason for dispersed
operation is that raw materials are in many different locations and this
causes transport problems. For example, in order to meet the needs of the
Party, government and army personnel of Guanzhong, Longdong, Sanbian, and
Suide the bedding and clothing industry finds it best to produce cloth (or
buy it) on the spot, and to make it up on the spot. It certainly should not
concentrate its making up in Yan'an alone. Thus we use the activism of the
various branches to undertake production to meet their own needs. Adopting
the policy of 'dispersed operation' is correct and ideas aimed at centralizing
everything are wrong. However, enterprises of the same kind carried out within
the same area should be centralized as much as possible. Unlimited dispersal
is not profitable. At present we are already carrying out or about to carry
out centralization of this kind. One example is the handing over to government
control of the Tuanjie Textile Mill of the Central Committee's Central
Administration Bureau [Zhonguang Guanliju] and the Jiao-tong
Textile Mill of the Rear Services Department [honquinbu]. Perhaps
this process of dispersal at first and centralization later cannot be avoided.
Dispersal makes it possible to use the activism of various branches when
setting something up, and centralization enables the various branches to
get better supplies. But it is very important that dispersed management does
not lead to forgetting centralized leadership. This facilitates unified planning,
balanced supplies, and essential arrangements in rational management and
distribution. Up to now we have had great shortcomings in this respect and
they must be corrected in future. To sum up, our policy is 'centralized
leadership and dispersed operation'. Not only is industry like this, agriculture
and commerce are too.

At this point we must distinguish between two forms of publicly-run agriculture,
industry and commerce, the large and the small. Large should be centralized
and small should be dispersed. Examples of things for which we should encourage
dispersed operation include agricultural work such as growing vegetables,
raising pigs, cutting wood and making charcoal, and handicrafts such as
shoemaking, knitting, or small mills when both are run by one or more provision
units [huoshi danwei] to provide for their own daily food,
bedding and clothing needs and to make up deficiencies in running expenses;
or cooperatives and small-scale commerce operated to provide from consumption
costs or to earn a small profit to cover office expenses. These things must
be dispersed, being carried out and developed everywhere. They cannot be
centralized and should not be. This is one kind. However, there is another
kind. Examples of this are such things as large agricultural plans to provide
a definite amount of grain for a whole brigade or regiment of troops —
that is the military farming [tun tian]plan; large agricultural
stations run to meet the grain and vegetable requirements of many official
organizations; large workshops and factories run to provide for the bedding,
clothing and daily requirements of a Whole brigade, a regiment, or a large
number of official organizations; and large-scale commerce run to meet the
operating costs of such large units. All these things must have a unified
plan, centralized control, and strict regulation of expenditure. We cannot
allow them to lack coordination and operate without restraint. However,
agriculture, industry and commerce which should be under centralized leadership
must not be put entirely in the hands of one single official organization
for the whole Border Region. Instead the unified plan drawn up by such an
official organization (at present the Border Region Finance and Economy Committee
and its office) according to the needs of the whole and the parts and the
possibilities for operation, is handed over to the Party, government and
army systems for separate implementation. Within the Party, government and
army systems, there is also a unified plan with division in operation. These
are the features of the policy of 'centralized leadership and dispersed
operation' in the publicly-run sector of the economy of the Border Region.

In the five years since 1938, the public sector of the economy has made some
very great achievements. These achievements are worth treasuring for ourselves
and for our nation. That is, we have established a new model for the national
economy. The reason that this is a new model is that it is neither the old
Bismarkian model of the national economy nor the new Soviet model of the
national economy but it is the national economy of the New Democracy or the
Three People's Principles.

Our publicly-run, self-supporting industry has not yet reached the stage
of supplying fully all our needs. We still cannot talk of using surplus capacity
to meet the needs of the people. As yet those needs can only be met by the
Party and government providing organizational stimulus and the people setting-to
themselves. At present all our efforts are aimed at meeting the needs of
self-sufficiency within two or three years, particularly the need for cotton
cloth. We must not indulge in the fantasy that in present circumstances we
can have tremendous development. That will only do harm.

Below I shall discuss our publicly-run economic undertakings over the past
five years item-by-item beginning with self-supporting industry.

We first began to pay attention to the construction of publicly-run industry
in 1938. In that year the Border Region successively established the Refugee
Textile Mills, the paper factory, the bedding and clothing factory, the
agricultural implements factory, and the Eighth Route Army medicine factory.
Later on most of these factories each provided an important stimulus. At
this time the industrialist Mr Shen Hong voluntarily moved his ten
privately-owned machines to the Border Region to serve the Eighth Route Army,
and Mr Shen himself came to the Border Region to work. Thereafter many scientific
and technical personnel also came to the Border Region to work, enabling
the Border Region to gather a pool of scientific and technical talent as
the guiding force in the establishment of industry.

In 1939 the blockade of the Border Region economy began. Imports of industrial
products were limited. The Party Central issued the calls to 'set-to ourselves'
and to be 'self-reliant'. After the Border Region Government held the
agricultural exhibition in January, it held an industrial exhibition on Labour
Day, which stimulated enthusiasm to develop industry. The government and
the Rear Services Department sent people to Si'an to select and buy machines
and materials. They also organized spinning and weaving cooperatives and
oil-pressing and tile-making producer cooperatives in Yan'an and Ansai. Although
the machines and materials bought from Si'an were insufficient, they became
one of the major material strengths in the development of Border Region industry
over the past few years. In that year we also set up the Xinghua Chemical
Factory and the Guanghua Medicine Factory, and began to explore the thick
coal-seams at Shilipu in Yan'an county.

The development of industry in 1940 was carried out under the policy of becoming
'semi-self-sufficient' in production. It was decided to make the development
of light industry the key feature. In January we held the second industrial
exhibition and reviewed the strength of our factories. The Border Region
Bank lent 1 million yuan to expand factory capital, to set
up proper factory sites and to continue buying materials. In February the
Central Committee put forward the policy of 'centralized leadership and dispersed
operation'. In September Commander Zhu promoted the wool-spinning movement
and developed some wool-spinning and weaving undertakings. Very many large
official organizations and schools and troop units planned actively to set
up factories. They sent people to existing factories to study techniques.
They studied methods of control and fixed plans for the rapid development
of industry in 1941.

In 1941 the Central Committee put forward the policy of 'moving from
semi-self-sufficiency to complete self-sufficiency'. Under this policy the
Bank increased its loan by 3 million yuan and the government
also invested 500,000 yuan in the publicly-run factories. Many
official organizations and troop units also set aside funds to establish
factories. On the Eight of March Festival [International Woman's Day) we
held a production exhibition. In December the large Bank building was completed
and we held another industrial exhibition presided over by the Bank. The
following list gives the factories set up by the official organizations and
schools directly under the Central Committee in 1942 so as to show the efforts
made by the various units to develop industry at this time. These industries
are all handicraft factories, none large and some very small.

(1) The Xin Zhongguo Textile Mill, the Shiyan Factory, the wooden implements
factory, the carpentry factory, the first and second charcoal factories,
the tile factory, and the bedding and clothing factory run by the Finance
and Economy Office directly under the Central Committee. Total capital over
200,000 yuan. More than 220 employees.

(2) The Shengli Wool Factory and Shengli Carpentry Factory set up by the
Central Organization Department [Zhonguang Zuzhibu].

(3) The Qiyi Mill set up by the Central Propaganda Department
[Zhonguang Xuanchuanbu].

(4) The Tuanjie Textile Mill set up by the Marxism-Leninism Institute.

(5) The Sun Yat-sen Textile Mill set up by the Central Party School.

(6) The blanket factory, mill, alcohol factory, glass factory and machine
factory set up by the National Sciences Institute.

(7) The factories run by the Lu Hsun Academy, the North Shaanxi Public School
[shaangong], the Youth League cadres and the Women's University.

(8) The Xinhua Carpentry Factory and the bedding and clothing factory run
by the Central Printing and Publishing Department.

(9) The Yanyuan Paper Factory run by the instruction brigade [jiaodao
dadui].

The above lists twenty-seven factories run my the systems directly controlled
by the Central Committee with a total of 447 employees and more than 400,000
yuan capital. Most were set up with the aim of achieving economic
self-sufficiency.

These apart, there are several small factories run by the Economic Construction
Department [Jingjianbu], the Garrison Office, the Public Security
headquarters, the Border Region Finance and Economy Office, 359 Brigade and
various special offices. The Daguang Textile Mill of 359 Brigade has a fairly
large output. The various regiments of 359 Brigade also have their own
small-scale cotton or wool-spinning and weaving workshops.

The industry constructed from 1938 to 1941 is now expanding. Development
during 1941 was particularly vigorous and provided a foundation for the work
of 1942. However throughout the period construction was carried out rather
blindly. Many personnel lacked conscious awareness. They only thought of
the present and not of the future. They only thought of dispersed operation
and not of unified leadership. They had an entirely anarchic outlook. As
a result some factories closed down as soon as they were built, some announced
they were closing down after a short period of operation and some merged
with other factories. Only a portion of them have continued to exist. To
take textile enterprises near Yan'an, by 1942 only three large factories,
the Refugee, the Jiaotong and the Tuanjie and two small factories, the Xinghua
and the Gongyi remained. This winding path could not be avoided at the time,
since one can only gain experience from paths that one has already travelled.
But having gained experience from this stage, it would be better to avoid
following similar winding path in new industrial construction.

In 1942 the Reconstruction Department laid down the policy of consolidating
existing publicly-run factories and developing rural handicrafts. Government
investment in industry was 1,700,000 yuan. Rural handicrafts
run by the people had already greatly expanded before this year. In Suide,
for example, there were 600-700 cotton cloth hand-looms. Blanket-making,
leather-tanning and ironwork had also developed in other places. The public
and private textile industry has developed particularly quickly and it has
a lot of problems. In order to ensure the development of the textile industry,
we have reduced the import tax on raw cotton and foreign yarn to 1 per cent
and increased the import tax on bolts of cloth to 15 percent. In Suide the
bank organized the 'the Yongchang Native Cloth Producing and Selling Company'
with capital of 2 million yuan. It issues raw cotton and collects
yarn and cloth, encouraging the peasant women to spin yarn and weave cloth.
Since cloth-weaving by peasant households has expanded, much of the cloth
produced by privately-run, small-scale, capitalist textile production
cooperatives can no longer be sold. They also have difficulties with the
supply of native yarn. They have no choice but to reduce their scope of
operation, or to become fragmented, distributing their equipment among the
people and transforming themselves into family subsidiaries. Since publicly-run
textile mills chiefly supply for public use, they can maintain themselves.
But they also have problems with the supply of raw cotton and yarn. This
year the Zhenhua main factory and branch factory of the publicly-run paper
industry completed the task of supplying the Publications Office with 3,000
rolls of paper made from malan grass. The Lihua first and second
factories originally planned to produce 2,500 rolls but did not succeed.
This year's output will not exceed 500 rolls. Other publicly-run paper factories
experience great difficulty since there is no market for their paper. The
products of the publicly-run woollen industry such as blankets are aimed
at solving problems of finance. The government does not use them itself.
Some are exported and others are sold to the troops. The fine-spun woollen
thread produced is particularly well received and brings a good profit. Beginning
in September, the Jiaotong, Xinghua and Tuanjie textile mills, and the first
and second Lihua paper factories were all handed over to the control of the
Border Region Government from the Central Committee and the Rear Services
Department systems. In order to ensure raw materials for spinning and weaving
in 1943, we have begun to buy cotton from the three eastern counties this
year. We plan to buy 750,000 jin . To ensure the supply of
raw materials for paper manufacture, we have raised a levy of 730,000
jin of malan grass from the counties of Ganquan,
Yan'an, Ansai, Anding, and so forth. The factories should wait until they
have carried out the policy of better workers and simpler administration
before dealing with the recruitment of personnel.

The year 1942, and particularly this Senior Cadres' Conference, is an important
landmark in beginning to get rid of blindness and anarchy, and for introducing
consciousness and unified and planned operation into the whole of the public
sector of the Border Region economy, and especially into publicly-run industry.
Although the Central Committee put forward the principle of 'centralized
leadership and dispersed operation' long ago in February 1940, only in 1942
has it attracted comrades' attention. It has only obtained unanimous acceptance
at this Senior Cadres' Conference. Five years of practical experience has
made us progress a lot. After this conference, the whole public sector, industry
included, must be reorganized so that it develops healthily.

Above I have given a simple outline of the history of industry in the Border
Region over the past five years. By December 1942 we have seven kinds of
industry: textiles, bedding and clothing, paper, printing, chemical, tools
and coal and charcoal. There are seven textile mills with 26,900,000
yuan capital and 1,427 employees; eight bedding, clothing and
shoe factories with l,001,100 yuan capital and 405 employees;
twelve paper factories with 4,100,000 yuan capital and 437
employees; three printing factories with 5,200,000 yuan capital
and 379 employees; twelve chemical factories (medicine, soap, leather, pottery,
petrol, etc. ) with 17,030,000 yuan capital and 674 employees;
nine tool factories with 3,662,792 yuan capital and 237 employees:
and twelve coal and charcoal factories with 1,777,070 yuan
capital and 432 employees. The total figures are sixty-two factories
with 59,670,962 yuan capital and 3,991 employees. Although
our industry is still very small and mainly takes the form of handicrafts
with not much machine industry, nevertheless it has taken five years of effort,
laid down an initial foundation and played a part in ensuring supplies and
regulating commodity prices. Developing from this foundation, it can certainly
plan an even greater role.

Our most important self-supporting industries are the textile industry and
the bedding and clothing industry. These are what the several tens of thousands
of troops and personnel in the official organizations and schools rely upon
each year for their cloth, bedding and clothing. Without them we would be
frozen. In 1942 our textile industry was already capable of producing over
22,000 bolts of cloth. However we needed 40,000-50,000 bolts and we can only
reach our goal of self-sufficiency through great efforts. If we want to develop
textiles, we must carry out the following policies.

(1) We must raise cotton-cloth import duty and protect native cloth. At the
same time, the troops and official organizations and schools must use only
native cloth produced in the Border Region.

(2) We must generally encourage peasant women to spin cotton yarn and woollen
thread to guarantee supplies of yarn and thread to the factories. At the
same time, we can raise the income of the masses.

(3) We must solve problems of supply and distribution. No matter whether
publicly-run, privately-run or family subsidiary, the ability to develop
is chiefly related to whether problems of supply and distribution can be
solved. As regards raw materials, we are still not self-sufficient in raw
cotton and cotton yarn, and the sources are not dependable. Since communications
are not very good either, there are problems in distribution. We must arrange
things so that yarn-spinners can buy raw cotton whenever they want it, and
cloth-wavers can buy yarn whenever they want it. As regards finished products,
the markets for cotton cloth and woollen products are not stable. We must
arrange things so that producers can sell their products at any time; of
suitable market-prices. These problems must be solved by the combined strength
of the financial organs, commercial organs and the people's cooperatives.

(4) As for problems in the supply of clothing and bedding, we must act according
to the methods implemented by the Finance Department in 1942 so as to economize
on costs and get clothing at the right time.

Our papermaking industry can already produce over 5,000 rolls of
malan paper per year. In 1943 we can increase this to 7,000
rolls, which is entirely sufficient for our printing needs. However, we must
(i) unify the production and supply of paper. malan paper is
not suitable for general use apart from printing. It cannot be sold if the
printing departments do not want it. At present we have the following situation:
if the printing factories do not use enough, the paper factories cannot sell
and have to stockpile, capital turnover is sluggish and this influences
production. In order to solve this contradiction between supply and demand
in 1943, we should unify purchase and supply, and make precise economic
relationships between particular official organizations and paper factories.
(2) We must improve the quality of the paper. With existing equipment and
technical conditions the quality of the paper can be improved at a greater
cost in work and raw materials. From the point of view of function and
significance, a slightly greater cost is worth-while. On the other hand we
must study improvements in papermaking implements so as to raise production
efficiency.

Our printing industry is a modernized cultural tool, and a large quantity
of books and papers depend on it. In 1942 printing shops of the Central
Committee, Eighth Route Army and Northwest Bureau printed 51,600,000 characters.
In 1943 this can be increased to 53,600,000. However, we must increase equipment
and ensure the supply of paper.

Our chemical industry includes medicine, soap, leather, pottery, glass, alcohol,
matches, petrol and so forth. The Eighth Route Army and Guanghua medicine
factories can produce some of the Western and Chinese medicines needed for
military and public use, but we are still not entirely self-sufficient. In
1943 we should study the medicinal materials produced in the Border Region,
and set up the means for buying raw materials so as to increase the production
of necessary medicines. The Xinhua and Daguang factories make soap. Their
production increases daily and their quality is good. As well as meeting
our own needs, they can sell outside. In 1943 the Xinhua factory can produce
420,000 pieces of soap valued at 7 million yuan. And it has
prospects of development. The scale of leather-tanning is small and the cost
of materials high. It cannot develop much. If we could use plant materials
produced in the Border Region to manufacture leather for military use then
there would be some prospect of development. There are three small pottery
kilns making pottery for daily and industrial uses. Glass has already been
successfully trial-produced and we have decided to set up a factory. We can
also make our own alcohol for industrial and medical use. We have still not
been able to solve the problem of supply of phosphorous for making matches.
We are now investigating the possibility of getting it from animal bones.
Apart from these, there is petrol from Yanchang which supplies a little each
year for military use. The white wax it contains can be supplied for daily
use. In sum, the chemical industry must choose to expand and introduce the
supply of things which are urgently needed or are profitable and possible.
It should not bother with the rest.

Our tool-manufacturing industry supplies spinning-machinery, weaving-machinery,
cotton-bowing and crushing machinery. paper-making equipment, horse-carts,
carpenters' tools, agricultural implements and so forth. They are mainly
handicraft tools but are extremely important. We must do research into
improvements, and provide for expansion.

Our coal industry is concentrated in Yan'an and Guanzhong. Its output is
for daily use. Although it is small-scale, It is very important.

The Border Region lacks iron, which impedes the manufacture and improvement
of industrial and agricultural tools. At present we are holding trials in
Guanzhong and there are hopes of success. If we can make iron, we can solve
a major problem of the Border Region.

The above discussion has roughly covered the whole of publicly-run,
self-sufficient industry. Textiles, papermaking, bedding and clothing, printing,
chemical, tool-making and coal, all have reasonable prospects for development.
Their first target is to meet the needs of the army and government, and their
second is to supply some of the people's needs. We should make the following
improvements in 1943 in order to meet these targets.

(1) Increase capital (the amount to be decided). Each official organization
concerned should draw up concrete plans for consideration by the Finance
and Economy Office [of the Border Region Government - caijing
Banshichu ] with the aim of investing in each. Of the various
industries and in certain investigation and research undertakings, in order
to promote the development of self-sufficient industry in a planned way.

(2) Establish a unified leadership for the whole of self-supporting industry,
overcome the serious anarchy which exists now; The principle of 'centralized
leadership and dispersed operation' put forward earlier is correct but it
has not been thoroughly implemented. As a result, there is lack of planning,
excessive dispersal in production, lack of work inspection and waste of manpower
and materials among the industries run by the Reconstruction Department,
the Finance Department, the troops and the official organizations. In 1943
we should set up unified leadership under the Finance and Economy Office
and first make all self-supporting industry have a unified plan, no matter
which branch it controls. In the unified plan we should calculate as a whole
the supplies of raw materials, grain and straw, the totals for production
and the coordination of sales. In supplying raw materials we must deal with
the problem of many factories facing regular raw-material crises because
the region is spread out and these materials are not concentrated, or because
supply comes from outside. In supplying grain and hay, we should provide
the factories with the grain and hay they need as calculated by the Finance
Department so as to save distracting the responsible people at each factory
from their concentration on looking after production. In respect of the problems
of production and sales, the Finance Department and the official organization
concerned should, under the unified plan of the Finance and Economy Office,
give each factory responsibility to produce a definite amount so that whatever
is needed is produced in the quantity required and the finished products
are accepted by a definite organ at the right time solving the contradiction
between production and supply. In the unified plan we must realize mutual
aid between enterprises and get rid of departmentalism, which gives rise
to independence from each other or even hindrance of each other. We must
also realize unified inspection, giving encouragement and criticism so that
the poor catch up with the good. In sum, the problem of unified leadership
is the central problem in advancing self-supporting industry during 1943.
We must make thorough efforts to solve it.

(3) Establish the system of economic accounting [jingji
hesuanzhi] overcome the muddled situation within the enterprises.
To achieve this we must do the following. First, each factory unit should
have independent capital (liquid and fixed ) so that it can handle the capital
itself and its production is not frequently hindered through capital problems.
Second, income and expenditure in each factory unit should be handled according
to fixed regulations and procedures, putting an end to the confused situation
where income and expenditure are not clear and procedures are not settled.
Third, according to the actual situation in the factories some should adopt
the cost-accounting system [chengben kuaijizhi] and some need
not for the time being. However, all factories must calculate costs. Fourth,
each factory should have regulations for inspecting the rate of progress
in completing the annual and monthly plans. They should not let things slide
by doing without inspections for long periods. Fifth, each factory should
have regulations for economizing on raw materials and looking after tools,
and for fostering the practice of doing these things. All these points are
the chief elements of the system of economic accounting. Once we have a strict
accounting system, we can examine fully whether an enterprise is profitably
operated or not.

(4) Improve factory organization and administration, overcome the tendency
to build organizations like those of government organs
[jiguanhua] and relaxation of discipline. The first thing we
must reform is the irrational phenomenon of excessive staffing in factories.
At present many of our factories are extremely irrationally organized. There
are too many personnel, the organization is too large, the ratio between
administrative personnel and those directly involved in production is not
right, and systems for administering large factories are being used in our
small factories. These phenomena must be quickly corrected so that all factories
carry out 'enterprization' [qiyehua]. All factories should
shrink or grow according to their economic prosperity. All salaries should
be paid from the factories' own profit and not from tax grant, government
clothing and government grants. Second, we should implement the ten-hour
work system and the progressive piecework wages system [jijian leijin
gongzizhi] so as to raise work enthusiasm and increase production.
The eight-hour system is something to be implemented in future with the
development of large-scale industry. At present we should universally implement
the ten-hour system and make employees understand that this is a requirement
of the War of Resistance. An egalitarian system of wages destroys the distinction
between skilled labour and unskilled labour and the distinction between
industriousness and laziness, thus lowering work enthusiasm. We can only
stimulate labour enthusiasm and increase the quantity and quality of production
by replacing it with a progressive piecework wages system. For the moment
industrial production in the army cannot adopt the piecework wages system
and should have the piecework incentive system [jijian jiangli
zhidu]. Next, we should improve the work of the workers' congress
[zhigonghui] and launch a Zhao Zhankui (A model worker) movement
in every factory. Work done by the workers' congress which is not suitable
for raising labour discipline and activism must be changed. Within a factory,
the work of the administration, Party branch and workers' congress must be
united towards common ends. These common ends are to save as much as possible
on costs (raw materials, tools and other expenses), to make as many and as
good products as possible, and to sell them as quickly and as profitably
as possible. These tasks of lower costs, better products and faster sales
are the tasks shared by the administration, Party branch and workers' congress,
all three of which should unite as one. Working methods which divide their
work into three separate areas are entirely wrong. The three sides must organize
a unified committee, in the first place to put administrative personnel,
administrative work, and production plans on the right track. The task of
the Party and the workers' congress is to ensure completion of the production
plans. Finally the factory should reward the workers and employees with the
greatest achievements, and criticize or punish workers and employees who
commit errors. Without a suitable system of rewards and punishments, we Cannot
ensure the improvement of labour discipline and labour enthusiasm.

(5) Strengthen and enlarge textile mills, increase output of bolts of cotton
cloth, Struggle to achieve complete self-sufficiency in cotton cloth used
by the government in 1944. Improve woollen goods and, after supplying the
army's needs, increase the amount exported. In the bedding and clothing industry
fix standards for the cotton cloth used and the methods of making up. Ensure
that cotton garments and bedding can be used for two years.

(6) Put papermaking factories in order, improve the quality of paper. Ensure
it is fully satisfactory for printing and office use. Make us entirely
self-sufficient in paper for printing and office use in 1944.

(7) Increase production of coal and oil, ensure self-sufficiency and also
some exports. Set up ways of making or buying phosphorous so that match-factories
can be established. As for other industries, continue with or enlarge those
which are urgently needed or profitable. All those which do not match the
principle of ensuring supplies or are unprofitable should be merged or closed
down.

  8. ON THE DEVELOPMENT OF THE PRODUCTIVE UNDERTAKINGS OF THE TROOPS


Which of the three branches of the public sector of our economy -- the
government, the army and the official organizations -- is ultimately the
most important in terms of directly meeting requirements most quickly and
in greatest quantity? Our experience of the past few years shows that it
is the army. The army's productive undertakings have become the most important
part of the public sector of our economy because the army is the body which
is relatively most organized and has most labour power. So long as it has
no direct fighting duties, it can use all its time outside training, doing
work. And under our present backward technical conditions, labour is the
decisive factor in economic undertakings.

The production movement in the garrison forces of the Shaan-Kan-Ning Border
Region began in 1938, and one year before that in the official organizations
and schools. A joint production movement of the army and official organizations
and schools together began in 1939. In 1940, 359 Brigade took on the duty
of defence on the Yellow River and joined in the production movement. In
1941 and 1942, the army increased its responsibility for self-supporting
production just like the official organizations and schools. However, the
tasks taken on by the army were greater and occupied the most important position
in the total volume of self-supporting production. It would have been impossible,
if during these years the army had not for the most part provided its own
means of livelihood and running costs and instead had relied on the government.
Responding to the Party Central and Northwest Bureau's call for 'production
self-sufficiency', the army has fulfilled its production tasks in the midst
of the urgent work of fighting, guarding and training. The objective
circumstances of some troop units are better than those of others; some have
more duties than others, some have worked harder than others. As a result
their respective level of achievement has varied. Nevertheless, in general
they have all fulfilled their tasks. With very little capital and backward
techniques, they have all developed agriculture, handicrafts, transport and
commerce. Some have even set up relatively large-scale textile and papermaking
factories. During these two years, the capital invested by the government
in the army's productive undertakings has not exceeded 6-7 million
yuan in total. However, in that time they have both ensured
supplies worth over 300 million yuan and they have accumulated
roughly 80 million yuan capital from their agriculture, industry
and commerce. They have opened up several tens of thousands of
mu of land, and supplied rich experience for the whole of
production construction. They have not only played a political and military
role in the protection of the Border Region but have also played a role in
directly providing a large amount of financial supplies and in helping to
develop the Border Region economy.

Let us take a look at the self-supporting production of a certain company
in a certain regiment. The income and expenditure of this company during
1941 are shown in Table 8.1.

With the exception of 750 yuan production capital from upper
levels, miscellaneous payments of 360 yuan from the office,
supplementary production payments of 2,855 yuan and supplementary
provisions payments of 3,771 yuan given by the regimental supplies
office, a total of 7,736 yuan, the expenditure of 52,530
yuan shown [Table 8.1] was met by the company's own production
of 44,794 yuan. This excludes the capital accumulated for use
in production the following year.

According to these figures, each regiment of ten companies can be self-supporting
up to 440,440 yuan.

Furthermore, there is still the self-supporting production run by the regimental
headquarters [shown in Table 8.2]. The total Value of production of the
companies, battalions and regiments is 703,828 yuan. The regiment's
total annual expenditure (including grain and a proportion of clothing and
bedding) is 896,638 yuan, which leaves a shortfall of 185,510
yuan to be supplemented from upper levels. As a result the
regiment's own self-supporting production accounts for 79 per cent of consumption
and supplements from above account for 21 per cent. If we add the large amount
of self-supporting production carried out by the brigade headquarters, the
proportion for the whole brigade far exceeds 80 per cent.

The following material is a summary by the Garrison Office of five years'
production by the garrison army. We can see the general situation in
self-supporting production by the army.


Table 8.1


Income and expenditure of a regimental company in 1941


1941 Income (yuan)

1941 Expenditure (yuan)


Transport of coal and charcoal (shitan)

698.20
Miscellaneous Expenses

1,312.00


Transport of salt

772.45
2 mules

2.850.00


Sawn planks

3,256. 40
1 donkey

574.00


Wooden beams

630.00
600 sweat shirts

600.00


Pig sales

738.02
shoes (2 pairs per man)

405.50


Stables

2,256.00
87 towels

128.00


Corn sales

998.20
Tobacco

179.00


Export business

935.60
Basins

90.00


Miscellaneous business

481 25
Production tools

181.00


Oil (840 jin)

16,800.00
Oil

16,880.0


Meat (1,610 jin)

16,100.00
Meat

16,100.00


Vegetables (4,690 jin)

4,690.00
Vegetables

4,690.00


Charcoal (5,000 jin)

500.00
Charcoal

500.00


Firewood (2,555 jin)

2,555.00
Firewood

2,555.00


Received Production capital

750.00
Supplementary provisions

3.771.00


Miscellaneous office payments

360.00
5 months' pay

567.50


Supplementary production payments

3,885.00
Rifle-cleaning

22.00


Supplementary provisions payments

3,771.00
Summer clothing

100.00


New Year costs

146.00


Office

339.00


Horse feed [?magan]

620.00


Total

Net income 6.537.12 yuan

59,147.12
Total

52,530.00


    Table 8.2


The values (in yuan) or self-supporting production
by

Regimental headquarters


Regimental headquarters

197,426


Directly controlled forces

27,149


1st Battalion headquarters

18,629


2nd Battalion headquarters

12,777


3rd Battalion headquarters

7,408


Total

263,389


A SUMMARY OF FIVE YEARS PRODUCTION BY THE GARRISON ARMY
(a)    Outline

In the new and difficult environment since the War of Resistance and following
Chairman Mao's call for production, the garrison army began the production
movement in the autumn of 1938. At the time, production was not yet aimed
at self-sufficiency and was merely making up for deficiencies in the necessities
of life. We could only give each member of the force 0.05
yuan for vegetables and 1.5 jin of grain per
day. At the market-prices of the time each yuan could buy 30-40
jin of vegetables, 2 jin of edible oil, or 100
jin of fire wood. With a hundred men in a company, each day
they had 5 yuan for vegetables. If they bought vegetables,
they could not buy oil, salt and firewood. If they bought oil, salt and firewood,
they could not buy vegetables. Pork was even further beyond their reach.
As for their clothing and bedding, you could rarely see a soldier whose clothing
was not darned and patched. Bullet bags were so tattered they could not longer
carry bullets, which had to be put in pouches. Some wore padded clothes in
summer and some wore shorts in winter. Some went on parade barefoot in the
snow and some could not even find a broken old leather bag for leg wrappings.
These were the material conditions of the troops then.

The methods used in the production movement at that time were: (i) to set
up cooperatives; (ii) to plant lots of vegetables; (iii) to set up
grinding-mills, to raise pigs and sheep, to make bean curd and to grow bean
sprouts; (iv) to mobilize every soldier to learn to make shoes; (v) to knit
woollen clothes, socks, shoes and gloves; (vi) to promote economy and prevent
waste. The result of half a year's production in 1938 exceeded the plan,
and the soldiers' life was greatly improved. For example, they ensured
self-sufficiency in vegetables, each week they had two pork meals, they partly
met requirements for woollen clothes, socks, gloves and shoes, and they
supplemented the supply of bullet bags, pouches, leather bags and leg wrappings.

The Significant achievements in production of the latter half of 1938 raised
the troops' enthusiasm for, and trust in, production. So in 1939 even greater
tasks for self-supporting production could be put forward, reducing the burden
on the people of the Border Region. In 1939 it was stipulated that the troops
in their agricultural work should plant grain as well as vegetables so as
to fulfil the task of producing 4,700 tan of grain. Most production
in 1939 was agricultural and 25,136 mu of new land was opened
up over the whole year. At first it was estimated that 2
tou of hulled grain could be harvested per mu
giving a total of 4,986 tan. But because the new land
was just being broken in, there were not enough agricultural tools, leadership
experience was not even and some of the land suffered natural disasters,
only 2,590 tan of hulled grain was harvested. At this time
the troops still had little capital and commerce had not yet developed.

In 1940 the production tasks for the troops stipulated that each section
should provide grain for one-and-a-half months, a total of 3,400
tan. In that year the troops opened up 20,679.7 mu
of land which should have given 4,136 tan of hulled
grain. Because the harvest was poor, they only got 2,400
tan. In order to fulfil its duties, each section also took-on
salt transport, digging liquorice root and felling trees (in Guanzhong they
also did some commercial work). The garrison army earned a total profit of
2,236,516.16 yuan from this supplementary production. This,
together with the agricultural harvest, provided grain for one-and-a-half
months and also met part of the supplements for equipment.

In 1941 the operating budget for all troops was 4,479,536.40
yuan and the task for production was to provide 400,000
yuan. However, the result was entirely different. The requirement
for operating expenses was much greater and the task for self-supporting
production was much greater than originally estimated. Chiefly as a result
of the call by Commander Zhu to select six battalions to get salt, we got
a total of 56,966 packs of salt valued at 236,408.90 yuan.
In agriculture 14,794.6 mu were opened up and 1,170
tan of miscellaneous grains harvested. In commerce the total
profit was 12,019,592.72 yuan. Because of price inflation,
the value of paper money fell. Regular expenses and clothing and bedding
expenses for the whole year were 7,881,757.17 yuan. (All these
excludes the income and expenditure of one regiment and the forces in Guanzhong.)
The average daily expenses for provisions per man over the whole year was
0.50 yuan. Apart from the 0.10 yuan issued by
the State, we provided 0.40 yuan ourselves, a total of 2,592,000
yuan. The total for the above regular expenses, bedding and
clothing expenses and provisions expenses was 10,473,757.17
yuan, 5,673,804.53 yuan above the original budget.
There was still a surplus after payments were made from production income.

In 1942 the budget for expenses (excluding grain, clothing and bedding) was
5,833,636 yuan and we took on the task of helping central expenses
with 2,500,000 yuan. The year's production plan was for 12,400,000
yuan. By August (statistics for the later period not yet
available), commerce had earned a profit of 38,969,230,20
yuan and industry had a profit of 431,773.40
yuan, giving a total of 39,401,004.60 yuan.

By June we had received 1,440,058.60 yuan running expenses,
and supplementary expenses for the first issue of summer clothing of 206,825
yuan. Actual expenditure was running expenses 7,750,598.85
yuan, supplements for bedding and clothing 3,067,730.60
yuan, and supplements for provisions (the State issued 0.70
yuan per man per day and the actual cost was 3.00
yuan) over the half-year, 9,180,000 yuan. Most
of the winter clothing and bedding for the latter half of the year was provided
by the brigades and regiments themselves. The second issue of summer clothing,
half of the padded cloth, 40 per cent of the bedding, and bindings, bullet
bags, grenade pouches, padded cotton shoes, and light shoes, these eight
items had a total value of 12,641,200 yuan. Other things like
charcoal for heating in winter were provided by each unit itself. As for
animal fodder, in 1941 we provided two months' horse-feed ourselves. In 1942
the Finance Department issued eight months' hay for horses, leaving two months'
unaccounted for. In general we cut two months' supply of grass ourselves,
saving roughly 1,200,000 yuan. Furthermore, in 1942 the budget
for horse fodder was 11,000 tan. According to the regulations
of the Finance Department 1 tou of hulled grain is equivalent
to 2 tou of horse fodder. But this is insufficient and it is
necessary to increase the annual amount by 2,750 tan which
comes to 1,375,000 yuan at 500 yuan per
tan.

The outcome of five years' production has been that, besides meeting annual
running expenses, clothing and bedding expenses and provisions expenses,
current financial assets include 24 million yuan commercial
capital 556 transport animals (excluding plough oxen, and excluding the First
and Fifth regiments) with a value of 11,232,000 yuan, and factory
capital of 712,000 yuan. The combined total is 35,944,00
yuan.

(Note: The above summary does not include 359 Brigade and the peace preservation
corps, [bao'an budui].)

(b) Lessons

(1) The reason why the forces of the Border Region have been able to carry
out self-supporting production and solve great problems over the past few
years is their immense labour power and better organizational strength, and
the fact that the Border Region also has rich resources to develop. This
experience proves that the troops can be entirely self-sufficient. Because
the troops have solved the problem of self-sufficiency over the past few
years and increased their faith in production, they have realized that
self-sufficiency is one of the major tasks in building-up the army, and is
one of the best methods overcoming hardships and coming through a difficult
period.

(2) The production construction of the troops is part of the economic
construction of the whole Border Region. Although in the past the troops
did well in working hard to fulfill production tasks, ideologically they
did not emphasize the relationship with the construction of the Border Region.
Therefore they still had a shallow understanding of the development of the
agricultural and industrial base. They were not good enough at working hard
to establish a secure foundation. Their thinking on unified construction
was also muddled. There was even a lack of coordination between units and
incidences of serious breaches of command discipline. These shortcomings
must be resolutely and ruthlessly corrected.

(3) Under conditions of backward production methods, the production base
must chiefly be built us depending on the labour power and economic base
of each unit. Therefore the government's financial and economic policy should
look after the productive undertakings of these units. Within the confines
of the government's unified policy, they should be allowed full development
and profitability. Only this way can the development of productive undertakings
have greater organization, greater strength, greater unity, greater rationality,
and greater ability to fight the blockade in a unified way. The greatest
shortcoming of the troops in production is to pay most attention to commerce
and to neglect agriculture. In future they must improve and encourage
agricultural production.

(4) In their productive work, the troops should grasp ideological leadership
tightly and set up and strengthen the regulations and leadership organs in
production. They should correct and guard against cadres doing things without
coordination, becoming decadent, eating and living well, spending recklessly,
not economizing, not stressing effective results and adopting other corrupt
practices.

The above sums up our opinions.

The self-supporting production of 359 Brigade is the best among the various
units in the garrison forces. In the first place the leading comrades of
359 Brigade have grasped the strategy of agriculture first, industry and
transport second, and commerce third. They have taken advantage of their
lack of active duties, the suitable environment of Nanniwan for agriculture
and of The Suide special military area for light industry. They have mobilized
the large amount of labour power and within three years have completed large
assignments for economic self-sufficiency. In particular they have grasped
the policy of taking agriculture as the core so that the economic base rests
on a secure foundation. Second, the troops of 359 Brigade have carried out
the following concrete economic construction: (i) Their grain production
in 1940 was a failure, but they were not disheartened. They persevered in
1941 and got tremendous results. In 1942 they strengthened this foundation.
They opened up 25,000 mu of land and planted grain, vegetables,
hemp and tobacco, meeting the troops requirements of vegetables, lamp-oil,
hemp for shoes and tobacco, and supplementing supplies of grain, vegetable-oil,
horse beans and fodder. Thus after only two years' work they laid the foundation
of the agricultural economy of all the companies in the brigade. Further
more, the period of labour for all the officers and men was no more than
two months per year. Ten months were left for troop exercises, and training
was not impeded. According to the new method thought out by the brigade,
each company sets up a specialist agricultural labour group of six or seven
men and the masses of soldiers only provide extensive assistance during the
busy agricultural seasons. In this way training time is even greater. (ii)
They have used the farms to develop animal husbandry. In 1942 the whole brigade
maintained 2,000 pigs which met the troops' requirements for meat and oil.
Since the troops ate more meat, they saved grain. In addition they organized
groups of men to gather firewood, make charcoal and saw planks, which not
only provided for their own fuel and building needs but also provided a surplus
for sale. (iii) They also built up industry and handicrafts. In 1941 they
assigned some soldiers and rear-service personnel to establish the Daguang
Textile Mill and Daguang Soap Factory. Now there are 'Daguang' products on
the market in addition to those they consume themselves. They set up ten
salt-wells in Suide and Nanniwan, one charcoal-pit, two carpentry factories,
three iron-factories, six mills, eight flour-mills and one oil-press. They
also mobilized the soldiers during their spare time after training to spin
woollen thread, to make various kinds of utensils from willow and elm wands,
to make writing-boards from birch bark, to make vegetable-boxes and to make
lamplighters. This work done by the soldiers not only benefited the whole
but also profited the individuals. The brigade stipulated that four-fifths
of all the products of handicraft labour done using publicly-owned tools
should come under public ownership and one-fifth should belong to the private
individual, and the two-thirds of that produced not using publicly-owned
tools should come under public ownership and one-third should belong to the
private individuals. This method provided commodities for public use and
was also equivalent to raising the soldiers' pay. (iv) They established a
strong transport undertaking. Now they have a transport team which owns 600
pack mules and is fully engaged in the transport of salt and goods. Along
the road between Suide, Sanbian and Yan'an they have set up ten stables and
settled a group of older and weaker personnel. (v) Their commercial organ
is the Daguang Store, which has ten branches besides the main shop. The profit
in the first nine months of 1942 was over 6 million yuan. However,
this commerce only makes up 10 per cent of the brigade's total production
of 60 million yuan (at Yan'an market-prices). (vi) The brigade
has implemented a unified production plan, and regulations for production
and supply. The production plan for the whole brigade is fixed by the brigade
headquarters. Some undertakings are directly run by the brigade headquarters
such as large-scale industry, transport and commerce. Others are run by the
regiments and companies such as agriculture, animal husbandry, small industry
and commerce. Inspections are carried out at each level from brigade down
to individual companies. The regulations for production are also fixed by
the brigade headquarters. The arrangements for soldiers spinning woollen
thread described above is an example of this. The regulations for supply
also preserve unity. Although the agricultural, industrial transport and
commercial undertakings are each run separately, all expenditure above a
certain level must be approved from above. Lower levels cannot spend freely.
This prevents instance where free spending of the fruits of production bring
unequal blessings or waste. It ensures the utility of the whole brigade.
(vii) They have not only developed large amounts of production but have also
carried out the policy of strict economy rigorously. For example, they laid
down that they would issue three suits of summer clothing every two years
and two suits of padded clothing every three years, and that new bedding
and clothing would only be issued in exchange for old. They also issued needles
and thread to the soldiers so that they could repair clothes themselves.
Thereafter bedding and clothing lasted longer, and the soldiers took greater
care of them, greatly reducing these expenses. As mentioned above, they ordered
the soldiers to make writing-boards from birch bark, vegetable-boxes and
lamplighters, and issued wool to the soldiers to knit socks, gloves and so
forth. This not only increased the supply of daily necessities but also
economized on purchases of these things. All building construction and tool
repairs for the whole brigade is done by the troops and none is contracted
out. All these things have not only economized on expenditure but have also
developed care for public property among the officers and men, attention
to results, opposition to waste and a simple style of work that rejects
ostentation.

The following material is a summary of three years' production by 359 Brigade,
drawn-up by its leading comrade. It shows us the actual situation in the
brigade's agriculture, industry and commerce.

A SUMMARY OF PRODUCTION AND CONSTRUCTION IN 359 BRIGADE OVER THE PAST
THREE YEARS

In the three years since this brigade has returned to take up the defence
of the Border Region, the implementation of the economic policy of self-reliance
and self-sufficiency has been a new creation in building up the army. With
the exception of grain received from the government, we have achieved 82
per cent self-sufficiency in all other expenses through carrying out this
policy. In this way we overcame difficulties with material resources, improved
our troops' provisions, consolidated our forces, promoted the physical strength
of the soldiers, consolidated army discipline and strengthened the ties between
the army and the people. The following outlines our experience over the past
three years in agricultural, industrial and commercial operations.

(A) Agriculture

In response to the call for a production movement, we began agricultural
production in 1940. We planned to plough and plant enough land to be
self-sufficient for two months' grain, to be entirely self-sufficient in
vegetables from the summer onwards, and to raise enough pigs to cover our
meat requirement for the New Year festivities. However, since the areas where
we were stationed in Suide, Mizhi and Wuqi counties were heavily populated
with little spare land, we had to travel to places over 100
li away (Jiulishan and Qingjian) to open up new land and wasted
a lot of time in travel. Although enthusiastic and taking trouble, we did
not investigate carefully nor plan suitably. As a result the harvest did
not match the capital spent on tools and seeds. However, the vegetables planted
near where we were stationed enabled us to be self-sufficient for these after
the summer Each provisions unit was issued 0.10 yuan provisions
expenses per man per day, barely enough to buy oil and salt. The troops had
to go up to 100 li away carrying charcoal for sale. They earned
enough to make more charcoal and a surplus to buy pigs for raising. These
productive activities laid the foundations for the companies to improve
provisions. Apart from opening up all the public unused land (public cemeteries,
the neighbourhood of temples, odd pieces of land near cities, stretches of
old unused road, old military defence works, etc. ) around the towns of Suide,
Mizhi, Jiaxian, Wuqi and Qingjian where we were stationed and along the river
defences, we also rented land from the local inhabitants to plant vegetables.
The spirit of bitter struggle and hard work of the commanders and troops
gained great sympathy and understanding from people of all walks of life.
Some of the landlords from whom we rented land (like the landlords and rich
peasants of Yihezhen) would not accept our rent payments. Other poor peasants
voluntarily granted temporary tenant rights. This came from the deep sympathy
and concern of the people for the army. For those stationed in poor agricultural
regions, particularly those where the climate only suited summer and autumn
crops, agricultural production was not only necessary to solve difficulties
in running expenses, but was also essential to maintain the correct relationship
with the people. From the end of 1939 to the spring of 1940, the troops did
not have enough expenses for provisions and were short of vegetables. Personnel
sent out to buy sometimes resorted to the serious actions of forced purchase
or purchase at unfair prices. In carrying out agricultural production, we
ensured a good political influence among the people with the exception of
the small number of people in the county towns who relied on market gardening
for their livelihood and spoke angrily of the poor defence forces who offered
no profit.

We solved the following problems with our production in 1940: (i) We became
self-sufficient in vegetables after May. (ii) We added pig-raising to
self-sufficiency in vegetables and improved provisions in the latter half
of the year so that each man could eat 1 jin of meat per month.
(iii) Each provisions unit made their own agricultural implements and raised
over ten pigs. (iv) We proved the old saying: 'If you have vegetables you
have half a year's grain, if you have no vegetables you have half a year's
famine.' The troops' grain was sufficient. (v) Planting grain meant opening
up new land. In the first year we got no profit from grain since it was too
far from the places we were stationed. We could not weed at the right time
and we wasted too much effort in travel. For these reasons, the planned grain
harvest was not realized.

In 1941 the troops found land they could farm and implemented the policy
of farming which the commander-in-chief himself ordered. Each man on average
farmed 6 mu of land. Each mu needed seven days'
work including opening up, planting seed, weeding and harvesting. Six
mu required forty-two days' from which was obtained roughly
3 tou (lower-middle harvest) of hulled millet, and hay, also
worth 3 tou hulled grain. The grain and hay together could
be exchanged for one suit of padded clothing. If an upper-middle harvest
could be obtained, the return would increase by one-quarter. Various secondary
crops such as corn, hemp and sesame also gave a harvest the same as that
of millet. Around the edges of the 6 mu we could plant many
subsidiary crops such as castor, pumpkins, beans and so forth giving good
harvest. In addition, each man planted half a mu to provide
vegetables for a whole year. Also among the products were hot peppers, garlic,
onions, lamp-oil, tobacco, grass rope for sandals, and so forth. Since we
had field crops, it was easy to raise domestic animals such as pigs, cows,
sheep, chickens, ducks, rabbits etc. As pig-raising was most profitable,
it was the major subsidiary. Reckoning at one pig for every five men, a hundred
men could raise twenty pigs. As well as this they could raise three sows.
Every year each sow can have two litters of at the very least four piglets.
With no swine fever and no untoward events, they could produce twenty-four
pigs per year. Killing pigs at a rate of two a month, we would have to kill
twenty-four a year. The pig-breeding rate would counterbalance the slaughter
rate and there would still be surplus piglets. From birth to slaughter,
piglets-can grow 5 liang per day on average. In actual practice
the annual average was indeed one pig per five men.

As a result of agricultural production, there was a lot of vegetable refuse.
Since we were grinding flour, we got the chaff remains from the husking,
and since we were making beancurd we got the bean residues, etc. We could
raise the pigs using waste and gain great benefits. Now the entire brigade
has achieved all of the above. The wealth obtained from agriculture and animal
husbandry by each provisions unit is increasing. And this wealth is controlled
by the party branch, supervised by all the soldiers and used rationally according
to the regulations laid down at high levels. As yet there is no summary for
1942, but harvests will definitely be no less than last year.

Reviewing the agricultural production movement, we can make the following
summary of its merits and shortcomings.

Merits

(1) The troops carried out political mobilization concerning the performance
of the tasks so that all personnel realized that the slogan of self-sufficiency
in production put forward by Chairman Mao was of great significance in
maintaining unity in the War of Resistance and in passing through an economic
crisis. The commander-in-chief himself led the way after his return to the
Border Region and strengthened the soldiers' enthusiasm and endurance.

(2) Improvements in real livelihood made us feel the advantages of the production
movement.

(3) The brigade and regiments fixed the whole of the annual -production plan,
stipulated the production tasks for the companies, and conscientiously supervised
the regiments' guidance and supervision of the companies' production.

(4) The companies organized production committees to discuss and arrange
the implementation of production tasks, to inspect and examine the economy
(the companies' economies are entirely public) and to ensure the implementation
of the supply regulations.

(5) Mow every company is enjoying a self-sufficient, rich peasant family
standard of living because of its agricultural production.

Shortcomings

(1) We have not paid full attention to production tools, we have not organized
and employed plough oxen and we have not selected some soldiers (from among
the cooks) to specialize in farming throughout the year. We have generally
adopted the method of all-round mobilization, wasting time and impeding
troop-training.

(2) Some cadres have taken a negative attitude towards farming and do not
strive to get a larger harvest by extending the land farmed.

(3) We have not been conscientious in gathering manure.

(4) We have no cadres specially directing production.

According to experience, we must use oxen for ploughing, carting manure and
harvesting (using ox-carts), prepare sufficient tools, assign cadres with
special responsibility for directing production (a deputy battalion leader
for production and company leaders with special duties), assign soldiers
(from among the cooks) to carry out agricultural production throughout the
year, mobilize all the officers and men to take part at planting, weeding
and harvesting times, and stipulate the number of workdays so as to use a
fixed amount of time. In this way the total work per man to farm 6
mu and cut a year's fire wood will not exceed two months, and
we shall not only get grain but will also become entirely self-sufficient
for all daily vegetables, meat, straw shoes, firewood, shoes and socks. The
last few items alone make up one-third of all running expenses so they cannot
he considered a small problem. The grain harvest can sustain 2,000 men.

The above is a brief summary of the brigade's agricultural production.

The following list shows how much work and time it would cost a provisions
unit for a hundred men to travel over 60 li to make its purchases
if it did not plant vegetables itself.


Monthly vegetable consumption (1
      jin per man per day)

      3,000 jin


Number of purchases (each time buying 100
      jin)

      30 times


Labour days per purchase (each time using
      2 men)

      4 days


Actual days per purchase (there and back
      2 days)

      2 days


Labour days per month

      120 days


Actual days per month

      60 days


Labour days per year

      1,440 days


Actual days per year

      720 days


Using this table alone we can explode the lie that 'agricultural production
is profitless and hinders training' .

(B) Industry

There follows a summary of our experience in establishing and developing
the Daguang Textile Mill and of other handicrafts.

(1) Motivation and intentions.

The troops need clothing and bedding every year. The raw materials for bedding
and clothing are the chief problems in supply work. In the winter of 1939
after the troops returned to the defence of the Border Region, we had
difficulties in buying these raw materials and also had no money. In response
to the call by Chairman Mao for self-reliance, self-sufficiency and overcoming
difficulties to build up the Border Region, we made a long-term plan to run
a textile mill.

(2) Trial beginnings.

We began to think of running a textile mill in September 1940. At the time
there was a man from Hebei in the short-term training class set up by the
supply department who could weave cloth. We set up a small wooden loom, bought
some foreign yarn and tried it out. Within ten days all the yarn was woven
and the cloth was quite good. We could weave 100 feet per day [Chinese
measurement] and costs worked out one-third cheaper than buying cloth.

Since there were weavers among the troops we decided to set up a factory
and undertook the following: (i) we bought wood and built nineteen small
looms in our own machine-repair shop, and we bought four metal looms from
Shanxi; (ii) we bought yarn from local merchants on credit; (iii) we selected
twenty skilled men from places like Gaoyang in Hebei who were among the troops.

In this way the factory got going. It was not only profitable and convenient,
but also solved problems in buying cloth.

In December 1940 we decided to enlarge the factory in order to achieve
self-sufficiency in cloth for the whole brigade.

Early in 1941 we abolished service personnel at all levels throughout the
brigade, and collected together over a hundred youths as apprentices to study
weaving.

We again bought two iron looms from the northwest of Shanxi and made a further
eleven large wooden ones ourselves. In February and March we made another
sixteen large wooden looms, and fourteen more towards the end of March. We
thus had sixty-six looms of all kinds. At the same time we made spinning-wheels
and other essential small implements.

As regards raw materials, in 1941 the government issued the brigade with
400,000 yuan capital for production. Of this, 250,000
yuan was divided among the regiments. Of the remaining 150,000
yuan, 100,000 was spent buying 300 bales of yarn (each bale
was 7 jin 14 liang and cost 280-90
yuan) and some things that had to be bought (such as the wire
for the looms which we could not make ourselves and had to purchase outside).

Administered by the supply department accountants, the workers divided into
yarn-starchers, weavers, thread-joiners [luoxian], and threaders
[daxian]. Each group had twenty to thirty men. About ten skilled
men became master workmen and took charge of the technical work in starching
and reeling the yarn. Intelligent youths studied weaving, and the less bright
and the younger did threading and thread-pining.

As soon as the looms started working, we became aware of a need for more
labour power. So taking the name, the Daguang Textile Mills, we employed
fifty young boys and girls from the Suide areas as apprentices. We also took
captured bandits and people who had committed mistakes from the military
courts. In this way we assembled our labour force. There were then over 200
workers administered by the military training unit and the supply department.
They were divided into four platoons and twelve squads (including one women's
platoon; each platoon had three squads of ten or more people).

The factory was roughly taking shape. But there were still two difficult
problems to be solved, first the supply of capital and raw materials, and
second the control, education and training of the workers.

(a) The problem of the supply of capital and raw materials
In May 1941 we borrowed 200,000 yuan from the Border Region
Bank but it still did not provide support for long. After that we had to
make friends, built up relationships, liaison with rich merchants and buy
raw materials on credit, making repayments at fixed periods.

Before May 1941 most foreign yarn was bought from Shanxi. Afterwards, because
supplies were cut off, we could only buy from Sian and Yan'an (Shenxin and
Guanghe brands). We also bought raw cotton from Sian and Yan'an.

The supply of local yarn came as a result of the government's encouragement
of local women to spin. At first the wage for spinning 1
jin of yarn was from 3 to 7 yuan (raw cotton
cost 4 yuan per jin ), and it was divided into
three grades. In July and August this was clanged to issuing 11/2
jin of prepared Cotton in return for 1 jin of
yarn. In February and March of 1942 this was again changed into 2
jin or 2 jin 2 liang for 1
jin of yarn.

Because the supply of yarn from the people was insufficient and of poor quality,
we set up our own yarn-spinning factory with four cotton-bowing machines
and forty spearing machines in October 1941. By July 1942 we still lacked
skilled workers and the cotton bowed by the machines could not all be used
on the machines (the raw cotton was poor). Now only the four bowing machines
are still going and spinning has stopped.

(b) The problem of controlling, educating and staining the workers.
The number of workers has increased but there are many different elements
and they are not easy to control. They young service personify in particular
were used to a free life and had not taken part in labour before they left
home. At first they would fight, curse and carry on every day. They would
say 'We've seen all the grocers, big and small' and would not accept any
controls.

Most of the women from the villages had come because of marriage problems.
They had been sent to the factory by the women's aid committee of the government.
Whenever they talked of marriage, some cried and some laughed. They often
asked for help in solving their marriage problems.

Persuading captured bandits to work was difficult.

Many of the people being punished for mistakes were company and platoon cadres
who maintained their old character, were unwilling to work and were
troublemakers.

From January to March 1941, the head of the supply department tried hard
to correct them and achieved some success.

During this time, approximately twenty skilled workers acted as master-workers
and taught the youths in the weaving group. First they used the small looms
(needed little strength and easy to manage). The master-worker did all the
preliminaries and told them how to start the loom, how to connect broken
threads, how to handle the shuttle, and how to coordinate hand and foot.
At the beginning they only wove for two or three hours a day. After one or
two months, this group had mastered these looms and moved onto the large
wooden ones, and another group came to learn. Thus group-by-group the teaching
went on until March 1941.

The work of joining the threads and threading was easy to learn and only
needed patience. Once you had learned to join the threads properly, you were
all right. But it needed practice. When unpracticed, the results were not
good enough for weaving.

When the work began and the young apprentices sat at the looms or did their
joining and threading, their backsides ached after a short time, yarn easily
broke, tempers rose, there was little patience and they wasted a lot of thread
and broke some looms. So before March 1941, products were no good.

Apart from strengthening technical training and raising technical skills,
the chief way of dealing with this was political encouragement and education
in revolutionary labour discipline. This made the workers consciously realize
the important significance of production, made them patient in their work
and improved their enthusiasm for production and their labour discipline.

Various methods of education were used to implement military discipline.
The head of the supply department, He Weizhong, the head of the military
training unit and the branch Party secretary personally came to give guidance
every day, explaining that production at the rear was equal to fighting at
the front, that they should accept organization, that work was glorious and
that they were the working class. We proposed a competition with emulation
between apprentices and emulation between male and female workers. We implemented
a system of rewards and punishments and a system for getting time off. At
the same time each person was given some writing materials every month, and
we bought some entertainment equipment.

Thereafter the workers felt that to work was glorious. After work they wanted
to study culture and politics and to live a military life. As a result life
became organized on military lines. In this way we gradually set up the
soldier-worker system, and the factory got going in the right way. Before
breakfast there were early-morning exercises and running. After breakfast
they went to work. In winter and spring there was a ten-hour day.

We then encountered new difficulties.

The factory site was a hired house. As it was not convenient for work, we
built ten or so cave houses ourselves for the workers to live in. Unexpectedly
the cave houses were moist and damp, the workers developed sores and many
of them could not work. So we changed the new caves into storerooms and the
workers moved into the hired house. In June we began to build five stone
cave houses for the looms and these were not completed until October. During
this period there was nowhere to put the looms. The only thing we could do
was to put them in the courtyards and work under tents. In May and June there
was early morning dew and it rained often. Wet thread is no good for weaving.
In July the weather was hot and the sun strong. The threads became very dry
which was also no good for weaving. The only thing we could do then was cover
the looms in wet army blankets and pour water on the ground. But this only
worked for two or three hours and, as can be imagined, gave a lot of trouble.

The months from June to September passed in this way. The new caves were
completed in October and we also built one-story houses with a total of
twenty-seven rooms for the workers to live in. Only then were all these problems
overcome.

As for raising the workers' technical level, after June the youths gradually
became skilled, and some even exceeded the master-workers.

In the first week when they were apprentices they generally only worked for
two or three hours a day and made four or five feet of cloth. Alter two or
three weeks they worked for seven or eight hours a day and could weave 10
to 40 feet. After April they could do 40 to 50 feet, and by May, 60 to 70.
After June, they had all become skilled workers and the best could weave
120 to 130 feet a day. During this time the quality of cloth continuously
improved.

We can say that after June 1941 the factory was consolidated and began to
develop, having overcome all kinds of difficulties.

(3) Establishing the soldier-worker system

The factory expanded and needed to be regularized. It was very inconvenient
for the administrators from the military training unit. And so under the
supply department we set up a factory head and a commissar to provide leadership,
and drew-up a draft outline for the administration of the factory.

Under the leadership of the head and commissar, the administration was divided
into four sections: labour, operations, accounts and general work. These
sections divided the tasks and worked together, each with its own responsibility.
We stipulated a variety of regulations for meetings, minutes, reports,
inspection, livelihood, pay (according to technical skill with the top rate
of 10 yuan)and for rewards and punishment. We settled the times
for work, study, rest and relaxation. We fixed the scope for democratic life
and all kinds of principles for the workshops, dormitories, canteen, days
off, leaving the premises and so forth.

By October 1941, everything was properly set up.

After October we felt that the wooden looms were not as good as the iron
ones. The cloth the latter produced was of good quality and needed less work.
We planned gradually to replace the wooden looms with iron ones. Between
January and October 1942 we built iron looms ourselves. However, as one had
to be strong and skilful to weave with these looms and there were not enough
workers like that, we could not convert entirely to iron looms and we did
not build any more. The total was forty-five iron looms and sixty-two wooden
looms. Apart from this, we bought thirteen wooden looms for weaving woollen
blankets and woollen goods from the Longwan Factory (in spring 1942) and
built thirteen wooden looms ourselves. This gave a total of 133 looms. On
average we produced about 1,000 bolts of wide cloth, 500 woollen towels and
100 blankets per month.

After May 1942 the pay system was changed into a piecework system giving
.70-80 yuan per month at the most ( roughly one-tenth of wages
in a privately-run factory), and 20-30 yuan at the least. This
increased the workers' enthusiasm to produce. Same workers did not take their
noon rest and did not stop work at the end of the working day but kept an
working. After some persuasion and education, we overcame this excessive
enthusiasm.

We persisted in the soldier-worker system. The factory workers also grew
vegetables and raised pigs for their food.

In the winter of 1942 we stopped work for one month to make padded clothing.

In 1941 after all expenses, the factory made a profit of 3,900,000
yuan. In the first ten months of 1942, the profit was 8 million
yuan. The value of the factory site, looms, yarn and raw cotton
is 5 million yuan ( yarn and cotton 1 minion
yuan). We intend to invest several million more to maintain
reproduction.

In sum the lessons of experience in running industry are as follows:

(i) The profit earned by the soldier-workers working in textiles, that is
the Daguang Hill led by the brigade supply department, is the largest of
all the profits earned by the various industrial enterprises. In 1941 the
total number of employees was 250 and in 1942 it were 225. After all expenses,
its profit in 1941 was 3,900,000 yuan equivalent to the price
of 4,000 tan of millet at year-end price (300 jin
per tan).

Profit by October 1942 was 8 million yuan, again equivalent
to 4,000 tan of millet at current prices in Suide. The average
net profit per worker was roughly 18 tan.

In the light of two years' experience and the present circumstances, we shall
invest 25,000 yuan per head for the 225 employees of the factory
during 1943, not counting buildings and tools, making a total of 5,625,000
yuan. The cloth required for uniforms will be bought from the
factory. In this way production for 1943 will earn a net profit per man of
20 tan of millet (because of inflation, it is best to take
millet as the standard ) .

Each regiment has a cloth-weaving factory which can produce enough cloth
for a hundred men.

In addition, apart from undertakings purely for producing equipment and clothing
for the troops such as shoemaking, cloths-making and leather-tanning, the
brigade also has roughly 200 blacksmiths and carpenters. In the light of
the past two to three years' experience and the prospects for the continued
development of the Border Region economy, these craftsmen could make an annual
profit roughly equivalent to 6 tan of millet in return for
an investment of 1,000 yuan per man.

There is also a papermaking factory and an oil-pressing shop which use as
raw materials the sesame seeds and straw coming from the troops' agriculture
and malan grass cut by the soldier-workers, for which the factories
pay a cheap price. These enterprise employ sixty people with an average net
profit per head of 6 tan of millet.

(ii) Besides agriculture, effective operation of the system of soldier-workers
is a way of realizing self-sufficiency and solve both commodity and financial
problems. Commerce is definitely not as reliable as agriculture and industry.
Commerce relies on others, not on oneself, so it is not suitable to do too
much of it.

(iii) Shortcomings are: in running a large factory there is a lot of expenses
and waste, and there is no fixed amount of capital. This influences reproduction.
Therefore in future we must strive to set up a fixed amount of capital.

(iv) In the past we did not take the whole Border Region economy into
consideration. Nor did we make a unified plan for the troops' agricultural
and industrial production. We could not interlock agriculture, industry,
transport and commerce. This was a great failing. Henceforth, we should have
unified plans and interrelated management.

The above is a summary of our opinions.

(C) Commerce

Our commerce began with a cooperative and it took six years to develop into
large-scale commerce.

In 1937, the brigade was sent across the Yellow River to the area around
Guoxian to fight the enemy. After the loss on Taiyuan, commerce was disrupted
and city goods could not be moved into the countryside. The common folk did
not dare to travel to buy goods. As a result there were great shortages of
daily necessities. Oil and salt were out of supply for a while. Both the
army and the people had to eat plain food. In these circumstances we set
up a cooperative at the request of the people. We allocated animals to go
to Ningwu and elsewhere for salt. The supply department put up 300
yuan to buy goods belonging to merchants which were stored
in the countryside. We contracted the merchant, Li Maolin, from Yangwu as
manager and set up business at Yangwu. It was called '359 Brigade Army-People
Cooperative'. The aim was simply to solve difficulties in the supply of salt,
oil and so forth, and to handle other necessary goods. At the time the currency
had not yet lost value, so, although the capital was small, business was
successful. In the short period of six months from October 1937 to April
1938 when the troops moved east, we gained great sympathy among the people
of the county. Thousands of people praised us saying that if it were not
for the cooperative, they would have died without being killed by the enemy.
Making a profit was not the aim at the time, so although business was good
we did not earn any money. At the end in April, the capital and profit of
490 yuan was handed over to the troops and used.

In May, 1938, the cooperative personnel went to the Shanxi-Chahar-Hebei Border
Region with the troops. When they got to Lingqiu there was another shortage
of daily necessities. Both the people and the army suffered. They wanted
to continue with the cooperative but had no capital and could think of no
way. In August, the cooperative personnel went to the county town of Laiyu
county to build up relations with merchants. Through friendly connections
they bought goods worth 3,042 yuan on credit. Most of it consisted
of bolts of cloth, writing-materials, paper, soap and so forth totaling eleven
packs. They returned to Donghenanzhen east of Lingqiu and set up a shop.
The suppliers of the goods also came along. Within five days the goods were
entirely sold and they got a net profit of 800 yuan. They paid
the suppliers 2,042 yuan and presented 1,000
yuan to the frontline troops for buying provisions. With the
800 yuan left over, they returned with the suppliers to Laiyuan
to get more goods. This process was repeated several times up until December
when the hill for goods was fully repaid. From August to December the operations
of the cooperative provided supplies of oil, salt and cloth needed by the
people of the Lingqiu region and earner 2,800 yuan to supplement
the troops' expenses. In addition there remained goods worth 1,500
yuan.

In January 1939 we moved the 1,500 yuan worth of goods to
Xiaguanzhen. We mainly dealt in oil and salt, on the one hand supplying the
troops and on the other helping the ordinary folk. since the troops were
continuously engaging the enemy at this time, we had over 1,000 wounded.
It was not easy to get Western medicines and nutritious foods so the cooperative
set up good relations with various merchants and through them got Western
medicine, milk, arrowroot and so forth from Tianjin, Beijing, Baoding and
other places. This ensured the supply of necessities for the wounded. In
September 1939 the brigade received the order to take on the defence of the
Yellow River between Shanxi and Shaanxi. The cooperative was closed down.
The nine months' business brought in 9,400 yuan. When the troops
set off they had no money so 5,400 yuan was paid out in expenses.
The remaining goods worth 4,000 yuan were brought west with
the troops in five donkey packs. In October we got to Wuliwan in Suide in
the Border Region, we sold them for 20,000 yuan and we sent
people to Loufan, Wenshui and Jiaocheng to buy writing-materials and cloth.
By the end of the year we had 31,000 yuan in goods and cash.

In January 1940 the cooperative moved to Nanguan in Suide. At that time the
troops' economy was in great difficulties. We could only rely on the earnings
of the cooperative to help pay expenses, so we felt the name 'Army-People
Cooperative' was not suitable and changed it into the ' Daguang Store' showing
that its goal had changed into making a profit. During that year we built
up friendships with some merchants and bought goods either for cash or on
credit. We bought writing-materials, cloth, paper, shoes, socks, towels and
so forth, and made a profit in the market. We worked hard and by the year-end
earned 191,700 yuan. We apportioned 101,700
yuan to the troops to help with the expenses, and kept 90,000
yuan as capital for 1941.

In 1941 the brigade decided to expand its commercial activities as a supplement
to the major undertakings in agriculture, industry and transport in order
to meet the urgent requirements of the troops. Besides the existing 90,000
yuan capital, a further 250,000 yuan was given
from the 400,000 yuan issued to the brigade by the Finance
Department for production capital. In addition all the small shops run by
the regiments were closed, and their capital of 60,000 yuan
collected together. The town capital was 400,000 yuan. Beginning
in January 1941 we set up ten branch shops. After a year's operation we got
a profit of 2,982,377 yuan of which 982,377
yuan was used to supplement the troops' expenses and 2 million
was kept as the store's capital.

In 1942, the store and ten branch shops got a profit of 6,720,080
yuan from operations during spring, summer and autumn. Two
million yuan were used to supplement expenditure for the troops
and the remaining sum of 4,720,080 yuan in use.

The lessons of experience are:

(i) We helped the ordinary folk to buy cloth, paper, oil, salt and other
necessities, and we strengthened relations between the army and the people.

(ii) We helped the troops to buy daily necessities by making it possible
for the soldiers' income of 1 yuan to purchase soap, towels,
toothbrushes, toothpaste etc., at a time when the Eighth Route Army was in
difficult economic circumstances. On the other hand, the troops rightfully
bought daily necessities with their money which reduced improper and wasteful
behaviour among the troops.

(iii) Building friendships is very important. If we had not had good relations
with the merchants of Laiyuan, we could not have bought goods.

(iv) Surplus income supplemented expenditure for our forces.

(v) We sold local products and put limits on goods from outside. However,
since we did not inspect strictly and provide firm leadership, some shops
could not carry out this work in a pleasant and integrated manner. They only
looked after narrow departmental interests and neglected all-round economic
construction.

(vi) Before 1940 we did not know much about setting up a Commercial information
network, and only knew how to work hard. As a result we suffered quite a
few losses from rises and few in prices. In 1941 we set up such a network
to report on the situation in various places and built up liaison with some
big merchants. We learned of rises and falls in prices at the right time.
Therefore we did not make losses of this kind in 1941 and 1942.

(vii) We liaised and worked together with local experienced merchants able
to operate outside the Border' Region. When we encountered difficulties in
the supply of raw materials for spinning and weaving, we obtained great help.
However, we also encountered some rogue merchants who used us to carry out
their own business, damaging our operations.

(viii) There were too many people working in the store not earning their
keep and adding to expenses.

(ix) Frequent contact with merchants from outside enabled us to understand
each other's policies and attitudes, reducing misunderstandings and building
friendships.

(x) We tested the cadres' Party spirit, thought and ability.

(xi) Only with strict administration and a correlate system of regulations
could the store reduce waste.

(xii) To help stabilize the currency, in 1940 the store changed Guanghua
banknotes.

(xiii) Comprehensive preparations, correct and lively application of trading
policies, staying within the scope of non-prohibited goods, selling local
products and selling necessities solved difficulties in the supply of goods
for the army and provided a profit.

(xiv) With the aim of earning money, after January 1941 all the brigade and
regimental cooperatives became part of the Daguang Store. The organization
took Suide as its centre and set up branches in Suide, Mizhi, Jiaxian, Wuqi,
Anding, Yanchuan and Yanchang. The brigade had the Daguang Store, and the
regiments had the branches.

(xv) Most personnel in the shops were soldiers given payments according to
their jobs. Employees were paid a wage according to their ability, strengths
and weaknesses.

(xvi) Most of the goods were bought from northwestern Shanxi during 1941.
Afterwards because of the enemy's mopping-up campaigns and the economic blockade
(the decline of the nationalist currency and the use of the puppet currency),
commodity prices rose. In addition because of our problems with capital,
we could not get much money to buy goods. Therefore using the slogan ' resist
the enemy's goods and sell local products', we sold the cloth we wove ourselves,
and the leather shoes, woollen towels and cloth shoes we produced ourselves.
We also sold Daguange soap in even greater quantities. To prevent unprincipled
merchants from raising market-prices and to promote the Border Region currency
we changed Guanghua banknotes, and lowered the rising market-prices. For
example, the salt we extracted ourselves we sold at 2 jin 4
liang per yuan compared to the market-price of
1 jin 4 liang per yuan. Thus we
enabled the ordinary folk to buy at cheaper prices. So we can say that in
a certain period our aim was not to earn money but to stabilize prices and
secure the people's livelihood

(xvii) 'If you knew what would happen in three days' time, you would be rich
for thousands of years.' It seems as if trading is a question of finding
the right way by accident. If you find a good opportunity, then you can earn
money. In fact it is not so. Trading relies entirely on correct estimation,
understanding of the situation locally and elsewhere, and understanding the
difference between imports and exports. Then you can forecast the rise and
fall in commodity prices, and fix the policies for attention in a certain
period.

(xviii) A stable currency and secured finances are the: primary conditions
for developing business. During the past three years the sudden rise and
fall in the value of the Border Region currency and the disruption of finances
has influenced trading in commodities and made everything difficult. Another
aspect is that this situation has enabled speculative merchants to deal in
currency notes. They have earned a lot of money and influenced the economy
of the Border Region.

(xix) The various regimental shops have in practice not thoroughly implemented
centralized leadership and have competed with each other. They have lacked
coordination which is an unhealthy tendency.

(xx) The various regiments have set up an accounting system run by specialists
who keep the accounts. However since too many of them were merchants in the
past, they did not use new methods of recording and still used the old.

A concrete plan for agricultural production In 1943 has been prepared by
359 Brigade. It is really clear and definite and may be supplied to all units
for consideration. The text follows.

359 BRIGADE'S 1943 AGRICULTURAL PRODUCTION PLAN

The military farming system of the troops stationed in the Border Region
is one of the basic duties of our army in carrying out the policy of the
anti-Japanese national united front and in establishing new democratic politics.
Persisting in carrying out this duty enables us to lighten the people's burden,
improve the quality of the army and achieve close unity with the people from
a position of self-reliance and self-sufficiency. Therefore, in the light
of the experience and achievements in carrying out the call from upper levels
for production during the past three years, the brigade has drawn up the
following plan to strengthen the implementation t of this call and to increase
he quantity of production in 1943 .

(A) How should we organize the troops' agricultural production?


(1) All the defence areas where the regiments and troops are stationed have
arable land, so we stipulate that each provisions unit should carry out
agricultural production according to its manpower and the land situation.

(2) In circumstances where the army is stationed in one place, each provisions
unit only needs three cooks for every hundred men. Therefore each provisions
unit can select six or seven strong comrades with agricultural experience
from among the cooks to specialize in farming.

(3) The deputy battalion head with responsibility for production in each
battalion, the head of the special duties in each company, and the deputy
officers with responsibility for production in the brigade and regiments
have the task of planning and inspection. During spring ploughing, summer
weeding and autumn harvesting, they should organize and lead all personnel
to take part.

(4) We stipulate that the provisions unit of each combat company, apart from
supplying all their own vegetables, should plant 600 mu of
grain. Table 8.3 lays down the tasks each unit can shoulder.


TABLE 8.3 -- AGRICULTURAL TASKS ASSIGNED TO UNITS


TROOP UNITS


A


B


C


D


E


F


G


H


TOTAL


 NUMBER OF PRODUCTION UNITS


AREA TO BE PLANTED (mu)


3,000


1,200


10,200


9,600


7,800


3,600




39,000


NUMBER OF MEN TO BE SELECTED  AMONG THE COOKS


(B) The year's plan relies on the spring. This winter we must prepare
for the work of the coming spring

(l) Each provisions unit must make a clear register of the land to be planted,
how much mountain land, how much river land, how much land that has been
farmed, and how much uncultivated land. It must also work out what is going
to be planted and how much work, seed and so forth will be required for planting,
hoeing and harvesting.

(2) Farming requires oxen, ploughs, and other agricultural tools such as
hoes, rakes, baskets and sickles. These should be fully prepared in winter.
Actual requirements per provisions unit are three plough-oxen, three ploughs
and sixty other implements.

(3) If you do not use manure, the crops do not grow well. Every unit must
collect manure. All nightsoil, animal manure, and wood and straw ashes must
be gathered. Pay attention to control of lavatories, pig-sties, sheep-pens,
and oxen and horse-stables. We must put at least 4 tan of manure
on each mu of land. In many places there are grass roots from
flooded land and tree leaves. These can be moved to the farmed land for burning.

Table 8.4 lists the amount of preparatory work to be undertaken by all units
and by the brigade as a whole.


TABLE 8.4 -- PREPARATORY WORK NECESSARY BY SPRING 1944


UNITS


A


B


C


D


E


F


G


H


TOTAL


NUMBER OF PRODUCTION UNITS


NUMBER OF PLOUGH-OXEN


NUMBER OF PLOUGHS


NUMBER OF OTHER IMPLEMENTS


1,020


3,900


AMOUNT OF MANURE IN 'tan'


12,00


4,800


2,400


40,800


38,400


31,200


14,400


12,00


156,000


 (C) How much money is needed and how many workdays?

(1) Oxen, ploughs and other implements all cost money to buy or make. This
is capital. In addition there is manure and seeds which come to at least
800 yuan for 600 mu. Total capital for 600
mu, and for the land formed by the units and for the brigade
as a whole, is shown [in Tables 8.5 and 8.6].


TABLE 8.5 -- CAPITAL NEEDED TO FARM

600 mu


ITEM


COST (yuan)


OXEN


12,000


PLOUGHS


OTHER IMPLEMENTS


6,000


MANURE & SEED


OX FODDER


2,700


TOTAL


22,100


  NB (i) Each ox is reckoned at 4,000 yuan.
  (ii) Each plough at 200 yuan.
  (iii) Each implement at 100 yuan.
  (iv) Ox fodder at 900 yuan per animal.

TABLE 8.6 - CAPITAL NEEDED FOR THE LAND FARMED BY THE UNITS AND BY THE
BRIGADE AS A WHOLE (yuan)


UNIT


A


B


C


D


E


F


G


H


TOTAL


OXEN


60,000


24,000


12,000


204,000


192,000


156,000


72,000


60,000


780,000


PLOUGHS


3,000


1,200


10,200


9,600


7,800


3,600


3,000


39,000


OTHER IMPLEMENTS


30,000


1,000


6,000


102,000


96,000


78,000


36,000


30,000


379,000


SEED, MANURE


4,000


1,600


13,600


12,800


10,400


4,800


4,000


52,000


OX FODDER


13,500


5,400


2,700


45,900


43,200


35,100


16,200


13,500


175,500


TOTAL


110,500


33,200


22,100


375,700


353,600


287,300


131,600


110,500


1,425,500


(2) How many workdays are required on 600 mu, from opening
up the land and sowing seed to harvesting? It is estimated that opening land
and sowing seed requires 500 days; preparation and spreading of manure, 800
days; three weddings, 1,800 days; and harvesting, 450 days. This makes 3,550
days in all.

Note: six cooks farming 600 mu throughout the year can do at
least 1,000 workdays; 3,550 work days minus 1,000 leaves 2,550. Each provisions
unit has a hundred men so each man has to do twenty-five days' agricultural
labour during the year.

(D) The type of crops and the harvest

(1) Find out what is the most suitable grain to be planted according to the
land. In general, plant spiked millet [gu (zi)], millet
[su], goaliang, maize [baogu], beans, rice and
so forth. In addition, also consider the needs of the troops and plant hemp
for sandals, lamp-oil and cooking-oil Some units can plant cotton.

The seventh regiment can plant 200 mu of cotton. Estimating
a harvest of 30 jin of cotton per mu, the total
will be 6,000 jin. At a value of 50 yuan per
jin this will be equal to 300,000 yuan.

Each company in the special duties battalion [tewuying] should
plant 80 mu of cotton in addition to its 600
mu of grain. This can give an estimated harvest of 2,400
jin worth 120,000 yuan. The battalion headquarters
can plant 20 mu giving 600 jin worth 30,000
yuan.

(2) Reckoning at 4 tou of hulled grain for every 3
mu, 600 mu can produce 80 tan of
hulled grain, and the 39,000 mu of the whole brigade can produce
5,200 tan. At a value of 1,250 yuan per
tan, the crop from 600 mu will be worth 100,000
yuan, and that of the brigade's 39,000 mu, 6
5 million yuan.

(3) In each 600 mu, it is estimated that 300 will be planted
to spiked millet. Each mu will Produce 300
jin of hay giving a total of 90,000
jin. At a value of 1 yuan per
jin, 600 mu will produce hay worth 90,000
yuan, and the whole brigade will produce hay worth 5,850,000
yuan.

The harvest totals are given [in Tables 8.7 and 8.8].

TABLE 8.7 -- HARVEST TOTAL ON 600 mu


HULLED GRAIN


Tan


VALUE OF GRAIN PER tan


1,250


Yuan


TOTAL GRAIN VALUE


100,000


Yuan


HAY


90,000


Jin


VALUE OF HAY PER 100 jin


Yuan


TOTAL VALUE OF HAY


90,000


Yuan


TOTAL VALUE GRAIN & HAY


190,000


Yuan


TABLE 8.8 -- HARVEST FOR 359 BRIGADE


UNIT

A

B

C

D

E

F

G

H

TOTAL


AREA PLANTED IN mu

3,000

1,200


10,200

9,600

7,800

3,600

3,000

39,000


GRAIN WHICH COULD BE HARVESTED IN
tan


1,360

1,280

1,040


5,200


HAY (10,000 jin)


VALUE OF HAY CROPS (10,000
yuan)


TOTAL VALUE OF CROPS (10,000
yuan)


1,235


After each regiment and unit has received this plan, it should at once call
a meeting of production cadres to discuss implementation. The general plan
for the regiment or unit and the plan for each provisions unit ( including
their own plans for vegetables, edible oil, lamp-oil, hemp for making sandals
and so forth for which they have been self-sufficient for three years) should
be reported upwards by the end of November. It is important that this should
be obeyed.

The above materials show us that the army's self-supporting production has
undoubtedly achieved a great deal. What have these achievements depended
on? These have depended on the active leadership of the cadres and the labour
enthusiasm of the troops. The cadres have given active leadership to the
production movement consciously in order to overcome difficulties in the
course of the revolution. The troops have taken part in productive labour
consciously in order to overcome difficulties in the course of the revolution.
If these two groups had not had this conscious awareness, if they had not
felt that their work was not for others but for themselves, not for some
worthless cause but for the sacred cause of the revolution, there would have
been no ways for them to fulfil these difficult production tasks. If they
had felt they were hired labourers, if they had felt that the production
they carried out had no relationship to their own interests and no relationship
to the common revolutionary cause, there would have been no way to fulfil
these production tasks.

Above we have discussed the fine experience and great achievements of our
army in self-supporting production. Below we shall again discuss the shortcomings
in our work.

Our work has shortcomings, and these shortcomings are not only found in the
army but also in the official organizations and schools. Some of these
shortcomings were unavoidable in the past. However, after five years' experience
we should be able to correct them. Some have already become serious abuses.
If we do not correct them, they will hinder the interests of the Party and
the revolution.

What are these shortcomings?

First, in order to solve urgent problems of self-sufficiency quickly some
army units and some official organizations and schools have relatively or
specially stressed commerce and neglected agriculture and industry. They
do not realize that only agriculture and industry produce value. Commerce
is merely a medium of circulation. It cannot produce any value itself. Warned
by experience, the production task for all forces and official organizations
and schools in 1943 is gradually to transfer the again emphasis to agriculture,
industry and transport. In our present circumstances, agriculture is particularly
important since the majority of the things we need are agriculture products
(staple grain, miscellaneous grain, vegetables, hemp, meat, vegetable-oil,
animal-oil, cotton, horse-fodder, timber, firewood, etc.). Agricultural products
can also be exported in exchange for industrial products. If we also undertake
some possible and necessary handicrafts (spinning yarn, spinning wool, making
shoes, weaving woollen thread and garments, digging coal, sawing wood, pressing
oil, etc.) and large light industry (textiles, papermaking), we can meet
the majority of our daily requirements and produce enough for trading.

The second shortcoming is that we lack unified planning and unified inspection.
Lower levels act without coordination and upper levels either do not have
or lack sufficient unified direction, planning and inspection of policy
principles and work content. As a result the various branches do not know
what they should not do, or do know but still do it. Thus instances of lack
of coordination or struggling for independence often occur. Incidents have
arisen where policy principles and government orders have been broken, where
the people's interests have been damaged, where various economic units have
not only not cooperated but have competed and hindered each other, where
the upper levels have been deceived and not the lower levels, or where both
have been deceived, where things have been kept back or where lies have been
told. There has been great waste, reckless spending, concentration on show
and not on results. Particularly serious are cases of the evils of bribery
and corruption among cadres. Some cadres have been enticed by material things
and are not loyal to the sacred cause of communism, having become completely
corrupt. Other cadres, have been poisoned, and can only get back to health
by drying out in the sun. All these bad things and all this corruption have
occurred to a lesser or greater extent among some parts of the army and in
some official organizations and schools. Henceforth, all upper-level leadership
organs in the army and the official organizations and schools must place
emphasis on looking after the whole situation and on grasping policy. They
must provide unified planning and inspection for the productive activities
of all subordinate units. They certainly must not permit the abuses described
above to occur again. If they do occur again, they must be strictly disciplined.
Less important cases should be criticized and serious ones punished. We certainly
cannot condone them or, to use a flattering term, 'have a liberal policy'.
These are the three work styles for rectification in economic work. We must
carry them out without the slightest delay.

The third shortcoming is that in the production activities of many army units,
official organizations and schools, the cadres responsible for administration
and control do not take many pains. A minority even pay no attention at all
and merely entrust every thing to the supply organ or to the general office.
This is because they still do not understand the importance of economic work.
And the reason they still do not understand it is because they have been
poisoned by the deceitful corrupting words off metaphysicisis like Dong Zhongshu,
'Conform to the required meets and do not seek gain, be concerned with the
way and do not plan for merit', and have not yet cast them fully aside. It
is also because they consider politics, Party and army affaires come first
and are most important, while economic work, although also important, is
not important to the same degree. They feel that they themselves do not have
to divide their attention or to give much attention by being concerned. However,
these attitudes are entirely wrong. In the present situation in the
Shaan-Kan-Ning Border Region, the great majority of people have work to do.
If you talk of revolution, then in the final analysis apart from economic
work and educational work (including theoretical education, political education,
military education, cultural education, technical education, professional
education and national education) what other work is worthy of the names
central or primary work? Is there any other work that is more revolutionary?
True, there is other work and a lot of it, but the central or primary work
for the majority of comrades in the present situation in the Border Region
is certainly economic work and educational work. All other work is only
significant in the context of these two. If we conscientiously carry out
these two items of work, we can consider that we have done well in supporting
the war at the front and in helping the people of the great rear areas. Of
the two, education (or study) cannot. be carried out alone. We are not in
a time when 'official rank lies in study'. We cannot go and 'conform to the
requirements and illuminate the way' with hungry stomachs. We must get food
to eat. We must pay attention to economic work. Talking of education or study
separately from economic work is merely using superfluous and empty words.
Talking of 'revolution' separately from economic work is like making revolution
against the Finance Department and against yourselves. The enemy will not
be in the least hurt by you. Because we have many comrades with leadership
responsibilities who still take the attitude of neglecting or not paying
much attention to economic work, many other comrades copy them, being willing
to do Party; government, army and educational work, or to work in literature
and art but unwilling to do economic work. Some female comrades are unwilling
to marry economic workers, imploring that they consider them dishonunrable.
They consider that marrying the head of a mule-and-horse-team would be an
insult and they would rather marry a political-worker. In fact all these
view-points are very wrong and do not match the situation in this time and
place. We must make a new division of labour. We need some revolutionary
specialists who are separate from production affairs. We also require some
doctors, literature and art workers, and so forth. But we do not want many
people like this. If there are too many then danger arises. If those who
eat are many and those who produce are few, if those who are employed suffer
and those who benefit are comfortable, we shall collapse. Therefore many
cadres must be transferred from their present work or study to economic posts.
Chief responsible cadres at all levels in the Party, government and army
must at the same time pay full attention to leading economic work. They must
investigate and study the content of economic work, be responsible for making
plans for economic work, allocate cadres for economic work, inspect the results
of economic work, and never again entrust this extremely important work to
the supply departments or general offices alone and wash their hands of it.

The fourth shortcoming is that in the past some army units and official
organizations have not had a division of labour between levels when allocating
production tasks. All levels from brigade to company and from upper level
to lower level have been permitted to run commerce without any limits. Thus
many defects have arisen. Henceforth most commerce, industry and transport
should be concentrated in brigades, in regiments working in independent areas
and in upper-level organs. Furthermore these must work according to correct
principles. Trade with the outside must be united under the direction of
the Commodities Bureau. Units under regiments working in an independent area,
units at battalion level or below, and most lower-level organs should be
instructed to carry out agriculture, handicrafts that can be done by troops
or miscellaneous personnel and business or trading of the consumer cooperative
type. They are not allowed to do other work.

In the light of achievements and Shortcomings over the past five years, the
concrete tasks for the various units of the army in 1943 are as follows:

(1) With the exception of most of the grain and some of the bedding and clothing
which are supplied by the government, the great majority of army units should
provide 80 per cent of their own supplies. Some units (such as 359 Brigade)
should provide 100 per cent. Only those in special circumstances (such as
the cavalry) can be allowed to bear a lighter production burden, and they
too should think of ways to provide more in 1944. All forces should prepare
to increase self-sufficiency in grain and clothing and bedding in 1944 so
as to reduce the burden on the people and to let them build up their strength.

(2) With the exception of 359 Brigade, which is already fully carrying out
the military farming system, or the cavalry, which would find it difficult
because of special circumstances to implement that system at once, and of
those with garrison duties, all other forces should carry out the policy
of military farming in individual units or several units together so as to
increase agricultural production.

(3) All units from top to bottom should carry out production in an organized,
led and planned way. Set up production committees at all levels from brigade
to company, and carry out collective planning and inspection at each level.
Study in production techniques so as to increase production and improve supplies.
Correct all irregular phenomena.

(4) Select cadres strong in politics and ability to administer production
and supply work in each department. Existing economic cadres should be examined.
Incompetents and those who have committed corrupt and decadent errors must
be transferred. Particularly serious cased must be punished. Every unit must
set up a deputy battalion head with responsibility for production and personnel
to administer production in companies. These people should specially control
production and the distribution of tasks for whole battalions and whole
companies. Brigade units and regimental units should establish deputy officers
with responsibility for production to administer the production work of the
units themselves. The commanding officer of each level must personally plan
and inspect economic work.

(5) All economic and financial work of the Party, government and army in
each sub-region should carry out coordinated cost-accounting under the leadership
of the finance sub-committee of the sub-region. In order to stimulate the
activism of the production and working personnel of all units, it should
permit them to spend a suitable amount of the results of their production
on improving their livelihood. Everything apart from this should be distributed
in a coordinated way so as to avoid the problem of unequal benefits. Some
coordinated distribution should be applied throughout the Border Region as
a whole, some within the sub-regions, some within the various systems, and
some within units. It can be decided according to the nature of production
and the economic situation.

(6) Implement the policy of 'giving consideration to both the army and the
people'. The economic activities of the army, Party and government should
harmonize with the economic activities of the people. Anything which damages
the people's interests or causes them dissatisfaction is not allowed.

(7) Production and education cannot be out of balance. All units must carefully
plan both kinds of work and their mutual relationships. Correctly share out
the time for each so that production and education in 1943 can be greater
and better than in 1942. We have had five years' experience and it is entirely
possible to achieve this aim..

(8) The core of the army's political work is to ensure the fulfilment of
its production and education plans, to ensure that while it is carrying out
these plans there are correct relationships with the Party, government, and
people, to ensure the correct relationship between upper and lower levels
within the army itself, and to ensure the purity of economic cadres. If political
work does not fulfil its own task in these areas then it will be defeated.

9. ON THE DEVELOPMENT OF THE PRODUCTIVE UNDERTAKINGS OF OFFICIAL ORGANIZATIONS
AND SCHOOLS

Within the three branches of the public sector of the economy, production
by the troops and by the official organizations and schools is directly intended
to meet their own living and running-costs. Production by government organs
is also included in this. For example, the personnel working in the various
departments and offices of the Border Region government run agricultural,
handicraft and commercial undertakings. These directly supplement deficiencies
in the running-expenses of the organs and in clothing, bedding and food for
the personnel. By contrast the salt industry, industry and agriculture
established as government enterprises are not intended to provide
running-expenses but to meet the needs of the whole Party, government and
army.

In Yan'an and the Border Region, the official organizations of the Party
and government, leading organs of the mass organizations and many schools
have pursued agriculture industry and commerce under the slogans 'set-to
ourselves' and self-reliance'. This is a broad mass-movement, and it has
solved many big problems of finance and supply. It is only just second to
the army's production and it is worth our while to sum up its experience
carefully, to point out its achievements and shortcomings and to determine
the work-plan for 1943.

The army's production movement began in 1938 and gained some experience.
In 1939 we spread this experience into all official organizations and schools.
In February 1939 we held a Production Mobilization Conference. We organized
production committees to be leading organs for the production movement and
we stipulated different production tasks according to the different circumstances
of the work and study of each official organization and school and the strength
of their labour form. For example, we laid down that working personnel in
district; and townships should be fully self-sufficient in grain and other
organizations from the centre down to the county should be either one-half
or one-third self-sufficient according to the strength and size of their
labour force. In total we asked them to open up 100,200 mu
of land and to harvest 13,000 tan of hulled grain. Besides
this we decided that all official organizations and schools should be entirely
self-sufficient in vegetables, should raise pigs for meat and should use
the straw from their crops to provide part of the fodder for horses. At the
time there were roughly 200,000 people in the official organizations and
schools of the whole Border Region. We issued average production expenses
of 2. 60 yuan per head, a total of offer 49,000
yuan. This provided capital to buy plough-oxen and agricultural
tools. After they had found land and bought oxen and tools everyone was mobilized
for the spring ploughing. Most of these people were intellectuals and youths
who had never previously taken part in production. Together with cadres from
worker and peasant backgrounds and service personnel, cooks and grooms, they
were organized into production groups to open up the land. All hilltops near
Yan'an with unused land became covered with men and women opening them up.
They automatically showed labour discipline and declared competitions in
clearing land. The strong took up hoes and the weak grew vegetables and raised
pigs, or took food and water to the workers.

The gains from this production movement were: (i) the official organizations
and schools of the whole Border Region opened up 113,414 mu
of land, harvested 11,325.63 tan of grain (equivalent to 5,830.17
tan of hulled grain) and harvested roughly 1,200,00
jin of vegetables. At prevailing market-prices the two harvests
were worth over 368,000 yuan (over 10,179,000
yuan at 1942 prices). This provided one-quarter of the grain
requirements of 20,000 people, one-half of the horse fodder and some of the
vegetables and meat. (ii) It enabled over 10,000 intellectuals and young
people to understand from their own experience what physical labors is. This
tempered them. (iii) When the common folk of the Border Region saw or heard
that all working personnel and young students in all the Party and government
official organizations — from Party Central Committee members to young
service personnel—were all going up into the mountains to farm, they
were moved. Everyone was keen to open up land and it became an exceptional
year for doing so.

On the other hand, the stipulated task for grain productions was not fulfilled
in this year because of lack of labour experience and because the application
of manure, seed planting and weeding was not done at the right time. Also,
in some areas there was drought and so forth. As a result, although a lot
of land was opened up, the harvest was not large and only 45 per cent of
the original grain target of 13,000 tan of hulled grain was
achieved. Secondly the error of egalitarianism was committed in leadership
and organization. The different nature of each organization and school was
not considered. Some were given tasks that were too great such as the call
for district and township cadres to be self-sufficient in grain. In fact
they only achieved one-quarter. Some put off and spoilt their work or study
in order to carry out production with the result that it was uneconomic.
In some cases male and female comrades, physically too weak to do hard work,
were forced to labour and their health suffered. Some units could in fact
have undertaken industry and commerce but this was not pointed out at the
time, and they purely and simply concentrated on agriculture.

In 1940 we corrected these shortcomings. First we reduced the agricultural
production tasks. Apart from self-sufficiency in vegetables and meat, we
stipulated that the official organizations and schools should be only from
one-seventh to one-sixth or one-quarter self-sufficient in grain according
to their different circumstances. We did not ask weak males nor any females
to do physical labour. No person over fifty or under fifteen took part in
production. We permitted the hiring of experienced peasants to join-in or
to direct production. In addition the Finance Department issued 50,000
yuan to the official organizations and schools as capital to
allow them to undertake industry and commerce and to develop animal husbandry,
raising pigs and sheep. Therefore in agricultural production during 1940
we did not increase cultivated land beyond the existing amount. Some units
lacked labour power and adopted the meshed of taking ordinary folk on as
tenants. Some gave part of their grain-producing land to others and concentrated
on planting vegetables and raising pigs. In addition some schools moved to
other places in north China. Therefore the 1940 harvest only amounted to
3,000 tan of hulled grain and 900,000 jin of
vegetables, worth 3 million yuan at the market-prices of the
time.

The commerce we ran began with cooperatives. In 1939 each official organization
and school had a consumers' cooperative and some had opened restaurants.
By the first half of 1940 there were thirty cooperatives and restaurants
with more than 60,000 guest capital. The largest had 10,000
yuan and the smallest not more than a few hundred
yuan. Their aim was to supply daily necessities for the
organization or school itself. At the same time they sold to outsiders for
a slight profit as a means of improving their livelihood. They had still
not become commercial undertakings to meet general needs. However, they gave
initial tempering to cadres ruling commerce, and accumulated some commercial
experience and a small amount of capital.

In the two years of 1939 and 1940, the organizations and schools generally
did not undertake industry. They only set up some flour mills for their own
needs and the rear services. Jiaotong set up a smithy for horseshoes. These
can be considered the beginnings of their handicraft production.

The above was the first period in self-sufficient production for the
organizations and schools. Below we turn to the second period.

In the winter of 1940 the production tasks of the organizations and schools
rapidly changed as a result of the economic blockade of the Border Region,
the cutting-off of outside aid, the extreme financial difficulties, and the
unavoidable need to move quickly from semi-self-sufficiency to full
self-sufficiency in finance and supplies.

At the time (with the exception of the troops) the various organs of the
Party, government, army and mass organizations and the personnel of the schools
could not all take up agriculture and the task of achieving self-sufficiency
was extremely difficult. On the one hand we wanted to rely on developing
production to ensure daily and monthly supplies. At the same time we wanted
to accumulate capital to establish a foundation for future self-sufficiency.

In order to get through this difficult situation, the Party had government
adopted necessary steps. First we improved the organizations for leading
production. In succession we established the Finance and Economy Office directly
under the Central Committee, the Rear Services Economic Construction Office,
the Finance and Economy Office at top level in the Border Region Government,
and ordered each sub-region and county to set up production committees. Second,
between the winter of 1940 and the spring of 1941 the government paid out
700,000 yuan and the Border Region Bank lent 3 million
yuan to increase the production capital of the various branches.
This was handed to the various bodies leading self-sufficient production
for issuing downwards, to be added to the capital accumulated by the
organizations themselves in the first period. Thereupon everyone made new
arrangements, selected personnel, chose undertakings put industry and commerce
to the fore.

Agriculture was then placed in a subordinate position.

Below we shall discuss the experience of' the various organizations and schools
in industry, commerce and agriculture during this period.

The starting point for the industry of the organizations and schools was
textiles. Since the Border Region had wool, the personnel of the organizations
and schools spun wool by hand after work and study during the winter of 1940.
For a while it became a movement and everybody began to spin. But since there
was not enough raw material and spinning skills were poor, the woolly threads
were uneven, and too much labour was wasted. After March 1941 this was gradually
stopped and we applied ourselves to setting up handicraft textile mills.
In the first half of 1941 each large organization and school selected service
personnel and messengers to go to the Refugee Textile Mill run by the government
to study spinning and weaving. Like bamboo shoots after spring rain, more
than ten textile mills grew up within a short time. The shortcoming was that
there was no planning. By the latter half of the year because they had no
ensured supply of raw materials or market for yarn, or because they lacked
sufficient liquid capital or were poorly administered, some had closed, some
had merged and some had temporarily closed. For example, the Xin Zhongguo
Textile Mill of the Finance and Economy Office directly under the Central
Committee first merged with the Shengli Mill of the Central Organization
Department and then merged with the Tuanjie Mill run by the Marxism-Leninism
Institute. Then using the name of Tuanjie Textile Mill, it was run in a
centralized way and got more profit. The wool-spinning factory run by the
Lu Xun Academy and the Women's University was closed down and its capital
used elsewhere. The Tuanjie Textile Mill of the Financial and Economy Office
under the Central Committee and the Jiaotong Mill run by the Rear Services
could not fully employ their production capacity because of all kinds of
difficulties. They alternately worked and closed down for a while until they
eventually got on the right track. Thus the process of moving from a
hand-spinning movement of several thousands of people to the setting up of
handicraft factories, from the setting up of over ten small textile mills
and wool-spinning factories to the final merger into two factories, the Jiaotong
and the Tuanjie, was a process of moving from blindness to consciousness
in which there was continuous groping forward through research, improvement
in techniques and improvement in administration. This process on the one
hand illustrated the hard-working spirit of the various organizations and
schools and on the other illustrated our complete lack of experience in running
industry at that time. By 1942 the Jiaotong produced 3, 336 bolts of cloth
and the Tuanjie produced 2,736, becoming major factories in the Border Region.
They are the valuable creation of the process of hard work and groping the
way forward.

Besides textile mills, the organizations and schools directly under the Central
Committee have successively set up many handicraft factories for such things
as bedding and clothing, shoes, coal and charcoal, carpentry, papermaking,
pottery, flour-milling and oil-pressing, silk weaving and making iron implements.
Their aim has been self-sufficiency. The capital for these factories came
either from commercial capital, or from bank loans, or from the closure of
the wool-spinning factories. Warned by the experience with textiles, these
factories were not run in such an entirely disorganized way. They were rather
more orderly With several organizations and schools cooperating, or with
cooperation with the common folk or with the Bank. But it was not all plain
sailing. Most only laid a firm foundation after following a winding path
from initial loss of capital through continued support to final profit.

In the years 1941 and 1942, the system under the Central Committee's Finance
and Economy Office [Zhong-cai xitong] set up a total of
twenty-seven large and small handicraft factories with total capital of over
400,000 yuan and with 477 employees. Among them there were
eight textile mills with 217,000 yuan capital and 161 employees,
three coal and charcoal factories with 70,000 yuan capital
and sixty-eight employees, three mills with 15,000 yuan capital
and twenty-one employees, two bedding and clothing factories with forty-eight
employees (capital details not available), three carpentry factories with
35,000 yuan capital and seven employees, one shoe factory with
10,000 yuan capital and thirty-eight employees, and one papermaking
workshop with 20,000 yuan capital and twenty-nine employees.
In addition there were six small factories individually producing machinery,
glass, alcohol, pottery, oil-lamps and blankets. (There are no statistics
on capital and employees for these factories. The first three were experimental
undertakings by the Natural Sciences Institute.) All the above factories
were reorganized in September 1941 when the official organizations and schools
directly under the Central Committee carried out their first drive for better
troops and simpler administration. They were transferred to the direct control
of Central Administration Bureau (the Finance and Economy Office directly
under the Central Committee was dissolved and we set up the Central
Administration Bureau attached to the Central Work Department
[Zhongyang Bangongting]). Their number was reduced from
twenty-seven by closure or merger to nineteen. In particular the merging
of the eight textile mills into two, the Tuanjie and the Shiyan, enabled
concentration of management and improvement in operation. Thus we were able
to move from a situation where eight mills either lost capital or just maintained
themselves to one of a profit of 1,600,0000 yuan in October
1942.

Self-sufficient industry run by the Rear Services system was started in the
winter of 1940 just like that run by the central financial system. After
two years' operation, 1941 and 1942, there was one textile mill, two papermaking
factories, three charcoal factories, two carpentry factories, two silk-weaving
factories, and one factory each for coal [shitan], refined salt, pottery,
bedding and clothing, writing-brushes, ironwork, flour-milling, shoes and
hemp-weaving, a total of nineteen altogether. There are no statistics yet
for the amount of capital, number of employees and amount of production of
these factories. Although the profit earned by these undertakings is not
great (in the first ten months of 1942 it was 200,000
yuan), their great merits are:


    they are run in a centralized war by the Rear Services and are not run freely
    in a dispersed way as by the various official organizations and schools.
    Thus leadership and inspection are thorough, and mistakes are quickly corrected.

    They constitute a wide range of operation. Unlike the Central Committee's
    Finance and Economy Office system's initial concentration on textiles through
    the establishment of eight factories, the Rear Services has at all times
    only run one factory, the Jiaotong Textile Mill, and thus had spare capacity
    to do other things.

    They are entirely aimed at ensuring supplies. Although they do not earn money,
    they have provided a supply of many necessary goods.


In October 1942 we carried out a thorough drive for better troops and simpler
administration. The Central Administration Bureau and Rear Services systems
were combined, and their industries administered in a unified way. We also
carried out further reorganization. The Tuanjie and Jiaotong textile mills
and the bedding and clothing factories were transferred to the Finance
Department. The medicine, alcohol, iron, and glassmaking factories were
transferred to the Garrison Office. The Natural Sciences Institute and all
the things that went with it were handed over to the government. All remaining
factories were closed, or merged and handed over to the control of the Central
Administration Bureau. By December 1942 there were three carpentry factories,
two papermaking factories, five charcoal-factories, one shoe-factory, one
oil-pressing factory, one flour-mill, three grinding-mills, one cart-factory,
one wine-factory and three blanket-workshops, a total of twenty-one large
and small handicraft factories and workshops. These can ensure all supplies
of coal, shoes and flour, the manufacture and repair of all wooden and
galvanized-iron implements, and some of the paper and edible-oil requirements
for the whole of the Central Administration Bureau system. Bedding and clothing
are supplied by the government. This is the outcome of the activism in industrial
production over the past two years of the Central Administration Bureau (prior
to September 1941 the Central Committee's Finance and Economy Office) and
the Rear Services.

The above experience shows that under present circumstances it is essential
for the official organizations and schools to run handicrafts. The aim is
not to earn money but to ensure supplies of necessities. However, organizations
and schools cannot set up any kind of factory they want to. They should choose
in a planned way which ones to run, according to the nature of the industry
and the situation in the official organization or school. They should reduce
the number of errors created by blindly groping around. Existing factories
should be organized into systems according to area and official organization.
Cutbacks, mergers and transfers can reduce waste and enable them to play
an even greater role in providing supplies.

As mentioned above, our comrades lacked experience of running commerce in
the same way as they did of running industry. They had previously only managed
a few cooperatives. We wished to turn to relying on a profit from commerce
in order to provide a large proportion of supplies. What had to be done?
Once again it was a process of moving from blindness to consciousness in
order to find an answer to this question.

During 1941 and 1942 commerce started off with the aim of rapidly overcoming
difficulties. Therefore we had no choice but to use the bulk of the capital
of each official organization and school to trade for a quick profit.

In the year from autumn 1940 to autumn 1941 we mainly operated large stores.
Some official organizations and schools enlarged their existing low-capital,
small-profit cooperatives, small shops and stalls, increasing capital and
staff, joining chambers of commerce and running proper commercial undertakings.
For example, the Jiaotong Store of the military base was at first a small
cigarette-shop set up at the entrance to the base at Qilipu in Yan'an. In
August 1939 it moved to the new market in Yan'an and as well as selling general
goods set up a Chinese Medicine shop and a horseshoe-shop. Its capital increased
from a few hundred yuan to 20,000 yuan. Another
example is the Hezuo Store which grew from the cooperative of the Anti-Japanese
University. In June 1940 it moved to the new market and set up branch stores
at the three branch schools of the Anti-Japanese University. Its capital
increased from 80 yuan to 19,000 yuan. The Rear
Services Store was at first a small stall with 30 yuan capital.
By September 1940 it had expanded and its capital had grown to 20,000
yuan. As well as selling goods it also set up a dyeing shop.
Originally many official organizations and schools did not have shops. Around
this time they too collected capital and people together and set up business
either independently or in partnerships. At the time the business done by
all the publicly-run stores depended on trading goods mainly from Suide,
Dingbian and Fuxian counties, in particular the cloth, paper, writing-materials
required by the official organizations, schools and troops themselves, and
the matches, raw cotton and so forth required by the common folk. During
this period the official organizations and schools set up over sixty large
and small stores in Yan'an, Suide and Dingbian, not including those run by
the army. In addition, there were many that did not set up premises but depended
on one or two people and a few animals to trade goods along the roads, calling
it 'floating trade'. According to statistics for October 1941 the stores
under the control of the Rear Services' committee for store administration
were the Xibei Store, the Xibei Vegetable Cooperative, and fourteen large
and small stores including the Xinghua, the Hezuo, the Jiaotong, the Xinxin,
the Xingmin, the Minxing, the Biahuo. the Junmin, and so forth. The Central
Administration Bureau had twenty stores.

We really relied on commerce to pass through a serious crisis during that
year. It solved great problems of supply. For example, during the first half
of 1941 the Central Committee's Finance and Economy Office and the official
organizations and schools relied on the twenty large and small stores run
by 113 staff with 296,800 yuan capital to earn a profit of
256,000 yuan which supplied 48 per cent of their daily
running-expenses. The Rear Services system with capital of 706,000
yuan made 810,000 yuan profit in the same period
which supplied 45 per cent of their daily running-costs.

However commerce during this period had one great fault which was excessive
dispersal and no centralized leadership. Furthermore, almost all of it was
trade in general goods. These faults came from the urgent need to solve
difficulties in running-costs for each official organization and school.
Each acted without coordination, competed with others and even disobeyed
Party policy, influencing prices and currency. Simultaneously. there was
price inflation, the Border Region banknotes lost value and the external
blockade intensified. Suddenly dealing in export and import of general goods
had a gloomy future and the various official organizations and schools which
relied on this for their running-expenses also found themselves with problems.
In this situation. it was urgently necessary to transform the commerce run
by the official organizations and schools and by the army. This transformation
began in the latter half of 1941. In the spring of 1942 the Border Region
carried out an initial drive for better troops and simpler administration.
It was then decided to organize all commerce into proper enterprises
[qiyehua]. On the one hand each system put its existing stores
in order, organized a joint committee for publicly-run commerce, unified
the leadership of publicly-run stores, and strictly carried out laws, commands
and policies. On the other hand they expanded the scope of commercial activity,
carrying out many kinds of business such as salt-shops, mule and horse supplies,
transshipment agencies, merchant warehousing, slaughtering and so forth.
The method of operation also changed. In some cases stores were merged, in
others capital was invested in private stores or in cooperatives and the
official organization or school did not run its own trade. In other cases
capital was invested in the government's Salt Company or in the Guanghua
Store. Thereafter the fault of having too many shops competing with each
other was avoided, and the function of providing the running-costs of the
official organizations and schools could be restored. For example, as a result
of reorganization according to this policy the Central Administration Bureau
and Rear Services systems reduced the number of their shops from thirty-eight
with 196 staff to twenty-five with 105 staff by October 1942. In the first
ten months of 1942 the two systems earned a profit of 16,440,000
yuan with capital of 8 million yuan. This accounted
for 68 per cent of all production income. Also during 1942 the production
committees of the various departments and offices of the Border Region Government
earned 600,000 yuan from agriculture and commerce, of this
commerce accounted for 350,000 yuan or 58 per cent. Official
organizations at sub-region and county level originally put agriculture first
but by 1942 commerce was the most important.

In 1943 financial and economic leadership will be united
[yiyuanhua]. External trade will be unified under the Commodities
Bureau. Every official organization and school must carry out a thorough
drive for better troops and simplified administration. As a result the commerce
run by the official organizations and schools must be regulated by the
Commodities Bureau, must share in running transport for local products and
salt, and must allocate some capital for cooperation with the Commodities
Bureau. In this way publicly-run commerce will be more rational.

The agricultural production of the official organizations and schools also
made progress in 1941 and 1942. In these two years there were great achievements
in the areas of grain, vegetables, charcoal and labour after work.

Some official organizations and schools were still growing grain entirely
independently in 1941, some had already changed to forming partnerships with
the common folk, and some ran agricultural stations (including both independent
operation and partnerships). Independent operation had changed somewhat.
The entire personnel no longer went up the mountains to farm. Instead, those
who went were chiefly those doing miscellaneous duties organized into production
teams accompanied by some of the physically stronger personnel. For example,
the production teams of the various official organizations in the Rear Services
system planted 5,200 mu of grain in 1941, and the Central Party
School planted 800 mu. Those in partnership with the common
folk included the Central organization Department which planted 840
mu and divided the grain at a ratio of 2:8, 2 to the government
and 8 to the private individuals, and the hay at a ratio of 7:3, 7 to the
government and 3 to the individuals. The agricultural stations included the
two stations run by the Secretariat of the Border Region Government on a
partnership basis. There were also the independent stations run at Nanniwan
by teams selected from the miscellaneous duties personnel of the official
organizations and schools equipped with oxen and tools. These included two
from the Rear Services and one each from the Central Committee's Finance
and Economy Office, the Central Organization Department and the Youth League
cadres. Official organizations of the sub-regions and counties also adopted
both independent operation and partnerships.

In 1942 the drive for better troops and simpler administration was carried
out. Many official organizations and schools in Yan'an were merged. As a
result, self-supporting vegetable production continued but all grain production
was only carried out either at agricultural stations or in partnerships.

Although partnerships have some of the character of exploitation, the common
folk, in particular the immigrants and refugees, appreciate it very much
since the government supplies seed, plough oxen and agricultural implements,
and the taxes are not high. This method has a role to play in encouraging
immigration and in adjusting the use of labour power. The Party School provides
an example:

The general office of the Party School planted 300 mu in
partnership with four immigrants. These four were all very strong. The Party
School sent one man responsible for leadership and inspection, The arrangements
were for the Party School to supply the agricultural tools, a hoe, a pick
and a sickle per man, to lend two oxen and to give the seed. They also lent
grain at rate of 4 sheng of hauled grain per 3
mu making 4 tan for 300 mu. It
was agreed to repay in the autumn of the following year. The division of
the grain and hay harvest was laid down as 20 per cent of the spiked millet
[gu (zi)] for the government and 80 per cent for the private
individuals, 30 per cent of coarse millet [Meiji] for the
government and 70 per cent for the private individuals, and 40 per cent of
the miscellaneous grains for the government and 60 per cent for the private
individuals. All the hay went to the Party School. This year the Party School
received 10,500 jin of hay, 8.37 tan of spiked
millet, 10.17 tan of coarse millet, 6.9 tou of
black beans [heidou] 4.2 tou of hemp-seed
[xiao mazi], l tou of sesame [lao
mazi] and 2 tou of adzuki beans
[xiaodou], valued at a total of 31,925 yuan in
Border Region money. The four partners received 33.48 tan of
spiked millet, 22.4 tan of coarse millet, 7.5
tou of black beans, 6.3 tou of hemp-seed, 1.5
tou of sesame, and 3 tou of adzuki beans, valued
at a total of 46,805 yuan This is a good example of giving
consideration to both public and private interests.

There is also new experience in building up agriculture stations. Since the
personnel selected from the official organizations and schools are not strong
labour powers, have limits on their working-time and are not skilled in
agricultural techniques, they will waste their capital if they only concentrate
on farming. In 1942 we adopted the following two methods. One was independent
operation which includes subsidiary undertakings such as animal husbandry,
wood-plank sawing and so forth as well as planting grain. This was like the
method adopted by 359 Brigade. The other was to form partnerships and involved
going into partnership with the common folk on stations that already had
some foundation, and setting up another new station oneself. In the first
year the new station brings no profit but in the second year it has some
foundation and can also be changed into a partnership. The Secretariat of
the Border Region Government provides an example. According to the comrades
there:

We have two stations, one to the east, the other to the south. Their size,
method of operation and harvest are much the same. In 1942 the southern station
planted 288 mu of river land, 324 mu of previously
farmed hill land and 408 mu of newly opened land. Altogether
the harvest was 244 tan of grain. Since beans and corn formed
the bulk, this was equivalent to 146.6 tan of hulled grain.
Taking each tan at 1,300 yuan this was worth
190,230 yuan. We also harvested 14,000 jin of
hay worth 14,000 yuan and 20,000 jin of vegetables
worth 20,000 yuan The total value for these three items was
224,320 yuan Originally we had 128 sheep. In 1942, eighty-one
lambs were raised, worth 10,000 yuan. We bought pigs for 3,482
yuan, and we also had thirteen worth 400 yuan
each. The total of all the above items is 243,002 yuan.

As we have adopted the method of partnership operation all our expenditures
were taken from the amount harvested including all expenses for the five
men we assigned. We went into partnership with twelve households, totaling
forty-five people. They had nineteen whole-labour powers, thirteen half-labour
powers and thirteen children not able to work. Altogether their share was
68 tan of grain equivalent 40.8 tan of hulled
grain with a total value of 53,040 yuan at 1,300
yuan per tan. They also received 7,000
jin of hay worth 7,000 yuan. The two items came
to 60,040 yuan. Our own five men (one was crippled and looked
after general running, two cooked, planted vegetables and crops, and two
looked after sheep and did general work ) four oxen, one mule and five dogs
received 30 tan of grain for eating equivalent to 18
tan of hulled grain worth 23,400 yuan and 50
jin of edible oil worth 1,300 yuan at 26
yuan per jin. In addition, repairs to implements,
ploughs, clothing and supplementary payments came to 20,000
yuan. The total of all the above expenditure was 104,740
yuan giving a surplus of 138,262 yuan. Adding
on the roughly 110,000 yuan from the eastern station, the return
on the two stations was roughly 250,000 yuan.

The two stations are nominally run by the Secretariat and the Civil Affairs,
Finance, Education and Reconstruction Departments. In practice, they only
send out ten people of whom two are hired labourers, one is a cripple and
seven are surplus personnel. The government has a production committee to
control the two stations. In practice usually only one person runs things.
This year thanks to floods and strong winds we were 150 tan
short on our harvest, worth 117,000 yuan. We were also swindled
on the seeds we bought for turnips and cabbage which were the wrong kind.
This lost 30,000 yuan. These two items came to 147,000
yuan and total losses for the two stations were roughly 200,000
yuan. This means that without natural disasters and the wrong
seeds we could get 200,000 yuan more. The working personnel
in the Civil Affairs, Finance, Education, Reconstruction Departments and
the Secretariat number around 400. The income of 250,000
yuan is thus an average of 625 yuan per head.
Although the harvest this year is below norm, they have laid the foundations
for next year and provided a livelihood for twelve immigrant households.
Furthermore, relying on this foundation, next year we are preparing to expand
the ploughed land at the southern station by 900 mu so as to
settle down surplus personnel. The two original stations will still be run
as partnerships.

The method adopted by the county-level official organizations also include
both individual operation and partnerships. For example, the top-rank official
organizations in Yan'an county have planted a total of 630
mu. Of these over 270 mu are farmed in partnership
with two households. These have five labour powers and the county committee
has only assigned two people to work on the station. The remaining 360
mu are farmed by criminals. In 1942, excluding the amount
distributed to the partners, they received a total of 75
tan of grain, equivalent to 45 tan of hulled
grain with a value of 58,500 yuan. With the addition of hay
worth 3,000 yuan, the total was 61,500 yuan.

As the above examples show, independent operation, partnerships and a combination
of both are correct. We should pay attention to this experience when determining
the grain production tasks for 1943.

A very great task in agricultural work is the growing of vegetables since
grain is also provided by the grain tax. If vegetables are not grown then
over 20,000 people will be semi-starved. The saying 'no vegetables is like
half a year's famine' is completely true.

The method for producing vegetables in the past two years has been to assign
personnel specially for growing them and to assign some supplementary labour
from the official organizations and schools. Each year we have on average
been self-sufficient for three to six months. According to the Rear Services
statistics in 1941 their various official organizations and schools planted
1,801 mu of vegetables consisting of 1,030 mu
of potatoes and 771 mu of cabbage, beans, turnips and miscellaneous
vegetables. In autumn, autumn cabbage and autumn turnips were planted on
the 771 mu. Over the year 879,000 jin of vegetables
were harvested equal to one-third of annual consumption on average. According
to the Central Administration Bureau statistics, in 1942 the various official
organizations and schools directly under central control assigned forty personnel
for growing vegetables and planted 388 mu of river land and
1,941 mu of hill land. They harvested 745,000
jin of vegetables, being self-sufficient for five months on
average. The Central Administration Bureau itself supplied nine months of
its needs. Yan'an University and the Natural Sciences Institute both supplied
eight months of their needs, and the Central Research Institute and the Chinese
Writers Anti-Aggression Association [wen-Kang] both supplied
seven months of their needs. The circumstances for vegetable production by
the personnel in the various official organizations are very varied. For
example, in Guanzhong sub-region they can only plant a little on account
of the climate, and can only achieve three months' self-sufficiency on average.
In the special military area they can only reach two or three months'
self-sufficiency because of the scarcity of land. In some areas such as Huachi,
Mudan and other counties they can achieve six months' or more because they
have land and can farm in partnerships. Production of vegetables for their
own use by official organizations and schools throughout the Border Region
is estimated to be worth around 6 million yuan.

The problem here is to discern whether the method whereby the official
organizations and schools assign production personnel to grow vegetables
outside their permanent organizational structure is ultimately worthwhile
or not. The experience of the various offices under central control shows
that it is. The best land for growing vegetables is river land, where all
kinds of green vegetables can be grown. On hilly land only potatoes and beans
can be grown. One mu of river land growing vegetables can supply
five people for a whole year, that is 0.2 mu per person. However,
1.5 mu of hill land is required to supply one person for one
year. Furthermore, so long as a man specializing in growing vegetables has
additional help when spreading manure, he can farm 6 mu of
river land. This means that one man specializing in growing vegetables together
with some supplementary labour can supply a year's vegetables for thirty
people. The daily vegetable requirement per head is 12
liang and the annual requirement is 300 jin.
For thirty people the annual requirement is 9,000 jin. At December
1942 Yan'an market prices of 3 yuan per jin,
the total value of this is 27,000 yuan. Allowing 6,000
yuan for the man specializing in growing vegetables there is
a surplus of 21,000 yuan. Taking the necessary incentive payments
into account, the least return is 20,000 yuan. Therefore in
future after each official organization and school has carried out a thorough
drive for better troops and simpler administration, it should pay attention
to arranging river land for growing vegetables, to assigning personnel for
the work, to providing supplementary labour and to ensuring self-sufficiency
in vegetables for more than half a year and even for a whole year.

Apart from grain and vegetables, raising pigs and sheep for meat is also
an important part of agriculture.

Some people consider that raising pigs wastes grain. However, our experience
proves that raising pigs does not waste grain and, instead, not raising them
does. First of all, without pigs, leftovers have to be thrown away, and there
are quite a lot of leftovers in large official organizations and companies.
Secondly, if little meat is eaten then greater quantities of other food is
consumed, and if a lot of meat is eaten then less other food is consumed.
Thus, raising pigs to increase meat supplies is not only necessary to maintain
health but is also economically rational. The various official organizations
and schools have developed many ways of raising pigs. For example, the Central
Party School directed the pig slaughterhouse to send someone to the kitchen
daily to collect the water in which the grain was washed and the vegetable
waste to feed the pigs. The Central General Affairs Section
[Zhongyang Zongwuchu] directed someone to collect
as pig-food the waste left after husking the grain and also the leaves and
roots left over in the vegetable plots when the vegetables were harvested.
According to the Rear Services Department statistics, in the first half of
1941 its various official organizations got 56,814 jin of pork
worth 170,440 yuan at the market-prices of that time. This
was enough for each person to have 1 jin of pork a month. If
we add the following six months, the value for the whole year was roughly
350,000 yuan. According to the statistics of the Central
Administration Bureau, the various official organizations and schools directly
under central control raised an average of 2 65 pigs a month up to October
1942. Over the ten months this gave an estimated 23,330 jin
of pork worth 700,000 yuan in Border Region currency. Another
example is the top-level official organizations in Yan'an county, which in
the first ten months of 1942 earned 10,000 yuan from pig-raising.
According to these figures the total value of animal husbandry by the official
organizations and schools of the whole Border Region is more than 4 million
yuan.

As well as raising pigs, raising sheep is also profitable where there is
pasture.

After a thorough drive for better troops and simpler administration in 1943,
we can adopt the method used by 359 Brigade whereby they assign one cook
for every forty people and reduce the service personnel. The remaining cooks
and service personnel are sent to work on the production front where they
can do many things such as growing grain and vegetables, and raising pigs
and sheep. Running large-scale animal husbandry on large livestock farms
should be given greater prominence in 1943.

Apart from the grain, vegetables and animals, there is also charcoal-burning
and labour done outside working hours, both of which have provided examples
worth looking at. All the charcoal used in the winter of 1942 by the various
official organizations and schools in Yan'an was provided by teams of people
from those institutions sent up into the hills. If it had been bought, a
substantial sum of money would have been involved. In September the Central
General Affairs Section organized a charcoal-burning team of forty-two people
made up of service personnel, cooks and grooms to spend three months up in
the hills making charcoal. Altogether they prepared 145 pits of charcoal
completing their task of making 140,000 jin. At 1.20
yuan a jin this was worth 168,000
yuan. If during the four winter months the 30,000 people in
the official organizations and schools of the Border Region on average made
1 jin of charcoal per head per day, this would provide 3,600,000
jin of charcoal worth 3,600,000 yuan. If we do
not make the charcoal ourselves, where shall we find such a large amount
of money?

There is also the labour done outside working-hours by the miscellaneous
duties personnel of the official organizations and offices of the Border
Region. For example, the Central General Affairs Section this year mobilized
them to repair buildings, to build surrounding walls, to make bridges, to
build roads and to cut horse-fodder. This saved the government over 110,000
yuan. Similar labour done by miscellaneous personnel of the
Central Party School saved the government over 139,000
yuan; and 359 Brigade did not employ outside workers for any
of its repairs or new construction. All official organizations and schools
should strive to do the same. Mobilize all the people in an official organization
or school to do all the work they can do. If we only consider the labour
done after working hours by miscellaneous duties personnel, the amount from
all the official organizations and schools of the Border Region could be
surprising. We should give rewards to all people who make achievements in
production, and this should also apply to labour outside working-hours.

The above is a summary of the experience of the various official organizations
and schools of the Border Region in self-sufficient production during the
period 1939-42.

According to the comrades doing economic work, in the two years 1941 and
1942 the agricultural, industrial and commercial capital of the Central
Administration Bureau and the Rear Services Department rose from 1,281,917
yuan to 11,690,000 yuan (much of this increase
was due to the fall in the value of the currency and it was not all due to
increased production). The production surplus of the year 1942 was 23,810,000
yuan. Except for the 2,330,000 yuan retained
to increase production capital in 1943 the remaining 21,480,000
yuan was all used to supplement food clothing, bedding and
office expenses for the various official organizations and schools. In terms
of the type of enterprise, agriculture accounted for 17 per cent, industry
8 per cent, salt 7 per cent and commerce 68 per cent. In terms of the official
organizations, the enterprises directly under the control of the Rear Services
Department got 8,400,000 yuan, those directly under the Central
Administration Bureau 3,500,000 yuan, those jointly run by
the above two 800,000 yuan, and those run by the various official
organizations and schools individually 11,100,000 yuan. If
we compare the amount of self-supporting production and the amount supplied
by the people, the former is 57.5 per cent and the latter 42.5 per cent.
The comrades at county level estimate that the monthly running-expenses for
Party and government at county level is roughly 10,000
yuan. Their own production is around 9,000
yuan and the upper levels only issue around 1,000
yuan The proportion is thus 90 per cent to 10 per cent and
is an even greater achievement.

In sum, the self-supporting production work of the official organizations
and schools of Yan'an and of the whole Border Region has had some success.
It has not only supplied the greater part of daily running-expenses and solved
urgent financial problems but has also laid a secure foundation for the public
sector of the economy. Relying on this base, we can continue to develop
production and solve future problems.

What is particularly important and worth raising is that we have gained
experience in running economic enterprises. This is a priceless treasure
that cannot be reckoned in figures. We should not only be able to manage
political, military, Party and cultural affairs, but should also be able
to manage economic affairs. If we could do all the others but not economic
work. we would be a useless bunch of people. We would be overthrown by our
enemies and decline until we collapsed.

In the light of our experience of the past five years and particularly the
past two, production by official organizations and schools must henceforth
improve, expanding its achievements. overcoming its weak points, developing
towards greater consolidation and completing even greater production tasks.
In 1943 we should adopt the following policies:


    Implement the policy of taking agriculture as the chief sector.


According to the actual circumstances in the official organizations and schools,
in each system adopt the following methods of running agriculture: (i) Those
with no foundations in agricultural stations should at once set-to to prepare
ploughs and tools, and separately or in partnership with the people grow
grain and vegetables. (ii) Those with agricultural stations, as well as
continuing production, should expand the scope of operations and arrange
for surplus personnel to do more subsidiary work such as raising pigs, sheep,
chickens and ducks, sawing planks and so forth. They should also form
partnerships with the ordinary people and open new farms. With these methods
grain production in 1943 will be greater and better than in 1942. Agriculture
must not be considered backward and must not be neglected.

All official organizations and schools, large and small, must allocate the
necessary personnel to specialize in growing vegetables supplemented by light
work done by working personnel and students. According to the area and climate
become self sufficient in vegetables for six or more months of the year,
and strive to become entirely self-sufficient. This is one of the most important
steps in improving livelihood.


    Coordinate and develop the various kinds of handicrafts. According to the
    area, system and the principle of better troops and simpler administration,
    join the existing handicrafts of a similar nature run by each section into
    partnerships. At the same time, according to the needs of each area and each
    system, set up new handicraft workshops, such as oil-pressing workshops,
    places to make Soya sauce and condiments, charcoal pits and so forth. The
    principles for running these handicrafts should be first that the workshop
    itself must be self-supporting, and second that it can make a profit.

    Develop animal husbandry. All official organizations and schools both large
    and small should raise pigs and strive to equal 359 Brigade's rate of one
    pig for every five people, so as to increase the supply of meat. Treat increasing
    the supply of meat, improving living-standards and raising health-standards
    as extremely important matters. In addition, each large official organization
    and school, and particularly the army, should set aside capital and without
    harming the interests of the people select areas in Sanbian, Longdong, Jinpenwan
    and so forth to run livestock farms. They should raise large numbers of cows,
    sheep, donkeys and horses, preparing for the time after victory in the War
    of Resistance when the Border Region's salt trade declines and it has to
    be replaced by animal exports.

    Develop transport undertakings. After a thorough drive for better troops
    and simpler administration, keep only a small number of animals to ensure
    the transport of grain and straw needed by each official organization and
    school itself. All surplus animals together with animals specially purchased
    should be organized into transport teams to transport salt or goods. These
    transport undertakings can be run by area and system as the best way of reducing
    costs.

    Regulate commerce. Following the policy of commerce playing a supplementary
    role and the principles of not going against trading policies nor doing
    speculative business, run shops in partnerships or individually according
    to the circumstances in the various systems and units after the drive for
    better troops and simpler administration. Eradicate commerce which goes against
    policy and close unprofitable shops. The various systems should transfer
    the proportion needed from commercial capital to agriculture, animal husbandry,
    handicrafts and transport. Do not hesitate to lay secure foundations in the
    work of becoming self-supporting through agriculture, industry, animal husbandry
    and transport.

    Treat improving the livelihood of the working personnel, miscellaneous duties
    personnel and students in the official organizations and schools as an important
    matter. Responsible people in these institutions should think of all kinds
    of ways of doing so. Under the principle of voluntary participation, they
    should encourage and direct miscellaneous duties personnel, working personnel
    and mothers with children to carry out some handicraft or agricultural production
    in ways which do not hinder their work, study or health. However, they should
    not run commerce. This work can be carried out in large production cooperatives,
    in small production groups or individually as the people involved wish. The
    government should provide loans for capital and the earnings should belong
    to the people who take part in the labour. All responsible people who run
    this very well and have the best successes should get rewards. All those
    who are not good at running their official organizations and schools hence
    make the life of the working personnel, miscellaneous duties personnel, students,
    mothers, children, the sick and the convalescent too harsh, or those who
    improve livelihood through ways which are wrong, hinder-work and study, or
    sabotage policies and orders should be criticized and taken to task.

    Implement unified leadership. Firmly carry out the principle of unified
    leadership and dispersed operation. The top-levels of the central Committee,
    the Border Region, the special regions [zhuangqu] and the counties
    should all set up strong leadership organizations concerned with unifying
    all production undertakings. According to the system and level, unify the
    policies for running enterprises, unify the coordination between the enterprises,
    and unify the ways of inspecting the running of each enterprise. Furthermore,
    under the condition of permitting each production unit to retain a suitable
    profit for itself, within a suitable area to the nature of production and
    operation, unify the distribution of the profits from production. This is
    necessary to avoid the great evils of lack of coordination, of inequalities
    in profits and losses, and of disparities in hardship and comforts.

    All agriculture, industry, animal husbandry, transport and commerce must
    be run as proper enterprises [qiyehua], using the system of
    economic accounting. The food, bedding, clothing and payments for the working
    personnel and employees in each enterprise should be supplied by the enterprise
    itself. They must not be provided at public expense.

    All production organs (factories, shops, etc.) should be 'popularized' no
    matter whether they belong to the government, the troops or the official
    organizations and schools. With the exception of the allocation of production
    tasks, the administration and supervision of production and the disposal
    of the results of production, everything else is under the leadership of
    the local Party and government, even including branch life. All personnel
    in production organizations must carry out policies, be law-abiding and pay
    taxes, take off their uniforms and put on ordinary clothing, join in the
    activities of the local masses and be model citizens of the Border Region.

    In accordance with the concrete circumstances, the Finance and Economy Office
    and the financial and economic committees of the sub-regions should issue
    specific production tasks for 1943 to the official organizations and schools
    in each county system. They should investigate and examine the production
    plans, and enter all the results of production completed within the plan
    by these production units into the financial accounts. Surplus production
    beyond the plan should be retained by the unit for itself as a means of improving
    livelihood. Upper levels should issue supplements to units whose production
    is not enough Those that made a loss in 1942 should be quickly examined to
    find ways of making up the deficiency.

    The four shortcomings pointed out in Chapter 8, 'On the Development of the
    Productive Undertakings of the Troops', also apply to the official organizations
    and schools. All official organizations and schools committing similar abuses
    should pay attention to correcting them.

    It must be clearly explained to all personnel engaged in agriculture, industry,
    animal husbandry, transport, commerce and labour outside working-hours (including
    the ordinary people working as hired labour or in partnerships) that their
    work is for the revolution and they are part of a very glorious cause. Setting
    aside a portion of the income from their labour to hand over to the government
    all helps our own, glorious and sacred revolutionary cause. It does not increase
    the assets of any individual. If publicly employed personnel working in the
    public sector of the economy plot to make special profits for themselves,
    they are guilty of immoral conduct within our ranks and crimes of corruption
    before the law. Those who are entirely free of corruption and waste, and
    work loyally for the Party and the country, are considered noble and moral,
    and should receive praise and rewards from the Party and the government.
    This point should be explained to the troops.

    All people doing economic, financial, supply and general service work, so
    long as they are not corrupt, do not waste, are loyal and work for the Party
    and the country, should be honoured. All people who treat their work lightly
    or with disdain should be criticized and rebuked.


10. ON GRAIN WORK


We have now completed our discussion of economic work. Our economy is divided
into the two large private and public sectors. The private sector of the
economy includes agriculture, animal husbandry, handicrafts, cooperatives
and salt undertakings. The public sector consists of the undertakings run
by the government, the army, and the official organizations and schools.
We have looked at all these things. We have not discussed commerce in the
private sector since we still lack the necessary information. For the moment
we have to ignore it. Now we must discuss the problems of finance. However,
we shall not look at all of its aspects but just look at three questions:
(i) the question of grain, (ii) the question of taxation, and (iii) the question
of economizing.

Our finances depend on two sources, the people and ourselves. Financial work
for the portion supplied by ourselves is basically distribution and supply
work when the process of production by the three elements of the public sector
of the economy is completed and becomes a process of distribution. The public
sector of the economy is the primary foundation for our finances and supplies.
It provided three-fifths of all finances and supplies during 1942. Thus our
primary financial work consists of properly carrying out the distribution
of the fruits of production in the public sector. We have already discussed
this question at length as a supplementary factor when dealing with the public
sector of the economy and there is no space to say more about the details
here. It can wait for further studies. Now we must discuss the second foundation
for our finances and supplies — the portion obtained from the people,
namely grain and tax. There is also the question of economizing. This is
related to what we get from the people and what we supply ourselves. It is
a question related to the whole of the resources we already possess and to
the correct distribution and use of the funds for running our undertakings.
Therefore it is an important financial problem. The grain question referred
to here is the grain tax alone and not all grain problems. This is part of
the tax system. However, since it is related to all the needs of the army
and government, and to the relationship of 80 to 90 per cent of the people
of the Border Region with the Party, the Eighth Route Army and the government,
it is worth specially setting it aside from the general question of taxation
and dealing with it first.

More than 90 per cent of the 1,400,000 people in the Border Region are peasants.
Landlords and merchants make up less than 10 per cent. Over half of these
peasants have obtained a share of land and the other half have not yet done
so. Why are we striving to the utmost to enable the peasants to develop
agriculture? In the first place our aim is to enable the peasants to grow
richer and improve their life. Secondly, we want the peasants to be capable
of paying grain tax to help meet the needs of the War of Resistance. There
is also a third reason which is that we want the peasants, after obtaining
a reduction in rent and in interest rates, to develop agricultural production
in order to be able to pay part as land rent to the landlords, and thus to
unite the landlords with ourselves in the War of Resistance. We must only
do one thing to achieve these three aims and that is strive to the utmost
to enable the peasants to develop agriculture. The more agricultural production
develops and the greater the amount of agricultural and subsidiary products
tile peasants harvest each year, then the less the amount of grain tax paid
to the government becomes as a proportion of their total harvest. We propose
to levy an annual grain tax of 180,000 tan beginning in 1943.
We intend to keep this amount as fixed in the following few years even if
as a result of agricultural development the total amount of grain produced
in the Border Region increases from its present level of around 1,500,000
tan. (Many comrades estimate that with better use of existing
labour power, we can raise the total production of the Border Region to 2
million tan. All increases will thus accrue to the peasants,
making them keen to work hard to develop their own production, and enabling
them to improve their own livelihood and to dress and eat well.

All comrades throughout the Border Region must learn from the way the comrades
of Yan'an county strive to work in the interests of the peasants,
so that the peasants rapidly get richer. The richer the peasants become,
the less they take exception to handing over a fixed amount of grain tax
and the more they feel close to and inseparable from the Communist Party,
the Eighth Route Army and the Border Region Government The peasant Wu Manyou
of Yan'an county is clear proof of this. On 30 April 1942, the Liberation
Daily carried the following report on him.

THE MODEL RURAL LABOUR HERO, WU MANYOU EXCELS IN OPENING NEW LAND AND
HARVESTING GRAIN FOR SEVERAL YEARS RUNNING, AND INFLUENCES THE MASSES TO
TAKE PART ACTIVELY IN SPRING PLOUGHING

(Our special report.) Rural labour heroes appear one after another in the
spring ploughing movement. In order to express their deep devotion to the
Border Region, to consolidate the Region and to improve their own life, they
display the spirit of labour to a high degree. Among them, Wu Manyou from
Luilin district in Yan'an county is especially respected by most peasants.
Every year his harvest of grain exceeds that of others by one-sixth. The
two labour powers in his family farm over 120 mu of land. This
year they opened up 35 mu of uncultivated land. He is already
publicly recognized as a model labour hero by the peasants of the township.
According to late news last night, the Reconstruction Department of the Border
Region Government has decided to give him a special award.

(Our report from Yan'an.) For successive years the peasant Wu Manyou of
Wujiacaoyuan in Second township, Liulin district, Yan'an county has been
active in spring ploughing and grown good crops. Usually people get an average
of 5 tou from every 3 mu; he gets 6
tou. Thus when the government issued the call for great efforts
in spring ploughing he said; 'I have benefited from the revolution and I
can never forget it. I truly love the Border Region and at the same time
I work to improve my own life'. He redoubled his efforts at opening up new
land and influenced the masses. He created an enthusiastic spring ploughing
movement in his own village. All the peasants in Yan'an county know that
Wu Manyou's township did the best farming this year. Wu Manyou originally
planned to open up 35 mu. He had already opened up 15
mu before it rained, and he was even more active afterwards.
He said: 'I can finish clearing the new land in ten days, and if there is
time I'll exceed the plan'. As for his other l00-odd mu of
cultivated land, some parts have already been seeded and some parts have
already been turned over. All the inhabitants of Wujiacaoyuan, the village
head, the head of the township, and the head of the district unanimously
praise him as 'a model hero in spring ploughing'. Now the district
government has applied to higher levels to reward him. On hearing this the
Border Region Government also decided after practical investigation to give
him a suitable reward as an incentive.

(Our report from Yan'an county.) During the spring ploughing movement many
labour heroes have appeared, but in the final analysis who is best at growing
crops? To clear up this question our reporters spent a month visiting various
villages. Now they have found the model labour hero generally recognized
by the masses. This model hero's name is Wu Manyou. This year he is forty-nine.
He is well built and strong. Before the land revolution he was a tenant farmer.
At that time he had to eat leaves and husks. He 'suffered hardship' [worked
for ethers] by cutting firewood. The money he earned he had to pay as taxes
to the local bad officials and rich gentry, and he himself usually went hungry.
After the Land revolution, he joined the revolution. He was given a share
of land on the hills, roughly 40 shang equal to 120-odd
mu. Apart from this private land, he has actively opened up
and sown uncultivated land in successive years, and he raises cows and sheep.
Now all the hill land is cultivated and he has two bullocks, three cows and
more than a hundred sheep. His prospects grow brighter and brighter. He has
got married, and eats and dresses well. Last year after government examination
his family status was raised from poor peasant to middle peasant. He often
says: 'When I think of the past and then of the present, how can I forget
the benefits, of the revolution and of the Border Region?'

(Our report from Yan'an county). Model labour hero, Wu Manyou, plants crops
like any other peasant. Why does he reap more grain than others? According
to the peasants in his village there are several reasons. First, he gets
up earlier than anyone else and goes to bed later. Before the sky grows light
he has fed his cows and gone up the hill. He only comes back from his land
when the sky is dark. He can really endure hard work. Second, in winter when
there is no work to do, he diligently collects manure. As he also can raise
sheep and cows, he has more manure than others. On average he applies seven
pack loads of manure to every 3 mu. Third, when the crops begin
to shoot, some peasants are afraid to go up into the hills. They do not hoe
the weeds or only hoe once at the most. He hoes twice at least, so his millet
naturally grows well. Fourth, he plough deeply. Other households plough down
5 inches he ploughs down 7 inches at least. Fifth, when breaking up the earth,
he breaks it finely and is not careless. Sixth, he always ploughs and sows
at the correct time, neither early nor late. Because of these fine qualities,
he harvests a top yield per 3 mu of 12 tou on
the old scale (18 tou on the market scale} and a lowest of
4 tou (6 market tou ). The average is 6
tou (9 market tou). The average for other peasants
is 5 tou (7 market tou). In terms of averages,
he is one-sixth better than others.

(Our report from Yan'an county.) Model labour hero, Wu Manyou, is not only
a model at growing crops but is also a model citizen. nest year he harvested
18 market tan of wheat (xiaomai) and 27 market
tan of grains (equivalent to 16 tan 2
tou of hulled grains). He paid 14 tan 3
tou in grain tax, 1,000 jin of hay tax, contributed
two lots of 150 yuan to government bonds, and paid 665
yuan cash substitute for the salt tax. The villagers said to
him: 'Old Wu, you pay out too much, cut down a bit! He said 'During the
revolution, the Eighth Route Army protects our Border Region. People at the
front loose blood. All we have to do is sweat a little more. How can you
say "Too much"?' Afterwards everyone respected his opinion and enthusiastically
gave grain to the State. This year the upper levels moved some refugees to
live in the village. He lent grain and hoes to them and helped them find
uncultivated land. He also often encouraged them materially and in spirit
to open up and plant land. Usually he is also the most fair person in the
village. His prestige among the ordinary people is very high and everyone
trusts him. In May last year he was elected a member of the township council
and director of the township's work in supporting families with dependents
fighting in the War of Resistance. He has a younger brother who is a soldier
with the Eight Route Army, so he himself belongs to such a family but he
declined public support. He said: 'Fighting is the duty of the Chinese people,
there is nothing strange about it. I've enough to eat, what other
support do I need?' However, he is extremely correct towards other families
in the township with dependents at the front. At the same time he is very
fair in his distribution of labour duties. There are twelve families in the
township with dependents fighting in the war. This year he arranged substitute
farming for 220 mu and all the families were grateful to him.
No one in township says he is not good.

(Our report from Yan'an county.) There are fourteen peasants sent households
in Wujiacaoyuan with fourteen heads of family. When you raise the question
of whether Wu Manyou is worthy of being called a model labour hero, everyone
raises his thumb and says 'What else can be said about old Wu. He is the
best at enduring hardship. If he isn't a hero who is fit to be?

On 2 June there was another report in the Liberation Daily.

Because of the influence of the labour hero, Wu Manyou, Wujiacaoyuan which
originally planned to open up 147 mu of undo cultivated land,
had already opened up 225 mu. Wu Manyou himself opened up 15
mu. After Wu Manyou was rewarded the whole town ship (Second
township, Luilin district) opened up 540 mu.

On 29 October, the Liberation Daily carried a further report.

This year the harvest of coarse millet is very good. In Wu Manyou's village
the yield per 3 mu is in general 5 to 6 tou but
he has got 8 tou (each tou is the large kind
equivalent to 45 jin). Most peasants get 3 or 4
tou of hulled grain from husking 1 tan of coarse
grains. He always maintains the official standard for the equivalent amount
of hulled grain. Wu Manyou often puts on a propagandistic air and says to
others: 'If you want to get your crops as good as mine, learn from me! I
have no secret, I am simply willing to labour' .

Wu Manyou is already a rich peasant. Because he got benefits from the soviet
government in the past and the Border Region Government now, he has united
his destiny with that of the Communist Party, the Eighth Route Army and the
Border Region Government. All empty words are useless, we must give the people
visible material wealth. The minds of many of our comrades have still not
fully turned into the minds of communists. They only know how to do one kind
of work, asking the people for this and that, for grain, for hay, for taxes
and for mobilization for various kinds of work. They do not know how to do
the other kind of work, striving to the utmost to help the people develop
production and to improve their cultural level. It is entirely rational for
us to ask things of the people for the sake of the revolution and the War
of Resistance. It is good that our comrades consider that in doing this work
they are doing the work they should do for the revolution. But it is only
doing one aspect of work and it is not the primary aspect. The primary aspect
of our work is not to ask things of the people but to give things to the
people. What can we give the people? Under present conditions in the
Shaan-Kan-Ning Border Region, we can organize, lead and help the people to
develop production and increase their material wealth. And on this basis
we can step-by-step raise their political awareness and cultural level. To
these ends we must endure all discomforts and night and day, diligently and
thoroughly look into the people's problems in their livelihood and production,
including such important matters as plough-oxen; agricultural implements,
seeds, manure, water conservancy, animal fodder, agricultural credit,
immigration, opening up new land, improving agricultural methods, female
labour, labour by loafers, plains for setting up households, cooperatives,
exchange-labour teams, transport teams, textiles, animal husbandry, salt
industry and so forth. Moreover, we must concretely help the people to solve
these problems and not use empty words. This work is the primary work for
all Communist Party members working in the countryside. Only after we have
done this aspect of work and achieved real results can we get the people'
s support when we do the second aspect of our work which is to ask them for
things. Only then will they say that our requests are necessary and correct.
Only then will they understand that if they do not give grain, hay and other
things to the government, their life cannot be good and cannot get better.
Only in this way will our work not be done through coercion. Only in this
way will things run smoothly, and only in this way will we be truly united
with the people. This is the basic line and policy of our party. Every comrade
(including those in the army) should study this thoroughly. Only when our
comrades understand and carry out the complementary nature of these two aspects
of work, can we call ourselves all-round communist revolutionaries. Otherwise,
although we do revolutionary work and although we are revolutionaries, we
shall still not be all round revolutionaries. Furthermore, some comrades
are still bureaucrats remote from the masses. Because they only know how
to ask the masses for things and do not know how to or are unwilling to give
things to the masses, the masses detest them. This question is extremely
important. I hope everyone will pay great attention to it and propagandize
the principle throughout the whole party.

In what follows we shall sum up our past experience in grain work and point
out the policy for 1943.

From 1937 to 1939, the grain tax levied in the Border Region covered only
a part of supplies. The deficiency each year was made up by purchase using
funds issued by the government. With the exception of particular areas and
periods when there were grain difficulties, there were no insurmountable
problems in the whole of grain supply for the four years. During that time
we actually enabled the people to build up their resources. The burdens of
grain tax were heavy on the rich peasants and landlords, very light on the
middle peasants and most poor peasants had none at all. In 1940 outside aid
was cut off and the government had no resources to buy grain. We had to turn
to raising all of it in tax. However, the principle of 'calculating tax on
the basis of income' had not yet changed. Also the grain tax for 1940 was
raised to only 90,000 tan and the policies for collection were
not altered. For supplies in the following year (1941) we put forward the
policy of 'strengthening grain administration and ensuring grain sufficiency'.
However, we could not provide all supplies since we had not levied much grain
in 1940. There was also the related matter of achieving self-sufficiency
in running costs in 1941, in connection with which the various army units
and official organizations paid careful attention to grain in order to solve
problems in livelihood. Another factor was that since the organizational
structure of the departments doing grain work was not yet strong and the
quality of the cadres was not good enough, the various regulations were not
well established and we could not fully control grain income and expenditure
in all places. At the time the problems of making excessive returns and rash
leadership were very serious, was constantly changing, increasing and decreasing,
and was too much occasional expenditure outside the set amount. The grain
tax levied in 1940 provided supplies until March 1941, when some places already
had nothing to eat. Before long there was a panic over grain everywhere.
It was only by successively buying grain once and borrowing twice that we
lasted until November. In order to guarantee supplies for 1942 and to repay
loans taken in 1941, it was estimated that a levy of 200,000
tan was essential. At this time the problem of grain had already
become the most serious financial problem. After repeated study by the Party
and government and under the new principle for collection of 'calculating
tax first on the basis of our expenditure and second on the basis of income',
it was decided to levy 20.000 tan of grain and 26 million
jin of hay. To ensure collection of this amount of grain and
taking the interests of all social strata into account, the base for collection
was expanded. The burden on the middle peasants was increased and the poor
peasants began to bear some of it. We corrected the earlier of bias towards
the minority of wealthy.

The grain accounts at the various county granaries were not clearly kept
in the past, and the great muddle in the formalities for buying and borrowing
grain during 1941 had increased the difficulties of sorting them out. The
Grain Office was deeply afraid that the lack of clarity over the old grain
would influence the new. Therefore 'grasp the new grain, ensure supplies
was made the strategy for work in 1942. Events during the year showed that
although there were deficiencies in implementation, the policy itself was
entirely correct. Grain tax for 1942 was reduced to 160,000
tan and hay tax to 16 million jin. The policy
for collection also reduced the burden on the poor peasants slightly.
Furthermore, we are preparing to implement a unified progressive agricultural
tax in 1943 in place of the grain-tax method. In order to raise the peasants'
enthusiasm for production, we lent them some of the grain and hay during
1942 to help them solve problems during spring ploughing. In supply work
the thing is to concentrate on grain and hay.

As regards the work of collection, we only levied 10,000
tan in 1937 and 1938. The burden on the masses was very light
and everyone was willing to pay. In 1939 the amount was raised to 50,000
tan. The government proclaimed new regulations for collecting
the grain. Work groups were sent down to the countryside to make surveys
and to collect tax according to the regulations. However, in reality, 50,000
tan was still a very slight amount of grain tax for the masses
to bear. The cadres were used to the method of democratic apportionment of
taxes and the survey work was very perfunctory. The so-called collection
to regulations remained a theory. In 1940 it was just the same. Only in 1941
when the grain-tax burden suddenly increased to 200,00 tan
did the government again seriously revise the regulations. The Finance Department
sent large numbers of work groups to the counties to work with the county
and district governments in carrying out fairly thorough-going surveys so
that the masses' burdens were made rational. This grain collection emphasized
'thorough-going surveys' and 'carrying out the regulations'. Summing up
collection in 1941, there is clear proof that if good survey work is done,
it is easy to carry out the regulations. For example, Ganquan county was
very conscientious in making surveys and then implemented the regulations
and rates for collection. Quzi county carried out three surveys and was able
to ensure a fair and rational distribution of the burden. In Baima district
of Huachi county the requirement was not filled after two allocations. Eventually
the head of the grain collection work group, Comrade Wang, himself surveyed
one township to get experience. As a result the whole district over-fulfilled
its quota by several tens of tan. In places where survey work
was poorly done, such as in the special military area, the regulations could
not be carried out. In general county cadres still treated survey work too
lightly. Only a minority of them carried out thorough-going surveys for grain
collection in 1941. The majority still used the old method of democratic
apportionment of taxes. In 1942 the grain collection gained from the experience
of the previous year. The regulations were revised again to bring them more
in line with reality. More thorough surveys were undertaken on the basis
of the surveys carried out in 1941. The Finance Department issued instructions
that the cadres collecting the grain had to follow the regulations. In cases
where carrying out the regulations meant that the task could not be completed,
they could also use the method of democratic apportionment of taxes. At the
same time, during this collection the cadres were given ideological education
which overcame their previously crude work-style and backward conduct such
as following personal preferences and holding things back. According to recent
reports from Longdong there is once again proof of the importance of
thorough-going surveys for the implementation of regulations. One district
in Qingyang county carried out a thorough survey, and because much new land
was cultivated during the year and production increased, it was able to exceed
the original collection target by several hundred tan in line
with the regulations.

A further point to consider is that for several years the figures set for
the grain collection have been achieved and exceeded, but the work of putting
the grain into the granaries has been too muddled. Many cadres involved in
grain collection think that they only have to meet the target. They do not
consider quality or investigate delayed payments. As a result on one hand
the quality is not good enough with 15 to 20 per cent consisting of husks
in some cases, and on the other there are instances where the masses delay
in paying their grain. There is a difference between the amount collected
and the amount put into the granaries. In the 1941 collection, although the
quality was a bit better, there were still a lot of husks mixed with the
grain. The slogan 'Grain to the Granary and Hay to the Cellar' was put forward
to overcome the problem of late payment but there was still too much of it.
In addition, because the 1941 collection was much bigger than any previous
year, the difficulties of getting it into the granaries were much greater.
As a result over 3,900 tan of the grain collected did not go
into the granaries. This was nearly 2 per cent of the total. During the 1942
collection the problem of getting the grain into the granaries was specially
emphasized. According to the latest examination this work has been done a
little better this year. However, the question of whether the full total
had been put in the granaries or not awaits a final summary before it can
be answered.

Another point is that for several years the Finance Department has assigned
work groups to help the county and district governments in the grain-levy
work. Where county and district cadres are too weak, this method is of great
help. Its shortcoming is that it easily creates dependency in the lower-levels
of government, and every time there is a mobilization, the upper levels have
to send people. The cadres have to go back and forth, spending much time
on the road, which leads to waste of manpower and of time. Since collection
in 1942 had the good foundation of work done in 1941, the Finance Department
adopted the principle of 'fewer and better' in its assignment of work teams.
It sent fewer cadres to each county and increased the responsibility of the
county and district government. In 1941, 150 people were sent down. On this
basis they are preparing to move towards not sending down anyone at all,
handing all the grain collection work over to the county and district
governments.

As regards supply work, because general income and expenditure was not firmly
controlled in 1941 so that grain had to be bought once and borrowed twice,
and because mobilization were hurried and almost cruel, the masses were not
satisfied. This was a great shortcoming. In 1942 we were able to control
income and expenditure. we also had the 200,000 tan of grain
levied in 1941 as a guarantee to ensure supplies until December. However,
since the drive for better troops and simpler administration was not thorough,
the budget could not be strictly implemented. Occasional expenditures combined
with unpaid grain tax came to over 18,000 tan. In addition,
troop movements influenced the relationship between supply and demand in
various places, and grain balances in the first half of 1942 could not be
maintained as allocated. Therefore, after July places like Yan'an, Nanniwan
and Linzhen one after another became short of grain. Afterwards the Finance
Department issued supplementary funds of 2 million yuan to
buy grain and a summer collection was made. Only in this way was a grain
panic avoided during 1942, and there was no bad effect on the masses. Next,
for the grain in 194 we adopted the method of 'allocation as a whole and
divide' administration'. Although this saved the bother and waste of transport
to and fro, it brought about cases of uncontrolled selling of grain, which
also entailed a lot of waste. There was still a gap between the amount collected
and the amount needed for supplies, which also led to many shortcomings.
For example the grain and hay allocated to the various counties in 1941 was
biased towards the harvest situation and neglected the supply and demand
situation. The grain requirement in Sanbian for the year was over 10,000
tan but only 1,600 tan was collected. A supplement
of 9,000 tan had to be transported from Longdong, Ansai, Zichang,
Zhidan and so forth. Not only was the year's grain transport work excessive
for the masses of these counties, but the masses in Sanbian were also very
busy handling transshipment. They called out that 'this way is not as good
as collecting more from us'. It is now estimated that just the 4,000
tan of grain moved to Sanbian from Longdong cost 7 million
yuan to transport, which is more than the cost of buying grain
in Sanbian. Another example was the grain collected in Yanchuan. Originally
it should have supplied Yan'an. However in 1941 grain from Dongyang district
was collected at the Majiapan granary which is on the opposite side of the
county near the Yellow River. As a result it took an extra three days to
transport the grain to Yan'an. Quite a few similar situations arose in other
counties. Again, the plan for the 1941 hay collection was not thoroughly
researched. It was decided everywhere to collect the hay after the grain
and no attention was paid to supply and demand. As a result some places kept
hay for which there was no use and it was allowed to go rotten which dissatisfied
the masses. In other places which needed a lot of hay there was an exceptional
shortage and supplies were only enough for eight months. Another example
was the 1941 grain collection in Guanzhong. Millet was made the unit instead
of wheat. The peasants had to go out of the Border Region tp sell wheat and
buy millet in order to pay the tax. As a result too much millet was collected,
the troops were not used to eating it and there were many disputes. After
summer begins millet rots easily which added to the troubles. Again in 1941
the relative proportion between regular and miscellaneous grains was generalized,
and not reckoned according to the grain production circumstances or the
relationship between supply and demand in each place. As a result some places
(such as the special military area ) collected a lot of miscellaneous grain
which could not be issued. Some places (such as Yan'an) needed horse fodder
but could not get miscellaneous grains. The official organizations had to
lower the relative proportions and exchange hulled grain for miscellaneous
grain which in turn led to waste of grain. The above shortcomings illustrate
that grain work is very concrete and meticulous, practical work. If it is
done crudely and in a way divorced from reality then the results will disturb
the people and disrupt the government. In 1942 after the grain collection
work was handed over to the Grain Office, the management of grain collection
and supplying was united. At the same time as a means of balancing resources,
it was decided to accept a money substitute for the hay tax according to
the different supply-and-demand situation in each place. As for the relative
proportions of grains, the earlier way of generalized application was changed
into a system of deciding according to the concrete situation in each place,
thus overcoming the previous shortcoming.

Next, from the winter of 1941 up to the present quite large successes have
been achieved in setting up and consolidating systems for grain supply. As
regards the budget system, for example, in 1942 most official organizations
were able to draw up their budgets at the correct time. They have got rid
of the bad practices of claiming excess grain and eating double rations,
and corrected the situation where counties approved budgets haphazardly and
spent grain without control. In particular they have grasped the policy of
'the final account must not exceed the budget'. During 1942 they have
conscientiously cut down on all irrational expenditure, economizing on over
19,000 tan of grain. As regards the system for paying out grain,
most army units and official organizations have honoured the regulations
that grain cannot be paid out without a grain payment document. The responsible
comrades in the counties have also paid attention to this regulation. They
have not indiscriminately permitted loans from tax grain. At the same time
during 1942 all the counties have used the official tou measure
which considerably reduced the number of disputes. As for the granary
regulations, because of the cadres' limitations, these could only be strengthened
first in the central granaries and then gradually generalized to all granaries.
For keeping accounts, the Finance Department drew up two standard account-books
(one new-style and detailed, the other very simple) which were adopted by
the cadres according to their ability. In 1942 most granaries, good and bad,
had account-books. Gradually we can reach the goal of being able to obtain
at any time statistics for grain income, expenditure and the amounts and
kinds of grain in store. As for the grain coupon regulations, there was much
corruption in 1941 because we issued large numbers of coupons. In 1942 we
abandoned the old grain coupons and issued three kinds of meal-ticket which
were only supplied for circulation among personnel in the official organizations
to cover meals. This was a step forward.

However, there were still many defects in the grain-supply work. For example,
a minority of large units still could not draw up their budget at the stipulated
time. A comparison of the actual personnel totals and the budgets of various
large units showed that there was still quite a proportion of figures without
foundation. Some instances of taking double rations still occurred. The ratio
of livestock was not clearly laid down, which in some cases led to quite
a lot of waste. Instances of individual troop units insisting on grain loans
from granaries because they had wasted grain and overspent could still not
completely be avoided. As for the storage system, most granaries still only
managed to do the work of receiving and paying out grain and of
administration. They were not good enough at supervising collection,
safe-keeping, submitting accounts and other duties. The meal-tickets could
not be circulated among the people, which caused problems for personnel sent
to do outside tasks. This too was a shortcoming. Finally, there was a great
defect in building up and consolidating all regulations which was that the
Grain Office only emphasized its own regulations and difficulties. It could
not comprehensively and concretely concern itself with solutions to the problems
and difficulties facing each official organizations.

In 1942 the official organizations in charge of grain were very successful
in the work of clearing up the granaries' old grain accounts. For several
years the county grain accounts had not been examined and reckoned up, so
that the Grain Office's accounts were no longer any use. For example, according
to the Office's accounts, in the winter of 1941, Ansai should have had over
2,900 tan in store. In fact it had less than 100
tan. Again the account for the grain taken from the granary
by the sanitarium had not been worked out for five years. It was discovered
in 1942 that it had collected over 100 tan too much. There
were many cases like these. Compounded by the muddle over purchases and loans
in 1941, many counties had no accounts to be examined. As a result the Grain
Office sent cadres down to each place to work out the accounts and adopted
all kinds of accounting methods. The old granary accounts were only cleared
up after six months' hard work. Now the Grain Office is able to work out
how much grain is actually held by the granaries and can keep a hold on grain
income and expenditure. The counties' administration of grain was also previously
very poor with losses due to a combination of rats, insects, rotting
and so forth. In addition there was serious corruption among the cadres.
During grain collection in 1941, there were more than ten cases. It
had even gone so far that individual special agents had infiltrated granary
work. For example, Zhang Bingquan, the director of the granary of Taile district
in Fuxian, was a special agent. In February 1942 he embezzled over 10
tan of public grain and fled from the Border Region.
This shows that previously the Grain Office's supervision of granary
cadres was too lax and its inspection work too infrequent. Since the granary
accounts were cleared up in 1942 and the leadership of the granaries by the
five sections of government at county level was strengthened, corruption
and waste have been reduced and many active and hardworking cadres
have been discovered.

In carrying out collection policy in the two years 1939 and 1940 the regulations
were fixed so that the tax threshold began at 1.2 tan (that
is, peasant families whose harvest per person was less than 1.2 tan
were not taxed). Tax was progressively applied to a top level of
36 per cent (that is, the tax rate increased until it leveled 36 per cent
of the harvest and thereafter the percentage did not increase). The failing
here was that the tax burden was biased towards the minority of the well-off.
At the same time the method of collection was that of democratic apportionment
of taxes and not that laid down by the regulations. As a result, there were
cases of going for big households' and 'ignoring everything but the target'.
Also the collection policy was influenced by excessive 'Leftism. 1941 the
regulations were revised. The tax threshold was fixed at 0,5 tan
(for example, a family of five whose annual harvest of regular grain
was less than 2.5 tan was not taxed). Taxation was progressively
applied up to 30 per cent. The implementation of these regulations resulted
in a broadening of the base for collection. Apart from Huanxian which suffered
natural disasters, the tax burden in all other counties was carried by over
80 per cent of the people and in Yan'an county it reached 95 per cent. In
terms of carrying for the interests of all classes and strata, with the exception
of Yan'an, Yanchang and Ansai, the burden in other counties did not exceed
30 per cent of the harvest. However, there were still shortcomings. For example,
the counties were not entirely rational in their allocations to meet the
total collection. The special military area lowered the tax threshold to
0.3 tan and reduced the number of steps in the tax progression.
As a result the poor and middle peasants suffered and the richer middle peasants
and above were let off too lightly Also, during grain collection in 1941
we only paid attention to collecting grain and not to reducing rents and
interest rates at the same time. Some new immigrants who should not have
paid tax had to do so. Family dependants of troops in the War of Resistance
should have received special assistance but this was stopped in some cases.
Some cotton-growers should not have been taxed for grain but were. All these
things contravened the government's pollicies. Other policies such as caring
for the interests of all strata, raising the enthusiasm or production of
the peasants and so forth merely remained general slogans. Actual implementation
was very deficient. With the experience of 1941, the grain collection in
1942 made some advances. However, we still did not pay enough attention to
the cotton-growing policy. For example, the allocation of a quota for grain
tax to the cotton-growing areas in the three eastern counties was the same
as that allocated to other counties. When it came to collection, problems
arose. If grain tax was not collected on the cotton fields the requirement
could not be fulfilled. Yet if it was collected, it would conflict with
government orders. Ultimately they had to make accommodations and reduce
the collection by half. This still damaged the authority of the government.

In any work, going beyond policies depends on whether the cadres are good
or bad. Grain work is no exception. The most hardworking people doing grain
work are the granary cadres. The easiest corrupted are also the granary cadres.
Therefore we shall here specially quote examples of typically good and typically
bad granary cadres, so that everyone can learn from the good and be warned
by the bad.

GOOD EXAMPLES

(A) Comrade He Chuango, director of Panlong granary is an old fellow of
fifty-two. He does not say much but is very careful and thoughtful, enthusiastic
and hardworking. In 1939 he was assigned to work in the Zhenwudong granary
of the Grain Office. In 1940 he was transferred to be director of the Panlong
granary, concurrently responsible for the grain-market balancing station
[diaojizhan] and the transport station. He is responsible for
the work of three men. In the past he has been secretary of a district Party
committee and has been trained at the Border Region Party School. Initially
he was one of seven people including Jia Zhicai and Ren Shengbiao who were
assigned from the Border Region Party School to do grain work but of these
he alone remains at his post today. His cultural level is not among the lowest
of the granary directors. He can write simple letters and keep clear accounts.
He is very conscientious in studying the newly adopted account books and
learns quickly. In 1941 when the 'monthly report tables' were issued to the
granaries some directors could not understand after three days of explanation.
After hearing once he was able to raise questions and opinions. After a few
questions like 'What should be filled in on this section?, Would it be all
right to fill in that section like this?', he could complete and send in
his 'monthly report tables' on time. Many fine qualities are expressed in
his work. The first is meticulous attention to detail. When receiving grain
he writes a receipt for the amount and makes up his accounts every evening.
When paying-out he double-checks on the abacus. The second is a deep sense
of responsibility. He takes great care of the granary. One storage bin was
a little damp and he paid special attention. He often had the grain spread
out to dry in the sun, and when paying-out grain he always paid from this
bin first. Eventually he dug a ditch behind the bin and dug the surface of
the earth around the bin lower than the bin, making it a little drier. When
the granary needs minor repairs he does not hire workers but sets-to himself
to carry bricks and plaster ( under his influence the personnel in charge
of moving the grain also work hard and help). As administrator of the transport
depot, every time a transport team arrives he helps to cut grass, draw water
and prepare food. His third quality is his friendly attitude to others. Some
of the personnel in leading official organizations get in a bad temper when
the grain is paid-out, but he patiently finishes the job and does not get
into arguments. Sometimes some of the masses send bad grain when paying-in.
He just encourages them to take it back. When buying grain to balance the
market, he can discuss things and get close to the masses. But he also has
his own opinions. Once when it was raining and the grain in the market could
not be sold, he took the opportunity to purchase it. The price was fairly
low and the masses were still pleased. For these reasons he enjoys some prestige
among the masses of Panlong. When receiving tax grain in 1941 a peasant from
Yongping district county offered him bribes. He got angry and sent the man
and the goods to the district government. His fourth quality is a plain and
simple way of life. He raises very few questions about his own life and he
expresses concern about receiving welfare expenses. In 1942 he was responsible
for collecting 4.000 tan of tax grain and everyone was concerned
that he might not manage since he is old and has few helpers. But every time
he wrote a letter to the Grain Office, he said that he could manage.

(B) Comrade Bai Heming is director of the Tianzhuang granary in Suide. He
is a graduate of upper primary school. He had worked in the old
baojia office. His qualities include first a deep sense of
responsibility. When receiving grain he compares receipts and invoices every
evening to make sure that there has been no mistake. He also makes out clear
accounts for households owing grain, and supervises the districts and townships,
encouraging them to send in their grain. Before receiving grain, he himself
lays stones and boards in the storage bins, spreads dry straw and puts straw
mats over the straw so as to guard against dampness. After the grain is in
store, he himself seals up the bins which will not be opened soon, using
bricks and plaster and covering-up holes which let in the wind, with broken
mats. Secondly, he is friendly towards others. When receiving grain he inspects
conscientiously. However, to those who send in bad grain he simply says:
'Look everybody, can you feel easy about sending grain like this for the
troops?' He has never raised his voice in abuse. If someone from the army
came to collect grain not in accordance with official procedures, he always
courteously and patiently explained things. On the one hand he would lend
some grain to prevent shortage, and on the other asked the them to make good
the procedures. Before long if anyone from the troops stationed in Suide
went to collect grain from old Bai's granary, they always went through the
procedures to avoid difficulties for old Bai and embarrassment for themselves.
Thirdly, he is very hardworking. He gathers firewood and draws water himself.
He is careful over operating and food costs. He reports excess expenditure
to the fifth government section at county level. He does not indiscriminately
take grain and sell it for the cash to make up deficiencies. Now Comrade
Bai Heming has been promoted to be head of the fifth section of Suide county
government.

BAD EXAMPLES

(A) Hy Dianchang was director of the granary of Fourth district Xinning.
When receiving grain in the winter of 1941, he sold 3 tan
privately, took 1.3 tan home, and lent 3.92 tan
to his relatives and friends. He himself and his relatives and friends,
Hy Diangong, Hu Qingrong and Liu Zixiao should have paid 7 tan
of grain tax. They did not hand over a single grain but he still
issued tax-grain receipts. When receiving grain he did not allow the masses
to sweep up the grain on the floor, but swept it up himself and shared it
with the personnel helping him to receive the grain. After he had finished
issuing tax-grain for deposit in citizens' homes, he was 0.2 tan
short but he falsely reported 1 tan to the fifth section
of the county government. After the fifth section found him out, he was sent
to court, sentenced to prison and ordered to return the embezzled grain.

(B) In September 1939 after grain was sold from the Shuifan district granary
in the Huachi county, 14.7 tan of tax grain was missing. The
granary director, Wang Wenbin reported to the upper levels that rats had
eaten 12.7 tan and another 2 tan had been
contaminated. In 1941 when the grain collection work group went to investigate,
they discovered that Wang Wenbin had gone to the county town for a meeting
during the time when the grain was sold. His place had been taken by the
district secretary Mao Yupeng. During the grain sales Mao Yupeng had lived
exceptionally richly. He had bought a flock of sheep and two skin coats.
He had also bought cloth. There was suspicion of embezzlement. However, at
the time the county government did not investigate. Afterwards Mao Yupeng
was transferred to work elsewhere. This affair is still going on.

Above we have summed up our experience in grain work during the past five
years. Below are the policies for work in 1943.

(1) Implement the unified progressive agricultural tax. In the past we have
used the method of levying national salvation grain tax. It is not an entirely
satisfactory method of taxation. If it is well done it can only achieve the
aim of being fair burden on the people. It cannot give any effective
encouragement to the peasants' feelings towards production. Therefore we
must actively prepare to implement the unified progressive agricultural tax.
How should our preparatory work be done? (i) Under the leadership of the
Finance Department set up a specialist research team consisting of five to
seven cadres selected for their experience in political work and their good
understanding of land and financial problems. This team should gather, study
and arrange materials concerning progressive taxation, and plan the work
for introducing it. In addition, directed by the Border Region Government,
responsible comrades from the relevant official organizations led by the
head of the Finance Department should organize a planning committee to take
charge of policy, to solve problems and to regularly lead the work of the
research team. (ii) Carry out survey work. A detailed summary of grain collection
work in 1942 should be supplied to the progressive taxation research team
as concrete source material. The research team should first study some counties
with different situations, whose collection in 1941 and 1942 was comparatively
good. They should draw up an initial survey plan, and first carry out trial
surveys. Afterwards they should revise the plan, draw up a format and carry
out a general survey. In the light of the materials from the survey they
should determine the regulations and methods. Counties with good successes
who complete the work early can carry out a trial run during 1943. (iii)
Carry out land registration at the same time as the surveys. (iv) Strengthen
the government organization at township level, build up sound clerical records
and survey thoroughly.

(2) Grasp grain and hay, ensure supplies. Supplying grain and hay is complex
and detailed work. Grain and hay resources are widespread and not easily
grasped. If we are unable to pay full attention at all times and cannot suitably
adjust the relationship between supply and demand, it will be hard to make
a good job of it. If we want to be able to grasp grain and hay and ensure
supplies, we must do the following: (i) We must first ensure that all the
160,000 tan enters the granaries, and improve the quality so
that 100 per cent is grain. Do not allow adulteration with husks. At the
same time, call on all counties to eliminate evasion of payment. We must
build up thorough regulations for the administration of grain and hay. Pay
attention to the running and inspection of granaries. Set up central granaries.
Gradually improve equipment. Prevent damage through contamination and rotting,
and corruption and theft. Strictly carry out the budget system. Completely
eradicate excessive claims and taking double rations. Set up grain accounts
in accordance with the cultural level of the cadres in each place. Do not
be too elaborate but require that receipts, issues and stocks of grain are
clearly recorded. Next, the regulations for paying-out grain are even more
important and must be carried out. The reason for building up regulations
soundly is to ensure supplies and to prevent corruption and waste. All instances
of not adhering to discipline must be strictly corrected. However, a mechanical
viewpoint which one-sidedly emphasizes regulations without concern for the
concrete facts must also be guarded against. (ii) To ensure supplies, we
must first handle the relationship between supply and demand of grain and
hay. Prepare supplements for areas deficient in grain through transport,
adjustment of distribution and so forth. In 1943 we should organize any unused
animals owned by the official organizations to transport grain and hay, improve
the work efficiency of every transport team (on average our animals each
carry 1 tou less than those of the common folk and we need
three days to go as far as they do in two) and lay down precise transport
tasks so as to economize on manpower and animal power which can then be used
for production. We must depend on the grain transported by the people, making
plans early and using the slack agricultural periods and unused porters and
animals. Except in special circumstances, mobilizing transport in the busy
agricultural seasons is not allowed. Long distance transport must also be
avoided as much as possible. In areas where the distribution of grain can
be adjusted, coordinated plans should be made by the Grain Office. Grain
should be sold or bought at the right times so as to supplement supplies,
save on transport and avoid waste. In areas where official organizations
and schools are excessively concentrated such as Yan'an, we should consider
the situation, and disperse men and horses to ease the distribution of grain
and straw.

(3) Carry out the drive for better troops and simpler administration, store
grain to prepare for famine. For successive years the Border Region has overdrawn
its tax grain and has not got the slightest reserve. If natural disaster
occurred, grain supplies for the army and people would become an extremely
serious problem. Everyone should be warned by this to take the following
steps: (i) Resolutely carry out the new reorganization plan of the Party
and government and the drive for better troops and simpler administration.
Through simplification and strict economy ensure a balance between grain
income and income and expenditure in 1943. (ii) Collect 180,000
tan of' tax grain in 1943 so that we have a chance to retain
some as reserve against need. (iii) During 1943 the troops, official
organizations and schools should put developing agriculture in first place.
Growing grain should form a considerable proportion of farming work so that
there will be an even greater surplus in 1944 and we will be prepared against
disaster. The troops, official organizations and schools certainly may not
relax their own grain production because we are preparing to levy 180,000
tan during 1943.

(4) Strive to economize, strictly prevent waste of grain. There is a serious
waste of grain among the official organizations and troops. Thus, mounting
a campaign to economize should be one of our central tasks for 1943. Recently
in Yan'an some of official organizations and schools have inspected the amount
of waste and carried out economy campaigns with great success. For example,
the administrators of a training squad in the supply department of the garrison
forces were diligent and responsible. When issuing grain and flour, they
did the weighing themselves. Thus their food supply was just right and they
were often able to eat buns and noodles. The Central Party School has large
kitchens. Recently administration of food has been strict. Grain-cooking
has been supervised. Left-over grain has been kept and eaten as the following
meal. After this was done, only 1 jin of millet was consumed
per head per day. Before a month was up more than 5 tan of
'millet was saved. Another example was the collective meals at the nursery.
In the past when the people there took meals in separate groups, the nursery
consumed 150 jin of flour a meal. After collective meals were
introduced, they only consumed 100 jin saving one-third. You
see, comrades, what a surprising amount this is. Similarly the central
departments and committees have implemented collective mess-halls and have
also got good results. The Central Party School planned in the first half
of the year to raise 2,000 chickens which required 300 bowls of millet a
day. The waste was quite large. Afterwards they killed most of the chickens
and only sixty were left. This saved quite a lot of grain. In addition, it
is necessary to foster the habit of using meal-tickets. It can reduce the
issue of large amounts of grain. In sum, in order to ensure that there are
absolutely no shortages of grain, on the one hand we must levy and produce
it and on the other we must seek to economize. This is the work for leading
comrades and it is a mass-movement. Everyone must pay attention and complete
the task given by the Party.

(Two chapters on taxation and economizing originally planned for this book
could not be written in time because the Senior Cadres' Conference closed.
They had to be left out.)
the Author

NOTES

1. These figures are the totals paid in agricultural tax
(public grain) by the peasants of the Shensi-Kansu-Ningsia Border Region
from 1940 to 1942.

2. For 'better troops and simpler administration' see 'A
most Important Policy'. Selected Works of Mao Tse-tung
Volume 3 pp, 99-102.

3. The 'Three mountains' refer to three mythical islands
where magic spirits are presumed to live.