Directives Regarding Supply and Marketing Cooperatives
(April 2, 1956)

Source: Wansui (n.d. 3), pp. 91–94.

According to the source, on April 2, 1956, Zhang XX (most likely Zhang Qilong),¹ Deng XX
(most likely Deng Shenxi),² and Deng X (most likely Deng Fei)³ briefed Mao on the work of
the supply and marketing cooperatives.⁴ Liu XX (most likely Liu Shaoqi), Peng X (most likely
Peng Zhen), Li Xiannian, and Ma XX were reportedly present.⁵ The document represents
excerpts of the conversation, almost entirely made up of the words that Mao spoke, with a
number of interjections by others, and with the conversation’s subject context given in
parentheses.

(When discussing the subject of the money put up by members of the cooperatives
as shares)
Mao: Isn’t there a need to return the money put up by members of the
cooperatives? If these cooperatives are to be transformed into state-run commercial
[enterprises], then I think [the money] has to be returned!


(When discussing the setting up of an office for the [technical] specialists at the
All-China Federation headquarters)6
Mao: Do you still have specialists [working with the federation]?
Zhang XX: We have three specialists from the Soviet Union.
Mao: Is there no limit to the time [when we must have] specialists [with us]? I
think perhaps we can dispense with hiring them, can't we?

(When discussing the fact that there are a total of 1.43 million workers engaged in
the supply and marketing cooperatives)
Mao: You have so many people?
Li Xiannian: If we add to that [the people who have been pulled into the category
by] the reforming of the private commercial [enterprises], there would be over 3
million people.
Mao: You have so many people; no other department can match you!

(When discussing the fact that the number of administrative personnel [in the
supply and marketing cooperatives' system] represents 25.5 per cent of the total
number of workers)
Mao: [It seems to me that] the ratio, of having administrative personnel make
up 25 per cent, is a bit too much. Wouldn't that affect cost?
Zhang XX: Lately we are preparing to transfer some of the administrative
personnel to the operational departments.
Li Xiannian: The cooperatives do not have a federal company, but there are a
bit too many administrators.

(When discussing the phenomenon that the retail amount of agricultural means of
production has been increasing gradually through the years)
Mao: There has been an increase in the means of production. This is to take
care of you.7 We will still add more to the means of production; that would only
be reasonable, because we want to promote production, and we must run the
cooperatives diligently and frugally.8 When we have put down a good foundation in production, in two years, we would be able to sell more means of
production. At the moment we are overwhelmed by the atmosphere of promoting production. In the days ahead, though, there will be a future for the means
of consumption. There are, to be sure, difficulties, but for now, let's get more
means of production!

(When discussing the financial situation)
Mao: Just the cooperatives by themselves have earned two billion rmb.9 That's
why some other people have designs on you! Is the rate of profit of 4.84 per cent
high?
Li Xiannian: Not really too high. The rate of profit for commerce is 8.12
percent.10 That's because the Ministry of Commerce is primarily engaged in
promoting wholesale, and [the rate of profit] ought to be higher. The cooperatives,
[on the other hand,] are primarily engaged in retail.

JANUARY—MARCH 1956 / 35

(When discussing the number of days it takes for the circulating funds to come
round cycle)
Mao: With you [the funds] take seventy-some days to make the cycle once, so,
in a year, they can be circulated five times. This is faster than the situation with the
Ministry of Commerce. In the Ministry of Commerce, a bit more than two cycles
are made [each year]. So you are faster, and they are slower [than you are].
Li Xiannian: The cooperatives are primarily engaged in retail, so they have to
be a bit faster; the Ministry of Commerce is primarily engaged in wholesale, and
that makes it a bit slower.

(When discussing the fact that the ratio [of enterprises that] operate on [the
merchandising of] piecemeal small commodities is increasing [among the supply
and marketing cooperatives])
Mao: Why weren’t [these enterprises] operated before? Is it that [now] there is
profit to be made [and therefore their number has increased]?
Li Xiannian: In the past—and this was a major problem with the Ministry of
Commerce—there was not enough attention paid to small commodities.
Zhang XX: In the past, these commodities’ [trade] was run by the private
merchants; if we were to [take over] its operations [then], we would have crowded
them out and forced their collapse, but without having arranged [any settlement]
for them.
Peng X: Once the piece-work wage appeared on the scene, things changed. The
amount of small commodities increased. There is already a phenomenon of
[people] forcibly dragging customers to buy things.
Mao: That’s what’s so strange about people in this world; as soon as we
implemented the piece-work wage, things began to increase [in number].

(When discussing the situation in which it is hard to market means of production)
Li Xiannian: The agricultural producers’ cooperatives11 really know how to stick
it to us.12 For instance, the peasants of X xian in Shandong [province]13 saw that
we had transported a large batch of granular fertilizer [to Shandong], but they
insisted on not buying [from us].
Mao: There is no seasonal discrepancy price in prepurchasing; that is something
that needs to be changed. The agricultural cooperatives know how to count, and
they’d wait till they are in need before they would buy.

(When discussing expanding the operations of direct transportation)
Mao: Direct-access transportation [of the goods] means to purchase incoming
merchandise according to the administrative regional distinctions. In the past, the
merchants did not follow any administrative regional distinction. Those who are
in the vicinity of Shashi could have taken in merchandise through Hankou; you
didn’t have to take it in at Changsha.14 Similarly, for the people in the area of Jiangxi
[province] adjacent to Zhejiang [province], they could take in merchandise in
Zhejiang.


(When discussing organizing the localities to produce mixed fertilizers)
Mao: In the past we focused on promoting the big items. The state itself could
only produce 500,000 tons of chemical fertilizers. [Now you talk of] 22 million
tons of mixed fertilizers; what would that be in terms of how many factories'
productive capacity?

(When discussing strengthening the supply items for educational and cultural
use)
Mao: There has been a change in the trends of consumption! In the Forty
Articles15 there was an article on running the cooperatives diligently and frugally;16
that was not meant for commerce. Fewer people are buying fewer things.
Li Xiannian: Right now people do not dare to go to the credit cooperatives17 to
save their money. They dare not buy liquor, cigarettes, sundry merchandise, or
cloth.
Mao: Let us wait three years! In China, the rich peasants18 make up 4 per cent
[of the population only]. The conservative ones are not the rich peasants but the
well-to-do middle peasants.19 But there are so many well-to-do middle peasants,
and in the end, they will drink liquor. A friend of mine came to Beijing, and when
he left I gave him two bottles of wine as a gift. Spending money can be legal. Let
us issue a directive [to the effect that people are] free to spend their money as long
as they do not affect production [adversely].

(When discussing the need to strengthen research and study and the plan to start
up a research office)
Mao: That would be very good. With that we'll have a method of doing
things.

(When discussing the idea that the method of doing things by having merchandise
taken in according to administrative regional distinctions must be changed resolutely)
Mao: You can talk about it and it would sound very resolute, and it would look
nice on paper. After all, there are only four characters to be written and it would
take only a few seconds to write them, but then other people would still have no
idea about what to do! To take in merchandise according to administrative regional
distinction is a matter of regression for Communists!
Peng X: People at the lower levels all have their tasks; they all have to realize
the profit-making plans. This is a matter of profit.
Li Xiannian: For several years now there have been proposals for change. This
is now an old problem.
Mao: For several years there have been proposals about change, but when will
there be change? For how many more years do we have to wait? You have come
here to Beijing for several years, but nothing has changed.20 We absolutely must
[have merchandise taken in] according to economic zoning. If we don't change
[from the method of taking in merchandise according to administrative zoning]
people will be killed. We must be oblivious to administrative [divisions in this

JANUARY—MARCH 1956 / 37

matter]. First we must have Hebei province change its profit planning; the same
then goes for Shanxi [province]. In some places [in Shanxi] there is no need to
take in merchandise through Taiyuan; and as far as the places outside of
Shanhaiguan, merchandise can be taken in at Qinhuangdao, not necessarily
through Liaoning.21
Liu XX: The problem is complicated. We must hold a special meeting [to discuss
it].
Mao: Let's hold a national conference; [but] let's first issue a directive, and let
it clearly express the goal that is to be achieved. This is to be put in Li Xiannian's
charge.

(When discussing bacterial fertilizers)
Mao: You can set up large numbers of factories and produce [bacterial fertilizers] in large quantities. It should be equivalent to such-and-such a number of
factories for chemical fertilizers. If we don't promote it, the dirt from the river beds
and bottoms of ponds will be all dug up and exhausted. Besides, we can't pull down
walls every year, can we? That would be a very major problem for agricultural
production.

(When discussing switching to running enterprises for small batches and scattered
products and scrap material)
Mao: Now that the big thing is taken care of, we must deal with the small. A
person can only make several revolutions. When we don't ask you to make this
revolution, [we'll ask you to] make the other revolution.22

(When discussing the root and the Siberian prickly fruit seed)
Mao: If there is more of a harvest, then let the peasants grow more. The Siberian
prickly fruit seed yields oil at a rate close to that of the soy bean. Right now we
don't have enough soy bean, and I hear that it would not be easy to expand the
cultivation of soy bean. The land that is used to grow soy bean can be used also to
cultivate grain! The purchasing of the prickly fruit seed should be done just as we
do the purchasing-harvesting of soy bean. How much is it? How many cents per
catty?
Zhang XX: Almost 5 cents.
Mao: You are not purchasing things at equal values. Two catties of prickly fruit
seed is equal [in price] to one catty of soy bean. This is a problem of usage.23 You
must set up a scientific research organization to study these things. For such a big
unit as yours there ought to be a scientific research institution, or a college.
Liu XX: [These things] can be planted in [broad] plots on the river banks and
in undressed land, then they can also be harvested in big plots.

(When discussing the contracts of mergers)
Mao: In this way we could reduce the factor of doing things blindly. Anything
can be merged. We just have to set [the rules]. This is a matter of the connection
between [those units that are under] the system of ownership by the whole people


The correct attitude should be one of allowing people to make revolution. When
people commit errors, we must adopt the policy of learning from past mistakes in
order to avoid future ones and curing the illness in order to save the patient so as
to help them to correct their mistakes.41 Ah Q zheng zhuan (The True Story of Ah
Q)42 is a fine piece of writing. I would urge comrades who have read this story
before to reread it and those who haven’t read it to read it carefully. In this story
Lu Xun writes mainly about a peasant who was backward and [politically]
unawakened and whose biggest fear was the criticism of others. He would come
to blows with anyone who criticized him. He had some ringworm scars on his scalp
which he himself didn’t like to talk about, and he was also afraid of other people
talking about them. But the more he was afraid of being talked about, the more
people would talk about him, consequently putting him in a very passive position.
In this story Lu Xun also devoted a whole chapter, Barred from the Revolution, to
describing how the Fake Foreign Devil did not permit Ah Q [to make] revolution.43
In fact, by revolution Ah Q meant grabbing a few things and nothing more. But
even this kind of revolution was denied him.
In the past, we committed mistakes within the Party in this regard. That was
when the dogmatists headed by Wang Ming44 held power. They always arbitrarily
charged people who were not to their taste with having committed such and such
a mistake and barred them from the revolution. Many people were hurt, and the
Party sustained great damage. We must learn this lesson well.
It is no good if we bar people in society from making revolution. Nor is it good
to prohibit those who have joined the Party and who have made errors from
correcting their errors.
We should allow people to make revolution. Some people may say we should observe
and see whether or not those who have committed errors correct themselves. This
statement is right, but only half right. There is another half to it, that is, we must
do some work on them and help them correct their errors, give them the opportunity
to mend their ways.
For those people who have erred, we must first observe and second give help.
We must give work to people who have committed errors and give them help. Don’t
gloat over others’ misfortunes. To deny them work and help is a sectarian way of
doing things.
For the revolution, it is always better to have more people. Except for an
extremely small number who cling to their mistakes, repeat them frequently, and
refuse to mend their ways, the majority of those who have erred can correct their
mistakes. Just as people can become immune to typhoid once they have had it,
those who have erred may make fewer errors, provided they are good at drawing
lessons from their mistakes and are cautious. We hope that all those who have
committed errors will become immune. On the contrary, it is those who have not
erred who are in danger and need to be more vigilant; because they do not have
such immunity, they are prone to become cocky.
We must take note [of the fact] that if people are excessive in rectifying other
people who have committed errors they may often end up finding themselves being
corrected. They are picking up a rock only to drop it on their own feet,45 which

JANUARY—MARCH 1956 / 39

[here] a relationship between leader [and led]. Even if we do want to change things,
we must not publish it in the newspapers, and we must not commit it to writing.
The Standing Committee29 must not make a resolution [on this], and the State
Council also must not issue an order. Use an internal notification and memorandum
[instead]. To the outside, the supply and marketing cooperatives [system] is
independent, and throughout the world it is independent. In reality there still is a
leadership-led relationship.

(Finally, when discussing the issue that [some of the] perspectives and proposals
in the briefing may be wrong)
Mao: Don't say that. I don't see much that is wrong with it. It is all right to do
things in that way.

Notes

1. Zhang Qilong (b. 1900) is a Hunanese who joined the CPC in 1924 and was
involved in guerrilla activities from 1927 to the time of the War of Resistance Against
Japan. After Liberation he mainly did political work in the Northeast (Liaoning province). He became involved with cooperative work in 1950, and became a specialist in
this area. He was elected as a member of the supervisory board of the All-China
Federation of Cooperatives in July 1950 and a member of the permanent board after the
reorganization of the federation in 1952. In 1954, the federation was again reorganized
and renamed the All-China Federation of Supply and Marketing Cooperatives (Quanguo
gongxiao hezuo zongshe), and Zhang became the senior deputy director under Cheng
Zihua. In this area of work, Zhang headed or took part in many delegations to the USSR
and other socialist countries. For more biographical information on Zhang, see
Zhonggong renming lu, p. 549; D. Klein and A. Clark, eds. (1971), I, pp. 13–15, and
W. Bartke (1981), pp. 511–512.
2. Deng Shenxi had been a deputy director of the Northern Chinese People’s Federation
of Supply and Marketing Cooperatives, and the manager of the Cooperative Bank of
Northeastern China since 1950. He was elected a member of the supervisory board of the
All-China Federation of Supply and Marketing Cooperatives in July 1954 and became one
of the federation’s deputy directors. For more information on Deng, see Zhonggong renming
lu, p. 947.
3. We have not been able to discover more information about Deng Fei except that he
was named as a deputy director of the All-China Federation of Supply and Marketing
Cooperatives. See Gao Chongyan (1969), p. 342, citing RMSC (1955).
4. On the supply and marketing cooperatives, see text Oct. 15, 1953, vol. I, note 15, and
text Oct. 11, 1955(1), vol. I, note 25. Here the reference is implicitly to the All-China
Federation of Supply and Marketing Cooperatives.
5. We cannot be certain as to who Ma XX might be. Tentatively we would speculate
that it may refer to Ma Yinchu. On Ma Yinchu, see text Mar. 1, 1957, note 18. Also refer
to Ma Yinchu jingji luwen xuanji (1981). On Liu and Li, see text May 19, 1953, vol. I, source
note, and text Apr. 1956, note 3, respectively.
6. This must refer to the All-China Federation of Supply and Marketing Cooperatives.
See notes 1 and 4.
7. The original text here has, in parentheses, an annotative remark that this is in reference
to Li Xiannian. The term that Mao uses here, which we have translated as “take care of,”
actually has a sinister sense of “fixing you”; it is the term zheng in the sense explained in
text May 15, 1957, note 27.
8. This had become a slogan. See text Oct. 11, 1955(1), vol. I, note 57.


9. An annotative remark in parentheses in the original text here explains that this refers
to zi you zijin (capital funds that the cooperatives hold by themselves).
10. The All-China Federation of Supply and Marketing Cooperatives was affiliated with
the Ministry of Commerce under the State Council, so the comparison being made here is
between the whole and a part thereof.
11. The Chinese here reads nongye shengchan she, which we take to be an abbreviated
form of the term nongye shengchan hezuo she (agricultural producers’ cooperatives). See
text Oct. 15, 1953, vol. I, note 2.
12. Here again the term is zheng, used in the pejorative sense. See note 7.
13. We cannot identify which locality is being referred to here.
14. Mao’s analogy here is a bit baffling. The municipality of Shashi is in the southern
part of Hubei province, and Hankou is also in the province of Hubei, about 170 km northeast
of Shashi. The two municipalities would therefore fall within the same administrative region.
Hankou is a major river port city and would serve a considerable region. Changsha is in the
province of Hunan and would not fall within the same administrative region as Shashi.
Moreover, it is considerably farther from Shashi than is Hankou, so there would appear to
be no natural reason why people in Shashi would use Changsha instead of Hankou. The
statement here thus does not appear to be consistent with the following one concerning
Jiangxi and Zhejiang.
15. See text Dec. 6, 1955, note 3, text Oct. 11, 1955(1), note 56, text Oct. 11, 1955(2),
note 18, and text Dec. 21, 1955, all in volume I.
16. See note 8.
17. See text Oct. 11, 1955(1), vol. I, note 26.
18. See text Mar. 12, 1950, source note, notes 1 and 2, and text Oct. 11, 1955(1), note
2, all in volume I.
19. See text Mar. 20, 1957, note 20.
20. An annotative remark in parentheses in the text here explains that this refers to Li
Xiannian.
21. Taiyuan is the capital city of Shanxi province. Shanhaiguan is a critical mountain
pass on the coast that straddles the boundaries between Liaoning province and Hebei
province. Thus the term “outside of Shanhaiguan” would refer to places in Liaoning
province, north of the pass. Qinhuangdao is a major port in Hebei province and only about
10 km from Shanhaiguan.
22. An annotative remark in parentheses in the text here explains that this means: “If
you are not engaged in promoting big batches [of merchandise], you should be engaged in
promoting the small batches.”
23. An annotative remark in parentheses in the text here explains that this refers to the
low price.
24. See text Mar. 5, 1956, note 12.
25. An annotative remark in parentheses in the text here explains that this refers to the
idea that the supply and marketing cooperatives collect and purchase many things.
26. The Chinese text here reads, for the respective numbers, “X wan dun” in the first
case, “XX wan dun” in the second case, “X nian” in the third case (referring to the number
of years). In each case it is rendered as an indeterminate (and indeterminable) number, except
that in the first case one character was replaced, while in the second case, two characters
were replaced. It is our editorial policy to render all such cases as simply X.
27. We are unable to determine who Bai XX might be, and there is no corroborating
evidence.
28. An annotative remark in parentheses in the text here explains that this sentence is
directed toward Li Xiannian.
29. Mao is referring to the Standing Committee of the Central Committee of the
CPC.

APRIL—JUNE 1956 / 41