Our relationship with the peasants is somewhat strained. One issue is grain, and another is supplies. In Beijing, I reviewed some materials and started thinking about this problem. In Tianjin and Zhengzhou, I spoke with provincial Party committee and prefectural Party committee comrades, and they are all working to resolve this issue. Opposing departmentalism and individualism—circumstances are understandable, so we pardon you and impose no penalties. It is entirely justified for peasants to underreport output and divide it privately; failing to do so would lead to disaster. Since last November, this "communist wind" has seen radishes eaten during the day and rice at night, with hundreds of millions of peasants and their team leaders uniting to resist the Party committees. On one side are the central, provincial, prefectural, and county authorities; on the other are hundreds of millions of peasants and their leaders as their representatives. The leaders of production teams in the management areas are the middle faction, wavering between the two sides. It is because we have overreached and taken too much that they are forced to underreport output and divide it privately. If they do not transfer grain upward and are not penalized, it is in effect an acknowledgment that they have this right. Since September, there has been a major error of adventurism. If this problem is not properly resolved, we could very well repeat Stalin's mistake, and agriculture will be unable to develop. In Henan, the commune's production costs account for 20%, accumulation and taxes 50%, and the peasants receive only 30%, but they conceal 15%, so in reality they get 45%. Pigs belong to the commune, napa cabbages also belong to the commune—equalitarianism is adventurism. Our resolution mentions distribution according to labor, but it does not explain how to implement it. The production responsibility system was mentioned, but again, how to implement it was not addressed. Who could have foreseen that a bumper harvest would lead to grain problems? This year, we must issue a public notice to reassure the people, specifying how much is produced, how much is procured, and how much is consumed. To whom do the pigs raised by the production team belong? To whom does the money from selling goods go? The vast majority of the overall situation involves the 500 million peasants. The first priority is to arrange for the livelihoods of commune members. The second is to arrange accumulation: commune accumulation should be 18%, plus 7% in state taxes, totaling 25%. In many places, this proportion has now been exceeded, which is very dangerous and will lead to repeating Stalin's mistake. There is currently too much centralized control; the commune exercises at least ten forms of it: first, control over taxes; second, over procurement; third, over accumulation; fourth, over production costs; fifth, over public welfare funds; sixth, over management fees; seventh, over industry; eighth, over culture and education; ninth, over supplies and wages... I say departmentalism can only be partial departmentalism; not everyone should be labeled a departmentalist. Having hundreds of millions of peasants wear this label is uncomfortable—we must remove it. Refusing to fulfill procurement tasks when one is able to can be considered departmentalism, but for the most part, their actions are fundamentally basic rights, not departmentalism.

I will address four issues: first, the question of ownership; second, the question of labor; third, the question of distribution; and fourth, sending cadres down to become commune members.

First, the question of ownership. The collective ownership of the commune will, over a period of no fewer than three to four years and no more than five to six years, or even longer, gradually transition from being fundamentally based on the ownership of the production brigade (i.e., the former advanced cooperatives) to commune ownership. The contradiction between large collectives and small collectives must be acknowledged as legitimate. At present, ownership is fundamentally theirs; the commune cannot fully own everything, so they underreport output and divide it privately. For now, there can only be partial commune ownership—that is, ownership is primarily with the brigade and partially with the commune. This was not clearly understood in the past. Peasants have a dual nature; peasants are still peasants. Before the last Zhengzhou Conference, people talked about the peasants' high consciousness, large-scale corps operations, and communist style. After the autumn harvest, however, underreporting and private division occurred, and their reputation became very poor—where did the communist style go? Peasants are still peasants; they can only act this way, and they should act this way. It is impossible to achieve communism all at once. Some say this is a matter of making concessions to the peasants. In a certain sense, it is a concession, but fundamentally, it is not a concession—it is that we have taken too much. The money from selling pigs and napa cabbages was handed over to the commune instead of being given to the production brigade. The peasants fear communism, so naturally they slaughter pigs and eat vegetables. In fact, large numbers of chickens in the communes have been communized, so the roosters are killed and the hens hidden.

At present, the commune is like a federal government. It must gradually transition from a federal government to a unified government. Becoming like Qin Shi Huang would be dangerous—his dynasty fell in thirteen years. Emperor Yang of Sui collapsed in thirty-one years. First, there must be no unified equalization of distribution; second, accumulation and commune-run enterprises cannot be excessive. A transitional period is needed. Currently, commune-run industries are too numerous, and the commune undertakes too many tasks. The wool comes from the sheep—the sheep are the peasants and production brigades. When wool is sheared off the peasants and production brigades, resistance arises, leading to the posting of sentries. We must not cut down rich brigades to supplement poor ones; instead, we must help poor brigades catch up to rich ones, and this requires time. I oppose equalitarianism and left-leaning adventurism. Overreaching, using too much labor, and running too many industries—draining the pond to catch the fish—could hinder agricultural development for thirty years. Ownership can only be primarily with the brigade and partially with the commune, gradually transitioning to being primarily with the commune and partially with the brigade. From mutual aid teams to advanced cooperatives, a transition was necessary. Acting this way is fundamentally not about making concessions to the peasants but is a process of gradual development. Commune ownership can only be achieved by guiding the peasants step by step over several years; it cannot be accomplished all at once. Attempting to do so would violate objective laws, so I ask you to rein yourselves in. From mutual aid teams to advanced cooperatives took four years (1953 to 1956); from advanced cooperative collective ownership to commune collective ownership may also require three to four years, or even longer. The idea that commune ownership could be completed as soon as the commune was established is mistaken. The issue is one of raising the production levels of poor brigades to those of rich brigades—a process that therefore requires a relatively long time.

Another issue is that commune industrialization, mechanization, electrification, and cultural and educational undertakings can only develop gradually, with incremental progress; they cannot be pursued in large volumes or on a massive scale all at once, or else we will commit the error of adventurism. Supporting poor brigades to catch up with rich brigades by using 20 million tons of Soviet steel to supplement China would be opposed by the producers. This process is also one of commune industrialization, agricultural mechanization and electrification, national industrialization, and the enhancement of the people's socialist and communist consciousness, moral character, and cultural, educational, and technical levels. Of course, this is still the first stage, and there will be several more stages thereafter to complete the tasks of socialist construction. Only in this way can commune ownership be achieved, which is also close to ownership by the whole people. Throughout this entire process, its nature remains socialist, and its distribution principle remains "to each according to their labor." However, within the first stage of this process, calculated from 1958, commune collective ownership will be completed in no fewer than three to four years and no more than five to six years. At present, ownership is primarily with the brigade, with the commune holding only partial ownership. If everything now belonged to the county and were all controlled by the commune, it would provoke the hundreds of millions of peasants to rebel. In three to four or five to six years, once commune collective ownership is completed, a portion or even a majority may transition to ownership by the whole people. In 1958, there was a bumper harvest of grain, cotton, oilseeds, and hemp, yet in the past four months, there has been a major uproar over shortages of grain and oil. The Party committees at the six levels—central, provincial, prefectural, county, commune, and management area—have heavily criticized the departmentalism of production brigades and production teams (I visited three provinces regarding this opposition to departmentalism and felt it was a matter of protecting legitimate rights; it is fortunate that this step was taken—the circumstances are understandable, and it may be a first-time offense or a failure to keep up with propaganda work), referring to what is called underreporting output and private division. On the other hand, the production brigades and production teams have universally and consistently engaged in underreporting, deep concealment, secret storage, and posting sentries in resistance, defending their products and criticizing the equalitarianism and forced communization by the communes and higher authorities. I believe the actions of the production brigades and the masses are fundamentally reasonable—and indeed they are reasonable. They are not fundamentally illegitimate departmentalism but legitimate and proper rights. Because the land and labor are theirs, the fruits of their labor—the products—should be theirs.

There are two issues here. First, the equalitarian distribution method that levels out the differences between poor and rich brigades results in poor brigades gratuitously appropriating part of the labor fruits of others, which violates the principle of distribution according to labor. Second, state rural taxes account for only about 7% of total agricultural output value, which is not too much, and the peasants support this. However, many communes and counties extract too much in accumulation from the commune's total income. For example, in Henan, accumulation accounts for 26%, and together with the 7% tax, the total is 33%—one-third of total income. This represents the peasants' investment in the state. This does not even include unpaid labor for tasks like building railways and reservoirs, as well as very low wages (such as for work on the Sanmenxia project). After deducting the 20% in 1959 production costs, plus public welfare funds and management fees, the total exceeds 53%, leaving commune members with less than 47% as personal income. I believe this amount is far too small.

When the communes were established in the autumn of 1958, a "communist wind" arose. First was the leveling out of rich and poor; second, excessive accumulation; third, the communization of various properties, including pigs, chickens, and ducks taken by the commune without compensation, as well as some tables, chairs, stools, pots, basins, knives, bowls, and chopsticks being transferred to public canteens (even scrap iron being collected without compensation), and private plots being collectivized. These several forms of "communization" should be analyzed. Some are correct, such as transferring most private plots to the commune—this is normal. Some are unavoidable borrowings, such as canteen buildings and tables, chairs, and stools. And some should not have been transferred to the commune but were anyway, such as all pigs, chickens, and ducks. It would be acceptable for a portion of pigs to be transferred to the commune at a set price. In this way, the communist wind began to blow. Gratuitously appropriating the fruits of others' labor is impermissible. In the past, we did gratuitously confiscate the properties of imperialists, but that was limited to Germany, Japan, and Italy. Britain and the United States were our allies in the war against Japan, and we did not confiscate their properties. In some cases, we requisitioned property, and in others, we forced closures. We confiscated the means of production of landlords and encroached on a portion of their means of subsistence (grain and housing). All these were the fruits of the labor of working people, so reclaiming them cannot be called an infringement on the fruits of labor. Regarding the means of production of the national bourgeoisie, we did not adopt a policy of gratuitous confiscation but a policy of redemption. With regard to well-to-do peasants, we must be even more cautious—how could we possibly resort to gratuitous appropriation with the peasants? Of course, public accumulation is not a gratuitous appropriation of consumer goods but is intended for expanded reproduction.

My basic thinking is not to pin the label of departmentalism on the brigades or the peasants, so as to avoid confrontations between county and commune cadres. Instead, we should shed the burden, unite as one, explain the principles clearly, not count it as an error, and clarify the policy. This concerns the morale of cadres above the small brigade level who are connected to hundreds of millions of peasants. The three levels of central, provincial, and prefectural authorities are relatively detached, while the counties and communes bear the brunt, with large brigades, small teams, and the broad masses below them. We have taken a bit too much; this also needs to be explained clearly—it was done with good intentions to build socialism. The idea was not good, and for the excessive part, we must admit that we overreached; its nature is adventurism. The solution is to convene a meeting of cadres at the six levels.

Let me discuss the history of our Party. Our Party Central Committee is effectively a combined committee, with many mountain strongholds. The First Army Corps had three strongholds, the Fourth Front Army had four, the Second Front Army had two, northern Shaanxi had two, and other base areas and the White Areas each had their own smaller strongholds. Back in Yan'an, it was said that we must recognize the strongholds, acknowledge them, accommodate them, and only then could we finally eliminate them—we must not curse them as conservatives. The strongholds today are the production brigades (in the past, they were poor villages and rich villages).

What should the commune do? First, allocate several million tons of steel to equip agriculture; mechanization can be achieved within seven years. Second, develop commune industries. Third, promote diversified operations: forestry, animal husbandry, and fisheries. These elements of a nature akin to ownership by the whole people will develop in the future. After three, four, five, or six years, when these have grown considerably, the goods produced by the brigades will seem smaller by comparison.

In Shandong, the Lü Hongbin Cooperative first dealt with matters using written orders, scales, and "labels," but later adopted three methods: using a "key" (ideology), clearly explaining the policy, and having both sides come down a "staircase" together.

Throughout history, the order has been stated as the state, the collective, and the individual, but in reality, it should be the individual, the collective, and then the state. In considering the overall situation, the first priority should be to arrange an adequate amount of grain for the 500 million peasants.

Our Party Central Committee has gradually built its authority. In the past, dogmatism led to forced implementation, which in effect isolated us from the masses and gave us no real power. Attempts to centralize too much only led to failure and caused the revolution to collapse. The central authorities having power is a process. In the past, industries were too rigidly and excessively controlled; only after the "Ten Major Relationships" were proposed did gradual adjustments begin. Appropriate concentration and appropriate unification must proceed gradually. Do not hope to achieve concentration all at once. Halfway through, how did we suddenly get such a stepfather—the commune? Industries also need tiered management to stimulate local initiative; absolute concentration and unification must be opposed. Labels of departmentalism must not be recklessly pinned on people.

There are rich brigades, poor brigades, and those in between. Standards for food and wages should differ. Grain rations should vary among four hundred, five hundred, or six hundred jin, and wages should be based on distribution according to labor, allowing for differences. For example, in Henan Province, there are rich brigades where labor-based distribution could reach 220 yuan, but in the end, only 130 yuan was distributed, cutting off 90 yuan. This is a case of gratuitously appropriating the fruits of someone else's labor.

II. Labor Issues. Land, labor, and products—these three things are now nominally owned by the commune, but in reality, they basically still can only be owned by the production brigade (i.e., the former cooperative). At present (in 1959 and for some time thereafter), only a portion is owned by the commune. That is to say, the commune’s accumulation, the permanent or semi-permanent workers in commune-run industrial and mining enterprises, plus a portion of public welfare funds and a portion of management fees—that is all. There is also a portion of production expenses, but that merely passes through the hands. What is being discussed here concerns people and goods. Planning has not been addressed. The commune’s powers also include unified planning and the like. Do not be overly ambitious, and do not grasp too much power—their power is only this much. I advocate that power should be limited to this extent, and we must teach commune secretaries to act accordingly. Herein lies our hope. Because as accumulation increases year by year and commune-run industries expand annually, the commune will have large and medium-sized agricultural machinery, commune-run power stations, commune-run schools, and so on. In three, five, or seven years, the current actual ownership situation can be reversed—from basically brigade ownership with partial commune ownership, to basically commune ownership with partial brigade ownership. This will approach ownership by the whole people. At that time, of course, there will still be a trailing remnant of individual ownership of the means of production, such as a very small portion of homestead land, fruit trees, small farm tools, domestic animals, and poultry, which will still be owned by individuals. Within the scope of the commune, there will be individual ownership, small collectives, and large collectives, and housing, until large-scale public dormitories are built, will of course be privately owned. Now peasants fear one thing but not another. They are not afraid of the commune taking away the land, because they know it cannot be moved. What they fear is that labor and products will be arbitrarily taken away by others—communism, the peasants call it “communism,” even though we speak of socialism. At present, it is a struggle over people and wealth. This is the contentious issue.

The current distribution of labor power is extremely unreasonable. Too little labor power is allocated to agriculture (farming, forestry, animal husbandry, sidelines, and fishery), while too much is allocated to industry, service trades, cultural troupes, schools, and administrative personnel. On one side, there is too little; on the other, too much. The excessive portions must be resolutely reduced to strengthen agriculture. The industrial sector has an excess of 20–30%; one commune in Shanxi immediately reduced it by 30%. Service personnel must be drastically cut; a ratio of ten people out of a hundred is too high, and in some cases, one cook prepares meals for ten people. Administrative personnel should be limited to a few per thousand, not a few per hundred. In the Dongjiao People’s Commune in Licheng, Shandong, with a population of 120,000, only thirteen people are released from production work; in fifteen management districts, there are five people per district; in 154 production brigades, three people per brigade are not released from production (excluding financial and trade personnel). Communes are not permitted to have cultural troupes or sports teams whose members are released from production; amateur groups are allowed. Production brigades compete with commune-run industries, with the county, and with the state for labor power—one commune in Shijiazhuang saw 11,000 people leave. The problem of scrambling for people is a serious one. The focus is to drive back those who have left for cities, industries, and service trades, and strengthen the agricultural front.

III. Distribution Issues—The distribution of consumer goods. Brigades fall into three categories—poor, middle, and rich. There should be differences in the distribution of grain and wages. The wages of commune-run specialized teams should be standardized. Wages may follow the principle of “fixed grades with flexible evaluation,” assessed once a month, with the upper limit fixed and the lower limit flexible. This year, a strict system for harvesting, managing, and using grain must be established; waste must be strictly prohibited, and a great effort must be made to oppose waste. In Xinxiang, when harvesting cotton seeds, a call was issued that whoever harvested them could keep them, and as a result, the harvest was completed in one day. In Luanxian, when harvesting peanuts, a three-day holiday was declared; whoever harvested them could keep them, and payment and delivery were made on the spot—and the problem was solved. It still comes down to “every man for himself, and the devil takes the hindmost.” Last year brought a bumper harvest, yet grain was insufficiently used, and last year’s grain was harvested carelessly. This is primarily a problem of the distribution system. Efforts to oppose departmentalism were ineffective; systems are still needed, even for ten thousand years. There must be separate granaries for the state, the commune, the brigade, and the dining hall (public canteen), each with its own system. Generally speaking, in 1958, the commune’s accumulation was somewhat excessive. In light of this, in 1959, it should be announced to the masses: the commune’s accumulation shall not exceed 18%, and together with state taxes of about 7%, the total shall not exceed about 25% (of the total income from industry and agriculture). This will set people’s minds at ease, help raise the peasants’ enthusiasm for production, and facilitate spring plowing.

IV. The issue of cadres being sent down to serve as commune members or workers. Cadres at all levels shall be sent down to production brigades in stages and in batches to serve as commune members; Shu Tong did so for nine days. They should do so for at least one month to one and a half months each year. A portion shall be sent down to factories to work as laborers, also for one month to one and a half months. There are six levels—central, provincial, prefectural, county, commune, and district—and it must be made clear that these six levels total only a few million people, while the other level is the several hundred million peasants and their leaders, the small team leaders and production brigade leaders, who constitute the majority. These two sides must be integrated. Within a certain number of years, ownership shall basically be practiced by the brigades, and gradually, in stages and batches, achieve commune ownership. In this way, the two major objectives of developing production and improving relations can certainly be attained. The current tense relations are between the brigade and the commune, somewhat resembling “international tension,” primarily arising from the fear of communism. One aspect is economic, the other political, so that production can be carried out comfortably. Both sides should come down the stairs. Cadres at the district level and above lean somewhat left; production team leaders and small team leaders are generally blameless. We must explain clearly to the commune party committees and small team leaders that only a portion should bear the blame—those who refuse to sell to the state what should be sold are guilty of departmentalism. In this way, we can win the sympathy of the broad masses, and the remaining tide-watchers and account-settlers will become isolated.

The meeting on March 15 will proceed as scheduled. Comrades and prefectural and county committee comrades should study and discuss this and put forward their opinions. My opinion is to relax a bit, so that the peasants produce more, and they will also be more willing to contribute more.