Chapter 3 1.2 Clearing up the relationship between legal currency and border currency

Don't let the finances take money from the bank casually, and clarify the relationship between the legal currency and the border currency. When there is a financial problem, the financial department will naturally be criticized and complained, and it is a bit embarrassing.However, Chen Yun understood them and relied on them. On March 20, Chen Yun, who had just taken office, spoke for the cadres of the Finance and Economics Office at the meeting of the Standing Committee of the Northwest Bureau of the Central Committee of the Communist Party of China: As a family member, you must be prepared to be angry, but you cannot change your policy because of it.After the establishment of the financial office, a lot of work has been done, and the cadres have made great progress.There are also mistakes, because we have no experience in building a country.

Chen Yun's words expressed his determination to drastically change the financial situation, and undoubtedly supported the financial cadres who were in trouble.After all, the family in the Shaanxi-Gansu-Ningxia Border Region is too difficult to be. At that time, the financial price situation was still very unstable.In order to curb inflation and skyrocketing prices, on January 6, 1944, the Border Region Bank had to abandon the listed price and let the border currency fluctuate with the black market price.At the same time, stop the issuance of border currency, promote local products, and stop all unit funds for 3 months to shrink border currency.By the first ten days of March, border currency and fiat currency exchanged out and inwards tended to be balanced. Banks had enough legal currency and gained the initiative in the currency struggle. Prices then gradually fell.Although the adoption of such compulsory administrative measures reversed the financial price situation for a while, the economy of the border regions paid a huge price for it. In some local markets, legal currency replaced border currency, and the market was depressed, and production was greatly affected.The situation is somewhat similar to the so-called economic "shock" today, and the economic situation is still extremely pessimistic.

Obviously, the focus of the problem is on the stability of the border currency value.Only when the border currency is stabilized and the circulation market is re-occupied can the market be stabilized, and the production, circulation, life of the masses, and supply of the party, government and army in the border area can be guaranteed.After several months of investigation and research, Chen Yun found out the situation, and immediately made up his mind to rectify the finance and rebuild the credit of the border currency. Chen Yun first established the nature of the bank as an enterprise, so that it could get rid of the status of financial cashier, so as to control financial issuance.

The Second Northwest Bureau High-Level Meeting held in March and April of 1944 believed that finances rely on the issuance of border currency for support, and turning banks into financial issuing agencies will not only lose the independence of banking operations, but also cause financial price turmoil. One of the main reasons is to determine the Border Region Bank as an enterprise and to strengthen the leadership of the Border Region Bank itself from an organizational perspective. On May 14, Chen Yun and He Long sent a letter to Huang Yaguang and Jia Tuofu, informing them: (1) Borrow 15,000 yuan in border currency from the bank's internal treasury, and use it to lend 10 million yuan to the Bureau of Materials and pay the Department of Finance. 50 million yuan from the Logistics Department of the Military Commission. (2) The Bureau of Materials is responsible for repaying the above loans in border currency, with a limit of 10 million yuan on June 10 and 50 million yuan at the end of June.The bank is responsible for taking it back on schedule, and after taking it back, it will still be sealed in the internal warehouse. (3) In the future, banks must obtain written instructions from the Finance and Economics Office to increase issuance.

This time, not only the financial department and the military logistics department took the lead in borrowing and repaying, but also transferred the power of currency issuance to the financial office, strengthening the control of currency issuance. At that time, bank loans in the border area were divided into general loans and special loans.General loans refer to the loans in the bank's fixed funds, which are mainly used for agricultural and industrial and commercial loans; special loans refer to the long-term or short-term economic construction or financial turnover issued by the bank and paid in the treasury with the approval of the Northwest Finance Office. The amount is included in the issuance library, and its lending and withdrawal are actually the issuance and withdrawal of border coins.The chaos in the issuance of border currency is mainly due to the out-of-control of special lending.

In order to effectively control the issuance of border currency, Chen Yun set up rules again. On June 9, Chen Yun and He Long issued the "Decision on the Special Loan Measures of Banks in the Shaanxi-Gansu-Ningxia Border Region" issued by the Northwest Finance and Economics Office. The borrowing agency shall not use the borrowed funds for other purposes.The source of funds required for special lending is the issuance of border currency, and the bank will pay the issuance library.After the bank recovers the loan, it must put the full amount into the issuance treasury and report it to the financial office for record.During this process, the Border Region Bank shall not divert this money for other purposes.

Finance can no longer take whatever it wants from the bank as in the past; even if it borrows from the bank, it must be repaid when it is due.This has completely eradicated the drawbacks of excessive financial issuance, enabling the financial office to control the issuance of border currency and stabilize the value of border currency according to market needs. While establishing the independence of border banks relative to finance, Chen Yun also correctly handled the relationship between border currency and legal currency, sorted out border currency, and allowed it to occupy the circulation market again.

Although the government of the Border Region explicitly prohibited the circulation of legal currency in the Border Region as early as 1941, the legal currency has not actually withdrawn from the Border Region. Instead, it has been competing with the border currency for the circulation market in the Border Region. Because the frontier currency was issued too quickly and too aggressively, the credit was seriously damaged, and the bank had to take severe measures to tighten the frontier currency at that time.Although this is conducive to controlling prices, it is actually tantamount to ceding the market to legal currency, sacrificing long-term interests and the overall financial situation at the expense of short-term interests.Chen Yun quickly realized this. On May 4th, Chen Yun talked with Zhu De, Jia Tuofu, Huang Yaguang and others about the issue of financial stability, and pointed out that it is impossible to neither raise the price of border currency nor issue border currency at present. If this continues, the circulation of border currency will shrink day by day.

However, in order to solve this problem, we must first clarify the relationship between border currency and legal currency.Because they did not understand the relationship between border currency and legal currency, the financial department of the border area suffered a lot in their work. In May 1941, at the meeting of cadres in Yan'an, Mao Zedong also criticized the phenomenon that "professors of economics cannot explain border currency and legal currency". Chen Yun seriously summed up the experience and lessons in financial work over the past few years. After in-depth thinking and analysis, he clarified the relationship between border currency and legal currency, and found the golden key to untie the deadlock of border currency.

On May 10, at the fourth meeting of the Northwest Finance and Economics Office, Chen Yun proposed a solution that he called a "stealth". Chen Yun considered that it is necessary to achieve a one-to-one ratio between the border currency and the legal currency, and to keep the financial market in the market.However, due to inflation, the credit of border currency has been damaged. If new notes are issued, there will be adverse political effects.Publicly allow border currency and legal currency to circulate at the same time. Due to the long legs of legal currency, the phenomenon of legal currency squeezing border currency will continue to occur.Therefore, he suggested: the salt company can consider issuing a kind of circulation certificate, the price of which is one to one with the legal currency and one to nine with the border currency, so that it can be circulated in the border area, and the border currency will be gradually withdrawn. Take back the salt industry circulation coupons with border coins.In this way, the price ratio between the border currency and the legal currency can be increased to one to one, and the legal currency can be driven out without disturbing the financial market.

Chen Yun's suggestion was accepted. On May 23, Chen Yun attended the fifth meeting of the Northwest Finance and Economics Office, which decided to issue commercial circulation certificates for border area trading companies. Practice has proved that Chen Yun's understanding is correct.Due to the sufficient reserves of legal currency and supplemented by a considerable amount of important materials, the issuance of commercial circulation certificates has stabilized finance.