Chapter 11 3.3 Strategies under the Price Trend

Just half a month after the founding of the People's Republic of China, the most violent price turmoil ushered in, and Chen Yun ordered: This time, we must teach speculative capital a lesson! The price boom that Chen Yun expected finally came. On October 1, the founding ceremony of the People's Republic of China was grandly held in Tiananmen Square, Beijing.Chen Yun served as the director of the Finance and Economics Committee of the Government Administration Council.However, only half a month later, the reverberation of the gun salute of the founding ceremony was still echoing in people's ears, and a huge economic storm hit the young republic violently!

Can the young republic withstand the brunt of this storm?People's eyes turned to Beijing, and to Chen Yun, the highest person in charge of financial work in New China. At the beginning of November, Chen Yun conducted a serious study and judgment on the price situation.Starting from reality, he set a realistic goal, that is, when the fiscal revenue and expenditure cannot be balanced for the time being and production has not yet resumed, the goal of stabilizing prices is to make prices rise steadily and moderately according to the increase in inflation, and to prevent sharp rises.Chen Yun has always been clear-headed about the increase in prices caused by the issuance of additional currency. He has clearly considered in advance how much additional currency will be issued and how much the price will rise.Although price fluctuations are caused by speculative capital disrupting the market, the fundamental reason lies in inflation.Judging from the actual situation, inflation is difficult to cure for a while. Under such circumstances, if inflation is not fully taken into account, price stability is emphasized one-sidedly, and administrative means and market regulation are used to "freeze prices", it will not only fail to achieve On the contrary, it will cause prices to get out of control due to the damage of the government's regulation and control ability.

On November 13, the Central Finance Committee called various places to analyze the situation and arrange strategies.The telegram analyzed the reasons for the sharp rise in prices, and pointed out that the root cause was that the issuance of banknotes had increased significantly, and the country had not withdrawn or offset the huge amount of currency materials, resulting in inflation.With the price of goods rising twice, the amount of money issued and the amount of money needed in circulation have been able to adapt, and it is possible to stabilize prices, and all localities should do their best to stabilize them.In order to stabilize prices, 12 instructions were issued in the telegram to fully mobilize the trade, taxation, and financial departments, and concentrate their forces to attack at the same time: ... For speculators, appropriate lessons should be given in this operation.For this reason: (a) When the rush to buy is booming at present, I should take the opportunity to throw the cold and dull goods to the speculators, but not to give them the main materials. (B) When money shrinks, prices balance, and merchants spit out the main supplies, I should take the opportunity to buy.

On November 25, according to the order of the Central Finance Commission, the whole country took unified steps to sell a large number of gauze in big cities such as Shanghai, Beijing, Tianjin, Wuhan, Shenyang, and Xi'an.A battle for speculative capital has begun! The battle commanded by Chen Yun was clean and swift, which dealt a heavy blow to speculative capital.The speculative forces in Shanghai suffered the most losses. Some capitalists were too involved in speculation. At this time, they lost all their money, unable to cope with the demolition of the day, committed suicide by jumping off the building, and some packed up their bags and fled to Hong Kong.Many private banks involved in speculation also lost money or even went bankrupt because a large number of loans could not be collected.In Shanghai, dozens of private grain wholesalers have closed down.The capitalists who participated in speculation in the Beijing-Tianjin area were pressured by the government's large-scale deployment very early on, and they had suffered losses in the past, so they quickly converged.

This battle is known as the "Battle of Rice Cotton".Speculative capital took a beating, and prices stabilized quickly in Shanghai and across the country. In the battle of rice cotton, speculative capital suffered a big loss.But with the accumulation of more than 10 years, their remnants still have the strength to attack.The most important thing is that inflation is still unresolved, and rising prices are inevitable, which provides opportunities for their activities.Chen Yun noticed this and was very vigilant. The speculative capitalists always saw food as the weak link of the new regime.In 1950, Shanghai's speculative capital began to speculate on grain, and the state-owned trading department had too little grain to dare to fight. The price of grain rose by 80% in more than half a month. On February 6, Shanghai was bombed by Kuomintang planes, which caused heavy losses and intensified market turmoil.The Kuomintang was elated and shouted, "Like a long-term bombing, it can shake the CCP's rule."Due to the attack on the power plant, which affected the production of the factory, speculative capital began to speculate on gauze again.Moreover, the Shanghai market has always had the old "rule" of "red stocks are bullish" during the Spring Festival. Speculative capitalists expected that prices in the Shanghai market during the Spring Festival in 1950 would rise sharply, so they mobilized funds in advance, snapped up and hoarded supplies, and prepared to make a fortune when the market opened after the Spring Festival. Bundle.This is the fourth price turmoil caused by speculative capital.

For price fluctuations, Chen Yun has already planned for it. After intense deployment, the state-run trade department has the strength to stabilize its position.On the first day after the Spring Festival, state-owned companies listed the same prices as before the Spring Festival, and major commodities such as grain, gauze, and cooking oil were all open for supply. At this time, the speculative capitalists tried to fight with their backs, borrowing money everywhere, snapping up food and gauze for three days in a row, and desperately driving up prices.But the state sector continues to throw out supplies.On the 4th day, the speculative capital was unable to do what it wanted, and the funds were exhausted. They wanted to organize a retreat and spit out the things they snapped up, but they suffered from no buyers and lost all their money.

By March, the national price rise stopped, and prices in six major cities, including Shanghai and Tianjin, dropped by 15% in March compared with February, and speculative capital suffered a devastating blow.Chen Yun commanded the Central Finance Committee to solve the price increase cleanly and quickly in only half a month.This struggle is also known as the "Battle of the Red Plate". After four waves of stable prices, the people's government finally repelled the challenge of speculative capital. Under the circumstances that the finance and economics were not fully unified and the fiscal revenue and expenditure still had a large deficit, they repelled the attack of speculative capital and took control of the market. The right to curb the sharp rise in prices and create conditions for the recovery of the economy and the eventual elimination of inflation.