Chapter 60 Five Ways to Squeeze Private Capital

After the establishment of the Nanjing National Government, the policy-based squeeze and deprivation of free businessmen began. Although these businessmen were the biggest "financial owners" of the Northern Expedition, their existence was undoubtedly the biggest obstacle to the nationalization policy. The crackdown was carried out step by step from multiple aspects: one was to completely disintegrate the organizational system of entrepreneurs, the other was to completely "kidnap" them with the seemingly incomparably favorable national debt policy, the third was to control the market for means of production, and the fourth was to take advantage of the economic crisis The expansion of state-owned enterprises, the "final work" is the nationalization of banks.

The first step is the disintegration of the organization. In July 1927, Chiang Kai-shek promulgated a decree announcing that all commercial organizations in Shanghai should be supervised by the Shanghai Social Bureau, and that all commercial disputes between industries should be resolved by the municipal government.The Shanghai KMT Party Headquarters established the National Salvation Association and the Merchants Association, which gradually replaced the functions of the Shanghai General Chamber of Commerce.The Kuomintang also launched an offensive in the newspapers, creating huge pressure from public opinion. The General Chamber of Commerce was identified as a "running dog of imperialism", and its principals were despicable and hateful traitors and profiteers.By 1929, the Central Executive Committee of the Kuomintang set up the Shanghai Merchant Group Reorganization Committee on the grounds of "unifying the business movement". Chamber of Commerce".This practice was popularized in commercial cities across the country. The book "Cambridge History of the Republic of China" commented: "The direction of development that has enabled these organizations to manage urban communities since the 19th century has been brutally reversed."

The second step is to kidnap the national debt.During the period of the Beiyang government, it was very difficult for the government to issue treasury bonds, and bankers often used this to blackmail the government.Finance Minister Song Ziwen, who was a financier, redesigned the rules for the issuance of national bonds: when the government announces the issuance of a national bond, it first deposits these national bonds in the subscribed bank to obtain cash loans from the bank. The cash is equal to half the face value of the bond deposited.At the same time, banks are allowed to place bonds directly on stock exchanges for speculative transactions.This kind of preferential policy has attracted bankers all over China.The problem is that when a new round of treasury bonds is issued, the government cannot repay them with cash at all, so it uses new debt to replace the old debt, and the banks have since fallen into a "circular trap".According to calculations in the article "China's Monetary and Financial Issues" by Zhang Naiqi, a scholar of the Republic of China, by around 1932, 80% of all securities held by banks were government bonds.With so much money being lent to the government, they had to sit in the same boat, and the relationship of equality ended.Wang Yejian, an expert on Chinese economic history, commented: "This kind of cooperation of Shanghai bankers not only solved the government's economic difficulties, but also strengthened the government's control over the business world. When the safes of various banks were filled with government bonds , that is, their active political participation in the regime."

The third step is to control the securities market. In October 1929, the national government promulgated the "Exchange Law", which stipulated that each region was only allowed to have one securities exchange, and all other exchanges were merged.Yu Qiaqing was the most supportive of Chiang Kai-shek's Northern Expedition. This time, his Shanghai Stock Exchange became the focus of rectification. Cotton yarn trading was first merged into the state-owned gauze exchange. Later, the securities part was merged into the stock exchange, and gold and commodity trading was merged into the gold industry. Exchange, by the autumn of 1933, the stock exchange was integrated into the Shanghai Huashang Stock Exchange.

The fourth step is to take advantage of the economic crisis to incorporate a large number of private enterprises. Around 1934, the domestic financial crisis broke out. Kong Xiangxi, Song Ziwen and others took the opportunity to extend their hands to private industries. State-owned enterprise groups entered a large number of light industries that were originally dominated by private capital, such as the tobacco industry and grain processing industry, through acquisitions and holdings. . The last step is to nationalize the banks.Before 1935, the initiative of China's financial industry was still firmly in the hands of private bankers.89% of the total assets of the national banks are in the hands of the members of the Shanghai Banking Association. Among them, the assets of the Bank of China and the Bank of Communications account for one-third of the total assets of the national banks. In March 1935, in the name of saving the real economy, Kong Xiangxi asked the trade association to purchase 100 million yuan of targeted national bonds.Later, he suddenly announced that the government required the Bank of China and the Bank of Communications to issue additional stocks out of the need for control, and the 100 million yuan of national debt would no longer be used as a relief loan to industrial and commercial people as originally envisioned, but would be used to buy two The government jumped to become the largest shareholder.In the following six months, China Commercial Bank, Netming Commercial Savings Bank, and Industrial Bank of China were successively controlled by the government, and the proportion of state-owned capital in the assets of national banks soared from less than 12% to 72.8%.

The nationalization of banks in 1935 was the third event of "state advancement and private retreat" in the course of China's modernization.American scholar Parkes Coble Jr. wrote in the book "Shanghai Capitalists and the National Government": "This sudden attack on the banking sector, in terms of the relationship between the government and capitalists, marked the ten-year rule of the Nanjing government. The most important and dramatic change in the world." Wang Yejian also had a similar view, he commented: "This incident not only shows the government's complete domination of China's financial sector, but also shows that entrepreneurs, as a powerful class It's over."

It was through seven years of systematic purges that the central government regained control of the national economy, and political, military, and economic centralization effects emerged. In November 1935, after the nationalization of the banking industry was completed, Kong Xiangxi announced the reform of legal currency, stipulating that the gold standard system would be implemented from the next day, and the national currency would be unified as legal currency. Since then, a unified modern currency system has been established.By 1937, there were nearly 4,000 modern factories, more than 10,000 kilometers of railways, 116,000 kilometers of roads, 12 civil air transport lines, 89,000 kilometers of telephone lines and 130,000 post offices across the country.In terms of economic construction, China has become another country.