Chapter 39 The Birth of the Red Currency

The next step is to prepare for the privileged business of the National Bank and issue a unified currency for the Central Soviet Area. The central revolutionary base area is located in an economically backward rural area, with no industry yet, only scattered individual agriculture and a small number of small handicrafts.Frequent wars, coupled with the increasingly intensified economic blockade of the Kuomintang, made it extremely difficult to ensure a balance of fiscal revenue and expenditure.At the beginning of the establishment of the base area, all kinds of miscellaneous banknotes and bad coins flooded the market.Bad money drove out good money, so that silver dollars rarely circulated.

Before the establishment of the Soviet State Bank, the currencies in circulation in the base areas included: Jiangxi Industrial and Agricultural Bank's copper dollar certificates, Minxi Industrial and Agricultural Bank's silver dollar certificates, as well as Guangyang and Kuomintang banknotes, and even copper plates from the Qing Dynasty.People buy things, grab a handful of all kinds of notes, and sometimes they can't even pay off.It is not only a headache for ordinary people, but also for businesses. Some Red Army soldiers were simple-minded, thinking that revolutionary fighters did not use Kuomintang banknotes, and sometimes they seized Kuomintang banknotes on the battlefield and set them on fire. They didn't even know that these banknotes could buy many supplies that were scarce in the Soviet area in the Kuomintang-ruled areas, such as salt, rice etc.At that time, the Kuomintang's legal currency and the miscellaneous coins issued by the warlords and local tyrants and evil gentry circulated in the Soviet area at the same time, which undoubtedly provided the Kuomintang with an opportunity to destroy the financial market in the Soviet area.

After the establishment of the National Bank, the unification of the currency in the Soviet area became a top priority. To issue currency, the first problem is, who will design and draw the pattern of banknotes? Someone recommended Huang Yaguang.He once studied in Japan, not only can write good calligraphy, but also can draw.After some inquiring, there was mixed joy and sorrow. The joy was that Huang Yaguang did have the talent for painting, and the worry was that he was designated as a member of the Social Democrats and imprisoned in the "Suppressing the Socialist Party" movement that swept across the west of Fujian.Mao Zemin reported to Mao ZeDong, Mao ZeDong thought twice, decided to save people under the knife at the risk of making mistakes, and personally approved Huang YaGuang's crime and meritorious deeds.

At that time, the Soviet area was under the severe economic blockade of the Kuomintang, and the working conditions were very poor. Huang Yaguang didn't even have a drawing pen or compasses, and he had no experience in designing currency, so it was very difficult.Mao Zemin secretly bought drawing pens, compasses, inks, and copper plates from Shanghai. Huang Yaguang started the design of currency patterns only with the memory of some used banknotes. In the process of designing the currency pattern, Mao Zedong required that the design of the currency of the Soviet government must reflect the characteristics of the workers and peasants regime.Therefore, when Huang Yaguang designed currency, he drew patterns such as sickle, hammer, map, and five-pointed star, and organically combined these patterns to give people a beautiful appearance and highlight the characteristics of currency in the base area under the leadership of the Communist Party.He originally wanted to draw Mao Zedong's portrait on the banknotes, but was rejected by Mao Zedong, and later changed to Lenin's portrait.Huang Yaguang imitated the head portrait of Lenin on the red books and periodicals, representing the new atmosphere of the people in the Soviet area under the guidance of Marxism-Leninism.

The issuance of banknotes also had to solve the problems of paper and ink.Due to the Kuomintang's blockade of the Soviet area, printing materials were scarce.After going to Shanghai and Hong Kong to film banknotes and purchase printing materials but failed, the National Bank could only print with white cloth and make paper by itself for the time being.There was no raw material for papermaking, so we picked up some rotten sacks and torn cotton wadding, went up the mountain to cut moso bamboo, peeled bark, and collected shoe soles and rope ends.As a result, people often see the "trash picking" team of the National Bank at the village head and street corners.After all the recovered things were smashed, they were soaked in lime ponds and then pounded into pulp for papermaking.

Later, I heard from a fellow villager that the tea wrapping paper made from an old tree bark on a nearby mountain is both wear-resistant and tough, and the people of the National Bank immediately went to the mountain to collect it.At first, the paper produced was not ideal, with poor toughness, thick and yellow. Later, glue and fine cotton were added to increase the toughness and whiteness, and finally the paper suitable for printing banknotes was produced. Purchasing ink from the White Zone was also a struggle.The ink purchased from Ganzhou was confiscated by the Kuomintang on the way back.A bank owner suggested using the traditional pine smoke method to make ink, burning the pine paste into smoke oil, and then mixing some tung oil.After a try, the effect is really good, so the ink problem is easily solved.

After overcoming various problems in funding, design, and printing banknotes, the National Bank of the Soviet Union printed the first Soviet banknotes on July 7, 1932, only 5 months after the establishment of the National Bank.The currency is based on the silver dollar, the banknotes are silver coin coupons, 1 yuan silver coin coupons are exchanged for 1 silver dollar, and the silver coin coupons are the national currency.With a unified currency, the National Bank announced in conjunction with the financial department of the Soviet area that all transactions and taxes would be calculated in national currency, the circulation of the KMT’s banknotes was prohibited, and the currency issued by the former Soviet area bank was withdrawn within a certain period of time and no longer used.

The National Bank issued silver and copper coins in addition to banknotes.At that time, the Central Mint of the National Bank also minted three kinds of silver coins, "Yuan Datou", "Sun Xiaotou" and Mexico's "Eagle Ocean", which could be circulated inside and outside the central revolutionary base area.The issuance and circulation of the national bank currency gradually recovered all kinds of miscellaneous coins, so that the currency of the Central Soviet Area was unified. In order to control the circulation of banknotes, Article 10 of the Provisional Regulations of the National Bank of the Soviet Union stipulates: "For the issuance of banknotes, at least three-tenths of cash, or precious metals, or foreign currencies must be used as cash reserves, and the rest should be in cash that is easy to sell. Goods or short-term bills of exchange, or other types of securities are prepared as guarantee.” [10] This ensures that the currency has sufficient cash as collateral, and can fully realize the effective expansion of the currency.

When the State Bank issued the first set of banknotes, due to limited conditions, there was no manufacturing technology and anti-counterfeiting technology. In order to achieve maximum anti-counterfeiting, Mao Zemin adopted the Russian signature of himself and Finance Minister Deng Zihui on the banknotes. Method.But this method is very easy to imitate.With the circulation of currency, the Kuomintang and warlords began to carry out various sabotage activities, importing a large amount of counterfeit currency and destroying the financial order of the Soviet area. In order to solve the anti-counterfeiting problem, Mao Zemin thought hard and couldn't find a good solution.One night, he smelled the stench from burning the ends of wool when his wife was knitting a sweater, so he came up with the idea of ​​putting a certain amount of wool into the paper when making paper, so that he could see through the banknotes for identification and tear them apart. Or burn banknotes to identify the real currency of the Soviet area by smelling a smell of wool, which solves the problem of anti-counterfeiting and ensures the normal circulation of currency in the Soviet area.

By the end of 1932, the State Bank of the Soviet Union had printed and issued 650,000 yuan of silver coin certificates, and its reserve fund had reached 390,000 yuan. The reserve fund accounted for 60% of the total amount issued, which was twice the ratio stipulated in the charter. The smooth circulation of banknotes in the Soviet area cleared the confusion of the money market in the past. In this way, the founder of the National Bank has gone through countless ups and downs, with firm belief and tenacious will, giving full play to his ingenuity and firmly grasping the money bag.