The struggle of the Party Central Committee to curb hyperinflation before and after the founding of New China

Before and after the founding of New China, the COMMUNIST Party of China, faced with severe financial and economic difficulties, successfully curbed the hyperinflation that had plagued the people for a long time through arduous struggle, and took a solid step toward economic recovery. This major measure and achievement can be called a miracle of the new Chinese economic history, and it has painted a heavy mark on the history of the party and the country.

Financial difficulties in victory

Since the spring of 1949, the War of Liberation has been victorious, but the financial and economic difficulties have been faced: tens of thousands of kilometers of railways, thousands of bridges and tunnels have been seriously damaged, and no railway can be opened to traffic; the Kuomintang has defeated Taiwan and taken away a large amount of gold, silver and foreign currency; the financial income is insufficient, and the funds for economic construction are scarce; there are nearly 2 million unemployed people in the whole country; and grain, raw materials, and fuel are extremely scarce in big cities. When Shanghai was liberated, it was a veritable "dangerous city". Coal can only sustain a week's worth of production, and grain is only enough for half a month's consumption. As a result of the blockade of the sea by the reactionary forces of the United States and Chiang Kai-shek, grain imports were almost cut off. Other large cities face similar problems.

The most prominent and concentrated manifestation of fiscal and economic difficulties is hyperinflation.

In the 12 years since the beginning of the All-out War of Resistance, especially in the late period of the Kuomintang government's rule, the issuance of legal tender, gold yuan coupons, etc. was like snowflakes, and it immediately depreciated dramatically, like waste paper. Currency issuance increased by 14.4 billion times and prices rose by more than 850 billion times. Long-term inflation has had a huge impact on people's lives. In 1937, 100 yuan of legal tender could buy a cow, and by 1949 it could only buy a few grains of rice. People have to carry bundles of paper money with them when shopping, and even formerly well-paid university professors struggle to survive.

Realizing the transformation from rural to urban work is the strategic goal of the CPC Central Committee, and whether or not to stabilize the cities is a key step, and the most urgent thing is to curb serious inflation. Faced with serious financial and economic difficulties and all kinds of doubts, Mao Zedong confidently replied: It is not easy to fight the world, and it is not difficult to govern the world. The CPC Central Committee kept a sober mind, confidently greeted the new challenge of governing the country and ensuring national security, played a set of beautiful combination fists, and created a new situation of "stable prices and world security."

Gather the world's talents and organize the financial committee

In order to meet the needs of the rapid advancement of the War of Liberation, in accordance with the decision of the Second Plenary Session of the Seventh Central Committee of the Communist Party of China, the Central Committee of the Communist Party of China issued a directive on May 31, 1949, deciding to establish the Central Financial and Economic Committee under the Military Committee of the Chinese People's Revolution, as the staff headquarters of the Party Central Committee to lead financial and economic work and the headquarters for directly commanding operations, and to unify the financial and economic work of the Liberated Areas.

In the process of forming the Central Finance Commission, an important aspect of the Party Central Committee and Mao Zedong was to transfer Chen Yun back from the northeast, organize the Finance Committee and serve as its director. In 1942, Chen Yun presided over the financial and economic offices of the five provinces of Shaanxi, Gansu, Ningbo, and Jinsui, with outstanding performance. During the Liberation War, he presided over the work of the Northeast Financial and Economic Committee and stabilized the northeast economy relatively early. Mao Zedong once spoke highly of his ability to govern the economy, saying: Yes!

In July, the establishment of the Central Finance Commission was completed. At the beginning of its establishment, the Central Finance Commission was faced with the situation of managing a country with a population of hundreds of millions, with a shortage of manpower and a myriad of tasks. In accordance with Chen Yun's requirement of "building financial and economic organs into headquarters with ideological and strategic vision," the Central Finance Commission has paid attention to politics and the overall situation, recruited qualified personnel, and united their work.

Among the 50 members of the Central Finance Commission, 20 are personages from democratic parties, accounting for 2/5 of the total, embodying extensive inclusiveness; there are Ma Yinchu, an economist outside the party with an outstanding reputation who serves as deputy director of the Central Finance Commission; Huang Yanpei, who is well-known at home and abroad and who served as vice premier and minister of light industry after the founding of New China; and there are also many industrial and commercial giants such as Sheng Pihua, Hu Weiwen, Chen Shutong, Hu Ziang, Zhou Shutao, and Song Tangqing. Sun Yueqi and Qian Changzhao of the former Kuomintang and Sun Xiaocun of the Democratic Construction Association served as deputy directors of the Planning Bureau of the Central Finance Commission. Sun Yueqi, a former chairman of the Kuomintang Resources Committee, refused to carry out Chiang Kai-shek's order to demolish the enterprises to Taiwan, and completely protected and handed over thousands of factories and nearly 30,000 personnel under the committee to the Communists. In addition, in the name of advisers and special researchers, the Central Finance Commission also recruited a number of non-party experts and professors, such as Zhang Naiqi, Qian Jiaju, Shen Zhiyuan, and Ji Taoda, to participate in the work. Chen Yun personally wrote to Zhou Enlai to recommend that he extend the qianjiaju who was known for his research on public debt to his subordinates. He accompanied Chen Yun to Shanghai for research and offered many suggestions to curb inflation.

The Central Finance Commission has established a working mechanism and a working meeting system to coordinate the central and local governments, showing excellent leadership and organizational strength; within the Central Finance Commission, people inside the party and outside the party have jointly consulted and made concerted efforts. All of this has made preparations for curbing the long-raging hyperinflation.

"Battle of the Silver Dollar" and "Battle of Mumian"

Money and the supply of goods are the two most important factors affecting prices. Under the leadership of the CPC Central Committee, the "Silver Dollar War" and the "Rice Cotton War" were fought, and through both political and economic hands, speculative capital was severely damaged, and the price rise was initially curbed.

At the end of 1948 Chinese Bank of China began to issue renminbi. Whether the renminbi can quickly occupy the market is an important prerequisite for curbing inflation. In the later period of the Kuomintang rule, legal tender and gold yuan bills went bankrupt one after another, and the renminbi encountered stubborn resistance from gold, foreign currencies, especially silver dollars, in the process of going south.

At this time, Shanghai was the financial center of the country, the source of financial speculation, and industry and commerce lacked a normal operating environment. After the liberation of Shanghai at the end of May 1949, speculative capitalists used gold, foreign currency, and silver dollars as speculative objects to manipulate huge price fluctuations. They declared: The People's Liberation Army entered Shanghai, but the renminbi could not enter Shanghai, and openly refused to use the renminbi, and the circulation of the renminbi was blocked. On June 3 and 10, 1949, the Shanghai Municipal Military Control Commission issued an order banning the black market and prohibiting the circulation of all foreign currency, gold and silver. After careful preparations, on June 10, the Securities Building, the general hub of financial speculation, was seized in one fell swoop, and more than 200 speculators were arrested. The "Silver Dollar War" shook Shanghai and removed obstacles for the renminbi to fully occupy the market. This is the first step in curbing inflation.

Not content with defeat, the speculative forces turned their targets to important materials urgently needed in big cities such as grain, gauze and coal (i.e., "two whites and one black"). In April, July, November 1949 and February 1950, speculative capital set off four relatively large price increases. In order to stop the rising wind, from the end of July to the middle of August 1949, Chen Yun was entrusted by the central government to hold financial and economic meetings in Shanghai for five regions, and formulated countermeasures to curb inflation and stabilize the economy. Under the unified leadership and command of the Central Finance Commission, several state-owned companies collected and stored materials, transferred a large amount of grain from the northeast to customs, and after speculative capital had eaten up all the materials, they concentrated on selling them in all major cities across the country from November 25 to early December, and at the same time stopped lending and recovered deposits. This is supplemented by the establishment of discounted savings and the absorption of floating funds. On the one hand, there is a continuous nationwide sell-off of materials, with the entry of state-owned enterprises to guide anchor price increases; on the other hand, multi-means to tighten the monetary root. After many days of competition, the goods swallowed by speculative capital at high interest rates had to be cut and spit out. After this battle, the speculators were devastated and never recovered. Some commentators said: In june, the CCP used political force to suppress the tide, and this time it can be stabilized by economic force, which is unexpected by the Shanghai industrial and commercial circles.

Draw salaries from the bottom of the cauldron and unify finance and economics

After the first two "battles", the state basically grasped the initiative in the market. According to the analysis of the CPC Central Committee and its Central Finance Commission, in order to truly stabilize prices, it is necessary to draw salaries from the bottom of the barrel and unify the national financial and economic system in order to balance fiscal revenue and expenditure and eliminate the hidden danger of inflation. This is the cure.

In March 1950, the Government Council of the Central People's Government issued an order to unify the financial and economic system. The order requires that all revenues and expenditures, national materials, and national cash be managed by the central government. Under the order of the central government, the whole country has banned it and implemented it efficiently. After a short period of arduous efforts in just 3 months, the whole country has achieved centralized and unified management of the fiscal economy system and the balance of fiscal revenue and expenditure, and prices have basically stabilized. To unify finance and economics, Mao Zedong praised it as no less than the "Battle of Huaihai."

Source: Learning Times