ECONOMIC AND FINANCIAL PROBLEMS IN THE ANTI-JAPANESE WAR

6. ON THE DEVELOPMENT OF THE SALT INDUSTRY

Salt is the great resource of the Border Region. It is the mainstay which balances imports and exports, stabilizes the currency, and regulates commodity prices. A large proportion the people rely on salt [as a form of] exchange for goods from outside. A relatively large proportion of the troops and working personnel rely on salt for their livelihood or to supplement their livelihood. Salt is also a major source of government financial revenue. Therefore salt plays an extremely important role in the Border Region. Since the War of Resistance began the supply of salt from the sea has been cut off and the supply from the Huai area and from Shanxi has been reduced. The southwest relies on salt from Sichuan and the northwest and the eastern areas on salt from Ningsia and Qinghai. Salt from a Border Region has thus come to occupy an important position and the transport and sale of salt increases annually. In 1983 our salt exports were only 70,000 packs (each pack is 150 and each jin is 24 liang.). In 1939 there was a sudden increase to 190,000 packs. In 1940, the figure was 230,000 packs and in 1941 there was another abrupt increase to 299,068 packs. By September 1942 the total was 155,790 packs and it is estimated that another 70,000-80,000 packs can be sold in the last three months making a total of 230,000-240,000 packs. These statistics reflect two important facts: the first is the external demand, and the second is our hard work. Some comrades cannot see that external demand is determined by the war of Resistance and that within certain limits salt can be sold. Therefore they propose that things should follow their own course and that there is no need for the Party and government to interfere. Other comrades merely ascribe the yearly increase in the sale of salt to external demand and do not recognize that the leadership of the Party and government is a great factor in that increase. We began to pay attention to the salt industry in autumn 1940. As well as the objective factor of the external salt famine and depletion of salt stocks which made 1941 salt sales particularly good, the abrupt increase from 230,000 packs in 1940 to 299,000 packs in 1941 was also due to the subjective factor that we implemented the policy of supervising transport in that year. Apart from the fact that external demand was not as urgent as in 1941, the sudden drop to 230,000-240,000 packs in 1942 from the previous year's 299,000 was due to our abandonment of the policy of supervising transport (putting an end to the many plans made by the people for transporting salt). If we do not learn a lesson from this, we shall repeat past mistakes in future work. Certainly there were defects in the salt-industry work for 1941. The original plan to transport 600,000 packs was too big. The Border Region still does not have such a great transport capacity. The achievement in producing 700,000 packs of salt was good but the quality [of the salt] was too poor. Supervision of transport was correct but it was unnecessary to mobilize everyone everywhere. There were also many abuses in the organization and method of mobilization which did not accord with the actual situation. All these things were shortcomings and mistakes in our work in 1941. Nevertheless, adopting a policy of active development of the salt industry was entirely correct. Belittling, misunderstanding and even opposing this policy is entirely wrong.

What should be done in 1943? First we must determine a policy for active development. In the current situation in the Border Region, we certainly cannot adopt a negative approach towards salt which is a major factor in solving financial problems (the publicly-run salt industry and the salt tax ), in balancing imports and exports, and in stabilizing the currency and commodity prices. Therefore we must enlarge the already established Salt Company into the main force for allying public and private salt industry and for expanding public and private production, transport and sales. And we must improve the quality of salt produced so as to promote sales. We must restore transport supervision and organize all possible transport capacity among the people to expand salt transport. We must draw in porters from outside areas to transport and sell more. We must build roads, and arrange for inns, warehouses and fodder to help transport. The Salt Company should gradually gain control of outside sales in order to avoid the anarchic situation produced by lack of public and private coordination. These are our general policies for the active development of the salt industry in 1943, Concrete arrangements should be as follows:

(1) Expand the Salt Company and increase its capital. Under the direction of the Commodities Bureau raise share capital from the various official organizations, the troops and privet individuals. Develop salt transport, expand salt sales. Regulate salt prices. Guarantee that the company transports 40,000 pack in 1943, and with this salt as a basis buy as much salt from the people as possible to carry out partial unification of salt sales to outside areas. Afterwards, depending on the situation gradually achieve complete unification so as to prevent outside manipulation and guarantee the interests of the government and the people.

(2) In 1943, plan to produce 400,000 packs of salt and to transport 300,000-360,000 packs. Moreover strive to exceed this. As regards production, continue the policy of supervision by officials and production by the people. Ensure that the salt is mostly or entirely top-quality and do not allow inferior quality to be produced again. As regards transport; plan for the Salt Company system to transport 400,000 packs, draw in porters from outside to move 50,000 packs, and organize the manpower and animal power of the Border Region to move 210,000-260,000 packs, making a total of 300,000-360,000 packs.

(3 ) The organization of the manpower and animal power of the Border Region to transport 210,000-260,000 packs is immense, arduous and meticulous piece of organizational and mass work. It should be directed by the Reconstruction Department and supervised by the government at various levels, the Party committees at each level having the responsibility for checking up and helping. Mobilization to transport salt must have a degree of coercion but it certainly must avoid commandism which causes damage. We must chiefly adopt the policy of unit propaganda and persuasion. The organization to transport salt must take the forms of transport cooperatives and transport teams. Propagandize the masses to buy shares voluntarily. Some can provide manpower and some can provide draught animal. Some can provide both. Some can provide running costs and some, in special circumstances, can be exempted from providing anything. We can organize transport teams among people who have rich experience in portering, together with the necessary animals. The Party and government at county, district and township level should actively direct the rational, fair and health, organization of these transport teams. They should set off smoothly, do the necessary work along the way and ensure the safety of the personnel and animals. On return pay attention to the distribution of the cooperative's profits and guarantee the interests of the people involved and of all the cooperative members. Salt transport must not violate the agricultural season. We must strengthen the organization of labour mutual-aid cooperatives (exchange labour) so that after the transport team has set off, the cooperative members do not lose agricultural production through lack of manpower and animal power. As regards the salt-transport organizations (cooperatives and teams) of the Sui-Mi special military area and the three eastern counties, we should allow the masses greater freedom and reduce coercion. The transport cooperatives and teams of all places must be built up on a basis of benefiting the cooperative members. The duties of the Party and government lie in making these benefits increase daily, otherwise we will certainly be defeated. The Reconstruction Department, the sub-regions and counties should teach the people through the most successful examples of salt transport by the masses. They should propagandize them widely for imitation so as to be certain that the plan for salt-transport in 1943 will be completed and will also bring large direct benefits for the people.

(4) The enterprises of the Commodities Bureau and the people's cooperatives in all places must closely coordinate with the people's transport cooperatives and teams, and strive to ensure that the animals used by the people to transport salt are able to transport other goods on their return journey. Only then can the people's salt-transport undertaking expand and the whole of salt transport develop, and only then will the whole salt-transport plan be completed.

(5) The key sector in developing the salt industry is transport, and the major condition for transport is communications. In 1943 the government should allocate 2 million yuan under the direction of the Reconstruction Department for the building of two cart-roads between Yan'an and Dingbian, and Dingbian and Qingyang, and for repairing the road from Yan'an to Fuxian. Furthermore the Commodities Bureau should set up inns with stables and trans-shipment warehouses along the main salt transport routes, and dig water-storage holes in places lacking water. The Reconstruction Department and Commodities Bureau together should plant alfalfa widely along the routes and also provide fodder in other ways. So long as there are roads, inns, grass and water, transport costs can be greatly cut, the volume of transport can be greatly increased, and the three forms of transport - porters from outside, people from the area and the Salt Company - can all develop. Plans to improve the means of transport should also be directed by the Reconstruction Department. Carts and handcarts should be built according to road conditions in order to increase salt transport. Provided the roads are well built. it is much better for the government to use more carts and the people to use more handcarts than to use pack-animals.

(6) In 1943 the salt tax is fixed as 100,000 packs. Those who live near will provide transport, those who live far away will provide a substitute, and some will provide a mixture of both. However, the salt tax and the development of the salt industry are two different matters. So long as we can definitely export 300,000-360,000 packs, it does not matter whether we accept actual salt or substitute payments for salt tax.

If we can complete our plans for planting cotton and spinning and weaving in 1943, we can reduce our imports of raw cotton, cotton yarn and cotton cloth. If we can export 300,000-360,000 packs of salt in 1943 at an average value of 10 yuan Border Region currency per jin (each donkey pack is 150 jin) our income will be between 450 million yuan and 540 million yuan. Thus by reducing one and increasing the other, the Border Region's problem of balancing imports and exports will be entirely solved. The following material reflects the people's experience in the transport of salt during 1941.

A RECORD OF LU ZHONGCAI'S LONG MARCH

Report on the first experiences in salt transport of Chengguan district, Fuxian county, as told by the deputy leader of Chengguan district, Lu Zhongcai. Supplemented by Wang Yuxian and Kong Zhaoqing. Recorded by Gao Kelin, 13 August 1941.

(l) For the first salt transport, Chengguan district should have provided fifty pack animals. In fact it provided twenty-eight. The reason the plan was not fulfilled was the lack of animals (at the very most we could mobilize forty ). Some animals were hidden away and not kept at home. The district government did not handle things firmly as it was busy with grain loans and government bonds.

(2) We set off on 18 July and returned home on 11 August, a total of twenty-five days. It took twelve days to get from Fuxian to Dingbian, one day to get to Yanchi and load up, and twelve days to return. The longest stage was 90 li. The route, stage names and conditions during each stage was as follows:

(i) From Fuxian to Zhangcunyi, 50 li. Five gullies and the road was difficult. Good water and grass.

(ii) Zhangcunyi to Lannipo, altogether five stages, each 70 li. Road good. Cut grass to feed the animals.

(iii) Lannipo to Lijiabian. 20 li of mountains and 40 li of gullies. Road difficult. Fodder no good.

(iv) Lijiabian to Lujiajiao. 30 li of gullies and 5 li of mountains. Most difficult to travel. Fodder no good .

(v) Lujiajiao to Luanshitouchuan. Travelling in gullies. There were military stations. Fodder was sold (each 100 jin of mountain grass 30 yuan of valley grass 50 yuan, and wheat hay 40 yuan.).

(vi) Luanshitouchuan to Sanlimiao, 80 li. There were military stations. Dry grass cost 50 yuan for 100 jin. Forty li of mountains, very precipitous. Difficult to travel. Water difficult ( Salt water not drinkable). Saw a salt-porter whose donkey had fallen to its death.

(vii) Sanlimiao to Liangzhuang, 80 li.

(viii) Liangzhuang to Dingbian 90 li. There were military stations. Fodder 50 to 100 yuan per 100 jin. No water.

(ix ) Dingbian to Yanchi, 40 li. One day there and back. Sandy road difficult to travel.

(3) Difficulties along the route were:

(i) During three of the five stages from Zhangcunyi to Lannipo, locusts [zhameng] were biting. It was best for men and animals to travel in the evening.

(ii) During the two stages from Sanlimiao to Liangzhuang and thence to Dingbian there was no water. Men and animals were thirsty.

(iii) There were a lot of thieves at Dingbian. Animals, money, clothing and tools often taken.

(iv) Beyond Luanshitouchuan since salt-transport animals from various counties converge there are often several thousands or hundreds of animals travelling together. Thus there are problems of inn space, fodder, water, and especially of room to rest animals. Things can easily go wrong and cause trouble.

(4) Life on the road:

Chengguan district sent twenty-eight animals and fourteen men. Along the way we cooked for ourselves. Each meal required 7 sheng of millet, roughly 25 jin. Everyone felt that 'We eat more when we have set out'. Inn charges ranged from 3 yuan at the lowest to 8 yuan at the most. It depended entirely on whether you had a good or bad relationship with the manager of the inn. When travelling we sang and told stories, many of them about Duke Xiang seeking a wife. Everyone was very happy and no one felt burdened. Animal fodder was cut in rotation. It was plentiful and could not all be eaten up. The masses along the route were very good, and there was no problem in getting grain and fodder, though we chiefly relied on ourselves. Sometimes there were quarrels, mainly because the animals had eaten someone's crops. Only in one place did the manager of an inn give us bad grain.

(5} Points that arose during the journey:

Good :

(i) None of the animals had any illness. Those from the first and third townships were thin when we set off but returned fat. This was because of the care of the porters, and careful feeding.

(ii) None of the porters had any illness. Everyone was very fit and in good spirits. No one grew thinner. They just got a little sunburned.

(iii) Nothing was left behind along the way and the animals did not eat people's crops. This was mainly because deputy district head Lu Zhongcai's was an old porter. He was experienced, responsible, and meticulous. Everyone else was very active and thus we were successful.

Bad:

(i) Du Hai, head of the village council of the First administrative village of the Third township, sold good donkey and bought a bad one to go. As a result the donkey was exhausted, did not carry pack and we wasted 165 yuan in travel expenses. The township also sent another bad animal (it had bad loins) and Jianjuntaicun of Fourth township sent donkey with a bad leg. Neither carried salt and each wasted 165 yuan in travel expenses. Furthermore, the same village sent a donkey with a rotten saddle with the result that its back was hurt through the pressure of its load. The head of Second township had two donkeys. He sent a bad one with a pod saddle and frame. This caused a lot of bother along the way. The district-level government did not make a careful inspection of these matters before we set out. Some were known about but not corrected. As a result only twenty-five of the twenty-eight donkeys carried salt. The other three travelled without loads, not contributing one bit to the value of salt carried and wasting from 500 to 600 yuan in travel costs. All in, the total loss was over 1,500 yuan. This is a valuable warning for district and township cadres.

(ii) The head of the village council of Jianjuntaicun in Fourth township did not obey deputy district head Lu Zhongcai's instructions. He did not bring good fodder for the animals (oats [yumai] and broad beans [candou]) and instead used kaoliang and other poor substitutes. As a result the animals from that township sometimes lay down when travailing because of their poor fodder. We are preparing to struggle against that village head and punish him.

(iii) The porter Yang Wanbao from Fourth township was a real troublemaker on the way. He pretended to be ill and skulked off home. He created wild rumours, 'two people had died, deputy district head Lu and a man called Wang... There was nothing to eat along the way... The donkeys' backs had all been ruined under their loads... The inns could not sell grain...' so that many people back in the town felt unhappy. The district head did not pay sufficient attention to this. In future he should be alert.

(iv) Some families sent bad donkeys which carried less, only about 110 jin. One family from Jianjuntaicun in Fourth district changed their donkey's halter for a bad one when they sent it off. They anticipated the donkey would die and had made up their minds to write everything off. The donkey from the head of Second township was only 10 li from home on the way back when it lay down. He was unwilling to send a good donkey to take over. He defaulted on his responsibility as he thought the donkey would surely die and could not return. So he did not come and take over.

(v) Twelve donkeys carried too much and 40 to 50 jin were given to a donkey without a load. When we got to the tax inspection office at Sunkeyaoxian they confiscated 50 jin of salt and one sack (value 20 yuan) because we had no certificate.

(6) Costs, losses and gains:

(i) Average expenses per donkey were: 2 tou of beans value 60 yuan; each man had 1.5 tou of grain and as each man looked after two donkeys this equaled 0.75 tou per donkey with a value of 35 yuan; travelling costs were 70 yuan. The total 165 yuan. In addition there was salt capital [yanben] of 20 yuan. The average cost per donkey was thus 185 yuan.

(ii) On average each donkey from First township carried 130 jin, and from Second, Third and Fourth townships 110 jin. At present market prices of 200 yuan per 100 jin salt, each load was worth from 220 to 260 yuan.

(iii) At current prices, after expenses are deducted, earnings per donkey load ranged from 35 to 75 yuan.

Notes: (a) If each donkey were able to carry 150 jin, the guaranteed income per donkey at current prices would be above 100 yuan.

(b) Reports on amounts carried were given by the porters who were certainly holding something in reserve—most donkeys here can carry 150 jin.

(c) At the same time the principle is clear that so long as you have good donkeys you can earn more. The worse the donkeys the less you earn, and you can even make a loss.

(7) Experience and lessons:

(i) The victorious return of this salt-transport team from Chengguan district, Fuxian, proves that the Party and government's plans, estimates and methods for salt transport are entirely correct. The doubts, lack of trust and considerations that it would be a burden by various comrades are all erroneous and shallow outlooks.

(ii) We smashed the fears of some cadres and masses about going to Sanbian for salt ( 'men and animals will die... they will go and not return'). On the contrary the animals carrying salt returned fatter, and the men were healthier and merely a little sunburned.

(iii) We proved that salt transport can earn money, and smashed the inaccurate reckless talk that we 'certainly would lose capital', 'each donkey would lose 100 yuan., and 'it is the greatest burden ever imposed it the Border Region'.

(iv) We showed that certain cadres at district and township level, particularly at township level, did not do their work responsibly (they did not inspect carefully ), were prepared to cover-up things that were wrong (village and township heads could send poor animals and were not investigated), were corrupt (used poor kaoliang instead of beans ), and had become tails following behind the masses.

(v) The cadres played a decisive role. Deputy district head Lu Zhongcai was experienced, lively and responsible. Each time we reached a place or something happened, he held a discussion meeting of the porters — he even discussed how much salt each donkey should carry. As a result neither men nor animals came to any harm and on the contrary ended up stronger and in better spirits than when they set out.

Lessons:

(i) The district and township cadres did not pay attention to and investigate at the right time the troublemaker from Fourth township, Yang Wanbao who skulked off home and created rumours. They did not talk to him and did not report to higher levels. As a result a rumour spread among the people of the district that two people had died - deputy district head Lu and somebody Wang - and that three donkeys had died. This made people very uneasy.

(ii) There were problems along the way (some stages were hard going, one or two had many locusts, and two had little water) but they could be overcome. On bad roads we had to be more careful. Where there were locusts we travelled in the evening. Where there was little water we drank more on getting up in the morning and carried water with us. With patience all difficulties could be overcome.

(iii ) The better the donkeys, the more we can earn. If we could earn 75 yuan for each donkey that carried I30 jin this time, we can earn 115 yuan for donkeys carrying 150 jin, The worse the donkeys the less we can earn, and we can even make a loss. For example, Chengguan district sent three poor donkeys (one with bad loins, one with bad legs, and one was exhausted). As a result they did not carry salt. Each donkey wasted 165 yuan in travailing expenses and the total loss including porters was over 1,000 yuan. At the same time this showed that work must be done carefully and you cannot muddle through. If the district and township had carefully inspected the donkeys sent this time, worked conscientiously, and not given any favours, we, would not have made these losses since everyone would have known about the poor donkeys.

(iv) If we had not stayed at inns along the way and let the animals out to pasture not buying hay, we could have saved over 50 yuan per donkey. What we save becomes earnings.

(v) We must pay more attention to the national laws. Because we were not careful we had 50 jin of salt and one sack confiscated. This was an unnecessary loss. ( This report was published in the Liberation Daily 14, 15 September 1941.)

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Selected Works of Mao Tse-tung