In 1938, Mao Zedong, Zhang Wentian, Wang Jiaxiang, and Liu Shaoqi jointly proposed six principles for the monetary policy of the border area in the form of telegram. This telegram was included in the second volume of the Collected Works of Mao Zedong, that is, the Monetary Policy of the Border Area. The basic point of view is that the border area must have a stable monetary policy; the number of banknotes in the border area must be suitable for market demand; the banknotes in the border area must have reserves; the monetary policy should be backed by foreign trade policies; the fiscal and monetary policy must focus on military expenditure; the value of the border area banknotes Should be higher than counterfeit currency. Although the telegram was sent to the person in charge of the Shanxi-Chahar-Hebei Border Area, it was actually the work of currency and finance during the confrontation between the Central Committee of the Communist Party of China and Mao Zedong. An overall guidance.

Monetary policy is an important support for the struggle against the enemy

The opening of the”Monetary Policy of the Border Area” clearly stated:”The border area should have a relatively stable currency to prepare for a protracted struggle against the Japanese invaders.”,”The military expenditures in the border regions are huge, and fiscal and monetary policies should focus on the sources of future military expenditures.” In essence, the War of Resistance Against Japan was a contest between China and Japan in terms of comprehensive national power based on economy. Finance, as the bloodline of the economy, played an important role in the victory of both sides in this cruel contest. After the outbreak of the War of Resistance Against Japan, in order to achieve their economic predatory purposes, the Japanese invaded the occupied areas by issuing counterfeit coins, severely disrupting China’s financial order. In times of national crisis, the Communist Party of China and its anti-Japanese armed forces went deep behind the enemy, established anti-Japanese base areas, established anti-Japanese democratic regimes, and assumed the responsibility of leading the entire nation in the war. At this time, if there is no correct monetary policy, it is impossible to crush the enemy’s economic conspiracy to”raise war through war”; if there is no correct monetary policy, it is impossible to carry out extensive production campaigns and economic construction to consolidate and expand fiscal and economic aspects.The Anti-Japanese Base Areas Behind Enemy Lines; if there is no correct monetary policy, it will not be possible to guarantee normal military expenditures and mobilize all forces to win the War of Resistance. This requires that the anti-Japanese base areas behind enemy lines led by the Chinese Communist Party must systematically fight against the enemy’s policy of issuing counterfeit currency and sabotaging the fiat currency. Set up local banks in the partitioned area, issue local banknotes, strictly inspect and prohibit private financial manipulation, disrupt the economy, fight tit-for-tat against the Japanese invaders, and prevent the Japanese invaders from”strangling China’s throat financially and financially.”

Monetary policy should be established on a reasonable basis

The banknotes in the border area are”tickets of resistance against Japan”, which are similar to the worthless counterfeit currency of the Japanese invaders and the inflationary legal currency of the Kuomintang. The essential difference is reflected in the value of the currency. How to achieve currency stability, Mao Zedong proposed the following principles:

First,”the banknotes in the border area should have reserves.” The implementation of the reserve fund system is an important prerequisite for modern currency issuance and an important measure to ensure currency stability. Mao Zedong proposed”goods, especially industrial products” as the first type of reserve fund for banknotes in the border area. In the war years, industrial products were urgently needed by the military and civilians in the base areas. What the people care about is not how much gold and silver the side coin can exchange for, but How much food and daily necessities can be exchanged. This is actually the replacement of the traditional”gold and silver standard” by the”material capital position”. Counterfeit currency is the second type of reserve for side currency, which is based on the consideration of using counterfeit currency as a means of foreign exchange. Because materials need to circulate inside and outside the base area, only maintaining a certain amount of foreign exchange can ensure that the currency value of the border currency does not change significantly due to the surplus or export of commodities. Fiat currency is the third type of reserve fund for side currency. In the early days of the Anti-Japanese War, legal currency not only had a dominant position in market circulation, but because it was linked to the US dollar and British pound, the currency value was relatively stable. Therefore, the use of legal currency as the third type of reserve also played an important role in ensuring the currency value of the border currency.

The second is”the border zone should have an appropriate foreign trade policy to back up the monetary policy.” The Monetary Policy of the Border Area pointed out that “the source of the industrial products in the border area is the area occupied by the Japanese invaders, and the agricultural products sold in the border area are also in the area occupied by the Japanese invaders.” Base areas rely more on industrial products in enemy-occupied areas, and at the same time, enemy-occupied areas rely more on agricultural products in base areas. Through targeted bilateral trade, the base area can not only break the blockade and exchange for necessities, but also realize the convergence of currency circulation and commodity circulation, so that the base area’s financial market can present a vibrant scene. At the same time, through bilateral trade with enemy-occupied areas, it is possible to obtain industrial products and foreign exchange, enrich the reserve fund of border area banknotes, and protect the value of border area banknotes.

Monetary policy should be controlled within a moderate range

First,”the number of banknotes in the border zone should not exceed the number required in the border market.” Mao Zedong first proceeded from the perspective of currency circulation, and required to act in accordance with the laws of the market, that is, the number of banknotes must meet the needs of market circulation in the base area. If the issuance quantity exceeds the circulation demand, the currency value will naturally decrease; conversely, if the issuance quantity cannot meet the circulation demand, the phenomenon of deflation will occur. At the same time, it emphasized the need to dynamically control the amount of currency issuance, taking into account the influence of military struggles,”the possibility of expansion and contraction of border areas,” and increasing or reclaiming banknotes in circulation based on reality.

The second is”the border zone banknotes should be maintained at a price not lower than the counterfeit currency.” The”Monetary Policy of the Border Area” mentioned four currencies, namely, border currency, legal currency, counterfeit currency, and miscellaneous currency, which actually pointed out that there was a currency struggle between the”two countries and four parties” during the War of Resistance. The final trend of the four-party struggle ended with the victory of the side coin. First of all, the War of Resistance against Japan is a protracted war, and China will win in the end. Therefore, the counterfeit currency is doomed to fail. Secondly, although the legal currency had a dominant position in the early days of the War of Resistance Against Japan, the Kuomintang army’s military defeat in North China allowed the National Government to absorb a large number of Japanese invaders. According to the realistic analysis that legal currency can only respond passively, Mao Zedong came up with a bold prediction that”the price of legal currency must continue to fall before the final victory of the Anti-Japanese War, and that legal currency may gradually disappear in North China.” Miscellaneous currency is a product of specific historical conditions such as warlords’ melee and unbalanced economic development between regions. As the war of resistance moves toward victory, its withdrawal from the historical stage is a historical necessity. While pointing out the final trend of the currency struggle between the”two countries and the four parties,” Mao Zedong once again emphasized that the border currency should follow the laws of market circulation,”if there are too many, it will fall.” At the same time, Mao Zedong pointed out that the central issue of currency struggles is that”the paper currency of the border area should be maintained at a price not lower than the counterfeit currency.” That is, the advantage of the currency struggle against the enemy must be maintained.

The basic point of view in”Monetary Policy in Border Areas” is an organically connected whole:a stable monetary policy is the actual demand for the struggle against the enemy. To establish a stable monetary policy, we must do a good job in key aspects, that is, monetary policy must be established on a reasonable basis and controlled within a moderate range. The reasonable basis is to maintain currency value stability, which requires flexible use of reserves and foreign trade; a moderate range is to control the number of banknotes issued, with the focus on maintaining the advantage of counterfeit currency. Only by establishing a stable monetary policy can we flexibly respond to and win the initiative in currency struggles and avoid being led by the enemy’s monetary policy; we can promote the economic construction of the base areas in an orderly manner, provide a stable supply of supplies for the military, and avoid currency Inflation or deflation caused a shortage of supplies. Only by guaranteeing the demand for military expenditure can we continuously expand the anti-Japanese armed forces and ensure the continuous consolidation and development of the base areas. At the same time, the victory of the military struggle will also lay a solid foundation for the victory of the currency struggle.

“Monetary Policy of the Border Area” played a strong guiding role in the monetary policy of the anti-Japanese base areas behind the enemy line during the war. The basic ideas contained in it have been time-honored, and it can also be used for reference in the new era of monetary and financial work. significance.