Rebirth: I am in Jin-Cha-Ji

Finally, there is internal digestion.

Affect profits.

Apparently, after the liberalization of the agricultural and sideline product market, some rural supply and marketing cooperatives saw this business opportunity. Transportation was extremely poor in those days, making it extremely difficult for many rural residents to travel to the city. With no means of transportation and poor transportation conditions, a single trip to the county seat took several hours or even half a day. Many farmers had devoted their entire lives to farming and rarely ventured into the city. So, when they arrived in the city and went to the state-owned supply and marketing cooperatives, they were hesitant. Often, when they arrived at the cooperatives, they were unsure what to do and couldn't even find what they wanted.

The same is true for the national supply and marketing cooperatives.

As a state agency, unless the state orders the state supply and marketing cooperatives to go deep into the countryside and sell goods there, why would they bother to go to the countryside and sell goods there?

So there is a problem here.

Farmers need certain products and have a little money. However, due to poor communication, these products cannot be sold to farmers. In the past, this problem was primarily caused by small-scale street vendors, the same ones now being targeted for "speculation and profiteering." But now, without these small vendors, these trade channels have been disrupted.

But after the free market for agricultural and sideline products was liberalized, the rural supply and marketing cooperatives established were different.

They spend years purchasing agricultural and sideline products from various rural areas. They are very familiar with the surrounding villages and know what they need. Moreover, as farmers themselves, they are not afraid of hardship. To earn money, they are willing to walk for hours to sell the goods they need in various rural areas.

This is typical agency sales.

This isn't new. During the War of Resistance Against Japanese Aggression, business in the Jin-Cha-Ji region essentially followed this model. While the base area's general trading company controlled the flow of goods into the base area, it couldn't distribute them all on its own. Therefore, after acquiring goods, the trading companies would sell them to local trading companies or small vendors, who would then go to various rural areas and sell the goods.

This is especially true in big cities.

Wholesale goods to various distribution companies. "How do you handle it?"

"We've had some internal debate. Some have suggested this should be banned. However, I believe this model increases sales for the state-owned supply and marketing cooperatives and allows rural cooperatives to earn money. Of course, the rural areas can also buy the products they need without going to the city. In the process, the state earns higher revenue from taxes and the profits of the state-owned supply and marketing cooperatives. It's a win-win for all. So I'm considering a wait-and-see approach."

Chu He spoke.

As he spoke, he looked at Wei Hongjun.

Wei Hongjun was the highest person appointed by the Central Committee to lead the free market for agricultural and sideline products. His attitude directly influenced the development of the free market for agricultural and sideline products in New China.

Chu He hopes that Wei Hongjun can give the following some time.

"Old Chu, I'll leave this matter to you. Keep a close eye on it. The emergence of any new thing is definitely not all good, with no drawbacks. You must record everything, both the good and the bad. One more thing: these supply and marketing cooperatives that are acting as agents can only sell in rural areas and are absolutely not allowed to set up shop in towns or national supply and marketing cooperatives."

Selling in rural areas might be controversial, but not a problem. But if you dare to compete with the state-owned supply and marketing cooperatives for the market in cities, you'll cross the central government's line.

"Yes."

"As for how to define these practices specifically, I still need to discuss this with other comrades in the Central Committee. Anything else?"

Local cadres are front-line cadres.

Although the central government has comprehensive data, it still doesn't have as much detailed information as local officials. Therefore, whenever Wei Hongjun visits a place, he chats with local officials before conducting research.

Then conduct research to verify these.

At the same time, it also confirms the authenticity of the local cadres' understanding of the situation.

Chu Hedao said, "There's one more thing. It's been four years since the government started the unified purchase and sale policy. At the beginning, there was some confusion in the countryside, and there were many complaints. But since the policy was adjusted, the amount of grain purchased and sold has been almost constant for the past two years."

"This is what the Chairman meant, and it's also the idea of ​​the Rural Work Department." Wei Hongjun nodded.

After the implementation of the unified purchase and marketing system, there was a huge backlash in the countryside. After the pig incident, Chairman Mao had a special conversation with Wei Hongjun, Deng Zhihui, and others. He meant that the amount of grain under the unified purchase and marketing system should not be arbitrarily changed in the short term, essentially meaning that the amount of grain under the unified purchase and marketing system should not be arbitrarily increased.

Therefore, the unified purchase and sale volume in 1953 and 1954 remained stable at 900 billion jin.

According to the Chairman's thinking, it was most appropriate to maintain the amount of grain subject to state purchase and marketing at 1956 billion jin during the First Five-Year Plan until 900. During the Second Five-Year Plan, the amount of grain subject to state purchase and marketing would be readjusted based on changes in urban population and increases in grain production.

"What's wrong? Is there any problem with the unified purchase and sale?"

"Yes. The amount of grain under the unified purchase and sale system has remained unchanged in the past two years, but rural grain production has been increasing."

"You mean the countryside wants to sell grain?" "Yes."

Wei Hongjun was really excited about this matter.

Chu Hedao said, "Currently, some rural areas with more arable land have seen a significant increase in grain production over the past two years. However, because the amount of public grain and the unified purchase and marketing system has not increased much, a lot of grain has been left on hand. Before the unified purchase and marketing system, there were grain dealers in the market who would buy grain from rural areas. Now, some cooperatives have grain on hand and want to sell it to raise funds. However, due to the current national unified purchase and marketing system, they have no way to sell the grain. This has given rise to some secret grain dealers and also to some local black markets. If the country does not quickly resolve this problem, many new problems will arise in the future."

Wei Hongjun nodded.

The country's completely planned economy has the current drawbacks.

There are many things the state can't plan for. Take the current unified purchase and marketing policy, for example. With grain production fluctuating year after year, many rigidities remain. Wei Hongjun pondered for a moment and said, "Old Chu, one thing is certain: unified purchase and marketing is a major national strategy, and it's impossible to change. Grain is a top priority for the state, and it's the focus of unified purchase and marketing. Therefore, for at least a few decades, it's impossible to open up the grain market. Not only will it be impossible to open up the grain market, but anyone who dares to resell grain will be the target of a major national crackdown."

"Ah."

Chu He was also a senior official of New China.

Wei Hongjun's words were clear. After a moment's thought, he said, "But many cooperatives have surplus grain that needs somewhere to go."

Too little food in rural areas is a problem, and too much food is also a problem.

Some cooperatives, with excess grain, wanted to exchange it for cash to buy goods and improve the lives of their members. However, under the unified purchase and marketing policy, the state supply and marketing cooperatives no longer purchased grain, so they had no choice but to find other channels.

This creates a black market problem.

“If there is more food, store it.”

Wei Hongjun said, "I will discuss this issue with other comrades in the Central Committee. However, my idea is that when there is an abundance of grain, of course we need to store it. And storing grain requires layers of storage, and there must be reserves. For any excess grain, the cooperatives should first have their own reserves. Then, the supply and marketing cooperatives should purchase any excess grain."

The state must have grain reserves, and rural cooperatives must also have their own. Only in this way can stability be maintained when something unexpected happens. "Should we increase the amount of grain purchased and sold under the unified government?"

"No."

Wei Hongjun shook his head.

He said: "Once the amount of grain under the unified purchase and marketing system increases, it will not only affect production cooperatives with high grain production, but also those with low grain production. This will affect most rural areas. Therefore, the amount of grain under the unified purchase and marketing system cannot be adjusted frequently, but must be stable. My idea is that rural areas with relatively high grain production can sell their excess grain to the supply and marketing cooperatives in addition to the unified purchase and marketing system. As for the price at which the national supply and marketing cooperatives purchase it, this needs to be discussed. Lao Chu, please have someone calculate the approximate amount of excess grain produced by the production cooperatives."

This problem also occurred in the 1960s and 1970s.

At the time, the state's practice was to purchase grain outside the unified purchase and marketing system at a price 30% higher than the grain purchased under the unified purchase and marketing system. This method increased state reserves and also modestly increased rural income.

After talking with Chu He, Wei Hongjun gained a deeper understanding of the current situation. Wei Hongjun also used this time to visit some free agricultural and sideline product markets and rural cooperatives with high grain production. While they were busy, Zhou Bin arrived in Wuhan.

Chapter 955 Credit Union Reform

"Since the founding of the People's Republic of China, rural credit cooperatives have developed rapidly. Currently, there are approximately 21.7 registered rural credit cooperatives nationwide, and 98% of districts and townships have credit cooperatives. They have become the most important credit guarantee institutions at the grassroots level in my country."

After Zhou Bin and his team arrived in Wuhan, Wei Hongjun immediately convened a meeting in Wuhan on issues such as rural industrial and commercial development and cooperation and reform among rural credit cooperatives. In addition to Zhou Bin and other financial system officials, Lai Ruoyu and Zhao Dezun from the Rural Work Department also arrived in Wuhan.

This isn't just about the development of rural credit cooperatives; the core issue is the development of rural industry and commerce. Therefore, the Standing Committee members of the Rural Work Department must participate. However, Tan Zhenlin is currently in Yunnan, collaborating with the Kunming Military Region to develop the Jiangxinpo Farmland Reclamation Base. Li Shaocheng, on the other hand, is in charge of agricultural production, primarily responsible for building fertile farmland and promoting improved varieties nationwide. He also remains in Beijing to handle the day-to-day work of the Rural Work Department and the Ministry of Agriculture.

In addition to these individuals, Wei Hongjun and Deng Zhihui also invited several local officials responsible for rural affairs. Zhang Tixue, Deputy Secretary of the Hubei Provincial Party Committee, who oversees rural Hubei, and Chen Tao, Deputy Secretary of the Guangdong Provincial Party Committee, who oversees rural Guangdong, also attended the meeting. Because the central government formulates policies for developing rural industry and commerce, local officials are the frontline implementers. Therefore, it was crucial to communicate with these officials and hear their opinions.

After everyone gathered for the meeting, Luo Weilin first detailed the Rural Work Department's next steps on behalf of Wei Hongjun and Deng Zhihui. They aimed to develop rural industry and commerce, primarily agricultural and sideline product processing. One goal was to utilize local resources and maximize the utilization of agricultural and sideline products, thus minimizing waste. Another goal was to reduce the current loss of agricultural and sideline products during transportation and storage. Finally, the goal was to boost the rural economy.

Local officials like Zhang Tixue and Chen Tao strongly support the Rural Work Department's plan. Currently, agricultural and sideline product processing is concentrated in cities, leading to numerous problems. The raw materials are in the countryside, but the processing plants are in the cities. The back-and-forth transportation results in loss of both raw materials and processed products. It also occupies already scarce transportation resources. Bringing agricultural and sideline product processing to rural areas could address this problem.

After detailing the Rural Affairs Department's next steps, Luo Weilin also explained the importance of utilizing funds from rural credit cooperatives to develop rural industry and commerce. He also frankly addressed the current problems facing rural credit cooperatives, as previously summarized by Wei Hongjun and Deng Zhihui.

After carefully listening to the Rural Affairs Department's proposals, Zhou Bin, Rong Zihe, and Cao Juru discussed the department's ideas. Their primary focus, of course, was on rural credit cooperatives. Following their detailed discussion, People's Bank of China Governor Cao Juru, in place of Zhou Bin, presented an overview of the current situation of rural credit cooperatives.

Despite the complex ownership structure of rural cooperatives, they remain under the leadership of the People's Bank of China. Therefore, the most detailed data on rural credit cooperatives resides with the People's Bank of China. Therefore, Director Cao presented detailed data unavailable to external departments.

Cao Juru and Zhou Bin are very familiar with each other.

As early as the Central Soviet Area, Cao Juru collaborated with Zhou Bin in establishing the National Bank of the Chinese Soviet Republic, establishing the State Treasury, rectifying taxation, and unifying finances. Towards the end of the War of Resistance Against Japanese Aggression, as the territory controlled by the Jin-Cha-Ji region expanded and the number of cities increased, there was an urgent need to rectify the financial order in the region. Cao Juru again followed Zhou Bin to the region. It wasn't until 1947, due to a shortage of cadres in Northeast China, that Cao Juru was transferred there and served as General Manager of the Northeast Bank, participating in the establishment of the Northeast's financial system. After the founding of the People's Republic of China, he was transferred to the central government and, on Zhou Bin's recommendation, became Governor of the People's Bank of China.

Credit cooperatives have developed almost in tandem with mutual aid groups and rural production cooperatives. Rural credit cooperatives are also an important component of the rural cooperative economy. Director Cao continued, "Currently, these rural credit cooperatives have a share capital of 3.4 million yuan and deposits of approximately 26 billion yuan."

"That means the total deposits of all the rural credit cooperatives in the country are only about 26 billion yuan."

Zhao Dezun couldn't help but speak.

Despite the poverty of rural areas, the annual contribution to the national treasury from the public grain and the gap between industry and agriculture alone exceeds 20 billion RMB. Rural areas are poor, but they are large, populous, and therefore possess considerable wealth. Yet, despite the over 26 credit cooperatives established in rural areas nationwide, their total deposits amount to only around billion RMB.

There is simply too little funding.

"Correct."

Wei Hongjun looked at Deng Zhihui.

After Deng Zhihui, Lai Ruoyu, Zhao Dezun, and Luo Weilin did a simple calculation, they said, "While 26 billion yuan in deposits isn't a lot, it's not a small amount either. If we can consolidate these funds, it will be enough to provide the initial capital needed for the next phase of rural industrial and commercial development."

26 billion yuan may not be a lot, but it is not a small amount either.

Rural industry and commerce, specifically agricultural and sideline product processing, differ from many heavy industries. Once established, many of these industries are profitable and self-sustaining. Therefore, their capital utilization differs significantly from that of heavy industry.

"Old Deng, there's one thing you need to understand."

Zhou Bin began, "While the original intention of establishing rural credit cooperatives did have financial attributes, they were primarily formed spontaneously by farmers as self-funded mutual aid organizations, primarily to help farmers overcome difficult times. They are a form of mutual aid economy, not a bank per se. I understand that rural industrial and commercial development currently lacks funds, and you need the funds of rural credit cooperatives. However, as part of the mutual aid economy, rural credit cooperatives inherently provide rural relief, a function that cannot be completely abolished. Especially given my country's current imperfect civil relief capacity, the mutual aid provided by rural credit cooperatives is a very necessary supplement. Therefore, a portion of the funds of rural credit cooperatives must continue to be used for mutual aid and relief, and not all of it can flow into rural industry and commerce. Therefore, only a portion of the 26 billion yuan in funds held by rural credit cooperatives can be used to support rural industry and commerce."

Zhou Bin and Deng Zhihui spoke casually and directly.

The two had known each other for over twenty years, having worked together in the Central Soviet Area. Furthermore, they were the same age. Zhou Bin knew Deng Zhihui's personality. He didn't like beating around the bush when it came to work.

Therefore, Zhou Bin told Deng Zhihui directly.

The current rural cooperative economy and mutual aid economy are not only about "strength in numbers" but also about changing rural production relations. They also take on some of the relief functions that the state should bear.

The country is poor now.

Limited funds were invested in heavy industry.

Therefore, the state is unable to properly undertake many of the functions it should have, mainly due to a lack of funds. Consequently, rural mutual aid and cooperative economies have been forced to replace state departments and fulfill some of the functions the state should have performed.

Rural credit cooperatives are a very important part of this.

Every year, they provide loans at very low interest rates, sometimes even zero, to help struggling farmers tide over difficult times. This funding serves as a relief measure and must be retained.

"Make a note of this first."

Lai Ruoyu and the others had more to say about this issue, but Wei Hongjun spoke first. They didn't want to argue about this issue for now.

Zhou Bin's point makes sense. The mutual aid and relief function of rural credit cooperatives should only be gradually taken over by the state. It shouldn't be blindly abolished until the state is able to take over. Abolishing them would be irresponsible and would completely abandon vulnerable rural farmers.

Although abandoning the system has eased the burden on rural credit cooperatives and state departments, it has left vulnerable and impoverished farmers to fend for themselves. This is not what a socialist country should do, nor what the Party should do.

"President Cao, please continue."

"Currently, state-run banks are all integrated from top to bottom. Bank funds are distributed equally. When needed, funds in East China can be transferred to South China, and funds in South China can be transferred to North China, depending on national needs. But the funds of rural credit cooperatives are different. They are scattered across the country and not integrated."

Director Cao continued, "Rural credit cooperatives are established with farmers' own funds, not top-down financial institutions. The funds of the Rural Credit Cooperative in East Village belong to the farmers in East Village, and the funds of the Rural Credit Cooperative in West Village belong to the farmers in West Village, because these credit cooperatives were established by them. We can't demand that the credit cooperative in West Village move funds to East Village just because East Village needs money. The East Village Credit Cooperative has no right to demand that the West Village Credit Cooperative, and neither do we, the government, have the right to demand that the West Village Credit Cooperative."

"I know the Ministry of Rural Affairs wants to pool funds from rural cooperative credit unions and use them to develop rural industry and commerce. But how to mobilize these scattered funds is the biggest problem at this stage."

Credit unions are not banks.

Although they're both called credit cooperatives, they're not related. They're not financial institutions like the Construction Bank and Agricultural Bank of China, established in the People's Republic of China, which can coordinate and coordinate nationwide. Rural credit cooperatives lack a true supervisory authority, and the People's Bank of China isn't truly a supervisory body for rural credit cooperatives; at most, it provides guidance.

Wei Hongjun began, "Rural credit cooperatives have reached a bottleneck, or perhaps a transitional period, in their development. With the orderly growth of the rural mutual aid and cooperative economies, the demands on credit cooperatives are constantly increasing. Previously, the primary function of credit cooperatives was to provide relief, but now, the rural mutual aid and cooperative economies will require greater financial support from credit cooperatives. Currently, these small, scattered credit cooperatives will soon become unsuitable for the development of the rural mutual aid and cooperative economies. Many rural credit cooperatives suffer from limited funds and disorganized personnel management, and it's time for restructuring. The unique circumstances of rural credit cooperatives make it difficult to establish provincial or municipal branches, but establishing some county-level cooperatives should be on the agenda. The rural industrial and commercial development promoted by our Rural Affairs Department isn't large-scale, cross-provincial expansion. Rather, given my country's current backward transportation system, we're focusing on local, county-centered industrial and commercial development. Therefore, the support of county-level credit cooperatives is sufficient."

"That's the truth." Director Cao nodded.

However, he said: "But credit cooperatives are run from the bottom up. If you want to establish a county-level credit cooperative, then you need rural credit cooperatives to contribute funds to establish it. This means that the newly established county-level credit cooperatives cannot manage the rural credit cooperatives. Instead, these rural credit cooperatives are the shareholders of the county-level credit cooperatives. This creates an inverted management phenomenon. It is impossible to solve the problems of capital circulation and overall management of credit cooperatives."