The Fourth Outstanding Person of Huangpu Military Academy

Now that his cousin Li Mingrui has returned to Guangxi and said he wants to recruit soldiers for the 8th Guangxi Division he leads, Yu Zuobai certainly supports this. However, although Yu Zuoyu is a family member, he still has to remind him that the Guangxi troops fighting outside have stricter control over ideology than the troops within Guangxi.

"Were all the factories and mines in Liuzhou built by people from Guangdong? Does that mean they're all Communist Party properties?"

"Yes. On the surface, it's a private bank in Guangzhou, but in reality, everyone knows what's going on. It's just that from the bottom up, not even Huang Shao wants to point it out."

The three of them were having dinner and chatting. Li Mingrui asked about the current situation in Guangxi and Guangdong. It seemed that business in these two provinces was quite booming.

Li Mingrui: "Cousin, that means the Guangxi government will definitely not touch these industries. Let them open up and make money, and we can get a share of the profits, right?"

Yu Zuobai: "Now the provincial government and the provincial army, the whole province knows about it. Don't fight the Guangdong Communists for no reason. It will only bring huge losses. If you don't want to fight, you can't disrupt these businesses. In fact, I heard that when Huang Shao first negotiated with the Guangdong side, the conditions were better than this. Later, the two sides still fought, and Guangdong investment was reduced by half. And all that was lost were businesses that made big money, quick profits. Only mines and factories are left. They are expensive, have long payback periods, and they stink."

Yu Zuoyu: "Take the Liuzhou iron mine we visited years ago. The Guangdong people came and built the wharf first, then the railway. Only after the railway was built did they start mining. It was very complicated. I saw several foreigners on the wharf, American and British engineers, directing and coordinating. Now there's a locomotive on the railway, but the mine hasn't even started yet."

Yu Zuobai: "There are even slower ones. In Baise and Guode, the Guangdong people are investing in a 20,000-kilowatt hydroelectric station and an aluminum mine. What do you call this? The supporting infrastructure system will take three years to complete... three years..."

Yu Zuoyu: "Brother, cousin, let's talk about the military situation outside. The Seventh Army is now in Jiujiang and Nanchang. How is it going over there?"

Yu Zuobai: "The Seventh Army is still the backbone of the Guangxi Clique. Number one, Mingrui, your 8th Division is now the backbone of the Seventh Army, right?"

Li Mingrui: "Yes, that time, Li Zongren pushed forward with all six divisions of the Seventh Army and the 37th Army, but only my 8th Division escaped unscathed. Zuo Yu, the Seventh Army now has two divisions stationed in Nanchang and one in Jiujiang. Our 8th Division is in Nanchang, and our main work is building bunkers, digging trenches, and training troops. The reason I went back to Guangxi to find people is that training soldiers well requires a lot of officers, preferably of higher quality."

Yu Zuobai: "Why didn't you tell me earlier? I was the principal of the Nanning Military Academy two years ago. If you want to recruit students or instructors at the military academy, it won't be a problem as long as I can help."

Nanning branch of the Whampoa Military Academy.

"Cousin, I actually brought back a few soldiers from the 8th Division this time. I wanted them to learn some knowledge at the military academy."

Li Mingrui said to Yu Zuobai: "I picked these men. Although they are young, they have all fought in battles and are smart and capable. They are all promising talents."

Yu Zuobai: "As long as I take action, it won't be a problem. Let's...take Principal Zhang's office first. Principal Zhang!"

Zhang Yun逸, the principal of the Nanning branch, saluted Yu Zuobai, who immediately returned the salute and shook hands.

Both of them were revolutionary veterans of the Xinhai Revolution and old members of the Tongmenghui. Zhang Yun逸 also participated in the Huanghuagang Uprising and survived the massacre.

Li Mingrui: "Principal Zhang, this is a promising talent I picked out from the 8th Division. I hope he can be enrolled in the military academy to study and improve his skills."

Zhang Yunyi: "Okay, no problem."

Li Mingrui: "This is Li Tianyou. This is Wei Jie. This is Qin Shimian. This is Huang Xinyou."

Zhang Yunyi looked at the four young men and said, "Yes, they have a sense of righteousness and courage. Leave it to me. You want to recruit some more people from me, right?"

Li Mingrui: "Yes, the 8th Division must continue to train and strengthen its troops."

"This is Mo Wenhua, the most outstanding of this year's graduating class, from the Infantry Department."

In the afternoon, Zhang Yun逸 brought people.

Mo Wenhua stood at attention and saluted: "Hello, sir!"

"Lu Shaowu," Zhang Yun逸 introduced the second person: "He has already graduated and stayed on as an instructor. He is very outstanding. To be honest, I am reluctant to give him away, but Lu Shaowu is determined to make great achievements in the army, so I will let him go to your 8th Division."

Li Mingrui recruited a group of graduates and teachers from the Nanning branch, which should be enough for his 8th Division to strengthen and reorganize.

So far, Li Mingrui has basically finished the important work he needed to do in Nanning. As the New Year is almost over, it is almost time to return to Jiangxi.

"cousin."

Li Mingrui: "What makes you happy running?"

Yu Zuoyu went out for a few days and returned to Nanning the day before his trip.

Yu Zuoyu: "I'm out on business. I met this guy last year when I was at the Landai Civilian Regiment in Donglan County. He's a native of Donglan, graduated from the Guizhou Military Academy, served as a staff officer in the Guizhou Army, and now he's back home teaching in Donglan. In his spare time, he comes to the militia to help train its soldiers."

Wei Baqun saluted Li Mingrui and said, "Hello, Commander Li. My name is Wei Baqun, and I graduated from the Guizhou Military Academy in the sixth year of the Republic of China."

Li Mingrui: "That's right. So, you don't want to be a teacher anymore?"

Wei Baqun: "I'm actually good at fighting. It was only after the Guizhou Army was disbanded that I returned home. I have a good relationship with Yu Zuoyu, and Yu Zuoyu is your relative. This way, we'll all be familiar with each other and know each other well, so we can help each other on the battlefield."

Li Mingrui: "Okay! Then, let's go back to Jiangxi together tomorrow!"

Chiang Kai-shek's military reorganization plan covered the entire Nanjing system's army, including the Guangxi clique. Even if Li Zongren and Bai Chongxi did not want to accept the reorganization, they had to at least make superficial adjustments to their own troops.

Since it is a major adjustment covering all troops, it is natural for Li Mingrui to use this as an excuse to fill the 8th Guangxi Division with new officers and non-commissioned officers in order to strengthen the army.

When Li Mingrui returned to Jiangxi, the team he led belonged to three party branches.

Li Mingrui himself was one of them, Yu Zuoyu and Wei Baqun were members of a party branch, and Mo Wenhua and Lu Shaowu were party members developed by Zhang Yun逸 in the Nanning branch.

During the days when Yu Zuoyu disappeared, he was not running to Donglan to meet Wei Baqun, but was waiting for notification from the higher-level organization. Wei Baqun was summoned by telegram.

It took the superiors two or three days to finally reply to Yu Zuoyu: go to Jiangxi with Wei Baqun, join the 8th Division of the 7th Army, and develop well in the 8th Division of Guangxi.

In addition, the superiors also instructed: "There are other party organizations in the 8th Guangxi Division." After arriving in Jiangxi, the superiors will contact us again and provide a time and address for us to meet and integrate with the other party organizations. Before then, we should avoid close contact with the officers and soldiers of the 8th Guangxi Division, but we should also refrain from reporting on each other.

Li Mingrui's passenger ship departed from Qinzhou, sailed around half of China's coast, entered the Yangtze River, and went up to Jiujiang.

While the passenger ship was sailing on the sea, another passenger ship, a larger ocean-going passenger ship, departed from Tianjin Port.

The passenger ship passed through Hong Kong, Sri Lanka, and Alexandria before its final destination was London, England. On board were Feng Yuxiang and his close associates, as well as the guards sent by Chiang Kai-shek to "supervise Feng Yuxiang's visit to Britain."

Feng Yuxiang, forced to resign, now lost all military power and his position as military and political chief of the Northwest region, but retained all his personal property. Chiang Kai-shek even retained Feng Yuxiang's general-level salary and benefits. After all, in this dispute between Chiang and Feng, Feng Yuxiang was defeated in just three moves, and Chiang Kai-shek's victory was not a surprise.

Lu Zhonglin: "Marshal, Shi Yousan and Han Fuqu delivered two letters just before we boarded the ship."

Feng Yuxiang: "It's a secret letter trying to salvage the relationship." "Yes. These two are fickle."

Feng Yuxiang: "Keep these two letters. They will be useful later."

Lu Zhonglin: "If they follow Chiang Kai-shek, will they be able to come back and rebuild the Northwest Army in the future?"

Feng Yuxiang: "Do you think you'll be able to rise to prominence if you follow Chiang Kai-shek? Shi Yousan and Han Fuqu are enjoying great success now, but in two years they will surely be suppressed and suffer injustice. By then, hmm."

Lu Zhonglin: "Yes, by then our overseas inspection trip will be almost over. I think it will take two years, or at most three years, before Chiang Kai-shek will have to ask you to return to China. Now that Ning and Yue are in a standoff, one has more soldiers and the other has a stronger army. It won't be easy to decide the outcome."

Feng Yuxiang: "What are those people in Guangxi doing now?"

Lu Zhonglin: "Following Chiang Kai-shek's first phase of military reorganization and training was a joy. The Guangxi Army and the Northwest Army were treated differently. Chiang Kai-shek said that Guangxi generals could still lead Guangxi troops, but they would have to add political workers, like Nanjing placing military supervisors there. Training could also use the Guangxi Army's methods, and there was no need to completely copy the Central Army's drill manual."

Feng Yuxiang: "No, I mean, Li Zongren and Bai Chongxi, don't you have any idea of ​​getting rid of Chiang Kai-shek?"

"It seems not, at least no one noticed it."

Feng Yuxiang: "That would be terrible. If Li Bai and Huang don't deal with Chiang Kai-shek, Chiang Kai-shek will deal with them."

Chapter 62, Strategic Opportunity Period

"In 1929, the coalition government's financial expenditures were still enormous." "In that year, we allocated 1170 million silver dollars in special military funds to support the second anti-encirclement and suppression campaign in the revolutionary base areas, which achieved complete victory."

“联合政府兴办了780所国民小学，其中580所为六年制高小。现在联合政府区域内的适龄儿童入学率达到了60.2%。兴办了322所扫盲班。为此政府新雇佣了4400名公办教师和9500名民办教师。这个教师的数量其实是不够的，很多学校的民办教师工作强度很大，常常身兼国文老师和数学老师。”

"Amidst the dramatic increases in expenditures and frequent policy adjustments, the coalition government's fiscal revenue reached 1.229 million yuan in 1929. Excluding industrial investment, government fiscal expenditures totaled 1.221 million yuan, resulting in a fiscal surplus of 80 silver dollars."

Mao Runmin made this work report on behalf of the Ministry of Finance. When he read this part, there was applause from both the stage and the audience.

It’s not easy, but we actually have a fiscal surplus this year!

You have to know that there was a counter-encirclement and suppression campaign in 1929. There was no counter-encirclement and suppression campaign in 1928, but there was a fiscal deficit.

Mao Runmin: "However, in 1929, the coalition government launched 23 industrial investment projects with a total investment of 6400 million yuan. These investments were all funded by government loans or financing."

"So, adding 1928 and the last three months of 1927, the total debt of the Coalition Government is now $1.33."

Tan Pingshan asked with a trembling voice: "Minister Mao, does this mean that the amount the coalition government owes is higher than our annual fiscal revenue?"

Mao Runmin: “Yes.”

Tan Pingshan: "Then...what about next year?"

Mao Runmin: "In 1930, the Ministry of Finance of the United Nations Government plans to raise another 1 million yuan. This is because 1930 is the first year of our Five-Year Plan. From a long-term perspective, some industrial projects with long payback periods, low profit margins, or uncertain, difficult, and complex projects must be implemented and launched in 1930. The current international situation is also relatively favorable for us to import industrial equipment. At this time, we should vigorously raise funds to obtain sufficient development funds for the government and industry and commerce, and strive to achieve the goal of doubling the total industrial output value within five years. ...Commissioner Tan, Commissioner Tan! Are you all right? Do you want to call for medical personnel?"

Not only Tan Pingshan, but many of the State Councilors present breathed heavily and were in a trance when they heard Mao Runmin's last words.

——So the Guangzhou United Government is only one step away from bankruptcy.

"Commissioner Tan," Chen Tianheng said, "Government debt can exceed annual fiscal revenue, because borrowed money doesn't have to be repaid immediately the following year. We only have to pay the interest on the debt we borrowed in 1927. Furthermore, you have to consider that the Coalition Government's fiscal revenue in 1928 was 77 million, and it has skyrocketed to 120 million this year. A significant increase in fiscal revenue is foreseeable in the future. We can still borrow money from banks, including British banks in Hong Kong, which shows that the banking industry has confidence in our repayment ability."

The government debt ratio isn't actually measured against annual fiscal revenue, but rather against annual GDP. Guangzhou hasn't yet calculated its GDP. However, it's estimated that the government only collects 5% in taxes from economic activity in its controlled area, perhaps even less. By the standard definition of the government debt ratio, this amount of debt is insignificant.

Bai Wenwei: "What was the Nanjing government's fiscal revenue last year?"

Mao Runmin: "According to the statistics we received, Nanjing's fiscal revenue last year was 3.38 million yuan, nearly three times ours. Song Ziwen said that the Nanjing government's fiscal deficit in 1929 was 1500 million yuan."

Nanjing's annual fiscal revenue also increased significantly, thanks to Soong Tzu-wen's efforts to establish a tax system in the area controlled by Nanjing and increase tax collection efforts.

In addition, the Nanjing-controlled area, except for Hunan and Jiangxi provinces, maintained peace for a year, which was also conducive to the increase of fiscal revenue.

Comparing the details, customs revenue reached 1.79 million yuan, accounting for more than half of the Nanjing government's fiscal revenue last year. The second largest revenue item was salt tax, which dropped sharply to 3800 million yuan, and the third largest item was unified tax, which amounted to 3000 million yuan.

In Guangzhou, the customs duty is 5100 million yuan, and the salt tax has been canceled. It does not mean that the tax is no longer collected, but it is no longer levied as a separate tax type. Instead, it is included in the national mineral resource tax. A total of 8 yuan was collected last year.

However, the Guangzhou government's total mineral resource tax revenue last year was 550 million yuan, of which 430 million yuan was contributed by tungsten mines.

The unified tax in Nanjing was a one-time commercial tax levied on several special commodities. Song Ziwen selected five commodities as the objects of unified tax: cigarettes, wheat flour, cotton yarn, matches, and cement, but not much was collected in total.

The Guangzhou government imposed two types of taxes: a general commercial tax and a sugar, tobacco, and alcohol tax. The former applied to all circulating goods, but unlike the lijin tax, it was a one-time levy; the latter was levied on specific goods: sugar, tobacco, and alcohol.

In 1929, the Guangzhou government collected 4100 million yuan in commercial taxes, with significant room for growth. The Nanjing government, however, was still using the lijin tax, as it had not yet been abolished. The lijin collected was essentially spent locally, either for local government or military expenses. T.V. Soong never saw any of it.

"The Republic of China should, and must, as soon as possible, abolish the likin system to facilitate the circulation of goods, the well-being of the people, and the development of industry and commerce."

In Nanjing, at a meeting of the Ministry of Finance convened by T.V. Soong, industrial and commercial representatives from all over the country called for "cutting levies and changing to unified tax system" as soon as possible.

T.V. Soong: "The Ministry of Finance has a plan for this. However, at present, the lijin tax is second only to the land tax as a source of revenue for local governments. If the lijin tax is abolished, local governments at all levels and local security forces will lose the vast majority of their financial resources. If this part of the expenditure is left to the central government to support, the pressure on the central government's finances will be unbearable."

Zhang Jingjiang: "In modern fiscal terms, the lijin tax is a highly inefficient and corruption-prone tax system. To generate revenue, local governments established checkpoints along the way, creating yet another barrier for merchants to collect lijin. Nanjing had absolutely no control over the localities. Within Sichuan Province, a 100-yuan grocery item from eastern to western Sichuan was subject to over 50 lijin tax checkpoints, collecting over 100 yuan in taxes—more than 20 times what it was during the Qing Dynasty. With such a situation, how could local industry and commerce develop?"

T.V. Soong: "Yes, yes, the Ministry of Finance is also aware that there are serious problems in this area. We will set up a tax reduction committee this year and plan to formulate a 'Tariff Reduction Outline' within the year to guide all regions in the orderly elimination of likin."

Zhang Jingjiang stopped talking.

Chen Guangfu, who was sitting on a nearby sofa, leaned over to Zhang Jingjiang and whispered, "This is a lack of decisiveness. Hesitant and hesitant. How long did it take for Guangzhou to abolish the lijin tax? Three months. Just three months. And during that time, they even fought a major battle."

Zhang Jingjiang: "What can we do? There are troops in Guangzhou. ... No, all the troops in Guangzhou are in the hands of the central government.

Chen Guangfu coughed lightly and spoke in a normal voice. "Minister Song, cutting taxes is indeed difficult, as I believe you understand. In order to implement fiscal centralization, the Ministry of Finance does need the cooperation and participation of powerful departments, such as your current tax police."

T.V. Soong: "The Ministry of Finance has such considerations. We are planning to formalize some of the tax police and establish a tax police corps under the Ministry of Finance. We will use this corps to ensure the smooth implementation of the tax reduction and unified system reform."

Yu Qiaqing: "Ladies and gentlemen, from the stock market crash at the end of October last year to February of this year, four months later, the Dow Jones Industrial Average rebounded. I wonder if this signifies that the current Western financial crisis is over?"

"The Ministry of Finance, the Economic Research Office, and the Central Government of the United Nations have made the following assessment of the current international economic situation, particularly in Western capitalist countries:"

Mao Runmin: "Western capitalist countries are experiencing an economic crisis triggered by the financial crisis. The current rebound of the Dow Jones Index does not mean that the economic crisis in capitalist countries has been alleviated or eliminated. In fact, it only marks that the economic crisis, or the economic crisis in the traditional sense, is about to begin."

"As the stock market rebounds, we see rising unemployment rates in Western countries. The US unemployment rate was less than 1.5% in the second half of last year, but has now risen to 5.5%, breaking the 5% warning line."

Chen Tianheng: "Now even some economists predict that the unemployment rate in the United States will eventually exceed 20%."

Mao Runmin: "Therefore, we must plan our work based on the expectation that a 'Western economic crisis is imminent,' rather than the expectation that 'the economic crisis is almost over.' The supply of money based on the gold standard remains insufficient, leading to deflation; money based on the silver standard has a relatively good supply. Loans from Western banks will be difficult to obtain, but for projects secured before the loan doors close, subsequent capital injections may be guaranteed. This is because industrial projects invested in by our joint government, on average, have better prospects than those in other countries, especially Western countries."

Chen Duxiu: "Okay, I understand. In the next few years, I, um, our government, will be accumulating more and more debt, right?"

Chapter 63: Small Boat Torpedo Party

The Joint Government Committee's document did not explicitly mention the "strategic opportunity period", but the National Industrial Promotion Law that was finally passed basically meant this.

From 1930 to 1934, the industrial output value of Guangdong and Hunan must be doubled, and an independently operated firearms and munitions industry sufficient to arm 50 regular troops and 30 local troops must be established. During the second five-year plan, Chiang Kai-shek must be overthrown and all of China unified.

The indicator of doubling industrial output value was discussed and debated for a long time during the meeting, and many committee members felt that it was too radical.

But based on Chen Tianheng's understanding of historical trends, this indicator is likely conservative. The starting point is low. By the end of 1929, after two years of development under the coalition government, Guangdong had 131 large-scale modern manufacturing factories and over 500 handicraft workshops. The average capitalization of these 131 factories was just over 90,000 yuan, while the average capitalization of the over 500 handicraft workshops was 8400 yuan.

The total industrial output value of all these large-scale factories and workshops was 2.2 million in 1929. Historically, when Chen Jitang was in charge of Guangdong, he was able to increase the industrial output value of Guangdong to 3.6 million in 1936.

"Chen Tianheng."

Mao Runmin found Chen Tianheng after the meeting and said, "You also raised your hand in favor during the final vote. It was quite unexpected."

Chen Tianheng: "The vast majority of the committee members raised their hands in agreement, and Committee Member Mao Runzhi also raised his hand in agreement. This is the common will of the two parties and the representatives of Guangdong, Hunan and Jiangxi."

Mao Runmin: "But in this way, the size of the army should not expand on a large scale in the next three years."

"We're not expanding on a large scale now because we want to make our armed forces stronger in the future," Chen Tianheng said. "The revolutionary army now has eight armies. Take rifles, for example. We have three calibers and five models. And that's just the main force. If you include local troops and militia, I'll have to ask the General Logistics Department how many types of rifles there are. The small-scale workshops at the First Arsenal are producing 26 types of bullets."

"Furthermore, we must consider many factors. We can't just assume our military strength is just enough to defeat Chiang Kai-shek and then start fighting right away. Throughout the entire war, we must retain some reserve strength. How much reserve strength should we retain? I think... 70%."

Mao Runmin: "Leaving 70% of the energy?!"

Chen Tianheng: "Of course, we won't keep 70% all the time. This should be when the civil war reaches its final stage. We will use 30% of our forces to finally deal with the remaining territory of Chiang Kai-shek at that time, and 70% of our forces to prevent some unpredictable events."

Guangzhou Naval Dock.