The Xiang-E-Gan Soviet Area was an important base established by the Communist Party of China during the land revolution period. In the early establishment of the base, some counties that had established Soviet power successively set up banks and began issuing paper currency. After the establishment of the Xiang-E-Gan Provincial Workers' and Peasants' Bank in November 1931, the counties stopped issuing paper currency, and the provincial bank issued paper currency uniformly. It was predetermined that the provincial bank would raise a fund of 40,000 yuan and issue 100,000 yuan in paper currency, but the actual issuance greatly exceeded this amount. By April 1932, there was a serious devaluation of the paper currency. The Xiang-E-Gan Provincial Committee of the Communist Party of China and the Provincial Soviet decided to withdraw this paper currency and then re-establish a new bank. The original plan was to withdraw the issued paper currency within three months, but in reality, the work of withdrawing the paper currency was not completed on time, and at the same time, paper currency continued to be issued. This article traces this historical period and briefly discusses the reasons for this situation.

Keywords: Soviet Area, Xiang-E-Gan, finance, banking, currency issuance

The Xiang-E-Gan Soviet Area is an important base established by the Communist Party of China at the junction of Hunan, Hubei, and Jiangxi provinces during the land revolution period. It consists of the border areas of Xiang-E-Gan and the southeastern part of Hubei. The financial and monetary work of this revolutionary base has both commonalities and its own characteristics compared to other Soviet areas. Investigating and studying the financial and currency issuance situation in the Xiang-E-Gan Soviet Area, clarifying some of the issues involved, has important academic value and practical significance for our in-depth study of the history of the Xiang-E-Gan Soviet Area and summarizing historical experiences and lessons. This article attempts to analyze this based on historical documents and related books, seeking guidance from colleagues.

1. The currency issuance situation in the early period of the Xiang-E-Gan Soviet Area

The establishment of the Xiang-E-Gan Soviet Area can be traced back to the Autumn Harvest Uprising that broke out in September 1927. In March 1931, the special committee of the Xiang-E-Gan border area under the Central Bureau of the Soviet Area was established, marking the formation of a unified leadership core for the Xiang-E-Gan Soviet Area. In July 1931, the special committee was renamed the provincial committee. In October, the Xiang-E-Gan Provincial Soviet (referred to as the Provincial Soviet) was officially established as a government institution, exercising government functions throughout the vast area of Xiang-E-Gan.

Before the establishment of the Xiang-E-Gan Provincial Soviet, the counties that established the red regime in the border areas successively set up county-level banks and began issuing Soviet currency. In a report in July 1931, Teng Daiyuan, an inspector sent to the Xiang-E-Gan Soviet Area by the Central Bureau, mentioned: "Each county has a bank. Pingjiang has issued paper tickets worth 13,000 yuan, and minted silver dollars worth 1,000 yuan. Liuyang has issued paper currency worth 10,000 yuan, Wanzai has issued 6,000 yuan, and Xiushui has issued paper tickets worth several thousand yuan. However, Liuyang has discovered that there are counterfeit tickets produced in collusion with unscrupulous merchants, and has publicly announced the execution of those involved. When paper tickets and silver dollars appeared, they were very popular among the masses. Red Army soldiers competed to exchange Soviet silver dollars as souvenirs, which circulated to the white areas such as Yuezhou and Miluo. Later, due to strict prohibition by the enemy, some small merchants and soldiers using paper tickets and silver dollars were executed, leading to unscrupulous merchants concentrating hundreds of yuan in tickets to redeem them, conspiring to undermine the Workers' and Peasants' Bank. The government had previously borrowed a lot of tickets for government expenses, and did not have a large amount of cash as collateral. Later, tickets could only be used within the red area without issue, as the enemy's blockade made it difficult for foreign goods to reach the Soviet Area, and products from the Soviet Area could not be exported. Moreover, purchasing from outside required foreign currency, resulting in a severe cash shortage in the Soviet Area, and paper currency could only be used within the red area." Teng Daiyuan's report reveals several important pieces of information: first, the reserves (i.e., silver dollars, which are the cash referred to in this article) when each county bank issued paper currency were very insufficient. When faced with people coming to redeem several hundred yuan in paper tickets, they found it very difficult to cope and even believed they were "conspiring to undermine the Workers' and Peasants' Bank"; second, the government's appropriation of tickets for daily expenses was considered very normal, and there was no sense of wrongdoing; third, although the paper currency issued by the county banks was welcomed by the masses in the short term, it was soon restricted to circulation only within the Soviet Area for two reasons: on the one hand, the enemy's blockade and prohibition; on the other hand, the lack of cash in the banks made redemption inconvenient. Finally, the Soviet regime imposed severe penalties for using counterfeit Soviet Area paper currency, and those daring to forge or use counterfeit bills faced the risk of losing their heads.

Teng Daiyuan mentioned that "each county has a bank," but he did not mention the time these banks were established. However, at least by April 1931, the counties had established banks. A document from April stated: "After several years of long-term struggle in the border area... although each county has established Workers' and Peasants' Banks, issued silver coins and minted silver coins, actively developed the rural economy, opened factories, and explored gold and coal mines, the benefits received so far are still very limited, so the economic situation in the border area is indeed at its breaking point."

Experts have discussed in detail the establishment time of banks in various counties of Xiang-E-Gan, among which the earliest bank was established in Pingjiang. "The county Soviet government... decided to establish the Pingjiang County Workers' and Peasants' Bank. After being reported to the Hunan Provincial Soviet government for approval, it was announced to be established in November 1930." The latest was in Yichun, which "officially announced the establishment of the Yichun County Workers' and Peasants' Bank" in August 1931. Among these county banks, the Pingjiang Workers' and Peasants' Bank issued the most paper currency, totaling 13,000 yuan in paper currency over eight months (from November 1930 to July 1931). This number is not particularly large, but even these not-so-large paper currencies could not be redeemed in a timely and sufficient manner, which should have been an ominous sign, unfortunately, it did not receive high attention from the leaders.

On August 30, 1931, the first expanded resolution of the Xiang-E-Gan Provincial Committee of the Communist Party of China formulated countermeasures for the financial aspect of the Soviet Area: "(1) Establish banks, issue and unify tickets, concentrate cash, mint silver coins, and implement low-interest loans and savings. (2) Organize a provincial bank, with branches in each county. (3) Unify the province's finance and taxation. (4) Determine the province's budget and final accounts. (5) Oppose waste and corruption, investigate past accounts, and implement financial transparency. (6) Confiscate the property of landlords, reactionaries, and religious figures in temples and shrines." This resolution indicates that the provincial committee attached great importance to financial and economic work from the very beginning and had clear guiding principles. The resolution also made plans for economic issues: "1) Establish banks. (1) Set up provincial banks with branches in each county. (2) Issue 100,000 yuan in paper currency, with a temporary fund of 30,000 yuan. (3) Concentrate cash. 2) Unify taxation. (1) The progressive agricultural tax ranges from five yuan to one hundred and twenty-five yuan, to be allocated to the provincial Soviet. (2) Determine various budgets and final accounts, and save expenses. (The rest omitted)" At this time, the provincial bank had not yet been established, but the provincial committee had already made relatively specific arrangements for the soon-to-be-established provincial bank and related economic work. If this resolution had been strictly implemented, the economy of the Xiang-E-Gan Soviet Area would have likely developed well.

One and a half months later, on October 14, 1931, the "Notice of the Hunan, Hubei, and Jiangxi Provincial Committee of the Communist Party of China (No. 5)" was released, which analyzed the economic situation and countermeasures in detail: "The economy and finance are currently the most serious problems in the Soviet area that have not been correctly resolved. The most serious issue in the Soviet area is: the financial difficulties of the Soviet area, the inability of various levels of Soviet finance to unify and plan, the inability of currency to circulate between counties, and the wealthy farmers and unscrupulous merchants burying cash. The leaders of the party and government agencies first hold a defeatist view, believing that the environment is severe, and that currency cannot be used and will lose faith. The Provincial Committee believes that if this problem is not resolved immediately, it will significantly affect the struggle. ... It is necessary to implement the concentration of all cash over 200 yuan in banks, and the currency must be used in production, strictly prohibiting the misuse of currency and the associated dangers." This document has already foreseen the danger of excessive issuance of currency and issued a warning. Unfortunately, later circumstances confirmed this warning.

After the establishment of the Soviet government in Hunan, Hubei, and Jiangxi provinces, work was quickly initiated to establish a red bank—the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank. "In November 1931, the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank was prepared and officially established by the provincial Soviet government." According to the previously cited resolution of the first enlarged meeting of the Hunan, Hubei, and Jiangxi Provincial Committee of the Communist Party of China on August 30, the banks in each county were changed to branches of the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank, and their power to issue currency should also be submitted to the head office.

Before the formal establishment of the Hunan, Hubei, and Jiangxi Border Workers' and Peasants' Bank, the total amount of currency issued by each county is a figure that still needs to be verified. According to the report records of Teng Daiyuan, even if the issuance amount increased in the months following the report, the total would not be very large. However, the Hunan, Hubei, and Jiangxi Soviet area also includes the southeastern region of Hubei. Before the formal establishment of the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank, "the amount of currency issued during the decentralized issuance phase in the southeastern Soviet area of Hubei was quite considerable, approximately over 500,000 yuan, equivalent to over 3 million copper coin notes, most of which were issued by the farmers' bank institutions in various counties and districts." Adding this part to the statistics, the total amount of currency issued by the red regime in the Hunan, Hubei, and Jiangxi Soviet area before the establishment of the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank was quite considerable.

How to handle the currency issued by each county after the formal establishment of the Hunan, Hubei, and Jiangxi Border Workers' and Peasants' Bank? If all of it is immediately invalidated, it will inevitably severely harm the interests of the masses and the credibility of the Soviet. A resolution from the joint meeting of the finance ministers of the Soviet governments in various counties of eastern Hubei, dated February 20, 1932, states: "The notes from each branch must be collected by mid-April, and those that are overdue will be invalidated." Here, the branches refer to the previous county banks, and the method of collection has not been clearly stated. It may be that before the specified deadline, the masses can exchange the paper money from the county banks for new paper money from the provincial bank; or it may be that both types of paper money circulate simultaneously in the market before mid-April, but the paper money from the county banks will not be reissued after being collected by the bank, thus gradually recovering the paper money from the county banks. The difference between the two methods is that under the first method, the issuance volume of currency will be relatively small. The situation in eastern Hubei is like this, and other regions should not differ much.

2. The currency issuance situation after the establishment of the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank.

After the establishment of the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank in November 1931, various urgent tasks were immediately initiated, such as printing banknotes that could circulate throughout the region, unifying the Soviet area's finances; collecting gold and silver, minting silver dollars; providing funds for trade between the red and white areas, etc. Among these, the most important work was still the printing and issuance of paper money, as there was also a Ministry of Finance in the Soviet area, and many financial tasks could be handled by the Ministry of Finance and the counties below.

In February 1932, just three months after the establishment of the Hunan, Hubei, and Jiangxi Provincial Workers' and Peasants' Bank, the Central Bureau of the Soviet area sent a letter to the Hunan, Hubei, and Jiangxi Provincial Committee: "The correct application of economic policy is very important at present. You must prevent all 'left' methods. Under the compliance with all Soviet decrees, private capital should be allowed to establish or rent factories and enterprises (firecracker factories, paper mills, mines) from the government, or workers should organize cooperatives themselves, with the government providing material assistance to develop production in the Soviet area. ... Establishing commercial transportation relations with the white-controlled areas must be executed very specifically, and you should export large quantities of firecrackers and cloth from your area to develop the economy of the Soviet area. The outflow of cash should be limited, but cash cannot be completely prohibited from circulating in the market, and the paper money of the Workers' and Peasants' Bank must not be excessively issued, so as not to lose faith in the future." The letter from the Central Bureau not only provided detailed instructions for developing the economy of the Soviet area but also specifically warned that "the paper money of the Workers' and Peasants' Bank must not be excessively issued," otherwise, the paper money would lose its credibility in the future. The warning from the Central Bureau should not be unfounded, but was likely raised after understanding some abnormal situations regarding currency issuance. Unfortunately, the warning from the Central Bureau did not take effect, and the situation of excessive currency issuance soon occurred.

On March 20, 1932, in a letter from the Central Bureau of Hunan and Hubei to the Hunan, Hubei, and Jiangxi Provincial Committee regarding economic issues, it was mentioned: "In your Soviet area, there are many products such as tea oil, black tea, paper, cloth, summer cloth, hemp, soybeans, firecrackers, and ceramics. Now they have all declined. The main solution here is the issue of commercial circulation. ... Now the banknotes have dropped to 70% of their value, and you must stop issuing the □□ fund to bring the banknotes back to parity with cash, and then issue according to market needs, ensuring that the reserve fund can be fully redeemed, and cash can only be limited in export, while it must still circulate within the Soviet area." Here it is mentioned that "the banknotes have dropped to 70% of their value," indicating that the consequences warned by the Central Bureau in February have already appeared. The Central Bureau also proposed some targeted solutions to the depreciation of currency in the letter, but these methods are likely to be difficult to implement. Examining this document, the requirement to ensure that the reserve fund can be fully redeemed is also unrealistic, as the originally planned fund was only 30,000 yuan, while the issued paper money was 100,000 yuan; how could it be fully redeemed?

Just two days later, on March 22, the third expanded meeting of the Executive Committee of the Xiang-E-Gan Provincial Committee passed the "Political Resolution" which reviewed the difficulties caused by the excessive issuance of currency and the overly leftist policies: "The Soviet land law is incorrect, the labor law has not been implemented, and the economic policy is even worse, with the establishment of overly leftist Soviet stores and restaurants. Absolutely prohibit cash from going out, prohibit the import of consumables (such as paper cigarettes, etc.), and regularly issue orders to monopolize the transportation of goods at market prices (such as grains, oil, paper, pork, etc.) (transshipment bureau), not a single cash, attempting to issue one and a half million paper currency, while the existing paper currency has dropped to 60% (in eastern Hubei), and even is worth nothing (in Xiushui). The most dangerous thing is not to [exchange] cash, and there are actually people begging, kneeling to the government and bank officials to [exchange] one dollar for buying salt, while on the other hand, there are many facts of cash abuse or improper use." Here, "Xiushui" refers to the commonly used abbreviation in documents at that time, referring to Xiushui and Tonggu counties. The resolution acknowledges that the degree of devaluation of paper currency is even lower than what was pointed out in the letter from the Xiang-E-West Central Bureau two days ago, and that Xiushui and Tonggu have reached a point where it is worth nothing, which is undoubtedly shocking and heartbreaking. The attempt to issue one and a half million paper currency also seems too bold.

Faced with such a severe situation, the Xiang-E-Gan Provincial Committee of the Communist Party of China decided to take decisive measures to correct previous mistakes. In less than half a month, on April 4, the temporary provincial committee of the Communist Party of China in Xiang-E-Gan proposed principles for solving the difficulties of state-owned stores and banks in the "Three-Month (April, May, June) Work Plan": "Six, cancel Soviet stores and restaurants, and the Agricultural Bank with a damaged reputation. The party leads the masses to organize cooperatives to replace state stores and restaurants; the masses will pool funds, and each level of the Soviet will allocate a sum of cash to establish the 'Chinese Soviet Republic National Bank Xiang-E-Gan Provincial Branch' after March." Four days later, on April 8, the expanded meeting of the Executive Committee of the Soviet government of Xiang-E-Gan Province made specific plans in the "Four-Month Administrative Plan Resolution" to cancel the discredited Agricultural Bank and re-establish a new bank: "The Agricultural Bank of Xiang-E-Gan Province shall no longer issue currency, and it is limited to be fully recalled within three months, with one-sixth recalled in April, one-third in May, and one-half in June. Each county's Soviet is responsible for recalling the currency fund in cash, and it is decided that Wanzai County Soviet will bear 16,000 yuan, Yiping County Soviet 11,000 yuan, Yifeng County Soviet 6,000 yuan, Tonggu County Soviet 6,000 yuan, Liuyang County Soviet 7,000 yuan, Pingjiang County Soviet 7,000 yuan, Xiushui County Soviet 11,000 yuan, E'nan County Soviet 16,000 yuan, and the 16th Red Army will bear 50,000 yuan. The past mistakes of excessive issuance of currency must be publicly acknowledged to the masses, and after the currency is recalled, the name of the Agricultural Bank should be immediately canceled, and the masses will pool funds to establish the 'Chinese Soviet Republic National Bank Xiang-E-Gan Provincial Branch' with cash assistance from each level of the Soviet. The currency of the E'dong branch should be recalled within the deadline."

This document specifies the timeline for recalling the excessively issued currency and assigns specific numbers for each county to raise the required cash for the recall. However, even if all tasks can be completed as desired, ensuring the normal operation of the new national bank branch and preventing the reoccurrence of currency devaluation must be planned in advance. In fact, the leadership of the Xiang-E-Gan Soviet area is also aware that the main reason for the excessive issuance of currency is due to excessive expenditures, so this document proposes some solutions to address the excessive expenditures: "Regarding future fiscal austerity measures, it must comply with the temporary government’s issued regulations on the provisional organization of local Soviets regarding the maximum limits for staff of various levels of Soviet agencies, and implement the elimination of redundant personnel. On the other hand, local guerrilla forces must strive to open up economic sources in various white areas and collect various progressive taxes according to the tax regulations issued by the central government. The provincial Soviet must find ways to organize and expand the gold mines in the Golden Cave to increase fiscal revenue. Strictly unify the provincial finances and formulate the provincial budget and final accounts. Each level must organize economic review committees to review the financial procedures of each level (but of a short-term nature), and in the future, military expenses will be self-sufficient by the army." These measures seem good, but whether they can be truly implemented and whether they can comprehensively solve the problem of excessive expenditures cannot be easily concluded.

The "Three-Month (April, May, June) Work Plan" formulated by the temporary provincial committee of the Communist Party of China in Xiang-E-Gan is very important, as the financial and fiscal work in the Xiang-E-Gan Soviet area in the following period is basically centered around how to implement this document. However, before analyzing how to implement this document, it is worth discussing a question: From the official establishment of the Xiang-E-Gan Provincial Bank in November 1931 to April 1932, in just over five months, how much paper currency did the provincial bank actually issue?

In the previous resolution of the first expanded meeting of the Executive Committee of the Xiang-E-Gan Provincial Committee on August 30, 1931, it was mentioned regarding the plan to establish a bank: "Issuing 100,000 yuan in paper currency, with a temporary fund set at 30,000 yuan." For the entire Xiang-E-Gan Soviet area, issuing 100,000 yuan in paper currency is indeed not much. The problem is that in the document dated March 22, 1932, it criticized the provincial Soviet for having the idea of "not a single cash, attempting to issue one and a half million paper currency," and the figure of 1.5 million is quite large. However, whether this was just an idea or became a reality is not recorded. Perhaps we can estimate the amount of paper currency issued based on the fund raised for redeeming the paper currency. According to the numbers assigned to each county for raising funds in the above document, the total adds up to 130,000 yuan. Assuming the fund and paper currency are calculated at a ratio of 1:1, the total amount of currency issued should be 130,000 yuan. However, if the Xiang-E-Gan Soviet area only issued 130,000 yuan in paper currency in about half a year, it seems impossible to cause such serious devaluation. Therefore, a more reasonable calculation method is to maintain the original ratio of fund to paper currency at about 1:3, meaning approximately 400,000 yuan was issued, while the actual fund remained at the original 30,000 yuan when the provincial bank was established, which led to the rapid devaluation of the Soviet area’s paper currency. The document hopes to mobilize and raise one-third of the issuance amount as a fund, which would roughly maintain the stability of the paper currency. This is merely the author's estimation, and some scholars analyzing the currency issuance in the Xiang-E-Gan Soviet area stated, "In 1932, the total amount of paper currency was 300,000 yuan." This figure differs somewhat from the author's analysis but is not too far off.

In addition, the currency issued in the southeastern Hubei region also amounted to 800,000 yuan.

3. The situation of recalling the Agricultural Bank's paper currency in the Xiang-E-Gan Soviet area.

The "Three-Month (April, May, June) Work Plan" formulated by the temporary provincial committee of the Communist Party of China in Hunan, Hubei, and Jiangxi was soon implemented in the Soviet area. The Soviet government of Hunan, Hubei, and Jiangxi officially began the work of recovering currency by publishing the "Work Report to All Voters in the Province" based on the plan set by the provincial committee. On April 25, Hu Zi, the Minister of Organization of the Hunan, Hubei, and Jiangxi Provincial Committee of the Communist Party of China, proposed in an article discussing economic issues: "Within three months, we should systematically recover the currency from various places as much as possible, resolutely levy progressive taxes on commerce and land, ensuring that the tax burden falls only on wealthy farmers and merchants, while exempting or reducing taxes for poor farmers and hired laborers. Each locality must immediately prepare a plan to develop the Soviet area's economy and expand outward, achieving self-sufficiency in funding and supplying the provincial Soviet, implementing a unified financial expenditure system, and striving to organize finances to increase revenue and cut expenditures." Hu Zi listed several specific requirements on how to implement the provincial committee's instructions and comprehensively improve financial work. He also candidly admitted in the same article: "The natural and objective enemy's blockade and brutal killings, as well as the sabotage by traitorous merchants and reactionaries within the Soviet area, are also important reasons for the economic difficulties. However, we should acknowledge the subjective 'leftist' leadership error, which should not be covered up by any explanation." He analyzed the reasons for the economic difficulties in the Soviet area from both objective and subjective perspectives.

Although the provincial committee formulated a plan to raise funds and recover currency within three months, many difficulties were encountered during the actual implementation, making it difficult to complete the plan. As a result, on June 7, the provincial Soviet issued the financial order No. 1, "Instruction from the Soviet Government of Hunan, Hubei, and Jiangxi Province," regarding the fund issue for recovering currency in various counties: "Regarding the funds for collecting currency in each county, which have been decided by the provincial government and communicated to all levels for execution, the provincial finance department has repeatedly urged payment. However, as of now, the third phase—June—has passed for several days, and except for 190 yuan collected from Xiushui, no other counties have paid. ... The provincial government has long announced the need to clear the currency in three phases. If we do not expedite the collection, the government's credibility will be lost, and the masses will inevitably doubt it, which is very serious. ... Recently, reports from Eastern Hubei indicate that they can clear over 800,000 yuan of currency before August. Given their large amount of currency and the same difficulties as the border counties, they have managed to clear it quickly, indicating that their execution is somewhat faster than other counties. ... The provincial government hopes that each county will further understand the significance of these matters and resolutely work hard to quickly find a batch of cash to recover the currency and promote the establishment of a new national bank..." This instruction revealed a harsh reality: the funds expected from each county are far from the planned amount, which will inevitably affect the currency recovery work. Although the situation in Eastern Hubei appeared optimistic based on reports, the facts proved that the reports were not accurate. Just a few days later, on June 20, the first representative assembly of the Southeastern Soviet in Hubei passed the "Soviet Work Resolution," which acknowledged: "The old banks have completely lost their independent operating nature and have become an accounting department of the Soviet, especially disregarding the amount of funds, simply issuing paper currency indiscriminately, leading to inability to redeem and a drop in currency value, even making it unusable. Now we should follow the three-month administrative plan of the office and resolutely clear the currency in phases. Currently, in circulation, apart from the amount already recovered, there are still over 500,000 yuan. By July, at least another 250,000 yuan should be recovered, and by August, redemption should be implemented. Previously, each county was assigned to organize the existing cash, and each county should pay the full amount." The task originally scheduled for completion by the end of June has now been postponed to August in the documents. In terms of specific numbers, 300,000 yuan of currency was recovered in the three months of April, May, and June (which is already a considerable achievement), leaving 500,000 yuan to be completed in July and August, which is also a challenging task.

The situation of currency recovery in the Southeastern Soviet area is not optimistic, and the situation in the Hunan, Hubei, and Jiangxi Soviet area is also not ideal. By September, it was already three months later than the original plan to recover all currency by June. The "Political Resolution" of the second representative assembly of the Hunan, Hubei, and Jiangxi Provincial Committee of the Communist Party of China mentioned this work only stating: "A portion of the old bank's paper currency has been recovered." It acknowledged that by September, only "a portion" had been recovered, and the task of recovering all currency had still not been completed.

The task of recovering old currency has been delayed repeatedly and cannot be completed on time, and the plan to establish a new bank can only remain on paper, unable to be implemented. Subsequent documents hardly mention this anymore. Since the new bank has not been established, the original bank still exists and operates as usual, so the prohibition on "not issuing currency" naturally becomes an empty document. As a result, while efforts are being made to recover the currency from the Agricultural and Industrial Bank, the issuance of such currency continues, and the amount issued exceeds the amount recovered. "By August 1932, apart from the more than 30,000 yuan recovered, there were still over 104,000 yuan in circulation. By the end of 1932, apart from the continued recovery of paper currency, the amount of paper currency in circulation increased to 194,000 yuan."

By late July 1933, the report from the Hunan, Hubei, and Jiangxi Provincial Committee to the Central Bureau was still reporting on the work of recovering currency: "Now the work of the provincial Soviet is becoming increasingly tense and orderly, and we are trying to overcome financial difficulties, mainly mobilizing party members and the masses to recover paper currency, which has already yielded considerable results. Just from the provincial committee, we have already received over 5,000 yuan in currency, totaling over 50,000 yuan recovered." At this time, more than a year had passed since the proposal to recover currency, and only over 50,000 yuan had been recovered, indicating that this work was far from complete.

4. Conclusion

The Hunan, Hubei, and Jiangxi Soviet area established the Provincial Agricultural and Industrial Bank in November 1931 and issued paper currency. By April of the following year, serious devaluation occurred, necessitating the recovery of paper currency, but the work of recovering paper currency encountered numerous obstacles and was difficult to complete. There are many issues worth our reflection in this.

The economy has its own objective laws, and people can only respect these objective laws and carry out work according to them. Any behavior that despises or ignores economic laws may be barely supported in the short term, but over time, it will inevitably face retaliation and punishment from objective laws. The issuance of currency also has its own rules; it must be compatible with the scale and level of local economic development. Issuing beyond the actual economic scale will certainly lead to currency devaluation. In fact, both the Hunan, Hubei, and Jiangxi Soviet area and the Central Bureau are aware of this. The Central Bureau had previously warned that "the paper currency of the Agricultural and Industrial Bank must not be issued indiscriminately," but this situation still occurred, which cannot be explained by "not understanding economic objective laws." As for attributing this situation to the "leftist opportunist line," it may not be a fair and objective attitude.

We might as well explore the reasons for this situation from the perspective of the parties involved. The leaders in the Xiang-E-Gan Soviet area were aware of the serious consequences of issuing a large amount of currency, yet they still agreed to do so, which must have been due to unavoidable difficulties. This was to maintain the operation of the party and government systems in the Soviet area, to support the revolutionary war against the attacks of the Kuomintang reactionaries, and many expenses forced the provincial workers' and peasants' bank to activate the paper currency printing press to provide tickets and currency to the relevant departments, as the funds obtained from normal tax revenue were simply too little. There are figures to prove this: "From the end of March 1932, after the third expanded meeting of the provincial committee, to August 10 of the same year, during the second workers' and peasants' representatives' congress in the province, in just over four months, the finance department overdrew a total of 146,000 yuan from the bank (not including the southeastern Hubei and border counties), and the bank overdraft accounted for about 87% of the military and political expenses during this period. From August 1932 to the end of the year, in about five months, although various taxes had been levied (totaling 38,700 yuan), due to the excessive military and political expenses, there was still an overdraft of 38,430 yuan from the bank." [3][P89]. It is evident that the enormous expenses were the fundamental reason for the excessive issuance of paper currency.

The solution to this problem is nothing more than increasing revenue and reducing expenditure. Increasing revenue means finding ways to increase financial resources, such as expanding the production of the Pingjiang gold mine, minting silver dollars, strengthening tax collection and management, and encouraging private business freedom, with the main reliance still on fighting the local tyrants. Once the local tyrants in the Soviet area were dealt with, they would target the rich peasants, or organize guerrilla teams to go to the white areas to fight the local tyrants. However, this approach could also lead to 'leftist' behaviors, such as randomly attacking rich peasants, even targeting farmers with four yuan as rich peasants." [4][P3]. As for reducing expenditure, to cut costs, the Xiang-E-Gan Soviet area had also taken many measures, such as setting limits on the daily operating expenses of Soviet institutions at all levels, reducing redundant personnel, lowering the living expense standards for public officials, and launching frugality campaigns, etc.; although these measures had some effect, they were difficult to fundamentally solve the problem of excessive military and political expenses. Thus, they had to rely on issuing paper currency to maintain operations, resulting in severe depreciation of the paper currency, which not only harmed the credibility of the Soviet government but also directly affected the lives of the people in the Soviet area. The historical lessons of currency issuance in the Xiang-E-Gan Soviet area are undoubtedly worth our attention and reflection.

Notes:

[1] Report by Teng Daiyuan from the Central Bureau on the inspection of the Xiang-E-Gan Soviet area (July 12, 1931) Literature and materials of the Xiang-E-Gan revolutionary base, Volume 1, People's Publishing House, 1st edition, September 1985.

[2] Report from the Special Committee of the Xiang-E-Gan area to the Central Committee of the Communist Party of China from East Hubei (April 1931) Literature and materials of the Xiang-E-Gan revolutionary base, Volume 1, People's Publishing House, 1st edition, September 1985.

[3] Ding Guoliang, Zhang Yuncai, eds.: History of Currency in the Xiang-E-Gan Revolutionary Base, China Financial Publishing House, 1st edition, October 1993.

[4] Literature and materials of the Xiang-E-Gan revolutionary base, Volume 2, People's Publishing House, 1st edition, January 1986.

[5] Literature and materials of the Xiang-E-Gan revolutionary base, Volume 3, People's Publishing House, 1st edition, December 1985.

Author Introduction:

Wang Xiaoling (1962-) Deputy Researcher at the Nanchang August 1st Uprising Memorial Museum.

Contact Number: [Sensitive Information Redacted]

Chen Hongmo (1951-) Deputy Researcher at the Nanchang August 1st Uprising Memorial Museum.

Contact Number: [Sensitive Information Redacted]