VKP(b) CC Politburo Decree concerning Xinjiang

[handwritten note at the top of the page: sheets 174-182 - in classified storage. Strictly Secret]

ATTACHMENT

to point 178(OP) of Politburo Minutes Nº 23

CONCERNING XINJIANG

VKP(b) CC Politburo Decree of 22 March 1935

Section I

TRADE

1. Establish that the basis of our economic relations with Xinjiang is the receipt from Xinjiang of that raw material which is needed for our industry (wool, cotton, hides, especially heavy [hides], and also furs and livestock), and that the volume of our exports to Xinjiang is mainly determined by the volume of our imports of raw material from there.

2. Establish the volume of trade with Xinjiang for 1935 at 9,750,000 rubles, of which imports from Xinjiang to the USSR are 5,000,000 rubles and the sale of exports from the USSR to Xinjiang is 4,750,000 rubles.

Hold the NKVT [People's Commissariat for Foreign Trade] responsible for having permanent leftover stock in trade with Xinjiang in warehouses abroad and at border bases (above the three-month balances in transit) of seven months toward the annual export plan, that is, 2,800,000 rubles for 1935. Finish the formation of these stocks no later than 1 August 1935.

Charge the Foreign Exchange Commission with determining within a three-day period the volume and timeframe of the shipments to industry in accordance with the export and leftover stock plan which has been adopted.

Goods being handed over to the Native Corporation [Tuchan gongsi] Government Company and buyers against trade loans are not included in these figures of the volume of trade for 1935 and are exported above the export plan for Xinjiang.

3. Charge the People's Commissariat of Finance with examining the question of increasing the cash reserves of Sovsin'torg in accordance with the increase of trade with Xinjiang which has been adopted.

4. a) Assign a currency allocation for Xinjiang of 950,000 rubles against the covering of Xinjiang reexport goods bought in Xinjiang in 1935 and sold abroad by us, of which 700,000 rubles is for the purchase of tea, specific Chinese [goods] (silk, special shoes, crockery, etc.) through Soviet organizations and East European goods which are not produced in the USSR, and 250,000 rubles in world currency by remittances to Eastern China and abroad through the Provincial Bank. In the event the buyers wish, allow calculations in silver instead of remittances so that the total amount of payments in silver does not exceed 75,000 rubles per year.

b) Set the prices for wool, cotton, and hides somewhat lower, and in any event no higher than the prices offered by the buyers from Eastern China. Leave the prices for livestock as before, that is, do not increase them; make the prices for furs competitive compared with the sales to Eastern China.

c) Consider the opening in Xinjiang of branches of the Vostvag company by agreement with the Urpra [Urumqi Government] to be advisable.

5. Hold the NKVT responsible for:

a) in the event of demand by the merchants permit the transit of goods from Xinjiang to Eastern China through the USSR and back.

b) consider it necessary for the time being to get a foothold in the method of exchangeable goods operations through trade with Xinjiang.

c) prohibit Soviet organizations trading in Xinjiang from selling any Soviet goods whatsoever for world currency, as well as foreign goods imported to cover reexport operations.

[Translator's note: the pagination suggests that a page is missing at this point]

Section II.

FINANCES.

1. in order to improve the finances of Xinjiang and strengthen the Xinjiang currency consider it a first-priority task to balance the Xinjiang budget, for which recommend [to] the Urpra:

a) Reduce expenditures, in particular the administrative and managerial expenses and the expenses for the army;

b) shift the centralized and local expenses to an estimated budget system;

c) centralize taxation.

2. Recommend the following [to] Urpra in the realization of the goals set above:

remove the collection of taxes from local governments and transfer it to central treasury bodies independent of the local governments;

eliminate internal customs collection;

replace all the taxes which now exist with general provincial taxes, namely: industrial for the city, and an agricultural tax and a tax on livestock for the countryside;

recommend taxes for construction and weighing fees for cities as local taxes, and veterinary, forestry, and animal branding fees for the countryside;

prohibit local governments from introducing new taxes and changing the rates of existing taxes without the permission of the center;

restore the monopoly on moiré, the duty on tobacco and alcoholic beverages, and the stamp duty;

introduce a permission system for extracting minerals with the establishment of payments by the pood.

Provide for tax benefits which stimulate the repair of the old and the creation of a new irrigation system, the growth of the number of livestock, the area planted for cotton, and resettlement.

Establish that taxes in the countryside can be introduced at the discretion of the payers in kind or in money, with discounts offered for payment in liangs [lany].

3. Modify the structure of the budget to the interests of the defense of the country and the maintenance of a sufficient army, and try for the expenses for the budget not to exceed the income, intending that the budget not be in deficit in the long term.

4. In connection with the need to ensure the budget is in balance and considering the continuing support of the liang, consider it necessary to periodically increase taxes calculated in liangs.

5. Strictly prohibit and prosecute the issue of substitute money.

6. Use the silver in part which is provided by Urpra against the trade loan in proportion to the need to pursue an intervention in silver at important points to strengthen the liang rate.

7. Reorganize the existing Provincial Bank, using it as the main lever to influence the Xinjiang economy. With this in mind, enlist the capital of the merchants in the Bank for this purpose, give it the functions of offering loans to commerce, agriculture, and transportation, and assign it the task of introducing foreign currency exchange in trade turnover. Offer it against a trade loan of 500,000 rubles in silver. Entrust the same Bank with issuing functions in the future, immediately separating the treasury functions from it. The bank will perform long-term granting of credit only from budgetary savings and loans. The Bank is to pay special attention to offering credit to agriculture, using no less than 250,000 rubles for this purpose from the silver loan fund of 500,000 rubles being granted the Bank. Open Bank branches in the most important commercial locations of Xinjiang.

8. The Xinjiang tax bills submitted by Cde. Svanidze's commission in coordination with the NKF [People's Commissariat of Finance] and NKID [People's Commissariat of Foreign Affairs] are to be sent to the Urpra as recommended material.

9. Hold the State Bank liable for reorganizing the finance and counting office in Urumqi into a foreign trade bank office within two months, and the offices in Kashgar [Kashi], Ghulja [Yining], and Chuguchak [Tacheng or Qoqek] into branches of the Urumqi offices of Vneshtorgbank [the Foreign Trade Bank].

10. In order to make it easier for Xinjiang residents to enter the USSR for commerce and other needs propose that the State Bank open a credit in gold-backed rubles [chervonnyy kredit] for the Provincial Bank of up to 500,000 rubles and permit its repayment by the Provincial Bank handing over raw material to the USSR at commercial prices. These credits should not be used for Xinjiang merchants to buy goods in the USSR.

11. Propose that the Xinjiang commission submit their proposals about further measures to improve the money economy of Xinjiang to the SNK [Council of People's Commissars] commission on the basis of the work done to increase the Xinjiang budget and money economy no later than the fall of 1935.

Section III.

AGRICULTURE.

1. Recommend that Urpra organize nine agricultural stations, nine veterinary stations, nine breeding sites and also one central veterinary laboratory with a storehouse in Urumqi from the implements and materials allocated through trade loans (within the limit of 200,000 rubles), holding USSR NKZ [the People's Commissariat of Agriculture] (Cde. Tsyl'ko) responsible for giving the necessary assistance in this matter.

2. Recommend that Urpra gradually limit the one-sided conditions of the leasing of land, water, and implements from rich landowners [bai], easing the conditions for peasants to buy back land from the rich landowners and help the government help the peasants resettle from the overpopulated regions to low-density ones, granting them state lands on preferential conditions.

Section IV.

TRANSPORTATION.

1. Recommend that Urpra bring the Urumqi-Shikho road into a condition suitable for vehicles by 1 January 1936, continuing the new route where it will be needed in order that the Urpra itself subsequently determine the further direction of the road toward the Soviet border.

Hold Tsudortrans [the Central Directorate of Roads and Automotive Transportation] responsible for helping Urpra build this road with road equipment and technical aid. Allocate 800,000 rubles from the trade loan to the disposition of the Urpra for this road construction, including 200,000 rubles of road equipment and 600,000 rubles in Xinjiang currency obtained by Sovsin'torg through the sale of food goods and consumer goods on the Xinjiang market above the export plan.

2. Recommend that Urpra:

a) Pursue measures ensuring the legal protection of transportation companies and individual haulers from requisitions and confiscations of livestock, transportation equipment, and forage, and also from compulsory tariffs on the delivery of freight.

b) Involve the merchants in the construction of pickets and forage bases, and also in the organization of cart shipments, allowing the granting of credit to the merchants for this purpose for a period of from one to one and a half years at 4-6% a year through the Xinjiang Provincial Bank, at the same time granting tax privileges for the industrial tax for periods of up to two years to builders of pickets and forage bases, and also to transportation companies and individual haulers.

c) Establish automotive communications through Kumul [Hami]-Urumqi and on to the Soviet border to Chuguchak through allocation from the Xinjiang [one page missing at this point]

4. Grant 600,000 rubles in Xinjiang currency to Urpra against a trade loan to pay the local expenses for construction (wages and the purchase of local materials).

Hold Sovsin'torg responsible for selling the corresponding amount of food and consumer goods above the export plan on the Xinjiang market for this purpose.

5. For the purpose of the prudent use of the loan funds in an efficient manner recommend that Urpra perform the construction and operation of all those facilities with regard to which this turns out to be possible in practice by means of a broad involvement of private initiative and private capital.

6. Consider it expedient to hand over the construction and operation of some facilities to private persons and to formalize [this] with individual tripartite agreements between Sovsin'torg, the Native Corporation, which guarantees the payment of the loan, and the private companies or individual merchants which are ensuring payment with their property and are receiving individual facilities for construction and operation.

7. Perform technical oversight of the industrial construction against the loans from Moscow through Ehksportstroy, with road work through Tsudortrans, agricultural measures through USSR Narkomzem [the People's Commissariat of Agriculture], and medical construction through Narkomzdrav [the People's Commissariat of Health], and in all cases in coordination with the Xinjiang commission, assigning people personally responsible for this work in each of these organizations.

8. Geological work in Xinjiang to prospect for minerals and, firstly, tin, is to be done at Soviet expense, for which the NKTP [the People's Commissariat of Heavy Industry] is to be held responsible for sending a geological expedition there in 1935, the documentation of which is to be done in 10 days.

Section VI.

PERSONNEL.

1. Considering the high proportion of Soviet organizations in the economic and political life of Xinjiang, suggest that the departments sending advisers and instructors to Xinjiang pay special attention to the qualitative selection of officials being sent to Xinjiang.

These officials are being selected and sent under the personal responsibility of the leaders of the institutions.

2. Suggest assigning [the following] to Xinjiang as advisers and instructors no later than 1 April 1935 in order to strengthen the apparatus of the Urpra:

a) to Narkomfin [the People's Commissariat of Finance] Cde. Grin'ko - three financial officials (budgeters and tax specialists);

b) to the State Bank - (to Cdes. Mar'yasin and Svanidze) - two finance officials (banking officials);

c) to Tsudortrans (to Cde. Serebryakov) - two road officials;

d) Glavzoloto [the Main Directorate of the Gold and Platinum Industry] (to Cde. Serebrovsky) - one instructor for gold prospecting;

e) Glavneft' [the Main Directorate of the Petroleum Industry] (to Cde. Barinov) - two officials for petroleum refining.

Hold Narkomzem, Cde. Tsyl'ko, and the RSFSR Narkomzdrav, Cde. Kaminsky, responsible for sending the necessary number of agricultural and medical workers to Xinjiang to staff these stations and institutions as agricultural and medical stations and institutions are opened. These officials are to determine the required number of agricultural and medical workers in coordination with the Xinjiang commission.

3. Considering the burdensomeness of the expenses to support the advisers and instructors, determine that in any event their total number for all of Xinjiang is not to exceed 50 men (including military advisers and instructors).

[Translator's note: the pagination suggests that one page is missing at this point]