Early fundraising story

During the resistance war, financial resources were limited, the state budget could only meet about 1/4 of the spending, the rest relied on money issuance. However, money issuance also had an impact on inflation. To reduce the negative consequences, the Government implemented a policy of borrowing from the people by issuing government bonds.

People enthusiastically participate in buying National Bonds. Photo: Document

Issuance of government bonds and resistance bonds

According to Decree No. 122/SL, dated July 16, 1946, issued by the President of the Government of the Democratic Republic of Vietnam, the South was the first region permitted to issue government bonds to mobilize people's resources for the resistance war. In July 1946, the South issued a batch of government bonds worth 5 million VND, divided into 5 installments, with a maximum interest rate of 5%/year. This was considered an important first step in mobilizing financial resources through government bonds, both serving production and combat, and creating a foundation for the issuance of resistance bonds later.

In early 1948, promoting the victory after the Viet Bac victory in the fall and winter of 1947, the Government continued to issue "resistance bonds" according to Decree No. 160/SL, dated April 3, 1948 with a total expected value of 500 million VND, interest rate of 3%/year, repayment period of 5 years, including 4 types of bonds: A (200 VND, anonymous), B (1,000 VND, anonymous), C (5,000 VND, anonymous) and D (10,000 VND, anonymous).

The purpose of resistance bonds was to mobilize idle money from the people to serve combat and production, and at the same time serve as reserve money so that local administrative resistance committees could issue coercive orders when necessary, helping bonds circulate like paper money and be used to buy and sell, and pay off debts on the basis of the people's voluntariness and patriotism.

By the end of 1949, only about 40% of the total issued war bonds were sold, due to many reasons, such as distribution not being close to regional realities, lack of a plan to promote issuance, low interest rates (only 3%/year) while interest rates on bank deposits and loans from the people were higher, along with the rapid depreciation of money, making people hesitant to invest in buying.

In 1950, learning from the experience of government bonds, the Government issued government bonds denominated in rice worth 100,000 tons, with an interest rate of 3%/year and a term of 5 years. Strong propaganda and a more thoughtful issuance plan helped the national government bonds sell faster, but the results only reached about 30% of the expected plan. Reasons such as socio -economic difficulties, limited financial level, the form of government bonds being new to the majority of the population, and the shorter issuance period, made the effectiveness of capital mobilization through government bonds limited.

Vietnamese financial banknotes and treasury bills issued in the South Central and Southern regions have truly become effective tools and means to successfully carry out the struggle on the economic, financial and monetary front, protect national independence, freedom and sovereignty and effectively serve the resistance war against France.

In mid-1947, the traffic situation between the regions was divided by the enemy, travel was difficult, so the transportation of Financial Banknotes printed in the North to the Central region for issuance also encountered difficulties, making the spending budget and circulation of goods no longer as favorable as before. Besides, at this time, the enemy sought every plot and trick to sabotage the Financial currency in order to weaken the economic - financial and monetary system in the Central region.

Faced with that situation, on July 18, 1947, President Ho Chi Minh issued Decree No. 231/SL allowing the issuance of credit notes in the South Central region, with a total value of no more than 100 million VND, divided into 7 types: 1 dong, 5 dong, 10 dong, 20 dong, 50 dong, 100 dong and 500 dong. The credit note printing factory in the Central region was located in Son Ha district (Quang Ngai province), then moved to Nghia Lam (Tu Nghia district, Quang Ngai province).

The issuance of treasury bills in the South Central region increased the financial resources for the Administrative Resistance Committees of the provinces in the region to spend on the needs of the resistance war against French colonialism, while helping to develop production, business, circulation of goods and build a self-sufficient economy. In addition, the issuance of treasury bills also had the effect of preventing the enemy from sabotaging Vietnam's Financial Paper Money.

In the South, on November 1, 1947, the President of the Government of the Democratic Republic of Vietnam also issued Decree No. 102/SL allowing the issuance of credit notes of 1 dong, 5 dong, 10 dong, 20 dong, 50 dong, 100 dong and 500 dong, with the same value as Vietnamese Financial Paper Money, with a total issuance value of 20 million dong.

Thus, Vietnam Financial Notes and treasury bills issued in the South Central and Southern regions have truly become effective tools and means to successfully carry out the struggle on the economic - financial and monetary front, protect national independence, freedom and sovereignty and effectively serve the resistance war against France.

Establishment of the National Bank of Vietnam

To meet the economic requirements for the resistance war, the Government established three monetary zones and allowed the issuance of regional currencies. On February 3, 1947, the Production Credit Department (the first credit institution in our country) was established with the mission of supporting capital for people to develop production, limiting usury in rural areas, supporting the policy of reducing interest rates and moving towards collective work.

Entering 1950, the Vietnamese people's resistance war against the French progressed more and more strongly, with resounding victories on all battlefields, and liberated areas were constantly expanding. The change in the revolutionary situation required economic and financial work to be consolidated and developed according to new requirements.

Therefore, the Second National Party Congress (February 1951) proposed new economic and financial policies, which clearly stated: "Financial policy must be closely combined with economic policy; establish a National Bank, issue new currency to stabilize currency, and improve the credit regime".

To implement that policy, on May 6, 1951, at Bong cave in Tan Trao commune (Son Duong district, Tuyen Quang province), President Ho Chi Minh signed Decree No. 25/SL to establish the National Bank of Vietnam to replace the National Treasury and the Production Credit Department, under the Ministry of Finance.

On the same day, the Government issued Decree No. 16/SL appointing Mr. Nguyen Luong Bang and Mr. Le Viet Luong as General Director and Deputy General Director of the State Bank of Vietnam. This is a historic turning point in the development of the Vietnamese monetary and banking system. The organizational system of the State Bank of Vietnam includes the Central Bank, inter-regional banks, and provincial and municipal banks. The first headquarters of the State Bank was located in Dam Hong commune (Chiem Hoa district, Tuyen Quang province).

Accordingly, the State Bank of Vietnam is assigned the task of issuing banknotes and regulating the circulation of currency; managing the national treasury, and at the same time being responsible for issuing government bonds; lending capital, contributing capital and mobilizing capital from the people to develop production; managing foreign currency and paying for transactions with foreign countries; managing precious metals, including gold, silver, precious stones and bank notes used to value assets according to administrative regulations.

The State Bank of Vietnam operates in a dual role, as both a central bank and a commercial bank. The activities of the State Bank during this period made an important contribution to consolidating the country's independent and autonomous monetary system, developing production and circulation of goods, strengthening the state-owned economic force, and serving the resistance war against France.

On May 12, 1951, the Bank began issuing bank notes to replace the Financial Notes with an exchange rate of 1 bank dong equal to 10 financial dong. The issuance of bank notes not only consolidated the financial and monetary system, but also conformed to the people's aspirations and the socio-economic situation at that time. At the same time, the Bank promoted the implementation of monetary circulation management and credit rectification.

The issuance of money was carried out in a planned and moderate manner, mainly to serve the production and circulation of goods, gradually limiting the issuance of money for financial expenditures. By the end of 1953, the proportion of issuance for state budget expenditures was only 10.8% of the total issued money; in contrast, the proportion of issuance for credit increased from 0.6% in 1951 to 30.6% in 1952 and reached 89.2% by the end of 1953.

Obviously, this is one of the positive measures to strengthen the currency value, stabilize prices and balance the state budget revenue and expenditure.

Source: https://baodautu.vn/chuyen-huy-dong-von-thuo-so-khai-d347527.html