The Mutual-Aid Co-operatives and the Animal Products Trade in Mongolia, 1913-1928
CHRISTOPHER P. ATWOOD
Central Eurasian Studies, Indiana University
Goodbody Hall 157
1011 East 3rd St.
Bloomington, IN 47405-7005
Email: catwood@indiana.edu
ABSTRACT
From the first decade of Mongolian independence after 1911, nationalist publicists and
officials denounced the dominance of foreign merchants and capital in the Mongolian
economy. Officials and historians declared co-operatives to be the road for simultaneous
improving the peoples’ living standards and also strengthening national independence.
Yet examination of statistics and the vigorous debates at the early party congresses and
Great Khural meetings from 1924 to 1927 shows that the co-operatives were neither
effective in their mandate nor popular with the herders they were intended to help. From
the beginning, the co-operatives appear to have answered the needs of the new state more
than those of the herding populace.
The little word called Co-operative
Put on a Mongol hat
And in the year 1921
Came here for the first time
The Chinese partners wiped their glasses
Over and over, and didn’t worry at all
Laughing aloud, saying shang this and pang that to each other.
When the Mongolian People’s Mutual-Aid Co-operative’s
Tiny little store
For the first time at the Western Market
Opened its doors for business
The masses showed tremendous interest
And when they swarmed in to look
The goods for sale were very few
But the prices were cheap.
One thought, that this was ours
Struck the people
One aim, that we will win
Gripped the Co-operative.1
Buyannemekhü, in Arad-un ündüsüten-ü erke. 77, 1936, for the fifteenth anniversary of
the first co-operative store.
1
Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural 118: 355-6.
Accounts of the influence of trade on the Mongolian economy have generally stressed the
dominant role of Chinese commercial and money-lending firms on the Mongolian plateau.
With cheap capital and aided by predatory lending practices, Chinese firms like
Dashengkui were, by 1796, able to secure a strong position in the Mongolian economy
and later extended their activities and came to own a significant percentage of the total
Mongolian livestock herd.2 This domination continued into the twentieth century, even
after the Mongolian proclamation of independence in 1911 and the 1921 Revolution.3
Chinese domination of the Mongolian economy has been held responsible for
many distinctive characteristics of Mongolia’s twentieth century history. It is a generally
held view that since the country's middle class was an ethnically foreign and exploitative
merchant-class, Mongols came to see trade and commerce as a morally suspect activity.
The Mongols loss of control of their own economy gave credence to the socialist program
of ‘by-passing capitalism’, using the power of the state to nationalise the economy and
thus return it to Mongolian hands. By this argument then, the Chinese domination of the
Mongolian economy played a vital role in making Communism a plausible choice for
Mongolia.
According to this view, from the Manchu-Chinese conquest until Mongolia was
firmly folded into the autarchic economy of the Soviet block, Chinese merchants
dominated an isolated Mongolian economy that had little or no direct access to the world
capitalist economy. Thus, the free market transition that began in 1990 would represent
the first time in recent centuries that Mongolia has been able to bypass Chinese
domination and deal directly with the world economy.
This traditional view, while generally valid for the nineteenth century, does not
accurately describe the position of trade in Mongolia in the early decades of the twentieth
century. Between 1911 and 1929, British, German and American firms rapidly rose to
compete with Chinese firms for the animal-products export market from Mongolia and by
the mid-1920s were clearly prevailing over the Chinese firms. The destination of this
trade was no longer just China but the world and in particular the United States.
Soviet and Mongolian writers of the Communist period, unlike the Western
writers cited above, often recognised the important role played by non-Chinese firms
between 1911 and 1929. Their characterisation of these Anglo-American firms was, of
course, entirely negative, seeing them as continuing the exploitative practices of the
Chinese and meddling in Mongolian political affairs, such as the alleged Bodô conspiracy
of 1922. By these accounts, the Mutual Aid Co-operatives, founded soon after the
revolution in 1921 and holding a major share in the Mongolian export markets from 1925
on, were the crucial means by which socialist trade, which was more beneficial to the
2
See the classic study of M. Sanjdorj, Manchu Chinese Colonial Rule in Northern Mongolia, trans.
Urgunge Onon (New York: St. Martin's Press, 1980).
3 Charles R. Bawden, The Modern History of Mongolia (1968; reprinted London: Kegan Paul
International, 1989), p. 203; cf. Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural: 1924
ony XI saryn 8-28. Delgerengüi tailan (Utaanbaatar: State Publishing House, 1984), p. 357.
herdsmen, was able to oust the Anglo-American films and their businessmen - just as the
Mongolians were ousting the Chinese püüs (companies) and their danjaad (managers).
What methods did the Mongolian government use to displace the foreign traders,
and what interests were driving this process? Accounts from the Communist period assert
that there was a common national interest in expelling exploitative traders, and that stateaffiliated monopolies drove the capitalist firms out of business by selling goods cheaper
and buying raw materials at higher prices than the foreign traders. This challenges the
free-market economic dogma that competitive markets are better for consumers than
monopolies, and contradicts the common historical experience that nationalist elites
usually build their new nation states on the backs of, and not in co-operation with, the
rural producers. An examination of the history of the co-operatives suggests, however,
that in this case, free-market dogmas and a somewhat sceptical view of nation-building
elites make better sense of the facts.
THE ANIMAL-PRODUCTS TRADE FROM THE MONGOLIAN PLATEAU TO
CHINESE CITIES
Before 1870, Russia was the major foreign (i.e. outside the Qing empire)
customer for Mongolian wool which, being of low quality, was mostly used in Russia for
padding clothes. In 1870, the United States also began importing sheep’s wool from
China, principally for the shawl trade, and by 1890, exports of wool from Tianjin to
United States and Great Britain had become an important Qing export. In the years before
World War I, the United States was buying more Chinese wool than all other countries
put together and Russia and Japan replaced Britain as the major secondary markets. Wool
from Tianjin was also used in the carpet trade, but up to 1914 was not used for clothing.
World War I changed the Chinese wool trade. With the high demand for wool for
uniforms and the wartime disruption of trade, the highest grades of Chinese wool were in
demand for clothing, a situation which continued after the end of the war.4 There were
also significant changes in the destination countries. Germany, Russia, and Great Britain
all eventually stopped importing Chinese wool and, with the exception of brief surges
directly after the war, were not the final market for Chinese wool in the 1920s. Japanese
wool imports also surged during the war, and although they fell considerably in the postwar period, they remained much larger than they had been before the war. Thus by 1923,
the United States and (on a much lower scale) Japan become the only significant markets
for Chinese wool.
Tianjin was the main centre for the export of Chinese wool, in 1925-6 accounting
for 91 per cent of China’s total wool. Fifty per cent of this came from the Tibetan plateau
via Gansu and Qinghai, while fifteen per cent came from Shanxi and Shaanxi provinces,
and presumably originated in the area of western Inner Mongolia and twenty five per cent
came from what is called ‘the rest of Mongolia’, including Outer Mongolia (or Mongolia
proper) and central Inner Mongolia which sold its wool at Zhangjiakou.5
4
5
The China Year Book 1921-22, ed. H.G.W. Woodhead (Tianjin), pp. 138-9.
The China Year Book 1925-6, ed. H.G.W. Woodhead (Tianjin), p. 489.
Zhangjiakou was the centre for the collection of Mongolian skins, wool and
hides.6 Until 1919, animal products were transported from Mongolia to Zhangjiakou by
cattle or camel caravans. In 1916, after Mongolia’s status had been regularised as a
separate state under Chinese suzerainty, the Americans Meyer and Larsen came to
Khüriye to negotiate with the Mongolian government the establishment of motortransport between there and Zhangjiakou. This connection was established in 1918, with
ten automobiles, under the name of the ‘Tianjin Automobile Transport Organisation’,
The company had a multinational staff of six working in Khüriye: three Americans, two
Japanese, and one Russian.7
From Zhangjiakou wool was moved southeast to Tianjin, which also received a
considerable amount of the Manchurian wool trade, mostly from Barga, and a significant
percentage of this would be transported south by rail to Niuzhuang and shipped to Tianjin
or Shanghai. In Tianjin, by 1923, seven firms, all British, had hydraulic presses for wool,
cotton, and skin packing and also handled wool cleaning and washing.8
A significant feature of the trade in animal products was its seasonality. Imports
of wool into Zhangjiakou sta11ed in October and were over by March.9 In the Barga area
shearing took place in June and July, and the wool was delivered to the foreign firms in
the autumn.10 Incomplete quarterly breakdowns of exports show a general pattern of
shipments abroad taking place largely in the first two quarters of the year, with the third
and fourth quarters devoted to shearing and gathering. This was only a general pattern,
however, and market conditions often forced exporters to store the wool in Tianjin and
then sell off-season.11
Fur markets were more strictly seasonal, for example the marmot skin trade which
was influenced by the seasonal change tram blue or blueish yellow in autumn to a yellow
6
The China Year Book 1926-7, ed. H.G.W. Woodhead (Tianjin), p. 670.
Tumuriin Namjim, in William Rozycki (ed.), The Economy of Mongolia: From Traditional Times to
the Present (Bloomington: The Mongolia Society, 2000), pp. 15-16.
8 The China Year Book 1923, ed. H.G.W. Woodhead (Tianjin), p. 517.
9 The China Year Book 1926-7, p. 670. That the fur trade season in Zhangjiakou and Khüriye started
in October is confirmed by RRIAC roll no. 184, 893.6231/1, ‘Fur Business in Urga Influenced by
Lack of Banking Facilities,’ 21 October 1922, from Consul Samuel Sokobin.
10 RRIAC, roll no. 184, 893.62222/3, ‘Wool Monopoly in Mongolia’ 13 July 1925, from Consul
Samuel Sokobin. Note the letter of appreciation from the American firm worded about a local
Mongolian monopoly on the wool trade came on 4 December 1925, presumably after the company
had ascertained that the season's trade had gone through and the bulk of the wool gathered in; see
RRIAC, roll 184, 893.62222/4, Consul G.C. Hanson to U.S. Secretary of State, 15 December 1925.
11 See figures in Chinwangtao & Tientsin Trade Returns, October-December Quarter 1920 and Trade
Report 1920 (Shanghai: Statistical Department of the Inspectorate General of Customs, 1921). pp. 5-7;
Chinwangtao & Tientsin Trade Returns, July-September Quarter, 1921 (Shanghai: Statistical
Department of the Inspectorate General of Customs, 1921), pp. 5-6; Chinwangtao & Tientsin Trade
Returns [October-December Quarter 1921] and Trade Reports 1920 (Shanghai: Statistical
Department of the Inspectorate General of Customs, 1922), pp. 6-7.
7
colour in spring.12 The incomplete quarterly breakdowns of marmot skin exports through
Manzhouli show very few sales in the third quarter, strong sales in the fourth quarter and
somewhat less in the first half of the year (probably concentrated in the early spring).
Another problem in these trades was the need for buyers to make large cash
advances to those responsible for collecting the skins. One reporter on the fur trade in
China remarked on this necessity as the trade’s main drawback.13 The need to advance
cash was not restricted to the fur trade alone, but was found necessary for various reasons
both in Barga and in Mongolia proper. In Barga, the shearing and felt-making was done
by about 1,500 Han Chinese labourers, most of whom received cash advances, tools, and
provisions from the British and American companies who dominated the market,
although these funds would often be distributed through the intermediary of Chinese
trading firms.14 The Chinese labourers had their own organisation, the ‘Chinese Felt
Makers Association’. They would do the shearing and felt-making for the Barga and
Solon Mongols who owned the herds and received wool in payment. Presumably after
settling accounts with the firm that had supplied their advances, the felt-makers could
then sell the wool to the highest bidder and they could also buy wool from the Mongols
on their own account. In 1925, the American firms committed in advance to purchase
about 200,000 silver dollars’-worth, while the British firms were committed to somewhat
more.15 (The total sheep’s wool sale from Manchuria as a whole - and virtually all of that
was from Barga - in 1925 was about 1 million haiguan taels, or about 1.5 million silver
dollars).
Chinese traders do not seem to have been so closely involved in the actual
shearing and felt-making in the more remote parts of Mongolia proper, but the same need
existed for cash advances. Shirendev, in his memoirs, gives a picture of two Chinese
traders living in what is now the southernmost part of Khövsgöl province in the far northwest of the country. Like shearers in Barga, they traded almost completely by barter and
labour service, mowing hay for and obtaining furs from most of the households in the
banner. They also bought animal-skins in the slaughtering and calving season and wool in
the shearing season. Although Shirendev does not explain how they traded, the large
stores of flour, brick tea, silk, cotton cloth and tobacco kept by the traders suggests what
commodities could be used for barter. The traders were visited periodically by Chinese
merchants from other, larger monasteries and banners, who counted the goods and made
inventories of the stock.16 In such a cash-poor society, the British and American
merchants, like their Russian competitors had a significant advantage due to their access
12
U.M.S. Torresani, Furs and Skins (Shanghai: Statistical Department of the Inspectorate General of
Customs), pp. 26-7.
13 The China Year Book 1924-5, ed. H.G.W. Woodhead (Tianjin), p. 525.
14 Owen Lattimore has some detailed comments about both the economic and technical aspects of the
Chinese involvement in shearing and felt-making in Inner Mongolia in his Mongol Journeys (New
York, 1941), pp. 210-14.
15 See the detailed report on the trade in RRIAC, roll no. 184, 893.62222/3, ‘Wool Monopoly in
Mongolia’ 13 July 1925, from Consul Samuel Sokobin.
16 Bazaryn Shirendev, Through the Ocean Waves, trans. Temujin Onon (Bellingham: Center for East
Asian Studies, Western Washington University, 1997), p. 33.
to cash.17 The Chinese need for cash advances and the British and American unfamiliarity
with the country apparently linked the British and American companies into the same
relations of interdependence as in Barga.
The Russian Revolution made the already complex Mongolian currency situation
much worse. After the end of the Qing Dynasty in 1911 the principal currency for large
transactions had been silver taels. Silver coins of Mexican origin (Chinese yangqian,
Mongolian yanchaan) had circulated in the mid to late Qing, and in the early Republic
they were replaced by the Yuan Shikai silver dollar. Fractional currency under the Qing
was primarily tea bricks.18 After trade with Russia increased in volume, small Russian
silver coins of the ten, fifteen, and twenty kopeck denominations came to be used, but
World War I and the Russian Revolution led to inflation of the paper rubles which
determined the value of these fractional currencies, and soon the face value of the
kopecks was less than the silver content. As a result, large amounts of these coins were
shipped to China to be sold and melted down and the Mongolians, who had a great
preference for the relatively stable Chinese silver dollar, carried them away into the
countryside leaving Khüriye without sufficient cash. As the U.S. Consul at Zhangjiakou
reported in October 1922, local fur dealers were willing to sell at 20-25 per cent discount
if the buyers would pay in cash in Khüriye, yet the buyers, unable to insure the shipment
of cash across 700 miles of open country, still preferred to have the local dealers bring
the furs by caravans to Zhangjiakou and sell at the higher prices there. Chinese firms in
Zhangjiakou which had branches in Khüriye would charge remittance fees of 12 per
cent.19 In November 1924, Tseden-Ishi, head of the Mutual-Aid Co-ops, estimated that
one-third of the total trade turnover of Mongolia was conducted in barter, and only twothirds conducted in cash.20 Eventually the revolutionary Mongolian government would
ease the situation by issuing its own silver-based currency, which until 1929 at least was
relatively stable in value.
Sources around 1924-1925 are consistent in stating that British and American
firms dominated the trade in both Barga and Mongolia proper, although the local agents
were often White Russian or Chinese. Mongolian figures from 1925 demonstrate that
whilst the total capitalisation of Chinese firms considerably exceeded that of the German,
American and British firms, the Chinese share of the market was divided between 283
small and individually very weak firms. Only the non-Chinese foreign firms, and in
particular the British firms possessed a concentrated capitalisation that could conceivably
match the state-supported Mongolian trade organisations (Table 1).
In Barga, at least, the foreign traders worked amicably with the Chinese
entrepreneurs. When the Mongolian co-operatives tried to monopolise the wool trade,
both the Chinese Commercial Society (presumably shang hui, usually translated as
17
See, for example, Shirendev, Through the Ocean Waves, p. 22.
See, for example, C.R. Bawden (trans. and ed.), Tales of an Old Lama (Tring: Institute of Buddhist
Studies, 1997), pp. 4-5.
19 RRIAC roll no. 184, 893.6231/1, ‘Fur Business in Urga Influenced by Lack of Banking Facilities,’
21 October 1922, from Consul Samuel Sokobin.
20 Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p. 236.
18
Chamber of Commerce) in Hailar and the Chinese Felt Makers Association, co-operated
closely with the foreign firms and the US and British consular personnel to pressure the
Hailar authorities to allow free trade again.
Category
(no. of individual firms)
Mongolian trade organisations
Mongolian Mutual Aid Co-op
Mongol-Soviet Bank
Total capital
(in tögrögs)
6,500,000
3,000,000
3,500,000
Soviet trade organizations
Soviet state capital
Private Russian capital (43)
Soviet and Mongolian capital
1,971,500
1,267,000
704,500
8,471,500
British firms (10)
Chinese firms (283)
German firms (3)
American firms (5)
Non-Soviet/Mongolian capital
4,500,000
7,248,000
673,000
560,000
12,481,000
Percentage
Average capital of
private firms
16,384
40.5
450,000
25,611
224,333
112,000
59.5
TABLE 1. Capitalisation of Firms in Mongolia, 1925 (Mongol Ardyn Khuvisgalt Namyn
V lkh Khural, p. 44). Note the discrepancy in the total for the non-Soviet/Mongolian
capital is in the original; the figures presented actually total 12,921,000. The tögrög,
introduced in 1925, was a convertible currency based on a unit of 18 ounces of silver and
hence had a value of 75 per cent of the Chinese or Mexican silver dollar.
THE CO-OPERATIVES
The domination of Mongolian trade by foreign firms combined with Mongolian
independence, or at least autonomy, to raise the issue of nativising trade even before the
1921 Revolution. Tsyben Zhamtsarano, an influential Buriat scholar closely affiliated
with the Russian consulate in Neislel Khüriye, the capital of Mongolia, pursued a course
of long-term intellectual preparation. In his journal, The New Mirror (Shine toli
khemekhü bichig) with its motto ‘Letting a myriad things bloom, and letting all sciences
spread’, he proclaimed a mission to enlighten Mongolia:
Now that the Mongols have set up their state and established an
independent country, it is only right that we should exert ourselves to
master the various arts and rapidly to make our country strong and
powerful. Therefore our publishing house has taken it upon itself to found
a periodical publication which will survey all the arts and sciences at work
in the foreign countries, so that the Mongols may be aided in their study.21
In this same first volume, Zhamtsarano not only explained the origin of natural
phenomena and surveyed the major countries of the world, but he also introduced to the
Mongols the concept of human development through stages, In a chapter entitled ‘On the
way the world’s people make a living’ (Delkhei degerekhi khümün-ü aju törökhü-yin
uchir-a), he first described the ‘wandering peoples’ (tenümel ulus) who lived by fishing
or hunting birds, and gathering plants, then the ‘nomadic peoples’ (negüdel ulus), and
finally the ‘settled people’ (sagurishigsan ulus), who not only farm but make all sorts of
goods and set up special places called fabrig or ‘factories,’ where things can easily be
made by machines.22
Zhamtsarano also explained the relevance of this information to the new
Mongolian state, He noted that Mongolia traded wool, leather, and pelts to foreign
countries such as China, Russia, Germany, and America, and in return bought from them
everything she needed including her tea, cotton, silk, and woollen cloths, hatchets, and
knives, He commented: ‘If one wants to become strong, it is necessary to be able to
produce the various goods oneself. A country with raw materials which cannot do that
will always be poor.’23 In later years, he made more concrete recommendations. In 1917,
in his new newspaper the Neislel Khüriye News (Neyislel Küriyen-ü sonin bichig) he
argued that ‘By development of agriculture, Mongolia will increase the supply of
foodstuffs. Through the ability to produce textiles, paper, spoons, forks, cups, matches,
and candles ourselves, the country will develop and people will become wealthy,’ He
also suggested forming joint-capital organisations for the cattle-cart transportation
business.
A monastery-educated caravan leader, Chagdurjab, who was friends with
Bodô (a staff member on the Neislel Khüriye News), took up this suggestion. In
1914 he had travelled to Russia, and thence to England, Italy, and China, on a mission to
‘learn through experience about the life and situation of foreign countries, their attitude
towards the Mongolian question, and how in general Mongolians should be educated’,
On returning in 1917, he, with 17 others, formed the ‘Mongolian Mutual-Aid Cooperative’ (Monggol-un khariltsan tusalakhu khorshiya), with an elective chairman and a
fifteen-article charter. In their petition to the Treasury Ministry of theocratic Mongolia
for approval of the new organisation, they showed a growing sense of economic
nationalism:
Now we eighteen people have discussed how through buying food and
goods from foreign countries and trading to the Mongolian citizens as
much as needed, and selling at a lower price than other traders, we, with a
21
Sin-e toli kemekü bichig, 20 December 1913, no. 1, p. 1. I would like to thank Sohn Hyun-sook of
Pusan Women’s University for supplying me with a photocopy of the first four issues of this journal
kept in the Toyo Bunko.
22 Sin-e toli kemekü bichig, 20 December 1913, no. 1, pp. 25-28.
23 Sin·e toli kemekü bichig, 20 December 1913, no. 1, p. 29.
small profit for ourselves, might limit the profits of greedy merchants and
their companies. With a certain profit from the money it would be of
important assistance to our own nation (öörsdöö yazguur ündsee).24
This co-operative began the long and ultimately successful Khalkha Mongolian effort to
displace foreign merchants from their dominant position in Mongolian commerce and
replace them by an ostensibly more public-spirited Mongolian commercial organisation.
Since Chagduljab eventually became Prime Minister of the provisional
revolutionary government in March 1921, and was replaced by Bodô who had worked on
the Neislel Khüriye News, clearly foreign domination of Mongolian commerce was a
serious concern for Mongolia’s nascent intelligentsia. This was true even before the
affiliation of this infant intelligentsia with Soviet Russia, and it was only to be expected
that one of the first actions of the new revolutionary government in Mongolia would be to
establish co-operatives, On 26 October 1921, the Treasury Ministry called on the people
to buy shares in the planned cooperative and in November issued the statutes of the
organisation, The first assembly of the Co-op members was held on 16 December in the
Neislel Khüriye (‘Urga’) customs house, by which time 44 members had joined,
including General Sükhebaatur, the poet Buyannemekhü, and the Jebdzundamba
Khutugtu, Mongolia’s titular ruler, whose membership card is preserved in the Palace
Museum.25 The stated aims of the co-operatives were both to improve the terms of trade
for the Mongolian herdsmen and the gradual exclusion of foreign firms from Mongolia,
which were justified by a rhetoric that linked the issue of national sovereignty with a
struggle against exploitation and backwardness.26
As a co-operative organisation, the members had to purchase shares to take
advantage of the co-operative facilities. The minimum share cost five taels and members
could buy as many as they wanted. This expense was a considerable burden for poorer
herders and constituted a formidable block to expanding its membership. When some
delegates to the Party's Third Congress proposed that joining the Co-operative be
compulsory for all party members, ‘Japanese’ Danzin noted: ‘We are informed from the
provinces that poor people will not enter the Party, because they cannot afford to pay the
fee for membership, If we add now that every member of the Party should also be in the
Co-operative and pay for a share of it, all poor people will leave at once from the Party.’
The motion was changed to say only that it was ‘desirable’ for Party members to join the
Cooperative.27 The initial 116 members from Neislel Khüriye and Maimaching (the
S. Idshinnorov, ‘Dambyn Chagdarjav (1880-1922),’ Zasgiin gazryn medee, April 1992, no. 13, p.
16; D. Khatanbaatar, Yörönkhii saidyn örgöönd (Ulaanbaatar: People’s Army ‘Shuwuun Saaral’
Company, 1992), pp. 7-9.
25 Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, pp. 355-611. 118; Ts. Nasanbaljir, ed.,
Ardyn zasgaas 1921-1924 onuudad avsan khuvisgalt arga khemjeenüüd (Barimt bichgiin emkhtgel)
(Ulaanbaatar: State Press, 1954), pp. 154-9.
26 Mongol Ardyn Namyn gurawdugaar ikh khural: 1924 ony naim-yesdügeer sar. Delgerengüi
temdeglel (Ulaanbaatar: State Publishing House, 1966), p. 228; Bügd Nairamdakh Mongol Ard Ulsyn
ankhdugaar ikh khural, pp. 232-5.
27 Mongolia: Yesterday and Today (Tianjin: Tientsin Press, n.d.), pp. 65-6.
24
Chinatown of Neislel Khüriye) invested an average of 53.2 taels per person.28 Based on
the 1,500 members in 1923-4, it was estimated that one-third invested more than 20
taels.29
These high investments prompted the frequent complaint that the Co-op members
were primarily the well-to-do herders, At the Congress of the Cooperatives in April, 1923,
the elected leadership included many of Mongolia’s richest men: Duke Tsedebsürüng
(Chairman of the General Committee); Prince and lama Dashidindüb (Chairman of the
General Office); Grand Duke Lubsangjantsan (Chairman of the Accounting Department);
Grand Duke Shagdurjab (Chairman of the Trade Department).30
Initially the co-operatives played little role in the Mongolian economy. They had
received 10,000 taels start-up capital, from the Treasury Ministry in December 1921, but
until 1923 any increase in capital came either from shares bought by the members or
from loans.31 The value of shares totalled 41,000 taels silver, making the Co-operatives
rather better capitalised than the average Chinese firm but rather worse than the average
European or American firm.32
Motor links between Mongolia and Zhangjiakou were restored in autumn, 1923.33
From 1921 to 1924, the number of foreign firms operating in Mongolia increased
dramatically. Yet the Mongolian leadership seemed determined to use the co-operatives
to nationalise the economy.34 In April 1923 the co-operatives’ previously elected
aristocratic leadership was replaced and at the party congress in July 1923, the authorities
called for them to be brought under the control of the party and youth league.35 Moreover,
improvement in Mongolian government finances allowed the Finance Ministry to
dramatically increase its investment in the co-operatives, to the tune of 300,000 taels
silver. Unfortunately the money was disbursed between July and December which was
too late to have a major effect on that wool-buying season, but it probably played a role
in the expansion of the co-operatives' reach; increasing from 6 to 16 departments by the
end of the year. The re-establishment of transportation links with China led also to the
creation of departments in both Zhangjiakou and Hailar.36 Thus the co-operatives were, at
least in theory, able to collect the raw materials in Mongolia and transport them abroad.
In fact, however, the co-operatives still formed only a small part of the Mongolian trade,
handling only 5.3 per cent of Mongolia’s exports and 4.1 per cent of its imports.
28
Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p. 356 n. 118.
Mongolia: Yesterday and Today, pp. 64-5.
30 Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p 357 n. 124.
31 Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p. 234.
32 Mongolia: Yesterday and Today, p. 64.
33 The China Year Book, 1924-5, p. 1259; The China Year Book, 1925-6, pp. 382,388, 428.
34 The China Year Book, 1924-5, p. 1259; The China Year Book, 1925-6, pp. 382,388, 428.
35 Mongol Ardyn Namyn khoyordugaar ikh khural (barimt bichgüüd). 1923 ony doloo-naimdugaar
sar. (Ulaanbaatar: State Publishing House, 1974), p. 127.
36 Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p. 235; Mongol Ardyn Namyn
gurawdugaar ikh khural, p. 184; Mongolia: Yesterday and Today, pp. 63-4.
29
Around the same time as this loan from the Finance Ministry, the government also
invested a million taels of revenue in the co-ops, thus becoming the overwhelming
stockholder. This massive purchase of shares by the government effectively made the cooperatives a government organisation, supplying profit to the government and being very
responsive to its needs. In 1924, total shares of the Finance Ministry, the Central
Committee and other governmental organisations, were 15 times the size of funds from
private members. To the Finance Ministry the co-operatives were primarily an investment
from which they budgeted revenues of up to 300,000 taels.37 Elbek-Dorzhi Rinchino
complained that ‘The Central Committee has invested some money in the cooperative,
but has so far received no interest, whereas the Ministry of Finance, being a partner of the
same kind, gets its dividends regularly.’38 It is not surprising then that the co-operative
leadership also thought it only right that they should have access to the compulsory
corvée labour of literate men as clerks, which the party and government had at their
disposal.39
Politics hung heavily over Mongolia’s southern relations during the first three
years of the co-operative, and· accentuated the pressure to squeeze out both the Chinese
and the Anglo-American fiems. Bodô, the government’s first prime minister, having been
forced from office after unpopular attempts to force Khüriye’s population to adopt
revolutionary dress, was shot in August 1922 on charges of conspiring with the American
consul in Zhangjiakou, Samuel Sokobin. Sokobin was established there in spring 1921
largely in response to the growing commercial connection between the United States and
the Mongolian plateau.40 He had visited Mongolia and met Bodô in September 1921,
while party chief Danzin and General Sükhebaatur, the two other members of the ruling
troika, were in Moscow, something which aroused suspicions particularly in ElbekDorzhi Rinchino.41 Thus from the beginning of the Mongolian government, a general
concern with nationalising the economy, common in revolutionary governments, came
into explosive contact with the Soviet suspicion of both China and the rest of the
capitalist world.
Leadership passed to Danzin, who after Sükhebaatur’s death took over the
position of Commander-in-Chief and dominated the government. At the People’s
Party’s Third Congress, he was suddenly executed, on charges of protecting Chinese
interests and making personal profits, being accused of links with Chinese generals and
of close connections with the Mongolian wool export. He had resisted the
reestablishment of the motor-car service as a Mongolian monopoly, holding out for a role
for the Dalaihe firm, in which he held shares. He was also accused of having connections
37
Mongolia: Yesterday and Today, pp. 50, 63.
Mongolia: Yesterday and Today, p. 68.
39 Mongolia: Yesterday and Today, pp. 63, 64.
40 See Alicia J. Campi, The Political Relationship between the United States and Outer Mongolia
1915-1927: The Kalgan Consular Records, Ph. D. Thesis, Indiana University, 1987, or her brief
account in ‘Early U.S.-Mongolian Diplomatic Contacts,’ Mongolia Survey, No.6 (1999), pp. 47-57.
41 On Bodoo’s execution, see Baabar [Bat-Erdene Batbayar], XX zuuny Mongol: nüüdel suudal, olz
garz (Ulaanbaatar: State Photography Office, 1996), pp. 279-282, 284-286; cf. the translation in
Twentieth-Century Mongolia, trans. D. Sühjargalmaa et. al., ed. C. Kaplonski (Cambridge: White
Horse Press, 1999), pp. 229-231, 233-4.
38
with the British firms D. Biederman and Robert Smith & Co. and the American firm
Joseph Ullman & Co., allowing their representatives to travel m Mongolia with rifles
without a permit. When the motor-car route opened up again between Khüriye and
Zhangjiakou without the participation of Chinese firms, he helped Dalaihe construct dian
(that is, fandian, or hotels), to profit from travel on the route.
His dealings with a Chinese firm called Tonghehe, in which he held shares,
seemed directly contrary to the aims of the Mutual-Aid Co-operatives and he was
accused of having allowed them to compete with the co-operatives. In 1922, the harvest
at Kharaa Gal was poor and flour prices rose from 2-3.5 rubles per pood to 7 rubles.
Danzin, it was charged, had invalidated an agreement to import flour from
Verkhneudinsk at 3.25 rubles per pood, and instead, when the military needs for flour
became too pressing, contracted to purchase flour from Tonghehe firm at 6 silver dollars
per pood. By the time the flour actually arrived the price had dropped to 2.05-3.5 rubles
per pood, but the flour was sold for 6 rubles per pood. This was much lower than the
buying price, and the government lost thousands of silver dollars on the sale. Danzin also
sent representatives from Tonghehe into Eastern Mongolia with an armed guard, claiming
to be working for the State Treasury and the co-ops themselves. There they purchased
marmot and ground-squirrel skins, using their position as government buyers to
intimidate the locals into selling goods at below market price. Eventually the Office of
Internal Security, effectively controlled by Danzan’s enemy Elbek-Dorzhi Rinchino,
arrested these merchants and their guards and put an end to their trading.42
The most important policy issue centred on the repayment of banner (county
administration) debts owed to Chinese merchants. Some of these debts had been
contracted by the banner rulers in times dating back to the Qing dynasty, and the cooperatives viewed them as exploitative remnants of the feudal system. Danzin, however,
at one point had debts owed to the once-great but now virtually bankrupt film
Dashengkui from Setsen Khan Aimag repaid from public funds. As the historian Baabar
speculates, such repayment may well have been intended to repair Mongolia’s credit in
the eyes of the Chinese and foreign firms, and so to relieve the serious shortage of capital
in Mongolia.43 In so doing, however, he ran directly contrary to the strategy of the cooperatives, two of whose chief advantages were sole access to government-supplied
capital and a more reliable ability to enforce contracts than the Chinese firms possessed.
The execution of Danzin thus opened the road for a full-scale offensive by the cooperatives to monopolise Mongolian foreign trade. The new head of the cooperatives,
Babasang (1899-1924), was also executed at the Third Congress. He had joined the
People’s Party in 1921 and served as the head of the training department of the
Mongolian People’s Army before replacing Duke Tsedebsürüng as Chairman of the
42
Mongol Ardyn Namyn guravdugaar ikh khural, pp. 166-8, 209.
Mongol Ardyn Namyn guravdugaar ikh khural, pp. 170, 209. See also the brief account in Baabar,
XX zuuny Mongol, p. 339; Baabar, Twentieth-Century Mongolia, p. 262-3.
43
General Committee of the Mongolian Mutual Aid Co-operatives.44 He apparently held
this post until 1924, when he moved on to positions in the government and the Youth
League and Jaddamba was elected Co-op chairman in his place.45 Babasang was linked to
Danzin, and his elimination opened the way for a new policy.
THE CO-OPERATIVES IN 1924
If 1923 had been the milestone in restoring Mongolia’s connections with the south, 1924
was the milestone in the move towards monopolising Mongolia’s animal-products
exports. Jaddamba had been elected head of the co-operatives, but Tseden-Ishi (also
known as Gochitskii), a Buriat who had been active in the Pan-Mongolian movement,
was the mainspring of the co-operatives in the following years. The 300,000 taels loaned
by the Treasury Ministry in 1923 was fully put into play in the 1924 buying season, and a
stronger network of 24 domestic departments and 82 branches was already in place. The
co-operative planned to buy 1,000,000 silver dollars’ -worth of goods for import and
2,980,000 silver dollars’-worth of raw materials for export. The latter figure would have
given the co-operative an estimated 21 per cent share of the Mongolian export trade, a
huge jump from the 1923 estimate of 5.3 per cent.46 In the event, the cooperatives
actually sold abroad 4,029,000 silver dollars’ -worth of Mongolian raw materials,
amounting to an estimated 28.7 per cent of their total exports. Imports, however,
exceeded their target only slightly with purchases of 1,080,000 sliver dollars’-worth of
goods from abroad, for a total of 5.8 per cent of Mongolia’s imports.47 (The percentages
were based on 1925 estimatess of Mongolia’s exports and imports of 14,000,000 silver
dollars and 18,500,000 dollars respectively. Since these figures were actually substantial
under-estimates of Mongolia's total trade, the co-operative officials were thus
overestimating their impact on the economy.)48
Suddenly the co-operatives were the single largest player in Mongolia’s export
market. The relatively small purchases from abroad reflected the greater profitability of
the export trade (raw materials collected were sold abroad for an 86 per cent profit, but
the markup on foreign goods sold in Mongolia was only 15 per cent),49 as well as a
concern for Mongolia’s persistent trade deficit.
The sorts of products the co-ops dealt in can be seen from Tsedn-Ishi’s report to
the First Congress of the Mongolian People’s Republic in November, 1924. In June, 1924,
the co-operatives purchased sheep and camel wool, marmot skins, cattle hides, sheep and
goat skins, mares, live oxen and sheep, lard and sheep guts from the Mongolian pastoral
44
See his congratulatory address to the People's Party's First Congress in Mongol Ardyn Namyn
khoyordugaar ikh khural, p. 17 and his brief biography in Mongol Ardyn Namyn guravdugaar ikh
khural, p. 256.
45 See Mongol Ardyn Namyn guravdugaar ikh khural, p. 21.
46 Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar Ikh khural, p. 236.
47 Mongol Ardyn Khuvisgalt Namyn dörövdügeer ikh khural: 1925 ony yesdügeer saryn 23arawdugaar saryn 1. Delegerengüi tailan (Ulaanbaatar: State Publishing House, 1978), p. 220.
48 For the 1925 estimates, see Mongol Ardyn Khuvisgalt Namyn dörövdügeer ikh khural, pp. 219, 220.
For the revised figures, see Mongol Ardyn Khuvisgalt Namyn V Ikh Khural: 1926 ony yesdügeer saryn
26-naas aravdugaar saryn 3. Delgerengüi Tailan (Ulaanbaatar: State Publishing House, 1981), p. 43.
49 Mongol Ardyn Khuvisgalt Namyn dörövdügeer ikh khural, pp. 219, 220.
nomads and foreign traders.50 These items together were valued at a total of 1,430,000
silver dollars and so constituted a significant portion of the total 2,159,000 silver dollars’
purchases for that year.
The figures on the amount collected were over-optimistic in one sense; the cooperatives had a difficult time finding buyers for much of the goods. It is possible that the
British and American firms were trying to freeze out the new rivals, but Tseden-Ishi in
his reports on the co-operatives described the destinations as primarily Soviet or
Mongolian. Some could be sold domestically to the small factories, mostly in Altanbulag,
producing military uniforms, felt boots, and other products. 100,000 silver dollars’ -worth
of raw materials were sent to the fair at Nizhnii Novgorod in order to raise the profile of
Mongolian goods. All the sheep guts were sold to buyers in the Soviet Far East, and
about 5,000 of the cattle had already been sold in various places. Most of the wool was
sold in the Soviet Union, only to be eventually sold to the United States by way of
Vladivostok.51 It should be remembered that the co-operative’s first foreign offices were
in Zhangjiakou and Hailar, with the addition in late 1924 of first Tianjin, and then
Moscow.52 Moreover, the eventual destination for wool the largest single item, was still
the United States; the operations of the co-operatives did not change this but added a
Soviet middleman between the Mongolian sellers and the eventual American buyers.
Tseden-Ishi was fully aware of the continuing significance of the British firms
and the American market. To the Third Congress he explained that ‘Although it is our
aim to sell our own raw materials directly to the users, we have as yet not been able to
execute it. Since our users are England and America, we would like to send people to
conduct negotiations but there is no one to send. Right now, a representative of ours is in
Kalgan and Tientsin, and soon we will have representatives in Moscow.’ The ultimate
aim was to resolve Mongolia’s constant negative balance of trade by raising the price for
Mongolian goods in the world market. Believing that Mongolia exported 9.5 million
silver dollars’-worth of goods while importing 13 million silver dollars (these estimates
both underestimated the amount of trade, and overestimated the deficit), he explained to
the delegates that Mongolia would have to increase its sales by 3.5 million silver dollars.
‘For this reason, our co-operative is trying above all else to get all the raw materials being
exported from Mongolia into its own hands.’ In the meantime, while the monopoly was
still incomplete, a fall-back strategy was used: ‘Leaving the market price as it is, we are
making it our aim to allow only a certain amount of goods to be imported.’53
While the expansion of tile Co-ops and the pressure on other traders certainly
assisted the political goals of nationalising trade, it is less clear that it benefited the
Mongolian herdsmen, The party and national congresses of 1924 gave ample space for
delegates from the rural areas to air their grievances over the high prices, bad service, and
50
Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p. 238.
Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural. pp. 237, 238.
52 In the party's Third Congress report (Mongol Ardyn Namyn guravdugaar ikh khural, p. 184), an
office (kheltes) has been established in Tianjin but not in Moscow yet, while in the State First
Congress report the one in Moscow has been established (Büge Nairamdakh Mongol Ard Ulsyn
ankhdugaar Ikh khural, p. 236).
53 Mongol Ardyn Namyn guravdugaar ikh khural, pp. 184, 185; Mongolia: Yesterday and Today, p. 64.
51
generally inefficient operations of this growing would-be monopoly. Elbek-Dorzhi
Rinchino, a Buriat who was closer than most to Soviet policy, in addressing questions of
Mongolian national security, found the free operations of Chinese door-to-door salesmen
a clear threat: “. . . it is wrong that there is no supervision and no registration whatsoever
over Chinese door-to-door traders,54 and moreover, since they bring harm to the economy,
it is necessary to prohibit rural door-to-door trade.’
Rinchino’s assumption was that having traders actually go out to their customers
was certainly harmful to the economy, and this has been reflected in decades of
nationalist and socialist historiography. Yet the Buriat politician had only to raise the
issue for rural delegates to suddenly object: ‘If door-to-door trading is prohibited, what
will happen to the people in places that don’t have branches of the co-operatives?’ Once
on the topic of door-to-door traders, another delegate raised the question of consumer
credit. The existing historiography sees the consumer credit extended by Chinese traders
as a form of exploitation which caused much resentment. Yet at the Third Congress, this
delegate saw the willingness of the Chinese to grant credit as a strong advantage: ‘Since
the Chinese traders loan us goods when important occasions roll around, they are helpful.
But the Mongolian co-operatives don’t give loans. . .’ At that point the soon-to-be purged
Danzin contrasted the document-oriented style of assessing risk which prevailed in the
new organs of trade and commerce with the more flexible style employed by Chinese
traders: ‘The banks and the cooperatives only believe in paper and in documents . .’
Rinchino, however, insisted that all such appearances were deceptive, and then changed
the subject: ‘As a rule the loans granted by the Chinese door-to-door traders are harmful
and their seeming to help is actually a false appearance. Let’s talk about this question
together with the question of the co-operatives.’55
Tseden-Ishi, also aware of complaints in the Third Congress, admitted, ‘You are
hear it everywhere that the Chinese goods are cheaper than ours, and the Chinese buy raw
materials at a high price compared an ours’ but he claimed that such ideas had no
foundation; the Chinese were using dishonest weights and ‘spreading rumours to slander
us’ This attempt to claim that the co-ops were too honest to use Chinese methods
provoked the delegates to relate some embarrassing anecdotes in public:
In our banner, there is an office of the co-operative, and the office trades
with different weights, using different weight when buying than it does
when selling. In a word, they are no different from the Chinese. The cooperatives buy wool when the weather is sunny and clear, but when the
weather gets even the least bit cloudy they say the wool will weigh more
and they’re too afraid of that to buy it. But right next to them the Chinese
are buying regardless of the weather.
The officials are all Russians and are hot-tempered foreigners with rough,
arrogant manners. While the Chinese buy a really lot of wool, the co54
Donshuur khudaldaa cf. donshuurch, a loafer, someone who wanders from house to house without
clear business.
55 Mongol Ardyn Namyn guravdugaar ikh khural, p. 87; Mongolia: Yesterday and Today, pp. 39-40.
operatives buy very little. This is because the officials have very nasty,
evil tempers and act fierce and irritable, and since they always hold the
Mongols at a distance, they stopped buying things from the co-operatives.
When they set the price for goods, they don’t pay attention to the need for
them. This is not a big disaster by itself, but it’s worse because they are
not thinking about our situation. They buy very little wool. There are also
people who steal from what they do buy. The co-operative manager was
saying that 500 jin of wool had been lost, and the original thief was
arrested and the 500 jin of wool returned, but the co-op manager told the
banner authority that that thief had not taken 500 but 1000 jin of wool.
That’s the kind of men our co-op managers are.
I met a person in Khovd province, and that person called himself a
representative of the co-operatives, and when he was selling Berdan
guns56 and bullets and when he was giving loans, the interest he took was
no lower than the Chinese did. I don’t know who he was. That man is
really ruining the reputation of the co-operatives, dragging its name into
the dirt!
Where we live, someone calling himself a representative of the cooperatives arrived and using the post-road requisitions had four sheep
slaughtered and ate them, and then left and we never heard anything more
about him. What was his position in the co-ops?
In the spring, we heard that the co-o goods had arrived. When we got to
the co-op bringing a good load of lamb skins, the manager drove us away
saying, ‘You don’t have many lamb skins, I don’t need to talk to the likes
of you’, and wouldn’t let us into the co-op. So then we went to the
Chinese and they were willing and excited to talk to us, and invited us in
for tea, and bought everything that we’d brought with us. That co-op
manager of ours curses us, puts on the ‘paper snake’, frightens the horses,
and scares the children. Now not one of the Mongols, and especially the
poor, goes to the co-op; they are afraid to go. This co-op only trades with
the rich.57
Tseden-Ishi himself anticipated the criticism that the foreign staff of the cooperatives
would receive. In his report to the Third Congress, he explicitly addressed the issue
saying: ‘We have some people who say that foreign instructors are unnecessary, and that
no matter how, Mongols must, be used. But in reality, this simply won’t work.’ There
were not enough Mongolians working in the co-operative, he explained, and those who
were Mongolian didn’t know accounting. He pointed out that in the process of expansion
56
A single-shot breech-loading rifle used in the Russian army until the arrival of the repeating Mosin
in 1891. The Berdan No. 2 was still widely used by civilians in both Barga and Mongolia proper up to
the 1920s.
57 Mongol Ardyn Namyn guravdugaar ikh khural, pp. 186-7; Mongolia: Yesterday and Today, p. 65.
the Finance Ministry sought new officials and received 200 applications from Mongols,
but hardly 15 of them were literate and the rest could only be used for menial tasks.58 In
his report to the First Congress of the MPR in November, Tseden-Ishi again admitted the
inadequacy of the personnel and mentioned bureaucratic problems that made it hard even
to employ qualified foreigners:
Because . . . the Mongols trained in writing are almost all serving as
officials in the state organs, to try to employ Mongols is just about
impossible. Moreover men trained in trade and commerce and keeping
books are very rare. Therefore we have ended up employing foreigners
and since it is not easy for them to get travel documents, etc., it has almost
got to the point of employing the first person we meet, so there are many
places where the people in the co-ops are not of that good quality.59
By the end of 1924, after the hiring for the expansion was over, the total staff for
the co-operatives was 615 persons, of which 226 were Mongols, 77 Buriats, 39 Chinese
and 273 were Russians.60 Given the comments noted above, it is likely that the Russians
were concentrated in the managerial positions, while the Mongols were in the menial
ones.
In general, however, the comments seem.to indicate a more fundamental problem:
as salaried employees of a state-affiliated organisation created primarily by national
policy considerations, the co-operative managers showed little interest in actually doing
business. Shirendev’s memoirs of his childhood in the 1920s are typical. In his banner the
leading representative of the new government was the manager of the local co-operative,
Choisdoo. While Choisdoo was not a terrifying Russian (the Russians who frightened
Shirendev belonged to Centro-Soiuz the Russian state-supported co-operative
organisation), as concurrent head of the party cell his primary interest lay in popularising
the new regime, discrediting the lamas, and recruiting young children for the Pioneers. In
short, Choisdoo’s primary impact on the district was as a political agitator, not as a
facilitator of the district’s trade, and it is hard to imagine that his office managed to
secure a large percentage of the local wool market. Indeed Shirendev points out that as
late as 1928 the local Chinese merchants played a major role, and he does not mention
any commercial role of Choisdoo at al1.61
In this situation, expanding the co-operatives and out-competing foreign
merchants by the use of legal privileges and appeals to revolutionary patriotism would
not improve the level of service for the herdsmen. Although Tseden-Ishi certainly had a
good sense of what the reality on the ground was, he was not the only one who responded
to criticism of the co-operatives by blaming their problems on the Chinese. Typical was
58
Mongol Ardyn Namyn guravdugaar ikh khural, p. 184.
Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, p. 235.
60 Mongol Ardyn Khuvisgalt Namyn dörövdügeer ikh khural, p. 224. This figure does not include the
160 workers at Altanbulag factory.
61 Shirendev, Through the Ocean Waves, on Choisdoo, see p. 26, 36-40. On Russian traders buying
livestock, see pp. 21-2.
59
the comment of Zhamtsarano, originator of the whole idea of displacing foreign traders
almost a decade earlier, who saw sinister reasons behind the co-op’s incompetence:
A directive was issued to take the co-op into our hands, but there has not
been any work on this. It is called the ‘People’s’ co-operative, but is it
really a people’s cooperative? In fact, isn’t it only the co-operative of ten
or twelve rich people? Isn’t it the co-operative of the Chinese firms who
stay in shadows behind it? . . . The congress should take up and discuss
this question. . .62
The Comintern agent Turar Ryskulov, newly appointed to Mongolia, in his report to his
superiors in Moscow labelled the complaints voiced by the rural delegates ‘interesting
opinions and criticisms’. Yet completely ignoring the negative references to the Russians
and the at least relatively favourable portrait of some Chinese business practices, he
reported to his superiors that the co-operatives were not only exploitative in their own
right but actually operating in collusion with the Chinese.63
CO-OPERATIVES, 1925-1928
The response in subsequent years was to pursue a policy of monopolisation of trade while
also attempting to address the obvious problems of the co-operatives. The Third
Congress’s resolution on Tseden-Ishi’s report began by emphasising that ‘In a sovereign
country, developing the economy is of most vital significance’. It ended by directing that
branches of the co-op should be established everywhere and that these branches ‘should
find ways as opportunities present themselves to liquidate the exploitation by the
merchants of foreign petty commerce’. In between, the directives emphasised getting all
party members to become co-op members, ordering local government organs to turn over
all in-kind taxes on animals and raw materials to the co-ops to be turned into cash,
allowing the co-ops better access to the pool of educated Mongols, asking the
government to give the co-operatives ‘special privilege’ (ontsa erkhe - that is, a
monopoly) in importing and exporting materials so as better to unify all trade in its hands,
and finally to improve the training of managers and fire the incompetent, lazy, and
dishonest.64 The Congress of the MPR added its own directives in November, asking the
People’s Co-operatives to become truly people’s co-operatives, reform their organisation,
employ Mongols as the officials, and explain to the people the significance of the co-ops’
work and gain their vigorous support.65
In the next half-year the implementation of these directives was at least ostensibly
held up by the snarling feud between Turar Ryskulov and Elbek-Dorzhi Rinchino. By
June 1925, Ryskulov was writing to Moscow that Rinchino was opposing the Third
Congress’s directives which he, as a loyal Comintern agent, fully supported. Writing
about the implementation of a state monopoly on foreign trade, Ryskulov charged that:
62
Dashdavaa and Kazlov, Komintern ba Mongol, p. 90.
Dashdavaa and Kazlov, Komintern ba Mongol, pp. 90-91.
64 Mongol Ardyn Namyn guravdugaar ikh khural, p. 228-9.
65 Dashdavaa and Kozlov, Komintern ba Mongol, p. 101.
63
Rinchino criticises [the decrees] saying ‘They aspire to apply the
experiences and principles implemented in the Soviet government’s own
territory in Mongolia.’ He says ‘No one is ready to implement it this way
and exactly whom [the decrees] criticise is not understood, and to execute
the country’s foreign and domestic trade as a result of this criticism along
the lines of the National Congress will not work.’66
Although the feud between these two Comintern-affiliated agents in Mongolia ended
with the recall of them both, the evidence indicates that neither Rinchino’s views about
the impracticablility of instituting a Soviet-style foreign trade monopoly nor his dispute
with Ryskulov significantly slowed the monopolisation programme. As Tseden-Ishi had
pointed out, the primary obstacles were not political, but technical. With subsidy of the
co-ops’ operations and increased resources being put into education, the obvious
problems could in time be resolved.
An important guarantee of success for the co-operatives was that they received the
‘special privilege’ or monopoly (ontsa erkhe) on foreign trade. At the Fourth Congress
this monopoly, which was based on the Soviet model, was temporarily entrusted to the
co-operatives. Subsequently it was planned to transfer foreign trade to a state-owned
trading firm, leaving the co-operatives operating only in domestic trade. For the moment,
however, foreign trade was the largest money-maker for the co-operatives and their
members. In the first half of 1925, one of the large British firms, W. Kaufman & Co.,
sold their Mongolian branches to the Mutual Aid-Co-operatives as they were unable to
compete successfully, and other firms followed suit.67 In reality, however, the monopoly
was not actually applied with full legal rigour until December 1930; up to that year a
dwindling number of foreigners continued trading.68
The steady displacement of foreign firms meant that in 1925 the co-ops were able
to negotiate with the foreign firms from a position of strength. Their representatives
secured a three-year contract with the British Wilson firm in Tianjin which gave three
advantages to the co-operatives: 1) 83,000 poods of the co-operatives’ unsold 1924 stock
was sold at a good profit; 2) the three year term would guarantee sales of at least part of
the co-operatives’s market; 3) the Wilson firm paid a large advance on the later years’
shipments, which supplied valuable capital for their activities. In 1924 on the Tianjin
wool market 83,000 poods was worth about 1,038,000 Chinese or Mexican silver
dollars.69 The combination of the improved security of trade with the south and the
cooperative’s monopoly on trade, meant that from 1925 on it could dispense with the
services of private firms. At the First Congress of the MPRP in 1924 one delegate asked
Tseden-Ishi, ‘What is the reason that the co-op bought several cart-loads of goods from
Sonomdorji’s and other companies? Isn't it more expensive than if it bought these things
66
Dashdavaa and Kozlov, Komintern ba Mongol, p. 101.
RRIAC, roll no. 184, 893.62222/3, ‘Wool Monopoly in Mongolia’ July 13, 1925, from Consul
Samuel Sokobin, p. 9.
68 Alan J.K. Sanders, Mongolia: Politics, Economics, and Society, p. 100.
69 Mongol Ardyn Khuvisgalt Namyn dörövdügeer ikh khural, p. 220.
67
from abroad?’ and Tseden-Ishi had to reply, ‘Because there are difficulties in bringing in
goods across the southern frontier, we buy them from here.’70 A year later at the Fourth
Congress, the delegate Amur, speaking for the co-operatives was able to answer a similar
question in a very different way. Q: ‘Does the Mutual-Aid Co-operative buy all the
finished goods from foreign cities and other places beyond the frontier or is there
anything that it buys from the trading companies here?’ A: ‘The Mutual-Aid Cooperative buys all finished goods from the places where those goods were originally
processed [abroad].’
Equally revealing in light of the comments at the Third Congress were the
changes in the nationality of the personnel. The representation of Mongols in the staff
increased, and efforts were being made to train educated Mongolian personnel. The
Mutual-Aid School was separated from the People’s College (Oyutan-u surgaguli), and
opened as a separate school on 25 November 1924 with 4 teachers training 25 students on
short courses. Over the next five years (1925-1930), the school trained more than 400
students with a programme extended to two years. Graduates included accountants,
salesmen, cashiers, as well as buyers in raw materials and coloured skins (‘hunting
hairs’).71 For the most advanced students further education was available in Moscow,
where ten Mongolian citizens (five native Mongols and five naturalised Buriats) were
sent in 1925.72 At the same time however, the number of Russians in managerial
positions, about whom the rural delegates had complained most, also increased. The
group that saw the most drastic decline was that of naturalised Buriats (who as refugees
from the Russian Revolution were politically suspect) and the Chinese, whose combined
percentage declined from 19 per cent to 9 per cent.73
The figures on nationality thus show a pattern in which changes in staffing were
motivated primarily by political considerations, rather than a desire to respond to the
dissatisfaction of the co-operatives’ clients. In 1927 delegate Batutemür repeated
continued problems with the employment of Russians both in the co-operatives and the
veterinary stations:
They say the work of the co-operatives and veterinary stations is not good,
and if you study the reason, since there foreigners are common at those
stations, when you talk to them, you can’t understand the language. They
are unable to improve it like this, and it seems like it is easier for them to
call those bosses together, listen to speeches and give directives to
implement.74
70
Bügd Nairamdakh Mongol Ard Ulsyn ankhdugaar ikh khural, pp. 243 (question), 243-4 (answer).
Sh. Nacugdorji [Natsagdorj], ed., Bügüde Nayiramdaqu Monggol Arad Ulus-un soyol-un teüke
(1921-1940) (Hailar: Inner Mongolia Cultural Press, 1988), pp. 174, 179.
72 Mongol Ardyn khuvisgalt namyn dörövdügeer ikh khural, pp. 249 (question), 252 (answer).
73 Mongol Ardyn Khuvisgalt Namyn döröwdügeer ikh khural, p. 224; Mongol Ardyn Khuvisgalt
Namyn V ikh khural, p. 46
74 Mongol Ardyn Khuvisgalt Namyn VI Ikh Khural: 1927 ony yesdügeer saryn 22-arawdugaar saryn 5.
Delgerengüi tailan. (Ulaanbaatar: State Publishing House, 1980), p. 131. The vagueness of the
translation follows that of the original.
71
The changes in the nationality of the co-operative staff matched changes in the direction
of trade. Despite the three-year contract with the Wilson firm, Mongolian trade moved
steadily north. Without exact figures on the direction of sale of the co-operative goods, it
is hard to tell how much of this transfer of trade from China to the Soviet Union was the
result of the co-operative's own policy or of the Soviet Stormong company, or both.
(Stormong was a state-owned Soviet company created in 1927 specifically to handle the
Soviet Union's purchases of raw materials and the sale of finished goods in Mongolia.)75
Yet the shift was clear and steady and presumably reflected the domination of the
Mongolian export market by state-owned or state-assisted Soviet and Mongolian
organisations. While sources show rather large disagreement on both the absolute
numbers and the balance of overall trade circulation, the change in the north-south
balance is similar, showing the Soviet share of Mongolia’s exports rising from less than a
quarter in 1925 to half or more in 1927.76 The figures are contradictory, however, on
whether Tseden-Ishi’s plan of creating a favourable balance of trade by deliberately
limiting imports was achieved.
Yet after some advances in 1924 and especially 1925, the drive to dominate
imports would stabilise at between one-fifth and one-quarter of the market. Not until
extreme political pressures were brought to bear in 1929 and 1930 did Mongolia finally
decisively turn to the Soviet Union for imports.
Soviet and Mongolian sources from the Communist period claim that the stateaffiliated trade organisations achieved their market dominance by out-competing the
capitalist firms. In 1927, for example, foreign films sold a pood of sugar for 16.85
tögrögs, while the new Soviet state-owned trading firm Mongolia, Stormong, sold sugar
at 12.19 tögrögs per pood. On the other side, 1928, Chinese films paid 20 tögrögs per
pood of sheep’s wool, while the remaining American firms paid 22 tögrögs, but the
Soviet firms paid 28 tögrögs.77 In evaluating these figures, it must be borne in mind that
figures for the Soviet Stormong may not be applicable to the co-operatives. Even if they
were, however, the wide fluctuations in prices mean that single figures cannot make a
definitive case. Indeed occasional comments at Party Congresses indicate that for the
herdsmen, poor service and unfavourable prices continued to limit the appeal of the cooperatives, although there was less and less alternative to them. At the Fourth Congress,
rural delegates made the following comments about the co-operatives:
A representative: The report of the co-operatives has been very opaque,
and moreover due to the situation of the rural branches not being good,
there are many instances in which they have not been able to bring
75
Sanders, Mongolia: Politics, Economics and Society, p. 85.
Two sets of figures are found in 1) Mongol Ardyn Khuvisgalt Namyn doldugaar ikh khural, p. 17;
and 2) N. Ochirbal, BNMAU-yn gadaad khudaldaa p. 22 and Mongol-Zöwlöltiin khariltsaany tüükh, p.
106, 109. By showing trade surpluses in 1923-1925, figures found in Mongol Ardyn Khuvisgalt
Namyn V Ikh Khural, p. 43, seem to run against other statements of trade balances, and indeed the
editors of the congress minutes note some difference with figures presented in the journal Khoziastvo
Mongolii.
77 Shirendev and Gafurov, Mongol-Zöwlöltiin khariltsaany tüükh (Ulaanbaatar, 1981), p. 108.
76
assistance to the people. I suggest we improve this situation as soon as
possible.
A representative: Since the Mutual Aid Co-ops buy raw materials from the
people at a lower price than do the foreign merchants, which should we
sell them to?
Representative Tsevenjab: As the price of the goods sold by the Chinese
who bring them across the Mongolian frontier from Höhhot is cheaper
than the price of the goods of the Mongolian Mutual-Aid Co-operatives, I
suggest the reasons and conditions behind these instances ought to be
closely investigated. The price of goods should be reduced and the number
of stores increased so that the co-operatives can develop their assistance to
the people, and no longer let them be exploited by the greedy foreign
merchants.78
Suggestively, whilst the first two comments, rather neutral in tone, were anonymous, the
last, more ideological voice, belonged not to a herdsman but to a 26-year-old soldier in
the 4th company of the Khovd border regiment.
Subsequent congresses saw repeats of the same comments. At the Fifth Congress
in 1926, Navanglubsang, rural delegate from Khan Taishir Mountain (former Zasagtu
Khan) Province, was fooled by the favourable report:
The report that the co-operative offices and branches are carrying on their
business well seems pretty hypocritical. If you look at the co-operative
branches now, most of them are really bad, and the trade circulation is
basically empty numbers. Moreover when party and league members
becomes co-operative members, they do not give them a certificate and
there are cases when the money paid in as their share has been completely
wasted - that’s just not right, is it?79
Problems with the co-operatives were reflected in the frustratingly slow growth in the
number of members. Superficially, the increase in the number of co-operative members
would look encouraging: between 1922 and 1927 the membership increased from 116
members to 10,048 members.80 Yet as the figures were reported they were always
preceded by a reminder that Mongolia had 80,000 herding households, all of whom ought
to be members of the co-op. Clearly the reach of the co-operatives was exceeding its
78
Mongol Ardyn khuvisgalt Namyn dörövdügeer ikh khural, pp. 256, 261. On Tsevenjab (Cyrillic
Tseveenjav), see pp. 301, 306.
79 Mongol Ardyn Khuvisgalt Namyn V ikh khural, p. 81. On Navanglubsang (Cyrillic
Navaanluvsan), see p. 259.
80 Mongol Ardyn Namyn guravdugaar ikh khural, p. 186; Mongol Ardyn Khuvisgalt Namyn
dörövdügeer ikh khural, p. 226; Mongol Ardyn Khuvisgalt Namyn V Ikh Khural, p. 46; Mongol Ardyn
Khuvisgalt Namyn VI Ikh Khural,p. 64; Bögd Nairamdakh Mongol Ard Ulsyn ankhdugaar Ikh khural,
p. 238, 356 n. 118.
grasp. The worst problem was the low percentage of party members. Since membership
in the co-ops was a way of expressing party and patriotic feeling, refusal to join the coops on the part of party members indicated a strong resistance to participate in what was
one of the new regime’s main vehicles for its nationalist aims. Navanglubsang’s criticism
showed that just because party members were supposed to join, some co-op managers
made no effort to keep them as satisfied members. One question and answer session at
the Sixth Party Congress in 1927 revealed some of the leadership’s frustration with this
situation:
Question: Why are there few party members among the members of the
Mongolian Mutual-Aid Co-operative?
--No special directive has been issued about having the co-operatives take
party members as their members, but all party members enroll as cooperative membership on their own initiative.81
One delegate, Odsürüng, proposed the obvious political solution of simply
ordering all party members to join the co-operatives, and having those who were
members already increase their shares.82 Another delegate, loyal to the idea behind the
co-operatives, pleaded for patience.
There are a lot of criticisms about the Mutual-Aid Co-operatives talking about this
or that, but the co-operatives’ aim is to carry on wholesale commerce all by itself,
and this business was never an easy or simple thing. Now the number of party
members among the share-holders in the co-operatives is barely two thousand,
which is really few, and the central organs have time and time again done
propaganda about this to party members about purchasing shares in the cooperative. Yet when they are so few, it is not right and you could say this fact
already is proof that discipline has become slack. It is hard to wipe out all at once
all the wrong things about the co-operatives and these goings-on are something
that needs to be slowly corrected and reformed from within. Moreover, the
Mongolisation of the Mutual-Aid Co-operatives is being held up constantly by the
lack of trained cadres among the Mongols who are up to the job, and so they are
continually trying to petition the appropriate offices to implement this
Mongolisation with due attention to the conditions.83
Indeed short of challenging the co-operative’s fundamental aim of ‘carrying on wholesale
commerce all by itself’ those delivering the criticisms could find no real reply to this
angry rebuttal.
In the final year before the sudden left turn of 1928 made the question of foreign
traders in Mongolia irrelevant, party, league, and even labour union members (!) were
brought in to increase the numbers in the co-operatives. 1,983 new members were
recorded in 1928, of whom more than 1,600 belonged to one of the three above
81
Mongol Ardyn Khuvisgalt Namyn VI ikh khural, pp. 86, 87.
Mongol Ardyn Khuvisgalt Namyn VI ikh khural, p. 122.
83 Mongol Ardyn Khuvisgalt Namyn VI ikh khural, p. 140.
82
mentioned organisations. The report on the People’s Mutual-Aid Co-operatives for the
Seventh Congress went through the usual litany of problems: most of the share-holders
were party, league, or union members, and those from the ordinary people (engiin ardaas)
were extremely few, inspection of the books was lax so there were large losses, many of
the managers were untrained and did not know how to buy raw materials or sell good,
and so sat in their offices doing nothing, while others caused large losses by mishandling
of the goods traded. The solutions were similar to those proposed earlier: encourage the
public to join the co-operatives through propaganda disseminated by the party, league,
and union members, as well as soldiers. Another suggestion was to found more ‘Red
Corners’ and ‘Co-op Clubs’ and use photographs to popularise the co-operatives.84
Ironically, the problems with the Mutual-Aid Co-operatives ended up causing
problems for the fledgling herding collectives, started just that year. In 1928, the new
regime had established four ‘people’s initial collectives’ (ardyn ankhny khorshoo) near
aimag (region) centres, The report to the Seventh Congress however, revealed that these
four collectives not only had little participation from the people, but were in fact
established and controlled by ‘middle-men traders’ (damyn khudaldaachid), These people
had used the name of initial collectives and the offer of start-up capital from the state to
carry on trade, The authorities thus had to insist that the new trial collectives were not to
try to compete with the co-operatives in trade, but that the two organisations should cooperate.85 Evidently, it was hard to close-off permanently the commercial opportunities
left by inefficient operations of the progressively more complete monopoly of the cooperatives.
CONCLUSION
The conclusion of the story of the monopolisation of the Mongolian economy came in the
Left Turn after the Seventh Party Congress in Autumn 1928, The last British and
American films were expelled from Mongolia, the Chinese firms reduced to impotence,
and although the volume of imports declined dramatically, the Soviet Union finally
achieved a dominant position in Mongolia’s import market. Within two years the disaster
of collectivisation almost brought the regime to destruction as popular revolts swept
much of the north-central part of the country. Yet though the sudden completion of the
nationalisation agenda for the economy caused a dramatic economic and political crisis,
the fundamental ideology that saw commerce as a matter of patriotism and national
strength had been active throughout the 1920s. Indeed this was a continuation of Tsyben
Zhamtsarano’s first proposals in embryo under the theocratic regime.
The anecdotal evidence from Mongolia strongly suggests that the co-operatives
did not replace the foreign merchants by offering less exploitative terms of trade, but only
by the application, covertly and overtly, of monopoly privileges. The driving force
behind this monopoly was not the herdsmen, but rather the nationalist intelligentsia for
84
Mongol Ardyn Khuvisgalt Namyn doldugaar ikh khural: 1928 ony aravdugaar saryn 23-arban
khoyordugaar saryn 11 (barimt bichig materialuud) (Ulaanbaatar: State Publishing House, 1980), pp.
71-3.
85 Mongol Ardyn Khuvisgalt Namyn doldugaar ikh khural, pp. 71-72.
whom the co-operatives fulfilled a crucial national need. For them, the degraded service
and unfavourable prices offered by the co-operatives were a small price to pay for
national sovereignty over the economy.
Donald Horowitz in his Ethnic Groups in Conflict has written of the Common
belief that peasants naturally have an intense dislike of entrepreneurial minorities and a
deep desire to escape their grasp. His own survey of the literature found that peasants
often were ambivalent about these ethnically alien commercial minorities, appreciating
the skilled services they provided and admiring their dedication to profit, at the same time
as disdaining their materialism. It was only the nationalist intelligentsia, he found,
intensely focused on the future of the nation and convinced that competitive emulation of
the more ‘advanced’ countries was the only way out of national extinction, who could
conceive both the ambition of wiping out these alien mercantile elements and the
concrete plans to achieve them. Judging from the initial research presented here, the
Mongolian Mutual-Aid Co-operatives is a case in point.
NOTES
An earlier version of this paper was presented at the Association for Asian Studies
Annual Meeting in San Diego, 9 March 2000. I would like to thank David Sneath for his
helpful comments on that earlier draft.