Mr. Conger to Mr. Hay.

No. 1544.]

Sir: I have the honor to inclose translation of a set of mining regulations issued for the province of Hu-nan, and which have received Imperial approval.

These appear to me so flagrant a violation of the provisions of our treaty that I have filed with the foreign office a formal protest against them, copy of which I also inclose. The English and German ministers here inform me that they have taken like action.

I have, etc.,

E. H. Conger.
[Inclosure 1.]

Regulations of the General Mining Syndicate of the province of Hu-nan.

Petition from the syndicate to the governor of Hu-nan, requesting him to memorialize the Throne and ask for the Imperial sanction for the grant of a monopoly of all the mines in Hu-nan to the syndicate.
Formation of a syndicate by the fusion of two former mining companies, Fu Hsiang and Yuan Feng.
The syndicate to have exclusive management and control over all mines in Hu-nan, with the exception of those already under government control, and all mining operations for which concessions have already been granted, or may be granted hereafter, to be under the control of the syndicate, which is to be the only mining company. The syndicate to correspond direct with the governor, and the governor’s instructions to be conveyed to the head mining bureau.
All mining operations, including going concerns, whether they be undertaken by private individuals or by companies with a subscribed capital, to be registered by the mining syndicate and to conform with its regulations.
The province of Hu-nan to be divided into three mining districts, Changsha, Yochou, and Chang-te, and Fu-li-chou being the central district; Pao-ch’ing-fu, Heng-chou-fu, Yung-chou-fu, Ch’en-chou, Kwei-yang-chou to form the southern dstrict; Ch’en-chou-fu, Yuan-chou-fu, Yung-shun-fu, Ching-chou, and the four subprefectures, Feng-huang, Yung-sui, Kung-sui, Kuang-chou, and Kan-chou, and Kan-chou being the western district.
The concession to be granted by the government to the syndicate to be in perpetuity.
The monopoly to be granted to the syndicate for mines of every description.
The syndicate to act on commercial lines, and not on official principles.
The object of the syndicate is to benefit all. No special privileges to be granted, equal treatment to be meted out to all comers.
The former companies, Fu Hsiang and Yuan Feng, had capitals of 2,000,000 taels and 200,000 taels, respectively. The capital they agree to put together, after the fusion into one company, is to be 3,000,000 taels at first, divided into 60,000 shares. Chinese of all provinces are entitled to be shareholders, but not foreigners.

Section II.

The syndicate to engage Chinese mining engineers educated abroad, or well-known foreign engineers, to prospect and inquire into the mineral resources of the whole province. Deputies or members of the gentry to be sent into all the districts to effect purchases of mining land.
The syndicate’s head office to be situated in Changsha and branch offices at Yochou, Hankow, and Shanghai.
The smelting of ore to be carried on by both foreign and by Chinese methods. Native smelting furnaces may be established wherever required; foreign smelting works to be established at places selected with a view to convenience of transport. The existing produce of smelting works to be disposed under the management of the syndicate at Changsha, to avoid confusion of prices.
The directors of the three districts to have joint control of the syndicate.
Persons of one district wishing to start mining operations in another district must come to an understanding with the syndicate previous to doing so.
Appointments to assistant directorships to be made by the head office of the syndicate with the approval of the governor.
Directors and subdirectors to be selected in accordance with the general desire of the shareholders. Should they disagree, the candidates to be nominated by ballot at the next general meeting of shareholders. The candidates selected to receive their appointments from the governor.
The governor to be requested to appoint an officer to supervise the handling of government grants and dividends, and to control the finances of the syndicate generally.
The syndicate to have a seal for its three districts, the old seals of the original companies to be destroyed.
The syndicate will create a mining bank, the checks of which shall be current among the various mining companies affiliated by the syndicate. (This paragraph is open to further discussion and amplification.)
A school of mines is to be founded, the cost of which shall be refunded from the net profits in a manner to be hereafter defined, whether the outlay be provided out of special funds or out of the capital of the syndicate. Any overplus may be used for extending the business of the syndicate.
It is hoped that the capital of the syndicate may hereafter be increased, and such increase shall be sanctioned.

Section III.

23 to 28.
Details of the management of the shares, with a restriction against their being transferred to foreigners.
29 to 37.
General meetings of shareholders.

Section V.

All the owners of mining property to be notified by the provincial authorities that they must forward to the syndicate samples of their ores for assaying purposes. In case of the distance being very great those samples to be sent to the nearest local official for transmission.
A competent member of the gentry shall be sent to the various local authorities to select and examine mining estates with a view to ascertaining whether they are worth working. He shall draw up plans and registers thereof and request the local officials to confer with him and act accordingly.
When a mining estate has been registered the syndicate shall inform the local authorities. Such estates thereafter not to be sold to nonmembers of the syndicate.
With the exception of the mining estates already in the possession of the syndicate all other estates that have been registered shall be surveyed afresh by a mining expert specially appointed by the syndicate, and shall then be bought up by the syndicate at a price agreed upon.
In case the owner of a mining estate is unwilling to sell, his property may be held as his share in the syndicate. The property shall be worked by the syndicate, and a suitable dividend shall be paid to the owner.
All mines that have been previously opened up, but where owners have had to suspend operations owing to want of capital, may also be assimilated as a share in the capital of the syndicate. If the owners wish to continue to operate their mines themselves, then the provisions of Section VII shall apply.
Should any capitalists in the three districts wish to purchase or lease a mining estate, they must first obtain a written permission from the mining bureau, who will have had surveys made, or a dispatch from the syndicate to the local officials, authorizing them to seal the contract and receive the taxes payable thereon. Failing these documents, and if only the usual threefold land deed with the words “mining property “added thereto is produced in order to obtain tax receipts by fraud, the local authorities, on detection thereof, shall cancel the said deeds. This measure has been submitted to and approved by the Wai Wu Pu.
Should owners of mining estates not be willing to sell or to take part in the operations of the syndicate, they must request the provincial authorities to issue a proclamation. In such cases the said owners shall send their title deeds to the authorities of their district to be sealed and entered in the registers to avoid other complications. In case of disobedience to this rule offenders will be punished. Thereafter, unless the owners, agree to let the syndicate manage their property, any private rules or other arrangements will not be permitted.

Section VI.

Mining operations that have been authorized formerly and that have been carried on without stopping up to the present time shall continue to be worked as heretofore, but must be registered by the syndicate.
The expenditure and receipts connected with work done at the mines and the method of mining remain under the control of the mine owner, and he may decide whether the ore produced shall be smelted by himself or sold to the syndicate smelting works. If he wishes to sell to outsiders the produce of ore smelted by himself, he must enter into an agreement with the syndicate and obtain a permit.
Whenever mine owners refuse to register their property or to take a share in the syndicate or secretly sell their produce to nonmembers and refuse to abide by the rules of the syndicate, it is to be feared that disturbances may occur and frauds be perpetrated. The syndicate shall in such cases apply to the governor to prevent such abuses.
Whenever mining concerns actually working wish to change their rules or to increase their share capital they must report the circumstances to the syndicate. The syndicate will then send an inspector to make investigations, and in case of noncompliance with the regulations of the syndicate or of disturbances and fraud, the syndicate shall, if necessary, petition the governor to put a stop to their operations.
The above regulations apply to mines actually in operation. Such mines as have not yet been started or that have ceased work or that may be started hereafter must be carried on as per Sections V and VII.

Section VII.

Merchants or gentry of our own or other provinces wishing to lease any particular mining property from the syndicate, with a view to mining in accordance with the syndicate’s regulations, must enter into an agreement with the syndicate and have the company registered as a branch of the syndicate.
The name of such company to be registered in accordance with section 1, 4.
The rent charged by the syndicate to such a company to be estimated according to the output.
In such cases the syndicate may depute a person to manage the branch [Page 153] company, and he is to have control over the output and to enforce discipline, etc., the costs to be borne by the branch company.
55 to 57.
Methods for the financing of branch companies. Any admission of a foreigner to the finances to invalidate the agreement.

Section VIII.

58 to 59.
The year to be divided into two halves, and accounts to be audited every year.
The syndicate and its branches to pay to the Government the royalties provided for by the regulations.
61 to 62.
Distribution of profits, etc.
The above regulations may be altered, in case they prove unsatisfactory, by a general meeting of the stockholders.
[Inclosure 2.]

Mr. Conger to Prince Ch’ing.

Your Imperial Highness: I have the honor to address your imperial highness on the matter of the new mining regulations of Hu-nan.

A copy of the regulations has been placed in my hands, and I am informed, much to my surprise, that they have already received the Imperial sanction.

I feel sure that this could only have been done by inadvertence or by some misunderstanding on the part of their imperial majesties and your highness of the present situation, because even a cursory reading of the regulations will show that they are unquestionably in violation of both the spirit and the letter of Article VIII of the new commercial treaty recently entered into with the United States, wherein China concedes that in the matter of developing her mineral resources it is desirable to attract foreign as well as Chinese capital for investment in mining enterprises. In the article mentioned China has agreed that she will offer no impediment to the attraction of foreign capital, nor place foreign capitalists at a greater disadvantage than they would be under generally accepted foreign regulations, and that she will permit citizens of the United States to carry on in Chinese territory mining operations and other necessary business relating thereto, provided they comply with the new regulations and conditions which will be imposed, by China on its subjects and foreigners alike, etc.

These Hu-nan mining regulations, however, if allowed to go into operation, would really withdraw the entire province of Hu-nan from the application of the treaty provisions just quoted, inasmuch as all foreigners and foreign capital are by the said regulations definitely and permanently excluded from any and all mining opportunities therein.

It is my duty, therefore, in the name of my Government and in the interest of its citizens to make respectful protest against the enforcement of such regulations. But confiding in the honest intentions of the Chinese Government to at all times observe its treaty obligations, I trust that it may be necessary only to call the attention of your imperial highness to the plain, but I believe unintentional, violation of the treaty with the United States recently ratified to have these Hu-nan mining regulations promptly diavowed and annulled.

I avail myself, etc.,

E. H. Conger.