Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1904

Mr. Conger to Mr. Hay.

American Legation,
Peking, China, May 14, 1904.

No. 1607.]

Sir: I have the honor to transmit herewith a copy of the recently published revised mining regulations for the Chinese Empire. A cursory review will show that they are impracticable, not at all in accordance with the letter or spirit of Article VII of our late treaty, and instead of “attracting” will repel foreign capital from embarking in mining enterprises.

Without going into details I have contented myself with notifying the foreign office that these regulations can not be accepted as fulfilling the provisions of the commercial treaty signed on October 8 last, and I inclose a copy of my note herein.

The German and British ministers have each filed similar protests.

I shall await your instructions before taking any further action.

I have, etc.,

E. H. Conger.

[Inclosure.]

Revised mining regulations.

This memorial is reverently submitted, proposing for temporary adoption the following set of mining regulations, which has been drawn up, and the examination of which by your imperial majesties is humbly requested.

In the memorial proposing for adoption certain railway regulations, which memorial was presented by this board in the tenth moon of the XXIX year of Kuanghsü (November-December, 1903) we said:

“As to mining regulations, we have already received an imperial edict directing Liu K’un-i and Chang Chih-tung to make a selection from the mining regulations of various countries. So far Chang Chih-tung has not yet come to a decision, and this board ought for the present to propose a set of regulations to be put into operation experimentally.” In response we received an edict saying, “Let it be as proposed.” “Reverently received; let it be reverently obeyed.” All of this is a matter of record.

Chang Chih-tung has now returned to his post, and we hear that he has bought a collection of western books on mining, the translation of which will yet require some time. This board having by an imperial edict been given direction of railway and mining affairs, has special responsibility with regard to this matter. The operation of mines is being gradually undertaken, and merchants are clamoring for concessions. If, then, we do not agree upon some regulations, it will be difficult to secure uniformity, in our granting or withholding of the concessions asked. Moreover, the matter is one which intimately concerns our foreign relations, and we ought, therefore, the more carefully and minutely to investigate the subject that we may have some definite course to follow. We find that in the tenth moon of the XXIV year of Kuanghsü (November–December, 1898) the general bureau of railways and mines submitted 22 regulations dealing with mines and railways together, and that in the second moon of the XXVIII year (March–April, 1902) the board of foreign affairs in a memorial submitted a set of 19 regulations. An examination of these two sets of regulations shows that under present circumstances there is need of revision and additions, and the members of the board, having consulted together, have prepared a set of 38 mining regulations which we propose for adoption temporarily, and herewith submit the same for the inspection of your majesties. Should your majesties sanction them, this board will circulate them throughout all the provinces for their observance and will also communicate them to the board of foreign affairs that they may be transmitted to the ministers of the various foreign countries in Peking to be placed on file. Afterwards, when Chang Chih-tung shall have compiled a special work upon the subject, it will have to be taken up again in connection with him, so that there may be no lack of uniformity.

As in duty bound, we have reverently set forth the reasons for issuing revised mining regulations for temporary use, and submit this memorial praying that Her Imperial Majesty the Empress Dowager and His Imperial Majesty the Emperor will examine the same and issue instructions.

The above memorial was submitted on the 1st of the second moon, the XXX year of Kuanghsü (March 17, 1904), and on the same day an edict was received saying:

“Let it be as proposed. Respect this.”

Regulations.

1. This board has with reverence received an imperial edict directing it to take over the joint management of mining and railway affairs, and has humbly complied therewith, as is a matter of record.

Railway regulations have already been submitted in a memorial by us and adopted. As to mining regulations already in use, the board of foreign affairs in those issued by it in the second moon of the XXVIII year of Kuanghsü (1902) stated clearly that matters not fully treated in said regulations would be provided for as occasion might require by such additions and excisons as circumstances might demand, in the hope that the regulations might be made as perfect as possible. Our board, having now agreed upon these temporary regulations, will not hereafter give its consent to any request for a concession based upon former regulations or methods of mining operation heretofore allowed in various Provinces brought forward as a precedent, except that mines already in operation or concessions for working which have already been granted may continue to be worked according to the agreements already made.

2. All who apply for mining concessions must obtain permits from this board and must not operate the mines before such permits have been obtained. Permits are divided into two classes—(a) prospecting permits—and (b) permits for working mines.

3. Only when mining lands are the property of the State, no matter what the kind of ore produced by them, can a permit be granted. If the lands be private property, an agreement must first be made with the owner as to a price or his consent obtained to taking shares instead, and a report to that effect made and recorded, when only may a permit be requested. If the mining land in question be a place which the Government ought to develop, the officials must buy the land at a fair valuation, and the owner must not oppose.

4. No matter whether the undertaking is to be managed by Chinese or by Chines and foreigners together, when application is made for a prospecting permit or a permit to work a mine the petition must be prepared in strict accordance with the requirements detailed below, and may be presented directly to this board or through the viceroy and governor of the Province concerned, and after they shall have investigated whether or not local circumstances present any obstacles to the concession, and whether or not these regulations are being violated, this board will take the matter into consideration and grant or withhold the concession asked. The requirements referred to are as follows:

(a) The petition shall state clearly the surname and personal name of each petitioner, and to what Province and district he belongs, the number of the petitioners, and whether the petitioners are really to operate the mine themselves or intend to dispose of it to others.

(b) Should the applicants consist of Chinese and foreigners, who are taking shares together, the application must state clearly to what countries the foreigners belong and the exact number of shares which they hold.

(c) The application must state the location and boundaries of the mine, measurements of these boundaries, and the area of the mine in square li and in mou, and must be accompanied by a map marked with proper explanations, in order to facilitate examination.

(d) The kinds of ore which the applicants intend to work must also be clearly set forth.

5. The mining concession asked must not contain more than 30 square li, and must be comprised in territory which is continuous; the length must not be more than four times the breadth, and should there be graves upon the land some method must be adopted to avoid them in constructing shafts and tunnels; if this should be absolutely impossible then a liberal allowance must be made for removing them.

6. Should the mining concession for which application is made have been granted already to some other person, or should the lands concerned be important to the use of the State, the permit can not be granted. This board, upon thorough investigation, will reject the application.

7. (The following refer to prospecting:) When an application has been made for a permit to prospect and the same has been granted, it is understood that permission is not given to work a mine, but merely to examine the surface outcrop of the vein in the locality mentioned in the permit, and such prospecting must not be carried to too great a depth nor over too great extent of ground.

8. A permit to prospect shall be good for one year, at the expiration of which time, if the examination shall really not have been completed, a petition must be prepared making a clear statement of the facts, and if, upon investigation, it shall appear that no false report shall have been made, the permit may be extended for not more than one year in addition.

9. Local officials shall still collect the land tax according to the usual regulation from all private lands affected by the permit to prospect, and public lands concerned shall pay an annual rental of 1 Ku-p’ing taels per mou, which shall be an established rule. A fee of 50 Ku-p’ing taels shall be paid for each permit to prospect, on the issue of which the rental in full for one year on all public land affected must first be paid to the local officials before work will be allowed to begin; and if an extension of time shall be granted, immediately after such grant is made an additional year’s rent shall be paid.

10. Every applicant for a permit to prospect must prepare a petition stating the locality, boundaries, and extent of the land to be examined, and present the same, as may be most convenient, either to the viceroy or governor of the province concerned, who shall investigate the locality to determine whether or not such permit will injure the people of the place, whether or not the applicants be reputable persons, whether or not they may have any considerable amount of property, and whether or not there may be in their application anything that violates the regulations, which have been submitted to the Throne and received the imperial sanction, and, if upon such investigation, they shall find that with inspect to the foregoing there has been no violation of the regulations and that there are no other objections to be made, they shall communicate the facts to this board for its consideration and action; or the applicants may present the petition, which they shall have prepared, directly to this board and await the communication of it by the board to the viceroy or governor of the province concerned, who shall investigate and report whether or not there be in regard to the matters above-mentioned any reason for refusing the permit, upon the receipt of which report this board will take action, either granting or refusing the permit.

11. If the mining lands shall really be the private property of some other person, whose permission shall not have been given, and the prospector, having fraudulently obtained his permit, proceeds arbitrarily to make examination, immediately upon complaint being made by the owner an estimate of the damage shall be made and compensation required accordingly.

12. Any person who shall have obtained a permit to prospect must within four months after the expiration of his permit completely fill in all excavations that may have been made, and if houses or trees shall have been injured during the time of his prospecting he must also put them in as good condition as before. If at the expiration of four months he shall have obtained a permit to work the mine, the foregoing shall not apply.

13. (The following refer to working mines.) No matter whether a mine is to be worked by Chinese or by Chinese and foreigners jointly, if a permit to work the mine be requested the permit to prospect must first be returned for cancellation and a report submitted stating clearly the exact amount of capital stock raised, what kind of ore it is desired to work, as well as in what reliable banking or exchange establishment the funds have been deposited, and the said banking or exchange establishment must give a guaranty to this effect, which shall be presented for inspection.

14. Should the original applicant for a permit to work a mine, either before or after beginning operations, desire to transfer the permit to some other person, he must first petition this board and wait its sanction or refusal. Should the transfer be clandestinely made, immediately upon its coming to the knowledge of this board the original holder of the permit will be severely punished, the permit canceled, and the property confiscated.

15. Any person who shall have obtained a permit to operate a mine must be permitted to take out ore at the place mentioned in the permit, and in addition to transport to the mine all machinery and materials needed in its operation, and having paid the customs duty on the same according to regulation shall not be required to pay any additional duty at any inland barrier; but if any goods not needed in the working of the mine should be secretly brought in with such machinery and materials, a fine will be imposed according to the regulations.

16. In raising capital for the operation of a mine, generally speaking, the shares owned by Chinese ought to be in the majority, so that the control may remain with them. If the Chinese-owned shares prove to be insufficient so that it becomes necessary to supplement them with foreign-owned stock, the latter must not amount to more than the number of Chinese-owned shares. And when the petition is presented it must state clearly the exact number of foreign-owned shares; there must be no vagueness. Moreover, it will not be permitted to borrow foreign money in addition to the foreign-owned supplementary shares. Should permission to operate be obtained by misrepresentation, on discovery of the facts the permit will be canceled and the property confiscated.

17. When permission is wanted to work mines, there ought first to be a rough estimate made of the amount of work to be done and the amount, in round numbers, of the capital that will be required. If after examination the mine appears to be promising, subscriptions of stock must be invited until the full amount of the capital estimated as necessary shall have been raised, when only will a permit to work the mine be given. If after the work shall have commenced it shall appear that on account of its difficult character the expenses are much greater than was estimated when the capital was being raised, and that the latter is insufficient, and that it is difficult to raise additional shares, and it be proposed to raise a temporary loan of foreign capital to meet the emergency, if the capital already employed be composed entirely of Chinese-owned shares, then permission should be given to mortgage the machinery and buildings for a term of years as security for a loan, but it will not be allowable to borrow money by mortgaging the mine, and the amount of the loan must not exceed three-tenths of the amount originally estimated as the capital needed.

A petition must first be presented to this board clearly stating the” number of years which the loan is to run, from merchants of what nationality it is to be borrowed, and containing the words: “Borrowed by merchants to be repaid by merchants; the Government assumes no responsibility.” Thereafter this board will take the matter into consideration and give permission to negotiate the loan. When the contract is prepared one copy must be deposited with this board for reference. It must not be clandestinely modified.

18. Hereafter should Chinese merchants make application for permission to conduct mining operations, and should they, without reporting to this board, have already entered into a contract with foreigners to mortgage the mine as security for a foreign loan, and for the time secured their permit by deception, or if after operations shall have begun they shall secretly sell the mining property to foreigners, and the original holder of the permit simply sit down and receive pay for the use of his name, as soon as such evil practice be discovered by the viceroy or governor of the Province concerned or by this board, action will uniformly be taken in accordance with article 14, due consideration being given to the lightness or gravity of the offense.

19. If the applicants for a mining concession are assisted by foreign-owned shares, no matter whether the permit sought be for prospecting or for working a mine, they must not only petition this board and wait for its action, but must also petition the board of foreign affairs, which will consider the application and approve or disapprove of it. As to the foreign merchants, since they are willing to take shares they must cheerfully recognize these regulations and uniformly comply therewith; there must be no transgression of them.

20. If a Chinese corporation, after having brought the mining enterprise mentioned in its permit into successful operation, shall desire to work in addition some neighboring mine, and its capital being insufficient shall propose to enlarge it by securing supplementary shares of foreign capital, it must petition this board, making a careful statement in detail, so that we may be able to decide whether to grant or refuse the petition, and after sanction is given a separate permit must be issued; the Chinese company already existing must not become involved in this new enterprise.

21. Should it be necessary to maintain guards at a mine to protect the works, a petition to that effect must first be presented to the local authorities, who will consider the matter and decide whether or not it may be allowed. Only Chinese must be used for guards. It is still more necessary that all employees, except those in charge of the machinery and those who keep the accounts, should consist entirely of natives of the district in which the mine may be situated. Only when the natives go on strike will it be allowed to employ men from the adjoining districts, but still there must be no foreigners employed. The rations of the guards needed, together with all the expenses of drilling them, must be supplied by the proprietors of the mine, and if they should want to establish a school of mining in order to develop skill the said proprietors will be permitted to consider the matter and take such action as they desire.

22. If it should be desired to construct a small branch railway for the economical transportation of the ore, examination must first be made to learn whether or not the nearest main line of railway of the nearest port is within a distance of 10 li, and whether or not there may be any local objections, which facts may be submitted in a petition to this board, which will consider the matter and decide whether or not the line may be built. If the distance should be more than 10 li the case must be presented and treated as a special one.

23. If the territory covered by the permit to mine contain 10 square li or less, a fee of 100 K’u-p’ing taels shall be paid for the permit, and for every additional square li an additional 10 taels must be paid, 30 square li being the largest concession that may be granted, and after the fixed rent per mou shall have been paid to the local authorities, no matter whether the operators be Chinese only or Chinese and foreigners together, equal protection must be given to all, but the officials must not interfere with the rights of the operators to manage their own business. In case the operators should meet with losses action shall be taken in strict compliance with the imperial statutes; the law does not require the Government to indemnify.

24. After applicants shall have received the permission of this board to work a mine they must commence operations within six months from the date on which the permit shall have been granted, no matter whether the operators be Chinese or foreigners, and they must also report to this board the date of beginning work. If the six months’ period shall pass without report the permit shall be canceled and others be invited to operate the mine. Should the delay be caused by some unforeseen difficulty, it will also be necessary for a clear report to this effect to be made to this board, which shall investigate the matter, and only if there shall have been no misrepresentation may the matter of extending the time be taken into consideration.

25. Holders of permits must mark the boundaries of their concessions with stones that their limits may be clearly shown. They must also adopt, proper measures to guard against dangers, lest the engineers or workmen should meet with accidents. If, in spite of the precautions taken, any accident should occur, a report must be made as soon as possible to the local official, who will make an investigation. If any of the workmen shall have been killed a satisfactory indemnity must be paid. The amount of the indemnity shall be determined by the circumstances, a generous allowance being made.

26. At present China has very few mining experts, and holders of permits must therefore be allowed to employ foreign engineers. The local officials must give them thorough protection. Should any disregard this injunction they shall be liable to impeachment and punishment. The mining engineers must also themselves observe the rules of propriety. Should any of them show that they are ignorant of restraint the blame must be borne by themselves, and the local official will inform the manager, who will discharge them and engage others. They must not be shielded.

27. The superior officials of those provinces in which mining enterprises are being conducted must direct their subordinates to issue proclamations and suppress all disturbances. Should the natives become contentious on account of any matter or the workmen stir up a row the nearest department or district magistrate will take jurisdiction and deal with the case in a just manner. It is even more necessary for the officials to forbid their yamen clerks to avail themselves of any pretext to extort money. If the local officials do not discharge their duties properly and accusation is made against them, this board will thoroughly investigate the matter and on learning the facts will impeach them and request their severe punishment.

28. When a quarrel arises on account of some matter, if both parties to it are Chinese the nearest local official ought to settle it with impartiality, but if both parties will not accept his decision as just an appeal may be taken to this board, which will consider and deal with the case so as not to cause both sides to suffer injury. If a troublesome complication should occur between Chinese and foreigners each of the two parties should nominate a man, and these two should arrange a fair settlement. But if the two arbitrators should not agree in their opinions, they together should refer the matter to a third arbitrator, no matter whether connected with the establishment or not, and thus the matter may be impartially arranged. The Governments of the two nationalities concerned ought not to interfere.

29. After the petition has been presented and granted and a permit issued the contract for operating the mine may be drawn up, in which all matters not settled may be provided for in detail, but there must not be the least infraction of these regulations, and when the contract is being made a copy must be sent to this board for its inspection and approval before it may be signed.

30. A permit to work a mine shall be good for thirty years only. Should it be desired to renew it, report to that effect must be made to this board not later than six months before the expiration of the thirty years’ period, and the board will consider the application and decide whether or not to renew it. In the case of mining lands for which the State may have some other important use, no renewal of the permit will be allowed, but an estimate will be made of a bonus to be paid for the recovery of the said lands. Otherwise, if the request for the renewal of the permit be granted, the holders of the new permit will pay fees as in the first instance.

31. Although a holder of a permit is allowed to open a mine and take out ore anywhere within certain boundaries mentioned in his permit, yet if there should be within those boundaries any property belonging to another or in which another has an interest, such property must be marked off as not included in the concession, and, moreover, at the time that application for a permit to work the mine is made the facts must be reported to this board that they may be entered on the permit to prevent any quarreling. If by misrepresentation a permit should be obtained for the time, on accusation being made and the facts discovered a penalty will be determined.

32. Of the forests grown on mining lands some are needed by the State, and no one will be allowed to cut trees at will. If at the time that the permit is taken it should be clearly stated that it is desired to cut wood for use in the work, then the operators must wait until this board shall have carefully examined the conditions of the region and decided whether or not such cutting can be allowed, and if permission should be given, the extent of the forest that may be so cut must be plainly stated in the permit, and outside of such limits no one must dare to disturb the timber. All wood cut must be paid for at market price.

33. The rent for mining land having been paid the first year, if no ore shall have been taken out, it must be paid again the second year according to the rate fixed. If ore shall have been taken, then the mine tax shall be paid according to regulation, and no collection of rent in addition shall be made. This is to manifest the Government’s consideration for trade. But notwithstanding this, if rent due shall not have been paid within three months after due date, the mine and all property connected with it shall be sealed up until the amount due shall have been paid in full. If within six months after the sealing the debt shall not be cleared off, the permit shall be canceled and the mine taken back.

34. The rate of the tax on the output of various ores will be determined according to the classification of the ores as more or less valuable. It is given in a general way below. Ores not specifically mentioned will be taxed at the rate of that which is nearest in kind to it among those given. In the case of mines for whose working contracts have already been entered into, in which no rate of duty is specified, the tax will be levied according to that here given.

(a) Coal, antimony, iron, alum, and borax, 5 per cent ad valorem.

(b) Petroleum, copper, tin, lead, sulphur, and cinnabar 7½ per cent ad valorem.

(c) Gold, platinum, silver, mercury, and zinc, 10 per cent ad valorem.

(d) Diamond, quartz crystal, and all sorts of precious stones, 20 per cent ad valorem.

35. Ores shipped abroad shall pay export duty according to the customs tariff, and this having been paid, no additional duties shall be collected at any inland barrier. All duties collected from this source must be kept by the customs in a separate fund until orders are issued for appropriation.

36. All mining companies must keep a tabulated account of the ores obtained, which shall present the exact amounts of the various ores obtained and the various amounts of each shipped from various ports, and the various grades of ore, whether excellent or inferior, and shall send report of these items to this board every quarter, that it may be placed on file. This board will either send a deputy to the mines to make examination or will compare the figures sent with those of the customs, and if the two sets of figures do not tally will consider the matter and impose a penalty.

37. When a permit to prospect is issued the receiver of the permit must present the bond of some reputable and wealthy firm as security in the amount of 5,000 taels, and the receiver of a permit to work a mine a bond in the amount of 10,000 taels, the bondsmen guaranteeing that the holder of the permit will observe the conditions recorded in the permit and the regulations of this board. In default thereof the sums mentioned will be forfeited as a penalty.

38. If Chinese applicants for a mining concession should be able of themselves to raise capital to the amount of more than 500,000 taels, and it should appear upon examination that they have been successful in their operation of the mine, this board will make a special request for an edict conferring extraordinary rewards as an encouragement.

The foregoing regulations, slightly altered by additions and excisions from those submitted and approved in the XXVIII year of Kuanghsü (1902), are declared to be the temporary regulations for the control of mining operations until a volume of mining laws shall have been compiled and published, when such amendments shall be made as may appear to be necessary.

[Inclosure 2.]

Mr. Conger to Prince Ch’ing.

American Legation,
Peking, April 15, 1904.

Your Imperial Highness: I have the honor to acknowledge receipt of Your Imperial Highness’ dispatch of the 4th instant transmitting a copy of the revised mining regulations, submitted in memorial by the board of commerce on the 17th of March last, and sanctioned by the Throne the same day.

I have carefully perused these regulations, and shall at once transmit a copy of them to my government, which, I am sure, will be greatly disappointed, as I am, in their provisions. Instead of attracting foreign capital to advantageously develop her mineral resources, as China proposed to do in Article VII of the commercial treaty signed on October 8 last, they will, in my judgment, practically prohibit the investment of any foreign capital in mining enterprises, and can not, therefore, be accepted as fulfilling the provisions of the said treaty.

I avail, etc.,

E. H. Conger.