No. 50.

CHINA.

REGULATIONS FOR THE WORKING OF MINES IN SZECHUAN, UNDER CHINESE AND FOREIGN DIRECTION, BY THE HUA YI COMPANY, ESTABLISHED FOR THE PURPOSE BY THE SZECHUAN MINING BUREAU AND THE HUI TUNG COMPANY ACTING IN CO-OPERATION. a

APRIL 14, 1899.

1. The Szechuan Mining Bureau establishes the Hua Yi Company, by whom an Agreement is drawn up with the Hui Tung Company that the work is to be done by Chinese and foreigners conjointly to their mutual benefit. Profits are to be divided proportionately, so as to avoid trouble and disputes.

Both Companies shall obey all the Regulations mentioned in the Agreement and the existing Rules memorialized and adopted by the head office.

2. The Hua Yi Company is to subscribe a sum of 1,000,000 taels for the purchase of land. This must be Chinese and not foreign money. This Company is to buy and own all mining lands and carry out all negotiations. The Hui Tung Company have no interest in the prices of land, whether dear or cheap, nor with the amount of capital spent or reserved. When the Hua Yi Company has bought the land and obtained the right to open mines, the same is to be handed over to the Hui Tung Company for working. In the Hui Tung Company there are foreign merchants; they are not to be allowed to buy mining property from any other Chinese, so as to avoid all complications.

3. The Hui Tung Company, with a Chinese Managing Director and a foreign Assistant Director, is to prepare a working capital of 10,000,000 taels, to be formed first of 50 per cent. Chinese shares and next 50 per cent. of foreign shares.

Shareholders of all nationalities are allowed to take shares out of the 50 per cent. allotted to foreigners. There can be no monopoly for any one country. Now Mr. Morgan, an English merchant, has taken shares, and undertakes to assist in carrying out the work. Shareholders of all other nationalities who should hereafter take shares will be supplied with share certificates, paid dividends, and refunded capital according to the number of shares they take. Should any other « British Parliamentary Blue Book, China. No. 1 (1900), p. 135.

country also start a Company on the same lines, with both Chinese and foreign shareholders, the mines of the one Company will have to be kept distinct from those of the other. Different Prefectures and districts will be granted to each Company to work in, and their proceedings should be regularly reported to the head office, but the Rules and Regulations of this Agreement must, however, be complied with by all to prevent any unfairness. Any Company composed of foreign shareholders only and no Chinese shareholders shall not be allowed to work any mines.

4. The Hui Tung Company is to send out mining engineers to find out what mines are worth opening. This Company is then to consult with the Hua Yi Company to make maps and insert explanations, and submit the same to the Mining Bureau of Szechuan. If these mines are not already being worked by officials, gentry, or merchants, and if they are not injurious to the place, land is to be at once bought; such land is only to be enough for the shafts and the necessary buildings. If the lands belong to the people, the lease or purchase shall be made by the Hua Yi Company by arrangement with the owners for a reasonable price. It can also be taken as a subscription of capital, and a proportionate value of shares granted to the owner. If it be public property, such as a monastery, temple, &c., the owners have the option of leasing it, renting it, or subscribing it as capital. The Hui Tung Company must wait till land is properly purchased before starting work, and no compulsory purchase or seizure of the land will be allowed.

5. After each mining property is bought by the Hua Yi Company, it is to be handed over to the Hui Tung Company for working. From the mines worked by the Hui Tung Company, such as coal, iron, petroleum, &c., the Hua Yi Company is allowed to collect rent at the rate of 5 per cent. on the value of the output, no matter whether such mines make money or not. To reckon the producing capacity and the prices of products, whether dear or cheap, the rent is to be paid on the real price at which the Hui Tung Company sells the products. The value must not be under estimated, and any undue advantage gained. With regard to gold sand obtained from gold mines, a rent of 5 per cent. will be charged on the pure gold obtained after the gold sand has been thoroughly washed, but not on the sand before it has been washed.

6. Of the mines worked by the Hui Tung Company, such as coal, iron, petroleum, &c., there shall be paid to the Chinese Government, as producer's tax, 5 per cent. on the value of the output of the mines. Export duty shall be paid according to the existing Rules now in force. The Szechuan Mining Bureau shall authorize the Hua Yi Company to collect the producer's tax and to compare the same with the rent, and thus there will be no difference or shortage. No officer

shall be deputed for this purpose, so as to save unnecessary expense. The export duty is to be collected by the custom-house, and after the export duty is paid, no inland li-kin dues will be required. As regards the taxes to be charged on precious metals of all kinds, they are to be decided by the Board of Revenue.

7. The Hui Tung Company is to send engineers to find out all the mines that are to be opened and to consult with the Hua Yi Company, which submits the same for the approval of the Mining Bureau. Should a mine be found in a Government hill, the opening of which will not be injurious to the place, permission will be granted to open it. The ordinary land tax on such land would, however, be too small a sum for the Company to pay the Government for its use. In the case of Government land, therefore, the 5 per cent. rent and the 5 per cent. producer's tax are to be collected at the same time, and both paid to the Chinese Government; but 10 per cent. of the rent is to be reserved to pay the expenses of the Mining Bureau and the Hua Yi Company. The Hui Tung Company is to pay the export duty.

8. The area of Szechuan is very extensive, and all sorts of mines exist. Chinese who work on their own property are only required to obtain the necessary permission, pay the necessary taxes, according to the Rules in force, and they are in no way restrained. But if foreign merchants undertake to work the mines, their operations must be limited in some way or other. They must confine themselves to certain intendancies, prefectures, or districts, and not take the whole province as their sphere of work. Now work must be started in the interior first, and at the boundaries afterwards. The Hui Tung Company shall then send engineers to find out first where are mines to be opened and what mines they are: if the same be in districts apportioned to savages, the Hui Tung Company must wait till they find out whether the advantage will be greater than the injury, and devise other means to open them. The Hui Tung Company in such event cannot compel the Hua Yi Company to buy the land quickly and hand it over for working. Any possible cause of disturbance must be avoided.

9. When prospecting for mines, if any boring or sinking of shafts be necessary to examine mineral deposits, an arrangement should first be made by the Hua Yi Company with the land-owner for the Hui Tung Company to compensate him according to market prices for any crops, &c., injured. After the mines are opened, should there be any damage to life or buildings caused by land-slips or subsidence in the mines, the Hui Tung Company shall make charitable compensation. If after mines are opened cemeteries or mortuary shrines are met with, some plan must be devised to avoid them if the owners do not like to remove them for money given; no excavation will be allowed. In excavating, as long as the galleries dug below the ground are not injurious to the soil above, rascals are not to be allowed to obstruct

the work on the grounds that it is injurious to "Feng Shui." Local authorities must be applied to for protection. The Hui Tung Company is not, however, allowed to claim compensation on these grounds in case it cannot succeed.

10. Whenever it may be necessary to make roads, build bridges, open or deepen rivers, erect sheds, make tools, or other necessaries for mining purposes, and land is required for such purposes, the Hua Yi Company is to buy the land and the Hui Tung Company to pay for it. If water power is required for machinery, and enormous work is done on it, no other person is allowed to make use of it. If branch railways have to be constructed in order to connect the mines with the usual trade routes, a thorough survey must be made of the proposed lines and maps drawn with explanations attached. These must be submitted to the Mining Bureau, which will forward them to the Szechuan Viceroy and head office at Peking for record and sanction. Nothing of the kind should be undertaken without such sanction. If telegraphs and telephones are wanted for connecting the various mines, the same are to be submitted to the Mining Bureau for approval.

11. The Hua Yi Company is to deal with all matters of negotiation, and the collection of rent and taxes; the Hui Tung Company to superintend and work all mines. Each has its own sphere of work, but each Company may inquire into the others affairs. A Chinese Manager and a foreign Manager should be appointed for each mining work, whose salaries shall be paid by the Hui Tung Company. The majority of the overseers should be Chinese, and all the miners natives of the province. All are to receive adequate wages, and further Rules must be made on this subject by the Hua Yi and Hui Tung Companies. Later on, the Mining Bureau should instruct the Company to select for important positions any Chinese who may have become proficient in mining engineering. They are to be treated the same as foreigners, to encourage improvement.

12. On opening the mines, the Hui Tung Company shall establish a School of Mining and Railway Engineering in some locality convenient to the mines, and there shall be selected twenty or thirty promising youths by the local officials and gentry to study in this school, under foreign instructors, and be thus prepared for future employment on railways and in mines.

13. At places where mines are opened, the Mining Bureau should apply to the local authorities for protection. Such mines should also obey their rules, and enrol volunteers to guard against thieves, &c. If the natives should enrol themselves as volunteers of their own accord to protect the localities, the Hui Tung Company should also subscribe towards their expenses.

14. The Mining Bureau, acting as intermediary between the superiors and subordinates, is to attend to all negotiations between natives

and foreigners and matters of protection. The work involved, as well as the expenses, will be great. The Hui Tung Company should therefore start work within three months after the signing of this Agreement, and pay the Mining Bureau the sum of 100 taels per month for its working expenses for each mine, reckoning from the day when work is started. There will be no other charges besides this. If work be not started after six months this Agreement is considered cancelled, and the Hua Yi Company will be at liberty to invite other merchants to take up the work. It will be no concern of the Hui Tung Company.

15. The Hui Tung Company shall work all the mines according to the existing Rules adopted by the head office. After paying the producer's tax and the export duty, if there should be a profit by the annual accounts, there shall first be paid 6 per cent. interest on the capital employed, next 10 per cent. of the remainder of the profit shall be set aside as a sinking fund for the yearly repayment of capital and consequent reduction of interest, payments to sinking fund ceasing when the invested capital is wholly repaid, and from the remaining net profit 25 per cent. shall be paid to the Chinese Government, and the remainder shall go to the Hui Tung Company for its own disposition.

16. The Hui Tung Company is to open not one mine, but a large number. The accounts and profits of each mine must be kept distinct from the others; the gains of one mine should not be made to offset the losses of another, and so cause the Government income to suffer reduction.

17. At the end of every year, the Hui Tung Company shall make up distinct accounts of the different mines, whether profitable or not, and the same must be audited by the foreign and Chinese Managers, and when found correct, a printed account of profit and loss shall be rendered by each mine to the Mining Bureau for approval. A general account of profit and loss for all the mines shall then be prepared and submitted to the head office at Peking, the Board of Revenue, and the Viceroy of Szechuan for audit. Payments due to the Government shall be remitted at the same time. The report shall show the real amount of money due to the Government in order to avoid all discrepancies in the accounts. The Chinese Government and the Hua Yi Company are not to be held responsible in case of loss.

18. The Hui Tung Company is to have control of all the mines opened by them for a period of fifty years, reckoning from the date on which each mine is opened, on expiration of which term all the mines, whether profitable or not, shall, with all plant, machinery, materials, buildings, roads, and all property acquired by the capital of the mines, be handed over gratis to the Chinese Government without asking for compensation, and in due time the Mining Bureau of