Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 3, 1888, Part I

No. 191.
Mr. Denby to Mr. Bayard.

Legation of the United States,
Peking, March 27, 1888. (Received May 5.)

No. 603.]

Sir: I have the honor to inclose herewith, for your information, a translation from a Chinese newspaper published at Tientsin, purporting to give the text of a memorial submitted to the Emperor by the Tsung-li Yamên, together with the boards of revenue and civil office, reporting favorably on a prior memorial submitted by Li Hung Chang, for developing the gold mines along the Mo-ho Valley, near the Amur River, and to the northwest of the city of Merguen.

The memorialist, after referring to the steps which have been taken to inquire into the subject, refers to the neglect of the Government in developing the mining resources of the country. The proximity of the Mo-ho to Russian territory, and the influx of foreign adventurers to these new gold fields, are also reasons why the Government should not lose time in assuming control of the works. Another reason which suggests itself to the writers of the memorial, and one which must be of great weight at present with the Government, is that the developing of mining industry in this desolate frontier district, open to the inroads of Russian adventurers, would cause the population to rapidly increase, and thus strengthen the frontier defenses of the Empire.

The memorialists then proceed to consider the proposals, sixteen in number, made by Li Hung Chang, in the memorial previously referred to, and in which he submits his plans for developing the mines in the Mo-ho region.

The most important of these measures are:

(1) The formation of a joint-stock company, with a capital of 200,000 taels, divided into two thousand shares.

(2) The engagement of competent mining engineers, and in this connection the viceroy speaks in the highest terms of the two American mining engineers, Professor Church and Mr. Ellsworth, who have been for the last year employed at the silver mines near Jeho and the gold mines near Pingtu, in Shantung.

(3) The necessity of constructing steamers to navigate the Amur, and thus render the Chinese authorities independent of the Russians, from whom they have heretofore been obliged to hire steamers whenever needed.

(4) The purchase of proper mining machinery. It is observed, however, that in the present case, the work being altogether placer mining, native appliances may prove sufficient.

(5) To obtain men to work in the mines it is suggested that those who have been driven away by the Government troops and have sought refuge in Russian territory be allowed to come back, those alone excepted who have become Russian subjects, who “should not be harbored under any circumstances.”

(6) The necessity of opening a road between Tsitsihar and Moho (500 miles) so as to facilitate transport; for this purpose it is proposed that a body of 1,000 or 2,000 soldiers be detached, who, when the work of road building is finished, can be employed in erecting telegraph lines, establishing stations, protecting convoys, etc.

The last clause provides that when the company shall have paid off its debts, among which is to figure a sum of 100,000 taels advanced by Li Hung Chang, and a further one of 30,000 taels advanced by the general of Hei Lung Chiang for preliminary expenses, it is to pay the salaries of the officers and men, the expenses of the office, the allowance of the extra garrison which it is proposed to establish, etc. “Whatever is left as the net profit shall be disbursed in the following manner: Thirty per cent, should go to the support of the army; 20 per cent, should be distributed as a bonus among the men, and the remaining 50 per cent, should be equitably divided pro rata among the share holders.”

Should a company be formed and the shares put on the market, and should the suggestions quoted above be incorporated in the charter, it may prove as difficult to find purchasers as it was when the Kaiping extension railway was started last year. It must also be borne in mind that joint-stock companies in which the official class has had a part have not proved successful in China; the management has always been most extravagant and preferred share-holders have invariably existed 5 lucrative sinecures have had to be provided for friends and relatives of directors, managers, influential officials, and share-holders, etc.

It can only be hoped that, in case the company is organized, it may prove an exception to the rule and turn out such a success that, as the memorialist remarks, “undertakings on a vast and comprehensive scale will be inaugurated, in order to enrich and strengthen our frontiers.”

I have, etc.,

Charles Denby.

[Inclosure in No. 603.]

memorial on gold mining along the amur river.

The Tsung-li Yamên, together with the boards of revenue and civil office, submit the following memorial in reply to certain proposals to develop the gold mines along the bed of the Mo-hó, which proposals were embodied in memorials by the military governor of Helung-kiang, and by Li Hung-chang. (See Chinese Times of 31st December, 1887.)

On the 24th November, 1887, the grand council handed to the Tsung-li Yamên a copy of a memorial by the military governor of Helung-kiang upon the subject of sending men to examine and survey the gold districts along the Mo-hó. This memorial was referred by rescript to the consideration of the memorialists.

Again, on the 20th January, 1888, a copy of a memorial from Li Hung-chang was received in which he proposed that the Government should take in hand the opening and developing of the gold mines along the Mo-ho. This memorial was likewise referred to the Tsung-li Yamên, with instructions that they draw up a reply thereon, giving the result of their views and deliberations.

The memorialists find that the Mo-hó, together with its adjacent mountains, is situated within the territory of Helung-kiang, to the northwest of the city of Merguen. According to previous surveys it is distant for Niao-tao about 800 li, from Yutao about 1,000 li, Tsitsihar 1,500 li. To the east is the town of Ai-hun, a distance by water of 1,500 li; to the north, just on the other side of the Amur River, are the recently established frontier towns of Pokana, Fu-ka-tun, Alaba, and Chin-cbêng. The gold ore along the bed of the Mo-hó is very abundant but the country is most wild and desolate. Hordes of ruffian characters used to frequently visit these places and stealthily dig away the ores, until finally they were driven away by the ex-military governor Wêu Hsu, who also established a frontier post there to keep off these marauders. But so long as it is known that gold exists in abundance in these regions, men will always be eager to obtain possession of it, and it will be well-nigh impossible to afford permanent protection on account of the inaccessibility of the country. Formerly a Russian merchant named Sabatin endeavored, by representations through the Russian minister at Peking, to obtain a lease of the district known as the Tsu-lu-hai-tu, which was situated to the west of the Mo-hó, in order to develop the gold mines there. The Russian merchant preferred this request on the ground that our Government were taking no steps to develop these mines. Since then the memorialists have carried on a frequent correspondence with Li Hung-chang and Kung-tang upon the subject in question. On the 10th February, 1888, an Imperial decree was issued authorizing the appointment of a commission to inspect and examine the valley of the Mo-hó, and also to project measures for mining exploitations. Afterwards Li Hung-chang submitted a memorial embodying sixteen proposals, treating of the matter on hand in an exhaustive manner. The memorialists would humbly observe that in the countries of Great Britian, the United States, and Russia much of their national wealth is derived from the gold mines in Australia, California, and Siberia, respectively.

Although China possesses gold mines in abundance, yet heretofore our Government has never made mining a national undertaking, and consequently very little gold has been obtained. And of this small quantity of gold in China foreigners have exported the bulk abroad, so that what little remains here is enhanced in value. The contiguity of the Amur districts, where the gold mines exist, to Russian territory is another cogent reason why mining exploitations should not be delayed.

If our Government is to adopt a far-sighted policy, it must at once develop the Empire’s resources and strengthen her frontiers, putting them upon a perfectly secure basis. Should the mining exploitations along the Mo-hó prove successful, immense benefit would accrue to Government and stockholders alike, while the desolate frontiers would become thickly populated and the poor miserable peasants would find sure means of obtaining livelihood. The memorialists now desire to consider carefully, one by one, the sixteen proposals of Li Hung-chang, because they feel that, this being the initial stage of national mining enterprise in China, too great caution can not be exercised.

According to the recommendation of Li Hung-chang, Li Chin Jung, expectant prefect, should be appointed by Imperial edict to be head director of mining enterprise in Helung-Kiang, as that officer has shown himself most zealous and indefatigable in his duties. The military governor of Helung Kiang should be directed by imperial command to act in concert with this officer, Li Chin Jung, in all matters pertaining to mining operations and they should both evince the greatest diligence.

Whatever exigencies or difficulties may arise that have not been provided against in these deliberations, it will be the duty of Li Chin Jung to report then to Li Hung-chang, in order that he may communicate them to the Tsung-li Yamên for their information and consideration. The sixteen proposals are appended below, with the memorialists’ suggestions and explanations.

(1) The establishment of a general mining office.—In inaugurating an important enterprise such as mining, the first step is to provide the requisite funds for the various purposes of purchasing machinery, erecting buildings, ordering steam-boats, constructing roads, engaging mining engineers, stationing garrisons to protect the mines, etc. These operations involve expenses on a large scale, to meet which funds must be obtained by forming a joint-stock company. At present Li Hung-chang has advanced 100,000 taels, and the military general at Helung-Kiang 30,000 taels, to be used for preliminary expenses. After the joint-stock company has been formed and all the required capital raised, this advanced loan will be returned to Li Hung-chang and the military governor.

(2) The formation of a joint-stock company.—Joint-stock enterprises in China are what are known as “kung su,” or corporate companies in Western countries. These are really enterprises by and among the people. In recent years the China Merchants’ Steam Navigation Company and the Kaiping Mining Company are examples of corporate companies, composed of merchant stockholders. It is proposed to raise a capital of 200,000 taels, to be divided into 2,000 shares. Branch offices will be established at Kirin, Tientsin, and Shanghai for the solicitation and allotment of shares, and afterwards for the payment of dividends to shareholders and other purposes. All details must be managed with absolute honesty, in order that stockholders may derive benefit and corporate companies may win popular favor.

(3) The selection of the locality for the commencement of mining operations.—It is found that the gold vein extends from the west mountain on the Ngo-erh-ku-na River, through Chi-kan-a-le-han and terminates at the lower section of the Amur River, a total distance of 500 li. This district was formerly known as the “Chin Yuen,” or “gold, cave.” Along the streams of the Yuen Pao mountain, which lies on the Mo-hó, traces of the former digging by gold depredators are still visible. It is decided that the mining operations be confined to this locality, beginning with those places that are richest in gold ore, as may be determined by the mining engineer, and extending the field step by step as may be advisable. Suitable buildings should be erected where the operations commence, for the accommodation of the officers and miners.

(4) The engagement of mining engineers.—During past years Chinese mining enterprises have suffered greatly through the employment of incompetent foreigners. To secure the service of an expert mining engineer is not an easy matter, but it is reported that the American engineer, Mr. Church, employed at the Jeho silver mines, and Mr. Elsworth, employed at the Pingtu-chou gold mines in Shantung, are men of great ability. For the present enterprise the strictest caution should be exercised to insure the engagement of honest and able men, in order not to squander the funds needlessly.

(5) The exercise of jurisdiction.—The Mo-hó is distant from the town of Tsitsihar by land 1,500 li; by water via Ai-hun the distance is still greater. About this region Russian steamers ply backwards and forwards on the Amur River, and it is most likely when mining has once commenced matters will come up for settlement with the Russian officials. Some one must, therefore, be empowered to transact such official business, as otherwise, by reason of the great distance of the mining districts, it will be quite impossible to report every question to headquarters. It is decided, therefore, that Li Chin Jung be authorized to deal with the Russian officials in all matters except those involving vital international interests. In which case they will be reported to Li Hung-Chang, or the military governor of Helung-Khing.

(6) The construction of steam-boats.—In the Russian treaty of 1858 it was agreed that only Chinese and Russian steamers shall be allowed to navigate the Amur River, and all other nations are debarred from the privilege. During the 4th moon of the 12th year of Kiang Hsü, the military governor of Helung-Kiang frequently hired Russian steamers to transport food supplies for the troops who had been sent to expel the gold marauders. This was found to be a great inconvenience, and subsequently efforts were made to purchase one of the Russian steam-boats, but the matter fell though. It is now decided to have two steam-boats constructed at the arsenal at Kirin, to be used for purposes of transport; also to construct four other boats for cruising and policing the rivers. As the steam-boats will require much fuel, the military governor should detach a portion of the soldiers to fell trees and supply all the fuel needed.

(7) The purchase of machinery.—In working placer mines a necessary step is to draw off the water, and for this purpose suitable machinery must be provided, as hand labor is impracticable. But as the depth of the water in the Mo-hó, where the gold is, does not come to 10 feet, perhaps it will hardly be necessary to purchase machinery for pumping purposes. Whatever machinery is required, however, must be supplied.

(8) The employment of men.—The country about the Mo-hó is wild, desolate, and inaccessible, and men contemplate going there with dread. But for the present undertaking it is absolutely necessary to have competent, upright, and energetic men, who will spare themselves neither time nor trouble to achieve success. It is proposed that the officers be appointed probationary. After three years’ conditional service, those who evince capability and usefulness will receive permanent appointment, and those who are specially meritorious will also be recommended for official promotion. In this manner men will be encouraged to earnest effort and upright behavior.

(9) The recall of refugees to work in the mines.—It is found that of those who formerly dug away the gold ores the principal part were Shantung and Chih-li emigrants who are without occupation. These had wandered from Hai-shen-wei and Chía-kó–tú to the Mo-hó, whence they were subsequently expelled by the Government troops sent against them. They then crossed the Amur River, and drifted into Russian territory in considerable numbers. It is thought that in opening these mines an opportunity should be offered to these men, so that those who choose may return to Chinese territory and receive employment. An exception should, however, be made in the case of those having already become Russian subjects, and they should not be harbored under any circumstances.

(10) The construction of roads for purposes of transport.—The distance from Tsitsihar to Ai-hun, and from Ai-hun to Mo-hó, both by land and by water is 2,350 li. Li Chin Jung reports, however, that the entire distance from Tsitsihar to the Mo-ho by land alone is only 1,500 li, which is shorter than the usual land and water route by 800 or 900 li. The land route from Tsitsihar to Mo-hó, however, traverses inaccessible mountains and impenetrable forests that have not seen the tracks of men. It is proposed that a body of 1,000 or 2,000 soldiers be detached to fell the trees and clear a road, and for this extra duty that they be compensated by extra allowances. This measure is suggested with a view of facilitating transport. The military governor of Helung-Kiang should be directed to concert plans with the commander-in-chief of the territorial army of Manchuria for putting this measure into execution. When the work of road construction has been completed the soldiers can be employed in erecting telegraph lines, establishing stations, protecting goods in transitu, etc.

(11) The stationing of an extra garrison.—At the newly-established frontier post of Po-lo-cbia-ta the garrison numbers only 500 men, and they are there to suppress local disorder and keep guard over the mines. In view of this fact, the request for an extra garrison should be granted, especially as the expenses of said garrison will be borne by the mining company.

(13 to 15) The appointment of treasurers and accountants; the co-operation of the shareholders in the management; the economizing of the company’s funds, and the methods of disbursements for the company.—All these four items belong to the duties of the head director, and it behooves him, in that capacity, to exercise due discretion and unimpeachable integrity.

(16) The payment of dividends.—It is proposed that when the mines have brought forth sufficient returns, the first step be to cancel all the company’s debts, interest and principal. After that the salaries of the officers and men, the expenses of the office, the allowance of the garrison, etc., should be paid. Whatever is left as the net profit should be disbursed in the following manner: Thirty per cent, should go to the support of the army; 20 per cent, should be distributed as a bonus among the men, and the remaining 50 per cent, should be equitably divided pro rata among the shareholders. A detailed statement of the company’s receipts and expenditures should at the end of every year be submitted to the examination of the board concerned. Should the present attempt prove successful, and the ores be found in great abundance, undertakings on a vast and comprehensive scale will be inaugurated in order to enrich and strengthen our frontiers.