File No. 893.631/2.
Minister Reinsch to
the Secretary of State.
No. 248.]
American Legation,
Peking,
June 1, 1914.
Sir: Referring to your instruction No. 87 of
May 1, just received, and to my despatch No. 166 dated March 24, 1914, I
have the honor to report that the objections of the Diplomatic Body to
the proposed Mining Regulations of the Chinese Government were on May 4
transmitted to the Foreign Office by the Dean in the form of the
enclosed note, which was prepared by the American Minister in
consultation with the Russian Minister and later with the Russian Charge
d’Affaires.
The formal exceptions taken to the Mining Regulations in the above note
correspond with the principles laid down in the Department’s
instructions Nos. 413 of February 12, 1908, and 87 of the 1st ultimo.
The Legation will also bring to the special notice of the Chinese
Government the fact that the objections raised in the note of the
Diplomatic Body apply equally to articles 86 and 87.
With respect to the provision that foreign subjects are to be restricted
to holding no more than one-half of the total number of shares in a
mining concern, I have the honor to state that unofficial assurance has
been given me by the Minister of Finance that this provision was not
intended actually to restrict the ultimate ownership and control of
mining properties, but that its purpose was to hold open the
opportunity, in every instance, for Chinese to acquire a one-half
interest in any new mining enterprise; if that opportunity had been
afforded, foreigners could nevertheless acquire a majority of the stock
either through taking up shares not actually purchased by the Chinese,
or by purchasing such shares from the Chinese later in the open market.
It seems therefore that the purpose of the Chinese Government was not so
much actually to prevent control by foreign owners as to maintain an
equal opportunity for the Chinese.
In consequence of the objections raised by the Diplomatic Body it is
understood that the Chinese are contemplating a more liberal arrangement
of this matter.
I have [etc.]
[Page 136]
[Inclosure.]
Diplomatic Circular No. 84.
British Legation,
Peking,
April 23, 1914.
The Dean has the honour to circulate herewith, for the approval of
his Honourable Colleagues, a draft note to the Wai Chiao Pu on the
Mining Regulations, which his excellency the American Minister and
the Russian Charge d’Affaires have been so good as to prepare.
Sir: I have the honor to inform your
excellency that the Diplomatic Body have duly considered the
Mining Enterprise Regulations, published by the Government on
March 11, 1914, and that they have arrived at the following
conclusions:
Article 4 makes it incumbent upon any foreign subjects who may
desire to engage in mining enterprise to secure a certificate,
issued by their own diplomatic or consular officer, proving that
they are willing to be subject to these regulations. Unless
confined to a mere witnessing of the signature, such
certificates cannot be issued by diplomatic or consular
officers, as such issuance would involve approval of the
Regulations, which must be considered inadequate in the
following respects:
- 1.
- The security of the investment is not sufficiently
protected. More especially, Article 46 provides that a
mining right shall be cancelled for the following, among
other, grounds: when the mining enterprise injures the
public interest; when there is non-compliance with the
orders of the police; when the plans and descriptions
given are not followed; and when any mining tax is not
paid upon falling due. The forfeiture of a right upon
which much capital may have been, expended, on so
indefinite a ground as that “it injures public interest”
or for non-compliance with regulations so minute as
those contained in Article 54 of the Detailed
Regulations for Mining Enterprises issued April 2, 1914
(dealing with plans and descriptions), would be an
excessive penalty, incompatible with due protection of
property rights.
- 2.
- While persons engaged in mining should be subject to
administrative regulations properly made, foreign
citizens would not thereby give up the rights of
extraterritorial jurisdiction enjoyed under existing
treaties. Insofar as implying the surrender of such
rights, it would be necessary to modify Article
93.
- 3.
- The provision that foreign subjects are not to hold
more than one half of the total number of shares of the
mining concern is not consonant with the promise
contained in the Treaty of 1903 between China and Great
Britain to the effect that foreign capitalists shall not
be placed at a greater disadvantage than they would be
under generally accepted foreign regulations. Efficient
development of mining resources through participation of
foreign capitalists can be secured only by according to
the latter the right to own or lease mining
properties.
For the above reasons, the Diplomatic Body find it impossible to
accept the Mining Regulations as in agreement with the treaty
rights accorded, until they shall have been further modified in
accordance with the above suggestions; and I have the honor to
give your excellency this notification in order to avoid any
misunderstanding.
I avail [etc.]
