I.The Mining of Iron.II.The Mining of Coal.III.The Mining of Oil.IV.The Mining of Copper.V.The Working of Some Particular Mines.VI.The Manufacture of Mining Machinery.VII.The Establishment of Smelting Plants.
I.The Mining of Iron.II.The Mining of Coal.III.The Mining of Oil.IV.The Mining of Copper.V.The Working of Some Particular Mines.VI.The Manufacture of Mining Machinery.VII.The Establishment of Smelting Plants.
I.The Mining of Iron.
II.The Mining of Coal.
III.The Mining of Oil.
IV.The Mining of Copper.
V.The Working of Some Particular Mines.
VI.The Manufacture of Mining Machinery.
VII.The Establishment of Smelting Plants.
Iron is the most important element in modern industries. Its deposits are found in great quantities in certain areas and can be easily mined. The iron mines should be worked absolutely as a state property. Besides the Chili and Shansi iron mines, the other iron fields must also be developed. There are very rich deposits in the southwestern provinces, the Yangtze Valley and the northwestern provinces in China Proper. Sinkiang, Mongolia, Manchuria, Kokonor, and Tibet also possess large deposits of iron. We have the Han Yeh Ping Iron and Steel Works in the Yangtze Valley and the Pen Chi Hu Iron and Steel Works in South Manchuria, both of which are largely capitalized by Japan and are working very profitably lately. There should be similar works in the vicinity of Canton, the Great Southern Port, and also in Szechuen, and Yunnan,where iron and coal are found side by side. The iron deposits in Sinkiang, Kansu, Mongolia, etc., must also be developed one after the other, according to the needs of the locality. Iron and Steel Works must be put up in each of these regions to supply the local demand for manufactured iron. What amount of capital should be invested in these additional iron and steel works must be thoroughly investigated by experts. But I should say that a sum equal to or double the amount to be invested in the Chili and Shansi iron and steel works will not be too much, because of the great demand which will result in the development of China.
China is known to be the country most rich in coal deposits, yet her coal fields are scarcely scratched. The output of coal in the United States is about six hundred million tons a year. If China is equally developed she should, according to the proportion of her population, have an output of four times as much coal as the United States. This will be the possibility of coal mining in China which the International Development Organization is to undertake. As coal deposits are found in great quantities in certain areas so its output can be estimated quite accurately beforehand. Thus, the risk is of no consideration and the profit is sure. But as coal is a necessity of civilized community and the sinews of modern industries, the principal objectfor mining should not be for profit alone, but for supplying the needs of mankind. After the payment of interest and capital of the foreign loans for its development, and the securing of high wages for the miners, the price of coal should be reduced as low as possible so as to meet the demands of the public as well as to give impetus to the development of various industries. I suggest that besides the mining of coal for the iron and steel works, a plan for producing two hundred million tons of coal a year for other uses should be formed at the start. Mines should be opened along the seaboard and navigable rivers. As Europe is now seeking coal from China this amount will not be over-production from the beginning. A few years later when the industries of China will be more developed more coal will be needed. How much capital will be required and what mines are to be worked, have to be submitted to scientific investigation under expert direction.
Besides coal mining, the coal products industry must be developed under the same management. This is a new industry without any competition and has an unlimited market in China. Great profits will be assured on the capital invested.
It is well-known that the richest company in the world is the Standard Oil Company of New York, andthat the richest man in the world is Rockefeller, organizer of this company. This proves that oil mining is a most profitable business. China is known to be a very rich oil-bearing country. Oil springs are found in the provinces of Szechuen, Kansu, Sinkiang, and Shensi. How vast is the underground reservoir of oil in China is not yet known. But the already known oil springs have never been worked and made use of, while the import of kerosene, gasoline, and crude oil from abroad is increasing every year. When China is developed as a motoring country, the use of gasoline will be increased a thousand-fold, then the supply from the foreign fields will not be able to meet the demands, as shortage of oil is already felt in Europe and America. The mining of oil in China will soon become a necessity. This enterprise should be taken up by the International Development Organization for the state. Production on a large scale should be started at once. Pipe line systems should be installed between oil districts and populous and industrial centers in the interior and also river and sea ports. What amount of capital should be invested in the project will have to be investigated by experts.
The copper deposits, like iron ores, are found in great quantities in different places. So the quantity of ores in each mine can be accurately estimated beforeit is opened and its working generally runs no risk. Thus, the mining of copper should be taken up as a government enterprise, as was always the case in China, and financed and worked by the International Development Organization. The richest copper deposits in China are found along the border of Szechuen and Yunnan on the Yangtze River. The government copper mine in Chaotung, in the northeastern corner of Yunnan, has been working for many centuries. Cash, the standard currency of China, was made mostly of the copper from Yunnan province. The currency still absorbs an enormous quantity of copper. Owing to the difficulty of transporting the Yunnan copper, most of the metal for currency is being imported from foreign countries. Besides currency, copper is very commonly used for many other purposes and when the industries in China are developed the demand will increase a hundred times. So the demand for this metal will be very great in the market of China alone. I suggest that production on a large scale should be adopted and modern plants should be installed in copper mines. How much capital to be invested in this enterprise should be decided by experts after careful investigation.
In regard to the mining of various kinds of metal, some particular mines should be taken up by the International Development Organization. There aremany famous mines in China which have been worked for many centuries by hand, such as the Kochui tin mine in Yunnan, the Moho gold mine in Heilungkiang, and the Khotan jade mine in Sinkiang. All these mines are known to have very rich deposits,—the deeper the richer. Hitherto only the surface parts of those mines have been worked and the larger deposits are still untouched, owing to the lack of means of getting rid of the water. Some of the mines are still in the hands of the Government, while others have been given up to private concerns. If modern machinery is adopted the mines should revert to the Government so as to secure economy in working. Many discarded mines of this kind should be thoroughly investigated, and if found profitable, work should be resumed under the International Development Scheme. All future mining, other than government enterprise, should be leased to private concerns on contract, and when the term is up, the government has the option to take them over, if found profitable as a state property. Thus all profitable mines will be socialized in time and the profit will be equally shared by all the people in the country.
Most of the metal deposits of the earth are in small quantities and scattered far and wide in various places. Most of the mining enterprises resemble farming in that it is more profitable to work by individuals and small parties. As such is the case, most of the mining enterpriseshave to be worked out by private concerns. In order to accelerate the development of mining, more liberal laws should be adopted; education and information should be given freely by experts employed by the state; and encouragement and financial assistance should be given by the state and private banks. The part that the International Development Organization should take in general mining enterprises is to manufacture all kinds of mining tools and machinery, and to supply them to the miners at low cost, either on cash or on credit. By distributing tools and machinery to the surplus workers in China, the mining industry would be developed by leaps and bounds. And the more the mining industry is developed the more will be the demand for tools and machinery. Thus the profits for the manufacturing concerns would be limitless, so to speak. Of course, the factories should be started on a small scale and be extended gradually according to the ratio of the development of the mining industry. I suggest that the first factory of this kind should be established at Canton, the seaport of the southwestern mining region, where raw materials and skilled labor can be easily obtained. The other factories should be established in Hankow and the Great Northern Port afterwards.
Smelting plants for various kinds of metals should be put up in all mining districts to turn ore into metals.These smelting plants should be conducted under the coöperative system. At first, a reasonable price should be paid to the miner when the ore is collected. Afterwards, when the metal is sold, either at home or in foreign markets, the smelting works will take a share of the profit to cover the expenses, the interest, the sinking fund, etc. The surplus profit should be divided among the workers according to their wages, and among the capitalists according to the proportion of ore they contribute to the furnace. In this way we can encourage private mining enterprise which forms the root of other industries. All smelting works should be put up according to local needs and their scale should be determined by experts and managed under a central control.
In this International Development Scheme, I venture to present a practical solution for the three great world questions which are the International War, the Commercial War and the Class War. As it has been discovered by post-Darwin philosophers that the primary force of human evolution is coöperation and not struggle as that of the animal world, so the fighting nature, a residue of the animal instinct in man, must be eliminated from man, the sooner the better.
International war is nothing more than pure and simple organized robbery on a grand scale, which all right-minded people deplore. When the United States of America turned the recent European conflict into a world war by taking part in it, the American people to a man determined to make this war end war forever. And the hope of the peace-loving nations in the world was raised so high that we Chinese thought that the "Tatung" or the Great Harmony Age was at hand. But unfortunately, the United States has completely failed in peace, in spite of her great success in war. Thus, the world has been thrown back to the pre-war condition again. The scrambling for territories, the struggle for food, and the fighting for raw materialswill begin anew. So instead of disarmament there is going to be a greater increase in the armies and navies of the once allied powers for the next war. China, the most rich and populous country in the world, will be the prize. Some years ago there was great inclination among the Powers to divide China and Imperial Russia actually took steps to colonize Manchuria. But the then chivalrous Japan went to war with Russia and thus saved China from partition. Now the militaristic policy of Japan is to swallow China alone. So long as China is left to the tender mercy of the militaristic powers she must either succumb to partition by several powers or be swallowed up by one power.
However, the tide of the world seems to be turning. After centuries of sound slumber, the Chinese people at last are waking up and realizing that we must get up and follow in the world's progress. Now we are at the parting of the ways. Shall we organize for war or shall we organize for peace? Our militarists and reactionaries desire the former, and they are going to Japanize China, so that when the time comes they will start another Boxer Movement once more to defy the civilized world. But as the founder of the Chung Hwa Min Kuo—the Chinese Republic—I desire to have China organized for peace. I, therefore, begin to utilize my pen, which I hope will prove even mightier than the sword that I used to destroy the Manchu Dynasty, to write out these programs for organizing China for peace.
During the course of my writing, these programshave been published in various magazines and newspapers time after time and are being spread all over China. They are welcomed everywhere and by everyone in the country. So far there is not a word expressed in disfavor of my proposition. The only anxiety ever expressed regarding my scheme is where can we obtain such huge sums of money to carry out even a small part of this comprehensive project. Fortunately, however, soon after the preliminary part of my programs had been sent out to the different governments and the Peace Conference, a new Consortium was formed in Paris for the purpose of assisting China in developing her natural resources. This was initiated by the American Government. Thus we need not fear the lack of capital to start work in our industrial development. If the Powers are sincere in their motive to coöperate for mutual benefit, then the military struggle for material gain in China could eventually be averted. For by coöperation, they can secure more benefits and advantages than by struggle. The Japanese militarists still think that war is the most profitable national pursuit, and their General Staff keeps on planning a war once in a decade. This Japanese illusion was encouraged and strengthened by the campaign of 1894 against China, a cheap and short one but rich in remuneration for Japan; also by the campaign of 1904 against Russia which was a great success to the Japanese, and its fruit of victory was no less in value; finally by the campaign of 1914 against Germany which formed her part in the world war Japan took. Although Japan took thesmallest part in the world war and expended the least in men and money, yet the fruit of her victory was Shantung, a territory as large as Roumania before the war, with a population as numerous as that of France. With such crowning results in every war during the last thirty years no wonder the Japanese militarists think that the most profitable business in this world is War.
The effect of the last war in Europe proves, however, just the contrary. An aggressive Germany lost entirely her capital and interests, plus something more, while victorious France gained practically nothing. Since China is awake now, the next aggression from Japan will surely be met by a resolute resistance from the Chinese people. Even granted that Japan could conquer China, it would be an impossibility for Japan to govern China profitably for any period of time. The Japanese financiers possess better foresight than their militarists as was proved during the dispute of the Manchurian and the Mongolian reservations when the former prevailed over the latter thus causing the Japanese Government to give up her monopoly of these territories to the new Consortium, in order to coöperate with the other powers. We, the Chinese people, who desire to organize China for peace will welcome heartily this new Consortium provided it will carry out the principles which are outlined in these programs. Thus, coöperation of various nations can be secured and the military struggle for individual and national gain will cease forever.
Commercial war, or competition, is a struggle betweenthe capitalists themselves. This war has no national distinction. It is fought just as furiously and mercilessly between countries as well as within the country. The method of fighting is to undersell each other, in order to exhaust the weaker rivals so that the victor may control the market alone and dictate terms to the consuming public as long as possible. The result of the commercial war is no less harmful and cruel to the vanquished foes than an armed conflict. This war has become more and more furious every day since the adoption of machinery for production. It was once thought by the economists of the Adam Smith school that competition was a beneficent factor and a sound economic system, but modern economists discovered that it is a very wasteful and ruinous system. As a matter of fact, modern economic tendencies work in a contrary direction, that is, towards concentration instead of competition. That is the reason why the trusts in America flourish in spite of the anti-trust law and the public opinion which aim at suppressing them. For trusts, by eliminating waste and cutting down expenses can produce much cheaper than individual producers. Whenever a trust enters into a certain field of industry, it always sweeps that field clean of rivals, by supplying cheap articles to the public. This would prove a blessing to the public but for the unfortunate fact that the trust is a private concern, and its object is to make as much profit as possible. As soon as all rivals are swept dean from the field of competition, the trust would raise the price of its articles as high as possible. Thusthe public is oppressed by it. The trust is a result of economic evolution, therefore it is out of human power to suppress it. The proper remedy is to have it owned by all the people of the country. In my International Development Scheme, I intend to make all the national industries of China into a Great Trust owned by the Chinese people, and financed with international capital for mutual benefit. Thus once for all, commercial war will be done away with in the largest market of the world.
Class war is a struggle between labor and capital. The war is at present raging at its full height in all the highly developed industrial countries. Labor feels sure of its final victory while capitalists are determined to resist to the bitter end. When will it end and what will be the decision no one dares to predict. China, however, owing to the backwardness of her industrial development, which is a blessing in disguise, in this respect, has not yet entered into the class war. Our laboring class, commonly known as coolies, are living from hand to mouth and will therefore only be too glad to welcome any capitalist who would even put up a sweat shop to exploit them. The capitalist is a rare specimen in China and is only beginning to make his appearance in the treaty ports.
However, China must develop her industries by all means. Shall we follow the old path of western civilization? This old path resembles the sea route of Columbus' first trip to America. He set out from Europe by a southwesterly direction through theCanary Islands to San Salvador, in the Bahama Group. But nowadays navigators take a different direction to America and find that the destination can be reached by a distance many times shorter. The path of western civilization was an unknown one and those who went before groped in the dark as Columbus did on his first voyage to America. As a late comer, China can greatly profit in covering the space by following the direction already charted by western pioneers. Thus we can foresee that the final goal of the westward-ho in the Atlantic is not India but the New World. So is the case in the economic ocean. The goal of material civilization is not private profit but public profit. And the shortest route to it is not competition but coöperation. In my International Development Scheme, I propose that the profits of this industrial development should go first to pay the interest and principal of foreign capital invested in it; second to give high wages to labor; and third to improve or extend the machinery of production. Besides these provisions the rest of the profit I should go to the public in the form of reduced prices in all commodities and public services. Thus, all will enjoy, in the same degree, the fruits of modern civilization. This industrial development scheme which is roughly sketched in the above six programs is a part of my general plan for constructing a New China. In a nutshell, it is my idea to make capitalism create socialism in China so that these two economic forces of human evolution will work side by side in future civilization.
This Agreement is made at Shanghai on the fourth day of the seventh month of the second year of the Republic of China being the fourth day of July, 1913, and the contracting parties are: The Chinese National Railway Corporation (hereinafter termed "the Corporation") duly authorized in virtue of the Presidential Mandate of the ninth day of the ninth month of the Republic of China being the ninth day of September, 1912, and in virtue of the Charter of the Corporation duly promulgated by a Presidential Mandate of the thirty-first day of the third month of the second year of the Republic of China being the thirty-first day of March, 1913, on the one part and Messrs. Pauling and Company, Limited, of 26 Victoria Street, London, S. W. (hereinafter termed "the Contractors") on the other part.
Now it is Hereby Agreedby and between the parties hereto as follows:
The Contractors, or their Assigns, agree to issue on behalf of the Government of the Republic of China a sterling Loan, bearing interest at the rate of five per cent per annum, (hereinafter referred to as "the Loan") for such an amount as may be mutually estimated to be necessary for the completion of the Railway from Canton to Chungking.
The Loan shall be of the date on which the first series of Bonds are issued and shall be called "The Chinese National Railways Government five per cent Gold Loan of 1912 for the Canton Chungking Railway."
The proceeds of the Loan are designed for the construction and equipment of the Railway from Canton to Chungking (hereinafter called "the Railway") and for all necessary expenditure appertaining thereto as may be arranged in the Detailed Agreement, referred to in Article 17.
The payment of the interest and the redemption of the Capital of the Loan are guaranteed by the Government of the Republic of China and by a special lien upon the Canton Chungking Railway.
This special lien constitutes a first mortgage in favour of the Contractors, acting on behalf of the Bondholders, upon the Railway itself, as and when constructed,and on the revenue of all descriptions derivable therefrom, and upon all materials, rolling stock and buildings of every description purchased or to be purchased for the Railway.
Should there be default in payments on the dates fixed of all or part of the half yearly interest or amortization payments, the Contractors shall have the right to exercise on behalf of the Bondholders all the rights of action which accrue to them from the special mortgage.
During the time of construction of the Railway the interest on the Bonds and on any advances made by the Contractors shall be paid from the proceeds of the Loan. The accruing interest from any proceeds of the Loan not used during the period of construction, and the earnings derived by the Corporation from the working of any sections of the Railway as they are built, are to be used to make up the amount required for the payment of the said interest, and if any deficiency remains it is to be met from the proceeds of the Loan.
When the construction of the Railway is wholly completed, the interest on the Bonds is to be paid from the income or earnings of the Railway received by the Corporation, in such manner and on such dates as may be provided for in the Detailed Agreement provided for in Article 17 of this Agreement.
If, at any time, the earnings of the Railway, together with the funds available from the proceeds of the Loan,are not sufficient to meet the interest on the Bonds and the repayment of the capital in accordance with the Amortization Schedule to be attached to the Detailed Agreement, the Government of the Republic of China, in approving of this Agreement, unconditionally undertakes and promises to pay the principal of the Loan and the interest of the Loan on the due dates to be fixed therefor in the Detailed Agreement provided for in Article 17 of this Agreement.
The bonds shall be Bonds of the Government of the Republic of China.
The Loan shall be issued to the public in two or more series of Bonds, the first issue to be made to the amount of from one to two million pounds sterling as soon as possible after the signature of the Detailed Agreement referred to in Article 17 of this Agreement. The issue price of the Bonds shall be fixed by the Corporation and the Contractors sometime before the issue, taking the last price of similar Bonds as a basis for fixing the market price. The price payable to the Corporation shall be the actual rate of issue to the public less a sufficient amount to cover the cost of stamps on the Bonds in the various countries of issue, provided always that at least fifty per cent of the Bonds shall be issued in England, plus floatation charges of four per cent retainable by the Contractors (that is to say, a chargeof four pounds for every one hundred pound Bond issued).
After the Detailed Agreement referred to in Article 17 is settled, and pending the issue of the Loan, the Contractors shall deposit the sum of fifty thousand pounds with the issuing Bank to the Canton Chungking Railway account, and this amount can be drawn on by the Corporation for survey and other necessary expenses authorized by the Managing Director against certificates signed by the Chief Accountant and Chief Engineer. This sum of fifty thousand pounds shall bear interest at the rate of five per cent per annum and shall be refunded out of the proceeds of the Loan.
The proceeds of the Loan shall be deposited with the issuing Bank, to be nominated and guaranteed by the Contractors, to the credit of a Canton Chungking Railway Account on such terms as may be mutually arranged in the Detailed Agreement referred to in Article 17.
When the work of construction is ready to begin a sum equal to the estimated expenditure in China for six months shall be transferred to a Bank in China to be mutually agreed upon and there placed to the credit of a Canton Chungking Railway Account to be operated upon by the Corporation under certificates signed by the Chief Accountant and the Chief Engineer. This amount of estimated expenditure for six months shall be maintained by subsequent monthly transfers so that,as far as possible, there shall always be six months estimated expenditure in China on deposit in a Bank in China to be mutually agreed upon.
Immediately after the signing of the Detailed Agreement, the Corporation will establish a Head Office at Canton for the Canton Chungking Railway. This Office will be under the direction of a Chinese Managing Director to be appointed by the Corporation, with whom will be associated a British Engineer-in-Chief and a British Firm of Public Accountants, of recognized standing, whose representative shall be Chief Accountant (hereinafter called "the Chief Accountant"). These British Employes shall be nominated by the Corporation and the Contractors, jointly, and shall be appointed by the Corporation. Their dismissal shall take place, only, with the joint approval of the Corporation and the Contractors.
It is understood that the duties to be performed by these employes are intended to promote the mutual interests of the Corporation and the Bondholders respectively, and it is therefore agreed that all cases of difference arising therefrom shall be referred for amicable adjustment between the Corporation and the Representative of the Contractors. The salaries and other terms of Agreement of the Engineer-in-chief and the Chief Accountant shall be arranged between the Corporation and the Contractors; and the amountof their salaries, etc., shall be paid out of the general accounts of the Railway.
For all important technical appointments for the operation of the Railway, Europeans of experience and ability shall be engaged and wherever competent Chinese are available, they shall be employed. All such appointments shall be made, and their functions defined, by the Managing Director and the Engineer-in-Chief in consultation, and shall be submitted for the approval of the Corporation; similar procedure shall be followed in the case of Europeans employed in the Chief Accountant's department. In the event of the misconduct, or the incompetency of these European employes, their services may be dispensed with by the Managing Director, after consultation with the Engineer-in-Chief, and subject to the sanction of the Corporation. The form of Agreements made with these European Employes shall conform to the usual practice.
The accounts of the receipts and the disbursements of the Railway's construction and operation, shall be in Chinese and English in the department of the Chief Accountant, whose duty it shall be to organize and supervise the same, and to report thereon for the information of the Corporation through the Managing Director, and of the Contractors as representing the Bondholders. All receipts and payments shall be certified by the Chief Accountant and authorized by the Managing Director.
For the general technical staff of the Railway, aftercompletion of construction, the necessary arrangements shall be made by the Managing Director in consultation with the Engineer-in-Chief, and reported to the Corporation in due course.
The duties of the Engineer-in-chief shall consist in the efficient and economical maintenance of the Railway, and the general supervision thereof in consultation with the Managing Director. The duties of the Chief Engineer during construction shall be set forth in the Detailed Agreement, referred to in Article 17 of this Agreement.
The Engineer-in-chief shall always give courteous consideration to the wishes and instructions of the Corporation, whether conveyed directly or through the Managing Director, and shall always comply therewith, having at the same time due regard to the efficient construction and maintenance of the Railway.
A school for the education of Chinese in Railway matters shall be established by the Managing Director subject to the approval of the Corporation.
The Contractors shall construct and equip the Railway and shall receive as remuneration a sum equal to seven per cent on the actual cost of the construction and equipment of the Railway. The term "Equipment" shall be held to include in its meaning all requirements necessary for the operation of the Railway way and shall therefore include Rolling Stock and Locomotives sufficient for operation.
It is clearly understood that the term "Equipment" does not include any purchases made for the Railway after it has been completely constructed and equipped and handed over ready for operation.
It is further clearly understood that the cost of land purchased for the Railway, the salaries of the Managing Director, Chief Accountants, Chief Engineer, and the cost of their offices and staff shall not be included in the meaning of the terms "construction and equipment."
The Contractors shall have the option of constructing on the same terms the proposed extension of the Railway to Lanchow in the Province of Kansu, or a Railway of similar mileage in some other part of China to be mutually agreed upon, and this option shall be for seven years from the commencement of construction.
All other arrangements in connection with the construction and equipment of the Railway shall be settled in the Detailed Agreement referred to in Article 17.
All land that may be required along the whole course of the Railway within survey limits, and for the necessary sidings, stations, repairing shops and car sheds, to be provided for in accordance with the detailed plans, shall be acquired by the Corporation at the actual cost of the land, and shall be paid for out of the proceeds of the Loan.
The Contractors shall hand over to the Corporation each section of the Railway, when completed, for operation in accordance with the provisions of the Detailed Agreement.
The Contractors shall be appointed Trustees for the Bondholders and shall receive such remuneration as may be fixed in the Detailed Agreement.
The Government of the Republic of China, whenever necessary, will provide protection for the Railway while under construction or when in operation, and all the properties of the Railway as well as Chinese and foreigners employed thereon, are to enjoy protection from the local Officials.
The Railway may maintain a force of Chinese Police with Chinese officers, their wages and maintenance to be wholly defrayed as part of the cost of the construction and maintenance of the Railway. In the event of the Railway requiring further protection by the military forces of the Government, the same shall be duly applied for by the Head Office and promptly afforded, it being understood that such military forces shall be maintained at the expense of the Government.
All materials of any kind that are required for the construction and working of the Railway, whether imported from abroad or from the Provinces to the scene of work, shall be exempted from Likin or other duties so long as such exemption remains in force in respect of other Chinese Railways. The Bonds of the Loan, together with their coupons and the income of the Railway shall be free from imposts of any kind by the Government of the Republic of China.
With a view to encouraging Chinese industries, Chinese materials are to be preferred, provided price and quality are suitable.
At equal rates and qualities, goods of British manufacture shall be given preference over other goods of foreign origin.
The Contractors may, with the approval of the Corporation, and subject to all their obligations, transfer or delegate all or any of their rights, powers, and discretions, to their successors or assigns.
As soon as this Preliminary Agreement is signed it shall be forwarded to the Government of the Republic of China for approval. When it has met with the approval of the Government of the Republic of China,a necessary Detailed Agreement shall be made embodying the principles of this Agreement with such amplifications and additions as may be mutually agreed upon between the parties hereto.
On its approval of this Agreement, and acceptance of the obligations set forth herein, the Government of the Republic of China shall officially notify the British Minister at Peking of the fact, and this approval shall be taken as covering the Detailed Agreement referred to in Article 17.
This Agreement is executed in quadruplicate in English and Chinese, one copy to be retained by the Corporation, one to be forwarded to the Government of the Republic of China, one to be forwarded to the British Minister at Peking, and one to be retained by the Contractors, and should any doubt arise as to the interpretation of the Agreement the English text shall be accepted as the standard.
Signed at Shanghai by the contracting parties on this fourth day of the seventh month of the second year of the Republic of China being the fourth day of July nineteen hundred and thirteen.
Legation of the United States of America
Peking, March 17, 1919.
Dr. Sun Yat Sen,29 Rue Molière,Shanghai, Kiangsu.
Dear Dr. Sun:
I have read with great interest your sketch project for the international development of China as embodied in your letter of February first to me. I congratulate you upon the broad and statesmanlike attitude with which you treat this very important subject. Your suggestion of united international participation in the development of China's resources deserves the support of all friends of China. It would be unfortunate indeed if the old régime of spheres of influence, struggles for concessions and activities flavoring of selfish exploitation should not, with the conclusion of the war, be relegated to the past. You are right in recognizing the necessity of a substitute for the old order and your proposal of a unified policy under international organization with Chinese participationfor the larger development in China, naturally assuming that the inalienable rights of the Chinese people are to be amply safeguarded, meets this demand admirably.
We are hopeful that conditions in China may become such that the Chinese people themselves may be encouraged to put their money into productive enterprise and participate in the larger developments. We are hopeful that the day is not far distant when the Chinese Government may be able actively to interest itself in the encouragement of native industry to the end that native capital of which there is a very considerable quantity, may be induced to lend itself to productive enterprises, because of a Confidence in constructive policy on the part of the government.
If you will permit a suggestion, I would be inclined to reduce your admirable program to one which would be in closer keeping with the limits of the present world's resources in capital. As we all know devastated Europe is calling for capital for rehabilitation and other nations want capital for development programs of considerable proportions. Thus it would seem that China's program of development must of necessity take cognizance of her most immediate and most pressing needs. We are all united in that transportation occupies a prominent place in such a program. 50,000 miles of railway and 100,000 miles of good roads would seem to be sufficient to engage our attention for any plans for the immediate future. This would allow ample opportunity to penetrate the greatrich unoccupied regions in the North and West, which should be opened to colonization and development as soon as possible in order to relieve the economic pressure of over population in sections along the coasts and waterways, and to accord opportunities to bring the rich regions of West China into contact with the trade of the rest of China and the world at large.
Along with transportation, China needs to develop its resources in iron and coal, the two great essentials to modern industrialism. Arrangements should be made whereby foreign capital can come to China's assistance in these two important industries, but care should be exercised so as to preserve to China the iron and coal necessary for its own uses, and prevent China's steel industry being mortgaged to foreign interests, in a way so as to jeopardize China's future in this important industry.
The reform of the currency and reforms in internal tax administrations are questions of immediate importance to China's economic and industrial development.
One of the greatest fields of potentiality in the immediate demands of the New China, is agriculture. The country depends in its final analysis upon the prosperity of its agriculture. At present probably as much as 80% of China's population is agricultural. China's greatest problem is the proper feeding and clothing of its vast population. Improved conditions in agriculture, opening of new lands to cultivation, irrigation and conservancy works, the encouragementof the cattle and sheep industries, the development of the cotton industry and the improvement of tea, silk and the seed crops of China, are timely subjects in any program of developments. There is a vast work to be done in agriculture in China, which will lead to prosperity generally, and make possible developments with native capital in other fields of activity, whereas if agricultural improvements are neglected, it will be difficult to insure prosperity in other directions.
Thus for the present, I hope the main thought may be centered on improvements in transportation, in currency and tax administrations, in the development of coal and iron industries, and in agriculture. Many of the suggested activities included in your very extensive program will follow as a corollary to the above.
In thinking of all these developments, I believe that we should always give thought to the fact that we are not dealing with a new country but with one in which social arrangements are exceedingly intricate and in which a long-tested system of agricultural and industrial organization exists. It is to my mind most important that the transition to new methods of industry and labor should not be sudden but that the old abilities and values should be gradually transmuted. It is important that the artistic ability existing in the silk and porcelain manufacture, etc. should be maintained and fostered, and not superseded by cheaper processes. It is also highly important that no export of food should be permitted, except as to clearly ascertained surplusesof production. It would produce enormous suffering were the food prices in China suddenly to be raised to the world market level. The one factor in modern organization which the Chinese must learn better to understand is the corporation, and the fiduciary relationship which the officers of the corporation ought to occupy with respect to the stockholders. If the Chinese cannot learn to use the corporation properly, the organization of the national credit cannot be effected. Here, too, it is necessary that the capital of personal honesty which was accumulated under the old system should not be lost but transferred to the new methods of doing business. So at every point where we are planning for a better and more efficient organization, it seems necessary to hold on to the values created in the past and not to disturb the entire balance of society by too sudden changes.
I wish again to congratulate you upon the statesmanlike view with which you consider the whole question of the development of your country, and the very timely suggestions you have to make in regard to a united policy of international participation in these developments. I am glad to note that the minds of the leaders among the Chinese people today are being centered more and more upon the constructive needs of the country and efforts are being made to meet these needs, in full appreciation of China's relations with the people of other nations, to the end that China's developments in the future may work in harmony with the world developments generally.
I should be glad to hear from you further and more in detail concerning development plans.
Believe me, with the highest regard,
Sincerely yours,(Signed)Paul S. Reinsch.
DEPARTMENT OF COMMERCEOffice of the SecretaryWashington
May 12, 1919.
Hon. Sun Yat Sen,29 Rue Molière,Shanghai, China.
Your Excellency:
I have read with the greatest interest the project for the International Development of China enclosed in your letter of March 17th, and agree with you that the economic development of China would be of the greatest advantage, not only to China, but to the whole of mankind.
The plans you propose, however, are so complex and extensive that it will take many years to work them out in detail. You doubtless are fully aware that it would take billions of dollars to carry out even a small portion of your proposals and that most of them would not be able to pay interest charges and expenses of operation for some years. The first question to bedecided, therefore, is how the interest charges on the necessary loans could be met. The revenues of the Chinese Republic are already too heavily burdened with the interest charges on existing Government loans to warrant further charges, and hence it would seem necessary for the present to limit the projects for development to those which seem sufficiently remunerative to attract private capital. The government of the United States has consistently endeavored to manifest its disinterested friendship for the people of China and will undoubtedly coöperate in every proper way in proposals to advance their best interests.
Please accept my thanks for your kindness in submitting your proposals.
Respectfully,(Signed)William C. Redfield,Secretary.
Il Ministro Delia Guerra
Rome, 17 Maggio, 1919.
Most HonorableSun Yat Sen,29 Rue Molière,Shanghai, China.
Honorable Sir:
I thank you for having so kindly communicated to me the interesting project regarding how to employ through an International Organization the exuberant industrial activities created by the war, in order to exploit the great hidden riches of China.
Though aware of the practical difficulties which present themselves in the accomplishment of this project, it meets with my utmost appreciation, I assure you, for the modern spirit by which it is animated and for the depth of its conception.
Accept my best wishes for complete success, in the advantage of your noble country and for the interest of humanity.
Believe Me,Faithfully yours,(Signed)General Caviglia.
Peking, June 17, 1919.
Hon. Sun Yat Sen,Shanghai.
Dear Sir:
Permit me as a professional railway man to express my pleasure with your article appearing in the Far Eastern Review for June.
I will not at this time express approval or disapproval of the route which you have chosen but the idea of a line to connect up the great agricultural interior with the densely populated coast appeals to me strongly. I feel that you are making a definite contribution to railway economic theory in this respect, whereas the line itself would relieve congestion, open up a production area which would lower food costs, furnish employment to large numbers of soldiers to be disbanded, and put in circulation a large amount of hard money which would go far to correct the currency situation.
I am especially pleased to have your article appear at this time for I had already written one at the request of the publishers of the forthcoming "Trans-Pacific" magazine in which I touched upon the same line ofthought. This will not appear until July and your opinions will have done much to prepare the minds of sceptics upon the subject by that time.
I trust that this intrusion of an entire stranger may be pardoned, and that you will continue to support the thought which you have so ably presented.
Very truly yours,(Signed)J. E. Baker.
3, Piazza Del PopoloRoma
August 30, 1919.
Dr. Sun Yat Sen,29 Rue Molière,Shanghai, China.
My Dear Dr. Sun Yat Sen:
I thank you for your very kind letter of June 19th which has just been forwarded to me from my office in Rome, also for your kindness in sending me your splendid project "To assist the Re-adjustment of Post-bellum Industries," and the program for "The International Development of China."
I assure you I read your proposals and studied the maps in connection with your able and logical argument with the deepest interest. And I beg you to accept my hearty congratulations.
I am entirely convinced that your nobleideals will berealised, not only for the benefit of China and the welfare of your own people, but for the benefit and prosperity of the whole human race.
The Nations cannot continue to deny in the futureas they have in the past, the unlimited natural resources of your rich fertile country, in foods, minerals, coal and iron, etc.; and your plans for development and activity, as well as your methods of communication for expanding and cultivating almost untouched miles of virgin soil, and bringing these products to the doors of the "World Market" by a practical and economic plan, scientifically studied out, places you at once among the very rare few unselfish humanitarian benefactors, and reveals so clearly your profound international sympathies.
The development of China's natural resources will give a new impetus and vitality to industry and commerce in your country and will not only be of incalculable benefit to your own people, but offer undeniable and unlimited advantages to all people in all nations. Therefore Governments and foreign financiers should not hesitate in giving your plans their most careful consideration and support, and come to your assistance in the realisation of your grand humanitarian project.
The construction of a great "Northern Port" on the Gulf of Pechili, and the building of a system of railways from this great Northern Port to the northwestern extremity of China, as well as the construction of canals to connect the inland waterways systems of North and Central China with the great "Northern Port," and the development of coal and iron fields in Shansi which would necessitate the construction of iron and steel works would not only offer employment to millions of your country people, but would openwider, and advantageously, the doors of thousands of well organised industries in many nations.
It is very encouraging to me, dear Dr. Sun Yat Sen, to know that you look upon my plans of an "International World Centre of Communication" with favor, and that you will further the idea among your countrymen by writing about it in your magazine "The Construction."
This city, erected upon neutral grounds would offer at once the practical framework for the essential needs of a League of Nations and could become its dignified "Administrative Centre" crowned by an International Court of Justice.
I have presented the plans and proposals of this World Centre to the Rulers and governments of all nations, and hope to be able to go to Washington in October to exhibit the large original drawings and personally explain the project from a practical and economic point of view before the foreign delegates who may meet there to assist in the formation of a League of Nations, and I have written to President Wilson, who after receiving the volumes containing the proposals and plans, wrote that "he valued them very highly."
I hope that in the very near future this International World Centre of communication may become a reality. It would be the means of clearly defining and bringing into focus the highest natural products as well as the most important industrial achievements of all countries. This accomplishment would be one of the first definitesteps toward more friendly social and economic relations, and the practicability of establishing such coöperation cannot be disputed.
This City of Peace should rise and stand as an International Monument, erected by international contribution to commemorate the heroic struggle and noble sacrifice of millions who gave their lives on the battle fields, in the air and on the sea, that justice should triumph and open the ways for humanity to progress in peace, and free from tyranny in the future.
With the assurance, dear Dr. Sun Yat Sen, of my most profound sympathies for your noble project, and with my deep gratitude for your keen interest in my plans,
I beg to remain, with high esteem
Faithfully yours,(Signed)Hendrick Christian Andersen.