The International Development of China/Program 6
PROGRAM VI
The Mining Industry
Mining and farming are the two most important means of producing raw materials for industries. As farming is to produce food for man, so mining is to produce food for machinery. Machinery is the tree of modern industries, and the mining industry is the root of machinery. Thus, without the mining industry there would be no machinery, and without machinery there would be no modern industries which have revolutionized the economic conditions of mankind. The mining industry, after all, is the greatest factor of material civilization and economic progress. Although in the fifth part of the first program I suggested the development of the iron and coal fields in Chili and Shansi as an auxiliary project for the development of the Great Northern Port, still, a special program should be devoted to mining in general. The mineral lands of China belong to the state, and mining in China is still in its infancy. So to develop the mining industry from the outset as a state enterprise would be a sound economic measure. But mining in general is very risky and to enlist foreign capital in its development in a wholesale manner is unadvisable. Therefore, only such mining projects which are sure to be profitable will be brought under the International Development Scheme. I shall formulate this mining program as follows:
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.
PART I
The Mining of Iron
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.
PART II
The Mining of Coal
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 object for 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.
PART III
The Mining of Oil
It is well-known that the richest company in the world is the Standard Oil Company of New York, and that 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.
PART IV
The Mining of Copper
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 before it 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.
PART V
The Working of Some Particular Mines
In regard to the mining of various kinds of metal, some particular mines should be taken up by the International Development Organization. There are many 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.
PART VI
The Manufacture of Mining Machinery
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 enterprises have to be worked out by private concerns 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 scaport 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.
PART VII
The Establishment of Smelting Plants
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.