OBSERVATIONS ON THE ECONOMICAL OPERATION OF THE TERMS ROYAL COMMISSION ON MINING ROYALTIES. FINAL REPORT. 66 TO THE QUEEN'S MOST EXCELLENT MAJESTY. WE, the undersigned Commissioners, appointed to inquire into "the amounts paid as royalties, dead rents, and wayleaves on coal, ironstone, iron ore, shale, and the metals of mines subject to the Metalliferous Mines Act, 1872, worked in the United Kingdom, and the terms and conditions under which these payments are made, and "into the economic operation thereof upon the mining industries of the country; and further to inquire into the terms and conditions under which mining enterprise is "conducted in India, the Colonies, and foreign countries by the system of concession "or otherwise, and the economic operation thereof," and to "report our opinion upon the several matters submitted for our consideration," have the honour humbly to present to Your Majesty this our Final Report. Preliminary Observations. 2. It would be difficult to over-estimate the importance of the mining industries of the United Kingdom. Coal and iron are essential to our manufactures, and form a considerable item of our commerce. A vast capital, applied with remarkable skill and energy, has for many years been engaged in their development and in that of other minerals, giving employment to more than half a million of persons, to whom forty-three millions sterling is estimated to have been paid in wages in the year 1890.* The subjects referred to us have a direct bearing upon this great industry; they are various and complicated; from the want of trustworthy information much misapprehension has prevailed with respect to some of them; and we have, therefore, spared no pains in collecting the best available evidence upon the different heads of our inquiry. 3. At the outset we addressed a series of questions to the secretaries of the Mining 1st Report Associations in Great Britain which represent the lessees of minerals, intended to elicit Appendix, information regarding the usual terms and conditions of mineral leases. For this P.158. purpose it was necessary to ascertain the term of years granted; the charges made by way of royalty, fixed rent, or otherwise in respect of the minerals raised; the manner in which such charges are assessed, and whether they vary in relation to the selling price; the powers given to make up by subsequent workings fixed rents paid in advance; the provisions dealing with surrender, assignment, and forfeiture for nonobservance of covenants; the conditions with respect to the property in buildings on the expiration of leases; and the manner in which payments are made for underground and surface wayleaves. We also asked if any difficulties in the working of minerals arise from joint ownership, or from a severance between the ownership of the surface and that of the minerals underlying it. We invited the Associations to bring to our notice any other matters within the scope of our inquiry to which they might desire to direct our attention, and to depute witnesses to give evidence before us who would generally represent their views. Moreover, such information as was necessary to make 1st Report us acquainted with the conditions under which metalliferous mines are worked was Appendix, called for from the pursers or secretaries of mines in Cornwall, Devon, and elsewhere. P. 237. A series of questions of a similar kind to those addressed to the Associations was put 1st Report, to Mr. Oswald Walmesley, the secretary to a representative committee of proprietors Appendix, of minerals which was formed in connexion with our inquiry. The replies to our P. 197. questions furnished a valuable mass of information, covering the greater part of the Walmesley, field of our investigations, and have been classified by us under the headings of Answers by Proprietors," and "Answers of Mining Associations," so as to admit 1st Report, of readier comparison. Return of Rates of Wages in Mines, 1891. The figures include persons employed in quarries. &c. 14,2766. Appendix, P. 210. 4. In some of these replies allusions were made to the incidence of rates and taxes upon lessors and lessees of minerals, but we did not consider that the subject came within our order of reference, and we have therefore taken no evidence regarding it. 5. We have held 45 sittings in London and 3 sittings in Edinburgh for the purpose of taking evidence, and have examined in all 142 witnesses. We have taken particular pains to obtain the evidence of working miners from different parts of the country, and we examined many of their leading representatives, including Mr. Charles Fenwick, M.P., Mr. John Wilson, M.P., and Mr. Keir Hardie, M.P. We regret that Mr. Pickard, M.P., President of the Miners' Federation of Great Britain, declined to give evidence; Appendix I. the correspondence which passed on the subject is printed in the Appendix. 1st Report, Appendix, p. 313. 4th Report, Appendix C. p. 92 et seq. 4th Report Appendix C. p. 29 et seq. 6. In connexion with the subject of mining enterprise in foreign countries, our attention was first directed to the Paper (Commercial, No. 7) presented to Parliament in 1887, containing reports by Her Majesty's Representatives abroad on mining rents and royalties, and the laws relating thereto. At our request a circular despatch was addressed in December 1889 to Her Majesty's Representatives at Paris, Berlin, Vienna, Rome, Brussels, Madrid, Lisbon, Stockholm, and Washington, for the purpose of ascertaining whether any substantial changes in mining legislation had taken place in the interim. An abstract of the replies received will be found in the Appendix to our First Report. This information proved, however, to be insufficient for our purpose, and in April 1891 we requested Her Majesty's Secretary of State for Foreign Affairs to obtain for us further oral or written information from Germany, France, Austria, Belgium, and Italy. An explanatory memorandum was enclosed at the same time, describing the leading features of the English royalty system, and specifying the chief points on which information was sought from abroad. 7. The voluminous reports which these inquiries elicited will be found in the Appendix to our Fourth Report. They were further elucidated by the oral evidence of M. Herman Hubert, a mining engineer in the service of the Belgian Government and Professor at the Mining School at Liège, Mr. T. R. Mulvany, Her Majesty's Consul at Düsseldorf, M. Raoul Duval, Director of the Bank of France, and M. Aguillon, Chief Engineer of Mines in France. Dr. R. W. Raymond, a mining engineer of considerable experience in New York, gave evidence with reference to the United States of America. Walmesley, Questions relating to foreign and colonial mines were also addressed by Mr. Walmesley 14,276b- d. to certain gentlemen in this country and abroad practically conversant with the subject, 3rd Report, Appendix, P. 202. and a digest of the information received in reply was supplied to us. Extracts from this digest were sent to the foreign experts whom we consulted, and its general accuracy was fully borne out. We desire to place on record the obligation we are under to Mr. Walmesley for the valuable information so laid before us. 8. With regard to India, evidence was tendered by Sir Charles Bernard, Secretary in the Revenue Department of the India Office, while in respect of the Colonies we examined Mr. Bramston, Assistant Under-Secretary of State, upon notes on the mining laws of the colonies supplied to us by Mr. Walmesley; we also examined Sir James Winter, formerly Attorney-General in Newfoundland; Mr. Francis Abigail, a member of the Legislative Assembly and former Minister of Mines in New South Wales, and Mr. Septimus Alfred Stephen, a member of the Legislative Council of the same colony. But, on consideration, we decided that it would be unnecessary for the purposes of our inquiry to take oral evidence from other Australasian colonies, or to pursue this branch of the subject into further detail; as the circumstances of countries possessing large areas of unoccupied land, where it is the special interest of the State to attract capital and to stimulate mining enterprise, differ essentially from those of Great Britain, where competition and abundance of capital have already secured the development of her mineral resources. 9. Although our terms of reference include the metals of all mines subject to the Metalliferous Mines Act, our attention has principally been directed to questions relating to mines of coal, ironstone, and iron-ore, the produce of which constitutes by far the most important element in the mineral wealth of the United Kingdom. From the most recent mineral statistics it appears that while the quantity of coal raised in 1891 was 185,483,790 tons, and of ironstone and iron-ore raised in the same year 12,809,227 tons, valued together at 77,473,0751., the total value of all the other minerals within the terms of our order of reference was only 3,059,8741. 10. Owing to complaints received on behalf of lessees of mines in Cornwall and Devonshire, we examined several witnesses from those counties whose evidence will be found in our Second and Third Reports. In consequence of differences which have arisen between the Office of Woods and Forests and the lessees of gold mines in Wales the Lords Commissioners of the Treasury suggested that we should invite Mr. Pritchard Morgan, M.P., who has taken the most prominent share in the proceedings connected therewith, to lay his views in detail before us. Mr. Pritchard Morgan was accordingly examined, as well as Mr. Culley, one of Her Majesty's Commissioners of Woods and Forests, and some other witnesses, and our conclusions upon the subject will be submitted in the course of this Report. 11. We propose to treat first of the minerals worked in the United Kingdom. It will be desirable to explain at the outset in whom the property in minerals is vested. In the year 1568, in the case of the Queen v. Northumberland, the decision of the See Case judges was in effect that only mines of gold and silver belonged to the Crown, and that of Attorney General v. the baser metals belonged to the proprietor of the land. This decision carried with it Morgan. the right of the Crown to search for gold or silver, and to enter upon private land and 3rd Report carry on the operations necessary for obtaining those metals. It was also held that a Appendix, mine of baser metals, if it contained any gold or silver, belonged to the Crown. the uncertainty to which this gave rise was found to interfere seriously with the mining industry, and it was ultimately set at rest by the Acts of 3 William and Mary, cap. xxx., 5 William and Mary, cap. vi., and 55 George III., cap. cxxxiv., which confirmed private property in mines containing copper, tin, iron, or lead, although they might also yield some gold or silver, subject to a right of pre-emption of the minerals by the Crown. This right has, we believe, never been exercised. The Crown, then, at the present time possesses the property in all mines of gold or silver, and the property in other minerals is vested, as a rule, in the proprietor of the surface; according to the maxim of English law, cujus est solum, ejus est usque ad cœlum, et deinde usque ad inferos. 12. Proprietors of minerals other than gold and silver may be divided into, 1st, the Cooper, Crown, which possesses important proprietary rights over minerals lying below the 19,466–70. foreshore and territorial waters, as well as over minerals in the Isle of Man and other places under Acts of Parliament. The Duchies of Cornwall and Lancaster also possess important mineral property. 2nd, Corporations and Public Bodies; for example, the Ecclesiastical Commissioners, who possess the largest mineral property in the United Kingdom; Universities and Colleges; Municipal Corporations; Charities and Hospitals; and the Board of Admiralty, which possesses the forfeited estates granted to Greenwich Hospital. 3rd, Private individuals, being proprietors of the surface as well as of the minerals, or owning the minerals without having possessory rights over the surface. Moreover, certain persons possess rights of mining in the Forest of Dean, in the "King's Field" in Derbyshire, and elsewhere, derived either from grants of the Crown, or, from immemorial usage; some of these rights have been confirmed by legislation. TERMS AND CONDITIONS OF PAYMENTS. 13. Minerals in the United Kingdom are usually worked by lessees and not by the proprietors, and we proceed to describe the usual "terms and conditions under which payments are made" by lessees. It will be convenient to deal first with leases of coal, and then with those of other minerals, as there are some important differences between them. COAL. Length of Leases. Returns by the Mining Associations 14. In England and Wales the length of leases usually varies from 21 to 63 years, and Combut in some cases it extends to 99 years, and some small collieries are let on yearly mittee of tenancies. The term varies according to the leasing power of the lessor, the extent Proprietors, of property embraced, and the number of seams let; the length of the lease depending upon the arrangements made between the parties. The lessee generally desires to obtain as long a term as possible, and usually lessors are not unwilling to grant long leases. In Scotland the length of leases is shorter, usually varying from 20 to 31 years. * As a lessee of coal is usually termed a "coal owner," we have throughout our report used the term "proprietor" to designate the person in whom the property in minerals is vested. † See Appendix II., for the old customs of Mendip, and McSwinney on Mines, Quarries, and Minerals for the customs of tin-bounding in Cornwall, &c. Chap. XVIII. sect. 3, p. 284. 1st Report, Adamson Moore, 66 Payments. 15. The right to work coal is usually conceded in return for an annual rent, and a royalty which is covered by or " merges in" the rent as far as the rent extends. The annual rent is variously called "fixed rent," dead-rent," "certain rent," or "minimum rent." Fixed Rent. Returns, &c., 1st Report, Appendix, p. 161 et seq. Ditto. Ditto. Simpson, 10,200. Lamb, 168. Lamb, 197. Adamson, 437. Daglish, 9676. Simpson, 10,199. Lamb, 251. 1st Report, 217. Lamb, 197. Simpson, 10,198. 16. There is no rule regulating the principle upon which a fixed rent is determined; Royalties. 17. The methods adopted for charging royalties fall into three classes: (1) a fixed sum per ton raised, (2) a fixed sum per acre worked, (3) a sliding scale, varying with the selling price of the coal raised. In Northumberland, Durham, Cumberland, South Wales, and Scotland, a tonnage rent is usually reserved, sometimes upon the total out-put with or without a deduction for colliery uses, sometimes upon the total sales, and sometimes varying according to the different descriptions of coal worked. In Lancashire, Yorkshire, and the Midlands the royalty is usually calculated upon the acreage of the coal worked, and is sometimes regulated by the thickness of the seam worked (per foot thick). In Staffordshire and North Wales the royalty is calculated sometimes by the acre, sometimes by the ton. Sliding Scales. 18. Sliding scales, varying with the selling-price of coal, were customary in Scotland and elsewhere many years ago, and probably grew out of, and succeeded, the primitive arrangement under which the proprietor received in kind a proportion of the coal raised. They seem, however, to have been generally superseded by fixed rates of royalty until the depression in the coal trade which occurred about seven years agc. The circumstances have been described by several witnesses. Leases were taken when prices were high at high royalties, and when prices fell the lessees applied to the proprietors for relief. The proprietors, although ready to meet the lessees, generally made the condition that the reduction should be combined with a sliding scale, so that, while they allowed a reduction upon existing prices, they might receive an increase if prices rose.* Examples of sliding scales will be found in the evidence. The scale is generally one-twelfth of the selling price at the colliery, that is to say, a rise or fall of d. per ton in the royalty upon a rise or fall of 6d. per ton in the price, usually with a fixed minimum and a fixed maximum. Sliding scales have been adopted in many new leases in Northumberland and Durham, and also in Scotland and South Wales. In other parts of the United Kingdom they are only in operation in excep. tional cases. Rates of Royalties. 19. Royalties vary in amount, owing to the various circumstances of each mine; that is to say, according to the thickness of the seams, the quality of the coal, and the facilities for raising it and conveying it to a market. They also vary according to the circumstances of the trade at the date of the leases. In a lease taken during a time of high prices the rate will naturally be higher than in a lease taken during a period of depression: in the former case lessees will be numerous and eager, in the latter, lessors will be anxious to invite offers. A full analysis of the evidence we have received will be found in Appendix III., but it may be useful to give here a tabular * Mr. A. De Bock Porter, Secretary and Financial Adviser to the Ecclesiastical Commissioners, who, as before stated, are the largest mineral proprietors in the United Kingdom, said that during the depression in the coal trade, whenever an abatement of rent was asked for, the Commissioners, though quite willing to meet their lessees, would only grant an abatement on condition that there must be a corresponding increase in the royalty in the event of prices rising. The proportion between the tonnage rate and the selling price adopted by the Commissicuers worked out on an average between an eleventh and a twelfth. Porter, 26-27. |