A CHANGING FRONTIER

Before we investigate the set of changes introduced by Chinese commercial and agricultural expansion, it is helpful to provide an overview of the existing political and social structure in the Mongol periphery. Historically, what is now Inner Mongolia was a contact zone that alternated in control between various nomadic groups of the steppe and settled Chinese dynasties in the south which competed there for living space and political power. For mainstream Confucianism, the nomads constituted the cultural Other against which the Chinese civilization defined itself. The Great Wall, constructed in the wake of military tension between the Ming Dynasty (1368–1644) and invading Mongols, exemplified this physical and symbolic demarcation between “interior” (nei) and “exterior” (wai), “cultured” (hua) and “barbarian” (yi).Footnote ⁵

Under the Manchu-ruled Qing dynasty, the borders were pushed outwards, far beyond the Great Wall. The Mongol lands became part of the Qing Empire, and the Mongols were given a privileged position as military allies and co-rulers of the empire. At the same time, Qing rulers transformed Mongolia by organizing the Mongols into a multitude of territorial-based subdivisions called banners (Mongolian: khoshuu, Chinese: qi) which were ruled by hereditary princes. The banners were then grouped into leagues (Mongolian: chuulghan, Chinese: meng) under the supervision of the Lifanyuan (Court of Dependency Affairs) in Beijing, the central agency in charge of the Mongol dependencies and Tibet. The system was designed to curtail the military power of the Mongols by weakening their horizontal solidarity while strengthening their bonds with the Manchu emperor.Footnote ⁶ The Qing court also patronized Tibetan Buddhism that was dominant among the Mongols, and separated Han and Mongols so as to protect the nomadic culture. A rigorous ban was in effect that prohibited Han Chinese from cultivating Mongol lands. It was only under special circumstances such as military campaigns or famine relief that the ban was temporarily lifted. The few Han cultivators who were allowed to till the land beyond the Great Wall were forbidden to bring families, marry Mongolian women, or construct permanent buildings, and were obliged to return to their native places after the harvest each year.Footnote ⁷

A set of changes in the eighteenth century, however, fundamentally altered the power balance between Han and Mongols. First, the Qing military expansion across the Eurasian steppe doubled the size of the empire to include the peripheries of Outer Mongolia, Xinjiang, and Tibet. This greatly facilitated the commercial penetration of Han merchants who were given direct access to the steppe for the first time. These merchants, the majority of whom were from Shanxi province, played a central role in supplying the Qing troops during the military expeditions across the steppe and mediating the financial needs of the Manchu and Mongol ruling elites. The lucrative long-distance trade resulted in a string of flourishing frontier market centers and an extensive trading network across the steppe. By the end of the eighteenth century, even the remotest corners of Mongolia had been exposed to a monetized economy based on silver.

Figure 1 The Qing Empire (c.1800).

A second change was the doubling of the Han Chinese population over the course of the eighteenth century. Overpopulation and environmental degradation combined to push a steady flow of Han migrants from adjacent provinces such as Shanxi and Shaanxi into the grassland. This started as a voluntary exchange, with the Mongols providing land in return for an annual rent in kind. Over time, the Han advance brought about a growing commercialization and privatization of land, as the communally owned Mongol land gradually passed into private ownership. While the Mongols retained the right of rent collection, the actual land use was permanently transferred to Han migrants. Another change was the expansion of a centralized bureaucracy to areas outside the Great Wall. By 1800, a total of twenty centralized administrative units had been established in Inner Mongolia, to manage the growing Han population there. Thus the territorial and demographical expansion of the Qing created the legal and administrative framework for the influx of Chinese capital and migrants into the Mongol periphery.

At the microcosmic level, a set of unique natural and social conditions made Hetao a perfect locus of change. Geographically, Hetao (meaning “river loop”, a.k.a. Houtao) is located between the old bed of the Yellow River and its present course, on the north-western section of the Ordos Plateau. The area was created by a shift of the river course during the eighteenth century, which left a stretch of extremely fertile alluvial plain between the two streams. It covers an area of 10,000 square kilometers, with less than 40 per cent of the total area arable.Footnote ⁸ Due to the arid weather and alkaline soil of Hetao, farming depended on irrigation, but the proximity of the Yellow River made irrigated agriculture possible, in contrast to other parts of Inner Mongolia – and north China – where dry farming prevailed. The irrigated land of Hetao was said to yield harvests ten times larger than those on the dry mountain lands south of the passes.Footnote ⁹ Although the claim may be proverbial rather than literal, it indicates the extraordinary fertility of the alluvial soil as compared to the dry land of north China. Further, the Yellow River provided cheap water transportation that linked the area to downstream markets in Baotou, Hekou, and beyond.

Administratively, Hetao was located at the intersection of three Mongol banners: the Dalad and Hanggin banners of the Ikh Joo league and the Urad banner of the Ulaanchab league. Its geographical isolation and marginality, far from any political, religious, or market centers, made it a weak link in the traditional form of Manchu–Mongol political control. None of the headquarters of the Mongol ruling princes were located within its boundary. Prior to the twentieth century, Han settlers in Hetao were under the jurisdiction of a Beijing-dispatched commissioner based in Shenmu county of Shaanxi province, and a sub-prefect at Salaqi who answered to the administration of Shanxi province, both residing outside the region. The political vacuum thus left ample room for the growth of a vigorous local autonomy.

Thus far we have analyzed the natural and social conditions that prepared the stage for the irrigation boom of Hetao: capital drawn from the Han–Mongol trade, cheap labor supplied by the influx of Han migrants, cheap land obtained from the Mongols, water provided by the Yellow River, and the negligible presence of an intrusive state. While these structural factors are indispensable in understanding the economic development and social transformation in Hetao, social actors played an equally significant role. The following section illustrates the first economic boom in Hetao during the first half of the nineteenth century, and the role played by the group of Han entrepreneurs who invested merchant capital in irrigation systems and organized commercial agriculture.

RISE OF LAND MERCHANTS

Compared with the areas adjacent to the Great Wall, farming in Hetao began rather late, owing to its geographical isolation and the capricious nature of the Yellow River. The area remained a marshy flood zone till the river settled in its present course in 1850, and it was not until the early 1800s that a group of Han merchants from nearby Baotou began to penetrate the area to barter with the local Mongols. By this time, the Mongols at large had been exposed to a monetized economy brought by Chinese trade, while the extravagant lifestyle of the aristocracy further made them easy prey to usurious moneylending. In Hetao, the merchants soon began to acquire the land that the Mongols put down as security and put it under irrigation. Because of their heavy involvement in land development, they were known as land merchants. Most members of this group were long-distance traders from the neighboring provinces of Shanxi and Shaanxi, but artisans and demobilized officers from other parts of China also entered the trade. Together they created a highly commercialized, capital-intensive, profit-oriented form of agriculture that departed from the traditional mode of production centred on small peasant family farms. Within decades, Hetao was turned from a pastoral hinterland into one of the most prosperous agricultural zones outside the Great Wall.

Much of what we know about land ownership and irrigation patterns in Hetao comes from the early twentieth century, when the government measured land and canals in preparation for their confiscation. In 1902, the Qing court changed its age-old protective policy toward the Mongols in favor of one that promoted active reclamation of their lands, as part of the New Policies reform that aimed at modernizing the empire. Its primary purpose was to raise funds to pay the colossal Boxer indemnities as well as cover the expenses of various reform programs in education, administration, and the military. During the official campaign, all the private canals of Hetao were expropriated, and the owners were obliged to report to the Qing authorities the details of each canal. These statements, preserved in the unpublished Archives of the Imperial Commissioner for the Reclamation of Mongol Banner Land (Qinming duban mengqi kenwu dachen, 1902–1911) in the Archive of Inner Mongolia, offer first-hand data on the irrigation systems of Hetao and their developers.

The following statement of two Shaanxi firms, Yongshengxing and Jinyonghe, described the circumstances surrounding the opening of Chanjindi (Mongolian: Chayija boro tala, in today's Bayan Noor league of Inner Mongolia), which marked the official inauguration of Han reclamation in Hetao.Footnote ¹⁰

The statement shows how the indebtedness of the Mongol aristocracy facilitated Han agricultural expansion. In this case, the prince of Dalad banner agreed to open a large block of land for cultivation in repayment of his debt. Along with the land rights, the firms also obtained water concessions. The Chanjin canal, built in 1825, was one of the earliest irrigation systems developed in Hetao.

The statement of another firm, Xiechenghe, provides more details on landholding and irrigation-related costs during the 1820s:

Like the two other firms, Xiechenghe acquired over 16,600 hectares of land from Dalad banner as repayment of a loan of 80,000 taels. It should be noted that the land was obtained through leasing rather than outright sale, with an annual rent in cash or kind paid to the Mongol banner. In addition, a small water fee was payable in kind to Hanggin banner, through which territory the water route ran. These expenses, however, were negligible compared with the labor expenses of the canal which cost 100,000 taels to build and another 20,000 taels per year to maintain. This was because the heavy sediment of the Yellow River made it necessary to dredge the bed and strengthen the dykes regularly so as to prevent silting up and protect the fields from floodwater.

These statements demonstrate several facts about agricultural development in Hetao in the early nineteenth century. First, in Hetao, unlike other peripheries, it was merchant-entrepreneurs rather than farmers who initiated the Han agricultural advance. Agriculture, from the very beginning, was part of the commercial transaction involving capital, land, and labor. Second, the endorsement of the Lifanyuan testified to a slackening of the Qing policy due to diminishing strategic concerns in the northern frontier. The Mongol elites were thus allowed greater freedom to ease their economic burden and generate income out of their hereditary land which was theoretically unalienable. Third, the natural conditions of Hetao created a high bar for irrigation development, which demanded significant capital investment on not just initial construction but also regular maintenance. All these set the merchants of Hetao apart from their kind elsewhere.

Canal building, as we have seen, was a laborious and expensive task. The colossal expenses often turned out to be beyond the means of individual firms, thus making collaboration necessary. The following statement details the cooperation between two firms:

The statement testified to a form of simple partnership in irrigation development. As the Gangmu Creek canal silted up, Yongshenghe set out to cut a new intake and link it to the lower reach of the canal that was undertaken by Xiechenghe. The two firms built their sections separately but became joint owners of the canal through a partnership, with more firms chipping in to cover the maintenance costs after 1843. Meanwhile, individual firms began to develop private branches that extended from the trunk canal to their individual plots.

A similar form of partnership was organized in operating the Chanjin canal. Initially built by the partnership of two firms, it later passed into a multiple shareholding system. As the local gazetteer of Linhe county notes, a relatively sophisticated system of financing and organizing irrigation existed in Hetao in the first half of the nineteenth century, in which all irrigation related affairs were resolved through public discussion attended by all shareholders:

As we can see, the necessity to pool resources created a densely connected yet relatively egalitarian community based on shared interests and responsibilities. The result was quite remarkable: during the 1850s, the Chanjin canal alone irrigated an area of between 20,000 and 26,700 hectares, with an annual yield of hundreds of thousand shi of grain.Footnote ¹⁵

This economic boom, however, was cut short by the Hui Muslim Uprising and its Qing suppression (1862–1877). During the suppression campaigns, the market town of Chanjin served as a supplying center for the Qing troops in Shaanxi and Gansu. The merchants were mobilized to transport military supplies and organize local militia to defend the locality against the rebels, resulting in the neglect of irrigation works. The exaction of the army, which garrisoned in Chanjin for three years, was followed by the rampage of “mounted bandits” (mazei) in 1876 that devastated the local economy. In its aftermath, businesses were nearly wiped out, and farm estates were in ruins or deserted.Footnote ¹⁶ The economic decay was manifest from the sharp decline of annual income of Dalad banner, which shrank from 100,000 taels of silver in the 1850s to less than 3,000 strings of copper coins in the 1870s.Footnote ¹⁷

REVIVAL OF IRRIGATION ECONOMY

The end of the mid-nineteenth-century crisis brought yet another economic boom in Hetao. The second stage, spanning from the 1870s through the turn of the century, departed from the earlier period in terms of geographical locus, organizational format, and degree of commercialization. Whereas Han settlement of the first stage was concentrated in the town of Chanjin in north-western Hetao, the second stage saw a shift of economic gravity to eastern Hetao, notably the market town of Longxingchang (present Wuyuan county of Inner Mongolia). While irrigation in the first stage was organized on the basis of simple partnerships (penghuo), the second stage saw rapid irrigation expansion through a more inclusive shareholding (penggu) arrangement in which shares were offered to those who provided not just capital but also expertise and labor. Moreover, the second period was characterized by growing commercialization of land and labor, with a greater degree of integration with the regional and global economic system.

A set of historical and social circumstances contributed to the second economic boom in Hetao. On the domestic front, massive rebellion, war, and famine punctuated the 1860s and 1870s: first the Hui Muslim Uprising and its suppression that devastated north-west China and the adjacent Mongolian periphery, immediately followed by the great famine of 1876–1879 that caused the death of 9–13 million people in north China.Footnote ¹⁸ The social turmoil, nevertheless, also brought new opportunities. The necessity to supply the Qing troops and expand fiscal revenue during the expeditions resulted in a further slackening of the ban on Han cultivation, especially in Hanggin banner that remained hitherto uncultivated.Footnote ¹⁹ The warfare also brought new settlers, among whom were a group of demobilized officers from southern China who made fortunes during the military campaigns. Attracted by the economic opportunities in Hetao, they began to invest in irrigation works and soon rose to power in their contest for land and water. At the same time, the social unrest and natural disasters drove large waves of refugees from north China into the grasslands. In 1876, the ban against Chinese women outside the Great Wall was lifted by the Qing court, spurring the process of migration into Inner Mongolia and Manchuria. These new immigrants supplied cheap labor for the irrigation systems and farm estates of land merchants. Further, the soaring grain prices in the wake of catastrophes made cross-regional grain trade prosperous, thus lending great impetus to the commercial agriculture in Hetao.

On the international front, the series of unequal treaties signed between China and the Western powers in the wake of the Second Opium War (1856–1860) increasingly absorbed China and its peripheries into the global framework of capitalism and nation-states. The opening of Tianjin as a treaty port increasingly turned Mongolia into a sourcing ground of animal skins, wools, and medicinal herbs, which were in great demand on international markets. The treaties also opened up the entire Qing–Russian frontier to trade, as well as allowing Russian merchants the privilege of carrying out duty-free trade across Mongolia and Xinjiang, thus giving them an edge on their Chinese competitors in these regions. In Hohhot, Chinese firms suffered great loss on Bohea tea because of the competition from the Russians, and the markets of cotton textiles there were completely dominated by foreign manufactures.Footnote ²⁰ Meanwhile, the opening of the Suez Canal in 1869 and the construction of modern railways caused the trade routes to shift, eventually resulting in the decline of the caravan trade overland. Foreign competition and introduction of modern means of transportation thus led some Chinese firms to redirect their investment from traditional lines of trade of tea and cotton cloth into the more profitable grain trade, thus spurring the commercialization of grain production.

With capital and labor flowing into Hetao in the 1870s, an economic surge was under way. By the early 1900s, irrigation networks in Hetao consisted of 8 major canals and around 40 minor ones, which added to a total length of nearly 800 km and covered an irrigated area of over 72,000 hectares.Footnote ²¹ In just a few decades’ time, Hetao became one of the most important grain-producing areas outside the Great Wall, with an estimated annual yield of over 100,000 tons of grain, enough to feed half a million people.Footnote ²² A local saying highlights the extraordinary prosperity of Hetao in contrast to the disaster-prone lower reaches: “The Yellow River brings a hundred disasters; it bestows prosperity only on the loop” [huanghe bai hai, wei fu yi tao].

Figure 2 Location of Hetao and the major canals of Hetao (early 1900s).

Table 1 shows basic information on the eight major canals that survived into the twentieth century. Each of these trunk canals (ganqu) supplied a hierarchical system of branches (zhiqu) and sub-branches (ziqu) that provided water to individual plots.

Table 1 Eight major canals (as of 1904).

Sources: Han Meipu, Suiyuan sheng hetao diaocha ji (Höhhot, 1934); Feng Jilong, Diaocha hetao baogao shu (Taipei, 1971); Wang Zhe, “Hetao qudao zhi kaijun yange”, Yugong banyuekan, 7:8 & 9 (1937), pp. 123–151; Zhou Jinxi, Suiyuan hetao zhiyao (Letterpress copy, 1924); Chen Erdong, Hetao guanqu shuili jianshi (Beijing, 1988).

In 1904, as part of the official reclamation campaign, the Qing authorities expropriated all private canals of Hetao, with the owners receiving a small amount of money – usually 10 per cent of the original costs – in compensation. To be eligible for compensation, the owners had to provide details about the canals, such as builder, year of construction, location, scale, and cost. As of 1907, a total sum of 72,175.651 taels of silver were paid to 38 parties in return for the 44 canals confiscated, with the amount each received varying from 100 to 10,000 taels.Footnote ²³

An analysis of these first-hand data reveals some general trends of irrigation development in Hetao. The vast majority of canals – 41 out of 44 – were built after the crisis of the 1860s, including 6 out of the 8 major canals. At the time of confiscation, 32 were still owned by their builders or their first-generation descendants, showing a significant surge of irrigation development in the final decades of the nineteenth century. Compared with the earlier period, the number of single-owned canals increased distinctly, due partly to the proliferation of smaller-size canals, and partly to the growing trend of consolidation. This can also be seen from the naming of the canals. While the earlier canals were typically named after places, the newer ones usually bore the name of a single investor, be it a firm (e.g. Heheyuan), a lineage hall (e.g. Changxingtang), a family clan (e.g. Caojiadi), or a person (e.g. Old Guo). Out of the 34 canals that were single-owned, 26 were minor ones or branches that were less than 25 km long. This may be explained by the opening of the hitherto uncultivated land of Hanggin banner adjacent to the Yellow River, which made minor canals a more affordable option for developers. Further, the influx of Han settlers also made fragmentation and subdivision of irrigation systems necessary.

Meanwhile, there was a countervailing tendency toward concentration of ownership, with some owners buying out others. This can be seen from canal names such as Sidagu, Wudagu, and Shidagu (meaning “Four/Five/Ten-big-shares”); while the names indicated the corporate origin of these projects, they eventually became single-owned, showing a brisk tendency of privatization and consolidation. Further, the preponderance of technology in irrigation development also played a part, which allowed technical experts to capitalize on their expertise and accumulate wealth, as seen in the case of Wang Tongchun, who singlehandedly developed three of the eight major canals in Hetao.

A SHAREHOLDING SYSTEM

While the rise of single ownership testified to a tendency of privatization in irrigation development, this was largely applicable to smaller-scale canals. Meanwhile, partnership-owned projects continued to thrive during the second period, as the scale of larger projects often made collaboration necessary. Compared with the simple partnerships in the earlier period, which were typically formed among fellow countrymen or close friends, the shareholding system of the second period was more complex and elaborate. Shares now became fully alienable; they could be split, bought, and sold, and also be acquired through investment of expertise, labor, or land.

The shareholding system was developed by the trading and banking firms of Shanxi merchants in the early nineteenth century, and gained popularity among the canal developers from the 1860s.Footnote ²⁴ Under this system, each shareholder obtained a certain amount of shares according to his investment, typically expressed in 10-per-cent (fen) or 1-per-cent (li) units. Benefits (li) and duties (hai) were distributed proportionately among shareholders. Apart from irrigating their own plots, shareholders may also sell water rights to others or rent them out for a fee. Meanwhile, they were responsible for paying their allotment of labor costs, in proportion to the area of irrigable land they possessed. Like other forms of property, shares were inheritable and transferrable. It was also possible to divide the shares into smaller proportions, with branches developed and owners of new sections sharing in the costs of trunk maintenance.

The shareholding system was reinforced by devices such as written agreements and the building of temples. Partnership contract (hehuoyue) established the terms of shareholding by specifying the rights and responsibilities of each partner. It was primarily private, signed in the witness of two to four middlemen that included Han and Mongols. The contract helped ground economic transactions in a set of social relations and customary practices, thus facilitating the process of commercialization.Footnote ²⁵ Apart from the contract, temples were sometimes erected as an inculcation of religious and symbolic bonds among shareholders. The stele inscription of the renovated Sidagu Temple showed that it was first built to commemorate the partnership of the original four big shareholders.Footnote ²⁶ Temples provided a public space for discussing irrigation-related affairs as well as staging public rituals and festivities, thereby embedding the economic practices in social and symbolic terms.

The following contract provides more detail on the terms of shareholding:

Here we see an example of joint ventures between Han merchants and Mongol elites in irrigation development, as the shareholding system allowed the latter to acquire shares in return for land. In this case, the deputy administrator of Dalad banner served as guarantor and nominal head for the irrigation project, and received a share in the canal, as well as the right of freely disposing of any unleased land that would potentially benefit from the project. This was by no means an isolated case. Several Mongols were listed as canal contributors during the official reclamation campaign, among whom were Ji'erguqing of Dalad banner, one of the five big shareholders of Tabuhe canal, and Lieutenant Officer Changhanbuluo of Hanggin banner, who offered two canals located within the boundary of his assigned household plot to the Qing authorities.Footnote ²⁸

The merchants in turn were responsible for any applicable duties incurred by the construction and future maintenance of the canal. In lieu of capital, one might also offer land in payment, at a rate of 50,000 copper coins (equivalent to 25 taels of silver) per qing.Footnote ²⁹ On top of that, rent was due to Dalad banner as usual. Once the due amount was cleared, the land would be returned to its original holder. What was involved here was in fact conditional sale of the right of use of land, showing a higher degree of land commodification as a result of its potential increase in value with irrigation. Here we see an arrangement in which irrigation was financed by offering shares to those who provided capital, land, and political support. According to the contract, the water route must not be blocked so as to ensure equal access to water for all shareholders. At the same time, duties should be distributed according to one's respective share, in proportion to the area of irrigable land one possessed. Hence the larger the area, the greater the share of duty payment as well as the benefits brought by water.

Contracts were also used to settle disputes over water use, as seen in the following contract regarding the Sidagu canal:

The contract testified to the growing competition among canal developers due to the commodification of water. Gongyiyuan, which owned a downstream branch canal, had been selling water rights to lower-level users without the permission of upstream developers, while the latter dammed up the canal in response. The scenario was common between owners of trunk and branch canals, or between upstream and downstream users of the same canal, often resulting in feuds and armed conflicts. Under such circumstances, shareholding provided a means to settle such disputes by offering shares for purchase and turning competitors into partners. After mediation, Gongyiyuan agreed to pay 1,000 strings of cash to Wandeyuan, forfeit its right of selling water to outsiders, and help cover any future costs incurred, in exchange for a share in the Sidagu canal.

However, contracts were not always binding. It often took multiple rounds of mediation, negotiation and contract-signing to settle a dispute. After the initial contract was signed in 1876, Gongyiyuan clashed again with an employee of Wandeyuan, and accordingly refused to pay the agreed sum while continuing to sell water to outsiders. To resolve their quarrels, a second contract was drawn up in 1880, which reiterated Gongyiyuan's obligation to pay its due and refrain from water selling. As a penalty, the new contract granted Wandeyuan the right to dam up the Gongyiyuan canal for ten days in the autumn, which was an open breach of the principle of equal access to water by all shareholders. It was not until after a third round of mediation in 1883 that the matter was closed, with Gongyiyuan made to pay an additional sum of 350 strings to Demaoyong and Wantaigong, in exchange for Wandeyuan forfeiting its extra water rights over the Gongyiyuan canal.Footnote ³¹ All this showed the limitation of shareholding entailed by inadequate legal enforcement. The multiple contracts indicated a dynamic process of power negotiation among shareholders that was grounded in customary practices rather than adjudication of the state.

The shares were not acquired through financial investment alone. Shanxi merchants traditionally divided the shares in their trading and banking firms into two types, “monetary” shares (caigu) obtained through capital investment and “corporeal” shares (shengu) granted in honor of special contributions by founders and managers. In canal building, shengu shares were offered to technical experts and skilled workers for the expertise and labor they provided, in lieu of most of the wages they would otherwise be owed.Footnote ³² This was because irrigation demanded not only considerable capital input, but also knowledge, expertise, and experience. To prevent silting up and ensure proper water flow, it was crucial to choose the location of the intake carefully, design the route, and build sluiceways to carry off surplus water. Technical details such as these were often neglected by previous builders, resulting in not only waste of time and resources, but also severe flooding and even the financial ruin of the owner.

The shareholding system thus provided opportunities for upward mobility of those who possessed expertise but little capital. The most prominent example was Wang Tongchun (1851–1925), a native of Xingtai county of Zhili who became the self-made “King of Canals” in Hetao. At the age of twelve he left home for Dengkou in Alashan banner on the left bank of the Yellow River, to work in a leather workshop owned by a kinsman. There he acquired hydraulic skills from observing practitioners from Ningxia, where irrigation dates back to the Eastern Han Dynasty (25–220 AD). Later he was hired as overseer of the Sidagu canal and acquired a shengu share through his service. At age thirty, Wang set out to build his own canal, after leasing land from a local monastery. In two decades, he completed four major canals – Yihe, Yonghe, Henghe, and Zhonghe – and became the wealthiest land merchant in Hetao.Footnote ³³ Much of Wang's success was attributable to his skills as a hydraulic engineer. The stele inscription of the Sidagu Temple compared him to legendary figures like King Yu and Li Bing who were renowned for taming rivers and creating irrigation systems in ancient China.Footnote ³⁴ After his death in 1925, Wang was worshipped as River God, with a temple dedicated in his memory, and ritual services were held on the anniversary of his death and during periods of drought or flood.Footnote ³⁵

Thus far we have analyzed the role of land merchants as entrepreneurs investing in and organizing irrigation works of Hetao. As we have seen, shareholding enabled an alliance of capital, expertise, labor, and land in irrigation, thereby lending a great degree of efficiency and flexibility to the system. In what follows, we shall discuss their role as landlords, with a focus on their relations with the Mongols and Han peasants and rural workers.

COMMERCIALIZATION OF LAND RELATIONS

Accompanying the commercialization of irrigation systems based on partnerships and shareholding was the growing commercialization and privatization of land during the second half of the nineteenth century, resulting in the separation of land ownership and actual land use, so that Mongol landowners were reduced to rentiers while Han settlers became actual landholders. Meanwhile, the development of commercialized land relations also resulted in distinct social stratification in the settler society, giving rise to wage labor in irrigation and agriculture.

The increasing commodification of land can be seen in the changing forms of rental payment. Early settlers in Hetao obtained land from the Mongols for a minimal rent in kind that varied from several dou to several sheng of grain per niuju (18 hectares).Footnote ³⁶ No purchase price was necessary, except for gifts offered to the landlord known as “personal favors” (bandi renqing). Over time, silver became the standard payment in land proceeds and fees, with qing replacing niuju as the standard unit of measurement. By the end of the nineteenth century, the rent charged by the Mongols had risen to 4 or 5 taels of silver per qing, or the equivalent amount of copper coins.Footnote ³⁷ In addition, a one-time contract fee (yadiyin) was charged at the time of land leasing, plus water fees (shuiliyin) due to Hanggin banner, which were initially paid in the form of gifts and later converted into a standard payment of 50 taels per annum.Footnote ³⁸ All this showed a growing degree of monetization and integration of the Mongol society into the Chinese economy.

The centrality of irrigation in Hetao also triggered changes in the land regime and socio-technical arrangements. First, it gave rise to a land tenure called perpetual lease (yongzu), which allowed the lease holder to hold and make full use of the land for an indefinite period of time, on condition of rent payment. The holder was also free to pawn (dian), sub-lease (zu), and transfer (tui) the land to others. It indicated an arrangement of conditional sale (dianmai), which differed from outright sale (juemai) in that the landowner retained the title and right of rent collection. This was to comply with the Qing laws that prohibited the sale of Mongol land, while protecting the long-term land use of the leaseholder.Footnote ³⁹ In effect, landowners became rent collectors while first tenants became de facto owners with full transfer rights. Eventually this arrangement led to the erosion of the hereditary, communal landownership of the Mongols by a privatized property regime that resembled those practiced in other highly commercialized parts of China, such as Taiwan and the Pearl River Delta.Footnote ⁴⁰

Second, the combination of extensive land and irrigation gave rise to large-scale managerial farming based on massive capital accumulation and wage labor. What characterized the farm estates of Hetao was their extraordinary size, usually ranging from hundreds to over 1,000 hectares in acreage.Footnote ⁴¹ For example, the Beiniuju estate owned by Wang Tongchun, which was located on the lower reach of Yihe canal, covered over 100 qing (667 hectares) of managerial farmland (niujudi) cultivated by hired hands and another 100 qing that was rented out to tenants. During the harvest season, threshing alone was done by some 300 hired hands, with bells used to coordinate their daily routines like clocking in and out and lunch breaks.Footnote ⁴²

The institution of perpetual lease in Hetao in some ways resembled the multiple land-ownership regime found in southern China and Taiwan known as permanent tenancy (yongdian) or “one field, two owners” (yi tian er zhu), which was characterized by the separation of the “surface field” (tianmian) rights of the tenant from the “subsoil field” (tiandi) rights of the landlord.Footnote ⁴³ Both regimes were products of increasing privatization and commodification of land, and both protected the long-term usufruct rights of the landholder. However, there were also important differences between them. First of all, the yongzu system caused a shift of de facto ownership (from Mongol to Han) as well as changes in land use (from pastoral to farming), while no such change was entailed under the yongdian regime. Further, the yongzu system benefitted entrepreneurs engaging in large-scale land acquisition and development, whereas the yongdian regime favored small holders and tenant farmers by protecting their rights. Moreover, the yongzu system was developed through personal favors and oral agreements that were largely outside of state supervision, whereas the yongdian regime was secured by legal contracts under state regulation. The property regime in Hetao thus showed traits distinct from other parts of China, namely, the central role played by merchant-entrepreneurs in a frontier setting that enabled large-scale land development, and the preponderance of commercial capital in agricultural production.

The land merchants used a hierarchical structure to organize irrigation and land. At the center were a number of gongzhongs, which were central administrative units in charge of a canal or a section, depending on the size of the canal. The management of a gongzhong resembled that of a business firm, often with two layers of control. At the top level, a canal overseer was responsible for canal construction and water distribution, construction of dams, hiring of labor, and collecting of fees. As the estate grew, a further administrative level was put in place, with a manager supervising all general affairs, a bookkeeper in charge of accounts, a foreman responsible for handling land issues and for recruiting and managing labor, and several canal runners in charge of waterway patrols and fee collection. Depending on their performance, they would receive dividends on top of regular salary, usually in the form of land, which provided them incentives to optimize in irrigation and land management.Footnote ⁴⁴ Each gongzhong oversaw several niuju or smaller outlier settlements that resembled the villages of China proper. Most niuju, however, were much more sparsely populated than a typical Chinese village, consisting of only a few households or sometimes even one.Footnote ⁴⁵ Such a hierarchical structure proved effective in organizing a settler community centering on irrigation.

What distinguished the gongzhong estates from other business firms, however, was that they not only controlled water, land, and labor, but also exercised a degree of judicial and policing authority in arbitrating disputes, providing security, and maintaining local order. We have mentioned that the indirect rule of the Qing government and the decline of nomadic society had created a power vacuum in this borderland, thus allowing the growth of a quasi-autonomous settler society. Many land merchants organized private militias to protect their estates, recruiting demobilized soldiers and vagabonds. These militias also kept an eye on workers and employees. As He Yangling points out, “In the old days, all civil and criminal affairs associated with farmers were determined by gongzhong, which functioned as a virtual government.”Footnote ⁴⁶ In the absence of centralized control, the gongzhong estates formed a mechanism of economic mobilization and political control that in some ways resembled the plantation economies in the Americas.

As we have seen, the availability of large amounts of arable land acquired from the Mongols and cheap labor supplied by land-poor farmers and refugees from north China incentivized land merchants to organize large managerial farms using hired labor, instead of simply dividing the land into smaller plots for leasing. In an interview in 1919, Wang Tongchun claimed to have established a total of 18 farm estates that covered over 1,000 qing [6,670 hectares] of cultivated land, which comes to an average size of 370 hectares or more per estate.Footnote ⁴⁷ Another source shows that Wang's estates yielded over 230,000 shi of grain in an average year.Footnote ⁴⁸ If these figures are accurate, we would get an output of around 2.3 shi per mu, a figure nearly comparable to that yielded by a piece of prime irrigated rice land in east or south China.Footnote ⁴⁹ The high returns were all the more remarkable given the arid and cold weather and short agricultural work year – from April to September – in Hetao as compared to those more accommodating areas. It was likely that these estates benefitted from professional management of irrigation works and a higher use of draft animals and natural fertilizer. For instance, Wang was said to have owned 3,100 cattle, 1,700 mules, 120,000 sheep, 500 camels, and 200 oxcarts and horse-drawn wagons.Footnote ⁵⁰ The diversity of animals indicated the supplementing of agriculture with animal husbandry and trade, something that characterized these estates other than their size.

Apart from organizing managerial farming, the land merchants also leased out significant proportions of irrigated land to renters. Wang Tongchun, for example, reportedly collected 170,000 taels of land rentals and water fees every year.Footnote ⁵¹ There were two types of land rentals: fixed-rate leasing (fangzu) and sharecropping (banzhong). In the first case, the rate was determined after measuring the area where crops sprouted in the spring, and the rent usually ranged between 20 and 30 taels of silver per qing, payable in the autumn in cash or kind, regardless of actual yield. The tenants usually needed to provide their own draft animals, seed grain, and agricultural tools, and thus functioned as semi-independent farmers. Sharecroppers, in contrast, owned little or no means of production and had to depend on the landlord for their supply, and the harvested crops were shared with the landlord according to a predetermined rate. Depending on soil quality and capital input, the rate varied from a three–seven (three for landlord and seven for tenant) to a four–six or half–half distribution.Footnote ⁵²

Most settlers of Hetao were from Baode prefecture and Hequ county of Shanxi, with Fugu county of Shaanxi coming next, followed by Zhili and Henan. Settlers were divided into two hierarchical groups according to their social and economic positions: merchants and peasant proprietors vis-à-vis tenants and rural workers, set apart by their landholding capacity and ability to gain access to irrigation. Whereas the former were landholders who leased land directly from the Mongols and invested in irrigation works, the latter either rented land from the proprietors or sold their labor for wages. Their migration pattern also differed: while the former tended to reside in the area for extensive periods, the latter typically arrived in the spring and departed in the autumn, drifting from place to place in search of well-irrigated plots, which earned them the name paoqing or “green-shoot chasers”.Footnote ⁵³

These categories were further divided into several subgroups across the social spectrum. At the top were land merchants who contracted large tracts of land from the Mongols and owned either shares of trunk canals or branch canals or both. The next level were proprietor farmers who acquired modest plots but owned no canals themselves, and therefore needed to purchase water rights from the land merchants. There was a certain degree of mobility between the two because of the capriciousness of the Yellow River, which could ruin or enrich farmers in unpredictable ways. Likewise, the tenants were also divided into two subgroups according to the different methods of rental payment: fixed-lease tenants who organized farming relatively independently, and sharecroppers who depended on the landlords to supply most or all means of production. At the other end of the spectrum was a group of long- and short-term laborers who hired out their labor at irrigation sites or farm estates owned by land merchants for wages. These were supplied by the influx of landless farmers and refugees from south of the passes in the wake of natural disasters. The application of wage labor, coupled with the privatized land ownership and growing estate economy, greatly facilitated the development of commercial agriculture in Hetao.

COMMERCIAL EXPANSION AND INTEGRATION

The economic boom in Hetao paved the way for further commercialization, urbanization, and Hetao's integration into larger regional and global economic flows during the late nineteenth and early twentieth centuries. On the one hand, the rapidly expanding grain trade increasingly integrated Hetao with the market of north China, thanks to the water transportation provided by the Yellow River, which was navigable by wooden boats from Shizuizi in Ningxia to Qikou in Shanxi between April and November.Footnote ⁵⁴ On the other hand, the opening of treaty ports and construction of roads and railroad lines further integrated this borderland with the global market as a source of wool, pelts, and medicinal herbs.

As Han settlement expanded, commerce and handicraft industry flourished. Apart from their engagements in irrigation and land management, the land merchants were predominantly merchants specializing in the long-distance trade of tea, cotton cloth, tobacco, and other Chinese products for the livestock and pastoral products of the Mongols; some were also engaged in handicraft industries such as food processing and felt making. Commerce and agriculture often sustained one another in these enterprises: while profits from commerce were invested in irrigation and land acquisition, proceeds from land were in turn converted into merchant capital.

Take Longxingchang, the largest trading firm in Hetao, for example. It was founded by a former Qing officer named Guo Xiangrong in 1880 and acquired by Wang Tongchun in 1893. The firm sold grain, oil, pelts, medicinal herbs, and soda to Baotou and Hekou, in exchange for consumer goods from China proper. It also participated in the trade of lumber and coal that were procured from Mt Helanshan and the mines near Baotou. The firm was equipped with around 200 iron and wooden-wheeled carts, dozens of wooden boats, and over 100 camels, which traversed the trade routes between Mongolia and north China over land and water. It also operated a set of mills, oil presses, distilleries, and felt shops, as well as engaging in the credit sale of consumer goods.Footnote ⁵⁵ The commercial success of the firm not only supplied the capital needed in the irrigation endeavors of Wang Tongchun, but also gave rise to the market town that bore the same name as the firm. Located on the bank of the Yihe canal 35 km north of the Yellow River, the market town Longxingchang served as an important trade link between the regional market system and the hinterlands of western Inner Mongolia.

The thriving commerce of Hetao testified to the emergence of an interlinked regional economy that encompassed both sides of the Great Wall, bound together by extensive caravan and water transport routes. The completion of the navigable Yihe canal in 1893 facilitated the flow of goods within Hetao, and connected the area with other parts of Mongolia and north China via downstream market centers like Baotou and Hekou. Two cart roads linked these river ports to overland traffic, one extending from Baotou northward to Mongolia, and the other from Hekou eastward to Fengzhen and Datong in Shanxi. The rise of a grain base north of the Great Wall thus considerably reduced transport costs and enriched contractors and brokers in these market towns.

With new land brought under cultivation, cross-regional grain trade became phenomenal. Every year, between 120,000 and 180,000 tons of grain was transported from Hekou to the markets of north China, a large proportion of which came from Hetao. Further, a good proportion of the Hetao grain (up to 30,000 tons a year) was transported to Mongolia via Baotou.Footnote ⁵⁶ As the local gazetteer notes, “Upon harvest, the grain is immediately transported via the Yellow River and sold to the markets of Baotou, Hequ, and Qikou. No attempts are made to store it because of the easy profits.”Footnote ⁵⁷ The mountainous areas of northern Shanxi and Shaanxi, in particular, had long depended on grain imports from the north China plain. This dependence was exacerbated during the frequent natural calamities that plagued north China during the late nineteenth century. Thanks to its extensive irrigation systems, Hetao continued to produce grain in years when drought and famine caused grain prices to soar across north China and many parts of Inner Mongolia. During the famine of 1891–1892, the price of coarse grain (such as maize, millet, and sorghum) in Inner Mongolia quadrupled from 300 to 1,200 copper coins per dou (i.e. 60 taels per shi) and that of wheat rose from 700 to 1,800 coins per dou (i.e. 90 taels per shi).Footnote ⁵⁸ The famine thus provided an opportunity for the land merchants to profit from the grain trade. In 1892, Wang Tongchun sold 25,000 shi of grain to northern Shanxi and Shaanxi, and donated 10,000 shi of famine relief to Beijing. In 1901, he again sold 12,000 shi to Shanxi, 6,000 shi to Beijing, and 7,000 shi to Otog banner of Ordos.Footnote ⁵⁹

Apart from the grain trade, the trade of wool and pelts also flourished. The Treaty of Tianjin (1858) opened more Chinese ports to foreign trade, while granting foreign merchants tax exemption on exports purchased inland except for a single charge of 2.5 per cent.Footnote ⁶⁰ The treaty paved the way for large-scale exports of wool and pelts from Mongolia to the wool textile and leather industries of Europe and America. Following the opening of Tianjin in 1860, foreign firms from Germany, Great Britain, and the United States began to establish branch offices in Inner Mongolia that purchased rawhides, goatskins, and sheep and camel wools, and transported them to overseas markets via Tianjin. Specialized wool and pelt firms mushroomed in Baotou and Hohhot, which served as commission-based brokers (yaji) mediating between itinerary traders and foreign firms.Footnote ⁶¹ According to Imperial Customs data, the export amount of wool and pelts increased forty-fold from 310,000 customs taels in 1876 to 13,370,000 taels in 1899, and despite a temporary setback at the time of the Boxer Rebellion in 1900, reached 26,120,000 taels in 1905. Likewise, their ratio in the entire export of north China ports rose from 0.4 per cent in 1876 to 11.5 per cent in 1905, while the price for wool and pelt shot from less than 9 taels per picul in 1895 to over 17 taels for wool and 26 taels for pelt in 1905.Footnote ⁶²

Another important export from the Ordos region (Hetao included) was medicinal herbs. In particular, the trade in licorice root, a wild desert plant found in many parts of Inner Mongolia, became extremely profitable because of high demand on the world market. Its extracts were widely used in cough syrups, as well as the flavoring of chewing gum, tobaccos, non-alcoholic beverages, soy sauce, etc. The trade was largely monopolized by merchants from the Baode prefecture of Shanxi, who hired workers to dig the licorice roots in Hanggin and Dalad banners as well as other parts of the Ordos from April through September. The roots were then sold to the firms at low prices and transported to Baotou and Hekou by caravan or boat. Hekou was especially known for its enormous trade in licorice roots. In the late 1800s, up to 5 million catties (3,000 tons), a total worth of 400,000 taels, were concentrated here every year and shipped to Hequ and Qikou and further to Tianjin and Qizhou in Zhili (present Anguo of Hebei province).Footnote ⁶³

The expanding long-distance trade gave rise to new urban centers that linked Hetao to a trading network spanning both sides of the Great Wall and reaching out to the world market through treaty ports like Tianjin. New market towns emerged in Hetao and on its immediate periphery, the most significant being Longxingchang, which served as a collecting and distributing center of grain and pastoral products, supplied by emerging local markets in Ulaan Obbo, Xiaoshetai, and Dashetai along the caravan routes to Urad banner as well as Mongolia.Footnote ⁶⁴ The second half of the nineteenth century also saw the rise of new regional market centers along the Yellow River. Located 200 km east of Hetao, Baotou became a major trading hub and tax port on the trade routes to Gansu, Xinjiang, and Mongolia, thanks to its easy accessibility to both land and water transport. Hekou, situated 150 km further downstream, remained the largest distributing center of licorice roots into the first quarter of the twentieth century. Its business waned only after the railway from Beijing to Hohhot was extended to Baotou in 1923 which provided a far more efficient means of transportation than carts and boats.Footnote ⁶⁵

The emergence of Baotou and Hekou indicated a trend of urbanization characterized by a high degree of commercialization as well as mutual dependence between economic cores and their peripheries that was mediated by the market rather than political or symbolic power. Unlike earlier frontier centers like Hohhot and Urga that were typically amalgams of Manchu-Mongolian politico-cultural control and Han merchant initiatives, these new market centers grew out of the Han commercial expansion relatively independently of official intervention. These were further linked to the frontiers of Mongolia, Qinghai, and Xinjiang, as well as to downstream river ports like Hequ and Qikou and to the treaty port of Tianjin. From these ports, the exports reached the markets of north China and the world, and this expanding trading network integrated the hinterlands of Mongolia into the larger regional and global economic systems.