The loess-basins along the Fen and Wei valleys were the home land of Chinese agricultural civilization. They offered not only the intrinsic advantages of open unwooded country and a fertile soil but also easy communication with the old oasis cultures of the Tarim basin. It is suggested, indeed, that by way of Central Asia indirect links may have existed with the oldest agricultural centres of all, at Anau and in Babylonia, and the fact that the cereals (wheat, barley and millet) which formed the basis of the agricultural system both in western Asia and in north-west China have been found in a wild state only in the former points to early cultural links between them. It seems probable that the early Chinese acquired first the art of pottery, always closely associated with early agriculture, and later the knowledge of metal from the west, by way of Central Asia. Whether the Wei or the Fen valley was the first to be involved in this early development is a debatable point, but the first dynasty, the Hsia (2205-1766 s.c.) is traditionally associated with the lower Fen-ho valley, and many of the oldest legends belong to it. The Fen-ho valley has thus been under continuous cultivation for fully forty centuries. The conservation of water-supply has always been one of the essentials of agricultural practice in Shansi due to the marginal rainfall and porous loess soil. An elaborate system of agreements between individual farmers in the same village and between villages in the same valley has grown up in order to ensure an equitable dis tribution of the water-supply. This necessity hastened organ ization and contributed to the early development of civiliza tion in the loess-lands. The chief crops grown are those cereals— wheat, barley and millet—able to subsist on comparatively small supplies of moisture. It was these which formed the basis of the agricultural system in the very beginning, in the 3rd millennium B.C. Rice, which was not adopted by the Chinese until they had spread out from their original home in the loess-lands into the Yangtze Valley, is cultivated only where the supply of water is sufficiently plentiful to permit the flooding of the fields.
Shansi was not only the home of Chinese agriculture but the centre of the most intense coal-mining activity and the site of the most famous iron industry of the Old China. The greater
part of south Shansi consists of a vast coalfield which, though buried underneath loess and sandstone in the centre, crops out in the terraces of the Tai-hang-shan edge, which Richthofen named the "Anthracit-Terrasse." The main seam is here on the average 18 ft. thick and at the base of the coal measures iron ores are interbedded.
From the "Anthracit-Terrasse" there developed an extensive trade not only in lump anthracite with the adjacent parts of the north China plain but also in pig iron and manufactured iron goods, which supplied the whole of the north China market. The two most famous iron-working centres were Pingting and Tsechow.
In modern China the arterial routes of communication with but one exception skirt the edges of but do not penetrate into the province of Shansi, and its old industrial importance has been lessened by coal-mining nearer the coast and by the importa tion of foreign iron. But in the future Shansi is likely to be penetrated by more railways than the single line at present in existence (the branch to Taiyijan-fu from the Peking–Hankow railway) and, although its iron industry may never revive, its coalfields are the most valuable in all China and will once again be the focus of coal-mining activity. This relative removal, how ever, at the present day from the turmoil along the main routes has facilitated the gradual transformation of the province which has been effected by Yen Hsi-shan who alone among the provincial governors has remained in office since the 1911 Revolution and has thus been able to carry out a continuous policy. He is known as the "model governor" and Shansi as the "model province." The chief agency in the transformation of the people is the school and Shansi comes nearer than any other province to attain ing compulsory school attendance. Over six hundred miles of roads have been built, hill-tops have been planted with saplings, partly f or !the sake of their timber and partly in order to regularize the flow of river-water, and the cultivation of several remunerative commercial crops has been encouraged with considerable success. The most important of the latter are cotton, cultivated chiefly in the Fen-ho valley, and the mulberry, which has been planted especially in the south-east overlooking the Hwang Ho plain.