Foreign Relations of the United States, 1901, Appendix, Affairs in China, Report of William W. Rockhill, Late Commissioner to China, with Accompanying Documents

Mr. Rockhill to Mr. Hay.

No. 89.]

Commissioner of the United States to China,
Peking, China, May 20, 1901.

Sir: The difficulty for the representatives of the powers to arrive at any kind of understanding, either as to the amount of the indemnities to be asked of China or the mode of payment, is becoming more apparent day by day. None of the methods suggested as to the mode of paying the indemnities meet with approval.

On the 14th of this month the British minister handed me confidentially a memorandum, copy and translation of which I inclose for your information.

So far as I can ascertain from my colleagues the British and Japanese Governments are the only ones which think we should insist, in case we have to give the Chinese increase of their import customs tariff, on obtaining from China compensating commercial concessions.

Russia, France, and Germany are willing to see the present tariff on imports raised to 10 per cent, if by so doing they can obtain more promptly the payment of their claims against China.

The Russian minister, and I fancy his French colleague will side with him, is most persistent in his desire to separate the financial from the commercial question here, while the Japanese minister and myself are equally convinced that the two must be treated together, and that if we make tariff concessions to China without securing settlement of the commercial questions we lose the most powerful leverage we have here and expose ourselves to years of desultory discussion with China before we may be able to settle one of the questions which so pre judiciously affect foreign trade.

The Russian and French Governments are emphatic in their declarations that the only mode acceptable to them for the payment of the indemnity by China is a loan with joint guaranty by the powers; this would result, possibly, in breaking up at an early date the present concert of the powers, which must endure, though perhaps somewhat limited, if the plan of paying the indemnity by the issue of bonds to run for thirty or forty-five years is adopted.

The British minister to-day read me the last instruction he had received from his Government on the subject of the payment of the indemnity. It practically reproduced the previous memorandum, with the exception of the proposition to reduce the amount of 450,000,000 taels to 400,000,000. I telegraphed you this afternoon, giving the substance of the British memorandum and the later instruction of the British Government.

The diplomatic corps will hold a meeting the day after to-morrow, to consider the reply of the Chinese plenipotentiaries indicating the means China proposes for paying the indemnities to the powers. From present indications, however, I greatly fear that it will take a great deal of telegraphing before anything definite is accomplished, most of my colleagues being apparently without any liberty of action whatever.

The wisdom of the proposal which you made to the powers in the early part of the year, to hold a conference in Europe or America for the settlement of these questions is made from day to day more apparent, and their refusal to accept your proposal is a source of constant regret to me.

I am, etc.,

W. W. Rockhill.

[Inclosure 2.—Translation.]

Memorandum by Sir Ernest Satow May 14, 1901.

No. 89.]

In view of the importance of the sum of 450,000,000 taels and the condition of the money market, a loan under the ordinary conditions would he impossible.

Three points noted:

• First. Prevent the bankruptcy of China.
• Second. The increase of the import duties beyond 5 per cent ad valorem is inadmissible, unless the questions indicated in article 11 of the Joint Note are settled in a satisfactory manner.
• Third. Not to take part in a joint international guaranty of a Chinese loan.

On the other hand, propositions from China for a decrease of the total amount and for indulgence concerning the conditions of payment would be considered favorably.

The following plan might perhaps be feasible: China should hand to each of the powers bonds representing, at par, the proportion due each interested power. These bonds would bear 4 per cent interest with one-half per cent sinking fund.

The following revenues would be set aside for the payments on these bonds: The gabelle, native customs, and the increase of receipts accruing from a duty of 5 per cent ad valorem on imports by sea and by land, except on rice and opium.

(This latter would continue to pay the duties of the present tariff, which amount to 4.97, as import dues, plus 80 taels a picul; in all about 19 per cent.)

These revenues would be paid to a mixed commission, the organization of which should be approved by the powers. It would, however, not have any right to interfere directly in the administration nor in the imposition and perception of customs duties.

The payments to the commission should take place at frequent intervals. [The proposition of a monthly payment made by the Chinese plenipotentiaries seems to correspond to this idea.]

The commission would have charge of the distribution.

Right for each power to dispose of its bonds as it sees fit, and to guarantee them.

To give to China the necessary time to settle its affairs the issue of bonds could be extended. [It could commence by issuing 300,000,000; the balance as soon as the interest on its present debts commence to decrease, perhaps after five years.]

N. B.—The words in brackets are Sir Ernest Satow’s amplification of his instructions.