Mr. Rockhill to Mr. Hay.
Peking, May 22, 1901.
Sir: The diplomatic corps held a meeting to-day to consider the note of the Chinese plenipotentiaries indicating how they proposed paying 450,000,000 taels, if this amount were asked as indemnity by the powers. Copy of this note was sent you in my dispatch No. 86 of May 16.
Sir Ernest Satow had but a few days before informed me privately-that his Government advocated the reduction of the total amount of the indemnity to 400,000,000 taels. This I duly telegraphed you on the 20th instant. Much to my astonishment, but as I learned later, as a result of a further concession made at the last moment by the British Government to Germany, which it was apparently feared might join Russia and France in insisting on a guaranteed loan, he informed the diplomatic body to-day that his Government was in favor of a method which, while effecting a reduction of the amount to be asked of China, would not change appreciably the figure already mentioned—that is to say, 450,000,000 taels. He therefore proposed that after July 1 of this year the powers should not demand of China any further payments on account of the military occupation. This, it is estimated, would be a saving to China of not less than 1,500,000 pounds a month.
The Austrian, German, and Russian ministers were opposed to this proposition, the German minister expressing himself most strongly on the subject, saying that his instructions directed him to insist on the integral payment of every cent spent, or to be spent, by his Government on the expedition to north China. I fancy, however, his Government has before this practically accepted the British proposal.
The Russian minister, while not so emphatic, declined to commit himself to accepting the date of July 1, though he is personally in favor of it.
The British proposals (see my No. 89) were then read and there ensued a general exchange of views, when I took occasion to say that while reserving for future presentation to the diplomatic corps the proposal of my Government concerning the amount of the indemnity, which had not yet been accepted or rejected by the representatives of the powers, I felt at liberty to say that the United States would be pleased to see whatever indemnity might be asked of China paid by the issuance of bonds by the Chinese Government without international guaranty. If this were agreed to, we would be willing to take them at par and at 3 per cent interest.
The German minister then remarked that in view of my statement that I would again bring up the suggestion of the American Government to scale down the indemnities, he would ask his colleagues to finally vote on the subject. He said he was not aware that any of the powers saw any reason for limiting the figure of their demands on China [Page 172] to £40,000,000, as we had suggested, especially in view of the note of the Chinese saying they could pay 450,000,000 taels, and of the note of Viceroy Chang Chih-tung offering to pay 400,000,000 in ten years. I replied we were, on the contrary, more convinced than ever that the figure we had indicated was the highest China could pay without getting into serious financial difficulties; that the report of the committee on the payment of indemnities was full of proofs of this; that the Chinese plenipotentiaries, while saying that China could pay this amount if called on, insisted on the fact that it would create grave financial disturbance in the country. As to the proposition of Chang Chih-tung (copy of which I sent you in my No. 82), it was not to be seriously considered, as it was practically based on doubling the customs dues and the likin, two measures we all refused to entertain, especially the second. I then said that if a vote was adverse to the original American proposition, I would then ask the diplomatic corps to vote on whether they agreed to make any reduction.
Mr. von Mumm then submitted to the diplomatic corps the following question which it was understood was intended to cover the whole of the American proposition:
“Do the powers agree to ask of China as indemnity the expenses actually incurred by the Governments and the losses of societies and individuals, reserving for future determination the question of the advisability of limiting the figure of the indemnity to be asked of China to the 1st of July—that is to say, to the sum of 450,000,000 taels?”
All of the ministers voted affirmatively, the Russian minister stating, however, that he simply voted with the majority, though his Government was equally willing to accept the American principle of scaling down the demands or to ask the payment of all expenses incurred. I did not vote.
Continuing the discussion of the British proposition, the suggestion therein contained, that the indemnity should be paid in bonds, was next taken up.
The Russian minister objected to this method, saying that bonds were only a promise to pay and left the future too unsettled. For this reason his Government proposed a guaranteed loan. He also advocated the raising of the tariff on foreign imports into China to 10 per cent, because we require, to insure the payments that have to be made on account of the indemnities, the very best guaranties, and that in view of our ignorance concerning native revenues, he thought that we should confine ourselves to those collected by a foreign administered service.
The British memorandum proposed, as one of the sources of revenue for the payment of the interest on the debt, the increase of the tariff on foreign imports to a 5 per cent ad valorem effective.
All the ministers agreed to this with the exception of myself. I said the United States Government would not agree to any increase of the present tariff without compensating commercial advantages; that the concessions which we could make China on the tariff constituted the most powerful leverage we had on the country for settling a number of questions, and we could not relinquish this valuable right except with full assurances that these commercial grievances would be promptly righted. I trust my action will meet with your approval. I think that I may thus be able to secure the cooperation of my colleagues in insisting with the Chinese Government on the immediate undertaking of the conservancy work on the Shanghai River; also [Page 173] those needed on the Tientsin River, and possibly at Niuchwang. Besides these I think we may secure their aid in having Peking placed on the footing of a treaty port. These are the compensations I shall at all events insist upon pending your instructions.
Before the meeting adjourned a note to the Chinese plenipotentiaries, asking them to indicate how they proposed paying interest on a sum of 450,000,000 taels, was agreed upon. I inclose herewith translation of said note.
Further discussion on the subject of the British memorandum was reserved until to-morrow.
I am, etc.,