Mr. Rockhill to Mr. Hay.
Peking, China, May 23, 1901.
Sir: The diplomatic corps continued to-day the discussion of the British proposals for the payment of the indemnity by China.
[Page 174]The first question taken up was that of the mode of payment—whether a guaranteed loan should be asked for or whether China should issue bonds.
The French minister said that the only instructions he had on the subject were those given some time ago to his predecessor, Mr. Pichon. France preferred the system, of a guaranteed loan, as being the simplest and most natural method, and the one which best equalized the conditions in which the loan would have to be made. Though he had no recent instructions, he thought that France would regulate her conduct on considerations of general interest and of the particular interest of China, whose restoration we were seeking, and without which the necessary means for discharging her newly incurred indebtedness could not be secured.
The Japanese minister said his Government preferred an international guaranty, if all the other powers agreed to this plan.
The German minister pronounced himself in favor of the issuance of bonds, but stated (I presume as his personal opinion) that he saw no objection to some of the powers guaranteeing between themselves the bonds issued to them by China.
The Austrian, Belgian, and Dutch ministers were without instructions.
The Italian minister said that his Government had no preference for one over the other mode.
I repeated what I had said the day before as to the preference of the United States for bonds without an international guarantee and our willingness to take them at par and bearing 3 per cent interest.
I am inclined to think, in view of the decided preference expressed to-day for the issuance of bonds by China for the payment of her debt, together with the statement of the French minister and the fact that the Russian minister did not further urge the views of his Government, that the British proposals will be very shortly agreed to by all the representatives.
The question of the sinking fund was then taken up by the ministers, and after some desultory discussion it was decided to request the Committee on the payment of the indemnities to have drawn up a number of plans of amortization, it being the understanding of the foreign representatives that the Chinese preferred to extinguish the debt within the shortest period possible, say thirty years.
The question of the interest on the bonds was also discussed, Great Britain proposing 5 per cent and the United States 3 per cent.
The Japanese minister remarked that he thought, if the debt were paid off in bonds, that some provision should be made for the countries which can not raise loans at a very low rate of interest; Japan, for example, had to pay 5 per cent. He suggested as a possible solution, in case a low rate was finally agreed upon, that an additional amount of bonds over and above that which represented the amount of the indemnity due be issued to the countries thus situated, so as to cover the difference between the amount of interest they would have to pay for a loan and the rate of interest insured by the bonds.
This plan does not seem to me to be practicable and would work a great hardship on China. * * *
I am, etc.,