Mr. Rockhill to Mr. Hay.
Peking, China, June 15, 1901.
Sir: The diplomatic corps resumed to-day the discussion of the question of the revenues to be assigned to the payments on indemnities, as to which a conclusion had not been reached at the last meeting, through my declining to accept fewer commercial compensations than those which I had reported you I had asked, in my dispatch No. 114 of June 11, 1901.
At to-day’s meeting I informed the diplomatic corps that the United States accepted the proposal to raise the duties on imports to a 5 per cent ad valorem effective on condition of a revision of the tariff and substitution of specific for ad valorem duties and the improvement of the waterways leading to Shanghai and Tientsin.
I likewise informed them that my Government, desirous of bringing to a prompt close the present negotiations, accepted the sum of 450,000,000 taels as the final amount of the indemnity calculated to the 1st of July, and as a further manifestation of the earnestness of its desire to expedite negotiations it accepted also the 4 per cent instead of 3 per cent interest, which latter we had been advocating.
From the remarks made during the exchange of views which followed, there can be no doubt that France and Russia accept the 450,000,000 taels indemnity, although the representative of the latter power said that he had no definite instructions on the subject.
The question of the mode of payment was then taken up—guaranteed loan or bonds.
The Russian minister stated that his Government, although always partisan of an international guaranteed loan, would accept the decision reached by all the other powers. The French minister said he was authorized by his Government to accept one or the other of the two modes of payment above mentioned.
The Japanese minister said that, if the system of a guaranteed loan was accepted, his Government would raise no objection to it, but if the payment was made by the issuance of bonds at 4 per cent interest Japan would incur a loss. The last Japanese loan placed on the London market was a 4 per cent one, and the bonds at the present time were quoted at 0.78. The Japanese minister said:
Taking note, therefore, of the principle laid down in the fifth section of the report of the commission on indemnities, and believing it to be the intention of the powers that the actual expenditure incurred by each Government in the interest of all should be made good, it was his duty to declare that if the bonds were to bear interest at 4 per cent nothing less than a capital sum which would yield interest equal to 5 per cent on the total amount of Japan’s claims should be regarded as equivalent to such claims which were calculated on the basis of immediate payment.
All the other powers were unreservedly in favor of the issuance of bonds at par, bearing 4 per cent interest.
[Page 245]Mr. Komura also remarked that the actual sum by which the face value of Japan’s claim would have to be increased would be considerably less than 25 per cent of the whole amount, because amortization as well as interest on the sum so increased would be taken into account in making good the loss of 1 per cent which Japan would actually incur.
The Russian minister remarked that the 4 per cent loans in his country were some points below par, and that he could not therefore feel at all sure that his Government would, accept the 4 per cent rate.
On the whole, the discussion established the fact that the only serious objection to 4 per cent was that in the case of Japan. It was generally felt that Russia’s present reserve in expressing itself definitely on the subject would not be maintained.
The embarrassment of Japan is so real, and on the other hand, that country deserves so much the thanks of all the others for the prompt, efficient, and modest way in which it performed its work here last year, that I trust some means may be devised to prevent it sustaining any loss.
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I may add that during to-day’s meeting, and also in one or two of those which have preceded it, the question of the currency in which the interest and amortization is to be paid was discussed. It is understood that the sum of 450,000,000 taels was only given to the Chinese as a convenient indication; that all the claims are in gold and payable in the currency of the country of the power claiming. The locality where the interest is to be paid has not yet been settled. There seems, however, to be a disposition to have these payments made at Shanghai.
I am, etc.,