Mr. Conger to Mr. Hay.
Peking, China, February 5, 1901.
Sir: I have the honor to confirm your telegraphic instructions of the 29th ultimo, concerning indemnities. We have not reached this subject yet in our meetings, and in private conversations most of the ministers claim not to have received instructions. The German minister informs me that he thinks that his Government will not be willing to agree to a lump sum, nor will it agree to any scaling down of its claim. He says they have already expended about $45,000,000, and the amount is rapidly increasing. It is believed here (and the belief is shared by Sir Robert Hart, the Inspector-General of Custom) that China can pay from $250,000,000 to $300,000,000. But unless the settlement is made soon, or an agreement is made to scale down the claims, even this amount will be grossly insufficient.
The outlook, therefore, for a speedy settlement of the question of indemnities is not very favorable. It will be taken up as soon as the question of punishments is out of the way.
In connection with the subject of indemnities and in trying to devise every possible means of increasing the revenue, it is proposed to increase the custom duties. The import duties are now nominally 5 per cent ad valorem, but in fact are only about 3½ per cent. It is conceded by most of the foreign merchants that this tax might safely be doubled; but just what increase of revenue that would produce can not be definitely told. Some of my colleagues are in favor of arranging for this increase at once—i. e., with the settlement of indemnities; others think it should be taken up only with the subject of treaty revision, the latter claiming that if import duties were increased now for the special purpose of raising revenue to pay indemnities to foreigners, the Chinese generally would say and believe that we were paying our own indemnities to ourselves.
I should like to receive special instructions upon this question, if it has not been settled by telegraph before the receipt of this dispatch.
The question of the opium, salt, likin, and other taxes, as well as that of cutting off the rice tribute and enormous gratuities paid to the Manchus, and other means of increasing revenue, will all have to be taken into account and disposed of as best we can agree upon them.
I have, etc.,