Mr. Rockhill to Mr. Hay.
Peking, China, June 1, 1901.
Sir: The diplomatic corps met to-day to consider the various plans of amortization of the Chinese indemnity. I inclose herewith copies of the two schemes which were considered.1 The first, prepared by the agent here of the Hongkong and Shanghai Banking Corporation, contemplates amortization of the entire debt of 450,000,000 taels, with interest at 4 per cent, in a period of fifty years. Its principal inconvenience is that it does not apply to the amortization all the sums which in the next forty years become available for that purpose by the gradual extinction of the other foreign Chinese debts.
The plan of the Commission, which contemplates amortization of the entire indemnity in forty-five years, is based on the principle that all accrued balances left over from the reduction of the Chinese foreign debt are applied to this purpose and no new charges made on China beyond the 18,000,000 taels necessary for the payment of the 4 per cent interest. The amortization under this latter scheme, which was accepted in principle by the diplomatic corps, commences in 1906.
The diplomatic corps also examined two schemes of amortization submitted by the Chinese plenipotentiaries. The first plan contemplated repaying the capital of 450,000,000 taels in thirty years, and afterwards paying for twenty years the sum of 13,950,000 taels as interest, or 279,000,000 taels as interest. This plan, of course, takes no account of compound interest and does not figure out an ordinary interest of much over 3 per cent. The second Chinese plan contemplates the amortization in forty years, and provides for the addition to the capital of the total of the interest and the payment in forty equal installments.
The question of the currency in which the indemnities would have to be paid was also considered by the diplomatic corps, but no agreement reached on the subject. The discussion seems premature until the powers have agreed whether they will limit their demands to 450,000,000 taels to the 1st of July. So far, the only powers which have formally agreed to this are Great Britain, Germany, Belgium, Holland, and Italy. I reserve to announce our acceptance of it until all the other representatives have done so.
I have the honor, etc.,
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