Mr. Conger to Mr. Hay.

No. 1435.]

Sir: I have the honor to inclose copy and translation of a plan submitted to his colleagues by the Belgian minister, proposing to continue to receive from the Chinese Government payments of the indemnity on a silver basis, but leaving the difference between this and a gold basis to be adjusted later, and granting an extension of time for the payment of this difference.

If all the governments interested agree to this, it is to be offered to the Chinese Government on condition that gold bonds shall be immediately signed and delivered.

I am informed that all the governments have signified their willingness to adopt this plan except Russia, the representative of which has telegraphed his government for instructions.

I have, etc.,

E. H. Conger.
[Inclosure 1.—Translation.]

Mr. Joostens to the Dean of the diplomatic corps.

Mr. Dean: A question which should have been settled long ago remains still in suspense. I speak of the signing of the national bonds of the indemnity. All the powers which signed the protocol of Peking have the same interest in seeing this settled without further delay. The powers, especially those which have capitalized the portion of the indemnity due to them by issuing a loan, must be put in possession of some instrument by which the settlement of this loan may be guaranteed, and the powers, who at the present time desire to do the same thing, would find themselves much embarrassed by the state of uncertainty in which we remain.

Moreover, several powers have shown the desire to help China in the execution of her obligations, but it has not been possible for them to agree on the manner in which their friendly desire should be manifested.

These various considerations have decided my government to direct me to submit to our honorable colleagues the proposition in the nature of a compromise, the text of which you will find transmitted with this letter.

If this proposition is favorably received by all the powers interested, my government will adopt it on the condition that the total amount of the payments made by China shall be equal to the whole sum of her debt calculated on a gold basis.

I would be very grateful to you, Mr. Dean, if you would kindly bring the preceding to the notice of our honorable colleagues, with the request that they refer it to their respective governments.

I beg of you, Mr. Dean, to accept, etc.,


On the one hand the Chinese Government shall sign immediately the national bonds payable in gold, as provided by the protocol of the 7th of September, 1901,

On the other hand, the undersigned powers, desiring to help China in the execution of her obligations, consent that the payments of the indemnity, when they fall due, shall continue to be made as heretofore; that is to say, in silver, at the rate of exchange of the day of each partial payment, and the said powers [Page 178] grant to China the time necessary to extinguish in this manner the entire amount of the indemnity which is due to them.

As the true value of the monthly payments made by China depends on the rate of silver, it is agreed that every time that the difference between the sums paid in and the sums due to the undersigned powers shall be in favor of the latter this difference will remain due to the said powers and will bear the same interest as the principal of the indemnity.

On the other hand, whenever this difference shall be in favor of the Chinese Government the sums paid in excess shall immediately be deducted from the total of the sums remaining due by China to the undersigned powers.

As the Chinese Government is required to make monthly payments, the representatives of the undersigned powers shall give instructions to their delegates on the bankers’ commission at Shanghai for the latter to fix the rate of exchange at the time of each payment, instead of awaiting the end of the period of six months.

If the total of the payments made by China up to the expiration of the year 1940 does not reach the sum necessary to make up in gold the total amount due to each of the undersigned powers, the Chinese Government shall continue to make monthly payments until the complete amortization of the indemnity, both capital and interest.

In this eventuality the bankers’ commission at Shanghai shall draw up for payments to be made after 1940 a new amortization table, unless the Chinese Government prefers to use the liberty, which is conceded to it, of freeing itself immediately by paying at once.