Mr. Conger to Mr. Hay.

No. 1669.]

Sir: Referring to my No. 1435, of November 21 last, concerning the proposition of the Belgian Government to receive payment of the indemnity, as heretofore, in silver at the rate of exchange at the time of each partial payment, leaving any difference between this and the gold rate to be settled hereafter and adjusted at the time the last regular payment falls due, granting additional time, if necessary, for China to pay any difference that may be due, etc., I now have the honor to report that all the representatives of the signatory powers, except me, have agreed upon a joint note, a copy and translation of which I inclose, which they will at once send to the Chinese Government.

Our position upon this question has heretofore been so fully explained to the Chinese Government and to the powers that I have deemed it unnecessary for me to take any action either for or against this proposition.

I have, etc.,

E. H. Conger.

Your Imperial Highness: The Chinese Government has always recognized the obligation which it contracted by the terms of the final protocol of the 7th of September, 1901, to pay the indemnity in gold or in a quantity of silver equivalent to the total in gold.

Nevertheless, because of the poverty of the treasury and the rise in gold, it has begged the representatives of the powers to seek some means to make it easier for China to fulfill her engagements.

Referring to this desire, the undersigned, by order of their respective Governments, [Page 179]have the honor to submit the following proposition in the nature of a compromise:

On the one hand, the Chinese Government shall sign immediately the national bonds, payable in gold, in accordance with the protocol of the 7th of September, 1901. On the other hand, the undersigned powers agree that the payment of the arrears of the indemnity shall continue to be made as heretofore; that is to say, in silver at the current rate of the day of each partial payment, and the said powers grant to China the delay necessary to extinguish by this means the total 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 and the sums due the undersigned powers shall be in favor of the latter, this difference will remain due to the said powers, and shall 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 surplus sums paid shall be immediately 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 of Shanghai, so that the latter may fix the rates of exchange for each payment instead of waiting for the end of each 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 equal in gold the total of the indemnity due to each one of the undersigned powers, the Chinese Government will continue to make monthly payments until the complete settlement of the indemnity, capital and interest included.

In this case the bankers’ commission in Shanghai shall draw up a new amortization table for the payments to be made after 1940, unless the Chinese Government prefers to use the privilege which is granted to it of settling immediately.

The undersigned do not doubt that the Chinese Government, recognizing that this proposition has been inspired solely by the desire to permit it to discharge its obligations more easily, will immediately give to its delegates the order to sign the national bonds in the form which has been drawn up by the commission of bankers.

It will not be possible to go any further in the way of making concessions, and to recommend other plans for the examination of their governments. The undersigned seize this occasion to renew, etc.