Mr. Hay to Mr. Conger.

No. 814.]

Sir: The Department is in receipt of Consul-General Goodnow’s dispatch, No. 579, dated the 23d ultimo, in which he reports that he [Page 191]found on his return to Shanghai that nothing had been done regarding the conservancy of the Whangpu since he left there, in September last, and inclosing a copy of the proposals which the viceroy at Nanking has made, as the result of representations made to him in the matter by the consular body.

The viceroy’s proposals, in brief, are that China shall pay all the cost of the improvement, and relieve foreign-owned property and shipping from any taxation in the matter; that Chinese officials are to superintend the work, and that China will ask the treaty powers to name two or three engineers to be in technical charge.

As Mr. Goodnow says that he has sent you a copy of his dispatch, I do not send you a copy. * * *

The Chinese Government should give sufficient guaranties that the work will be done thoroughly and satisfactorily, and that when the work is once completed it will be kept in good condition.

You should make it clear to your colleagues and also to the Chinese Government that whereas the United States is willing to waive temporarily its right to insist on China complying with the terms agreed to by her in Article VI of the final protocol concerning the improvement of the course of the Whangpu River, it will do so only so long as the Chinese Government promptly and satisfactorily discharges the new obligations which it now wishes to assume. Should it become evident at a later date that the conservancy work is not being done promptly, or that a disposition is evidenced not to carry out the work to the satisfaction of all interests concerned, the United States will insist upon full and strict compliance with the terms of the original agreement.

I am, etc.,

John Hay.