Mr. Conger to Mr. Hay.

No. 1684.]

Sir: Concerning the Whangpu conservancy scheme, I have the honor to report that on the 15th instant I received an additional note from the foreign office, of which I inclose a copy.

This note is by no means satisfactory, and is very far from complying with the suggestions of my note of the 11th instant.

Believing a personal conference better than a continuance of correspondence just now, and as Prince Ch’ing is at present out of the city, I sent Mr. Williams on yesterday to the foreign office to explain more fully to the ministers our position, and make them understand, if possible, just what the Chinese Government must do in order to [Page 197]secure consideration of their proposed new scheme. I gave him, as the basis for his conversation, the memorandum, a copy of which is inclosed, telling him to inform them that I spoke only for myself, and not for my colleagues, and that while I did not pretend to give them a plan in detail, yet they must clearly understand that a plan less comprehensive than the one outlined in the memorandum would not be entertained by my Government, nor, I believed, by the others; that, therefore, it was useless to continue the correspondence unless China was prepared to make to the powers some such comprehensive and detailed proposition as indicated.

Mr. Williams reports a satisfactory conference with their excellencies Na-t’ung and Lien-fang, who readily indorsed all the points in the memorandum except that of making a loan. Mr. Williams told them that that was the most essential of all, as that appeared to be the only way to get the very large amount that must be at once available for the purchase of plant and machinery, and for the early organization of the work and that the 460,000 taels mentioned in the protocol was orignally intended as the annual sum necessary for the interest and amortization of a loan which must be made.

They finally agreed that a loan would be necessary unless some equally efficient plan could be devised for realizing the large sum necessary to begin with.

They said, however, that it would be necessary to correspond with the viceroy at Nanking, which they would do at once They were also given to understand that the proposed plan must come to the representatives of the powers as their own proposition, and not one supplied by me.

The British minister has received instructions to cooperate in support of this plan and he will advise the Chinese along the same line.

If the Chinese Government does propose a plan fully embodying the suggestions of the British minister and myself, I apprehend our colleagues can be induced to accept it, but unless the Chinese do this at an early date I see no other feasible course except that indicated in my No. 1680 of the 12th instant.

I have, etc.,

E. H. Conger.
[Inclosure 1.]

The foreign office to Mr. Conger.

We have the honor to acknowledge the receipt on the 2d of the present moon of your excellency’s note saying that you had telegraphed to your Government the proposal to give the opium revenues of Szechuen Province and of the Hsti-chou prefecture of Kiangsu Province as a guaranty for the appropriations for the improvement of the Whangpu, and that you had just received a telegraphic reply stating that as the work was a large one some sort of bond ought to be given; that, in a word, we ought first to prepare a detailed statement of the plan to be adopted for the improvement and the sort of bond to be given, and that if the work should be done promptly and energetically your Government would make no objection.

We find that the annual expense of dredging the river will amount to 460,000 taels, and the board of revenue has already set aside the opium revenues of Szechuen Province, and the prefecture of Hsu-chou, which, being more than the amount needed and never falling below it, form a thoroughly reliable and bona fide fund. As to the work, we find that Article III of the regulations says:

“The plan now proposed is set forth in these five regulations. Within three [Page 198]months after the various foreign governments shall have consented to it China will select and appoint a thoroughly qualified riverine engineer to take charge of the work,” etc.

We have now definitely appropriated the funds, and within the time specified the superintendent of trade for the south will select and engage a foreign engineer, in accordance with the plan originally proposed. As to the necessary bond and the detailed plan of the work, it will also be necessary to wait, as originally proposed, until three months after the approval of the scheme, when these matters may be taken into consideration and dealt with.

As in duty bound, we send this reply to your excellency and trust that you will forward it to your Government for its examination and approval, so that it may be possible to speedily undertake the work.

We avail, etc.

Cards inclosed.

[Inclosure 2.]

Memorandum.

The original plan for the improvement of the Whangpu River was set forth in Annex XVII to the final protocol of 1901. Therefore, if China desires to adopt a new plan she must enter into a new protocol with the powers, and she should prepare and submit to their representatives a statement in which she should say:

(a) That China herself will furnish the funds and do the work.

(b) That it will be done under the supervision of foreign engineers, selected by or satisfactory to a majority of the powers.

(c) The original intention of the signatories of the protocol was that a loan should be negotiated to secure funds for the work, and that 460,000 taels per annum would be needed to repay the principal and interest of this loan in twenty years, and not merely that there should be expended 460,000 taels each year upon the work, as this amount would not be sufficient for the first year, when it will be necessary to purchase machinery, etc.

China should therefore issue a series of bonds on which to raise the needed funds, these bonds to be secured by the opium revenues of Szechuen Province and of Hsü-chou perfecture in Kiang-su Province.

(d) That as an essential condition of the agreement, in case of a failure on the part of the Chinese Government to faithfully carry out its obligations under the agreement, reversion shall be had to the plan outlined in Annex XVII to the final protocol, and the commission mentioned therein authorized to at once carry out the work according to the provisions of the said annex, without waiting for the appointment of the Chinese member of the commission.