Minister Rockhill to the Secretary of State.

No. 113.]

Sir: Referring to my dispatch, No. 35, of July 25, with regard to the new indemnity arrangement, I have now the honor to inclose a more carefully prepared translation of the note to the Prince of Ch’ing, by which, with our concurrence, the new system was established.

I have, etc.,

W. W. Rockhill.

Note to Prince Ch’ing in re new indemnity arrangement.

Your Highness: We have the honor to acknowledge the receipt of the letter which your highness was so good as to 4ddress to us on July 2, 1905, in answer to the collective note of the representatives of the powers, dated July 26, 1904, regarding the payment of the indemnity. It is therein stated as follows:

“On July 26 last we had the honor to receive the collective note by which the representatives of Germany, Austria-Hungary, Great Britain, Italy, Japan, The Netherlands, and Russia made certain proposals to us for regulating the payment of the indemnity.

“We have examined these proposals with the greatest care, after having discussed them several times both verbally and in writing with the Belgian and other ministers. We are now in a position to submit to the powers concerned and to ask them to be so good as to accept a definitive arrangement respecting both the liquidation of the arrears and the payment to be made in future.

“Recognizing that the sum of 450,000,000 taels constitutes a debt in gold; that is to say, for each haikwan tael due to each of the powers China must pay in gold the amount which is shown in Article VI of the final protocol as the equivalent of one tael, we undertake:

  • “1. To extinguish by means of a lump sum of 8,000,000 protocol taels the whole of the debt incurred toward all the powers, collectively, on account of the payment in silver during the years up to January 1, 1905. This lump sum shall be divided among the powers in proportion to the amount of the sums which remained due to each of them on January 1, 1905. With regard to these sums, which are determined by converting the balance of each half year into gold and carrying it forward in protocol haikwan taels, we beg the ministers to be so good as to let us know what they are in order that they may be paid by telegraphic transfers to each power direct a fortnight after the present proposals have been accepted. These 8,000,000 taels will bear interest at 4 per cent per annum from January 1, 1905, to the day of payment.
  • “2. To sign the national bonds as soon as the powers have given their assent to our proposals.
  • “3. In future on the last day of each month to pay equal monthly installments of the whole of the sum payable each year for interest and sinking fund, which is fixed by the sinking-fund tables attached to the respective national bonds, the powers agreeing that China at the end of each half year may deduct interest at the rate of 4 per cent per annum on these installments from the date on which they have been made to the last day of the half year.
  • “China will make these payments, calculated on the bases set forth above, which fixes the value of the haikwan protocol tael in relation to the money of each country, either in silver, according to the price of silver on the London market, or in gold bills, or in telegraphic transfers, at the choice of each power. China may obtain bills and telegraphic transfers as best suits her interests at any place and at any bank at the lowest price or by public tender, provided that the payments in gold be made to each power direct on the due date. It is understood that China is responsible for the exact payment of the transfers and the bills. Each power in accepting the present proposals must inform the Chinese Government which of the three methods cited above is the one it chooses till the debt is extinguished.
  • “4. As to the sums in silver which have been paid over to the banker’s commission between January 1, 1905, and the coming into force of the new arrangement regarding the indemnity, we propose that they should be repaid to the Shanghai taot’ai. He will then meet the installments that have then fallen due, in accordance with the methods set forth above, with deduction of interest at 4 per cent per annum from the day the payment shall have been reeffected up to the date of the next half-yearly payment.

[Page 157]

“We beg, your excellencies, the ministers of the powers, to inform us as soon as possible whether their governments accept our proposals.”

We have submitted these proposals to our respective governments, who, after examining them in a conciliatory spirit, have assented to them.

We therefore have the honor to inform your highness that we all accept the definite arrangement of the question of the indemnity proposed in your letter of to-day.

It is understood that article 4 of the present agreement shall be applied in an equitable manner.

Your highness will find attached a table setting forth the division of the 8,000,000 taels, which you have expressed the desire to receive.

Amount due each power from the sum of 8,000,000 protocol taels.

Country. Foreign currency. Protocol taels.
Germany marks 4,971,917.95 1,627,469.05
Austria-Hungary crowns 263,700.83 73,352.11
Belgium francs 560,776.83 149,540.44
Spain do 8,943.75 2,385.00
United States dollars, gold 490,435.44 660,964.20
France francs 4,684,727.62 1,249,260.70
Great Britain pounds sterling 138,114.91 920,763.04
Portugal £250,16s.4d. 1,672.11
Italy francs 1,759,261.46 469,136.39
Japan yen 724,487.16 514,916.25
Netherlands florins 24,169.69 13,457.51
Russia roubles 3,266,264.32 2,313,218.36
International claims Pounds sterling 408.73 2,722.42
Sweden and Norway do 171.73 1,142.42
Total 8,000,000.00