File No. 1571/22–23.
Chargé Fletcher to the Secretary of State.
Peking, September 16, 1909.
Sir: Referring to my No. 1193, of July 2, 1909, on the subject of the conservancy of the Whangpoo River, I have the honor to report that a meeting of the diplomatic corps was held yesterday to consider what steps should be taken to secure the necessary funds for carrying the work to completion.
[Page 83]Under the agreement of September 27, 1905 (see legation dispatch No. 122 of Oct. 12, 1905; Rockhill’s Treaties, etc., vol. II, p. 20), China took upon herself the whole of the expense of the river improvement without levying any tax or contribution, either upon riparian property or upon trade or navigation (Art. IX), and engaged (Art. X) to devote annually to these works the sum of Haik-wan 460,000 taels.
As the work progressed it was found that the cost of the work far exceeded the sum mentioned, viz, Haikwan 460,000 taels a year, and in the early part of last year a loan was made and this annual sum pledged for interest and reduction of the principal of the loan.
The money thus raised has been expended, and the engineer, Mr. de Rijke, estimated that a further sum of Mexican $7,898,820 will be necessary to complete the work in the next five years. To this estimate must be added each year Mexican $294,000, the sum required for salaries, rent, and general working expenses.
As can easily be seen, this will prove a heavy burden for China to bear. By Article XII, should China fail to furnish annually sufficient funds, in accordance with this new convention, in such manner that the execution of the works should be thereby impeded, or, should she omit to conform to any other essential stipulation of the present arrangement, the original provisions of the protocol of 1901 and of annex 17 thereto will immediately come into force.
The department will recall that by the final protocol and annex 17 (Rockhill, Vol. I, p. 90) the Whangpoo conservancy scheme was a joint Chinese and foreign undertaking. China disliked the foreign share in this work and the expense thereof, fearing that a vessel foreign interest would thereby be created. To escape this China voluntarily assumed the burden and expense of the conservancy by the agreement of September 27, 1905.
It seems inequitable that this large sum of money should be spent on improvements the benefits of which inure directly and almost entirely to the foreign trade, and foreign residents of Shanghai without contribution on their part.
China now faces the dilemma of returning to the original semi-foreign scheme or of continuing the work at an increased outlay of almost $10,000,000 Mexican in the next five years, and this at a time when China’s finances can ill afford it.
It is estimated that 1,000,000 taels should be guaranteed by China immediately for the proper continuance of the work.
Upon my motion it was decided to appoint a committee composed of the Doyen, the British, German and Japanese ministers to call upon the Wai-wu Pu and explain the situation fully, and ascertain the wishes and attitude of the Chinese Government on the question.
In view of the fact that the work will cost a sum so far in excess of the amount estimated in the protocol and the agreement of 1905, (viz, haigwan, 460,000 taels yearly for 20 years) it would seem to be but reasonable that the Chinese Government be allowed to levy a surtax, to be agreed upon, both on riparian property and upon trade and navigation at the port of Shanghai.
On the other hand, the additional expense might be provided for in connection with the increase in the import duties so much desired by China and this proposed solution may be found to be of [Page 84] value as an added inducement to certain nations to consent to such increase.
I have mentioned the matter to Mr. Liang Tun-yen. He was of opinion that China would prefer to carry out the conservancy work at her own expense for the reasons given above, but he complained bitterly of the enormous outlay involved. We also discussed the matter in its relation to the increase of the import duties. Our conversation on the last-mentioned topic I am making the subject of another dispatch.
I am, etc.,