The Ambassador in Great Britain (Houghton) to the Secretary of State

No. 1045

Sir: I have the honor to refer to my telegram No. 107, of May 25, 1 p.m.,71 relating to the Customs Conference now meeting at Peking, and to transmit herewith a copy of the Note mentioned therein.71

A memorandum, a copy of which is also enclosed, was handed today to a member of the Embassy staff by Mr. Mounsey, of the Foreign Office, who stated that Mr. Wellesley was at the moment out of town.

In referring to the question of debt consolidation, Mr. Mounsey informally stated that His Majesty’s Government were in his opinion prepared to consider favorably a proposition which they understood was now being entertained by the Conference, namely, that up to one third of the customs revenue be devoted to debt consolidation. It would seem evident from the conversation however that the British are most anxious that some action of the Conference should commend itself to the Chinese public in order that there may be no increase in anti-foreign feeling thereby increasing any existing resentment against Great Britain. To this end it would seem that the British may insist that the Washington surtaxes be granted before any adjournment, even temporary, of the Conference takes place. Secondly, that a scheme of foreign control of the customs revenue for debt consolidation will not be favorably considered in view of the probable dissatisfaction this might create among the Chinese over the alleged increase of foreign interference and control thereby.

I have [etc.]

For the Ambassador:
F. A. Sterling

Counselor of Embassy

The British Foreign Office to the American Embassy


His Majesty’s Government have received through the United States Embassy in London a message from the United States Government72 enquiring whether His Majesty’s Government endorse the attitude ascribed to the British Delegation at Peking of desiring to abandon [Page 756] the negotiations at Peking and break up the Tariff Conference; and expressing the hope that His Majesty’s Government will continue to cooperate with the other interested Powers in bringing to a conclusion the task which was begun last October.

His Majesty’s Government desire to assure the United States Government that the report received by them that the British Delegation desire to withdraw from the negotiations at Peking appears to be based on a complete misunderstanding. His Majesty’s Government have no intention whatever of breaking up the Tariff Conference. It is true that the question has been considered whether at the present juncture it might not be convenient to arrange a brief suspension of the conference over the summer months. It was realized, however, that in existing circumstances suspension of the conference might prove to be more prolonged than was intended, and in order to prevent the possibility of misunderstanding as to the sincerity of the Powers, His Majesty’s Government considered it to be of the greatest importance that before even such a brief suspension as above contemplated took place, there must first be a complete liquidation of the promises made at Washington.
The British Delegation in Peking fully shared this view, and appreciated the prime necessity of liquidating the Washington Treaty. A considerable interchange of views has, however, taken place between the Foreign Office and the Delegation in regard to the proceedings of the conference on the subject of the unsecured debt; and it is probable that the misunderstanding to which reference is made above has arisen in consequence of the attitude which the Delegation has been instructed to take on this matter, and which was formally stated by the chief British Delegate at the meeting at the Netherlands Legation on the 6th May.
The United States Government will no doubt recollect that His Majesty’s Government were from the first averse to the imposition on the Chinese Government of any scheme of consolidation of the unsecured debt as part of the work of the Tariff Conference, and that they only agreed later and with great reluctance to the discussion of any such scheme at the conference. If the schemes of the foreign Delegations for the consolidation of the unsecured debt should postulate too strict a control over China’s customs revenues (shortly to be increased by tariff autonomy) His Majesty’s Government are afraid that a dangerous deadlock may arise, for the discussions on this subject show that the Chinese, though willing to bind themselves to devote a proportion of their revenues to the unsecured debt, have declined to allow the details of debt consolidation [Page 757] to be dealt with by the Tariff Conference, and will refuse to submit to any extension of foreign control—for that or any other purpose—over China’s customs revenues.
His Majesty’s Government, after full consideration and prolonged consultation with their Delegation in Peking, have come to the conclusion that, while they are ready to agree to any reasonable scheme for dealing with the unsecured debt put forward by the Chinese and agreed to by the other Powers, it would not be right to associate themselves with any attempt to force upon the Chinese a greater degree of foreign control over the revenues required for that purpose than they are prepared voluntarily to concede. A policy involving increase of foreign control, and capable of being regarded as an encroachment on that sovereignty and independence of China which the Powers agreed at Washington to respect, is so fundamentally opposed to the traditional policy of the United States towards China that His Majesty’s Government are disposed to believe that the State Department will share their anxiety on this subject.
It is true that His Majesty’s Government originally desired to exact proper guarantees from China in regard to the abolition of likin as a condition precedent to the grant of the Washington surtaxes, but they have come to the conclusion that, in the altered circumstances and changed atmosphere of to-day, any attempt to insist upon guarantees against the will of the Chinese Government would only result in postponing indefinitely the liquidation of the Washington promises. They are as anxious as the United States Government fully to implement these promises at the earliest possible moment, and believe that it would be contrary to the intentions of both governments, both at and subsequent to the Washington Conference, to subordinate the fulfilment of these promises to the imposition upon China of a scheme for the consolidation of her unsecured debt and extension of foreign control over her customs revenues. Any failure to implement the Washington Treaty might create a very dangerous situation, and His Majesty’s Government, now, therefore, hold the view that if any reasonably satisfactory assurances are given by the Chinese Government as to the use which it proposes to make of the new revenues the Powers should accept such assurances, abstain from any attempt to impose control or exact guarantees, and forthwith authorize the levy of the surtaxes. They feel confident that a policy, so closely in accord with the friendship and generosity always displayed by the United States of America towards the people of China, will receive the full and cordial support of the United States Government.
  1. Not printed.
  2. Not printed.
  3. See telegram No. 66, May 5, to the Ambassador in Great Britain, p. 748.