No 1733.] Mr. Conger to Mr. Hay. AMERICAN LEGATION, Peking, October 26, 1904. SIR: I have the honor to confirm my telegram of the 23d instant and your reply of the 24th, concerning the payment by the Chinese Government of the indemnity provided for in the protocol of September 7, 1901. The Chinese Government has sent a draft of a reply, translation herewith inclosed, which it proposes to formally transmit to the ministers signatory of the joint note of which I inclosed a copy in my dispatch No 1669, of July 26 last, if they will signify beforehand that its terms will be accepted. As you will observe, the Chinese Government proposes to pay the indemnity at gold rates, and promptly sign and deliver the fractional bonds if the foreign powers will concede three things: First. That the rate of exchange at which payments are made shall be determined by the average daily rate for the whole month, and not the rate of the last day thereof, the date on which payment is made. Second. That the interest on the arrearages which have resulted from payments heretofore having been made at silver instead of gold rates shall be written off or canceled. Third. Since interest is due semiannually and principal annually, but is in fact paid over to the banks monthly, interest at 4 per cent per annum shall be allowed the Chinese Government on all sums thus paid before they are actually due. The Chinese Government prefer this arrangement to the Belgian proposal because they dread the uncertainty of the latter. It appears to me to be a very happy solution of a difficult and long-discussed question. The representatives here are all pleased with it and believe their Governments will instruct them to accept it. As we have already agreed to accept payment in silver it can not affect us much, unless there should be an unexpected and phenomenal rise in silver. But the allowance of the interest on the advance payments is of quite as much interest to us as to other powers. However when I accept, I shall have it understood that in all payments we shall expect as advantageous treatment as the other powers, which will of course mean that if other governments are paid at gold rates, we must be, and that the arrearages mentioned in proposition 2 shall be paid to us as well as to others. I have, etc., E. H. CONGER. [Inclosure.-Translation.] A dispatch has been received from your excellencies saying that since China pays the indemnity by monthly installments, orders should be given to the bank to reckon according to the rate of gold exchange fixed monthly instead of half yearly. This just proposal of your excellencies is gratefully appreciated and may of course be followed. But it is necessary to state clearly that in reckoning the rate of gold exchange for any month it is not to be taken as that of the day on which the installment is paid, but must be the average rate of gold exchange for the whole month. For instance, the installment to be paid on the 1st of January should be reckoned by taking the rate of gold exchange for each of the thirty-one days of December and calculating an average rate for the month. 2. From the commencement of the payment of the indemnity, owing to a difference in the interpretation of the text of the protocol, as made by yourselves on the one hand and us on the other, there has been a discussion as to whether the indemnity is payable in gold or silver, and no decision has been reached. On this account China has simply made her monthly payments according to the amounts in silver mentioned in the table of amortization. Now, if the payment is to be reckoned in gold, the installments already paid over will show a shortage when compared with the amounts which ought to have been paid, but the deficit is due to the fact that the point was under discussion and undecided and not to any inexcusable delay, so that the shortages in the payments heretofore made ought to be relieved of interest charges to enable China the more easily to pay them in full. 3. According to the protocol the interest on the indemnity is to be paid every six months and the payments on the principal once a year. Now China is taking the whole amount of the principal and interest due for each year and dividing it into twelve portions, one portion being handed over each month to the bank for receipt and deposit. Thus it would be but just that the sums paid in advance of due date upon principal and interest should be reduced severally month by month by the amount of the interest which would accrue upon them at 4 per cent per annum, i. e., during the time for which each is paid in advance. For instance, the payment on the indemnity made on the 1st of February is onetwelfth of the principal and interest due for that year, but the portion reckoned as interest is not due until the 1st of July, and as it is now paid in advance should therefore be reduced by the amount of five months' interest. The portion reckoned as principal is not due until the 1st of January of the following year and, being now paid in advance, should be reduced by the amount of eleven months' interest thereon, and so on for each of the monthly payments. 4. If all the powers agree to the procedure set forth in the three items given above, China will agree to pay up in full at the end of the year 1904 whatever deficits may appear in the payments made during the three years beginning with 1902, reckoning them at the average monthly rate of gold exchange. And she will further agree, beginning with the year 1905, to clear off in full at the end of each year the amount of the indemnity due for that year, paying in monthly installments at the average monthly rate of gold exchange. Furthermore, after these items have been agreed upon, the separate bonds for the indemnity may be given and signed. Mr. Conger to Mr. Hay. [Telegram.-Paraphrase.] AMERICAN LEGATION, Peking, November 22, 1904. (Mr. Conger requests to be informed whether the United States will continue to accept payments in silver or whether the same treatment accorded to other powers, in case the proposal of the Chinese Government is accepted, will be insisted upon.) Mr. Hay to Mr. Conger. [Telegram.-Paraphrase.] DEPARTMENT OF STATE, Washington, November 23, 1904. (Mr. Hay states that the views of this Government on the payment of the Chinese indemnity in silver were stated in Department's telegram of July 11, 1902 (printed below). In accepting the decision reached by the Chinese Government the United States Government expects the same treatment as the other interested powers. [Inclosure.] Mr. Hay to Mr. Conger. [Telegram.] DEPARTMENT OF STATE, Our position, payment indemnity in silver, is not attempted new interpretation of terms protocol; but the United States Government has always understood this to be meaning of agreement. The President reserves full liberty of action whatever may be decision reached. JOHN HAY. Mr. Conger to Mr. Hay. [Telegram.-Paraphrase.] AMERICAN LEGATION, Peking, December 5, 1904. (Mr. Conger states that the Chinese Government insists that the United States ought to receive payment according to the terms of the bonds signed by China. The Chinese have been very grateful for our just and generous position, and the other powers respect us for it. Suggests that the United States Government, although insisting on its right to demand equal treatment with other powers, should, in view of China's helpless position, waive that right and accept payment as stipulated in the bonds, without regard to the more favorable treatment which China may be forced to accord to other powers.) Mr. Hay to Mr. Conger. [Telegram.-Paraphrase.] DEPARTMENT OF STATE, Washington, December 6, 1904. (Mr. Hay states that for the present and pending future arrangement of the payment of the indemnity it is preferred that the United States should not be placed in an exceptional position.) Mr. Hay to Mr. Conger. [Telegram.-Paraphrase.] DEPARTMENT OF STATE, Washington, December 20, 1904. (Mr. Hay states that the United States Government accepts the proposal of the Chinese Government concerning the payment of the indemnity, subject to the conditions set forth in Department's telegram of the 6th instant.) NEUTRALITY OF THE UNITED STATES IN THE WAR BETWEEN RUSSIA AND JAPAN. No. 862.] Mr. Hay to Mr. Conger. DEPARTMENT OF STATE, Washington, December 1, 1904. SIR: In a recent personal conference the Russian ambassador has adverted to the attitude of the military, naval, and civil officers of the United States in China as regards the present contest between Russia and Japan. While indisposed to make specific statements in individual cases, allusion is made to instances of personal and official action on the part of some of these officers, which, when coming to the knowledge of the Russian representatives, cause an impression of unfriendliness. It seems proper to bring this to your attention to the end that you may advise all officers dependent upon your branch of the service. cautioning them to observe the utmost circumspection and to avoid all action which may in any way suggest departure from the strict rule of impartial neutrality, which is as binding upon the individual officers of this Government as upon the Government itself. In this relation I append by way of example copy of the circular orders given by the President on March 10, 1904, enjoining “all officials of the Government, civil, military, and naval, not only to observe the President's proclamation of neutrality in the war between Russia and Japan, but also to abstain from either action or speech which can legitimately cause irritation to either of the combatants." I am, etc., JOHN HAY. [Inclosure.] Executive order. WHITE HOUSE, March 10, 1904. All officials of the Government. civil, military, and naval, are hereby directed not only to observe the President's proclamation of neutrality in the pending war between Russia and Japan, but also to abstain from either action or speech which can legitimately cause irritation to either of the combatants. The Government of the United States represents the people of the United States, not only in the sincerity with which it is endeavoring to keep the scales of neutrality exact and even, but in the sincerity with which it deplores the breaking out of the present war, and hopes that it will end at the earliest possible moment and with the smallest possible loss to those engaged. Such a war inevitably increases and inflames the susceptibilities of the combatants to anything in the nature of an injury or slight by outsiders. Too often combatants make conflicting claims as to the duties and obligations of neutrals, so that even when discharging these duties and obligations with scrupulous care it is difficult to avoid giving offense to one or the other party. To such unavoidable causes of offense, due to the performance of national duty, there must not be added any avoidable causes. It is always unfortunate to bring old-world antipathies and jealousies into our life, or by speech or conduct to excite anger and resentment toward our nation in friendly foreign lands; but in a government employee, whose official position makes him in some sense the representative of the people, the mischief of such actions is greatly increased. A strong and self-confident nation should be peculiarly careful not only of the rights but of the susceptibilities of its neighbors; and nowadays all the nations of the world are neighbors one to the other. Courtesy, moderation, and self-restraint should mark international, no less than private, intercourse. All the officials of the Government, civil, military, and naval, are expected so to carry themselves both in act and in deed as to give no cause of just offense to the people of any foreign and friendly power-and with all mankind we are now in friendship. THEODORE ROOSEVELT. No. 1603.] CONSERVANCY OF THE WHANGPU RIVER. Mr. Conger to Mr. Hay. AMERICAN LEGATION, Peking, China, May 12, 1904. SIR: On the 3d instant the German minister, by a circular, informed his colleagues that the German consul-general at Shanghai, Doctor Knappe, had been appointed by his Government a permanent member of the Whangpu conservancy board, and that an engineer by the name of Schellhoss had been appointed as a supplementary member or substitute. This would seem to be the creation of a permanent proxy for the German member, a proceeding for which the regulations make no provision, and for which I apprehend there is no precedent in the general practice of such organizations. I suggest that our member of the board be instructed in accordance with whatever view the Department may take of the question. In this connection your attention is called to Article VI of the regulations, which fixes the term of office of the members designated by the several governments at one year. Should not, then, the representative of the United States be now reappointed? The viceroy at Nanking recently promised Consul-General Goodnow that he would select the appointee to be named by the Chinese Government on or before May 13, which is to-morrow; but my experience with several positive promises of the same kind, made me by the foreign office here, does not inspire much faith in the fulfillment of this. SIR: In continuance of my No. 1603 of May 12 last, concerning the Whangpu conservancy commission, I have the honor to report that upon receipt of the proposals of the Nanking viceroy, copy inclosed herewith, transmitted here by the consular body of Shanghai, the dean of the diplomatic corps circulated them among the representatives of the powers signatory of the final protocol. I inclose copies of the indorsements made on the circular by the German and British ministers, with which all the colleagues agreed except the French minister, who says he must ask his Government for instructions. It seems to me, as I have heretofore written, that the organization |