CO129-343 - Public Offices & Foreign Office - 1907 — Page 424

1.

[This Document is the Property of His Britannic Majesty's Government.]

418

C.O.

9150

AFFAIRS OF CHINA.

CONFIDENTIAL.

[6019]

No. 1.

[February 28de

REGE 12 MAR 07,

SECTION 2

Sir J. Jordan to Sir Edward Grey.-(Received February 23.)

(No. 10.) Sir,

Peking, January 7, 1907. WITH reference to your despatch No. 351 of the 12th October and telegram No. 206 of the 29th November, informing me of the view held by His Majesty's Treasury that the Shanghae Taotai's contention regarding the deduction of interest on indemuity payments was not unreasonable, I have the honour to report that, at the special request of my colleagues, who had not received instructions from their Govern- ments on this question, I agreed to wait until after the end of the past year before communicating this decision to the Chinese Government.

On the 31st December I learnt from the British Delegate that the Taotai had paid over in accordance with his own method of calculation, leaving an apparent deficit of 1657. 1s. 8d. The British Delegate therefore awaited my instructions before remitting to London.

At a meeting of the Diplomatic Body on the 5th January I was informed that similar news had been received only from the Belgian Delegate. I informed my colleagues that I must instruct the British Delegate to make his remittance, and did so on returning from the meeting.

The same evening I received a note from Prince Ch'ing, translation of which I have the honour to inclose, in which the Taotai's method of calculation is described. This coincides with the directions contained in your telegram No. 206.

I am circulating this communication among my colleagues, and propose to inform the Wai-wu Pu that the contention of the Shanghae Taotai is accepted by His Majesty's Government.

I have, &c. (Signed)

J. N. JORDAN,

(Translation.) Sir,

Inclosure in No. 1.

Prince Ch'ing to Sir J. Jordan.

January 5, 1907. IN my note of the 29th October the Board's views were clearly expressed on the question of the deduction of interest in making payments of the indemnity. We held that, when the settlement of accounts is made at the end of each six months, the rule laid down in the Protocol, Article 6, must still be adhered to, viz., that interest is pay- able half-yearly and capital annually, and we asked your Excellency to give instructions to the British Delegate on the Bankers' Commission at Shanghae to this effect.

We have now just received a telegram from the Shanghae Taotai reporting that, in making deductions of interest, he calculates the amounts to be deducted for the first half-year and then for the second half-year, still making a further deduction of interest ou the capital paid in advance during the first half-year at the end of the half-year 1st July-31st December.

This method of calculation is employed for all the Powers, yet the Hong Kong and Shanghae Bank has repeatedly disputed it, and demands recovery of the further deduction of interest on the capital paid in advance during the first half-year, stating that the payment must be made in full before they can remit to London.

This Board have the honour to observe that, by the stipulations of the Protocol concerning the indemnity, the only duty of China during the first half of the year is to pay off interest. Then, when China combined capital and interest in equal monthly instalments, it follows that the proportion of capital paid in advance during the first half of the year constitutes a surplus sum when the accounts are made up at the end of June, and should therefore continue to be subject to the deduction of interest till

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