gold, and The Bank so treated a haikwan tael in its account with the United States. The Bank did not convert the 900,391.64 Shanghai taels into New York exchange, but deposited what it claims to be the correct proceeds thereof with the assistant treasurer at New York, less its commission of one-half of 1 per cent. This deposit was the full equivalent of purchasing and transmitting New York exchange. The Auditor did not concur in this accounting by The Bank for the 900,391.64 Shanghai taels received by it from the commission of bankers as aforesaid, wherein it accounted for such taels at a gold value of $0.55375 fixed by said bankers' commission, instead of the valuation as fixed by the London market on said 1st day of July, 1902, at $0.56661551. At the latter valuation these 900,391.64 Shanghai taels were worth in American gold at Shanghai, using the London market on that day of $0.56661551 as the value of a Shanghai tael in United States gold, without cost of exchange, the sum of $510,175.87 instead of $198,591.87 as accounted for by The Bank. The Auditor computed the commission of one-half of 1 per cent on $510,175.87 instead of on $498,591.87. This method of settlement by the Auditor resulted in finding a balance due from The Bank in favor of the United States of $11,526.07. It is from this settlement finding this balance that The Bank appeals. It is not contended, as I understand from a careful reading of the able argument of the attorney for The Bank, that it (The Bank) did account to the United States for the gold value. of these Shanghai taels, as expressed in gold dollars of the United States, in Shanghai on the 1st day of July, 1902; but it contends that it accounted for these Shanghai taels at a value put upon them by the bankers' commission; that this commission represents all the Powers to the protocol, and not the United States alone; that it also represents China, and that its action in fixing such value is final and conclusive. It is true that the bankers' commission as a commission represents all the Powers jointly, and that the United States, through Mr. Fearon, its delegate, has a voting strength on said commission of only 7.31979 per cent; but it is not true, as I understand, that this commission represents the Empire of China, or that China had anything to do with its appointment, or that this commission by the terms of the protocol, or by any other authority conferred upon it by the Powers, has the arbitrary authority in its own pecuniary interest to fix the value of the haikwan or other Chinese tael in anyway different from that fixed by the protocol or by the market at Shanghai. It was the evident intent, of the protocol at least, to fix the value of the haikwan tael at $0.742 American gold at the date of the protocol, without exchange, in so far as payments were to be made to the United States. These 900,391.64 Shanghai taels were the equivalent, necessarily, of so many haikwan taels, ascertained by a mere matter of calculation, and were of a value greater than $498,591.87, the total amount China owed on account of interest then due. This difference the United States can not, in good conscience and with a due regard to its own self-respect, take from China, or afford to permit her agent acting for her, The Bank, to retain as its own. By the terms of its agreement with the United States, The Bank agreed to account for and pay over to the United States all sums which came into its hands, in New York exchange, without cost of exchange. It does not fulfill this obligation until it accounts to the United States for the gold value in Shanghai on the 1st day of July, 1902, of these 900,391.64 Shanghai taels. For this service it was to receive one-half of 1 per cent on all such amounts collected. The other Powers can not possibly be interested in the fact that the United States refuses to take from China more than China agreed to pay by the terms of the protocol, or that the United States refuses to permit, in so far as she is concerned, her delegate and agent in her name and on her behalf to take and exact from China more than China agreed to pay. If she permits her agent to undervalue the silver in which China makes payment to her, then the United States indirectly makes China pay more than was agreed by China to be paid under the terms of the protocol. The service of this indemnity was to be effected at Shanghai. In plain language, China was to pay to the bankers' commission at Shanghai, in monthly instalments, so far as the United States is concerned, in lumps of silver, a sufficient amount (a haikwan tael to be valued at $0.742) to produce the share of the United States. She does this by paying, in shoes and sicee, just as was contemplated by the protocol and as was understood by the bankers' commission and the agent of the United States; and these shoes and sicees were expressed in Shanghai taels. The settlement made by The Bank, the agent of the United States, was not on the correct basis of the value of the Shanghai tael expressed in gold in Shanghai at the date when the agent was to account for what he collected and pay over in New York exchange, he bearing the cost of the exchange for a consideration to be paid him therefor, but on the basis that a Shanghai tael was worth admittedly less than it was quoted on the market in Shanghai on that date. The result of this undervaluation of the Shanghai tael is that for the purposes of China paying this indemnity the Shanghai tael is worth in Shanghai in gold a given amount on that day, but for all other commercial purposes it is worth more than this amount. This undervaluation was fixed by the bankers' commission, by each stating the value of a Shanghai tael and dividing the sum total by the number of bankers; the bankers' commission being in part the same instrumentality that fixed the general commercial value of Shangai taels, and being the same instrument, in its broad sense, that reaps the profit from this undervaluation, if it is permitted by this Government. The question to determine in this case is, what was the gold value of a Shanghai tael on July 1, 1902, at Shanghai, when it was the duty of The Bank under its contract with the Treasury Department to account for the value of such Shanghai taels in New York exchange without cost to the United States. The Auditor in making his settlement fixed this value on the basis of the value of an ounce of commercial silver in London on said date, and, according to his figures, this undervaluation amounts to $11,526.07. The experts who reported on this case used the same basis, calling this undervaluation of the Chinese silver an exorbitant charge for exchange, and found that it had been undervalued, speaking in round numbers, at $18,000. I do not think the value of silver in London at that date is the correct basis for arriving at the value of silver in Shanghai, although the market value of silver in London no doubt had much to do with the price of silver in Shanghai. In the first place the service of this debt was not fixed to be had in London, but in Shanghai. Again, the London market doubtless would not take the marking of the bankers' guild in Shanghai as to either fineness or weights, but required an assay, which assay could not be had without paying for it. Also, the price in London or in Shanghai would be affected on a given date by the respective demands for silver at such places. The bankers' commission, composed of representatives of banks actually doing business at Shanghai, accepts the markings of the members of the bankers' guild on Chinese silver. The banks of Shanghai, including those represented on the bankers' commission, fix the commercial and exchange values on Chinese silver, including Shanghai taels, for every business day of the year. It appears that July 1 and 2, 1902, were holidays in Shanghai, with no published quotations, but that Shanghai taels were quoted July 3, 1902, at the rate of 56 cents, expressed in American gold. This being true, the 900,391.64 Shanghai taels, at 56 cents, would produce From this deduct the amount due the United Difference $504, 219. 32 498, 591. 87 5, 627. 45 Which represents the true undervaluation of the Shanghai tael. The auditor charged against The Bank the sum A certificate of difference will issue in accordance with the foregoing. This indemnity being a trust fund, the Secretary of State, under the provisions of the act of February 27, 1896 (29 Stat., 32), is authorized by law to refund to China the sum of $5,627.45 when it reaches the Treasury. I have not in this decision discussed or considered the questions of the practicability of converting these Shanghai taels into New York exchange by The Bank, or the effect such a transaction would have upon the silver market or the price of silver in Shanghai-the matters upon which the major part of the brief of The Bank is directed-for the reason that these matters must have been fully considered by the United States and The Bank at the time The Bank agreed to do this very thing for a compensation of one-half of 1 per cent. The Bank agreed, as heretofore set out, to collect this indemnity in Chinese silver, and to convert it into New York exchange without expense. It assumed these burdens by the terms of its contract with the Treasury Department, and it can not now treat these matters as open questions. If The Bank in its future accountings with the United States would reduce the silver received from China to haikwan taels, instead of Shanghai taels, much confusion and trouble would be avoided. ADDENDA. It appears from the evidence before me in this case that the United States, through the State Department, demanded and received from the International Banking Corporation, its agent, one year's interest, at the rate of 2 per cent, on these monthly installments of deposits, viz, the sum of $3,880.03, paid June 19, 1903, to the subtreasury at New York. It is quite clear to me that under the terms of the protocol no such interest was due the United States from China, nor was it due to the United States from the banking company, its agent. These monthly deposits were credited to the bankers' commission, and interest is being carried at the rate of 2 per cent in its favor thereon by the International Banking Corporation. China did not by the terms of the protocol exact interest from the bankers' commission on these monthly payments. No interest would therefore probably accrue to her legally on account of paying the indemnity in monthly installments. Equity and good conscience, however, demand that the bankers' commission should pay to China the same rate of interest on these deposits as is paid to other large depositors. But with this question of interest payment as between the bankers' commission and China I have no official concern. I |