One Treaty, a Diplomat, & Three Countries

By Emery Pan, Gale Editor in Beijing

On April 17, 1895, the first Sino-Japanese War (hereinafter, the “War”) came to a truce, and a treaty was signed at the Japanese city of Shimonoseki. Newspapers around the world competed with each other to report on this event. Japan: an ancient, mysterious country and a new power rising from the Far East dominated all the headlines that day. It is universally acknowledged among those with any knowledge of history that a treaty never ends the chaos, instead it gives rise to new conflicts. The Treaty of Shimonoseki is no exception.

Report from The Times on the signing of the Treaty of Shimonoseki – The “Latest Intelligence” “Times, April 18, 1895, 3. The Times Digital Archive (accessed April 16, 2018).”

The main terms of the Treaty of Shimonoseki, signed by Chinese and Japanese governments, include: independence of Korea, cessation of Chinese territories (including Formosa and Fengtien Province), opening of new localities in China to trade, and war indemnity to Japan. With these harsh terms, the treaty is considered to have seriously hindered the modernisation of China, and totally altered its status in international relations for the following several hundred years.[1]

One month after the signing of the Treaty, a new Plenipotentiary of the British Government, Sir Ernest Satow, was appointed and dispatched from England to Tokyo.

Report from The Times on official dispatch of Satow to Tokyo. 2) (Satow’s appointment by the Queen) “Times, May 18, 1895, 14. The Times Digital Archive (accessed April 16, 2018).”

Satow once famously defined diplomacy as ‘the conduct of business between states by peaceful means,’ and argued that professional diplomats could play a vital part in lubricating and improving relations between governments[2]. Then, what did this new role – the new Minister Plenipotentiary at Tokyo – mean to both Satow and Great Britain at this critical juncture?

Before the outbreak of the Sino-Japanese War in 1894, Sir Ernest Satow described China as ‘an ancient civilization that had become stagnant,’ and that had no bearing on the European balance of power [3]. However, the War exposed China’s weakness to the world, attracting more attention from the European Powers who were seeking resources and trade overseas.

Article IV of the Treaty stated that “China agrees to pay to Japan as a war indemnity the sum of 200,000,000 (Kuping Taels) in seven years. The first installment of 50,000,000 (Taels) to be paid within six months after the exchange of the ratifications of this treaty; the second installment of the same amount shall be paid in one year. The balance to be paid within six years. If the whole be paid within three years, no interest is to be charged…” (See the image below for the actual terms of the Shimonoseki Treaty in the Daily Telegraph Historical Archive.)

(Report from Daily Telegraph on Articles of Treaty of Shimonoseki. Source: “Treaty of Shimonoseki.” in Daily Telegraph, 18 June (1895): 5, The Telegraph Historical Archive, Accessed 13 Feb. 2018.)

Before the War broke out, China did not have much foreign debt. However, the war indemnity put Peking in a situation where foreign loans became the last straw. Adding up to £6,635,000, two-thirds of these loans were from the British Hong Kong and Shanghai Banking Co [4]. As the Plenipotentiary, Satow strove to persuade London and Tokyo to grant the loans with an agreeable rate to China so that the interests of both countries could be guaranteed. This can be seen in the following excerpts from the newly published Diaries and Travel Journals of Ernest Satow, Volume V (1895–1899.)[5]

(Feb. 8, 1896)
He [Itō; 伊藤博文] asked me to find out abt. Hg Kg. & S’hai [Hong Kong & Shanghai Bank] agents negotiations for loan to China to pay the great indemnity instalment. They had nearly agreed for a 5% loan to be issued at 89½ but the Chinese stuck out for 90, and the negotiations had been dropped. Others he heard [Folio. 156 recto]were now attempting to take up the business.
I said I wld. try to find out, & afterwds. telegd. to Sanderson [Thomas Henry Sanderson].

(Jan. 20, 1898)
As to the loan Engl. offered to guarantee a loan of 120,000,000 @ 4%, in return for the opening of Ta-lien-wan [大連灣], Nanning Fu [南寧] and a port in Hunan (Siang-tan) [湘潭] and a guarantee of the freedom of the Yantze valley. He asked me if * [sic.] I had any news abt. the loan to China. I said I knew nothing but what appeared in the newspapers, of a loan of 120,000,000 at 4% guaranteed by H.M.G. (this he had first told me) and the opening of certain ports. He said it wld. be a nice sum of China to receive, to wch. with a smile I replied that it wld. be useful to Inouye to balance his Budget.

(Feb. 18, 1898)
Went to Itō. He said he had called on Monday to consult with me abt. indemnity loan. I said I had no information beyond the balance sheet of the indemnity-loans up to 31 Dec. last wch. showed £932,200 in London, & £1,500,000 wch. was supposed to be either in Berlin or to have been remitted to China. If these sums were still intact they wld. almost suffice to pay the instalment of £2,800,000 odd including expenses of occupation of Weihaiwei due in May next.
He said he had recd. a strange teleg. fr. Yano that after consultation with British Min, HgKg & S’hai Bank offered to give a bond for the balance of the indemnity in May, to be redeemed in cash within 3 or 4 months, if Japan wld. accept.
A second shorter teleg. said it was an intended offer on behalf of a syndicate connected with HgKg & S’hai Bank. He had some doubts whether Ld. Salisbury knew of this, but I said it had no doubt been telegd. to him. Itō had replied to Yano that he wld. accept if H.M.G. guaranteed. As for the domestic loan announced, he did not believe it practicable [Folio. 151 recto] they collected all that silver, it wld. at once send down the market price, but he felt sure that bond [sic. both] bonds & money wld. disappear without China getting the coin. Yano was told by Li Hungchang that Russia had objected to a Br. loan, ‘as perturbing the peace of the East’, while G.B. had firmly opposed a Russian loan.

(Feb. 24, 1898)
Went to tell Itō that tho’ H.M.G. know of the loan negotiations of the HgKg & S’hai Bank they wld. not guarantee. He was anxious to let China know that she must pay on 8 May, or there wld. be trouble. Also if she pays 30 or 40 million yen then & gives bond of HgKg & Shai Bank payable in cash in 3 or 4 mos. he wld. accept in satisfaction of the whole debt. She must guarantee the bond.

(Mar. 10, 1898)
Congratulated him [Nishi] on the Chin. loan, & remarked that everything seemed peaceable. He spoke of the ‘partition’ of China & said ‘Japan’s preparations were not ready, therefore he was glad the thing was not imminent.

In the long bleak years after the War, the Chinese Qing Dynasty was heavily indebted by foreign loans and war indemnities. This ancient country, which used to enjoy a unique glamour and prosperity, plunged into in an unprecedented crisis and poverty. More than a century later, unofficial documents and personal records of diplomats, such as Sir Ernest Satow’s diaries and journals, have offered us a unique perspective to review and relive this major event.

Information on volumes 1-4 of Diaries and Travel Journals of Sir Ernest Satow can be found here.

Blog post cover image citation: [By Commercial Cable to the Herald]. “The Treaty of Shimonoseki.” New York Herald [European Edition], 17 May 1895, p. [1]. International Herald Tribune Historical Archive 1887-2013 . Accessed 16 Apr. 2018.

[1] Chien, Chen. “A Historical Review of China’s Treaties.” in The China Quarterly, vol. 2, (1936): 29, from China from Empire to Republic, Accessed 1 Mar. 2018.
[2] Paul Wilkinson, “Diplomacy under siege” in The Listener (London, England), April 03 (1980): 427. © Copyright 2011 Cengage Learning; © BBC logo 1996; Gale Document Number:GM2500161374.
[3] Otte, T.G. “Great Britain, Germany, and the Far-Eastern crisis of 1897-98.” in The English Historical Review, vol. 110, no. 439 (1995): 1157, from Literature Resource Center, Accessed 27 Feb. 2018.
[4] Skrivan, Ales, Sr., and Ales Skrivan, Jr. “Financial battle for Beijing: the great powers and loans to China, 1895-1898.” in The Historian 79, no. 3 (2017): 476. . (Accessed March 29, 2018).
[5] For more details, please see Diaries and Travel Journals of Ernest Satow: Volume V [1895–1899] (Singapore: Gale, 2018).

Emery Pan headshot

About the Author

Emery Pan is a Gale Editor based in Beijing. Emery joined Gale last October, after serving as Rights manager for a Chinese publisher and translator for a German bank consultancy firm. Emery likes working for Gale because this position gives her a wonderful opportunity to learn and read. When not assisting in editing Gale titles, Emery likes playing music, cooking, and spending time with her beloved family and friends.