Office of the Historian

File No. 5315/134–136.

Minister Rockhill to the Secretary of State.

American Legation,
Peking, October 12, 1908.
No. 1024.]

Sir: Under the provisions of article 5 of the loan contract for the construction of the railway from Peking to Hankow made between the Chinese Government and the Société d’Étude de Chemin de Fer en Chine (Belgium), signed June 26, 1898 (see Rockhill’s Treaties and Conventions, 234), the former had the right to pay off the whole of said loan (Ł4,500,000) after the 1st of September, 1907. A loan has now been negotiated by China, represented by the board of posts and communications (yu-eh’uan pu), and the Hongkong and Shanghai Banking Corporation (British), and the Banque de l’lndo-Chine (French), for the sum of Ł5,000,000 for this purpose. I inclose a copy of the new loan agreement, signed on October 8, and of the imperial decree sanctioning it.

I have, etc.,

W. W. Rockhill.

[Inclosure.]

Loan agreement between the board of posts and communications on the one part and the Hongkong and Shanghai Banking Corporation and the Banque de l’lndo-Chine on the other.

1.
A loan of Ł5,000,000.
2.
Eighty per cent to be employed in Europe by the Chinese Government to the complete redemption of certain railway loans.
3.
Twenty per cent “will be employed by the board of posts and communications in productive works of public utility coming within the department and functions of the board.”
4.
The term will be 30 years.
5.
The principal is payable to the bondholders in 20 equal annual installments of Ł250,000, commencing the eleventh (11th) year, but China has the right to redeem the whole loan by giving six months notice or to increase the regular redemption by extra drawings after the fifteenth year up to the twenty-third year, inclusive, by the payment of a premium of 2½ per cent upon the par value of each bond redeemed (Ł102.10 for each Ł100 bond) and have the right to redeem the whole or increase the redemption after the twenty-third year at par.
6.
The loan shall be for 5 per cent for the first 15 years and 4½ per cent thereafter.
7.
Ł2 per Ł1,000 commission for the expenses of transacting the payments of interest and redemption shall be paid to the banks concerned.
8.
“The loan is secured by surplus revenues of various works of public utility controlled by the board of posts and communications. In case these are insufficient other revenues will be selected to make up the deficiency.”
9.
“The Imperial Government of China hereby unconditionally guarantees and declares itself responsible for the due payment of principal and interest of [Page 203] the loan which Is hereby secured by first charge, free from all encumbrances, upon the following provincial revenues.”
10.
“In Chekiang Province the house tax, wine tax, pawnshop tax, title deeds tax, and the old and new salt tax.”
11.
“In Kiangsu Province the new salt tax and the house tax.”
12.
“In Hupeh Province the old and new additional salt tax on salt from Szechuen and Kiangsu Provinces, the tobacco tax, wine tax, sugar tax, and house and land title deeds tax.”
13.
“In Chihli Province the tobacco tax, wine tax, and miscellaneous duties, the salt commissioner’s treasury, the fund for the adjustment of prices, and the new and old tax on salt.”
14.
“The two banks shall take the loan at 94 per cent.”
15.
“Ł3,760,000 shall be held at the order of the board of posts and communications in Europe December 10, 1908.”
“Ł940,000 shall be held to the order of the board in Europe February 5, 1909.”
16.
“The loan shall be floated by the two banks in equal shares in London and Paris.”
Signed October 9, 1908.

Hongkong and Shanghai Banking Corporation,
By
E. G. Hillier.

Banque de l’Indo Chine,
By
Casenave.
[Inclosure 2—Translation.]

Imperial edict, October 6, 1908.

The board of posts and communications memorializes with reference to raising a Government loan for the redemption of the Pei-Han Railway.

The same board also forwards with approval the memorial of Chang Ming-ch’i advising that an attempt be made to raise a domestic loan for the same purpose.

Both proposals are sanctioned.

Imperial edict, October 8, 1908.

The board of posts and communications memorializes to the effect that it is proposed to make an agreement with the Honkong and Shanghai Banking Corporation and the Banque de l’Indo-Chine for a foreign loan. The officials of the board of posts and communications are hereby authorized to sign the said agreement and the other proposals of the memorialists are approved.