The agreement must receive the sanction of imperial edict before becoming
effective.
The agreement was telegraphed by the viceroy to Peking and an imperial
edict was immediately issued (Oct. 3) referring it to the Tu-chih Pu,
Yu-cLVuan Pu, and the Wai-wu Pu for report. We are now awaiting the
result of the deliberations of these boards.
I also inclose copy of the agreement entered into by Mr. Straight for the
American group and Lord Jfrench for Pauling & Co., subject to
ratification by their principals, which stipulates that the American
group shall receive not less than 2½ per cent of the contract price of
the railway, and that at least one-half of the materials and equipment
purchased in Europe and America shall be American and also that American
engineers shall be employed during construction.
[Inclosure 1.]
Preliminary agreement providing for the
financing, construction, and operation of the railway from
Chinchow to Aigun.
This preliminary agreement to provide for the financing, construction
and operation of the railway from Chinchow to Aigun is made between
their excellencies the viceroy of Manchuria and the governor of
Fengtien, hereinafter called the administration, of the one part,
and the American group and its associates (such associates to be
admitted to participation with the full consent of and to the
extent—not more than 40 per cent of the whole—to be determined by
the Chinese Government), hereinafter called the banks, and Pauling
& Co., hereinafter called the contractors, of the other
part:
Now it is hereby mutually agreed by and between the parties hereto as
follows:
I. The administration engages to borrow from the bank the sum
necessary to construct the railway from Chinchow to Aigun. The rate
of interest for this loan shall not exceed 5 per cent per annum, and
the terms of issue, which shall be the most favorable obtainable,
and the other details of procedure shall be arranged in a mutually
satisfactory manner.
The payment of interest and amortization of this loan shall be
guaranteed by the Imperial Chinese Government and the security
therefor shall be the railway line.
Interest payments and amortization shall be met by the receipts of
the railway or the proceeds of the loan, and, if these be
insufficient, by Manchurian revenues as may hereafter be selected by
the administration and the bank in a manner to be mutually
satisfactory.
The first bond issue shall be for the amount necessary for the
construction and equipment of the railway between Chinchow and
Tsitsihar. The second shall be for the construction and equipment of
the railway between Tsitsihar and Aigun.
An equitable arrangement shall be made for the redemption of the bond
issue by the board of communications prior to the expiration of
their term.
II. The administration agrees to contract with the contractors for
the construction and equipment of this road. The contractors engage
to build and equip the line, using the best possible materials on
the cheapest possible terms.
The detailed terms and conditions, etc., shall be arranged hereafter
in a manner that shall be mutually satisfactory.
III. On equal terms Chinese materials shall be given the preference.
If, however, Chinese materials are not available, recourse shall be
had to other markets.
The administration shall be liable to the contractors only for the
contract price of the railway, and it is clearly understood that no
commission shall be paid on the purchase of materials.
IV. During the construction of this railway the appointment of the
chief engineer shall be vested in Pauling & Co., but this
appointment must be approved by the president of the railway
company, to be designated by the Imperial Chinese Government. The
chief engineer shall be under the control of the board of
communications and the railway company.
V. As the work of construction is completed, section by section, the
railway shall be operated during the currency of the loan by a
company which shall be under the
[Page 233]
control of the board of communications. If
after the payment of interest and amortization charges and operating
expenses there be a surplus the railway company shall receive 10 per
cent thereof.
VI. The company shall be composed of Chinese, Americans, and British,
as may hereafter be arranged, the Chinese to have a majority
interest in the control, but under no circumstances shall persons of
any other nationality than those herein mentioned have any voice in
the management or control of the company without the full permission
of the Imperial Chinese Government.
The company shall have as its president a high official appointed by
the Imperial Chinese Government. The other details of organization
shall be subsequently arranged in a mutually satisfactory
manner.
VII. This railway company is to be organized by Chinese, American,
and British interests. It is recognized, however, that this line is
constructed in Chinese territory for commercial purposes and in case
of war may be used only for the transportation of Chinese troops and
munitions of war.
VIII. This preliminary agreement is signed by their excellencies the
viceroy of Manchuria and the governor of Fengtien with the bank and
the contractors, subject to approval by imperial edict, without
which it shall be null and void.
IX. In case certain portions of this agreement are characterized as
unacceptable by the imperial edict or in case the administration
finds on further consideration that there are certain unsatisfactory
provisions therein, these clauses, to which exception has been
taken, shall be revised in the detailed agreements in a manner which
shall be satisfactory to all parties.
X. This agreement is executed in triplicate in English and Chinese,
one set to be retained by their excellencies the viceroy of
Manchuria and the governor of Fengtien, one set by the American
group, and one set by. Pauling & Co. In case there be any
misunderstanding arising from a difference between the English and
Chinese texts, the matter shall be settled by a mutually
satisfactory arrangement.
Signed at
Mukden by the contracting parties
this 19th day of the eighth moon of the first year of the
Emperor Hsuan Tung, being the 2d day of October of the year 1909 of
the western calendar.
(Signed)
The Viceroy of Manchuria andThe Governor of Fengtien.
(Signed) For
J. P. Morgan & Co.,
Kuhn, Loeb & Co.,
The First National Bank,
The National City Bank of New
York,
Constituting the American
Group.
Willard D.
Straight, Agent.
(Signed) For
Pauling & Co.,
ffrench
,
Per
W. D. S.
,
Agent.
