Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1910
File No. 5315/948.
Ambassador Bacon to the Secretary of State.
Paris, May 27, 1910.
Sir: Referring to my cable of the 25th instant regarding the Hukuang loan, I have the honor to send herewith copies of the documents incident to the settlement of this matter between the banking groups, viz:
- 1.
- Memorandum of agreement between the bankers.
- 2.
- Supplementary loan agreement.
- 3.
- Minutes of the meeting May 23.
- 4.
- Minutes of committee meeting May 23.
- 5.
- Minutes of meeting May 24.
I have, etc.,
hankow-canton and hankow-ch’eng-tu railway loan negotiations.
Memorandum of terms of agreement come to at a meeting at the Banque de l’Indo-Chine, Paris, on the 23d day of May, 1910.
Parties:
- The British and Chinese Corporation (Ltd.), Chinese Central Railways (Ltd.), representing the British group.
- The Deutsch-Asiatische Bank, representing the German group.
- The Banque de l’Indo-Chine, representing the French group.
- Morgan, Greenfell & Co., representing the American group.
- 1.
- The British, German, French, and American groups agree to enter into an agreement with the Chinese Government for a loan of £6,000,000 and any supplementary loans to be issued in connection therewith for the above railways on the basis of the two draft agreements approved by the parties hereto and initialed by them, being the draft original loan agreement, with accompanying dispatch and a draft supplemental loan agreement.
- 2.
- This loan to be divided equally between the four groups, and to be issued simultaneously.
- 3.
- All orders for materials to be divided as far as possible equally between the four groups.
- 3a.
- The American group shall share equally in the commissions on the purchase of materials, plant, and goods allowed by the terms of article 18 of the original loan agreement.
- 4.
- In regard to the appointment of chief engineers and subengineers for the lines contemplated by the original loan agreement it is agreed that the chief engineer for the Hankow-Canton Railway is to be appointed by the British and Chinese Corporation (Ltd.); that the chief engineer for the Ichang-Hsiangyang-Kuangshui line and the Ichang-Hanyang line, to the length of about 800 kilometers, is to be appointed by the German group, which is to provide for the appointment by the American group of a subengineer for a section of these lines to the length of about 200 kilometers. With regard to the proposed extension of the line from Ichang or Hsiangyang to Ch’eng-tu, which is estimated to be 1,600 kilometers in length, the chief engineer for [Page 281] the first 400 kilometers is to be appointed by the American group; the chief engineer for the next 600 kilometers is to be appointed by the British group, and the chief engineer for the remaining 600 kilometers is to be appointed by the French group. If the extension of the line above referred to should be less than 1,600 kilometers in length, then the above-mentioned lengths of 400, 600, and 600 kilometers shall abate proportionately. If the extension of the line above referred to should exceed in length 1,600 kilometers, then the appointment of chief engineers of the excess between 1,600 kilometers and 2,200 kilometers shall be apportioned equally between the American, British, and French groups. If such extension should exceed in length 2,200 kilometers, then the appointment of chief engineers of the surplus over 2,200 kilometers shall be divided as nearly as possible equally among the four groups.
- 5.
- Each of the groups to apply to their respective bourses for the internationalization of the above loans.
- 6.
- The stamp duties on the bonds to be pooled and divided equally between the four groups, but this is not to be treated as a precedent for future loans. All other expenses of issue to be borne by the respective groups.
- 7.
- The preliminary expenses incurred by the four groups prior to the signing of this agreement shall be shared by the four groups upon an equitable basis.
- For the British group:
- Carl Meyer.
- C. S. Addis.
- G. Jamieson.
- For the German group:
- Fr. Urbig.
- E. Rehders.
- For the French group:
- J. Caillaux.
- St. Simon.
- Ullmann.
- Casenave.
- For the American group:
- E. C. Grenfell.
- H. P. Davison.
- Max Warburg.
- H. H. Harjes.
- Willard Straight.
[Inclosure 2.]
This agreement made between his excellency on behalf of the Imperial Chinese Government of the one part, and the Hongkong and Shanghai Banking Corporation, the Deutsch-Asiatische Bank, the Banque de l’lndo-Chine, and Messrs. J. P. Morgan & Co., Messrs. Kuhn, Loeb & Co., the First National Bank, and the National City Bank, all of New York, constituting the American group, hereinafter called the “banks,” of the other part, witnesseth as follows:
Whereas an agreement initialed on the 6th of June, 1909, between the Imperial Chinese Government and the Hongkong and Shanghai Banking Corporation, the Deutsch-Asiatische Bank, and the Banque de l’indo-Chine, copy of which is attached hereto and made part hereof, hereinafter referred to as the orignal loan agreement, authorizes these banks to issue a 5 per cent gold loan for the sum of £500,000, to be called the “Imperial Chinese Government 5 per cent Hukuang Railways loan of 1909,” it is now agreed by and between the Imperial Chinese Government and the banks, as follows:
1. The amount of the said loan shall be increased to £6,000,000, of which the sum of £3,000,000 shall be allotted to the Hupeh section of the Szechuen-Hankow line.
2. The American group shall have a participation of one-quarter of the whole loan, with corresponding banking privileges and advantages. It is further understood that American materials shall be entitled to the same privileges and preferences as are reserved in article 18 of the original loan agreement to British, French, and German materials, plant, and goods.
3. It is understood that the articles of the original loan agreement shall be affected by the terms of the preceding clause in the following manner:
In articles 1, 3, 5, 6, 7, 8, 9, 10, 12, 13, 16, 20, 21, the words “the banks,” wherever they occur, shall be understood to include the “American group” and/or its agents or nominees in China or elsewhere.
In articles 10 and 12 the words “Berlin, London, or Paris,” where reference is made to the Chinese minister, shall be understood to include “Washington,” and where reference is made to the banks, shall be understood to include “New York.”
In articles 7 and 13 the word “Europe” shall be understood to mean “Europe and America,” and in articles 13 and 17, and in paragraph 4 of the letter covering the working [Page 282] regulations, the word “Europeans” shall be understood to mean “Europeans and/or Americans.”
In article 14, wherever “Berlin, London, Paris” are referred to, such reference shall be understood to include “New York,” and wherever the “Hongkong and Shanghai Banking Corporation, the Deutsche-Asiatische Bank, and the Banque de l’Indo-Chine” are referred to collectively either by name or as the “the banks,” such reference shall be understood to include “the American group in New York or such banks in China as from time to time shall be designated by the American group, the International Banking Corporation being now so designated.”
With regard to article 18, such modifications or extensions of the provisions respecting the appointment of purchasing agents for the two lines as may be necessary to secure equal consideration for British, German, French, and American materials, and equal facilities for the receipt of tenders in the markets of the four countries, shall be made the subject of an equitable arrangement between the director general and the four banks, and the words “British, French, and German,” wherever they occur in said article 18 shall be understood to mean “British, French, German, and American.”
In article 22 the words “the American group” are understood after the words “the Banque de l’Indo-Chine.”
In article 23 the words “the American group” are understood after the words “the Banque de l’Indo-Chine,” and the words “German, British, or French Company” are understood to mean “German, British, French, or American Company,” etc.
The provisions of the original loan agreement in regard to supplementary and future loans, contained in articles 15 and 19 thereof, shall remain unaffected by this present agreement, except that the American right to one-quarter participation in these supplementary and future loans is hereby recognized.
4. The imperial edict sanctioning the loan in accordance with the provisions of the original agreement as interpreted by this present agreement will be officially communicated to the minister of Great Britain, France, Germany, and the United States of America, in Peking by the Wai-wu Pu.
Eight sets of this agreement are executed in English and Chinese, four sets to be retained by the Imperial Chinese Government, and one set by each of the contracting banks and/or groups. In the event of any doubt arising regarding the interpretation of the contract the English text shall rule.
Signed at Peking, etc.
french, british, german, and american groups.
Minutes of a meeting held at the Banque de l’Indo-Chine on 23d May, 1910, of the committee appointed at the meeting of the four groups held that day.
- Present:
- Mr. F. Urbig, in the chair.
- Mr. M. Casenave.
- Mr. G. Jamieson.
- Mr. W. D. Straight.
The following resolutions were passed:
1. Preliminary expenses.—That to carry out and give effect to clause 7 of the agreement between the four groups drafted at the meeting of the groups held that day, the American group pay to the French, British, and German groups, respectively, the sum of £1,500, being 1 per 1,000 on the share of the loan allotted to the American group.
2. Purchasing arrangements.—That the existing arrangements of article 18 of the original loan agreement be allowed to stand, provided that the two purchasing agents give to the French and American groups a letter in the following terms, and provided, moreover, that said purchasing agents shall be bound to report as far as possible to any group requesting such information regarding the purchase of materials under the instructions of the director general in accordance with the provisions of the original loan agreement with accompanying dispatch and the supplemental loan agreement:
“We beg to inform you that we have been appointed purchasing agents for Hankow-Canton, Hankow-Szechuen Railways, in accordance with article 18 of the Hukuang loan agreement initialed on the 6th June, 1909.
“In view of the terms of said loan agreement with accompanying dispatch and the agreement supplementary thereto providing for the admission to participation of the American group and securing equal consideration for British, German, French, and [Page 283] American materials and equal facilities for the receipt of tenders in the markets of the four countries, we beg to state that we will take all steps necessary to assure the above-mentioned consideration for French-American materials and make all proper provision for the receipt on an absolute basis of equality of tenders from British, German, French, and American manufacturers.”
3. Commission on materials.—As regards commission on materials it was resolved that one-fifth be retained by purchasing agents to cover expenses; that the balance be divisible:
On Hankow-Canton: One-fourth each to the British and Chinese Corporation (Ltd.), the French group, the German group, and the American group.
On Hankow-Szechuen: Two-fourths to Chinese Central Railways, (Ltd.), one-fourth to the German group, and one-fourth to the American group.
4. Rotation of purchasing agents.—It was also resolved that upon any new loan being negotiated for the purposes of the extension referred to in article 4 of the agreement of the 23d May, 1910, the group which is entitled to the appointment of chief engineer shall be entitled to nominate the purchasing agent.
(Signed)
(Signed)
(Signed)