File 893.51/470.]

The American Minister to the Secretary of State.

No. 230.]

Sir: I have the honor to inclose herewith a copy in duplicate of the loan agreement for national currency reform and, industrial development in Manchuria, which was signed on the 15th instant by the local representatives of the quadruple banks, on the one part, and Duke Tsai-tse, President of the Board of Finance, on the other. * * *

I have [etc.]

W. J. Calhoun.

Currency Reform and Industrial Development Loan Agreement of April 15, 1911, between the Chinese Government and the quadruple group of bankers.

In pursuance of the tripartite group’s preliminary agreement of October 27, 1910, and the supplementary agreement admitting the American bankers, the Chinese Government agreed on April 15, 1911, with the resultant quadruple group:

To authorize the banks to issue what should be called the “Imperial Chinese Government Five-per-cent Currency-reform and Industrial-development Sinking-fund Gold Loan of 1911,” the proceeds to be used for Chinese currency reform and industrial development in Manchuria.

The loan to be a direct charge or liability of the Chinese Government; all advances, interest, and repayments of principal to be a first charge on the following revenues to the annual amount mentioned in Kuping taels (a) Tobacco and spirits in Manchuria, 1,000,000; (b) production tax in Manchuria, 700,000; (c) consumption tax in Manchuria, 800,000; (d) newly added surtax on salt in all China, 2,500,000; total revenues pledged, 5,000,000 taels per annum, all free from other incumbrances; if these prove insufficient China to supply the deficit from other sources.

The revenues not to be interfered with as long as payments are regularly made, but upon default sufficient revenues to satisfy it to be transferred to and administered by the Maritime Customs for the account of the bondholders.

On the date of signing the agreement the Chinese Board of Finance to hand to the banks: (a) The Regulations for the Unification of the Currency on a Silver Basis authorized by Imperial edict and otherwise known as “the program of currency reform”; (b) a statement showing in what amounts the proceeds of the loan are to be applied to the various expenditures incident to the operation of said program; (c) a statement specifying the nature of the proposed enterprises in Manchuria and showing in what amounts the allotted portion of the proceeds of the loan is to be applied thereto.

The banks to have six months to study the regulations and statements and to plan all matters pertaining to them; upon acceptance thereof as the bases for the bonds, said acceptance to be conveyed to the Board of Finance and the bonds to be issued as soon as possible.

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The price to the Chinese Government to be 95% of the face of the bonds, that Government to be the preferred applicant; subscriptions to be next invited on equal terms in China, the United States, and Europe.

An advance of £1,000,000 for industrial developments in Manchuria to be made, if desired, upon execution of the agreement and satisfaction given the bankers as to the nature of such industrial developments. A further sum of £1,000,000 for the preliminary expenses of currency reform to be held by the banks in America and Europe at the disposal of China.

The rate of interest for the loan to be five per cent, payable semiannually.

The term of the loan to be 45 years; repayment to begin with the eleventh year by yearly amortization in half-yearly payments.

Article 16 provides that if China should desire to borrow in foreign parts, in addition to this loan, funds for continuing or completing the operations contemplated in the agreement, the banks are to be the first to be invited to furnish such funds; but if China and the banks fail to agree on the terms, other financial groups may be invited.