Papers Relating to the Foreign Relations of the United States, With the Address of the President to Congress December 2, 1913
File No. 893.51/1158.
The American Minister to the Secretary of State.
Peking, October 29, 1912.
Sir: In acknowledging the receipt of the Department’s instruction number 266, October 2, 19122, enclosing copy of memoranda exchanged between the Department of State and the American group regarding the repayment of the advance of £400,000 under the currency-loan agreement3, I have the honor to send herewith for the information of the Department, copy of the English text of the bond together with copies of the correspondence exchanged between the representative of the American group in Peking and the Ministry of Finance, relative to the extension of the time for repayment of the aforementioned advance to April 14, 1913.
I have [etc.]
Imperial Chinese Ministry of Finance £400,000 Bond of May 24, 1911.
The Imperial Chinese Ministry of Finance, for and on behalf of the Imperial Chinese Government, hereby promises to pay on or before the fifteenth day of October, one thousand nine hundred and twelve, Western Calendar, from the first proceeds of the Imperial Chinese Government Five-per-cent Currency-Reform and Industrial-Development Sinking-Fund Gold Loan of 1911, when issued, or from other sources, in gold in equal shares, to the American Group in New York, The Hongkong and Shanghai Banking Corporation in London, the Deutsch-Asiatische Bank in Berlin, and the Banque de I’lndo-Chine in Paris, the sum of Four Hundred Thousand Pounds (£400,000) Sterling with accrued interest at the rate of six per cent per annum calculated from the thirteenth day of May, 1911, for value received, being the first installment of an advance of One Million Pounds (£1,000,000) Sterling for Manchurian requirements to be held at the disposal of the Imperial Chinese Government under the provisions of Article VIII, Sections 4 and 6 of the Loan Agreement signed at Peking on the seventeenth day of the Third Moon of the Third Year of His Imperial Majesty Hsuan T’ung, being the fifteenth day of April, one thousand nine hundred and eleven, Western Calendar, the said advance being secured by a first charge on the revenues pledged as security for the said Loan in terms of Article V of the said Loan Agreement.
Executed in Chinese and English at Peking the twenty-sixth day of the Fifth Moon of the Third Year of His Imperial Majesty Hsuan T’ung, being the twenty-fourth day of May, one thousand nine hundred and eleven. Western Calendar.
[Page 193]Memorandum of Endorsement of October 15, 1912.
This bond has been endorsed “Extended by mutual consent to 14th of April, 1913,” this endorsement being dated and being signed by the representatives of the American, British, German and French banks, and on the part of the Chinese Republic by Chou Hsueh Hsi, Minister of Finance, on the 15th day of October, 1912.
Extension of £400,000 Advance on Currency Loan: Minutes of a conversation between Mr. McKnight and the Minister of Finance on October 1, 1912.
On October 1st Mr. McKnight called upon the Minister of Finance by appointment at 3:00 p.m. Mr. McKnight explained that the American group had all along taken the lead in matters connected with the currency-reform loan and that he came to-day informally to call to the Minister’s mind the fact that the advance of £400,000 fell due for payment on the 15th of this month, and to ask the Minister whether he had taken steps to provide for repayment at due date or whether he desired to request an extension of time. The Minister replied that he had this matter under consideration and had brought it to the notice of the President, and hoped that it would be possible to secure an extension of time, for China was in financial difficulties. He feared that if payment of this advance was pressed for he would have to borrow to meet the demand. * * *
Mr. McKnight asked the Minister whether or not in his opinion the advance could be repaid if an extension of time till next April were agreed to by the groups. The Minister replied that it was impossible to say, but he hoped that conditions by that time would be so much improved as to make repayment possible. He tried to ask Mr. McKnight whether the currency loan could be floated by April next. * * *
Mr. McKnight replied to the Minister to the effect that while he hoped it would be possible for China to obtain from the groups funds for the currency reform when needed, yet he personally did not think that it would be possible to float the currency loan by April next on the conditions called for in the agreement; he further said that much would depend on the general financial policy of the Chinese Government, for this would determine China’s credit on the foreign markets. * * *
The Minister stated that he knew full well that in the matter of China’s credit everything depended upon whether or not China could make great advances toward a settled condition and embark upon a sound progressive policy during the intervening months. He expressed the hope that this would be done and requested Mr. McKnight to do his best to secure an extension of time for repayment of the £400,000 advance.
Mr. McKnight informed the Minister that in case he desired to ask for an extension of time it was important that a letter should be sent to the groups as soon as possible in order to give time for consideration; he assured the Minister that such a letter would have most careful consideration and that a reply to it would be made as soon as possible.
The Minister said that he expected a reply from Mukden within one or two days and that no time would be lost after its receipt.
The Chinese Minister of Finance to Mr. McKnight.
Peking, October 2, 1912.
Sir: With reference to the currency-reform and Manchurian-industrial loan concluded between your group and the former Manchu Government on April 15th, 1911, £400,000 of which have already been advanced in accordance with clauses 4 and 5 of article 8 and is due for repayment on October 15th of this year, and with reference to the enquiries made by Mr. McKnight at his visit yesterday, I find that the agreement stipulates that these funds shall be repaid out of the [Page 194] proceeds from the sale of the first issue of the bonds. In view of the fact that these bonds have not been issued for sale and that the Republic in this its initial stage of reconstruction has an enormous expenditure to meet and has no other funds upon which it may draw for repayment at once, I have to request that the time for the repayment of this sum of £400,000 be extended until the 15th October, 1913. Or that it be paid from the first proceeds of the sale of the currency-loan bonds.
In view of the good feeling that has characterized the relations with your group in the past, I trust that this request may be granted.
Trusting to receive your reply. Compliments [etc.]
Mr. McKnight to the Minister of Finance.
Sir: I have the honor to acknowledge the receipt of your letter of October 2nd in regard to the £400,000 advance upon the “Currency-Reform and Industrial-Development” Loan.
The clause of the loan agreement which governs repayment of this advance provides that it shall be repaid “from the first proceeds of this loan when issued, or in any case within eighteen months from the signature of this agreement unless otherwise mutually agreed between the Board of Finance and the Banks.” Repayment is clearly due, therefore, on the 15th of the present month, since the loan agreement was signed on April 15th, 1911.
In view, however, of the fact that you acceeded very promptly to our request for an extension of the time of the “Currency-Reform and Industrial-Development Loan Agreement” to April 14th, 1913, and also having in mind the unusual circumstances now prevailing in this country as mentioned in your letter, which may very well make it difficult for you to make repayment of this advance when due, my colleagues and myself have thoroughly considered your request for further time and have decided that we can extend the time for repayment to April 14th, 1913, which is the date to which the Currency Loan Agreement itself has been extended—this extension being subject, of course, to repayment of the advance from the first proceeds of loan if issued before the date mentioned. We are unable at this time to consider an extension to October 15th, 1913.
If an extension to April 14th, as above suggested, is satisfactory to you, I suggest that you make an appointment to call at my office before October 15th and formally extend the bond by mutual consent and by joint signature.
I am [etc.]
Mr. McKnight to the American Minister.
Sir: I beg to advise you that we have this day endorsed on the bond of the £400,000 advance of the currency loan the words “Extended by mutual consent to the 14th of April, 1913,” this endorsement being dated and being signed by the representatives of the American, British, German and French banks and on the part of the Chinese Republic by Chou Hsueh Hsi, Minister of Finance.
I enclose copy of a letter in this matter which we received yesterday from the Minister of Finance.
I have [etc.]
The Minister of Finance to Mr. McKnight.
Peking, October 14, 1912.
Sir: I beg to acknowledge receipt of your letter informing me of your having kindly consented to extend the time for repayment to your groups of the advance [Page 195] of £400,000 provided for in the currency-loan contract until the 14th day of April, 1913, and requesting the Finance Minister to appoint a time to meet your groups to formally extend the time and sign the bond.
In reply I desire to express my thanks and appreciation of the kindness the groups have shown in this matter.
I am sending to confer with you at your office Mr. Wang Shih Teng, a departmental chief in the Ministry of Finance. He will take up with you the various points referred to in your letter under reply and as soon as the contract for extension of time has been drawn up a time will be set to meet with you at the Ministry of Finance and to jointly affix the required signatures.
With compliments [etc.]
- Not printed.↩
- For. Rel. 1912, p. 95.↩