Papers Relating to the Foreign Relations of the United States, With the Address of the President to Congress December 8, 1914
File No. 893.811/112.
Minister Reinsch to the Secretary of State.
Peking, February 3, 1914.
Sir: With reference to my telegram of January 30, I have the honor to transmit herewith one of the three originals of the memorandum executed by his excellency Chang Chien in behalf of the Chinese Government and accepted by myself in behalf of the American Red Cross; which embodies the text cabled to the Department in my January 23.
I have [etc.]
Huai River Conservancy Memorandum addressed by the Government of the Republic of China to the American National Red Cross, or its representatives or successors.
- I.
- In consideration of the interest already practically manifested by the American National Red Cross in the Huai River region, and in consideration of the readiness of that organization and its representatives or successors to take steps with a view to obtaining the funds for carrying out the engineering works of the Huai River Conservancy,
- II.
- The Government of the Republic of China engages itself to allow the American National Red Cross, or its representatives, or successors, a period of one year from date for the purpose of preparing and effecting a Huai River Conservancy Loan. The amount of this loan is to be Twenty Million Gold Dollars ($20,000,000), or such sum as may be found necessary, after complete surveys have been made, to carry out the work of improving the water courses embraced in the Huai River district, including the Huai River from Hsin-yang-chow, in Honan, passing through Hsi-hsien, Hou-ch’iu-haien, Feng-t’ai-hsien, Huai-yuan-hsien, Wu-ho-hsien, and Yu-i-hsien, the Inner Grand Canal, the Yi, Ssu, and Shu Rivers, in the province of Kiangsu, the Sui, Ko, Fei, [Page 103] K’uai, Ch’ung, T’ung and T’o Rivers, in the province of Anhui, and the Hungtzu Lake, together with the contemplated outlets to the sea and the Yangtze River. If, after the above conservancy work has been in progress for some time, it shall appear that the original loan is insufficient to provide for its completion, then, after complete investigations as to requisite amount have been made by the Engineer-in-chief, the Director General of the National Conservancy Bureau, upon approving the report submitted by the Engineer-in-chief, shall approach the American National Red Cross, who will continue to use their good offices for increasing the loan, on terms mutually satisfactory at the time of such increase, to such an amount as will render possible the completion of the Huai River Conservancy work as herein delimited.
- III.
- The loan shall be a Government of China Gold Loan, bearing
interest at the rate of five (5) per cent per annum and shall be
secured as follows:
- (a)
- All Government revenue derivable or now derived from government lands in the Conservancy Area as defined in Article II and Appendix A, and also all additional revenues which may in the future accrue to the Government of the Republic of China as a result of the conservancy work, which shall include revenue from the sale or lease of reclaimed lands, as well as special conservancy taxes to be levied by the Government of the Republic of China on all lands benefited by the conservancy work; also all tolls levied for the use of the Grand Canal within the Conservancy Area.
- (b)
- Should the above revenues and taxes derived by the Government of the Republic of China be insufficient to meet the payments of the interest and principal of the loan when they fall due, the Government of the Republic of China undertakes to repay in full both principal and interest, on their due dates, with revenue derived from other sources.
- IV.
- The issue price of the bonds shall be fixed by agreement between the Government of the Republic of China and the American National Red Cross, or its representatives, or successors, in accordance with the most favorable market price of the similar obligations of the Government of the Republic of China, such as bonds for railway construction, at the time of signing the loan contract. The price payable to the Government of the Republic of China shall be the actual rate of issue to the public less an equitable amount for bankers’ commissions, flotation charges, and stamps.
- V.
- The Government of the Republic of China expresses its desire to trust the American National Red Cross to secure an engineer of at least five years’ experience in the United States in river conservancy work of the first magnitude and of the highest professional reputation, for the post of Engineer-in-chief of the Huai River Conservancy work, who shall be entrusted with the preparation of definitive plans for the engineering work and shall be in charge of all the works in the Conservancy Area as defined in paragraph II and delimited in Appendix A. As an evidence of its good intention to assist the Republic of China the American National Red Cross shall designate for appointment by the Government of the Republic of China an engineer possessing the qualifications desired by the Chinese Government as stated above. In order to give evidence of American fairness and strengthen the confidence felt in the Chinese Government any consulting engineer representing the Director General of the National Conservancy Bureau who shall be under orders to inspect the progress of the works of the Huai River Conservancy and the other conservancy works in the Conservancy Area as delimited in Appendix A, shall be afforded reasonable facilities for such inspection, in the same way that he is assisted in the inspection of all the other works undertaken by the National Conservancy Bureau.
- VI.
- The construction work shall be carried out under a percentage contract, and the construction company selected to carry out the work shall have the approval of the Government of the Republic of China and of the American National Red Cross, or its representatives or successors. All sub-contracts, of a nature to be specified in the Final Agreement, which may be let out by the construction company for the prompt prosecution of the work, are to be made on the basis of public tender.
- VII.
- If within the Huai River Conservancy Area there are engineering works of lesser magnitude that, either from the standpoint of conservancy or water communication, demand immediate action and necessitate the preliminary advance of one or two million dollars gold, then the American National Red Cross, or its representatives or successors, actuated by a friendly purpose to assist China, agrees to use its good offices, after receiving the representations of the Government of the Republic of China, to secure at the earliest possible moment [Page 104] an advance to the amount required, said advance to be repaid from the large loan when made.
- VIII.
- All arrangements for the efficient handling of disbursements and receipts and for the mutual protection of the Republic of China and the bondholders shall be settled by negotiation and embodied in the Final Agreement. General lump sum appropriations from the proceeds of the loan must first receive the sanction of the Director General of the National Conservancy Bureau, but all payments made therefrom shall be made only upon joint approval by the Managing Director and the Engineer-in-chief.
- IX.
- As soon as possible after the signing of this Memorandum the two parties shall appoint delegates with full powers to negotiate and conclude a Final Agreement subject to the approval of their principals. When the expiration of the time covered by this Memorandum has arrived should either party thereto be unable to fulfill its engagement it shall become of no effect.
- X.
- The English and Chinese texts of this Memorandum have, been carefully compared; but in the event of there being any difference of meaning between them, the sense as expressed in the English text shall be held to be the correct one.
Appendix A.
The Huai River Conservancy Area shall include the following watercourses, together with such subsidiary works as according to the final plans of the Engineer-in-chief shall be necessary for the proper working of the whole system:
Huai River.—Starting, from Hsin-yang-chow, in Honan, it proceeds through Hsi-hsien, Hou-ch’iu-hsien, and Feng-t’ai-hsien to Huai-yuan-hsien, uniting the following rivers: Sui, Ko, Fei, K’uai, Ch’ung, T’ung, and To; it passes through Wu-ho-hsien and Yu-i-hsien, to the Hung-tzu Lake; it subsequently passes through Ch’ing-ho-hsien and An-tung-hsien to the sea.
Inner Grand Canal.—Starting from Kua-chow on the Yangtze it proceeds to Ch’ing-ho-hsien and joins the Grand Canal.
Yi River.—Starting from Ch’i-ts’un it proceeds to Yao-wan, where it enters the Grand Canal.
Ssu River (also called the Pu-lso River).—Starting from the Lin Chia Pa it goes to a place between Yao-wan and Hsu-t’ang, where it enters the Grand Canal.
Shu River.—Starting from Ta San Ch’a K’ou it goes eastward to Chou Chia K’ou, where it enters the Lin T’ang River. (This portion is known as the “Ch’ien, Anterior, Shu River.”)
Arriving at Lung Wang Miso it makes a turn to the north and proceeds to Ma Chia K’ou and enters the Ch’ing Yi Lake. (This portion is known as the “Hou, Posterior, Shu River.”)
For purposes of the security for the loan under paragraph III, the area shall also include the entire drainage area of the above-mentioned water courses.
Accepted on behalf of the American National Red Cross:
Envoy Extraordinary and Minister Plenipotentiary of the United States of America
For the Government of the Republic of China:
(Signed in Chinese)
Seal of Chang Chien as Director General of the National Conservancy Bureau.
Seal of the Minister of Agriculture and Commerce.