Papers Relating to the Foreign Relations of the United States, With the Address of the President to Congress December 4, 1917
File No. 893.51/1830
Minister Reinsch to the Secretary of State
Pelting, October 9, 1917.
Sir: I have the honor to transmit for your information copies of the agreement signed August 28, 1917, for an advance of Yen 10,000,000 made by the Yokohama Specie Bank to the Chinese Government.
I have [etc.]
agreement for an advance of yen 10,000,000
The Government of the Republic of China, being now desirous of making a loan of Yen 10,000,000, as an advance on the Supplementary Reorganization Loan which it has been proposed to negotiate with the Four Power Banking Group, has suggested that this be effected by a Japanese Banking Group. Therefore, the Minister of Finance, representing the Government of the Republic of China (hereinafter referred to as the Chinese Government), and the Yokohama Specie Bank (hereinafter referred to as the Bank), representing the Japanese Government, have drawn up this agreement, the provisions of which are as follows:
Article 1. The Bank guarantees, within ten days from the conclusion of this agreement, to advance Yen 10,000,000, to be handed over to the Chinese Government in accordance with the provisions of Article 4 of this agreement.
The Chinese Government agrees that the Bank, within ten days from the conclusion of this agreement, will issue Chinese Government Treasury Certificates in Japan to the total amount of Yen 10,000,000, the proceeds of this issue to be applied to the service of this advance. The Treasury Certificates will bear the date when issued and will be called the Treasury Certificates of the Government of, the Republic of China of the 6th Year of the Republic (that is the 6th Year of Tacheng).
Article 2. The period for the redemption of the Treasury Certificates will be fixed at one year from the date of issue. Ten days before the date of redemption the Chinese Government will hand over to the Bank the actual amount of Yen 10,000,000 to be applied for redemption purposes. The Chinese Government will assemble in Kuei Yin and (or) national currency a sum sufficient to cover the payment in Japan, on due date, of Yen 10,000,000 and will hand the same over to the Bank at Shanghai, the rate of exchange being settled with the Bank on the same date or at any time within six months preceding. If the Chinese Government has Japanese currency on actual deposit [Page 147] in Japan, not for the purpose of redeeming the Treasury Certificates, such deposit can be used ten days before due date to redeem the loan, but the Bank must be so informed two months before due date.
Article 3. The Treasury Certificates will pay interest at the rate of 7% per annum from the date of issue in Japan and will be discounted at 93.
Article 4. The actual proceeds of the issue of the Treasury Certificates, set forth in Article 3, will have deducted therefrom by the Bank 1% banking commission, or $1.00 for each certificate of the face value of $100, and also the expense of printing the Treasury Certificates in Japan, which should amount to about $3,000. The whole of the balance will be deposited on the third day after issue in the Bank at Yokohama to the account of the Chinese Government and subject to the disposition of the Minister of Finance. This deposit will bear interest at the rate of 3% per annum.
The deposit referred to in the previous paragraph will be remitted by the Bank to China each week, the amount remitted to be agreed upon with the Bank, and not to exceed Yen 2,000,000 per week.
Article 5. The proceeds of the Treasury Certificates will be applied only to administrative expenses for the months of July, August and September of this year. The detailed use to which they are put will be embodied in a separate statement which will be communicated to the Bank as a supplement to this agreement.
Article 6. The Treasury Certificates will be secured on the whole amount of the salt receipts of the Chinese Government, except that part which has been fixed as the security of former loans which have not yet been liquidated.
Article 7. The procedure and conditions governing the disposition of the proceeds of the Treasury Certificates by the Minister of Finance will all be in accordance with Article 14 of the Reorganization Loan Agreement of the 2d Year of the Republic of China.19
Article 8. The Minister of Finance, representing the Chinese Government, on the date of issuing the Treasury Certificates in Japan, as stipulated in Article 1 of this agreement, will temporarily issue one Chinese Government General Treasury Certificate for Yen 10,000,000 and deposit it at the Bank at Peking as a guarantee. This General Treasury Certificate will be returned to the Ministry of Finance for cancellation on the date when the subsequent issue of Treasury Certificates provided for has all been printed. The form, lettering, and denomination of the Treasury Certificates issued in Japan will be settled between the Bank and the Chinese Minister at Tokio, in accordance with the practice of foreign banks issuing Treasury Certificates in Japan.
The Treasury Certificates will have engraved thereon the signatures and seals of the Minister of Finance and the Chinese Minister at Tokio as a guarantee of the consent of the Chinese Government to the issue of the Treasury Certificates and of the security thereof. The Director General of the Bank will also affix his signature and seal to the Certificates as agent.
On the date of the conclusion of this agreement the Chinese Government will telegraph the Chinese Minister at Tokio to act in accordance with the provisions of this article.
Article 9. When the period of the Treasury Certificate is about to fall due, if the Chinese Government wishes to extend the period of this advance, it will notify the Bank two months before due date. The Bank will then agree to undertake a Second Issue of Treasury Certificates for a term of one year and will exchange the old Certificates for new ones. The procedure and conditions governing the issue will be as follows:
- (1)
- The Second Issue of Treasury Certificates will take place three days before the expiration of the (original) Treasury Certificates. The rate of interest and banker’s commission will be agreed upon in accordance with market conditions one month before issue.
- (2)
- Ten days before the expiration of the term of the (original) Treasury Certificates the Chinese Government will reckon the difference between Yen 10,000,000 to redeem the (original) Treasury Certificates, and the net proceeds of the Second Issue of Treasury Certificates and will assemble a sum sufficient to make good this amount in Kuei Yin Taels and (or) national currency and hand it in to the Bank at Shanghai to be remitted to Japan, the remittance rate to be settled in consultation with the Bank on the same date.
- (3)
- The Chinese Government agrees that, beginning from the date of the Second Issue of Treasury Certificates, it will deposit at regular intervals a certain [Page 148] amount of the receipts of the salt administration at the Bank at Shanghai as a reserve for the redemption of the said Treasury Certificates, said reserve to pay interest at the rate of 5% per annum. The date for depositing the same and the amount to be deposited at each time will be agreed upon with the Bank one month before the issue of the said Treasury Certificates.
- (4)
- The procedure and conditions other than as stated in the preceding paragraphs will be governed by the provisions of this agreement.
Article 10. The (original) Treasury Certificates will be redeemed, upon the conclusion of the Supplementary Reorganization Loan, with the proceeds of the said loan upon which they will be a first charge.
Article 11. The provisions of this agreement will be communicated by means of a formal note by the Ministry of Foreign Office to the Japanese Minister at Peking.
Article 12. This agreement will be drawn up in Chinese and Japanese, four copies being made of each. The Chinese Government will keep two copies and the Bank two copies of each. In case of disagreement the Japanese text will be the deciding one.
28th day of the 8th month of the 6th Year of the Republic of China.
28th day of the 8th month of the 6th Year of Tacheng (August 28, 1917).
Representative of the Yokohama Specie Bank “Ch’ü-t’i-I-hsiao-t’ien-ch’ ieh-wan-shou-chih-chu”