Papers Relating to the Foreign Relations of the United States, 1918
File No. 893.51/1958
The American Group to the Acting Secretary of State
Dear Sir: We are in receipt of your letter of August 2, contents of which we note with interest.
[Page 185]We hand you herewith for your information copy of the agreement which is being signed by members of the new American group. As soon as we have heard from ail of the institutions on the list approved by you we will send you the complete membership of the group.
Yours very truly,
Memorandum of agreement, dated the 30th day of July, 1918, by and between Messrs. J. P. Morgan & Co., of the City of New York, parties of the first part, Messrs. Kuhn, Loeb & Co., of the City of New York, parties of the second part, First National Bank, of the City of New York, party of the third part, The National City Bank of New York, party of the fourth part, Guaranty Trust Co., of New York, party of the fifth part, Chase National Bank, of the City of New York, party of the sixth part, Messrs. Lee, Higginson & Co., of the City of Boston, party of the seventh part, and Continental & Commercial Trust & Savings Bank, of the City of Chicago, party of the eighth part, and such additional persons, firms and corporations as shall become parties to this agreement as hereinafter provided, Witnesseth:
The Government of the United States having expressed its desire that a banking group be formed to aid in the obtaining of loans to the Government of China, and the Department of State of the United States Government having expressed approval of the participation in such group of the parties to this agreement above named, and of such other persons, firms and corporations as the parties hereto may agree, with the approval of the said Department of State, to associate with themselves as hereinafter provided, the parties hereto severally are desirous of aiding or participating in any such loans as shall be sought and as shall prove acceptable to the parties hereto respectively, and accordingly hereby agree as follows:
First. In consideration of the premises and of the expected common benefits to result therefrom, the several parties to this agreement (including the parties hereinabove named and such other parties as they may associate with themselves hereunder as hereinafter provided), without forming a partnership, will cooperate as the American Group for the purpose of considering proposals for loans to the Government of China, and at the time of each such proposal of according to each of the parties to this agreement, severally and respectively, the opportunity of participating in any such loans as shall be approved.
The scope of this agreement shall include any loan or advance business, after the date of this agreement, with the Chinese Government, or with the Government of any of the provinces of China, or with any Chinese Government Department, or with Chinese Government official banks or companies having Chinese Government or Provincial Government guaranties, it being understood that there is excluded from the scope of this agreement current banking business, including small financial operations.
Any existing options in respect of Chinese loan or advance business such as is above described, which at the date of this agreement are held by any of the parties to this agreement, shall be transferred to the group.
Each proposition within the scope of this agreement which shall come to any member or members of the group, shall be submitted to the managing committee hereinafter provided for, and if approved by such committee shall be submitted by it to all the members of the group. Any member or members of the group may elect not to join in the proposition offered. The election of any member not to participate in any proposition shall not prejudice the right of such member to participate in subsequent propositions.
Any party to this agreement may withdraw at any time, but the agreement may not be dissolved except by the vote of a majority in interest. No withdrawal by any party shall relieve such party, or any other party, from liability in respect of any transactions in which such withdrawing party shall have previously elected to participate.
Second. With the consent of the managing committee hereinafter named, other persons or firms or corporations may become members of the group in [Page 186] accordance with the terms of this agreement. Each such additional party admitted into the group shall evidence his acceptance of participation in the group upon the terms of this agreement by subscribing one of the parts or copies of this agreement.
The interests of the parties hereinabove named, as well as of such other parties as may become associated with them as hereinbefore provided, shall be apportioned equitably as from time to time agreed upon between them and the managing committee.
In case any party shall decline to participate in any proposition, the share in such proposition otherwise belonging to such party shall be apportioned to the participating parties ratably according to their several shares.
In the proportion of their respective interests at the time in the group, the parties hereto severally and respectively shall contribute to the expenses in respect of any proposition taken under consideration in behalf of the group, incurred by the group or its agents prior to the acceptance of such proposition.
In the proportion of their respective interests in each proposition accepted by the group, the parties participating in such proposition (a) shall contribute to the expense in connection therewith incurred after acceptance, and (b) shall share in the net results thereof. It is understood, however, that in case upon or after the acceptance of any proposition additional participants therein shall be admitted, such additional participants shall bear, in addition to their ratable share of the expenses incurred after acceptance, a like ratable share of that portion of the expenses incurred prior to acceptance not borne by withdrawing members.
Third. The headquarters of the group shall be in the office of J. P. Morgan & Co. All negotiations undertaken for account of the group; decision as to whether any proposition shall be submitted to the group; and the detailed management of each proposition accepted by the group, shall be in the hands of a managing committee consisting of the following:
J. P. Morgan & Co., Kuhn, Loeb & Co., The National City Bank of New York, Guaranty Trust Co. of New York, and Continental & Commercial Trust & Savings Bank of Chicago.
For convenience, this agreement may be subscribed in several parts or copies with like force and effect as though the subscriptions were upon one part or copy thereof, each such part or copy to be taken as an original and all collectively as one instrument.
Witness the hands and seals of the parties hereto the day and year first above written.