File No. 893.51/1958
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.
[Enclosure]
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
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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.
