Papers Relating to the Foreign Relations of the United States, 1919, Volume I

893.77/1768

The Minister in China ( Reinsch ) to the Acting Secretary of State

Peking , April 12, 1919.
[Received May 17.]

No. 2680

Sir: I have the honor to transmit herewith enclosed the texts of agreements⁸⁷ as given out by the Foreign Office in a translation appearing in the Peking Leader. ⁸⁸

I have [etc.]

Paul S. Reinsch

[Enclosure 1—Translation]

Preliminary Agreement between the Chinese Government and Certain Japanese Banks for the Tsinanfu-Shunteh and Kaomi-Hsu-chow Railway Loan, Signed September 28, 1918

For the purpose of constructing a railway from Tsinanfu in Shantung to Shunteh in Chihli and another from Kaomi in Shantung to Hsuchow in Kiangsu (which are to be called “the two railways” hereinafter) in China. The Government of the Republic of China (to be called “the Government” hereinafter) has entered into the following preliminary agreement with the three Japanese banks, the Nippon Kiogio Bank, the Bank of Taiwan and the Bank of Chosen (to be called “the Banks” hereinafter) which are represented by the Nippon Kiogio Bank, as a preparatory step towards the conclusion of a formal loan agreement.

• Article 1. The Government shall sanction the issue, through the Banks of the Tsi-Shun Railway Gold Currency Public Loan Bonds and the Kao-Hsu Railway Gold Currency Public Loan Bonds of the Government of the Chinese Republic (to be called “the two railway loan bonds” hereinafter) to meet all the expenses to be incurred in the construction of the railways from Tsinanfu in Shantung to Shunteh in Chihli and from Kaomi in Shantung to Hsuchow in Kiangsu.
• In case it shall be found after investigation that the construction and management of the two railways, Tsi-Shun and is likely to prove to be Kao-Hsu, unprofitable⁸⁹ the Government and the Banks may alter the lines by mutual consent.
• Article 2. The Government shall speedily make an estimate about the funds required for the construction and other purposes in connexion with the two railways and submit the same to the Banks for approval.
• Article 3. The time limit for the issue of the two railway loan bonds shall be forty years from the date of their issue; and the repayment of capital shall commence from the eleventh year, and shall be made by annual instalments.
• Article 4. Construction of the two railways shall be commenced simultaneously with the conclusion of the formal agreement of the two railway loan[s] by the Government and it shall be completed as soon as possible.
• Article 5. The Government shall offer the following as security against the redemption of, and payment of interest on, the two railway loan bonds:
• All the properties [which] at present [belong or in future] shall belong to the Tsi-Shun and Kao-Hsu Railways and their revenue. The Government shall not pledge the aforesaid properties or their revenue as security or guarantee to other persons without the approval of the Banks.
• Article 6. The issuing price of the two railway loan bonds, their rate of interest and the net receipt from the sale of the said bonds by the Government shall be fixed by mutual consent at the time of issue on a principle advantageous to the Government.
• Article 7. Regarding details not been [sic] stipulated in the foregoing articles the Government and the Banks may arrive at an understanding by mutual agreement.
• Article 8. The formal agreement of the Tsi-Shun and Kao-Hsu Railway Loan shall be based on the present preliminary agreement and it shall be concluded within four months after the conclusion of the latter.
• Article 9. Upon the conclusion of this preliminary agreement the Banks shall make an advance of 20,000,000 Yen to the Government in full without any discount.
• Article 10. The rate of interest to be paid on this advance shall be eight per cent, per annum, that is, on every hundred Yen eight Yen shall be paid as interest every year.
• Article 11. This advance shall be made to the Government as payment on the Government Treasury Bonds in accordance with the “discount” practice.
• Article 12. The aforesaid Treasury Bonds shall be changed once in every six months and each time the Government shall pay the interest of six months to the Banks.
• Article 13. After the conclusion of the formal agreement of the Tsi-Shun and Kao-Hsu Railway Loan the Government shall first of all repay this advance with the proceeds from the sale of the said loan bonds.
• Article 14. The delivery of this advance, the repayment of same and the payment of interest on same and other matters of delivery and receipt in connexion thereof shall be transacted in Tokyo.

Of this preliminary agreement two sets, each containing two copies, one written in the Chinese language and the other in Japanese, shall be provided and the Government and the Banks shall each keep one copy. In case any doubt arises regarding the interpretation of the provisions therein the Japanese version shall be considered binding.

(Signed and Sealed)

Chang Chung-hsiang,

Envoy Extraordinary and Minister
Plenipotentiary of the Chinese Republic.

Koe [Ono?],

Vice-Governor of the Nippon Kiogio Bank.

The 28th day of the 9th month of the 7th year of the Chinese Republic.

The 28th day of the 9th month of the 7th year of Taisho of Imperial Japan.

[Enclosure 2—Translation]

Preliminary Agreement between the Chinese Government and Certain Japanese Banks for the “Four Manchurian and Mongolian Railways” Loan; Signed September 28, 1918

For the purpose of constructing a railway from Jehol to Taonan, another from Changchun to Taonan, a third from Kirin through Hailung to Kaiyuan, and a fourth from a point on the Jehol-Taonan line to a certain harbour (to be hereinafter called “the four Manchurian and Mongolian Railways”) the Government of the Republic of China (to be hereinafter called “the Government”) has entered into the following preliminary agreement with the three Japanese Banks, the Nippon Kiogio Bank, the Bank of Taiwan and the Bank of Chosen, (to be hereinafter called “the Banks”) which are represented by the Nippon Kiogio Bank, as a preparatory step towards the conclusion of a formal loan agreement.

• Article 1. The Government shall sanction the issue, through the Banks, of the Je-Tao Railway Gold Currency Public Loan Bonds, the Chang-Tao Railway Gold Currency Public Loan Bonds, the Ki-Kai Railway Gold Currency Public Loan Bonds, and the … Railway Gold Currency Public Loan Bonds (to be hereinafter called “the Four Manchurian and Mongolian Railway Gold Currency Public Loan Bonds”) of the Government of the Chinese Republic to meet all the expenses to be incurred in the construction of the railways between Jehol and Taonan, between Changchun and Taonan, between Kirin and Kaiyuan and between a certain point on the Jehol-Taonan line to a certain harbour.
• But the line from a point on the Jehol-Taonan line to a certain harbour may be determined by the Government and the Banks by mutual consent.
• Article 2. The Government shall make an estimate of the funds required for the construction and other purposes in connexion with the four Manchurian and Mongolian Railways and submit the same to the Banks for approval.
• Article 3. The time limit for the issue of the Four Manchurian and Mongolian Railway Gold Currency Public Loan Bonds shall be forty years from the date of their issue; and the repayment of capital shall commence from the eleventh year and shall be made by annual instalments.
• Article 4. Simultaneously with the conclusion of the formal Agreement of the Four Manchurian and Mongolian Railway Loan the Government and the Banks shall mutually decide upon the plans of construction of the said railways, which should be done and completed as soon as possible.
• Article 5. The Government shall offer the following as security against the redemption of, and payment of interest on, the Four Manchurian and Mongolian Railway Gold Currency Public Loan Bonds:
• All properties which at present belong or in future shall belong to the Four Manchurian and Mongolian Railways and their revenue.
• The Government shall not pledge the aforesaid properties or their revenue as security or guarantee to other persons without the approval of the Banks.
• Article 6. The issuing price of the Four Manchurian and Mongolian Railway Gold Currency Public Loan Bonds, their rate of interest and the net receipt from the sale of the said bonds by the Government shall be fixed by mutual consent at the time of issue on a principle advantageous to the Government.
• Article 7. Regarding details not stipulated in the foregoing articles the Government and the Banks may arrive at an understanding by mutual agreement.
• Article 8. The formal agreement of the Four Manchurian and Mongolian Railways shall be based on the present preliminary agreement and it shall be concluded within four months after the conclusion of the latter.
• Article 9. Upon the conclusion of this preliminary agreement the Banks shall make an advance of 20,000,000 Yen to the Government in full without any discount.
• Article 10. The rate of interest to be paid on this advance shall be eight (8) per cent, per annum, that is, on every hundred Yen eight Yen shall be paid as interest every year.
• Article 11. This advance shall be made to the Government as payment on the Government Treasury Bonds in accordance with the “discount” practice.
• Article 12. The aforesaid Treasury Bonds shall be changed once in every six months and each time the Government shall pay the interest of six months to the Banks.
• Article 13. After the conclusion of the formal agreement of the Four Manchurian and Mongolian Railway Loan the Government shall first of all repay this advance with the proceeds from the sale of the said loan bonds.
• Article 14. The delivery of this advance, the repayment of same and the payment of interest on same and other matter of delivery and receipt in connexion thereof shall be transacted in Tokyo.

Of this preliminary agreement two sets, each containing two copies, one written in the Chinese language and the other in Japanese, shall be provided and the agreement and [sic] the Banks shall each keep one set. In case any doubt arises regarding the interpretation of the provisions therein the Japanese version shall be considered as binding.

(Signed and Sealed)

Chang Chung-hsiang,

Envoy Extraordinary and Minister Plenipotentiary of the Chinese Republic.

Ono,

Vice-Governor of the Nippon Kiogio Bank.

The 28th day of the 9th month of the 7th year of the Republic of China.

The 28th day of the 9th month of the 7th year of Taisho of Imperial Japan.

87. See also Foreign Relations, 1918, p. 205.
88. Issues of April 10 and 11, 1919.
89. Error in file copy; should read, “Tsi-Shun and Kao-Hsu, are likely to prove to be unprofitable”.