893.51/4907
The Minister in China (MacMurray) to the Secretary of State
Peking, March 11,
1926.
[Received April 23.]
No. 508
Sir: With reference to my telegram No. 523 of
December 11, 1925, 12 noon,16 in which I reported that the Hukuang bond payment
was again in default, I have the honor to transmit herewith enclosed,
for
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the Department’s
information, a copy of a joint note dated December 12, 1925, signed by
the British and French Ministers, as well as by myself, to the Wai Chiao
Pu, protesting against the default. There is also transmitted herewith
enclosed a copy, in translation, of note No. 120, dated December 31,
1925, from the Foreign Office in reply.
The Department’s attention is invited to the quotations therein from the
Ministry of Communications to the effect that “this debt has already
been placed in the category of those to be consolidated by the new
Customs surtax,” and “we have also already written the Ministry of
Finance, requesting that an appropriation be made to meet the principal
and interest due this time.”
In view of this unsatisfactory reply the interested Ministers, after
agreement with their respective Group representatives, transmitted, on
February 10, 1926, an identic memorandum to the Wai Chiao Pu in which
inquiry was made as to the nature of the means which were being
contrived by the Ministry of Finance for the payment of the loan
service, and requesting that, failing the provision of funds from other
sources, the necessary funds should immediately be furnished from
Customs revenues.
I am now in receipt of a memorandum from the Ministry of Foreign Affairs,
dated March 5th, in reply. This memorandum quotes a statement from the
Ministry of Communications to the effect that the Hukuang Loan has
already been placed by the Ministry of Communications before the
Commission for the Readjustment of Finance, with a request that,
together with others, the loan be placed upon the list for
consolidation.
Copies of the enclosures accompanying this despatch have been transmitted
to the American Group Representative for his information. The Department
will be informed of any further action in this case.
I have [etc.]
[Enclosure 1]
The American, French, and
British Ministers to the Chinese
Ministry of Foreign Affairs
The Undersigned, the British, French and American Representatives,
present their compliments to His Excellency the Minister for Foreign
Affairs, and have the honour to state that they have been informed
by the Agents of the Banks concerned that the amount of £261,046.
5s. 5d., including the unpaid service of the German issued portion
due in June last, namely £73,245: 8s. 10d., payable on December 3rd
on account of the Hukuang Railways Loan is in default, and that the
Banks have been informed by the Ministries concerned that the
Chinese Government is unable to meet payment.
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The Undersigned have the honour to point out that payment to the
bondholders is due on December 15th and that there are still some
days in which it is possible by prompt measures to avoid the grave
consequences of public default. They would in this connection,
referring to their Joint Memorandum of October 12th, 1923,18 remind His Excellency that according to
Article 8 of the Loan Agreement19 the Chinese
Government undertook if payment of the Loan Service could not be
made from the funds originally designated for the purpose:—
“to make arrangements to ensure that the
amount of deficiency be met from other sources and handed
over to the Banks on the dates upon which funds were
required to complete full payment of interest and repayment
of principal.”
From this provision it is clear that the Hukuang
Loan Service is entitled to an automatic priority of charge on the
available revenues of the Chinese Government over loans contracted
at a later date, such as the internal loans, the services of which
are now being met out of Customs revenues, and the Undersigned have
therefore the honour to request that the necessary funds shall
immediately be furnished from the Maritime Customs revenues.
- J. V. A. MacMurray
- D. DeMartel
- Ronald Macleay
Peking, 12 December,
1925.
[Enclosure 2]
The Chinese Ministry of
Foreign Affairs to the American Minister
(MacMurray)
[Peking,] December 31,
1925.
No. 120
Sir: We have the honor to acknowledge the
receipt of a joint memorandum from you, the British, and the French
Ministers, stating:
(The Undersigned … Representatives) “… have the honour to
state that they have been informed by the Agents of the
Banks concerned that the amount of £261,046–5s–5d, including
the unpaid service of the German issued portion due in June
last, namely £73,245–8s–10d, payable on December 3rd on
account of the Hukuang Railways Loan is in default, and that
the Banks have been informed by the Ministries concerned
that the Chinese Government is unable to make payment.
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“… According to Article 8 of the Loan Agreement … the Hukuang
Loan service is entitled to … priority … over loans
contracted at a later date ….”
This Ministry at once communicated a request for consideration and
action to the Ministries of Finance and Communications,
respectively. We have now received a note in reply from the Ministry
of Communications, stating:
“Because the supplementary loan of this railway could not be
floated, work on the road was suspended and the receipts
have thus been small, and the railway has been unable to pay
the principal and interest of the Hukuang Railway Loan when
due, so that the Government has had the heavy expense of
meeting the payment each time. Further, recent conditions
have been much upset, and the Government has found it
difficult to prepare the funds, and this debt has already
been placed in the category of those to be consolidated by
the new Customs surtax.
On the other hand, we have also already written the Ministry
of Finance, requesting that an appropriation be made to meet
the principal and interest due this time.”
This Ministry having received the foregoing communication, we have
the honor, Mr. Minister, to indite this note for your
information.
With compliments.
Seal of the Ministry of Foreign
Affairs
[Enclosure 3]
The American, French, and
British Ministers to the Chinese
Ministry of Foreign Affairs
[Peking, February 10,
1926.]
The Undersigned, the British, French, and American Representatives,
have the honour to acknowledge the receipt of the letter from the
Wai Chiao Pu of the 31st ultimo20 on the subject of
the default in the Hukuang loan coupon, and they note that the
Ministry of Finance have been requested to contrive means for the
payment of the instalment of the loan service now overdue. More than
a month has, however, since elapsed without the default in this
important railway loan having been made good, and they have
therefore the honour to enquire the nature of the means which are
being contrived by the Ministry of Finance for the payment of the
loan service, and to renew their request that, failing the provision
of funds from other sources, the necessary funds shall immediately
be furnished from Customs revenues.
[File copy not signed]
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[Enclosure 4]
The Chinese Ministry of
Foreign Affairs to the American Minister
(MacMurray)
Memorandum
The Ministry of Foreign Affairs has the honor to acknowledge the
receipt of the American Minister’s memorandum of February 10th,
regarding the sums which should be paid on principal and interest of
the Hukuang Loan, which was at once communicated for consideration
and action to the Ministry of Communications.
The Ministry of Foreign Affairs has now received a reply from the
Ministry of Communications, stating:
“We have the honor to recall that the Hukuang Loan, principal
and interest, has already been placed by this Ministry
before the Commission for the Readjustment of Finance, with
a request that the loan be consolidated with others and
handled from the new Customs surtax. As to the payment of
principal and interest now due, as conditions are now much
disturbed, no payment can be made.
“Aside from addressing despatches to the Ministry of Finance
and to the Commission for the Readjustment of Finance, we
have the honor to indite this note for the information of
your Ministry and to request that you will in turn inform
those concerned.”
The Ministry of Foreign Affairs has the honor to make this reply to
the American Minister.
