893.51 Con. Ob. Andersen, Meyer and Co./23
The American Minister in China (Johnson) to the Chinese Acting Minister for Foreign Affairs (Wang)29
Excellency: I have the honor to inform Your Excellency that on October 31, 1933, the Ministry of Railways acting for and on behalf of the Peiping-Hankow Railway signed an agreement with certain American creditors of that railway, namely Messrs. Andersen, Meyer & Co., Ltd., the General American Car Company and the Baldwin Locomotive Works, for the liquidation of debts owed these companies for materials supplied to the railway. The agreement provided for a minimum monthly payment by the railway to the above mentioned creditors of silver $50,000 per month. An additional proviso, however, contained in paragraph three of the agreement, stated that the minimum payment of $50,000 monthly was based on the financial condition of the railway at the time the agreement was signed and that as and when there should be an improvement in the financial condition of the road the monthly payment would be increased.
Since that time there appears to have been a marked improvement in the financial condition of the railway. The Railway Gazette, which is published by the Ministry of Railways, in its editions No. 1127 of March 30, 1935, No. 1134 of April 8, 1935, No. 1135 of April 9, 1935, No. 1139 of April 13, 1935, No. 1146 of April 22, 1935, No. 1153 of April 30, 1935, No. 1156 of May 3, 1935, No. 1157 of May 4, 1935, No. 1169 of May 18, 1935, and No. 1175 of May 25, 1935, gives ample evidence of the very considerable improvement in the earnings of this road. The increase in income appears to have averaged about $200,000 a week for the last three months. The Legation, however, has been informed that, in spite of the improved condition in the earning power of the Peiping-Hankow Railway, the Minister of Railways, when [Page 758] the matter was discussed with him recently, not only declined to consider the question of an increase in the monthly payment to the American creditors, but gave no assurance that the provision of paragraph three would be complied with in the future. The Legation has now been advised that the Ministry of Railways has placed an order for some twenty new locomotives for the Peiping-Hankow Railway at a cost of approximately $1,500,000, which it is understood are to be paid for in cash. That the railway is at this time undertaking new commitments involving large disbursements is surprising in view of the agreements above-mentioned. I therefore urge that Your Excellency impress upon the Minister of Railways the necessity of fulfilling his obligations to the American creditors of the Peiping-Hankow Railway as set forth in paragraph three of the above-mentioned agreement.
I avail myself [etc.]
- Copy transmitted to the Department by the Minister in China in his despatch No. 3740, August 13; received September 7.↩