893.51 Con. Ob. Andersen, Meyer and Co./23
The Chinese Acting Minister for Foreign Affairs ( Wang ) to the American Minister in China ( Johnson )30
Sir: I have the honor to acknowledge the receipt of your formal note of June 13, 1935, concerning the agreement signed on October 30, 1933, between the Ministry of Railways acting for and on behalf of the Peiping-Hankow Railway Administration and Messrs. Andersen, Meyer & Co., Ltd., the General American Car Company and the Baldwin Locomotive Works, which provided for a monthly payment of $50,000 on the debts. You stated that, however, paragraph three of the agreement provides: “as and when there should be an improvement in the financial condition of the road the monthly payment would be increased.” You requested that I impress upon those concerned (the necessity) of fulfilling the obligations as set forth in paragraph three of the agreement.
This Ministry at once addressed a despatch to the Ministry of Railways requesting it to consider the matter and take action. A reply has now been received, stating:
“We have the honor to observe that since the agreement for adjustment of material debts between the Peiping–Hankow Railway and Messrs. Andersen, Meyer & Company, Ltd., and other American firms was signed the Railway has duly fulfilled the agreement without fail
“The provisions contained in paragraph three of the agreement refer to the general financial condition of the Railway. In order to improve the financial condition, it is necessary to devise means to pay the principal and interest of loans, and other debts similar in nature to those owed to American firms should also be adjusted. Furthermore, for the purpose of developing the business and increasing the income, it is even more necessary to consider purchases of equipment required. The twenty locomotives recently purchased by bids by the Peiping–Hankow Railway are necessary additional equipment which should be purchased. Thus the income will be increased in the future and the various creditors will be benefited.
“The opinion of the American Minister appears to be merely that the increased income of the Peiping–Hankow Railway should first be used to increase payment of material debts owned to American firms, and that, on the contrary, other debts and all legitimate needs of the Railway should be disregarded. This really confuses the increase of income with the improvement of financial condition as the same, and appears to be a misinterpretation of the original purport of paragraph three of the agreement.
“In short, this Ministry implicitly observes the signed agreement mentioned above. At the present time there has been no stabilized development nor improvement of the financial condition of the said [Page 761] Railway. Wait until the suitable time comes, when of course negotiations will certainly be held with the creditors and action taken.”
I have the honor to make this reply for your information.
- Copy transmitted to the Department by the Minister in China in his despatch No. 3740, August 13; received September 7.↩