The Chinese Minister for Foreign Affairs (Wang) to the American Ambassador in China (Johnson)98


Sir: I have the honor to quote hereunder a joint despatch which has been received from the Ministries of Finance and Railways: [Page 671]

“With reference to the Hukuang Railway Loan, we, the two Ministries, have held prolonged discussions with the creditors of the four nationalities, British, French, American and German. A procedure for adjustment has recently been decided upon. This procedure was advertised in the press on April 5 in an announcement to the public. There are enclosed copies, in Chinese and English, of the announcement and the amortization schedule with the request that they be transmitted to the British, French, American and German Embassies in China for their records.”

I have the honor to indite this note for your information, and to transmit with it one copy each of the announcement in English and Chinese as well as a copy of the amortization schedule referred to above.99

Accept [etc.]

Wang Chung-hui

Announcement of Offer Concerning Service of the Hukuang Railway Loan of 1911

(Published April 5, 1937)

Their Excellencies the Ministers of Finance and Railways announce the following offer concerning the service of the outstanding bonds of the Hukuang Railway Loan of 1911 amounting to about £5,650,000, under which the interest rate paid is to be reduced in 1937–38 and the amortization plan modified. Other provisions of the Hukuang Loan contract are to remain unchanged.

Interest is to be paid at the rate of 2½% per annum in 1937–38 inclusive and 5% per annum thereafter. Payment of interest is to be made out of net earnings of the railway and guaranteed out of salt revenue. Interest due as from January 1, 1941, is to be guaranteed also out of customs revenue with rank as to the date of this announcement.
Amortization is to begin in 1941 and to be completed in 39 years from 1937 according to a table to be filed with the paying agents. Payment of amortization and of the scrip to be issued in accordance with paragraph three hereof is to be made out of net earnings of the railway and any deficiency to be made good from revenues under control of the Ministry of Finance. The Government upon reasonable notice and without premium may increase the amount of principal retired on any payment date. Bonds drawn but not yet retired are to be paid according to the order of drawing.
Interest in arrears is to be calculated at 1% per annum simple interest instead of 5%. Non-interest bearing scrip is to be issued for arrears of interest so calculated, and also for one-fifth of the short [Page 672] fall of interest during 1937–38. This scrip is to be paid beginning 1942 over approximately 20 years, the yearly installments to be substantially equal except that the Government reserves the right of transferring to the last three of the aforementioned approximately 20 years not over 50% of payments due in the first three years.
Suitable instructions are to be given to the Chinese Maritime Customs, the Chief Inspectorate of Salt Revenue, the Central Bank of China, and the Railway Administration to give effect to the understanding reached.

Announcement also was made that the railway authorities are taking steps to improve the condition of the railway and its administration on the general lines contemplated in the loan agreements with a view to benefiting both the interest of the Government and of the bondholders.

  1. Copy transmitted to the Department by the Ambassador in his despatch No. 1220, May 7; received June 1.
  2. Not printed.