893.51/6382
The Chinese Minister for Foreign Affairs
(Wang) to the American Ambassador in China (Johnson)98
[Translation]
[Peiping,] April 27, 1937.
Sir: I have the honor to quote hereunder a
joint despatch which has been received from the Ministries of Finance
and Railways:
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“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.]
[Enclosure]
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.
- 1.
- 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.
- 2.
- 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.
- 3.
- 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
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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.
- 4.
- 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.
