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(No. 26.)
Sir,
Inclosure 1 in No. 1.
Consul-General Fraser to Sir J. Jordan.
Hankow, April 22, 1908.
I HAVE the honour to transmit herewith copy of my despatch of yesterday's date to his Excellency the Governor of Hong Kong.
I have, &c.
(Signed)
E. H. FRASER.
Inclosure 2 in No. 1.
Consul-General Fraser to Governor Sir F. Lugard.
Your Excellency,
Hankow, April 21, 1908.
I HAVE the honour to forward a translation of the Agreement cancelling the Concession for the construction of the Hankow-Canton Railway granted to the American China Development Company.
The loan bonds mentioned in it were not presented, and are still outstanding, the interest payable on them being provided by Hupei, Hunan, and Kuangtung in the same proportions of one-seventh, three-sevenths, and three-sevenths as the Hong Kong Government's resumption loan instalments of interest and principal.
So soon as that loan was made, the Viceroy Chang Chih-tung suggested the advisability of a further loan of 5,450,000 taels on the same terms for the purpose of extinguishing all foreign interest in the railway. As under the Concession Agreements the holders of these loan bonds have no control over the line, his Excellency's request was not entertained by your Excellency's Government, and the British and Chinese Corporation demanded guarantees for a par loan, which His Majesty's Government could not agree to.
Upon every occasion, when the question of a British loan for construction purposes has been mooted, however, the Belgian Government, with French support, has claimed prior right to lend on the score of the unauthorized promise made by his Excellency Shêng in June 1898, set forth at p. 246 of Rockhill's Treaties and Conventions, and especially of Belgians being the holders of these bonds. I believe that this objection has had much to do with the Peking Government's forbidding any foreign loan for the Hankow-Canton Railway, and that his Excellency Chang Chih-tung might advise his colleagues on the Grand Council and the Board of Communications to negotiate a construction loan with British capitalists, were it possible now for your Excellency's Government to give favourable consideration to his proposition for a supplementary loan, the principal gradually to be paid off only after the total repayment of the resumption loan of 1905, the security for which would, in my opinion, amply cover such an addition to the loan.
In view of the Decrees forbidding foreign loans on behalf of the southern trunk line, I do not think the subject could be opened except at Peking. The present Viceroy likewise assures me that the prospect of the Hunan section being financed with native capital remains remote, but disclaims influence sufficient to overcome that province's objection to accept an alien loan.
I hope within a few days to be able to give definite information regarding the Hupei section.
I am forwarding copy of this despatch and its inclosure to His Majesty's Minister.
I have, &c.
(Signed)
E. H. FRASER.
Inclosure 3 in No. 1.
American China Development Company's Agreement to Sell the Road.
(Translation.)
(Submitted for Imperial perusal.)
THIS 29th August, 1905, Chang, Hukuang Viceroy, representative of the three Provinces of Hanan, Hupei, and Kuangtung, and Liang, Envoy to the United States of America and Mexico, acting on behalf of the Government of the Chinese Empire, party of the first part, and the China Development Company, of the State of New Jersey, United States of America, party of the second part, entered into the following Agreement
Whereas by a formal Agreement of the 14th April, 1898, made at Washington, United States of America, and by a Supplementary Agreement made on the 13th July, 1900, the party of the second part was invested with power to construct in the Empire of China a railway from Hankow city to Canton city, together with the right to operate the same.
And whereas, previous to the 7th June, 1905, the Imperial Chinese Government cancelled the two Agreements or the special powers aforesaid, declaring its determination itself to deal with the railroad in the said Agreements referred to. And duly notified the party of the second part of such cancellation and determination, and simultaneously of the Imperial Chinese Government's willingness to pay just compensation to the party of the second part for the cancellation of the Agreements above mentioned. And whereas the two parties to the present Agreement have agreed that the amount of such compensation to be paid by the party of the first part to the party of the second part shall be 6,750,000 American gold dollars. Now the terms decided upon are set forth in a preliminary contract as follows:---
“Preliminary Contract agreed upon between the Imperial Chinese Government and the China Development Company of the United States of America.
The
"Whereas the Chinese Government cancels and annuls the special powers for building the Yüeh-Han Railway, and its agreements, and does not authorize the Development Company to proceed with the railway work, but is willing to pay compensation at a fair rate. This compensation is fixed at a total sum of 6,750,000 American dollars. The Chinese Government may take over and control all the Development Company's property in China, the railroad already built, the railroad materials, surveys and plans, special mining powers, together with all power and privileges in China thereunto appertaining, whether express or implied whatsoever absolutely. Chinese Government loan bonds already taken up by the Development Company, apart from the 2,222,000 dollars already sold, shall all be returned to the Chinese Government's custody. As regards the 2,222,000 dollars already sold, the buyers may either return or retain them at their option, and if the buyers choose to retain them, either wholly or in part, the amount at the rate of 90 dollars per 100 dollars shall be deducted from the total sum of 6,750,000 dollars. Provided in any case the 55,550 dollars of interest accrued and due on these 2,222,000 dollar bonds upon the 1st May, 1905, must be duly paid by the Chinese Government within three months from the date of these presents; and further, within three months from the date of these presents the Chinese Government must pay an instalment amounting to 2,000,000 dollars of the total sum of 6,750,000 dollars, and the balance within six months of the said date unto the Development Company. It is agreed that the said payments shall be duly provided for by the Chinese Government, which shall on each instalment pay, in addition, interest at the rate of 5 per cent. per annum from the 1st May, 1905, to the date of payment of the
"The foregoing arrangement requires confirmation by the Chinese Government and the Development Company's shareholders to render it binding.
same.
Signed this 7th June, 1905, by Foster, Roots, Ying Ko-lau."
And whereas the shareholders of the party of the second part did, on the 29th August, 1905, in meeting assembled, duly confirm the foregoing preliminary contract, and a majority of the shareholders and directors of the said party of the second part have authorized the carrying out of the foregoing Preliminary Agreement, the managers of the party of the second part are able to complete the Agreement necessary for the carrying out of this contract;
And whereas a Decree of His Majesty the Emperor of China has duly confirmed the above draft contract, and appointed Chang Hukuang Viceroy and Liang Envoy to -carry out the original contract, Now, therefore, the two parties thereto agree as follows:-
The party of the first part agrees to give the party of the second part 6,750,000 American gold dollars, together with interest at 5 per cent. per annum, from the 1st May, 1905, to date of payment, whether one or several, in the manner following,
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