This Document is the Property of His Britannic Majesty's Government.]
CHINA RAILWAYS.
CONFIDENTIAL.
[January 20.]
SECTION 1.
5085
REGP 11 FE 45
[2586]
(No. 1.) Sir,
No. 1.
Sir J. Jordan to Sir Edward Grey.--(Received January 20.)
Peking, January 1, 1909. IN my despatch No. 483 of the 27th October, 1908, I had the honour to report that the Board of Communications was borrowing the sum of 3,000000 taels from the Hong Kong and Shanghae Bank for the purpose of supplementing the loan funds available, under the Agreement of the 8th October, for the redemption of the Peking- Hankow Railway.
At that time, the Board of Communications maintained that the remaining portion of the total sum required would be met with Chinese funds, but it is evident that the necessary amount has not been forthcoming since the Board has followed up the loan of 3,000,000 taels from the Hong Kong and Shanghae Bank by similar loans from the Banque de l'Indo-Chine for 1,700,000 taels, from the Deutsch-Asiatische Bank for 1,200,000 taels, and from the Yokohama Specie Bank for 1,000,000 taels, making a total of 6,900,000 taels, equivalent to 762,0007.
From the loan Agreement with the Hong Kong and Shanghae Bank, of which I have the honour to inclose a copy, and which, as far as
formed a information goes, my model for the other contracts, it will be seen that China has thereby incurred a debt in silver at 7 per cent, per annuon for a period of three months on the security of the 1,000,0007. balance of the Anglo-French loan of the 8th October.
I am unaware of any advantages which this complicated method of raising money may possess for China, and can only judge from the fact that the transaction is con- sidered highly lucrative by the banks concerned that the borrowers have chosen a costly way out of their difficulties.
Of the internal loan, which formed the subject of my despatch above mentioned, nothing further has been heard.
I have, &c.
(Signed) J. N. JORDAN.
Inclosure 1 in No. 1.
Agreement between the Chiao-tung Bank and the Hong Kong and Shanghae Banking
Corporation.
THIS Agreement for a loan of 3,000,000 taels Shanghae syece is made between the Chiao-tung Bank, of the one part, and the Hong Kong and Shanghae Banking Corporation of the other part.
1. The Hong Kong and Shanghae Banking Corporation agrees to lend to the Chiao-tung Bank in Shanghae the sum of 3,000,000 taels Shanghae sycee. The loan shall date from the 10th day of December, 1908, and repayment of the same shall be made by the Chiao-tung Bank to the Hong Kong and Shanghae Banking Corporation in Shanghae, in Shanghae sycee, on or before the 10th day of March, 1909.
2. Interest on the loan shall be charged at the rate of 7 per cent, per annum up to the date of repayment, and shall be paid to the Hong Kong and Shanghae Banking Corporation, Shanghae, with the repayment of the principal of the loan.
3. The proceeds of the loan, namely, 3,000,000 taels Shanghae sycee, are to be remitted by the Hong Kong and Shanghac Banking Corporation, Shanghae, on the 10th day of December, 1908, by telegraphic transfer at the rate of 2 fr. 93 c. per Shanghae tael to Paris, and the equivalent, namely, 8,790,000 fr. is there to be held to the order of the Chiao-tung Bank.
4. The Chiao-tung Bank hereby guarantees and declares itself responsible for the payment to the Hong Kong and Shanghae Banking Corporation in Shanghae, at due date, of the principal and interest of this loan, the sanie being further secured by
[2104 u-1]