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Enclosure 5 in No. 1.
Draft Supplementary Agreement respecting the Hukuang Railway Loan.
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on behalf of THIS agreement, made between his Excellency, the Imperial Chinese Government of the one part, and the Hong Kong and Shanghae Banking Corporation, the Deutsch-Asiatische Bank, the Bank de l'Indo-Chine, and Messrs. J. P. Morgan and Co., Messrs. Kuhn, Loeb, and Co., and the First National Bank, and the National City Bank, all of New York, constituting the American group, hereinafter called the "banks," of the other part, witnesseth as follows:-
Whereas an agreement, initialled on the 6th June, 1909, between the Imperial Chinese Government and the Hong Kong and Shanghae Banking Corporation, the Deutsch-Asiatische Bank, and the Banque de l'Indo-Chine, copy of which is attached hereto and made part hereof, hereinafter referred to as the original loan agreement, authorises these banks to issue a 5 per cent. gold loan for the sum of 5,500,0007., to be called the " Imperial Chinese Government 5 per cent. Hukuang Railways Loan of 1909," it is now agreed by and between the Imperial Chinese Government and the banks as follows:-
1. The amount of the said loan shall be increased to 6,000,000l., of which the sum of 3,000,0001. shall be allotted to the Hupei section of the Szechuan-Hankow
line.
2. The American group shall have a participation of one-quarter of the whole loan, with corresponding banking privileges and advantages. It is further under- stood that American materials shall be entitled to the same privileges and preferences as are reserved in article 18 of the original loan agreement to British, French, and German materials, plant, and goods.
3. It is understood that the articles of the original loan agreement shall be affected by the terms of the preceding clause in the following mauner :--
In articles 1, 3, 5, 6, 7, 8, 9, 10, 12, 13, 16, 20, 21, the words "the banks," where- the American group," and (or) its ever they occur, shall be understood to include
agents or nominees in China or elsewhere.
In articles 10 and 12 the words "Berlin, London, or Paris," where reference is made to the Chinese Minister, shall be understood to include "Washington," and where reference is made to the banks shall be understood to include "New York."
In articles 7 and 13 the word " Europe" shall be understood to mean "Europe and America," and in articles 13 and 17, and paragraph 4 of the letter covering the working regulations, the word "Europeans" shall be understood to mean "Europeans and (or) Americans.'
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In article 14, wherever "Berlin, London, Paris," are referred to, such reference shall be understood to include "New York," and wherever the Hong Kong and Shanghae Banking Corporation, the Deutsch-Asiatische Bank, and the Banque de l'Indo-Chine" are referred to collectively either by name or as "the banks," such reference shall be understood to include "the American group in New York or such banks in China as from time to time shall be designated by the American International Banking Corporation being now so designated.”
group,
the
With regard to article 18, such modifications or extensions of the provisions respecting the appointment of purchasing agents for the two lines as may be necessary to secure equal consideration for British, German, French, and American materials, and equal facilities for the receipt of tenders in the markets of the four countries, shall be made the subject of an equitable arrangement between the director-general and the four banks, and the words "British, French, and German," wherever they occur in said article 18, shall be understood to mean British, French, German, and American."
In article 22 the words "the American group" are understood after the words "the Banque de l'Indo-Chine."
are understood after the words
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In article 23 the words the American group "the Banque de l'Indo-Chine," and the words German, British, or French Company" are understood to mean "German, British, French, or American Company," &c.
The provisions of the original loan agreement in regard to supplementary and future loans, contained in articles 10 and 19 thereof, shall remain unaffected by this
(
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present agreement, except that the American right to oue-quarter participation in these supplementary and future loans is hereby recognised.
4. The Imperial ediet sanctioning the loan in accordance with the provisions of the original agreement as interpreted by this present agreement will be officially communicated to the Ministers of Great Britain, France, Germany, and the United States of America in Peking by the Wai-wu Pu.
Eight sets of this agreement are executed in English and Chinese, four sets to be retained by the Imperial Chinese Government and one set by each of the contracting banks and (or) groups. In the event of any doubt arising regarding the interpretation of the contract, the English text shall rule,
Signed at Peking, &c., &c.
Enclosure 6 in No. 1.
Draft of Letter respecting Imperial Chinese Government Fire per Cent. Hukuang Railways Loan of 1909.
BY article 18 of the present agreement it is provided that at rates and qualities equal to those of German, English, French, or other foreign materials, preference shall be given to Chinese materials and goods already manufactured in China, in order that Chinese industries may be encouraged.
Now, the most widely-used railway materials are sleepers and rails. China produces much timber, and therefore Chinese sleepers should be purchased if of suitable quality.
As regards rails, it is agreed that one-half shall be purchased from the countries of the contracting banks or from other countries, and one-half from the Hanyang Iron-works. If the output of the Hanyang Iron-works proves really insufficient for requirements, more can in that case be purchased from the countries of the contracting banks and other countries, in order to obviate delay. If, on the other hand, the output of the Hanyang Iron-works is sufficient, more rails can be purchased from them. All purchases will still be executed in the manner laid down by article 18 of the agreement.
Further, as regards engineers and other technical employés on the various sections, it shall be within the discretion of the director-general to appoint either Chinese or Europeans; or, on account of their familiarity with the survey of the line, may take into consideration the appointment of Japanese; provided always that such persons are suitable through possessing some knowedge of the language of the engineer-in-chief.
he
Again, since this loan is raised by the Chinese Government with the object of furnishing the necessary capital for constructing Government railways, the chief and branch bureaux established by the two provinces shall be entirely under the control of officers deputed by the director-general; and if amongst these officers it is found necessary to employ gentry, they shall act as deputies in all respects under the orders of the director-general.
Article 14 of the present agreement stipulates that two days prior to the issue of a requisition upon the loan funds, the managing director of the railway or his representative shall, in addition thereto, issue statements in duplicate clearly setting forth the objects of such requisition, one copy of which shall be handed to the bank and one to the auditor. The intention of this stipulation is that the managing director and the auditor shall each fulfil his responsibilities within his own province, and further that the auditor shall be enabled to discharge to the full his duties as auditor.
If the auditor is of opinion that in any requisition there are disbursements which should not be made, he shall be entitled on the one hand to apply to the managing director for specific information and to discuss the matter with him, and at the same time give notice to the bank temporarily to suspend the issue of such funds. As soon as he shall have satisfied himself by enquiry that the payments are actually such as are permissible under the terms of the agreement, he must at once notify the bank that they are to issue such funds accordingly. He shall not intentionally delay or obstruct matters to the hindering of important work, and it shall be imperative upon
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