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co-operate with the American group for the working of two coal mines in the vicinity of the railway, in which Pauling and Co. would also be interested.
A further letter from the administration, dated the 30th April, 1910, referred to the use of loan funds for colonisation purposes and the opening of an ice-free port at Chinchou
The letters from the Viceroy, dated the 26th April, 1910, were accepted by Mr. Straight on that date, his acceptance of the final loan agreement, however, being made conditional upon the receipt of the assurances which were eventually embodied in the two letters received from the administration on the 30th April, 1910, together with an engagement on the part of the Viceroy that the construction contract with Pauling and Co. (Limited) was practically concluded.
On the 30th April, 1910, therefore, Mr. Straight addressed to the Viceroy a letter finally accepting the loan agreement and the letters supplementary thereto.
Messrs. Pauling and Co., who were parties to the preliminary agreement, concluded their construction contract with the Manchurian administration carly in May. This contract was recognised as final in a letter similar to that addressed by the Viceroy to Mr. Straight with regard to the final loan agreement.
By private arrangement between Messrs. Pauling and Co. and the American group it is provided that Pauling and Co. shall pay to the American group 24 per cent, on the contract price for the line, certain provisions being made for additional payments in case Messrs. Pauling and Co.'s profits exceed a certain percentage on the total cost. Messrs. Fauling and Co. have also engaged, where foreign materials are used in the construction of the railway, that one-half shall be American and one-half British,
The American group is authorised by Messrs. Pauling and Co. to state that, in case the other partics to the interbank and intergroup agreements concluded on the 10th November, 1910, accept the offer of the American group to participate in the Chinchou-Aigun loan, they shall be entitled to a pro rate share of the 23 per cent. to be paid by Messrs. Pauling and Co. on the contract price, and Messrs. Pauling and Co. will, in so far as possible (in view of the fact that their contract price has been based on all foreign materials used being one-half American and one-half British), use German and French materials in addition as nearly as possible in equal proportions. In case the other parties to the interbank agreement accept the American offer of participation in the Chinchou-Aigun loan on the basis above outlined, Messrs. Pauling and Co. will be prepared to exhibit their construction contract.
The Russian Government has informed the Chinese Government that it objects to the construction of the Chinchou-Aigun Railway, and in the face of this opposition China has not yet seen fit to ratify the detailed agreement.
Japan has informed China that she has no objection to the Chinchou-Aigun Railway, but that should it be constructed she desires such participation as may be agreed upon by the interested parties, and desires also that China shall engage to construct a branch line between the Chinchou-Aigun Railway and the South Manchurian Railway.
In order to secure the withdrawal of the Russian opposition various alternative schemes have been proposed; none of these, however, has as yet been adopted.
A suggestion has recently been informally put forward by the Russian Minister in Peking, which is now being considered by the group, and which, if acceptable to China, would provide for the construction of a line from Chinchou via Taonan-fu to Hailar, and of another line from Harbin to Aigun.
It is hoped that, since Russia shows no disposition to obstruct all railway construction in Manchuria, a solution of the present difficulties may be reached satisfactory to all parties.
It is probable, in the light of the Russian objection to the Chinchou-Aigun Railway as originally contemplated, that certain amendments must be introduced in both the loan and the construction contracts to meet new conditions, and it is in this connection that the American group anticipates it will be possible to so amend the final agreement, as now accepted, as to permit of the admission of the other parties to the interbank agreement.
W. D. S.
November 9, 1910.
[This Document is the Property of His Britannic Majcety's Government 191
CHINA RAILWAYS.
CONFIDENTIAL.
[45233]
CO
1168
[December 14.]
RESP
SECTION 2.
REGE 13 JAN 11
No. 1.
Memorandum communicated by Mr. Kato, December 14, 1910. SUMMARY of the agreement signed in London on the 10th November, 1910, among representatives of the British, French, German, and American groups :----
Consideration.-Each of the groups to bring into the common pool certain railway concessions (or any other adequate concessions (?)) in China appertaining to each of
them.
Scope.--Loan and advances concluded or to be concluded with the Chinese Government or any of the provinces forming part of the Chinese Empire.
Conditions.--Independence of negotiations for each of the groups, but joint signature of agreement and equal division of results obligatory.
Period.--Agreement in force till the 31st December, 1912; thereafter, terminable at six months' notice.
The considerations tendered by the groups :-
The British Group.--The Hankow-Kwangtung Railway, the Hankow-Szechuan Railway, the Pukow-Sinyang Railway concessions.
The French Group---The Hankow-Szechuan Railway concession. The German Group.---The Hankow-Hunan Railway concession. The American Group.-The Hankow-Szechuan Railway concession, the currency loan, and the Chinchow-Aigun Railway loan.
On the 23rd November the French Ambassador in Tokyo called on Count Komura, and made in substance the following communication as under instructions:--- According to the American Ambassador in Paris, the object of the new Chinese loan was currency reform, whilst the French Minister to China reported that the question as to how the proceeds of the loan were to be used was not yet decided, and M. Pichon was uncertain which information was true. The French Government consented in principle to the participation of the French group in the Chinese loan, but should they find that the money was to be employed in any way not consistent with the stipulations of the Treaty of Portsmouth regarding Manchuria and Mongolia, or the special interests therein established by the two subsequent conventions between Japan and Russia, they would cause the French financials to take immediate steps to decline their participation in the loan. In short, the Government of the republic desired to announce that their attitude on the Chinese loan in question was exactly the same as that which they assumed in regard to the Manchurian railways neutralisa- tion question of the last year.
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