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would bring to bear on the task, and having no strong support from his own legation, he will probably either seek to obtain it from some other legation or become a mere puppet in the hands of the Chinese.
It is evident even at this early stage of the negotiations, that the Chinese are trying to minimise the importance of the adviser question.
The term of his service, according to Mr. Calhoun, is to be made as short as possible, although the loan runs for a period of forty-five years.
His appointment should presumably precede the preparation of the currency programme, the execution of which is to be his chief duty, but Mr. Callioun appeared to think that the signature of the agreement might take place at once and the appointment of the adviser could be arranged later.
Mr. Hillier informs me that the draft agreement is open to many objections from a banker's point of view, and will require considerable revision. He therefore asks that it may be considered strictly confidential so as to avoid possible complications and misunderstanding.
I have, &c.
J. N. JORDAN.
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Art. 6. This agreement is executed in duplicate in English and Chinese, one set to be retained by the Government and the other set by the American group. In case there be any misunderstanding arising from a difference between the English and Chinese texts the matter shall be settled by a mutually satisfactory arrange- In the event of it being impossible to come to a mutual understanding regarding the points not already settled, then this preliminary agreement will be cancelled.
ment.
Signed at Peking by the contracting parties this 25th day of the 9th moon of the second year of Hsuan Tung, corresponding to the 27th day of October, 1910 (Western calendar).
Enclosure 1 in No. 1.
Preliminary Agreement made between the Imperial Government of China and the American Group, covering a Loan of 50,000,000 gold dollars,
PRELIMINART AGREEMENT made between the Board of Finance acting on behalf of the Imperial Chinese Government, hereinafter called "the Government," of the first part, and Messrs. J. P. Morgan and Co., Messrs. Kuhn Loeb and Co., The First National Bank, and The National City Bank, all of New York City, constitute the American group, hereinafter called "the group," of the second part.
WHEREAS the Government, desiring to facilitate certain changes in the administration of Imperial and Manchurian finance, and to undertake certain industrial enterprises in Manchuria, proposes to create and issue Imperial Chinese Government Sinking Fund Gold Bonds, bereinafter known as "the bonds," in an aggregate principal amount not exceeding 50,000,000 dollars United States gold coin, and to negotiate a loan in the manner and form to be hereafter approved. It is agreed as follows:-
Article 1. The Government agree to issue and the group agree to offer on behalf of the Government a gold loan, hereinafter referred to as "the loan," for an amount not exceeding 50,000,000 dollars United States gold coin, on the terms and subject to the conditions to be stated in a final agreement to be negotiated as hereinafter provided.
Art. 2. The loan shall constitute a direct liability and obligation of the Imperial Government of China, which bereby pledges its good faith and credit for the punctual payment of the principal and interest of the loan.
Art. 3. The rate of interest on the loan shall be 5 per cent. per annum; the group shall take the bonds at 95 flat. The net proceeds of the loan shall be deposited with the group or its duly authorised representatives in New York or elsewhere, subject to withdrawal for the requirements of the operations contemplated under the loan, and the conditions governing such deposit and withdrawal, the term of the loan, the manner and form of payment of the interest and amortisation charges, also the date from when interest upon the bonds is to commerce and to cease, the creation of a sinking fund and other provisions necessarily incident to the service and redemption of the loan shall be settled in a mutually satisfactory manner, and stated in the final agreement.
Art. 4. Interest and amortisation payments and other expenses incident to the service of the loan shall be made the first charge upon such revenues as shall be suitable and sufficient for the purpose to be hereafter agreed upon and stated in the final agreement.
Art. 5. This preliminary agreement is subject to ratification by Imperial edict, which Imperial edict when issued shall be officially communicated to the American Legation at Peking by the Wai-wu Pu with the request that the group enter at once upon negotiations of the final agreement with the board or the high official to be designated by the Imperial Government of China.
Enclosure 2 in No. 1.
Draft Agreement respecting 50,000,000 dollars Chinese Currency Loan, dated February 25, 1911.
(Draft of February 12, 1911, as amended in conference with his Excellency Sheng Kung Pao, February 19, 1911.)
AGREEMENT made between the Imperial Chinese Government, represented by the Board of Revenue acting under Imperial edict on its behalf, hereinafter called "the Government," of the one part, and the American group, the Hong Kong and Shanghai Banking Corporation, the Deutsch-Asinstische Bank, the Banque de l'Indo-Chine, hereinafter called "the banks," of the other part, witnesseth, as follows:-
WHEREAS the Government, desiring to establish a uniform currency in accordance with a plan to be prepared, and to undertake certain industrial enterprises in Manchuria, proposes to negotiate a loan for such purposes and to evidence the same by the issue of Imperial Chinese Government Sinking Fund Gold Bonds, hereinafter known as "the bonds," in an aggregate principal amount not exceeding 10,000,0007, în manner and form as hereinafter set forth; and
Whereas a preliminary agreement providing for the negotiation of this final agreement for the loan for tlie purposes above-mentioned was duly signed by the Government with the American group at Peking on the 25th day of the 9th moon of the second year of Hsuan Tung, being the 27th day of October (Western calendar), and was subsequently ratified by Imperial edict; and
Whereas the American group being now associated with the Hong Kong and Shanghai Banking Corporation, the Deutsch-Asiatische Bank and the Banque de l'Indo-Chine, the Government has consented that these banks shall, with the American group, act as joint agents for the issue of the loan hereunder;
Therefore it is agreed as follows:-
Article 1.-The preliminary agreement hereinbefore mentioned shall be considered binding only as interpreted by this agreement.
Art. 2. The Government authorises the banks to issue a 5 per cent. sinking fund gold loan for an amount of 10,000,0001. The loan shall be of the date on which the bonds are issued to the public. Its term shall be for forty-five years from such date, and it shall be called the Imperial Chinese Government 5 per cent. Currency Reform Sinking Fund Loan of 1911.
Art. 3.-The proceeds of the loan shall be used and applied for the following purposes:---
1. For the establishment of a uniform national currency system in accordance with a programme for that purpose, approximately 60,000,000 taels.
2. And for the promotion of industrial enterprises in Manchuria, approximately 20,000,000 taels, to be expended in the manner to be determined as provided in article 8, paragraph 1, hereunder.
Art. 4.--The loan shall constitute a direct liability and obligation of the Imperial Government of China, which hereby pledges its good faith and credit for the punctual payment of the principal and interest of the loan and for the performance of all the undertakings on its part herein assumed.
Art. 5.-1. The principal and interest of the bonds, and the instalments of the sinking fund, hereinafter provided for, and all other amounts required for, or incident
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