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notwithstanding article 2 of the draft agreement approved in Paris on the 12th May, 1919, as within the scope of the Consortium Agreement.
For and on behalf of the British group:
C. S. ADDIS.
For and on behalf of the French group: TH, DE LA CHAUME.
For and on behalf of the Japanese group:
K. TAKEUCHI.
For and on behalf of the American group: THOMAS W. LAMONT.
Minutes of an adjourned Meeting held in the Executive Committee Room of the New York Chamber of Commerce on October 15. 1920.
Representing the British group--
Sir Charles Addis.
Mr. S. F. Mayers.
Representing the French
group
M. R. Thion de la Chaume. M. Georges Picot.
Present:
Representing the Japanese group—-
Mr. Kimpei Takeuchi, Mr. Reitaro Ichinomiya.
Mr. R. C. Witt.
M. Henri Mazot.
Mr. C. F. Whigham.
Mr. J. Ridgely Carter.
Representing the American group- Mr. Thomas W. Lamont. Mr. Mortimer L. Schiff, Mr. Charles E. Mitchell.
In Attendance:
Mr. Joseph R. Swan. Mr. Robert I. Barr. Mr. Frederic W. Allen. Mr. John Jay Abbott.
Mr. Jeremiah Smith, Jr. Mr. F. W. Stevens.
Mr. A. M. Anderson. Mr. Burnett Walker.
Mr. L. L. Strauss.
The minutes of the meeting of the 13th October were read, confirmed and signed.
XIII. Conditions of Pooling.
Resolved that in tabling and offering for pooling the agreements or options of which they have furnished particulars, the groups do so on the understanding that the other parties will also offer for pooling their contribution in the form of agree- ments or options, and until such contribution is forthcoming the consortium shall have power to determine at a meeting of the consortium whether such group shall be entitled to share in any benefits arising out of the agreements or options pooled by the other
groups.
XIV. Consortium Agreement.
The agreement submitted on the 11th October was signed by the delegates.
XV-Pacific Development Corporation Loan.
The sub-committee upon the subject of the Pacific Development Corporation loan and contract reported unanimously that in their judgment the wine and tobacco revenue is capable, under effective foreign supervision, of furnishing a satisfactory security for a substantial loan, The sub-committee offered for consideration by the consortium the following resolutions:
TE
Resolved, that the American group be requested, if it deems well, to take over for its own account, for the ultimate benefit of the consortium, the $5,500,000 loan heretofore made by the Pacific Development Corporation, and with such loan to take over all such rights and privileges with reference to the wine and tobacco revenue as may properly be assigned with it:
Resolved further, that it is the sense of the consortium that the Pacific Development Corporation contract in its present form does not furnish a practicable working basis for further loans; that an entirely fresh contract should be negotiated by the representatives in Peking; and that the Chinese Government should be notified of these views of the consortium." The foregoing resolutions were adopted.
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XVI. Hukuang Railways Loan, 1911, German Issue.
It was resolved without questioning that the course hitherto pursued by the Chinese Government has been followed in good faith, that it is now manifest that the successful flotation of further Chinese loans in foreign markets, which are necessary
if the work of the consortium for the benefit of China is to be carried out, imperatively requires a public announcement by the Chinese Government with reference to the German issue of bonds forming part of the Hukuang loan, to the general effect that after consideration of all the facts and the unprecedented conditions involved, and resolving all doubts in favour of the holders of such bonds, the Chinese Government has determined to recognise the entire issue without distinction.
XVII-Railway Policy of the Consortium,
It was resolved that the following memorandum for the guidance of the repre- sentatives in Peking upon the subject of the railway policy of the consortium presented by the sub-committee appointed to consider the question be adopted :-
Memorandum,
The early resumption of railway construction in China is of first importance, and completion of the Hankow-Canton section of the Hukuang Railways should be the first aim.
Provided that the Chinese Government will accept conditions satisfactory to the consortium in regard to the supervision of construction expenditure and of operation, to be embodied in a new loan agreement, the consortium will be prepared to undertake the issue of gold bonds, if market conditions permit, and to authorise their representative banks in China to issue in China, on behalf of the Chinese Government, silver bonds, of sufficient amount to meet the necessary expenditure for eighteen months' requirements, which are tentatively estimated at silver dollars 20 million (say G$15 million). Of this amount the consortium will be prepared, by the issue of gold bonds, to furnish two-thirds, if the balance can be furnished by the issue of silver bonds in China.
On this basis, and without precluding some increase in the amount named in case it is shown to be insufficient, the new agreement should form a founda- tion for the various modifications which are requisite in giving effect to other railway loan agreements pooled by the groups constituting the consortium.
It should be explained to the Ministry of Communications, after study of the question and at the discretion of the Peking representatives, that the desire of the consortium is to place its services at the disposal of the Chinese Govern- ment as an instrument to furnish capital and other means for railway construc- tion, and that it cannot convince foreign markets of the desirability of Chinese investments unless it can satisfy them completely that the investments offered are duly safeguarded.
The consortium is fully prepared to leave to the judgment and responsibility of the Peking representatives the actual definition of the safeguards required. It should, however, be borne in mind that the ultimate unification of the Chinese Government railways is an object to be kept in view and that the consortium has recognised in principle the desirability of treating the problem of construction as an undivided whole and not sectionally. Further it is the desire of the consortium to receive from their Peking representatives suggestions on the question of improving the existing system of purchasing materials, and on the subject of purchase by open tender, as well as information upon the action already taken by the Chinese Government regarding the standardisation of railway equipment.
In order to carry out the wish of the consortium to be of continuous practical assistance to the Chinese Government, the consortium would view with favour the admission of its representatives in Peking to the counsels of the Ministry of Communications by means of the formation by the Ministry of a standing committee of which the Peking representatives would form part and which would be charged with supervising the construction and operation of Chinese Government railways financed by the consortium.