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XVIII. Chinese Eastern Railway.
It was resolved that the consortium will, if desired by their respective Govern- ments, and if market conditions permit, consider an application for a loan to meet the financial requirements of the Chinese Eastern Railway, estimated at $10,000,000 Gold, provided satisfactory conditions can be arranged as to security, as to the payment of the debts due from the Allied and Associated Powers, as to the Allied and Associated Powers undertaking that there shall be no military interference with the traffic of the railway, and as to the position of the representatives of the consortium Powers on the technical board (or other administrative body) being regularised and stabilised.
The Japanese representatives stated that they were not in a position to express their views on this question, for the reason that the Japanese group were not authorised by their Government to take up the matter, pending negotiations between the Governments concerned, and further that the Japanese group considered the matter as technically lying outside the scope of the Consortium Agreement.
XIX. Central Agency and Clearing House.
It was resolved that, in lieu of the provisions of the minutes of the 7th July, 1913, and of the arrangement of the 2nd October, 1913, each of the
groups shall pay to the Hong Kong and Shanghai Banking Corporation an inclusive annual fee of £750, payable half yearly to defray the cost of the special work entailed in acting as central agency to the consortium and including its services for acting as clearing
house.
XX. Approval of Governments.
It was agreed that all resolutions taken by the delegates as recorded in the minutes of the consortium are subject to the approval of the Governments of the respective groups.
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.
Enclosure 3 in No. 1.
The China Consortium Agreement. October 15, 1920.
AN agreement made the fifteenth day of October 1920 between—
The Hong Kong and Shanghai Banking Corporation, having its office at 9. Gracechurch Street, in the City of London (hereinafter called "the Hong Kong Bank") of the first part:
The Banque de l'Indo-Chine having its office at 15bis, Rue Laffitte. Paris (hereinafter called the French Bank ") of the second part;
The Yokohama Specie Bank, Limited, having its office at Yokohama in Japan (hereinafter called the Japanese Bank ") of the third part: and
Messrs. J. P. Morgan and Co., Messrs. Kuhn Loeb and Co., The National City Bank of New York, Chase National Bank, New York. The Guaranty Trust Company of New York, Messrs. Lee, Higginson and Co. of Boston and the Continental and Commercial Trust and Savings Bank of Chicago (hereinafter called "the American Managers), acting as to the United Kingdom by Messrs. Morgan, Grenfell and Co., of 22, Old Broad Street, in the City of London, and as to France by Messrs. Morgan Harjes and Co. of Paris, of the fourth part:
Whereas the Hong Kong Bank the French Bank the Japanese Bank and the American Managers are acting for the purposes of this agreement as the repre- sentatives of the British French Japanese and American groups respectively;
And whereas the British French Japanese and American groups were formed with the object of negotiating and carrying out Chinese loan business;
And whereas their respective Governments have undertaken to give their
C complete support to their respective national groups the parties hereto in all operations undertaken pursuant to the agreement hereinafter contained and have further undertaken that in the event of competition in the obtaining of any specific loan contract the collective support of the diplomatic representatives in Peking of the four Governments will be assured to the parties hereto for the purpose of obtaining such contract:
And whereas the said national groups are of the opinion that the interests of the Chinese people can in existing circumstances best be served by the co-operative action of the various banking groups representing the investment interests of their respective countries in procuring for the Chinese Government the capital necessary for a programme of economic reconstruction and improved communications:
And whereas with these objects in view the respective national groups are prepared to participate on equal terms in such undertakings as may be calculated to assist China in the establishment of her great public utilities and to these ends to welcome the co-operation of Chinese capital.
Now it is hereby agreed by and between the parties horeto as follows:-
1. Each group reserves to itself the right of increasing or reducing the number of its own members but so that any member of a group dropping out shall remain bound by the restrictive provisions hereof and any member of a group coming in shall become subject to the restrictive provisions hereof and so that no group shall (without the consent of the others) be entitled to admit into its group a new member who is not of its nationality and domiciled in its market. The admission of any new group shall be determined by the parties hereto subject to the approval of their respective Governments.
2. This agreement relates to existing and future loan agreements which involve the issue for subscription by the public of loans to the Chinese Government or to Chinese Government departments or to provinces of China or to companies or corporations owned or controlled by or on behalf of the Chinese Government or any Chinese Provincial Government or to any party if the transaction in question is guaranteed by the Chinese Government or Chinese Provincial Government but does not relate to agreements for loans to he floated in China. Existing agreements relating to industrial undertakings upon which it can be shown that substantial progress has been made may be omitted from the scope of this agreement.
3. The existing agreements and any future loan agreements to which this agreement relates and any business arising out of such agreements respectively shall be dealt with by the said groups in accordance with the provisions of this agreement.
4. This agreement is made on the principle of complete equality in every respect between the parties hereto and each of the parties hereto shall take an equal share in all operations and sign all contracts and shall bear an equal share of all charges in connection with any business (except stamp duties and any charges of and in connection with the realisation by the parties hereto in their respective markets of their shares in the operations) and the parties hereto shall conclude all contracts with equal rights and obligations as between themselves and each party shall have the same rights privileges prerogatives advantages responsibilities and obligations of every sort and kind. Accordingly preliminary advances on account of or in connection with business to which this agreement relates shall be borne by each of the parties hereto in equal shares and each of the parties hereto shall be entitled to participate equally in the existing agreements and will offer to the other parties hereto an equal participation with itself in any future loan business falling within the scope of this agreement. Should one or more of the parties hereto decline a participation in the existing agreements or any of them or in any such future loan business as aforesaid the party or parties accepting a participation therein shall be free to undertake the same but shall issue on its or their markets only.
5. All contracts shall so far as possible be made so as not to impose joint liability on the parties hereto but each of the parties hereto shall severally liquidate its own engagements or liabilities. The parties hereto will so far as possible come to an understanding with regard to the realisation of the operations but so that such realisation in whatever manner this may take place shall be for the separate benefit of each of the parties hereto as regards their respective participations therein and so that each of the parties hereto shall be entitled to realise its participation in the operations only in its own market it being understood that the issues in the respective markets are to be made at substantial parity.
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