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6. Any one or more of the parties hereto who shall have accepted its or the participation in any business hereunder shall be entitled by notice in writing to call upon the other or others of the parties hereto who propose to issue their own respective participations to issue for the account of the party or parties giving such notice or notices either all or one-half of the amount which may constitute the participation of the party or parties giving such notice or notices and the party or parties so called upon shall issue the said amount or amounts (hereinafter called the residuary participation") specified in such notice or notices upon and subject to the terms and conditions following, viz:--
(1.) Such notice or notices must be received by the other or others of the parties hereto before the execution of the final agreement for the issue of the loan or (in the case of an issue of a part only of the loan) of so much thereof as the parties bereto may from time to time agree to issue. (2) The party or parties to whom such notice or notices shall have been given shall be entitled to decide among themselves and without reference to the party or parties giving such notice or notices as to which one or more of them shall issue the residuary participation but in default of any such decision they shall issue the same equally between them. (3.) In issuing the residuary participation no distinction shall be made between the residuary participation and the amount or amounts issued on its or their own account by the party or parties issuing the residuary participation which shall in all respects be subject to the conditions of the respective syndicates which may be formed for the purpose of effecting the issue.
(4) Each of the parties issuing the residuary participation shall be entitled to decide for itself and without reference to the party or parties giving such notice or notices as to what expenses shall be incurred in relation to the issue of the total amount issued by such party.
(5.) The party or parties issuing the residuary participation shall be entitled between them to charge the party or parties giving such notice or notices with a commission of not exceeding 14 per cent. on the nominal amount of the residuary participation and also with a pro ruta share of the total expenses which the issuing party or parties may in their sole discretion incur in relation to the whole issue and being in the proportion which the residuary participation bears to the total nominal amount of the issue. (6.) The party or parties issuing the residuary participation shall not by virtue of this agreement incur any responsibility to subscribe for the residuary participation or to cause the same to be subscribed.
(7.) Each party issuing the residuary participation shall apply all subscriptions received by it pro rata between the residuary participation issued by it and the amount issued by such party on its own account.
(8.) Each of the parties issuing the residuary participation will apply for and use its best endeavours to obtain a quotation on its market for the total amount issued by it.
(9.) No issue of the residuary participation or any part thereof shall be made by the party or parties giving such notice or notices unless mutually agreed by the parties hereto.
7. No participation shall be given by any one of the parties hereto outside its own market. Any participation given in its own market by any one of the parties hereto shall be for its own account only or in the event of the issue including any of the residuary participation for the accounts pro rata of the issuing bank and the party or parties giving such notice or notices as aforesaid and in giving any such participation the party giving the same shall use its best endeavours to secure that no part of such participation shall be transferred to parties outside the market of the party giving the same. Any other participation shall be given only with the consent of all parties hereto and shall be borne in equal shares by the parties hereto.
8. This agreement shall remain in force for the period of five years from the date hereof provided nevertheless that a majority of the parties hereto may by twelve months' previous notice in writing addressed to the other parties hereto determine this agreement at any time.
C
Il
In witness whereof the duly authorised representatives of the respective parties hereto set their hands the day and year first above written.
(Confidential.)
For the Hong Kong and Shanghai Banking Corporation,
on behalf of the British group:
C. S. ADDIS.
For the Banque de l'Indo-Chine, on behalf of the
French group:
TH. DE LA CHAUME.
For the Yokohama Specie Bank (Limited), on behalf of
the Japanese group;
K. TAKEUCHI,
For and on behalf of the American group:
J. P. MORGAN AND Co. KUHN, LOEB AND Co.
The National City Bank of New York:
by J. A. STILLMAN, President.
The Guaranty Trust Company of New York:
by J. R. SWAN, Vice-President. Continental and Commercial Trust and Savings
Bank, Chicago:
by JOHN JAY ABBOTT, Vice-President, Chase National Bank, New York City:
by A. H. WIGGIN, Chairman. LEE, HIGGINSON AND Co.
Enclosure 4 in No. 1.
Memorandum respecting the China Consortium.
CONFERENCE AT NEW YORK, OCTOBER 1920.
Arrival in New York.
THE representatives of the British, French and Japanese groups assembled in New York on the 6th October, 1920, and had several opportunities for preliminary conversations prior to the date fixed for the first meeting, viz., the 11th October. These were not without value in disclosing the general position taken by the other groups on the various points arising on the agenda, which had been prepared in advance and circulated among the groups.
French Group.
From the outset a serious difficulty presented itself in the fact that the French alone of all the groups came to the conference without any agreements or options to pool. It appeared that in spite of the repeated representations which had been made to them previously by the British group, no substantive steps had been taken to secure for the benefit of the consortium the important agreements held by the Banque Industrielle de Chine. The importance to be attached to this incident was enhanced by the fact that the chairman of the Banque Industrielle was M. Berthelot, the brother of the French Minister for Foreign Affairs, who has been associated with the direction of French foreign policy for the past ten years.
Visit to Washington.
Foreseeing that there would be a deadlock if no remedy could be found in time, Sir Charles Addis visited Washington on the 8th October and explained to His Majesty's Ambassador that he could not sign the agreement if the French group, with no contribution of their own, were to share in the benefit of the other groups' agreements. On the following day the difficulty was explained at the State Depart- ment to Mr. Norman Davis, Acting Secretary of State in the temporary absence of Mr. Colby, and a decision was reached that instructions would be cabled by the State Department to the American Embassy in Paris to urge the French Government
bring pressure to bear on their group and on the Banque Industrielle.
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