PUBLIC RECORD OFFICE
Reference :-
C.O. 882
6
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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Kung Taotai, referring to the articles arranged at last meeting, suggested certain further verbal amendments of the text, which were accordingly discussed and agreed to in several instances.
Mr. Bland requested, in view of possible delay, in the negotiations between the Canton Viceroy and IIong Kong Government, the inclusion of a clause in Article IV. providing for an extension of the eight months' time limit in the event of com- mencement of construction work being delayed as the result of causes beyond the power of the Corporation to prevent, which clause was accordingly inserted.
Article VII. His Excellency T'ang Shao-Yi desired it to be clearly stated that the land purchased for railway purposes within the survey limits, should be paid for out of the proceeds of the loan. Mr. Bland suggested that a maximum sum for such purposes be named, but His Excellency considered that under the particular con- ditions of this agreement this is unnecessary, since it is to the undivided interest of the Chinese Government that the line shall be built as economically as possible. He stated that in the event of the loan funds proving insufficient to complete the railway, the Chinese Government would provide the balance required.
Article VIII. No discussion.
Article IX. The amount of the commuted commission (£35,000) was briefly discussed, and eventually left in abeyance to be further considered in connection with the price of the loan.
Article X. This article was amended by the omission of the last clause refer- ring to railway police and other verbal alterations.
Article XI. His Excellency Tang Shao-Yi observed that the procedure pro- posed for depositing six months in advance the amount required for payments of interest and principal could only be accepted with the stipulation that the surplus earnings of the line were sufficient to allow of such deposits. He was of opinion that for some time after the opening of the line to traffic this would not be the case, and that it would be unreasonable to expect such deposits to be made from other than railway sources. It was, therefore, agreed to word the article in this sense, providing for remittances 14 days before due date in the event of there being no surplus funds available for deposit six months in advance.
Article XII. The proposal contained in this article was fully discussed, His Excellency Tang Shao-Yi considering the same as justifiable, and the amount of remuneration reasonable, while the Canton Viceroy's representatives opposed it as a new feature of the agreement, not to be found in the Shanghai-Nanking Railway
Contract.
Mr. Bland pointed out that remuneration of the trustees for Bondholders was an equitable and usual condition in such cases; that the Corporation's liability and responsibility would continue for an indefinite period under the agreement after its financial interest and benefits thereunder had ceased, and that it would be unreason- able to expect the Corporation to perform these necessary duties without payment— the amount to be paid out of the railway funds under this heading_was less than that paid to the foreign members of the Shanghai-Nanking Railway Board of Com- missioners; by meeting the Corporation in this matter, the Chinese Government would be properly recognising the amicable and reasonable spirit in which the Corporation had accepted the numerous and important modifications of its rights under the preliminary agreement.
His Excellency T'ang Shao-Yi eventually proposed that the question be left in abeyance pending discussion of the price of the loan.
Article XIII. His Excellency Tang Shao-Yi stated that the Chinese Govern- ment was about to issue new regulations in regard to Government Railways stipu- lating for payment of Maritime Customs duty on all importations of material; the exemption arrangements heretofore in force could, therefore, not be applied in the present case: under the conditions of the present contract, however, the matter would not affect the bondholders. With the omission of the reference to Customs duty, the article was agreed to.
His Excellency Tang Shao-Yi, in adjourning the meeting, stated that owing to pressure of other business he could not appoint a date for these negotiations earlier than Thursday, the 18th instant. It was agreed, however, that with a view to expe- diting business at the next meeting, Mr. Bland should continue the revision of the draft with the Canton Viceroy's deputies, reserving for discussion all points of disagreement.
J. O. P. BLAND.
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Enclosure 5 in No. 318. CANTON-KOWLOON RAILWAY. Draft Final Loan Agreement.
ARTICLE 1.
The Corporation agrees to issue on behalf of the Imperial Chinese Govern- ment a sterling loan (hereinafter referred to as "the loan ") for the amount of £1,500,000 on the terms and conditions hereinafter contained. Imperial Chinese Government bonds are to be issued for the entire amount, similar to the bonds of the Shanghai-Nanking Railway, with the railway as first mortgage security therefor. The loan shall be in one issue, and the price agreed upon shall be
5
per cent. of the nominal value, and any loss or profit in disposing of the bonds shall be borne by, or go to, the Corporation. The interest on the bonds shall be at the rate of
per cent.
per annum on their nominal value, payable half yearly, and shall be calculated from the date of their sale to the public.
Subject to Article 16, the duration of the loan is fixed at 50 years, commencing from the date of the ratification of this agreement, but no interest shall be paid on any bonds which may be redeemed or cancelled under the terms hereinafter men- tioned after the redemption or cancellation thereof.
On the face of each of these bonds shall be expressed the value thereof in the sum of £100, or in such different amounts as the Chinese Minister in London in consultation with the Corporation may sanction.
ARTICLE 2.
The proceeds of the loan are to be used in the construction and equipment of the railway, and in paying interest on the loan during the course of construction.
The railway, being the first mortgage security for the loan, shall be built and equipped under the direction of the representative of the Imperial Chinese Govern- ment, with the aid of the Corporation rendered through the agency of the Engineer-in- Chief acting in his dual capacity, and of its agents and representatives in China. The line shall be built as economically as possible in accordance with the best modern system.
It is understood that the Viceroy of Canton will secure all the necessary land for the railway as well as other facilities, and assistance for the purposes of its construction and working. The railway will be built in the first instance as a single line, but provision will be made, with the approval of His Excellency the Viceroy, and wherever necessary to meet traffic requirements, for the eventual construction of a double line.
If, during the time of construction, the proceeds of the loan, together with the accrued interest thereon, payable by the Corporation, should, after deduction of the sums necessary for the payments of interest on the loan, be insufficient to complete the construction of the railway, the amount of the deficiency shall either be provided from the Chinese Government's own resources or by a supplementary loan to be hereafter issued by the Corporation, the interest and other conditions of which supplementary loan shall be the same as in the present agreement, but the price thereof shall be arranged when the time arrives, having due regard to the conditions of the money market.
When the railway is completed, if there is a surplus from the sale of bonds, the said surplus shall be at the disposal of the Chinese Government either to redeem the bonds in accordance with the terms of this agreement as hereinafter stated, or to be placed on deposit with the Hong Kong and Shanghai Banking Corporation for the purpose of paying interest on the loan, or for other purposes beneficial to the railway, in regard to which the Viceroy will communicate in due course with the Corporation.
In all matters relating to the construction of the railway it is expressly agreed that particular heed shall be paid to the opinions, habits, and ideas of the Chinese people, and that, when practicable, Chinese shall be employed in positions of trust and responsibility in connection with the railway.
In regard to earthwork, or such other work as Chinese are competent to perform, contracts shall be entered into for such work with Chinese under the sanction of the Head Office, and the work itself shall be carried out in accordance with plans and specifications of the Engineer-in-Chief and under his supervision.
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