CO129-331 - Public Offices - 1905 — Page 592

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of these and other points; and the Loan Agreements could stipulate for an "inspector with right to audit accounts, and, in case of default, for a General Manager and Secretary as well. His Secretary is already hinting that we will be asked to find a Chief Engineer. What Chang fears most is a mortgage on the line and land, and such mining privileges as obtain in Shantung,

I take it that an acceptable tender, besides the points mentioned by Chang in my telegram No. 61, would be: Interest 44 or 5; issue price 91 or 95; security the li-ki revenues of the two provinces, with liability proportionate in first instance to length of line in each, ultimately to the amount of expenditure; an inspector, perhaps, paid by China, to watch aud verify construction and expenditure, with right of lenders in case of default to appoint a General Manager and a Secretary as well, and to have all accounts transferred to a special account at the Hong Kong and Shanghae Bank on which the Manager only could draw until the loan is paid off. The amount of loan would be payable in instalments not exceeding, say, 500,0001. at intervals of not less than 6 (?) months and each bearing interest from date of payment; China to have right to pay off loan at par on giving six months' or a year's notice at any time after five or ten years from date of payment of last instalment of capital.

As to the Szechuan-Hankow section, it might do good if we intimated that our explorers had investigated and found the best trace for it, as Chang has only bis students' idea.

One good thing about Chang's new proposal is that it must prevent his accepting the German tender at present, and, as the Germans stipulate for a Chinese Government loan in the tender I saw, the Wai-wu Pu can, of course, block anything contrary to their note to you of September 1905.

Apologizing for a very long letter, I am, &c.

(Signed)

E. H. FRASER,

ffice or Individual.

1905

it previous Paper.

fo

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No 43488.

(Subject.)

585

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