432
In regard to the second question, H.B. LIANG SHIH-YI observed that under ordinary conditions of the exchange market, the Chinese Government might suffer serious and unfair disadvantage by being bound to purchase sterling drafts for remittances on railway accounts through the Hongkong and Shanghai Bank only; China was bound to pay the interest and principle at due dates to the bank, but in so doing, was entitled to benefit by the exchange markets' ordinary competition.
He described this condition as a monopoly unfair to the railway's interests and observed that if another Bank was in a position to offer a better rate than the Hongkong and Shanghai Bank the Railway should be entitled to take it. He desired therefore that the Clause in question should be amended to read "fourteen days before the due dates either in sterling drafts, or in local currency sufficient to meet such payments in sterling in London, exchange for which shall be settled with the Hongkong and Shanghai Banking Corporation at the most favourable rates."
MR. BLAND stated that he had already referred the point to the Manager of the Bank at Shanghai, who had expressed the opinion that this condition, usual in the Chinese Government's railway agreements, could not be withdrawn. The Bank were the officially recognised Agents for the service of the Loan, and therefore entitled to transact its business; the effect of the proposed amendment of this Clause might be to create artificial competition to the Bank's disadvantage. The Article, as drafted, stated that the Bank would settle exchange "at the most favourable rates" and H.E. would no doubt recognise the fact that its established reputation for fair dealing was sufficient guarantee that such rates would be given in the future as in the past.
His Excellency admitted the justice of this view and thought the Bank would, as a matter of course, transact such business; but the Chinese Government was entitled to preserve freedom of action in making these remittances on account of the Bondholders. He declined therefore to accept the clause as drafted. MR. BLAND agreed to telegraph to the Chief Manager of the Bank and submit the point.
After
432
In regard to the second question, H.B. I'ANG SHAC-YI observ
ed that under ordinary conditions of the exchange market, the Chinese
Government might suffer serious and unfair disadvantage by being bound
to ourchase sterling drafts for remittances on kailway accounts
through the hongkong and Shanghai Bank only; China was bound to pay
the interest and principle at due dates to the bank, but in so doing,
was entitled to benefit by the exchange markets' ordinary competition.
He described this condition as a monooly unfair to the failway's
interests and observed that if another Eank was in a position to
offer a better rate than the Hongkong and Shanghai Bank the Railway
should be entitled to take it. he desired therefore that the Cleuse in
question should be erended to read "fourteen days before the due dates
either in sterling drafts, or in local currency sufficient to meet
such payments in sterling in London, exchange for which shall be
settled with the Bongkong and Shangbei Banking Corporation at the
most favourable rates."
MR.BLAND stated that be had already referred the point to of the Bank
the Manager, at Shanghai, who had expressed the coinion that this
condition, usual in the Chinese Government's railway agreements,
could not be withdrawn. The Bank were the officially reccenised Agents
for the service of the Ican, and therefore entitled to transect its
business- the effect of the proposed amendment of this Clause might
be to create artificial competition to the Bank's disadvantage. The
Article, as drafted, stated that the Bank would settle exchange "at
the most favourable rates" and H.. would no doubt recognise the fact
that its established reputation for fair dealing was sufficient
guarantee that such rates would be given in the future as in the past.
Ris Excellency admitted the justice of this view and
thought the Bank would, as a matter of course, transact such business
but the Chinese Government was entitled to preserve freedom of action
in making these remittances on account of the Fondholders. He declin-
ed therefore to accept the clause as drafted. MR. ELAND agreed to
telegraph to the Chief Vanager of the Bank and submit the point.
After
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