4
255
Inclosure 2 in No. 1.
CANTON-KOWLOON RAILWAY.
Minutes of Second Meeting held at the Wai-wu Pu on Wednesday, August 29, 1906, at 3 P.M.
His Excellency Tang Shao-yi;
Present:
Kung Taotai and Mr. Hu, representing the Viceroy of Canton; Messrs. Chu Pao-fay and En, Secretaries to the Wai-wu Pu; and
Mr. J. O. P. Bland, representing the British and Chinese Corporation (Limited).
Mr. Bland's Minutes of the last meeting having been compared with those recorded in Chinese, his Excellency Tang Shao-yi observed that they were practically identical. Mr. En was directed to forward a copy of the Chinese text to Mr. Bland for record.
Proceeding to discuss the clauses of the Viceroy of Canton's draft Agreement in their order, and omitting all present reference to the preamble, his Excellency Tang Shao-yi stated the proposals of the Chinese Government, as follows:---
Article 1.—An Imperial Chinese Government Loan for 1,500,000l. would be issued, of which the Corporation would be asked to raise 1,000,000, the remainder of the bonds being taken firm by the Viceroy of Canton. On the bonds thus allotted to China, the Corporation's commission and ordinary flotation expenses would be paid, but no expenses for underwriting, the 2 per cent. usually expended under this heading being credited to China.
Mr. Bland inquired whether the intention was to guarantee that the Viceroy would subscribe and pay for 500,000l. of the bonds, this amount to be reserved for China. On this point there seems to be some uncertainty, Kung Taotai being without definite information. He suggested that if the amount reserved was not fully taken up in China, arrangements might be made for disposing of the unsold balance in London.
Mr. Bland explained the conditions under which loans are floated in London, observing that subscriptions could be simultaneously received in Shanghae, Hong Kong, and England, and suggested that the Chinese Government should either state definitely the amount of bonds to be reserved for China, or that the Viceroy of Canton should take firm, and be responsible for a fixed amount. The matter was left open, the meeting proceeding to discuss the question of price.
His Excellency Tang Shao-yi suggested a 4½ per Cent. Loan which, according to his information, should be obtainable at 95. This proposal was, however, abandoned as impracticable, and the loan left at 5 per cent. As regards the price, his Excellency observed that, whereas on previous occasions—(e.g., the Northern and Nanking Railways) the Corporation had been obliged to pay large commissions to Chinese officials in order to conclude the contracts, no such necessity would arise in the present case, and it should therefore be possible for the Corporation to deal at easier rates.
He thought China should receive the benefit of this economy. His proposals, after long discussion, were either that the Corporation should undertake to give a fixed price of 96¼ per 100l. or to float the loan, deducting 4 points from the issue price. He requested Mr. Bland to telegraph submitting these terms for the Corporation's consideration.
Mr. Bland, while undertaking to comply with this request, observed that, apart from the fact that 96¾ was an impossible rate, it was extremely improbable, after recent experience in the Shanghae-Nanking Railway Loan, that the Corporation should consent to name any fixed price in the loan contract, even if the loan consisted of one issue only, inasmuch as the Corporation could not guarantee itself against fluctuations of the money market. It had been shown in the Nanking Railway Loan that when the price of Chinese securities improved, the Chinese Government declined to be bound by the fixed price agreed to in that loan contract, claiming and obtaining the profit which by agreement was to go to the Corporation. If, however, the price should fall, the Corporation would be compelled to carry out its agreement. Under such conditions it was impossible to name a fixed price, and Mr. Bland therefore hoped that the Chinese Government would conclude the present agreement on the equitable basis of a fixed commission, payable to the Corporation to cover all expenses of the loan, and to remunerate the Corporation for its services in floating the same. The minimum rate at which the Chinese Government could expect the Corporation to do this business (in the absence of the profit certificates to which the Corporation was properly entitled under the terms of the Concession) would be 5 points below issue price; he thought that if the other conditions of the Agreement were amicably arranged the business might well be done on these terms.
Article 2.—The Chinese Government's intention, based on experience gained in the Northern Railway, is to build a single line of railway. The provision of land bridges, &c., for double lines would be a matter for the Viceroy's consideration, and no pledges need be given. There could be no possible necessity, in his Excellency's opinion, for a double line at present. Mr. Bland observed that the matter was one for experts, but that the Viceroy had in his own draft recognized the advisability of providing for future development of traffic. Questions of construction must depend upon local requirements, survey, &c., but the decision taken by the Chinese Government might affect the flotation of the loan.
Article 3.—Proposed to delete all reference to the Salt Gabelle and to include the remainder of this Article under Article 1.
Article 4.—His Excellency Tang thought that this Article needed little amendment, but reference to the additional 500,000l., would be unnecessary if it were definitely decided that the Viceroy of Canton would subscribe for bonds to that amount.
Article 5.—Deleted.
Article 6.—His Excellency Tang Shao-yi desired the omission of that paragraph which stipulates for reference, in case of disagreement between the Viceroy and the Corporation's representative, to the Wai-wu Pu and Legation.
Article 7.—No alterations proposed.
Article 8.—His Excellency Tang Shao-yi desired the omission of this clause, condemning it as unnecessary and conflicting with China's dignity, but, after discussion, agreed to recognize the precedent recorded in all similar Agreements heretofore concluded by China, modifying the wording in one or two particulars.
Article 9.—The discussion of this Article was renewed from the point at which it was left at the last meeting, but no decision was arrived at, his Excellency Tang holding to the view that the Corporation's rights did not involve responsibility for construction or right to commission, except when acting as agents for materials purchased in England.
Mr. Bland again pointed out that such a contention involved practical repudiation of the concession granted by the Imperial Government to the Corporation, and stated that his instructions did not permit of his entertaining any proposal other than that already submitted. He pointed out that in this case the line taken by the Chinese Government was less reasonable than that of the provinces, for both the Wuchang and Canton Viceroys had agreed to the Corporation's commission as reasonable and just.
At this point the meeting adjourned till Monday next, the 3rd September.
Inclosure 3 in No. 1.
CANTON-KOWLOON RAILWAY.
Minutes of Third Meeting held at the Wai-wu Pu on Monday, September 3, 1906, at 3 P.M.
Present:
His Excellency Tang Shao-yi;
Kung Taotai and Mr. Hu, representing the Viceroy of Canton; Messrs. Chu Pao-fay and En, Secretaries of the Wai-wu Pu; and
Mr. J. O. P. Bland, representing the British and Chinese Corporation (Limited).
THE Minutes of the last meeting were accepted as correct. Discussion of Article 9 of the Canton Viceroy's proposals was resumed, and continued at considerable length.
5
4
255
Inclosure 2 in No. 1.
CANTON-KOWLOON RAILWAY.
Minutes of Second Meeting held at the Wai-wu Pu on Wednesday, August 29, 1906, at 3 P.M.
His Excellency Tang Shao-yi;
Present:
Kung Taotai and Mr. Hu, representing the Viceroy of Canton; Messrs. Chu Pao-fay and En, Secretaries to the Wai-wu Pu; and
Mr. J. O. P. Bland, representing the British and Chinese Corporation (Limited).
Mr. Bland's Minutes of the last meeting having been compared with those recorded in Chinese, his Excellency Tang Shao-yi observed that they were practically identical. Mr. En was directed to forward a copy of the Chinese text to Mr. Bland for record.
Proceeding to discuss the clauses of the Viceroy of Canton's draft Agreement in their order, and omitting all present reference to the preamble, his Excellency Tang Shao-yi stated the proposals of the Chinese Government, as follows:---
Article 1.—An Imperial Chinese Government Loan for 1,500,000l. would be issued, of which the Corporation would be asked to raise 1,000,000, the remainder of the bonds being taken firm by the Viceroy of Canton. On the bonds thus allotted to China, the Corporation's commission and ordinary flotation expenses would be paid, but no expenses for underwriting, the 2 per cent. usually expended under this heading being credited to China.
Mr. Bland inquired whether the intention was to guarantee that the Viceroy would subscribe and pay for 500.000% of the bonds, this amount to be reserved for China. On this point there seems to be some uncertainty, Kung Taotai being without definite information. He suggested that if the amount reserved was not fully taken up in China, arrangements might be made for disposing of the unsold balance in London.
Mr. Bland explained the conditions under which loans are floated in London, observing that subscriptions could be simultaneously received in Shanghae, Hong Kong, and England, and suggested that the Chinese Government should either state definitely the amount of bonds to be reserved for China, or that the Viceroy of Canton should take firm, and be responsible for a fixed amount. The matter was leit open, the meeting proceeding to discuss the question of price.
His Excellency Tang Shao-yi suggested a 44 per Cent. Loan which, according to his information, should be obtainable at 95. This proposal was, however, abandoned as impracticable, and the loan lelt at 5 per cent. As regards the price, his Excellency observed that, whereas on previous occasions-(e.g., the Northern and Nanking Railways the Corporation had been obliged to pay large commissions to Chinese officials in order to conclude the contracts, no such necessity would arise in the present case, and it should therefore be possible for the Corporation to deal at easier rates.
He thought China should receive the benefit of this economy. His proposals, after long discussion, were either that the Corporation should undertake to give a fixed price of 964 per 100%. or to float the loan, deducting 4 points from the issue price. He requested Mr. Bland to telegraph submitting these terms for the Corporation's consideration.
Mr. Bland, while undertaking to comply with this request, observed that, apart from the fact that 963 was an impossible rate, it was extremely improbable, after recent experience in the Shanghae-Nanking Railway Lean, that the Corporation should consent to name any fixed price in the loan contract, even if the loan consisted of one issue only, inasmuch as the Corporation could not guarantee itself against fluctuations of the money market. It had been shown in the Nanking Railway Loan that when the price of Chinese securities improved, the Chinese Government declined to be bound by the fixed price agreed to in that loan contract, claiming and obtaining the profit which by agreement was to go to the Corporation. If, however, the price should fall, the Corporation would be compelled to carry out its agreement. Under such conditions it was impossible to name a fixed price, and Mr. Bland therefore hoped that the
5
Chinese Government would conclude the present agreement on the equitable basis of a fixed commission, payable to the Corporation to cover all expenses of the loan, and to remunerate the Corporation for its services in floating the same. The minimum rate at which the Chinese Government could expect the Corporation to do this business (in the absence of the profit certificates to which the Corporation was properly entitled under the terms of the Concession, would be 5 points below issue price he thought that if the other conditions of the Agreement were amicably arranged the business might well be done on these terms.
Article 2.-The Chinese Government's intention, based on experience gained in the Northern Railway, is to build a single line of railway. The provision of land bridges, &c., for double lines would be a matter for the Viceroy's consideration, and no pledges need be given. There could be no possible necessity, in his Excellency's opinion, for a double line at present. Mr. Bland observed that the matter was one for experts, but that the Viceroy had in his own draft recognized the advisability of providing for future development of traffic. Questions of construction must depend upon local requirements, surrey, &c., but the decision taken by the Chinese Government might affect the flotation of the loan.
Article 3.-Proposed to delete all reference to the Salt Gabelle and to include the remainder of this Article under Article 1.
Article 4.-His Excellency Trang thought that this Article needed little amendment, but reference to the additional 500,0001, would be unnecessary if it were definitely decided that the Viceroy of Canton would subscribe for bonds to that amount.
Article 5.--Deleted.
Article 6.-His Excellency Tang Shao-yi desired the omission of that paragraph which stipulates for reference, in case of disagreement between the Viceroy and the Corporation's representative, to the Wai-wu Pu and Legation.
Article 7.-No alterations proposed.
Article 8.-His Excellency Tang Shao-vi desired the omission of this clause, condemning it as unnecessary and conflicting with China's dignity, but, after discussion, agreed to recognize the precedent recorded in all similar Agreements heretofore concluded by China, modifying the wording in one or two particulars.
Article 9.-The discussion of this Article was renewed from the paint at which it was left at the last meeting, but no decision was arrived at, his Excellency Tang holding to the view that the Corporation's rights did not involve responsibility for construction or right to commission, except when acting as agents for materials purchased in England.
Mr. Bland again pointed out that such a contention involved practical repudiation of the concession granted by the Imperial Government to the Corporation, and stated that his instructions did not permit of his entertaining any proposal other than that already submitted. He pointed out that in this case the line taken by the Chinese Government was less reasonable than that of the provinces, for both the Wachang and Canton Viceroys had agreed to the Corporation's commission as reasonable and just.
At this point the meeting adjourned till Monday next, the 3rd September.
Inclosure 3 in No. 1.
CANTON-KOWLOON RAILWAY.
Minutes of Third Meeting held at the Wai-wu Pu on Monday, September 3, 1906, at 3 P.M.
Present:
His Excellency Tang Shao-yi;
Kung Taotai and Mr. Hu, representing the Viceroy of Canton; Messrs. Chu Pao-fay and En, Secretaries of the Wai-wu Pu; and
Mr. J. O. P. Bland, representing the British and Chinese Corporation (Limited).
THE Minutes of the last meeting were accepted as correct, Disenssion of Article 9 of the Canton Viceroy's proposals was resumed, and continued at considerable length.
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