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2
that the other conditions of the Agreement be accepted, as stated by the Corporation. In making the offer he again explained that the Canton-Kowloon Railway was regarded by the money market as a security decidedly inferior to that of the Northern Railway (now quoted at 101¼), and that if any further modification affecting the security of investors were introduced, the price must suffer corresponding depreciation. It was impossible for the Chinese Government to expect that the bonds for a short railway as yet unbuilt, should be on the same footing as those of a remunerative and extensive system, and the price suggested by Kung Tantai, 95, was therefore impossible.
His Excellency Tang Shao-yi, stated that the Viceroy had named 95 as the price in his draft Agreement, and that it would be extremely difficult for his Representatives, and for the Wai-wu Pu, to conclude the loan at a lower rate. Setting the question of price aside for the time being, however, he proposed that the redraft of the Agreement made since the last meeting by Mr. Bland, be discussed seriatim with a view to coming, if possible, to a final understanding on all other points.
Article 1.—His Excellency Tang Shao-yi took exception to the bonds being specifically described as similar to those of the Shanghae-Nanking Railway, on the ground that the form should be a matter for arrangement in the event of there being anything in the Nanking bonds to which the Chinese Government might take exception. Mr. Bland said that conditions of this kind while without possible detriment to the interests of the Chinese Government, were absolutely necessary to inspire confidence amongst investors. He had sent to Shanghae for one of the bonds and hoped to be able to reassure his Excellency as to its form being unobjectionable.
Article 2.—His Excellency Tang Shao-yi objected to the wording of this Article in so far as it referred to the Working Agreement to be hereafter negotiated between the Viceroy and the Hong Kong Government. He considered this as a matter beyond the proper scope of the present Loan Agreement which referred only to the Chinese section of the railway, and he therefore proposed to delete all mention of the said Working Agreement. Incidentally, he objected to the term as liable to create misapprehension and difficulty in the future, and stated that the Chinese Government would not bind itself to the condition that the two sections of the line should be worked as one undertaking it being their intention to have separate frontier stations and an independent system, under conditions similar to those existing at the Feng-tai junction of the Northern and Ching Han Railways.
Mr. Bland expressed regret that this intention had not been made clear from the outset since the loan issue must inevitably be prejudiced if there be any doubt as to the railway being worked under reciprocal arrangements calculated to promote its earning powers. He pointed out that the Working Agreement had been frequently mentioned and its eventual arrangement assumed at earlier meetings; also that in Article 21 of the Viceroy's draft it is specifically provided for. After considerable discussion it was agreed to substitute for the clause as drafted the Viceroy's original proposal, reading as follows:—
"The junction of the sections of the railway from Canton to the boundary of the Kowloon leased territory under British control and from the said boundary to the port of Kowloon respectively, shall be arranged and the railway worked under conditions based on the Agreements usual in regard to the junction and working of inter-State railways in other countries. The Viceroy and the Governor of Hong Kong shall in due time appoint officials to consider the subject and to arrange Regulations accordingly."
Mr. Bland suggested the advisability of naming a date for these negotiations to commence, but his Excellency Tang Shao-yi considered this to be unnecessary, and outside the scope of the Loan Agreement.
Mr. Bland further suggested that, in accordance with the provision of the preliminary Agreement it be generally stated under this Article that the railway would be hereafter worked in connection with the trunk line to Hankow, a condition without detriment to China and calculated to improve the prospects of the loan, but his Excellency was opposed to the insertion of this statement.
Article 3.—Reference to the Working Agreement was deleted. Articles 4 and 5.—Accepted without modification.
Article 6—This Article was considered in detail and eventually passed with the addition of a clause providing for the appointment of a Chinese Accountant for duty in the Chief Accountant's department.
His Excellency Tang Shao-yi having another appointment this meeting adjourned at 4:30 P.M., another meeting being arranged for Wednesday, the 10th instant, at 3:45 P.M.
3
Inclosure 3 in No. 1.
CANTON KOWLOON RAILWAY.
Minutes of the Sixth Meeting held at the Wai-wu Pu on Wednesday, October 10, 1906, at 3:45 P.M.
His Excellency Tang Shao-yi.
Present:
Kung Taotai and Mr. Hu, representing the Viceroy of Canton.
Mr. En, Secretary to the Wai-wu Pu; and
Mr. J. O. P. Bland, representing the British and Chinese Corporation (Limited).
DISCUSSION of the draft Agreement was renewed.
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 Hong Kong Government, the inclusion of a clause in Article 4 providing for an extension of the eight months' time limit in the event of commencement of construction work being delayed as the result of causes beyond the power of the Corporation to prevent, which clause was accordingly inserted.
Article 7.—His Excellency Tang 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 conditions 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 8.—No discussion.
Article 9.—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 10.—This Article was amended by the omission of the last clause referring to railway police and other verbal alterations.
Article 11—His Excellency Tang Shao-yi observed that the procedure proposed 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 fourteen days before due date in the event of there being no surplus funds available for deposit six months in advance.
Article 12.—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 Shanghae-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 unreasonable 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 Shanghae-Nanking Railway Board of Commissioners. By meeting the Corporation in this matter, the Chinese Government would be properly recognizing 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 Tang Shao-yi eventually proposed that the question be left in abeyance pending discussion of the price of the loan.
444
2
that the other conditions of the Agreement be accepted, as stated by the Corporation. In making the offer he again explained that the Canton-Kowloon Railway was regarded by the money market as a security decidedly inferior to that of the Northern Railway (now quoted at 1014), and that if any further modification affecting the security of investors were introduced, the price must suffer corresponding depreciation. It was impossible for the Chinese Government to expect that the bonds for a short railway as yet unbuilt, should be on the same footing as those of a remunerative and extensive system, and the price suggested by Kung Tantai, 95, was therefore impossible.
His Excellency Tang Shao-yi, stated that the Viceroy had named 95 as the price in his draft Agreement, and that it would be extremely difficult for his Representatives, and for the Wai-wu Pu, to conclude the loan at a lower rate. Setting the question of price aside for the time being, however, he proposed that the redraft of the Agreement made since the last meeting by Mr. Bland, be discussed seriatim with a view to coming, if possible, to a final understanding on all other points.
Article 1-Bis Excellency Tang Shao-yi took exception to the bonds being specifically described as similar to those of the Shanghae-Nanking Railway, on the ground that the form should be a matter for arrangement in the event of there being anything in the Nanking bouds to which the Chinese Government might take exception. Mr. Bland said that conditions of this kind while without possible detriment to the interests of the Chinese Government, were absolutely necessary to inspire confidence amongst investors. He had sent to Shanghae for one of the bonds and hoped to be able to reassure his Excellency as to its form being unobjectionable.
article 2.-His Excellency Tang Shao-yi objected to the wording of this Article in so far as it referred to the Working Agreement to be hereafter negotiated between the Viceroy and the Hong Kong Government. He considered this as a matter beyond the proper scope of the present Loan Agreement which referred only to the Chinese section of the railway, and he therefore proposed to delete all mention of the said Working Agreement. Incidentally, he objected to the term as liable to create misap- prehension and difficulty in the future, and stated that the Chinese Government would not bind itself to the condition that the two sections of the line should be worked as onc undertaking it being their intention to have separate frontier stations and an independent system, under conditions similar to those existing at the Feng-tai junction of the Northern and Ching Han Railways.
Mr. Bland expressed regret that this intention had not been made clear from the outset since the loan issue must inevitably be prejudiced if there be any doubt as to the railway being worked under reciprocal arrangements calculated to promote its earning powers. He pointed out that the Working Agreement had been frequently mentioned and its eventual arrangement assumed at earlier meetings; also that in Article 21 of the Viceroy's draft it is specifically provided for. After considerable discussion it was agreed to substitute for the clause as drafted the Viceroy's original proposal, reading as follows:--
"The junction of the sections of the railway from Canton to the boundary of the Kowloon leased territory under British control and from the said boundary to the port of Kowloon respectively, shall be arranged and the railway worked under conditions based on the Agreements usual in regard to the junction and working of inter-State railways in other countries. The Viceroy and the Governor of Hong Kong shall in due time appoint officials to consider the subject and to arrange Regulations accordingly."
Mr. Bland suggested the advisability of naming a date for these negotiations to commence, but his Excellency Tang Shao-yi considered this to be unnecessary, and outside the scope of the Loan Agreement.
Mr. Bland further suggested that, in accordance with the provision of the preliminary Agreement it be generally stated under this Article that the railway would be hereafter worked in connection with the trunk line to Hankow, a condition without detriment to China and calculated to improve the prospects of the loan, but his Excellency was opposed to the insertion of this statement.
Article 3.--Reference to the Working Agreement was deleted. Articles 4 and 5.---Accepted without modification.
Article 6-This Article was considered in detail and eventually passed with the addition of a clause providing for the appointment of a Chinese Accountant for duty in the Chief Accountant's department.
His Excellency Tang Shao-yi having another appointment this meeting adjourned at 430 P.M., another meeting being arranged for Wednesday, the 10th instant, at
3.45 P.M.
3
Inclosure 3 in No. 1.
CANTON KOWLOON RAILWAY.
Minutes of the Sixth Meeting held at the Wai-wu Pu on Wednesday, October 10, 1906, at 3:45 P.M.
His Excellency Tang Shao-yi.
Present:
Kung Taotai and Mr. Hu, representing the Viceroy of Canton.
Mr. En, Secretary to the Wai-wu Pu; and
Mr. J. O. P. Bland, representing the British and Chinese Corporation (Limited).
DISCUSSION of the draft Agreement was renewed.
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 Hong Kong Government, the inclusion of a clause in Article 4 providing for an extension of the eight months' time limit in the event of commencement of construction work being delayed as the result of causes beyond the power of the Corporation to prevent, which clause was accordingly inserted.
Article 7.-His Excellency Tang 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 conditions 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 8.--No discussion.
Article 9.-The amount of the commuted commission (35,0001) was briefly discussed and eventually left in abeyance to be further considered in connection with the price of the loan.
Article 10.--This Article was amended by the omission of the last clause referring to railway police and other verbal alterations.
Article 11-His Excellency Tang Shao-yi observed that the procedure proposed 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 he made from other than railway sources. It was therefore agreed to word the Article in this sense, providing for remittances fourteen days before due date in the event of there being no surplus funds available for deposit six months in advance.
Article 12.--The proposal contained in this Article was fully discussed, his Excellency Fang 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 Shanghae-Nauking 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 unreasonable 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 Shanghae-Nanking Railway Board of Commissioners. By meeting the Corporation in this matter, the Chinese Government would be properly recognizing 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 Tang Shao-yi eventually proposed that the question be left in abeyance pending discussion of the price of the loan.
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