445
4
Article 13.-His Excellency Tang Shao-yi stated that the Chinese Government was about to issue new Regulations in regard to Government railways stipulating for payment of Maritime Customs duty on all importations of material; the exemption arrangement 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 expediting 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.
(Signed) J. O. P. BLAND.
Inclosure 4 in No. 1.
CANTON KOWLOON RAILWAY.
Draft Final Loan Agreement.
ARTICLE 1. The Corporation agrees to issue on behalf of the Imperial Chinese Government 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 Shanghae-Nanking Railway, with the railway as first mortgage security therefor. The loan shall be in one issue, and the price agreed upon shall be 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 5 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 fifty 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 mentioned 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.
Art. 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 Government, 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 payment 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 Shanghae 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.
Detailed plans and estimates of cost, whether of the respective sections of the railway or of any alterations of the same, are to be submitted for the approval of the Viceroy by the Engineer-in-chief.
Art. 3. The loan shall be secured by mortgage declared to be now entered into in equity by virtue of this Agreement, and shall as soon as possible hereafter be secured by a specific and legal first mortgage in favour of the Corporation upon all lands, materials, rolling-stock, buildings, property, and premises of every description purchased or to be purchased for the railway, and on the railway itself as and when constructed, and on the revenue of all descriptions derivable therefrom.
The provisions of this Article in respect of the mortgage are to be construed and treated as equivalent in purport and effect to a mortgage customarily executed and delivered in England to a trustee for the purpose of securing loans and bond issues upon railway properties in foreign countries.
Art. 4. It is hereby agreed that in six months after this Agreement is officially ratified the Corporation shall provide the amount necessary to proceed with the detailed survey of the railway, whether this amount comes from the sale or hypothecation of the bonds or from advances made, provided that bonds for the required amount shall have been executed and delivered to the Corporation. If after expiration of eight months from the date of the ratification hereof the work of construction shall not have been begun on the railway, this Agreement is to become null and void; but if failure to commence construction be due to any cause beyond the power of the Corporation to prevent, a reasonable extension of this time shall be arranged between the Viceroy and the Corporation.
Of the proceeds realized from the sale of the bonds, after deducting so much of them as may be required to be kept in England for the purchase of materials and the payments of contracts there, such amounts as may be estimated and certified to by the Engineer-in-chief to the Viceroy, hereafter mentioned as being actually required for the construction of any particular section of the railway may be ordered by the Viceroy after consideration to be transferred to Hong Kong to be kept in the Hong Kong and Shanghae Bank, and placed to the credit of the construction account of the railway, for the exclusive purpose of constructing the railway in the manner herein provided for under the supervision of the head office and the Viceroy.
On each occasion of remittance being made to China the amount realized in sycee will be reported to the Viceroy, and any portion which may not be required shall be placed at interest. Similarly the balance in England shall be placed at interest, to be allowed at the usual rate.
The accounts of the money spent from time to time in England, and of the money transferred to the credit of the construction and other accounts for use in China, are to be submitted quarterly to the head office for report to the Viceroy, for the information of the Wai-wu Pu, and for his further report to the Board of Revenue and the Bureau of Mines for record therein, after such accounts have been approved and signed by him.
Art. 5. As to the form of the bond, it is to be agreed upon by the Viceroy or by the Chinese Minister in London and the Corporation at the same time as this Agreement is signed, but if hereafter the money markets in London or other countries require any modification of the form of the bond, except in anything that affects the amount of the loan and the liability of the Chinese Government, which are not to be touched at all, such slight modifications may be made to meet the views of the money markets by the Corporation in consultation with the Chinese Minister in London.
Page 450
Page 451
445
4
Article 13.-His Excellency Tang Shao-yi stated that the Chinese Government was about to issue new Regulations in regard to Government railways stipulating for payment of Maritime Customs duty on all importations of material; the exemption arrangement 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 expediting 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.
(Signed) J. O. P. BLAND.
Inclosure 4 in No. 1.
CANTON KOWLOON RAILWAY.
Draft Final Loan Agreement.
ARTICLE 1. The Corporation agrees to issue on behalf of the Imperial Chinese Government 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 amonut, similar to the bonds of the Shanghae-Nanking Railway, with the railway as first mortgage security therefore. The loan shall be in one issue, and the price agreed upon shall be 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 5 per cent. per annum on their nominal vaine, 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 fifty 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 mentioned 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.
Art. 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 Government, 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 payment of interest on the loan, he 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
D
honds in accordance with the terms of this Agreement as hereinafter stated, or to be placed on deposit with the Hong Kong and Shanghae 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 he 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.
Detailed plans and estimates of cost, whether of the respective sections of the railway or of any alterations of the same, are to be submitted for the approval of the Viceroy by the Engineer-in-chief.
Art. 3. The loan shall be secured by mortgage declared to be now entered into in equity by virtue of this Agreement, and shall as soon as possible hereafter be secured by a specific and legal first mortgage in favour of the Corporation upon all lands, materials, rolling-stock, buildings, property, and premises of every description purchased or to be purchased for the railway, and on the railway itself as and when constructed, and on the revenue of all descriptions derivable therefrom.
The provisions of this Article in respect of the mortgage are to be construed and treated as equivalent in purport and effect to a mortgage customarily executed and delivered in England to a trustee for the purpose of securing loans and bond issues upon railway properties in foreign countries.
Art. 4. It is hereby agree that in six months after this Agreement is officially ratified the Corporation shall provide the amount necessary to proceed with the detailed survey of the railway, whether this amount comes from the sale or hypothecation of the bonds or from advances made, provided that bonds for the required amount shall have been executed and delivered to the Corporation. If after expiration of eight months from the date of the ratification hereof the work of construction shall not have been begun on the railway, this Agreement is to become null and void; but if failure to commence construction be due to any cause beyond the power of the Corporation to prevent, a reasonable extension of this time shall be arranged between the Viceroy and the Corporation.
Of the proceeds realized from the sale of the bonds, after deducting so much of them as may be required to be kept in England for the purchase of materials and the payments of contracts there, such amounts as may be estimated and certified to by the Engineer-in-chief to the Viceroy, hereafter mentioned as being actually required for the construction of any particular section of the railway may be ordered by the Viceroy after consideration to be tranferred to Hong Kong to be kept in the Hong Kong and Shanghae Bank, and placed to the credit of the construction account of the railway, for the exclusive purpose of constructing the railway in the manner herein provided for under the supervision of the head office and the Viceroy.
On each occasion of remittance being made to China the amount realized in sycee will be reported to the Viceroy, and any portion which may not be required shall be placed at interest. Similarly the balance in England shall be placed at interest, to be allowed at the usual rate.
The accounts of the money speut from time to time in England, and of the money transferred to the credit of the construction and other accounts for use in China, are to be submitted quarterly to the head office for report to the Viceroy, for the information of the Wai-wu Pu, and for his further report to the Board of Revenue and the Bureau of Mines for record therein, after such accounts have been approved and signed by him.
Art. 5. As to the form of the bond, it is to be agreed upon by the Viceroy or by the Chinese Minister in London and the Corporation at the same time as this Agreement is signed, but if hereafter the money markets in London or other countries require any modification of the form of the bond, except in anything that affects the amount of the loan and the liability of the Chinese Government, which are not to be touched at all, such slight modifications may be made to meet the views of the money markets by the Corporation in consultation with the Chinese Minister in London.
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