5. The loan to be guaranteed by the Imperial Chinese Government, and to be secured upon provincial li-kin and miscellaneous duties indicated.
6. In order to comply with the custom of the market it will be necessary to state that the loan funds are to be applied, first, to the redemption of the existing loan for the Peking-Hankow Railway, and the balance employed by the Yu-ch'uan Pu for productive objects coming within the province of that Department, such as railways, telegraphs, and commercial shipping lines.
7. The payment of loan proceeds to be made in Europe, either in one amount or in instalments as required by the Yu-ch'uan Pu, transfers of loan funds to China being made through the lenders' banks.
8. The loan to be repaid by China in forty years. The payments to meet the yearly sum of 380,402l. for interest and principal of the loan to be made by the Yu-ch'uan Pu in silver to the lenders' banks in Shanghae, first, out of the surplus revenues of the Peking-Hankow Railway, and, secondly, from such revenue as the Imperial Government may think fit to assign. The arrangements for such payments and other necessary matters not here referred to be settled generally in accordance with the precedent furnished by previous Chinese Loan Agreements.
9. Where materials have to be procured from abroad for the maintenance of the Peking-Hankow railway line, or for carrying out the productive objects designated for the expenditure of the loan funds, arrangements will be made to give preference to the manufacturers of the lenders' countries when prices and qualities are equal.
10. The loan will be negotiated and concluded with the Yu-ch'uan Pu by one lender, in consultation with his partner or partners, who will become parties and signatories to the Agreement. The Agreement will be sanctioned by Imperial Edict, and, after signature, the Board will request the Wai-wu Pu to communicate it officially to the respective Ministers of the Contracting Parties.
June 30, 1908.
Inclosure 5 in No. 1.
Mr. Hillier to Hong Kong and Shanghae Banking Corporation, London,
(Telegraphic.)
Peking, July 1, 1908. WITH reference to my telegram of yesterday, we propose the following terms as a basis for negotiation: 7,000,000l., forty years, interest at 4 per cent. per annum, security as advised, but we must have additional 5 lacs taels, total 35 lacs taels, annuity 380,000l. payable first from revenues Peking-Hankow Railway, no control, but if insufficient, then from other sources, idea same as Peking Octroi Loan. Agreement must state loan proceeds applied first to redemption Pekin-Hankow Loan, afterwards to productive objects to include railways, telegraphs.
With reference to foregoing, we have reason to believe Belgians again negotiating; it is necessary to act promptly.
The following is for your private information only: J. O. P. Bland objects to loan proceeds applied to railway construction. Casenave informs us French will object to absence of conditions securing material benefits, consequently we are in a very difficult position. Our opinion is, if we insist upon conditions other than necessary for good security and market requirements, it will be very difficult to compete with the Belgians.
Inclosure 6 in No. 1.
M. Casenave to the Banque de l'Indo-Chine, Paris,
(Télégraphique.)
Pékin, le 2 Juillet, 1908. HILLIER a demandé à Londres par télégramme de proposer au Gouvernement Chinois les négociations sur la base de 7,000,000l., intérêts 4½ pour cent avec augmentation de garantie, remboursable en quarante ans par annuités de 380,000l., payables d'abord sur revenus du Chemin de Fer Hankow-Pékin, sans contrôle, et ensuite sur autres ressources en cas d'insuffisance. Le contrat stipulerait que l'emploi des fonds serait (1) le rachat du Chemin de Fer Hankow-Pékin, (2) objets utiles, chemins de fer, télégraphes. La préférence serait donnée aux prêteurs pour fournitures à égalité de prix.
J'ai fait remarquer que le projet-
1. Implique participation Allemande;
2. Ne stipule rien en ce qui constitue le personnel Français;
3. En ce qui concerne l'utilisation du surplus à de nouveaux chemins de fer, engage l'avenir dans de mauvaises conditions.
Inclosure 7 in No. 1.
Banque de l'Indo-Chine to M. Casenave.
(Télégraphique.)
Paris, le 3 Juillet, 1908, RÉPONDANT à votre dépêche No. 9, nous approuvons entièrement vos trois objections. Vous devez maintenir la nécessité d'un emprunt de chemin de fer. Nous allons donner à Londres communication de votre dépêche en insistant sur le contenu.
(Télégraphique.)
Inclosure 8 in No. 1.
Banque de l'Indo-Chine to M. Casenave.
Paris, le 4 Juillet, 1908. LE Gouvernement Français a prescrit au Ministre de France à Pékin de notifier au Gouvernement Chinois que les obligataires Français de la Société d'Études exigent le remboursement à la date du 31 Décembre si le contrat existant actuellement est modifié pour quoi que ce soit. De plus, la cote serait refusée à nouvelles obligations émises par Société d'Études sans mettre en vue le remboursement.
En conséquence, de votre côté, faites comprendre au Gouvernement Chinois que s'il veut proroger pour une durée de vingt ans le contrat de la Société d'Etudes, il doit s'entendre avec vous et votre collègue Anglais, car le marché de Paris et celui de Londres seront ouverts seulement à un emprunt que vous aurez négocié.
Il est bien évident que si nous tenons à un emprunt de chemin de fer à peu près analogue à celui du Tien-tsin-Pukow ou du Shanghai-Ningpo, cela est beaucoup plus avantageux pour les Chinois que la prorogation du contrat de la Société d'Etudes.
C'est entre ces deux seules alternatives que les Chinois devront choisir.
Inclosure 9 in No. 1.
Private Memorandum for Sir J. Jordan.
37
ON the 4th March last the bank in London telegraphed to me referring to a letter of May 1907, with regard to the possible redemption of the Peking-Hankow Railway were about to conclude Loan. It was reported in London that the "Société d'Études arrangements for the continuation of the contract, and they asked if I had any information, and if I was doing anything in the matter. I replied that I had no information, but that I thought it likely that the Chinese would be prepared to entertain an offer from the Hong Kong Bank, provided that it fulfilled certain conditions.
After a further exchange of telegrams, London informed me that the French were prepared to participate, if necessary, in a supplementary clause, and had no objection to the Germans participating also.
I approached the Board of Communications tentatively, through the medium of my compradore, but the moment did not seem opportune for taking more active steps.
On the 4th April I received a telegram from London informing me that it was proposed to issue the Shanghae-Ningpo Railway Loan some time in May, and adding that, if the Peking-Hankow Railway Redemption Loan negotiations were sufficiently advanced, it might be advisable to suggest to the Chinese Government that it would be preferable to issue the loan for the larger amount first. I replied that, after consulting M. Casenave, my opinion was that nothing could be done at present, at
Page 596
6
5. The loan to be guaranteed by the Imperial Chinese Government, and to be secured upon provincial li-kin and miscellaneous duties indicated.
6. In order to comply with the custom of the market it will be necessary to state that the loan funds are to be applied, first, to the redemption of the existing, loan for the Peking-Hankow Railway, and the balance employed by the Yu-ch'uan Pu' for productive objects coming within the province of that Department, such as rail- ways, telegraphs, and commercial shipping lines.
7. The payment of loan proceeds to be made in Europe, either in one amount or in instalments as required by the Yu-ch'uan Pu, transfers of loan funds to China being made through the lenders' banks.
8. The loan to be repaid by China in forty years. The payments to meet the yearly sum of 380,4021. for interest and principal of the loan to be made by the Yu-ch'uan Pu in silver to the lenders' banks in Shanghae, first, out of the surplus revenues of the Peking-Hankow Railway, and, secondly, from such revenue as the Imperial Government may think fit to assign. The arrangements for such payments and other necessary matters not here referred to to be settled generally in accordance with the precedent furnished by previous Chinese Loan Agreements.
9. Where materials have to be procured from abroad for the maintenance of the Peking-Hankow railway line, or for carrying out the productive objects designated for the expenditure of the loan funds, arrangements will be made to give preference to the manufacturers of the lenders' countries when prices and qualities are equal.
10. The loan will be negotiated and concluded with the Yu-ch'uan Pu by one lender, in consultation with his partner or partners, who will become parties and signatories to the Agreement. The Agreement will be sanctioned by Imperial Edict, and, after signature, the Board will request the Wai-wu Pu to communicate it officially to the respective Ministers of the Contracting Parties.
June 30, 1908.
Inclosure 5 in No. 1.
Mr. Hillier to Hong Kong and Shanghae Banking Corporation, London,
(Telegraphic.)
Peking, July 1, 1908. WITH reference to my telegram of yesterday, we propose the following terms as a basis for negotiation: 7,000,000l., forty years, interest at 4 per cent. per annum, security as advised, but we must have additional 5 lacs taels, total 35 lacs taels, annuity 380,0001. payable first from revenues Peking-Hankow Railway, no control, but if insufficient, then from other sources, idea same as Peking Octroi Loan. Agree- ment must state loan proceeds applied first to redemption Pekin-Hankow Loan, afterwards to productive objects to include railways, telegraphs.
With reference to foregoing, we have reason to believe Belgians again negotiating; it is necessary to act promptly.
The following is for your private information only: J. O. P. Bland objects to loan proceeds applied to railway construction. Casenave informs us French will object to absence of conditions securing material benefits, consequently we are in a very difficult position. Our opinion is, if we insist upon conditions other than necessary for good security and market requirements, it will be very difficult to compete with the Belgians.
Inclosure 6 in No. 1.
M. Casenave to the Banque de l'Indo-Chine, Paris,
(Télégraphique.)
Pékin, le 2 Juillet, 1908. HILLIER a demandé à Londres par télégramme de proposer au Gouvernement Chinois les négociations sur la base de 7,000,000l., intérêts 43 pour cent avec augmen- tation de garantie, remboursable en quarante ans par annuités de 380,0001, payables d'abord sur revenus du Chemin de Fer Hankow-Pékin, sans contrôle, et ensuite sur autres ressources en cas d'insuffisance. Le contrat stipulerait que l'emploi des fonds serait (1) le rachat du Chemin de Fer Hankow-Pékin, (2) objets utiles, chemins de fer, télégraphes. La préférence serait donnée aux prêteurs pour fournitures à égalité de prix.
J'ai fait remarquer que le projet-
1. Implique participation Allemande;
2. Ne stipule rien en ce qui constitue le personnel Français ;
3. En ce qui concerne l'utilisation du surplus à de nouveaux chemins de fer, engage l'avenir dans de mauvaises conditions.
Inclosure 7 in No. 1.
Banque de l'Indo-Chine to M. Casenave.
(Télégraphique.)
Paris, le 3 Juillet, 1908, RÉPONDANT à votre dépêche No. 9, nous approuvons entièrement vos trois objections. Vous devez maintenir la nécessité d'un emprunt de chemin de fer. Nous allons donner à Londres communication de votre dépêche en insistant sur BOYL
contenu.
(Télégraphique.)
Inclosure 8 in No. 1.
Banque de l'Indo-Chine to M. Casenove.
Paris, le 4 Juillet, 1908. LE Gouvernement Français a prescrit au Ministre de France à Pékin de notifier au Gouvernement Chinois que les obligataires Français de la Société d'Études exigent le remboursement à la date du 31 Décembre si le contrat existant actuellement est modifié pour quoi que ce soit. De plus, la cote serait refusée à nouvelles obligations émises par Société d'Études sans mettre en vue le remboursement.
En conséquence, de votre côté, faites comprendre au Gouvernement Chinois que s'il veut proroger pour une durée de vingt ans le contrat de la Société d'Etudes, il doit s'entendre avec vous et votre collègue Anglais, car le marché de Paris et celui de Londres seront ouverts seulement à un emprunt que vous aurez négocié.
Il est bien evident que si nous tenons à un emprunt de chemin de fer à peu près analogue à celui du Tien-tsin-Pukow 'ou du Shanghai-Ningpo, cela est beau- coup plus avantageux pour les Chinois que la prorogation du contrat de la Société d'Etudes.
C'est entre ces deux seules alternatives que les Chinois devront choisir.
Inclosure 9 in No. 1.
Private Memorandum for Sir J. Jordan.
37
ON the 4th March last the bank in London telegraphed to me referring to a letter of May 1907, with regard to the possible redemption of the Peking-Hankow Railway were about to conclude Loan. It was reported in London that the " Société d'Études arrangements for the continuation of the contract, and they asked if 1 had any informa- tion, and if I was doing anything in the matter. I replied that I had no information, but that I thought it likely that the Chinese would be prepared to entertain an offer from the Hong Kong Bank, provided that it fulfilled certain conditious.
After a further exchange of telegrams, London informed me that the French were prepared to participate, if necessary, in a supplementary clause, and had no objection to the Germans participating also.
I approached the Board of Communications tentatively, through the medium of my compradore, but the moment did not seem opportune for taking more active steps.
On the 4th April I received a telegram from London informing me that it was proposed to issue the Shanghae-Ningpo Railway Loan some time in May, and adding that, if the Peking-Hankow Railway Redemption Loan negotiations were sufficiently advanced, it might be advisable to suggest to the Chinese Government that it would I replied that, after be preferable to issue the loan for the larger amount first. consulting M. Casenave, my opinion was that nothing could be done at present, at
D [1897 au-3]
596
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