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"Bureau of currency reform and/or native hank designated will hand banks quarterly published statement prepared for information Imperial Chinese Parliament showing disbursements of loan funds for currency reform.
["Note. Funds required for Manchuria will be probably withdrawn in large amount under certificates, form of which will be fixed in statement which will be subject to your approval, but it will not be possible supervise their actual application. We propose insist upon as condition of our acceptance statement of expenditure for currency reform that same shall specify that certificates for withdrawal of funds from four banks must be signed by financial adviser, and that adviser shall certify to banks that quarterly statement agree with accounts kept by designated Chinese bank. Loan agreement will be so worded that banks may withhold loan funds if certificates and/or quarterly statement are not in order. We consider provisions stipulating that quarterly Parliament constitutes safeguard against
statements are to be submitted to misappropriation.]
Five per cent. per annum payable semi-annually from date on which loan issued to public.
*Terms of loan forty-five years repayment principal commencing with eleventh year to be made by yearly amortisation in half-yearly instalments.
Silver payments in Shanghai or payments in gold bond fide in America Europe to be made ten days before due date. Banks to receive 1 per cent. commission on loan service. China agree to pay 24 per cent. premium on extra redemption from fifteenth to twentieth years inclusive,
["Note.--We can obtain possibly premium up to twenty-fifth year if you insist upon, but suggest that you make concession.]
"China agree to give banks preference for supplementary loan and for partici- pation in any Manchurian business to be undertaken under this loan or in connection with.
"If after group has accepted currency reform programme and statement Manchurian and currency reform expenditures, political crisis, &c., should occur before publication prospectus, banks shall be given six months within which to issue. If at the expiration of this time loan shall not have been issued Government shall repay all advances with accrued interest at 6 per cent., and reimburse banks for expenses, engraving and/or printing bonds, but shall be liable for no other compensation, and on such repayment agreement shall become null and void.
"All necessary details of final agreement not specified about follow precedent of Hukuang and previous loan agreements.
"We have suggested to China that since we derive no commission on sale of materials proceeds of loan to be deposited with banks in Europe or held by banks in China shall bear no interest, and that China allow banks rebate of i per cent. on China amount of loan in partial reimbursement of flotation and other expenses- refuse rebate and demand interest. We can probably insist upon no interest, but doubt if we can obtain rebate would you authorise us compromise by offering small interest and mixed loan 5/4 per cent. at 94. We suggest 3 per cent. per annum in Europe and America currency account rate China. Please send us definite instructions on this
point.
"We believe by signature foregoing agreement and by hold obtained through proposed advances immediate and contingent, you will be able oblige China grant adequate control provisions under statement of expenditures and force them in con- sultation with adviser to be appointed accept such alterations in currency reform programme handed to you as you after consultation with your expert at home may deem to be necessary.
"We believe agreement now proposed is best that can be obtained, and in view of probable competition strongly urge you authorise us conclude negotiations upon the basis of above and sign agreement immediately."
(2.)
Cable from W. D. Straight to E. C. Grenfell, March 13, 1911.
Repeat to New York and communicate this to respective groups :--
"Following from Straight, Hillier, Cordes, Casenave :---
“With reference to proposed currency loan, telegraphic information has been
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received from Japan that meeting bankers called at the instance of Japanese Govern- ment has reported in favour of participation Chinese loan.
"In view of foregoing we strongly urge prompt conclusion of currency agree- ment in order to avoid introduction of possible political complications.""
(3.).
Telegram received from W. D. Straight, Peking, March 14, 1911.
Please repcat to New York and communicate this to respective groups :— "Following from Hillier, Cordes, Casenave, Straight :-
"Strongly urge endeavour to arrange conference before the 21st March, failure to take immediate action might give opening to complication which would defeat the entire project.''
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