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regards all Chinese railway loans within China proper, while reserving to themselves freedom of action regarding railway business in Manchuria and Mongolia, and also as regards political loans, which were interpreted to mean financial loans for railway purposes throughout the whole of the Chinese Empire.
After mature consideration the representatives of the four groups came to the decision which was conveyed to you in my telegram No. 72 of the 10th instant. In view of the provincial opposition they doubted whether diplomatic pressure would succeed in forcing the Chinese Government to include the branch line in the final contract, and they thought it advisable to reserve the diplomatic intervention for They securing the adherence of China to the other terms of the original agreement. were afraid that if the legations pressed for inclusion of the branch line, the resulting delay would afford an opportunity to the new Anglo-Belgian-Russian group to offer competing terms. They therefore recommended that the Ministers should be requested to submit the following terms to the Chinese Government: that the amount of the loan and the other conditions of the original and supplementary agreement should remain unaltered, and that the Ching-men-chou-Hanyang line should be constructed with Chinese funds by the provincial company within three years, at expiration of which, if not completed, the line should be undertaken by a German chief engineer, with a supplementary loan borrowed from the groups. This arrangement would necessitate the American group temporarily waiving their sub-section in consideration of corres- ponding sacrifice to be borne by the German group. The German and American rights would revive in the event of the Ching-men-Chou-Hanyang branch being constructed with foreign capital, or if not, the sacrifice would be compensated by corresponding preference in future business.
This proposal has now been accepted by the Governments of all the four Powers, and their Ministers here are engaged in concerting measures for presenting it to the Chinese Government,
I have, &c.
Enclosure in No. 1.
J. N. JORDAN.
Hukuany Railways Loan Agreement: Revised Draft received from the Board of Communications. (Translation.)
LOAN AGREEMENT for the Canton-Hankow Railway within the boundaries of the two provinces of Hupei and Hunan and the Szechuan-Hankow Railway within the boundaries of the province of Hupei.
THIS agreement is made at Peking on the
year of Hsuan Tung, corresponding to the
contracting parties are:-
day of the
day of
month of the and the
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The President of the Board of Communications Sheng, the Acting Senior Vice- President Li, and the Junior Vice President Wu, duly authorised by Imperial decree to act on behalf of the Imperial Government of China, on the one part; and the Hong Kong and Shanghai Banking Corporation, the Deutsch-Asiatische Bank, the Banque de l'Indo-Chine, and the American banks of Messrs. J. P. Morgan and Co., Messrs. Kuhn, Loeb, and Co., the First National Bank, and the National City Bank, herein. after called the "banks," of the other part.
"The Imperial Article 1. Amount of loan 6,000,0001. Alter date. Name of loan: Chinese Government 5 per cent. I oan for the Canton-Hankow Railway within the boundaries of the two provinces of Hupei and Hunan, and the Szechuan-Hankow Railway within the boundaries of the province of Hupei."
Article 2. This loan is designed to provide capital, first: for the redemption, in accordance with the terms of an agreement made in the year 1905 with the American China Development Company, for the repurchase of the railway concession granted to to that company, of certain unredeemed gold bonds of the total par value of 2,222,000 dollars United States currency, with accrued interest, which were issued by that company on behalf of the Imperial Chinese Government under an agreement which has since been annulled; the amount required for such redemption being estimated at 500,000l. And it is now agreed that if is it found that the amount required
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for such redemption is less than 500,000, the surplus that remains over out of this amount shall be credited in full to the Canton-Hankow Government Railway within the boundaries of the two provinces of Hupei and Hunan and the Szechuan-Hankow Government Railways within the boundaries of the province of Hupei; and secondly, for the construction w thin te boundaries of the two provinces of Hupei and Hunan of the Canton-Hankow Government Railway main line, and within the boundaries of the province of Tupei of t Szechuan-Hankow Government Railway main line.
The allotment of car tal will be in the proportion of 2,750,000 for the Canton- Haukow Railway, and 20,000%, for the Szechuan-Hankow Railway.
The Canton Bankow Railway main line will run from Wucbang to Yochow and from Yochow through Changsha to a point on the southern boundary of the province of Hunan in the prefecture of Ch'en-chou, so as to connect with the Canton-Hankow Railway line under construction in the province of Kuangtung, and will be referred to in the following articles of this agreement as the Canton-Hankow Railway within the boundaries of the provinces of Hupei and Hunan.
The Szechuan-flankow Railway main line will run from Ichang through Ching- men Chou and Hsiang Yang to Kuang-shui, or to a point near thereto, so as to connect with the Peking-Hankow Railway main line, and will be referred to in the following articles of this agreement as the Szechuan-Hankow Railway within the boundaries of the province of Hupei.
The survey lines shall be open to revision by the director-general.
When the redemption has been effected of the gold honds, to which reference is made as being unredeemed in the agreement with the American China Development Company for the repurchase of the railway concession granted to that company, the Board of Communications will notify the Wai-wu Pu and the Viceroys and Governor of the provinces of Hupei, Hunan, and Kuangtung, in writing, to cancel completely the inscription in their archives of the pledge of the Carton-Hankow Railway; and after such cancellation has been effected they will inform the banks in writing that this action has been taken.
Article 3.The lines of the railway already constructed by the two provinces of Hupei and Hunan prior to the signature of this agreement with capital provided by those provinces themselves, together with the property of those two provincial railways shall henceforward be vested in the Canton-Hankow and the Szechuan-Hankow Government Railways administration; and further, any supplementary funds which may be furnished in the future by the Board of Communications on account of a deficiency in the amount required for the construction of the Canton-Hankow and Szechuan-Hankow main lines within the boundaries of the two provinces of Hupei and Hunan, as provided for in article 15 of the present agreement, shall also rank as capital of the Canton-Hankow and Szechuan-Hankow Railway main line within the boundaries of the two provinces of Hupei and Hupan.
But the returns due upon such capital shall not in any manner impair the arrangements for payment of interest and repayment of principal of the present loan.
After "deduction" (as in original) after "Europe," add "America" and read “500,000l.” in lieu of $10,0001," and "not exceeding 5 per cent." in place of "not exceeding 6 per cent." in the penultimate line.
Article 4-The rate of interest for the loan shall be 5 per cent, per annum on the But this nominal principal and shall be paid by the Imperial Chinese Government. interest at the rate of 5 per cent, must be calculated only from the date on which the bonds are sold and the amount of interest due for the period covered by the first coupon shall be calculated in accordance with the date on which the bonds are sold.
The Imperial Chinese Government shall pay the interest on this loan either from the proceeds of the loan or from other sources, as it pleases, but when the railways are open to traffic, as payments of interest in this loan become due, it shall in the first place pay interest out of the net revenues of the respective lines after all working expenditure has been inet; and if such net revenues are insufficient to meet interest charges the Imperial Chinese Government shall pay the interest from such other revenues as it may see fit to use for the purpose. These payments of interest shall be made annually according to the amounts specified in the schedule attached to this agreement and fourteen days before their due dates, western calendar, commencing from the date on which the bonds are sold and reckoning in annual periods therefrom till the principal of the loan has been completely repaid.
Article 5-Repayments of principal in yearly instalments.
Article 6.-No change; but add, "when the loan has been repaid fully this agree- ment will immediately become null and void. Bonds and interest coupons which have
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