CO129-451 - Public Offices - 1918 — Page 177

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The Chinese Government authorises the bank to issue in Japan within ten days, commencing from the date of this agreement, Chinese Government Treasury bills to a total amount of 10,000,000 yen, the proceeds of such issue to be used for the making of the present advance.

The date of the Treasury bills shall be that on which they are issued, and their designation shall be "Treasury bills of the sixth year of the Republic of China" (sixth year of Dai Djeng, Japanese calendar).

2. The term of the National Treasury bill shall be one year from the date on which they are issued. Ten days ior to the date of repayment the Chinese Govern- ment shall hand to the bank the full amount of 10,000,000 yen for the purpose of making repayment. The Chinese Government shall make full provision in Shanghai aycee and/or national currency of the equivalent of 10,000,000 yen, being the amount payable in Japan, aarl make payment to the bank at Shanghai, the rate of exchange to to be settled with the bank either on the same day or at any time six months previously. Should the Chinese Government happen to have bond fide funds in yen lodged in Japan, not specially remitted there for the purpose of redeeming the National Treasury bills, then these funds may be availed of for making repayment ten days before due date, only the bank must be given two months' prior notice.

3. Interest on the National Treasury bills shall be at the rate of 7 per cent, per annum, commencing from the date on which they are issued, the said interest first to be deducted on the date on which the bills are issued, ie, the bills are to be discounted at 93 per cent. of their face value.

4. From the net amount of proceeds of the bills issued, as stated in article 3, a commission of 1 per cent., ie, 1 yen on each bill of 100 yen face value, together with the cost of printing the Treasury bills, probably amounting to 3,000 yen, is to be deducted by the bank; the whole amount of balance of proceeds remaining is to be placed three days after the date of issue to the credit of the Chinese Government, and to be held to the order of the Minister of Finance with the Yokohama Specie Bank (Limited), at Yokohama, the bank to allow interest on the funds at the rate of 8 per cent. per annum,

The above proceeds are to be remitted to China by the bank, the amount to be remitted each week to be arranged with the bank, but not to exceed 2,000,000 yen in any one week.

5. The proceeds of the Treasury bills are to be devoted solely to administrative expenditure for the months of July, August, and September of the present year, us per separate detailed statement to be communicated to the bank and attached to this agreement.

6. The Treasury bills are to be secured on the whole receipts of the Chinese Salt Gabelle, with the exception of the receipts of the Chinese Salt Gabelle already designated as security for prior loans not yet paid off.

7. The terms and conditions of the procedure to be followed by the Minister of Finance when drawing upon the proceeds of the Treasury bills shall be entirely as laid down in article 14 of the Chinese Government Reorganisation Loan of 1913 Agreement.

8. On the day on which the National Treasury bills are issued in Japan, in accordance with article 1 of the present agreement, the Minister of Finance, representing the Chinese Government, shall temporarily issue one comprehensive Treasury bill of the Chinese Government for 10,000,000 yen, which is to be deposited with the bank in Peking as evidence of the transaction, and it is agreed that this comprehensive Treasury bill is to be returned by the bank to the Ministry of Finance for cancellation on the day on which the printing of all the National Treasury bills referred to in the next paragraph shall have been completed.

The form, language, and denomination of each of the National Treasury bills to be issued in Japan shall be settled by the bank, after study of examples of foreign National Treasury bills issued in Japan, in consultation with the Chinese Minister at Tokyo.

The National Treasury bills shall be signed and sealed by the Minister of Finance as well as by the Chinese Minister at Tokyo, as evidencing the agreement of the Chinese Government to the issue of the National Treasury bills and its responsibility for the debt thereby incurred. The Governor of the bank must also sign and seal the bills as evidence that he is acting as agent.

The Chinese Government shall, on the day on which this agreement is made, telegraph instructions to the Chinese Minister at Tokyo to act in accordance with the provisions of this clause,

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9. When the National Treasury bills are becoming due, should the Chinese Govern- ment desire an extension of the term of the advance, it must notify the bank accordingly two months prior to the due dite, and the bank shall consent to undertake the issue of a second series of one-year National Treasury bills in place of the old. The terms of issue and manner in which it is to be made are set forth below:-

(1.) The issue of the second series of National Treasury bills must be made three days prior to the date of expiry of the present National Treasury bills. The amount of interest to be deducteri and commission to be paid to the bank shall be arranged one month prior to issue, in accordance with the market conditions then prevailing.

(2.) Ten days before the date of expiry of the present National Treasury bills the Chinese Government must calculate the amount of the difference between the sum of 10,000,000 yen repayable on account of the present National Treasury bills and the net proceeds of the second issue of National Treasury bills, and having made adequate provision of the equivalent of such amount in Shanghai sycee and/or national currency, shall make payment to the bank in Shanghai for remittance to Japan, the rate of exchange for the transfer to be settled the same day with the bunk.

(3.) The Chinese Government agrees that, commencing from the date of issue of the second series of National Treasury bills, regular paynents from the receipts of the Salt Gabelle shall be made to the bank at Shanghai, to constitute a sinking fund for the repayment of the National Treasury bills. Interest on the sinking fund must be allowed by the bank at the rate of 5 per cent. per annum. The dates of the payments and the amount payable on each occasion shall be arranged with the bank one month prior to the issue of the second series of the National Treasury bills.

(4.) With the exception of the three preceding clauses, the rest of the procedure to be followed and conditions to be observed sball all come under the provisions of this present agreement.

10. On the conclusion of the Supplementary Reorganisation Loan the present National Treasury bills shall constitute a first charge on, and be repaid out of the proceeds of the said loan.

11. The provisions of this present agreement shall be officially communicated to the Japanese Minister in Peking by the Wai-chiao Pu.

12. Four sets of this agreement are executed in Chinese and Japanese, two sets to be retained by the Chinese Government and two by the bank. In the event of any doubt arising regarding the interpretation the Japanese text shall rule.

Peking, August 28, 1917.

LIANG CHI CH'AO,

Minister of Finance, (For the Yokohama Specie Bank (Limited)),

MASHUNOSKE ODAĞIRI, Manager.

Chinese Ministry of Finance to the Yokohama Specie Bank (representing the Japanese Group). Gentlemen,

Peking, August 28, 1917. ARTICLE 5 of the agreement made on the 28th instant between the Chinese Government and your bank for an advance of 10,000,000 yen states :—

"The proceeds of the National Treasury bills are to be devoted solely to administrative expenditure for the months of July, August, and September of the present year, as per separate detailed statement to be communicated to the bank, and attached to this agreement,"

We now have the honour to hand to you herewith, for your information, the separate detailed statement referred to, to be attached as an annex to the present agreement, as stated in article 5 thereof.

We have, &c.

(Seal of Ministry of Finance.}

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