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reorganisation currency and Hukuang loans, had been received, discussion followed on the various reservations which were made. Those of the Japanese and American groups drew attention to the fact that their negotiations with the holders were technically not quite complete, while that of the British group referred to the sum of £120,000 due to Chinese Central Railways (Limited) in terms of article 22 of the Pukow-Sinyang Agreement of the 14th November, 1913. This, it was explained to the meeting. was in commutation of a share in the net profits of the railway which it would not be equitable to surrender to the consortium. No objection was taken to this reservation, or to those of the other groups.
Messrs. Pauling and Co. and Messrs. Erlanger.
In reply to an enquiry of the French representatives as to why the Loan Agree- ment of Messrs. Pauling and Co. was not included in the British list, Sir Charles Addis explained the offer he had made to Messrs. Erlanger, the bankers to Messrs. Pauling and Co., viz., that in consideration of surrendering the Pauling contract to the British group. Paulings as regards the industrial part and Erlangers as regards the financial part should be placed in the same position as if they had issued their loan and executed their contract themselves. Their agreement contemplated a loan of £10,000,000 for the construction by contract of the Shasi-Singyi Railway, and the effect of this offer would be that if and when the consortium issued this loan the benefits arising from the industrial share of the British group, at present one quarter, would enure entirely to Paulings and as subsequent loans for other railways were made the British group's share of such subsequent loans would similarly enure to Paulings up to a total of £10,000,000 and that the. British group would use its best endeavours to secure for Paulings a preference in any future construction by contract. Furthermore, that Erlangers should share in the issue of the Pauling loan and that their name should appear on the prospectus. This offer evoked only the counter-proposal that Erlangers should be admitted as members of the British group, and when this was rejected Erlangers asked for an assurance that should the British group be extended at any future time Erlangers should be given a preference. Sir Charles Addis had replied that this assurance could not be given, and the negotiations terminated without result.
Agreements Pooled comprise all those held or controlled by Groups.
After this explanation the French representatives specifically asked the American and Japanese representatives whether they held or controlled any agree- ments or options other than those tabled. The American and Japanese representa- tives replied in terms that the agreements they had tabled included all they held or controlled.
Lund Tax.
The question of the land tax as a possible security for future loans was not discussed in detail, the Japanese representatives showing a disinclination to consider the subject while the French held the view that foreign supervision of the land tax would not be practicable and intimated that in their opinion a suitable source of revenue to form security of future loans would be the stamp duty under foreign supervision.
Silver Loans.
The prospect of issuing silver loans in China was reviewed and the opinion of the meeting was unanimous in considering that the policy of the consortium should be to facilitate by every means in their power the raising of money from Chinese sources and to endeavour to create a Chinese investing public. With exchange at its present high level it was regarded as indispensable for the purposes of railway construction that the capital required for expenditure in China on native labour, salaries, land purchase, building, &c., should be raised in silver, leaving only the balance required for rolling-stock and equipment to be raised abroad in gold.
Final Meeting: Removal of Difficulties regarding Pooling of Agreements.
The final meeting of the conference was held on the 15th October, by which time the French representatives had received authority from Paris to accept the conditions of pooling laid down by the British group after consultation with His Majesty's
15
Ambassador. The necessary resolution recording these conditions was unanimously passed
Signature of Consortium Agreement.
Thereupon the Consortium Agreement, the signature of which had stood over meanwhile, was duly executed and the chairman congratulated the representatives on the successful issue of their deliberations.
Pacific Development Corporation Loan: Railway Policy of the Consortium.
The reports of the sub-committees previously appointed to deal with the questions of the Pacífic Development Corporation Loan and the railway policy of the consor- tium were next considered.
Appointment of Sub-Committees.
These sub-committees consisted in the case of the former of Messrs. Abbott, Mayers, Mazot, Stevens and Wiggin, and in the case of the latter of Messrs. Mayers, Mazot, Stevens and Takeuchi.
Reports of Sub-Committees.
The substance of their reports is embodied in the resolutions printed in the minutes and the outcome of their deliberations has been that the American group, with the concurrence of the other groups, authorised its representative in Peking to inform the Chinese Minister of Finance that they will be prepared to consider an early issue of bonds for the completion of the Hankow-Canton Railway provided (a) China recognises her liability for payment of the German-issued Hukuang Railway coupons without distinction. (b) that a separate security other than the revenues of the railway, such as, for example, the wine and tobacco revenue hypo- thecated to the Pacific Development Corporation, is given to cover the contemplated new issue, the amount of which is estimated at 100,000,000 dollars gold, to be issued in series, (c) that the Ministry of Communications will accept the consortium conditions for foreign supervision of the railway. This tentative offer, the full terms of which appear in the telegram of the 27th October, 1920, annexed hereto (Appendix 2), is not likely to prove acceptable to the Chinese Government, but it seemed inexpedient to discourage any tendency on the part of the American group to make an offer of their own conditions which would demonstrate the preparedness of the consortium for immediate action.
Hukuang Railway, German Issue,
As regards the German-issued bonds of the Hukuang Railway, the attitude of the British group had been to regard this question as of relatively minor importance so far as their own market is concerned, but they saw no reason to dissent from the views strongly urged by the American group and therefore concurred in the resolution to be communicated to the Chinese Government.
Chinese Eastern Railway.
This
As soon as the question of a loan to the Chinese Eastern Railway was reached the Japanese representatives entered an objection on the ground that the instructions of their Government precluded their considering it as well as on the ground that such business was outside the defined scope of the consortium's activities. latter objection was dissented from by the other groups on the ground that it was within the competence of the consortium to determine from time to time what business it would undertake. In these circumstances it was decided that all the consortium could do was for the groups to inform their Governments of their readiness to consider a loan for the requirements of the Chinese Eastern Railway upon the con- ditions laid down in the minutes. At the same time the paraphrase of a telegram dated the 13th October, 1920, and communicated by the State Department (Appendix 3) was read, from which it appeared that the Russo-Asiatic Bank and the Chinese Government had recently made an agreement to meet the immediate financial require- ments of the railway.
Central Agency.
The resolution as to the central agency was primarily intended by the British group to preserve the central agency of the consortium in London, and to insure that
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