With reference to the matter of Japanese participation in the Canal
enterprise, the Corporation encloses herewith, for the information
of the Department and for its archives, the following letters
exchanged between the Corporation and the Representative in New York
of the Industrial Bank of Japan:46
[Enclosure 2]
Agreement between the Chinese Government and
the American International Corp. for a Loan of Two Hundred
and Fifty Thousand Dollars for the Preliminary Survey of the
Grand Caned; Signed May 1, 1918
This instrument negotiated and signed this first day of May,
1918, by the Republic of China by its duly authorized and
accredited representative therefor, the Honourable V. K.
Wellington Koo, Minister of the Republic of China to the United
States, and the American International Corporation by its
President Charles A. Stone, duly authorized thereto,
[Page 618]
Witnesseth:—
Whereas the American International
Corporation made to the Government of China a proposal for a
loan in the following terms:
“Notwithstanding the preference of the American
International Corporation to perform independently and
at its own expense the survey work necessarily
preliminary to going forward with any work on the Canal
project under the Canal Contract, nevertheless the
American International Corporation will acquiesce in the
desire of the Chinese Government to furnish funds itself
for such preliminary survey work, and in order that
Chinese Government may have such funds, the American
International Corporation is prepared, if the Chinese
Government so desires, to make a separate and distinct
loan therefor and to this end to purchase at ninety-nine
a One Year Treasury Note for Two Hundred and Fifty
Thousand United States Gold Dollars. However, in order
to secure uniformity of method in expenditure and
accounting, the proceeds thereof are to be furnished,
handled, and expended in every and all respects as if
the funds realized were in advance under the Canal
Contract which, however, does not and cannot become
operative until sanctioned by Parliament. If Contract is
so sanctioned, any financing done thereunder before Note
is paid shall provide for its payment or conversion. The
form of such a Treasury Note shall be as follows: ‘For
value received the Government of China promises to pay
to bearer, one year from the date hereof or thereafter
on demand, Two Hundred and Fifty Thousand Dollars in
Gold Coin of the United States, with interest at the
rate of eight per centum per annum, payable
semi-annually from date until paid. All payments of
principal and interest shall be made in United States
Gold at The National City Bank, New York City, United
States of America.’ In accordance with agreement of
which Chinese Government already notified, the
Industrial Bank of Japan will be afforded opportunity to
participate in this loan by furnishing American
International Corporation five twelfths of funds
advanced.
and
Whereas the Government of China by and
through its duly authorized and accredited representatives, the
Honourable V. K. Wellington Koo, has accepted such offer, and
has confirmed such acceptance as appears from the following
letters:
American international
corporation
120 broadway
New York, April seventeenth, 1918.
“Mr. Minister: Mr. Dearing duly informed the Committee in
charge of the Corporation’s enterprises in China of the
reply of His Excellency Hsiung Hsi Ling to the proposals
made in the Corporation’s telegram of March
twenty-third, which Your Excellency was good enough to
transmit to Peking, and of his acceptance of all of them
save the proposal as to the rate of interest which he
desired reduced from eight to seven per cent.
[Page 619]
The Committee has again carefully considered the factors
influencing it to propose the rate of eight per cent, in
the first instance and it is convinced that the decision
it then arrived at as fair and equitable is still so and
that the rate should not be reduced. As Mr. Dearing
informed Your Excellency when he received from you the
Director General’s message, it is extremely difficult to
secure money at the present time at any price. The
difficulty is increasing and may soon be further
augmented by governmental restrictions, and interest
rates may go even higher. In view of this situation and
the fact that the demand for money in all quarters is
urgent, I trust you will be good enough to inform your
Government the Corporation regrets it cannot alter its
proposals as originally made but must request interest
at the rate of eight per cent.
In so informing the Director General allow me to ask you
to lay before him the financial situation as I have
described it. Allow me also to offer the opinion that
his acceptance of the rate proposed should be immediate
if greater difficulties and higher rates are to be
avoided. An immediate acceptance of the Corporation’s
proposals as they stand is also essential to the prompt
initiation of the projected Canal surveys. The
Corporation hopes, therefore, that it will very shortly
be informed that your Government finds the Corporation’s
proposals acceptable in all respects.
I am, my dear Mr. Minister,
Yours very sincerely,
R. P. Tinsley,
Vice-President
His Excellency
V. K. Wellington
Koo,
The Chinese Minister,
Washington, D.
C.”
chinese
legation
Washington, April 22, 1918.
“Mr. Richard P. Tinsley,
Vice-President,
American International
Corporation,
120 Broadway, New York.
Dear Sir: With reference to your letter of the 17th
instant I beg to say that I have now received the
necessary authorization from Director Hsiung Hsi Ling to
conclude the loan negotiations on the basis you have
outlined in your original cablegram to him, including
the 8% interest on the proposed loan.
The Director General requests me to enter into an
agreement with you and I shall be glad to have you send
a representative for the purpose.
Yours very truly,
V. K. Wellington Koo”
[Page 620]
Now Therefore it is witnessed and
agreed by and between the parties hereto:—
- I.
- The aforesaid offer and acceptance are hereby
confirmed as constituting the agreement by them made for
the purposes and under the terms and conditions therein
named.
- II.
- The Government of China by its proper officer will
execute a Treasury Note in the terms and figures set out
in the aforesaid offer and will deliver the same to the
American Legation in Peking for transmission by it to
the American International Corporation, New York City.
This Note shall be written in English, and also in
Chinese if the Government of China so desires.
- III.
- The American International Corporation will deposit
with The National City Bank of New York the sum to be
realized from the sale of this Note, this sum to become
available under this agreement upon the receipt by The
National City Bank of notice, transmitted through the
American Department of State, of the deposit of the
aforesaid Treasury Note with the American Legation at
Peking.
- IV.
- In all matters of interpretation both of this
agreement and of the Treasury Note, the English text
shall prevail.
Government of the Republic of
ChinaBy
V. K.
Wellington Koo
E. E.
& M. P. of the Republic of China to the United States of
AmericaAmerican International
CorporationBy
Chas.
A. Stone
,
President
