Papers Relating to the Foreign Relations of the United States, 1920, Volume I
861.77/1822
The Minister in China (Crane) to the Secretary of State
[Received November 11.]
Sir: With reference to my telegram of October 5th, 8 P.M. No. 295,71 I have the honor to transmit herewith the text of the agreement signed by the Ministry of Communications of the Chinese Government, Yeh Kung Cho, and the Russo-Asiatic Bank represented by Messrs. Jezierski and Raindre on the 2nd instant regarding the Chinese Eastern Railway. This text was given me in confidence by the Russian Minister and the Bank. I regret that the [Page 713] shortness of time before the despatch of the pouch prevents the inclusion of an English translation of the text.
I have [etc.]
Agreement between the Chinese Government and the Russo-Asiatic Bank Supplementary to the Contract for the Construction and Operation of the Chinese Eastern Railway, October 2, 192072
Preamble
The Chinese Government:—
In view of the payment, as participation, of five million Kuping Taels (Kp. Tls. 5,000,000) to the Russo-Chinese Bank (now the Russo-Asiatic Bank) with a view to the putting into execution of the contract drawn up the 25th day of the Seventh Moon of the twenty-second year of Kuang-Hsu (September 2 [8?], 1896) for the construction and operation of the Chinese Eastern Railway;
In view of the sum due by the above-mentioned railway company to the Chinese Government, accruing from the principal, namely five million Kuping Taels (Kp. Tls. 5,000,000), and the interest duo thereon, as also the credit rights resulting from the subsequent advances made in recent years in favor of this railway;
In view of the situation created by the complete political disorganization in Russia, rendering temporarily impossible for the said company the maintenance of regular operation;
Having regard, moreover, to its rights of sovereignty:—
Finds itself under the obligation to take measures indispensable not only for the safe-guarding of security in the regions served by the said railway and for the maintenance of communications which are of world interest, but also for effective protection over the property of the said railway.
By reason of the obligations stated above, the Chinese Government has, under date of October 2, 1920, notified to the Bank its decision to assume provisionally, pending such arrangement concerning the railway as the Government may reach with the Russian Government that may be recognized by China, the supreme control exercised over the said railway by virtue of the contract and of the regulations in force, and to resume the advantages and particular interests conferred upon China by the operating contract concluded in the twenty-second year of Kuang-Hsu (1896) and the original statutes of the [Page 714] said Company; and it therefore, under date of the 2nd day of the tenth month of the ninth year of the Republic of China, corresponding to October 2nd of the year 1920, charges the Minister of Communications, representing the Chinese Government, to conclude at Peking with the Russo-Chinese Bank (now the Russo-Asiatic Bank, and whatever may be the name of this Bank hereafter), representing the Central administration of the Bank provisionally at Paris, the following arrangement as a supplement to the contract of 1896.
Article I
The Chinese Eastern Railway Company, hereinafter designated by the words “the Company”, recognizes that it should pay to the Chinese Government, in bonds of the railway, upon conditions which will be made the subject of a separate letter, upon the signing of the present contract, the equivalent of the amounts which should have been paid by the Company, to wit:—
- (a)
- A sum of five million Kuping Taels (Kp. Tls. 5,000,000) which should have been paid to the Government by the Company beginning with the day of the opening of the said line to operation, in accordance with Article 12 of the original contract;
- (b)
- The interest on the sum above named, calculated from the day of the opening of the said railway to operation, at the rate of six per cent (6%) per annum, as provided by Article 16 of the Statutes of the Company, and under the rule of compound interest, up to the year 1920.
Beginning with the year 1921, the interest on these sums will be five per cent (5%), and will be payable semiannually. The repayment of the bonds will be effected in silver, either at the time of the repurchase of the railway by the Chinese Government, or from the funds which are to serve for the repurchase of the said railway.
The bonds issued in payment of the said loan will be guaranteed by a lien upon all the movable and immovable properties of the railway.
Article II
It is understood that the Chinese Government will have the right to name, in addition to the President, four members of Chinese nationality upon the Board of Management (Pravlenia) of the railway. It is not necessary that members thus named by the Chinese Government should be shareholders of the Company. The shareholders will on their side have the right to name freely the Russian members of the Board of Management. In the event of a tie vote, the President will have a casting vote in addition to his vote as a member.
[Page 715]Article III
The quorum of the Board of Management will be seven members. No decision will be effective unless it has been approved by at least seven members.
Article IV
It is understood that the Chinese Government will have the right to name, of the five members of the Committee of Audit (Comité de Révision), two members of Chinese nationality. The President of the Committee will be elected from among the five members in question, but will be of Chinese nationality.
Article V
It is understood that, in order to assure the satisfactory progress of operation of the said railway, the posts of the railway will be shared in an equitable manner between Chinese and Russians.
Article VI
The rights and the obligations of the Company will henceforth be in every respect of a commercial character: every political activity and every political attribute will be absolutely forbidden to it. To this end, the Chinese Government reserves the right to prescribe restrictive measures of any character and at any time.
Article VII
It is clearly understood that the clauses of the contract concluded the twenty-fifth day of the seventh Moon of the twenty-second year of Kuang-Hsu (September 2 [8?], 1896), as also of the Statutes of the Chinese Eastern Railway, which do not conflict with the clauses of the present temporary agreement, remain in force.
The present agreement is signed in four copies, two of them in the French language, and two others in the Chinese language. The French text alone will be authoritative.
The Minister of Communications,
For the Russo-Chinese Bank (now the Russo-Asiatic Bank, and whatever may be the name of this Bank hereafter),
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications (Yeh Kung-cho)
Mr. Minister: As has been agreed in the course of the negotiations leading up to the Agreement signed today, the sum due by the Chinese Eastern Railway Company to the Chinese Government will be calculated in the following manner:—
- (a)
- A sum of five million Kuping Taels (Kp. Tls. 5,000,000) and accrued interest, which should have been paid to the Chinese Government by the Company beginning with the day of the opening of the said railway to operation, in accordance with Article 12 of the original contract;
- (b)
- The interest on the sum above named, calculated from the day of the opening of the said railway to operation, at the rate of six per cent (6%) per annum, as provided by Article 16 of the Statutes of the Company, under the rule of compound interest, to the year 1920.
In view of the fact that there exists a difference of opinion between the Chinese Government and the Bank as to the date of opening of the railway to operation,—which according to the Chinese Government should be 1903, and according to the Bank, 1907,—it is at present impossible to fix the amount due to the Chinese Government. This question will be reserved until one party or the other shall have adduced its proofs, and the question shall have been settled. A special letter will then fix the definitive amount of the sum due, including principal and interest.
Pray accept [etc.]
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications (Yeh Kung-cho)
(The full text of Annex 2 is quoted in Annex 3.)
The Chinese Minister of Communications (Yeh Kung-cho) to the Representatives of the Russo-Asiatic Bank
Sirs: I have the honor to acknowledge the receipt of your letter of today by which you make known to me that:—
“As has been agreed in the course of the negotiations leading to the Agreement signed today, it is understood that the Vice-President [Page 717] of the Board of Management (Pravlenia) of the Chinese Eastern Railway will be of Russian nationality. The Pravlenia will furthermore comprise two Assistant Vice-Presidents who will be elected from among the members of the Board of Management, one of whom shall be of Chinese nationality and the other of Russian nationality. In the event of the absence of the Vice-President, the Assistant Vice-President of Russian nationality will replace the Vice-President.
It is likewise understood that the Manager of the Railway will be of Russian nationality and that an Assistant Manager will be of Chinese nationality.
It is understood, finally, that, in the Departments of Movement and Traffic, of Traction and Material, of Ways and Works, and of General Accounting, there shall be named an Assistant of Chinese nationality under the Department Chief of Russian nationality.
If the Board of Management finds it necessary to create new posts for assistants, these posts will be reserved for Chinese.”
By the present letter, I confirm to you my agreement to this arrangement.
Pray accept [etc.]
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications (Yeh Kung-cho)
(The full text of Annex 4 is quoted in Annex 5.)
The Chinese Minister of Communications (Yeh Kung-cho) to the Representatives of the Russo-Asiatic Bank
Sirs: By your letter of today, you ask me as follows:—
“As has been agreed in the course of the negotiations leading up to the Agreement signed today, we would be grateful if Your Excellency would be so good as to confirm that instructions will immediately be given to the President of the Chinese Eastern Railway to convene at Peking, during the course of October, a general meeting of the shareholders of the Company, which will legally name its Board of Management (Pravlenia) and will proceed to the discussion of the reorganization of the line upon a commercial basis.
It remains understood that, in the future, a general meeting will take place annually in accordance with the Statutes of the Company.”
I have the honor to acknowledge the receipt of this communication and to confirm to you my agreement upon all these points.
Pray accept [etc.]
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications (Yeh Kung-cho)
(The full text of Annex 6 is quoted in Annex 7.)
The Chinese Minister of Communications (Yeh Kung-cho) to the Representatives of the Russo-Asiatic Bank
Sirs: By your letter of today, you kindly make known to me the following:—
“As has been agreed in the course of the negotiations leading to the Agreement signed today, the temporary post of Acting Manager of the Chinese Eastern Railway will not be retained, nor any of the other posts which have been created as a temporary matter and which are not contemplated by the Statutes.”
I have the honor to acknowledge the receipt of this communication and to confirm to you my agreement thereto.
Pray accept [etc.]
The Chinese Minister of Communications (Yeh Kung-cho) to the Representatives of the Russo-Asiatic Bank
Sirs: In conformity with Article I of the contract for construction and operation concluded in the twenty-second year of Kuang-Hsu (1896), the shares of the Company can be acquired only by Chinese and Russian subjects, which carries with it a right on the part of Chinese subjects to purchase these shares.
Article 10 of the Statutes has fixed the amount of capital of the Company at five million roubles (Es.5,000,000) divided into a thousand shares of five thousand roubles (Es.5,000) each. The Chinese Government has consequently requested the Bank to sell to Chinese subjects one-half of these shares, that is, an amount of two million five hundred thousand roubles (Es.2,500,000).
This question having been discussed without its proving possible to arrive at an agreement for the time being, the Chinese Government, in signing the contract of October 2, 1920, declares that it does not forego its right hereafter to take up this question.
We beg [etc.]
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications (Yeh Kung-cho)
Mr. Minister: We have the honor to acknowledge the receipt of your letter of today, by which you declare that in signing the supplementary contract of October 2, 1920, the Chinese Government does not intend to forego its right to take up hereafter with the Bank the negotiations for the purchase by Chinese subjects of shares of the Chinese Eastern Railway Company.
Pray accept [etc.]
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications (Yeh Kung-cho)
Mr. Minister: As Your Excellency has expressed the desire, we have the honor to certify by the present letter that the Russo-Asiatic Bank (formerly the Russo-Chinese Bank) is a joint stock Company (société anonyme par actions) of a purely commercial character, and that it is not connected with any political party in Russia.
We expressly declare that no other nation than Russia and China has an interest in the Chinese Eastern Railway.
Pray accept [etc.]
The Chinese Ministry of Communications to the Representativesy of the Russo-Asiatic Bank
I have the honor to state that (1) The Chinese Government subscribed Kuping Taels 5,000,000 in the 22d year of Kuang Hsu, 7th Moon, 25th day, for shares and engaged in business with the Russian Hua O Ta Sheng Bank (Now known as the Russo-Asiatic Bank), which concluded a contract to construct and manage the Chinese Eastern Railway. Secondly, the Chinese Government has a very important interest therein because of money loaned to the said railway in times of need in addition to the 5,000,000 taels due by the Chinese Eastern Railway to the Chinese Government. Thirdly, because of political disturbances, Russia has been unable to manage the said railway and to maintain order. Fourth, the Chinese Government has responsibilities in connection with its sovereign rights, [Page 720] the maintenance of peace in places within the railway zone, the maintenance of international communications, the protection of the railway property and the maintenance of everything in good order. Combining all the reasons mentioned above, together with the resulting responsibility, this Ministry, representing the Chinese Government, officially informs your bank that the Chinese Government has decided to execute temporarily on behalf of the Russian Government the said railway agreement and assumes the duties and authorities granted by the regulations now in force, and it will also execute the agreement made for joint management in the 22d year of Kuang Hsu and also assumes the special authority granted by the original regulations.
The substitution for Russian authority will last until the date when the Chinese Government officially recognizes the Russian Government and until the two Governments draw up an (another?) agreement for the management of the railway.
I have the honor to request that you take note of the above, and that you favor me with a reply.
With compliments—
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Ministry of Commimications
I have the honor to acknowledge the receipt of the Ministry’s communication in which the following is set forth:
(Letter of October 2, 1920, from Ministry of Communications to Russo-Asiatic Bank quoted here.)
and I have the honor to reply that I have taken note thereof.
I have the honor to state that with regard to our discussion of the Chinese Eastern Railway with reference to Your Excellency’s requests (demands) I telegraphed to the head office of this bank stating that trustworthy evidence must be offered showing that the Russo-Asiatic Bank control all the shares of the Chinese Eastern Railway.
A telegraphic reply and a letter were transmitted to this Bank by the French Minister to China on September 24th, and I now have the honor to enclose herewith copies. The proof (of ownership) was transmitted through the French Foreign Office and is conclusive proof that the shares of the Chinese Eastern Railway belong to the Russo-Asiatic Bank.
The French Minister in China (Boppe) to the Representative of the Russo-Asiatic Bank (Jezierski)
I have the honor to acknowledge the receipt of your request with reference to the reply to the official despatch from the Chinese Ministry of Communications requesting proof that the share[s] of the Chinese Eastern Railway belong to the Russo-Asiatic Bank, and I now have to inform you that the French Foreign Office has favorably acted upon my request and has instructed the bank to deliver the evidence. This evidence bears the signature of M. Sahmen, the representative in London of the Russian Ministry of Finance, The official despatch has already been sent you by the Paris office under registered cover.
I enclose herewith for your information a copy of the telegram dated September 18th [16th] from the French Premier and Minister for Foreign Affairs. This telegram is sufficient proof of the evidence desired and you may so inform the Chinese Government.
The French Minister of Foreign Affairs (Millerand) to the French Minister in China (Boppe)
Please inform Jezierski that the evidence requested has been issued. Please transmit the following to him:
“You will receive by the next mail steamer the registered letter with the proof sent you by M. Sahmen, the representative in London of the Russian Ministry of Finance.”
The letter of M. Sahmen, representative of the Russian Ministry of Finance and attaché of the Russian Embassy in London, is proof that the shares of the Chinese Eastern Railway belong to the Russo-Asiatic Bank.
By Director of Russo-Asiatic Bk.
The Representative of the Russo-Asiatic Bank (Raindre) to the Chinese Minister of Communications
I have the honor to certify that the Russo-Asiatic Bank is a corporation of Russian nationality and is registered at Petrograd.
With compliments [etc.]