(JAPAN AND CHINA)
Preliminary Agreement for Loan for the Construction of Kirin-Hueining Railway
June 18, 1918
For the purpose of constructing the railway from Kirin, in the Republic of China, to Hueining, through the Southern part of Yenchi (Chientao) and the Tumen River, the Government of the Republic of China (hereinafter called A) hereby enters into the present preliminary agreement with the three Japanese Banks, the Industrial Bank of Japan, the Bank of Chosen and the Bank of Taiwan, represented by the Industrial Bank of Japan (hereinafter called B) as the basis of a formal loan agreement for the same Railway:—
ARTICLE I.—A shall with due promptness outline the amount of funds required for the construction of the railway and other items of necessary expenditure and bring it to the notice of B for its consent.
In accordance with the amount of funds required as referred to above, B shall issue 5 per cent. public loan bonds of the Republican Government of China gold currency for A.
ARTICLE II.—The period for the redemption of the present loan shall be limited to forty years. Redemption of the loan shall begin from the 11th year calculating from the date of the issue of the bonds, and the method of yearly-instalment redemption shall be followed.
ARTICLE III.—As soon as the formal agreement for the Kirin-Hueining Railway loan is signed, A shall begin to construct the line so as to hasten its completion.
ARTICLE IV.—A shall build the railway bridge over the Tumen River conjointly with the Railway Department of the Office of the Japanese Governor General for Korea and shall share half of the expense thereof.
Regarding through traffic between this railway and the railways in Korea, a separate agreement shall be entered into with a view to developing the traffic and securing the smooth co-operation of the two railways concerned.
ARTICLE V.—A shall pledge the following assets to B as security for payment of interest and redemption of the present loan bonds:
All the property owned by and the revenue due to the railway either at present or in the future.
Without the approval of B, A shall not offer either the property or the revenue of the railway to others as loan security.
ARTICLE VI.—The actual amount of funds to be received by A out of the issue of the present loan bonds shall be such as to be more profitable to A than what is stipulated in the Ssupingkai-Chengchiatun Railway Loan Agreement concluded on December 17 of the 4th year of the Republic.
The rate at which the present loan bonds are to be issued shall be fixed according to the circumstances under which they are issued.
ARTICLE VII.—Regarding the particulars which are not provided for under the foregoing articles, they shall be decided upon by A and B in accordance with the Tientsin-Pukow Railway Loan Agreement signed on the 10th of the 12th moon of the 33rd Year of Kuanghsu.
ARTICLE VIII.—The present preliminary agreement shall be the basis of the formal agreement for the Kirin-Hueining Railway Loan, which
shall be concluded within six months after the conclusion of the present preliminary agreement.
ARTICLE IX.—Upon the conclusion of the present preliminary agreement, B shall pay to A an advance of $10,000,000 in full without any deduction for commission.
ARTICLE X.—The advance referred to above shall bear 7½ per cent. interest per annum; that is, 7½ yen shall be paid for the yearly interest on every 100 yen.
ARTICLE XI.—The advance shall be paid to A in specie in exchange for the Treasury Notes by A.
ARTICLE XII.—The Treasury Notes mentioned in the foregoing article shall be subject to change every six months. At each occasion of their change for new ones, the interest due for the said period shall be paid to B.
ARTICLE XIII.—After the conclusion of the formal agreement for the Kirin-Hueining Railway Loan, the advance shall have the preferential right of being repaid with the proceeds from the issue of the loan bonds referred to above.
ARTICLE XIV.—The payment of the advance, its redemption and the payment of its interest and transactions in connection therewith shall be carried out at Tokio.
Two copies of the present preliminary agreement shall be written in the Chinese language and two copies in the Japanese language, and A and B shall each keep one copy written in each language. In case any dispute arises with regard to the interpretation of the agreement, the text of the one written in Japanese shall be considered as authoritative.