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The Hankow-Szechuan Railway Loan

Published online by Cambridge University Press:  04 May 2017

Ching-Chun Wang
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Extract

The Hankow-Szechuan loan controversy, which has just been closed by the final ratification of the loan agreement, is typical of the numerous loan questions in China. In order to understand the meaning of the different phases of this controversy, two points must be borne in mind — that a foreign railway loan in China is entirely different from what it would be in the United States, and that the creditors in advancing their capital to China are induced by other than purely commercial motives. In the United States a railway loan is understood to be a commercial transaction between two parties, either private or public; in China it is regarded as a “ treaty ” between the Chinese Government and many other governments. No matter how a loan is made and who makes it, it invariably becomes mixed up with politics in the end. Loans are concluded only after much tedious diplomatic negotiations. Promises and “ undertakings,” which might have been made years before under exceptional circumstances, often play a more important part in determining the terms of the loan than the merits or demerits of the loan itself.

Type
Research Article
Information
American Journal of International Law , Volume 5 , Issue 3 , July 1911 , pp. 653 - 664
Copyright
Copyright © American Society of International Law 1911

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References

1 See the author’s article on “Why the Chinese Oppose Foreign Railway loans” in the American Political Science Review, August, 1910.

* This railway loan contract was signed in Peking on the 21st of May, 1911, the signatory parties being the Hongkong and Shanghai Bank, the Deutsch-Asiatische Bank, the Bauque de L’Indo-Chine the American group and H. E. Sheng Hsuan-huai, Minister of Communication and Post. The loan will ultimately amount to about $50,000,000 and is to be applied to

  1. 1)

    1) The redemption of the unredeemed gold bonds, amounting to about $2,500,000 issued by the original American concessionaries of the Canton-Hankow Railway,

  2. (2)

    (2) The construction, under a British chief engineer of a main line of 600 miles from Wuchang, the capital of Hupeh Province, through Changsha, the capital of’ Hunan, to the southern border of Hunan, where it will make connection with the Canton Railway now under construction.

  3. (3)

    (3) The construction, under a German chief engineer, of a main line of 400 miles in Hupeh Province from Ichang on the Yangtze to Kuanshui on the Peking-Hankow Railway.

  4. (4)

    (4) The construction, under an American chief engineer of a main line of 200 miles from Ichang westward to the border of Szechuan Province.

The loan is amply guaranteed by the Chinese Government and is secured upon specified revenues. — C. C. W.