cepted, subject to the approval of the four governments already involved. The suggestion was also favorably entertained of welcoming a Chinese National Banking Group, provided such a unit should be formed in China. It was further agreed to inquire of the Chinese Government as to the possible measures to be taken to render assistance to the currency reform of China. Respecting the German-issued bonds of the Hukuang Railway Loan of 1911, the interest charges of which the Chinese Government had withheld, the conference resolved to ask the Chinese Government to recognize these bonds just as the other bonds of the entire issue. Particular attention was also given to the new railways, improved methods of communication, the purchase of materials, standardization of railway equipments, etc.

On October 15, 1920, the Consortium agreement was signed, and the New Consortium was formally organized.

NOTES TO CHAPTER XXIV

1. MacMurray, 1911/5.

2. MacMurray, 1911/2.

3. MacMurray, 1913/5.

4. Documents Concerning the New Consortium, released to press by the Department of State, March 30, 1921, Am. Bankers to Dept. of State, July 8, 1918.

4A. Ibid., Department's Letter of July 9, 1918, to the Bankers. 5. N. Y. Times, July 30, 1918.

6. Documents Concerning the New Consortium, British For. Office to American Embassy, London, Aug. 14, 1918.

7. Ibid., Department's Note and Memorandum to the French, British and Japanese Embassies, Oct. 8, 1918.

8. Ibid., British For. Office to American Embassy, London, March 17, 1919.

9. Ibid., Department's Note of May 31, 1919, to the French, British and Japanese Embassies.

10. Ibid., British Embassy, Washington, to the Department of State, June 7, 1919.

11. Ibid., Department's Note of July 3, to French, Japanese and British Embassies, setting forth the degree of diplomatic support to be accorded to the Consortium.

12. Ibid., British For. Office to American Embassy, London, July 17, 1919.

13. Ibid., Letter from Mr. Thomas W. Lamont to Mr. M. Odagiri, dated June 23, 1919.

14. Ibid., Memorandum of the Dept. of State to the Japanese Embassy, July 30, 1919.

15. Ibid., Memorandum of the British For. Office, Aug. 11, 1919.

16. Ibid., Imperial Japanese Embassy, Washington, Aug. 27, 1919.

17. Ibid., Dept.'s Reply, Oct, 28, 1919, to the Memorandum of the Japanese Embassy, dated August 27, 1919.

17A. Ibid., Earl Curzon's Memorandum to the Japanese Ambassador, Nov. 20, 1919.

18. Ibid., Memo. of Imperial Japanese Embassy, Wash., Mch. 2, 1920.

19. Ibid., Memo. left with Lord Curzon by the Japanese Ambassador, Mch. 16, 1920.

20. Thomas W. Lamont, Preliminary Report on the New Consortium for China, p. 8.

21. Documents, op. cit., Dept.'s Memo., Mch. 16, 1920, to the Japanese Embassy in reply to the Japanese Memo. of Mch. 2. 21A. Ibid., Earl Curzon to Viscount Chinda, Mch. 19, 1920. 22. Ibid., Imperial Japanese Embassy, Washington, Apr. 3, 1920.

22A. Ibid., Memo. left with Sir Eyre Crowe by the Japanese Ambassador, April 14, 1920.

23. Ibid., Earl Curzon to Viscount Chinda, Apr. 28, 1920. 24. Ibid., Dept.'s Reply, Apr. 29, 1920, to the Memorandum from the Japanese Embassy of Apr. 3, 1920.

25. Ibid., Imperial Japanese Embassy, Washington, May 8, 1920.

26. Ibid., Memorandum Communicated by Japanese Embassy to British Foreign Office, May 11, 1920.

27. Ibid., Dept.'s Reply to the Note of the Japanese Embassy, May 8, 1920.

28. Ibid., Memorandum Communicated to Japanese Embassy by British For. Office, May 17, 1920.

29. Ibid., French Gov't to Japanese Emb., May 25, 1920.

30. Ibid., Letter to Mr. Thomas W. Lamont from Mr. N. Kajiwara, dated May 11, 1920; letter from Mr. Thomas W. Lamont to Mr. N. Kajiwara, May 11, 1920; also cf. Millard's Review, Oct. 23, 1920. Also see The Consortium, published by Carnegie Endowment for International Peace, Division of International Law, No. 40.

XXV

THE NEW INTERNATIONAL BANKING

CONSORTIUM (cont.)

THE Constitution of the New Consortium is found in the agreement of October 15, 1920.1 The purposes are to negotiate and carry out Chinese loan business and to supply the Chinese Government with the necessary capital for economic reconstruction and improved communications. They are embodied in the Preamble of the Agreement as follows:

"And whereas the British, French, Japanese and American Groups were formed with the object of negotiating and carrying out Chinese loan business

"And whereas the said national groups are of the opinion that the interests of the Chinese people can in existing circumstances best be served by the coöperative action of the various banking groups representing the investment interests of their respective countries in procuring for the Chinese Government the capital necessary for a program of economic reconstruction and improved communications."

The requisites of the Consortium to operate in China. are the diplomatic support given by each Government interested to their respective national banking groups, and in case of competition in contracts, to the Consortium as a whole, as set forth in the Preamble:

"And whereas their respective Governments have undertaken to give their complete support to their respective national groups the parties hereto in all operations

undertaken pursuant to the agreement hereinafter contained and have further undertaken that in the event of competition in the obtaining of any specific loan contract the collective support of the diplomatic representatives in Peking of the four Governments will be assured to the parties hereto for the purpose of obtaining such contract."

The membership in the New Consortium is limited to the National Banking Groups. The admission of a new National Banking Group requires the unanimous consent of the parties, subject to the approval of their respective Governments. Each National Banking Group possesses the right to increase or decrease its own membership, but shall not admit, without the consent of the other Groups, any new member that does not belong to the nationality of the Banking Group and domiciled in its market, and shall bind the withdrawing member to the observance of the restrictive provisions of the Consortium and the incoming member to abide by the same (Article 1).

The scope of the New Consortium does not include the vested interests nor the existing agreements as to industrial undertakings in which substantial progress can be shown to have been made, nor does it aim to invade the domain of private enterprises in banking, industry or commerce. It covers, rather, the existing loans in which no substantial progress has been as yet made, and all future loans, administrative, political, industrial, and financial, to be made to the Chinese Government or any province. To be more specific, it aims "to include within its scope only those basic transportation systems, highways, reorganization of the currency, etc., which would serve to establish sounder economic conditions throughout China and thus form a firmer foundation for the encouragement of private initiative and trade." Arti

cle 2 of the agreement sets forth the scope of the Consortium as follows:

"This agreement relates to existing and future loan agreements which involve the issue for subscription by the public of loans to the Chinese Government or to Chinese Government Departments or to Provinces of China or to companies or corporations owned or controlled by or on behalf of the Chinese Government or any Chinese Provincial Government or to any party if the transaction in question is guaranteed by the Chinese Government or Chinese Provincial Government but does not relate to agreements for loans to be floated in China. Existing agreements relating to industrial undertakings upon which it can be shown that substantial progress has been made may be omitted from the scope of this agreement."

At the same time, however, it was mutually agreed that the existing agreements or future loan agreements within the scope of the Consortium should be subject to the provisions of the Consortium Agreement (Article 3).

The rights and the duties of the constituent groups are defined on the principle of complete equality. That is to say, every group enjoys the same rights and carries the same obligations as the other. To be more specific, equal rights are accorded to all in all operations, the signing of contracts, the equal sharing in existing agreements and future contracts, and in the liberty to decline participation. On the other hand, equal obligations are placed upon all groups for expenses connected with any business, for preliminary advances in any transaction, excepting stamp duties and the profits and losses of each group in their operations (Article 4).

Respecting liability, each group is to liquidate its own liabilities, disclaiming any responsibility for joint liability. Furthermore, each group is to realize its own profits within its own market, on the understanding,