Thursday, December 20, 2012

1911 5% Hukuang Railway Loan

The 5% Hukuang Railway Loan of 1911 was, according to author John M. Thomson, for the capital sum of £10,000,000 of which only the first £6,000,000 was issued.

The historical events linked to this loan included “opposition agreements coupled with public outrage at the Imperial Chinese Government’s decision to not only nationalize all of China’s Railways, but also to grant major concessions to foreigners, significantly contributed to the downfall of 3,000 years of imperial dynastic rule.,” according to Thomson. The financial institutions that handled the arrangements for the issuance of bearer bonds against the loan included:
  • Hongkong & Shanghai Banking Corporation 
  • Deutsch-Asiatiche Bank St Book Nook Banque de l’Indo-Chine 
  • New York Banks (jointly issued £1,,5000,000 in New York at 97%) 
    • J.P. Morgan &Co. 
    • Kuhn, Loeb & Co. o First National Bank of the City of New York 
    • National City Bank of New York 

The initial loan agreement was negotiated by the British & Chinese Corporation, however, French and German interests exerted pressure to be allowed to participate in the financing of the project. An intervention by U.S. President William H. Taft secured a share of the project for American capital enterprises.

Reference: Historic Foreign Bonds of China: A Collector’s Compendium by John M. Thomson.

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