Collection of pre-WWI Chinese bonds consigned for auction

05 May, 2017

Our 9th June Coins, Medals & Militaria auction will include six Chinese Government bonds issued between 1907 and 1913.  This was a turbulent time in China's history and the government sought loans and foreign investment; firstly to build a railway network, and then to re-build the country after the collapse of the Manchu Dynasty, uprisings and revolution.  The fascinating history of these bonds is augmented by their aesthetic appeal, and of course the on-going hope that the current Chinese government may one day honour them and pay out!

During the 19th century, Western colonial powers sought to increase commercial spheres of influence in the East.  An important aspect of this was to develop a railway network, which had been so crucial to trade and the industrialisation of Europe.   The financing of these projects allowed European businesses and banking corporations rights of way, property concessions, local jurisdiction and the promise of generous repayments from the Chinese Imperial Government.  

However, these glittering prizes were short-lived.  Although the railways were (mostly) constructed as planned, by 1911 China was riven with internal disorder, and Europe was facing growing tensions of its own.  Not least of these, ironically, was Chinese popular opposition to foreign powers having control of China's railroads.  1912 saw the overthrow of the Qing Dynasty after 300 years of rule, and its replacement by the Republic of China.  

The Government of the new Republic then took out a loan and issued bonds to foreign investors in 1913, in order to rebuild the country and meet the financial liabilities of the previous Imperial Government.  This 'Chinese Government Reorganisation Gold Loan' was principally arranged by the Hong Kong & Shanghai Banking Corporation (aka HSBC), Deutsch-Asiatiche Bank (now part of Deutsche Bank), Banque de L'Indo Chine (now part of Credit Agricole), and Russo-Asiatic Bank (closed 1926).  These bonds were pegged to the price of gold as a hedge and were denominated in four currencies to reflect the parties involved. 

In 1921 the Chinese government declared bankruptcy and began defaulting on its loans.  After the Chinese Communist Revolution of 1949, the government of the new People's Republic of China repudiated the debts of former governments, however, this has not stopped bond holders taking out lawsuits and seeking settlement. It has been mooted that a 1913 £100 gold bond would now be worth in the region of £20,000,000!

The collection in the 9th June auction includes:

A 1907 Canton-Kowloon Railway 5% gold loan of £1.5 million red bond for the value of £100 issued by the Chinese Imperial Railway. 

A 1910 Teintsin-Pukow Staatseisenbahn 5% of £4,800,000 Kaiserlich-Chinesische loan bond for the value of £100.

Two 1913 Lung Tsing-U-Hai Railway Chinese Republic 5% blue loan bonds for £20 (also known as Super Petchili).

A 1913 5% Reorganisation Gold Loan blue bond for £100 issued by the Chinese Government.

And a 1913 5% Reorganisation Gold Loan green bond for £20 issued by the Chinese Government.

chinese bonds

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