The London auctioneer house, Bonhams, will be selling Chinese railway bonds — a reminder that capitalist interest in China goes back a very long time.
These particular bonds relate to the Chinese Government of 1913 wishing to open up their vast country by using railways to bring agricultural goods and people cheaply to the cities. They issued bonds – in this case via the Hong Kong and Shanghai Bank – to attract western capital.
In his book The China Dream, Joe Studwell writes: “The first great investment gold rush in China concerned railways. The railway investors applied John Maynard Keynes’s investment ‘multiplier’ theory even before the British economist’s career had begun. With China’s modern infrastructure almost non-existent, it was reckoned that the construction of trunk rail routes would pump prime an explosion of economic growth – across trade, manufacturing and services.”
China sought money and railway expertise (often Scottish) to punch a railway infrastructure through its derelict Empire. There was huge interest in the west, just as there is today in China once more, but the Chinese adventure eventually turned sour for many western capitalists when the Communists took over.
However these bonds on sale at Bonhams did pay interest at a more than reasonable rate up until the 1930’s.
A previously unlisted type of Chinese Government bond has been found in the archives of the London bankers to the issue. It is the Shanghai-Nanking Railway 6% Government Guaranteed Sterling Land Bond of 1913. The issue was for 150 bonds of 1,000 raising 150,000. On offer at Bonhams is the reserve stock of ten bonds.
Also on offer is the reserve stock of 20 bonds for the Chinese Government 6% Shanghai-Fengching Railway Mortgage Redemption Loan of 1914, raising 375,000. These are bonds for 1,000 each and have not been seen before and until now it has been widely thought that the issue was made in 100 denominations.
Finally Bonhams sale includes three unissued bonds of 100 for the Chinese Imperial Railway Gold Loan (Imperial Railways of North China), dated 1899. These are of interest to the specialist collector as catalogues of Chinese bonds have always shown the loan of 23,000 bonds being fully issued, whereas the three bonds offered in auction are numbered 22,998-23,000 creating a question mark against the original assumption of the loan being fully issued.