It shall endeavor to complete the construction of the line within three years. ARTICLE 20.-On the Hankow-Sinyang section and eventually on the other sections between Paoting and Sinyang, the Russo-Chinese Bank in the first place and afterwards the bank designated by common accord by the Chinese Railway Company and the Société d'Etudes, shall deposit each month with the Chinese Railway Company, out of the available funds in their hands, the amounts necessary to settle the payments for the ensuing month, according to the estimates prepared by the Société d'Etudes or its delegates.

A first transfer equivalent to the estimated value of the work already executed on the Hankow-Sinyang section shall be made as a first credit.

The price paid for the above mentioned bonds being exclusively affected to the construction of the line from Hankow to Paoting, the Russo-Chinese Bank and the bank referred to in the first paragraph of the present article, would have the right not to pay the funds in case one of their payments were diverted from the purpose stipulated, as well as in case the representatives of the Société d'Etudes were not empowered by the Chinese Railway Company to continue the management of the construction works with which this company is exclusively entrusted.

The balance, if there be one, shall be held subject to the order of the Chinese Railway Company.

ARTICLE 21.-The Chinese Government cedes to the Société d'Etudes an option till December 31, 1901, to purchase the surplus of the loan, to wit: 73,500,000 francs at 90% nominal, plus the accrued fraction due on the coupon.

This option can be availed of one or several times, without regard to the amortizations made, but each notice must be for a sum not less than 25,000,000 francs net.

The delivery of the bonds taken on the options shall be to the RussoChinese Bank in Paris; the final bonds shall be delivered within a month dating from the telegraphic notification to the Management of the Chinese Railway Company.

The price of these bonds shall be deposited in the bank designated, by common accord, by the Chinese Railway Company and the Société d'Etudes, and it shall not surrender them except under the conditions stipulated in the above Article 20.

ARTICLE 22.-If the Société d'Etudes takes advantage of the right granted it to purchase all or part of the bonds on which it holds an option, it shall each time confer with the Chinese Railway Company to determine upon the sections (of line) to be built with its new funds.

ARTICLE 23-The surveys of the line, dating from the signing of the present contract, are to be made at the expense of the Chinese Railway Company; the Hankow-Sinyang sections shall first be surveyed, and then successively each of the other sections, for building which an agreement may be had before the Société d'Etudes avails itself of the right of option conceded it by Article 21.

It is henceforth understood that the section to be built with the funds derived from the first option shall be the one from Paoting towards the Yellow River, and the survey shall be begun during the first year.

ARTICLE 24.-The Société d'Etudes reserves the right to make one or more issues, by public subscription or otherwise, of all or any part of the bonds whether bought outright (achetées ferme) or included in the option.

Should the issue be by public subscription, the Société d'Etudes shall have the right to include in the total offered for subscription, exclusive of the 78,000 bonds taken outright (prises ferme), all or any part of the bonds covered by the option, without on that account being committed to take outright (prendre ferme) any part whatever of the bonds covered by the options.

It shall be allowed fifteen days, counting from the closing of the public subscription, to inform by registered telegram addressed to His Excellency Sheng, Director General of the Chinese Railway Company at Shanghai, the number of bonds it has taken, and that, at the price and under the conditions above specified.

The payment and the delivery of the bonds taken by the Société d'Etudes following the public subscription shall take place under the conditions specified in the above mentioned articles.

ARTICLE 25.-The present contract shall only be binding on the Société d'Etudes inasmuch as it shall have the promise that, with the exception of what can be supplied by the Hanyang works, all the materials and supplies necessary for the construction and working of the railroad from Lu-kou-chiao (Peking) to Hankow will be ordered from the Société d'Etudes, which will fill the orders. under the best possible terms.

Exception is made for the material necessary for the equipment (armement) of the line from Lu-kou-chiao to Paoting, as this material is almost entirely ready.

Compliance with the provisions of this clause by the Chinese Railway Company shall result from the ordering of material for each of the sections undertaken.

Material ordered from the Société d'Etudes shall be exempt from all customs and likin duties on entering or crossing Chinese territory.

If this franchise is not made good before the expiration of the month following the date on which the Belgian Government shall have notified the Société Belge of the receipt of the notifications stipulated in Article 29, it (the Société d'Etudes) reserves the right not to hold itself bound.

It reserves the same right and within the same time if extraordinary events should arise, as for instance war, or if the French Debt (rente française) should fall below par.

If, on its side, the Société Belge should not keep the terms of the present contract, it shall be annulled; the Chinese Railway Company shall be free to enter into contract with whomsoever it may see fit, and to dispense with the services of the Engineer-in-chief.

ARTICLE 26.-In case of controversies or differences between the Société d'Etudes or its representatives and the Imperial Chinese Government or the Chinese Railway Company, these controversies or differences shall be submitted to the judgment of a member of the Tsung-li-Yamên and the Belgian Minister in China.

In case of disagreement between these latter, the Tsung-li-Yamên and the Belgian Minister shall designate an arbitrator who shall decide finally.

ARTICLE 27-As guarantee for the financial execution of the present contract, the Société d'Etudes has already deposited in the Russo-Chinese Bank 20,000 pounds sterling as security.

It shall take full possession of this sum as soon as it shall have fulfilled the provisions stipulated in the first two paragraphs of article 18 here above. It is understood that the payment of 8,600,000 francs to the Russo-Chinese Bank at Shanghai must be made within the month following the date of the signing of the present contract.

ARTICLE 28.-The Tsung-li-Yamên shall be bound in case the Belgian Minister at Peking request it to give cognizance of the title to the Minister of the foreign country, indicated by him, as subscriber to the issue of stock [i.e., Si le Ministre de Belgique à Pékin en faisait la demande au Tsung-li-Yamen, celui-ci, serait tenu de notifier le titre au Ministre du pays étranger qu'il lui désignerait, comme prenant part à la souscription des titres.]

ARTICLE 29.-The present contract is made in triplicate, one copy for the Chinese Government, one for the Chinese Railway Company and the third for the Société d'Etudes des Chemins de fer en Chine.

In case of doubt or disagreement, the French text alone shall be used to interpret the contract.

The present contract must be submitted through the proper channel for Imperial Sanction, and when said Sanction has been obtained, the Tsung-li Yamên must advise the Belgian Representative at Peking by official dispatch and eventually the Representative in Peking of the foreign country to whom it may give cognizance of the title (le Représentant à Pékin du pays étranger auquel le titre sera notifié). These formalities shall be complied with within the month following the signing of the contract. The provisions of the contract signed at Wuchang the 27th May, 1897, and of the protocol signed the 21st July, 1897, which do not conflict with the present contract, especially those of Article 14 of the Wuchang contract and Article 2 of the Shanghai protocol, are and remain in force. The Société Générale of Brussels and the Russo-Chinese Bank are parties to the present contract, and they, after having examined the preceding contract, declare that they, as far as necessary, accept the duties imposed. According to Article 14 of the above mentioned Wuchang contract, the Chinese Railway Company will only recognize the Société Belge as contracting party. Done at Shanghai, the twenty-sixth day of the month of June, one thousand eight hundred and ninety-eight.

The Engineer representing the Société d'Etudes

des Chemins de fer en Chine,

The Director General of the Chinese
Railway Company,

The Representatives of the Imperial Chinese Government:

The Viceroy of Hupeh.

The Viceroy of Chihli.

OPERATING CONTRACT.

BETWEEN THE UNDERSIGNED:

1o. The Imperial Chinese Government, represented by Their Excellencies, the Viceroys of Chihli and of Hupeh;

2o. The Chinese Railway Company, represented by His Excellency Sheng Hsüan-huai, its Director General, Office of the Company at Shanghai;

And the Société d'Etudes des Chemins de fer en Chine, whose office is at Brussels,

Has been agreed as follows:

ARTICLE 1.-The Chinese Railway Company, in accordance with the Imperial Chinese Government, entrusts the Société d'Etudes des Chemins de fer en Chine, which shall appoint representatives for that purpose, with the direction, administration, and operating of the line from Hankow to Lu-kou-chiao (Peking), for which it holds a concession, under the terms of an edict of His Majesty the Emperor of China dated October 20, 1896, and of which a copy is annexed to the present contract.

ARTICLE 2.-The Société d'Etudes shall take over the working of the line as soon as each section is completed, following final acceptance by the Imperial Administration of Chinese Railways. Each section must be completely and previously equipped and provided with all the material necessary for its working, as well as with the supplies of tools, furniture and a fund for running expenses. The Société d'Etudes or the representatives it shall appoint under the provisions of Article 1, shall organize the various services, shall have the right to hire the personnel, which it shall have absolute right to dismiss, or disband, and to fix its salaries according to a fixed schedule previously communicated to the Director General of the Chinese Railway Company. It shall make all purchases necessary for operating, maintaining or repairing the road; it shall fix the schedule of rates in the terms of concession contracts, collect revenues of all kinds and pay the operating and management expenses of the Company. The foregoing measures, taken for the purpose of operating the line, shall be submitted, for consultative purposes, to the Director General of Chinese Railways.

The Chinese Railway Company, which will appoint delegates for that purpose, shall have absolute right of control over the receipts and expenses.

The purchase of all new material or works for the improvement or extension of the regular road, or of stations, which may be found necessary after the opening of each section of the line to traffic, shall be at the sole expense of the Chinese Railway Company. As far as possible the supplies necessary for the maintenance and repairing of the road shall be ordered from the works and mines under the control of the Director General of the Chinese Railway Company.

ARTICLE 3.-In case of war or revolution in China, the transportation of troops, munitions and of the supplies of the Chinese army shall have right of way over all commercial transportation. The rate for such transportation shall be 50 per cent of the tariff; and it shall be carried according to the instructions of the

Director General of the Chinese Railway Company. The transportation of anything of nature to injure the Imperial Chinese Government shall moreover be forbidden.

ARTICLE 4.-Out of the receipts from operation available, after payment of all expenses, the Société d'Etudes shall retain the necessary sum to insure the payment, every six months, and at least three months before its date of payment, of the service of the loan of 112,500,000 francs contracted by the Imperial Chinese Government.

This reserve shall be made as long as said loan is not entirely paid off. The amount of this reserve shall be deposited monthly with the Société Générale Belge pour favoriser l'Industrie Nationale, or with the Company designated by it. The latter shall convert into gold on the best terms procurable, the sums paid to it for the service of the loan.

When, by means of the sums thus paid in, the service in gold of the loan. shall have been insured, the Société d'Etudes shall deduct 10% of the surplus, which shall be applied to the creation of a reserve fund for rebuilding or making extraordinary repairs necessary to insure the working of the lines.

It shall then pay the balance remaining available out of the operating revenues to the Chinese Railway Company.

ARTICLE 5. The duration of the present operating contract is fixed at thirty years dating from the signing of the contract.

However, this period would be fully entitled to extension in case the loan of 112,500,000 francs should not at that time be wholly paid off; this extension would continue as long as the complete amortization had not been made. But if the refunding of the loan should be made before the dates on which they fall due, the present working contract will be annulled from the date of the total refunding of the loan.

ARTICLE 6.-During the entire period of the working of the line by the Société Belge, the Chinese Railway Company grants it 20% of the net profits of the railroad from Peking to Hankow, as agreed upon by mutual consent, after the closing of each fiscal term (exercice), taking into account, naturally, the sums necessary for the service of the interest and the amortization of the loans. ARTICLE 7.-In case of contentions or disagreement between the Société d'Etudes and the Management of the Chinese Railway or the Imperial Chinese Government, said contentions and disagreements shall be settled as specified in Article 26 of the loan contract.

ARTICLE 8.—If the revenues from operating the lines are not sufficient to cover the expenses, the Chinese Railway Company must supply the Société d'Etudes with the necessary means to insure the operating of the lines under normal conditions.

ARTICLE 9.—All materials and supplies needed by the Société d'Etudes for the working of the line, as well as for the maintenance and repair of the line, shall, when imported from abroad, be exempt from all customs or likin dues.

ARTICLE 10.-The present contract is made in triplicate; one copy for the Imperial Chinese Government, one for the Chinese Railway Company, and the third for the Société d'Etudes des Chemins de fer en Chine.