This deposit will be made on the conditions and under the reservations provided for in Article XX.

The balance of the funds, after the completion of construction and after the equipment of the line, will be paid over to the Chinese Government through the Imperial Chinese Railway Company.

ARTICLE XIX.-After the signature of the present contract, the Imperial Chinese Railway Company entrusts to the Russo-Chinese Bank the choosing of an Engineer-in-Chief, experienced in construction work, whose duty it will be to direct the construction of the line and to devise the projects of survey, plans, route, and entire system of the line. This will all be subject to the approval of the Director General of the Imperial Chinese Railway Company.

This Engineer will be appointed, upon recommendation by the RussoChinese Bank, by the Director General of the Imperial Chinese Railway Company, to whom he will be directly subordinate.

The Director General of the Imperial Chinese Railway Company will fix the amount of the salary of the Engineer-in-Chief, after coming to an agreement with the Russo-Chinese Bank.

The Engineer-in-Chief will prepare a tabulated plan of organization of the European staff required for the construction of the line, and will submit it for the approval of the Director General of the Imperial Chinese Railways. This staff will be engaged by the Russo-Chinese Bank, which will place it under the orders of the Engineer-in-Chief.

As regards the Chinese staff, technical or other, the Director General of the Imperial Chinese Railway Company reserves the right to choose it and to turn it over to the Engineer-in-Chief. No Chinese employee may be engaged without the consent of the Director General of the Imperial Chinese Railway Company.

It is understood that Chinese subjects who have made special studies or have acquired sufficient practical knowledge may be employed on the work on the suggestion of the Director General of the Imperial Chinese Railway Company.

As regards the technical service, both the Chinese and the foreign staff shall be under the authority of the Engineer-in-Chief; but the Director General of the Imperial Chinese Railway Company reserves the right to ask for the dismissal of any agent who may have been guilty of misconduct, insubordination, or disrespect for the Chinese authorities, whatever his nationality.

The Director General of the Imperial Chinese Railway Company likewise reserves the right to delegate upon the works a Special Representative with full powers. The salary of this Representative, as also the running expenses of the head office at Shanghai, will devolve upon the Shansi Railway project as in the case of the Peking-Hankow Railway.

Orders for materials, tools and rolling-stock necessary for the construction of the line and for its regular operation must be presented in advance through the Enginer-in-Chief for the approval of the Director General of the Imperial Chinese Railway Company. Orders and local tests of the work must be arranged jointly by the Engineer-in-Chief and the Special Representative of the Director General of the Imperial Chinese Railway Company.

Statements of the amounts paid for the supply of materials and for expenses of all kinds settled in Europe must be sent every three months to the Imperial Chinese Railway Company.

Every month, the Engineer-in-Chief, in agreement with the Director General of the Imperial Chinese Railway Company, will ask the Russo-Chinese Bank to pay over, through its Peking branch, the amounts necessary for the general expenses of the undertaking for the following month, into the hands of an agent of the Director General of the Imperial Chinese Railway Company. This agent may only surrender the funds against the joint signature of the Engineerin-Chief and the Representative of the Director General of the Imperial Chinese Railway Company.

The Russo-Chinese Bank shall not therefore have to meet any of the expenses in connection with construction or operation.

It will endeavor to complete the work on the line within a period of three years.

ARTICLE XX.-On the various sections between Chengtingfu and Taiyuanfu, the Russo-Chinese Bank will pay over each month to the Imperial Chinese Railway Company, from the available funds in its hands, the amounts necessary to make the payments for the following month, in conformity with the estimates drawn up by the Engineer-in-Chief.

The price paid for the above-mentioned bonds being destined exclusively for the construction of the line from Chengtingfu to Taiyuanfu, the RussoChinese Bank will have the right not to surrender these funds in the event that any of the payments should not have been applied as provided for, as also in the event that the Russo-Chinese Bank should not have been enabled to continue the direction of the work of construction with which that Bank is exclusively entrusted.

ARTICLE XXI.-The Chinese Government gives the Russo-Chinese Bank an option to December 31st, 1905, to purchase the balance of the loan, or 18,000,000 francs, at the price of 90% of par value.

Said option may be availed of at one or several times, regardless of the amortizations made. Delivery of the bonds taken on the options will be made at the Russo-Chinese Bank in Paris, which will only surrender them under the conditions and terms provided for in the above Article XX.

ARTICLE XXII.-If the Russo-Chinese Bank should avail itself of the right given it to purchase all or a portion of the securities for which it has an option granted it, it shall come to an agreement in each case with the Imperial Chinese Railway Company to determine the sections (of line) to be built with the new funds.

ARTICLE XXIII.-Surveys for the line, dating from the signing of the present contract, are at the expense of the Imperial Chinese Railway Company. The whole line shall be divided into two principal sections: The first from Chengtingfu to Ping-ting on the left bank of the Weishui River, to the north of Ping-ting Chou, and the second from that point to Taiyuanfu.

It is henceforth to be understood that the section to be built with the funds

derived from the first option, will be that from Chengtingfu to Ping-ting and that surveys for it will begin the first year.

Within two months from the date of ratification of the present contract, the Russo-Chinese Bank will place at the disposal of the Director General of the Imperial Chinese Railway Company a sum of 1,000,000 francs as an advance on the proceeds of the loan.

This sum, it is understood, can only be applied to surveys and construction work on the Shansi railway. The rate of interest on this advance is fixed at 6% annually, regardless of the price of issue.

The first option must be taken up within eleven months from the date of signing the present contract.

The proceeds of said option shall be applied in the first instance to refunding the above-mentioned advance.

ARTICLE XXIV.-The Russo-Chinese Bank reserves the right to make one or more issues, by public subscription or otherwise, of the whole or a part of the bonds bought outright, or forming a part of the option; the expense of such issues to be borne, of course, by the Russo-Chinese Bank.

ARTICLE XXV.-The entire quantity of materials and supplies necessary for the construction and operation of the railway from Chengtingfu to Taiyuanfu will be ordered by the Russo-Chinese Bank, which will execute these orders conscientiously and on the best terms.

It is agreed that, upon equal terms, such materials and supplies as can be produced in China will not be ordered abroad. The mines and factories under the control of His Excellency Sheng Hsüan-huai must, more particularly, profit by this preference in case terms and price (including freight and insurance charges) are such as though these materials and supplies had been ordered from abroad.

Orders given will be freed from all customs and likin dues upon entry and in transit through Chinese territory.

If proof of the granting of this privilege is not furnished to it before the lapse of the month following the date on which the Russian Government has advised the Russo-Chinese Bank of its having received the notifications provided for in Article XXVIII, the latter reserves the right not to consider itself bound.

It reserves the same right, within the same time-limit, in the event of the occurrence of extraordinary events, such as a war, or the falling below par of the French rente.

If the Russo-Chinese Bank should, for its part, not fulfil the obligations which it has assumed under the present Contract, this would be cancelled; the Imperial Chinese Railway Company would be free to contract with whomsoever else it desired, and forego the services of the Russo-Chinese Bank.

ARTICLE XXVI.-In case of conflict or difference of views between the Russo-Chinese Bank or its delegates, and the Imperial Chinese Government or the Imperial Chinese Railway Company, these conflicts or differences of views will be submitted to the judgment of a member of the Ministry for Foreign Affairs of the Chinese Government, and of the Minister of Russia in Peking.

In case of disagreement between the latter, the Minister for Foreign Affairs of the Chinese Government and the Minister of Russia will designate an arbitrator who shall make a final decision.

ARTICLE XXVII.-Should the Russo-Chinese Bank so request the Ministry for Foreign Affairs, the latter would be bound to give cognizance of the title (i. e., notifier le titre) to the Minister of the foreign country that it might designate to him as subscribing to the issue (of Bonds).

ARTICLE XXVIII.-The present Contract is drawn up in duplicate, one copy for the Imperial Chinese Railway Company, and one for the Russo-Chinese Bank. In case of doubt or of disagreement, the French text alone will be authoritative in interpreting the present Contract.

The present Contract must be submitted through the proper channel for the Imperial sanction, and when that sanction has been obtained, the Minister for Foreign Affairs of the Chinese Government must give notice thereof by official dispatch to the Minister of Russia in Peking, and in case of necessity, at the latter's request, to the representative in Peking of the foreign country to whom the title is to be notified.

These formalities will be carried out within a period of one month after the signature of the Contract.

Done at Shanghai, October 2/15, 1902, that is, the 14th day of the 9th moon of the 28th year of the Reign of H. M. Kuang Hsü.

The Director General of the Imperial Chinese Railway Company,

(1) The Imperial Chinese Railway Company, represented by its Director General, His Excellency Sheng Hsüan-huai, duly authorized by the Imperial Government;

(2) The Russo-Chinese Bank, represented by Mr. C. R. Wehrung, one of its Directors;

It has been agreed as follows:

ARTICLE I.—The Imperial Chinese Railway Company, in agreement with the Chinese Government, entrusts the Russo-Chinese Bank, which will appoint delegates for the purpose, with the directing, managing and operating of the line from Chengtingfu to Taiyuanfu, for which the Imperial Chinese Railway Company holds the concession under the Edict of His Majesty the Emperor of China dated October 13, 1902, that is, the 14th day of the 9th moon of the 28th year of the Reign of His Majesty Kuang Hsü, a copy of which is annexed to the Loan Contract.

ARTICLE II.-The Russo-Chinese Bank will undertake the operation of the line upon the completion of the several sections, after their definite acceptance by the Director General of the Imperial Chinese Railway Company, each section

having to be completely equipped and supplied in advance with all material necessary for its operation, as well as with supplies, tools, and rolling-stock; the Russo-Chinese Bank or the delegates it may have appointed in accordance with the provisions of Article I will organize the service, will engage the staff-over which it will have an absolute right of discharge or dismissal, and whose salaries it will fix according to a tabulated plan of organization previously submitted to the Director General of the Imperial Chinese Railway Company,-will order whatever is necessary for the operation and upkeep or for the repair of the line, will fix the tariffs within the terms of the contracts for the concession, will receive the revenues of all kinds, and will make the payments for the expenses of operation and the management of the Imperial Chinese Railway Company in connection with the Shansi Railway.

The foregoing steps to be taken in respect to the operation of the line will be submitted by the Russo-Chinese Bank or by the engineers appointed by it to the Imperial Chinese Railway Company, as a matter of consultation (i. e., à titre consultatif).

The Director General of the Imperial Chinese Railway Company will have the most extensive control over revenues and expenditures. He will appoint a Representative, a cashier, an accountant, and an interpreter, who will be attached to the European staff in order to exercise the effective control contemplated above. The Representative and his assistants, mentioned above, will be paid by the Shansi Railway enterprise.

This Representative will countersign all documents of account.

As stipulated in the Loan Contract, the Director General of the Imperial Chinese Railway Company reserves the right of requiring the dismissal of any agent, of whatsoever nationality, who may have been guilty of misconduct, insubordination, or disrespect towards the Chinese authorities.

The Chinese staff will be chosen by the Representative of the Director General of the Imperial Chinese Railway Company, who will place them under the exclusive orders of the Engineer-in-Chief.

The acquisition of all new material, and new work of improvement or upkeep of the line or of the stations, which may be necessary after the opening of each section to traffic, will be entirely at the expense of the Shansi Railway enterprise. In so far as possible, the orders required for the upkeep and repair of the line will be given to the factories and mines of China. It is understood that the mines and factories under the control of His Excellency Sheng Hsüan-huai will enjoy a right of preference over foreign mines and factories in the purchase of all the above-mentioned materials, upon terms and prices (including freight and insurance charges) such as if the materials had been purchased abroad.

ARTICLE III.-In case of war or of revolution in China, the transportation of troops, munitions and provisions for the Chinese Army will have precedence over all commercial traffic. This transportation will be charged for at a reduction of 50% from the tariff; it will be conducted in accordance with the orders of the Director General of the Imperial Chinese Railway Company; and it will moreover be forbidden to transport anything which might be of a character to injure the Chinese Government.