Special service for the local authorities and for the members of the Imperial Chinese Government will be arranged by the operating management, upon an understanding with the Representative of the Director General of the Imperial Chinese Railway Company. The same will be the case in regard to free tickets, which must be countersigned by the Director General of the Imperial Chinese Railway Company.

ARTICLE IV. From the operating revenues remaining available after the payment of all expenses, the Russo-Chinese Bank will retain such amounts as are necessary to assure each half-year, at least three months before due-date, the service of the loan of 40,000,000 francs contracted by the Imperial Chinese Government.

This retention will be made so long as the said loan shall not have been wholly repaid.

The proceeds of this retention will be paid over each month into the hands of the Russo-Chinese Bank or into the hands of the firm that the latter may have designated. The latter will convert into gold, to the best advantage of the Imperial Chinese Railway Company, the amounts paid over to it, in order to use them for the service of the Loan.

Whenever the service in gold of the Loan may have been assured through the sums thus paid over, the Russo-Chinese Bank will set aside 10% of the surplus, which will be devoted to the establishment of a reserve fund for extraordinary rebuilding or repairs to assure operation.

It will thereafter pay over to the Imperial Chinese Railway Company such balance as remains available out of the operating revenues.

In the event of the repayment contemplated in the following article, the Russo-Chinese Bank or its delegates will hand over to the Representative of the Director General of the Imperial Chinese Railway Company the line, its fixed material and rolling-stock, and all its appurtenances, in good state of upkeep and in normal operation.

ARTICLE V.-The term of the present Operating Contract is fixed at thirty years, reckoning from the date of the signature of the Contract.

This term, however, would be prolonged as of course (i. e., de plein droit) in the event that the loan of 40,000,000 francs should not at that time have been completely amortized: and that prolongation would continue so long as complete amortization had not been effected.

But if the repayment of the loan were to be effected before the due period, the present Operating Contract would be cancelled as from the date of the full repayment of the Loan.

ARTICLE VI. During the whole period of the operation of the line by the Russo-Chinese Bank, the Imperial Chinese Railway Company grants to it a participation of 20% in the net profits of the railway from Chengtingfu to Taiyuanfu, as determined by mutual agreement after each accounting period, allowing, however, for the amounts necessary to meet the service of interest and amortization of the Loan.

ARTICLE VII.-In case of conflict or difference of views between the Imperial Chinese Railway Company, or the Imperial Chinese Government, and the

Russo-Chinese Bank, these conflicts or differences of views will be adjusted as provided in Article XXVI of the Loan Contract.

ARTICLE VIII.-If the operating revenues should not be sufficient to cover the costs, the Imperial Chinese Railway Company would have to furnish the funds necessary to insure the regular operating service under normal conditions. The funds so furnished will be considered as an advance, repayable to the Imperial Chinese Railway Company so soon as the revenues come to exceed the expenses.

ARTICLE IX.—All materials and all supplies that the Russo-Chinese Bank may need for the operation and for the upkeep and repair of the line will, when they come from abroad, be exempted from all customs or likin dues.

ARTICLE X.-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 difference, the French text alone will be authoritative for the interpretation of the Contract.

The present Contract will 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 despatch 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.

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

The Director General of the Imperial Chinese Railway Company,
H. E. SHENG KUNG PAO.

(Sgd.)
(Sgd.)

The Manager of the Russo-Chinese Bank in China,

CH. R. WEhrung.

Note.

66

In Rockhill, p. 309, appears the following translation of a Draft of Agreement between Fang, Superintendent of the Liu-lin-Tai-yuan Railway Co. (understood to be acting under authority from the Governor of Shansi), and Pokotilow, Director of the Russo-Chinese Bank," dated 1898:

Preliminary Loan Agreement for Chengtingfu-Taiyuanfu Railway.-1898.

"The line is to run from Chengting to the coal mines on the Weishui river to the north of Pingting, and thence to Taiyuan. The cost-including 'official profits' (kuan-li) -is estimated at Tls. 6,800,000. As it is impossible to raise this amount in China, Fang agrees to accept a temporary advance from the Russo-Chinese Bank on the following

terms:

"1.-A Company will be formed to construct the railway, and the Company will borrow Tls. 6,800,000 necessary from the Bank. Interest 6 per cent. from the date of advance.

"2.-The exact amount required will be determined after the completion of the surveys and estimates.

"Until the railway is opened to traffic the interest will accrue, and be added to the principal of the loan. Should the traffic receipts during the two years following the opening be insufficient to pay the interest the deficiency will also be added to the loan capital.

At the close of these two years, all the moneys owing to the bank by the Company on principal and interest must be reckoned up and interest paid on the full amount at 6 per cent. per annum. All surplus profits, excluding official profits' (kuan-li) made within five years from the opening of the railway to be deposited in the Bank, the amount to go to the redemption of the loan at the end of the five years. The Bank to pay 4 per cent. on the amounts so deposited.

Dating from the sixth year after the opening of the line the Company agree to pay off the interest and principal due to the Bank by quarterly instalments, extending over 25 years: such instalments to be paid in gold at current rates.

"3.-The Company may at will redeem the loan before the limit of the time specified. "The Company may issue share certificates to the amount of the loan, which are to be deposited with the Bank as security. Within the 25 years' limit certificates to the amounts redeemed from year to year will be handed over to the Company by the Bank. If, before the loan is redeemed, the Chinese public consider these shares a good investment, the Company may purchase them from the Bank and issue them at a premium of 20 per cent. 'Should the Company redeem the debt due to the Bank in either of the two ways stated above, the Bank will have no further concern with the railway.

"4.-The Bank will decide in consultation with the Company all questions of route, gauge, position of stations, amount of rolling stock, etc. All the construction and works will be executed under the supervision of the Company.

"The Bank engages to use local materials and labour as far as possible, and in any case to spend the greater part of the loan on the spot. As little material as possible is to be procured from abroad, but whatever is thus obtained must come from Russian or French territory. All such materials are to be purchased by the Bank at the most reasonable prices, and questions as to the reasonableness of the prices are to be settled by reference by the Company to the Chinese Ministers in Russia and France.

"5-During the whole 30 years and/or while the loan is unredeemed, the high authorities of Shansi shall, at the request of the Company, interdict the construction of another railway or other mechanical means of transport between Liu-lin and Taiyuan-fu, as such would be detrimental to the interests of this railway.

"6.—The Company will see to the acquisition of the land required for the railway in accordance with the provisions of Chinese law. The regulations for the purchase of the land will be drawn up by the Company and approved by the Governor of Shansi who will be requested to instruct the local authorities to surrender or let whatever Government land is required for the railway line. As to private ground, graves, bridges, rivers, and roads, the regulations of the Tientsin railways will be followed, and reasonable compensation will be awarded. The local officials are to lend every assistance and to check disorder. In other matters the established precedents ruling in the railways already opened to traffic in Chihli are to be followed.

"The price of the ground will be arranged by the Company with the owner, and the money handed over in the presence of a representative at the Bank specially appointed for that purpose. This will prevent irregularities.

The Bank will prepare detailed plans of the railway and send them to the Company, and the Company are given six months from the date of receipt of the plans within which to secure the land required for the track.

"7.-The Governor of Shansi will be moved to exempt from likin charges all railway material. Import and transit dues paid to the Imperial Maritime Customs are not included in this exemption.

"8.-The administration of the railway will rest with the Company. Mr. Fang will procure the assistance he needs, and from the date of the approval of this agreement Tls. 10,000 a year will be advanced to him to cover the salaries of himself and assistants.

'Before the opening of the railway and traffic these salaries will be advanced by the Bank and the amounts will be added to the loan accounts. After the opening they will be paid out of receipts by the Company. If there is a surplus after the payment of all expenses out of the receipts, it will rest with the Company to decide whether the remuneration above mentioned shall be increased. The Foreign Agent of the Bank will be present at all meetings of the Managing Officers, and will exercise supervision over all matters of accounts, machinery, etc.

9.-The Foreign Agent will be specially appointed by the Bank after the completion of the railway to inspect the accounts, receipts, and expenditure. The accounts will be kept after foreign methods. He will also inspect the permanent way, machinery, stations, etc., and see that they are kept in good working order, and free from dilapidations. He will have foreign assistants, but their number will be kept as low as possible. The salaries of the Agent and his staff, which are not to exceed 100,000 francs or say Tls 30,000 a year will be paid by the Company. With these exceptions the personnel will be Chinese. As a temporary arrangement, however, China not possessing. capable machinists, foreign artificers will be engaged by the Bank to work the machinery, but as soon as Chinese are available for this purpose the foreigners will be sent home. It is fully expected that Chinese will be employed as machinists before many years are over, and to attain this end

the Superintendent is at liberty to establish engineering and mining schools near at hand, and to engage foreign instructors to teach 10 to 20 selected Chinese youths of capacity who may also be sent abroad to complete their knowledge.

"The Board will assist the Company as far as possible in its efforts to dispense with foreign assistance and to secure capable Chinese machinists without delay.

"5-10ths to the Company.

10.-After the completion of the railway the yearly surplus, if any, left after payment of working expenses and official profits,' is to be dealt with as follows:— Should this 5-10ths amount to 30,000 taels or over, the Superintendent's salary will be paid out of it; if the 5-10ths do not amount to Tls. 30,000 the salary will form part of the working expenses.

"2-10ths to the State.

"1-10th to the Trade Bureau to be used for public purposes, and

"2-10ths to the Bank-this payment to cease at the end of 30 years from the opening of the line. Should the Company be able to redeem the loan before this limit of time as provided for under Article 3, the Bank's 2-10ths will cease with such redemption.

"11.-The Bank will first undertake the construction of the first section to the coal mines of Ping-ting; this to be completed within 3 years from the acquisition of the ground required, according to the plans. This section finished, the Bank engages to begin work on the 2nd section from the coal mines to Taiyuan Fu within two years. If it fails to do so the Company is free to discharge the Bank from the contract and hand the work over to others to undertake. The Bank, in this case, is to hand over the surveys, estimates, and other documents relating to the 2nd section to the Company without payment therefor and without objection to the Company's action.

"12.-In case of default in the payment of principal and interest, the administration of the railway will pass temporarily into the hands of the Bank, but the Company will continue its supervision. The Superintendent, etc., will continue to meet and consult as before and the salaries will continue to be advanced in the manner stated in Article 8. The Bank will not under these circumstances be considered as entering into possession of the railway; it will simply administer on behalf of the Company until the loan and interest are paid in full, when the administration will be returned to the Company.

13. Superintendent Fang will move the local authorities to permit the Company, through the Trade Bureau, to select a few coal and iron mines in the country adjoining the railways; places granted to other persons being excluded from the selection.

Within a year from the approval of this agreement the Bank will indicate a few coal and iron mines which it will be able to work as soon as the necessary authorisation is received from the Governor of Shansi through the Trade Bureau. But the number of mines thus selected must not exceed four or five.

Superintendent Fang will also be authorised to choose a convenient site for glass works, the funds for the establishment of which will be provided by the Bank.

“The financial terms relating to the mines and glass works will follow the same lines as those relating to the railway; 2-10ths of the surplus after payment of working expenses and 'official profits' will go to the Bank in payment of principal and interest. In case of default the management of all the mines and the glassworks will revert to the Bank who will retain it until the loans and interest are redeemed.

"14.-This loan being a commercial arrangement made between Russian and Chinese merchants, it is understood that the Governments of China and Russia are in no way concerned.

"15. This instrument is only preliminary. When it has been approved by the Governor of Shansi and authorised by the Emperor, it will as it stands become definitive."

In the Memorandum on Railway and Mining Concessions secured by France and French Companies in China, printed in Doc. Dipl., Chine, Juin-Octobre, 1900, p. 23, appears the following statement in regard to the concession for the Chengting-Taiyuan Railway:

"The concession for this line was provided for by a contract between the Bureau of Commerce of the province of Shan-hsi and the Russo-Chinese Bank, said contract being approved by the Chinese Government May 21, 1898.

64

'The length of the line is 246 kilometers from Tai-yuan-Fu to Cheng-ting-Fu where it will join the railway from Peking to Hankow. The line will open the very rich coal field of Ping-ting, and its exploitation should be remunerative. The concession contemplates the extension of the Tai-yuan-Fu line to the southwest. The system as above will measure from 500 to 600 kilometers and will be worth about 60 millions.

"The French group in the Russo-Chinese Bank is entrusted with working this concession."

NUMBER 1902/9.

PORTUGAL AND CHINA.

Supplementary Commercial Convention.*-October 15, 1902.

His Most Faithful Majesty the King of Portugal and of the Algarves, and His Majesty the Emperor of China, desiring to facilitate the commercial relations between Portugal and China, have decided to introduce certain modifications into the Treaty of friendship and commerce which at present governs the relations between the two countries: for this purpose they have named their plenipotentiaries, to wit:

His Most Faithful Majesty the King of Portugal and of the Algarves, José d'Azevedo Castello Branco, his Envoy Extraordinary and Minister Plenipotentiary on Special Mission near His Majesty the Emperor of China, of the Council of His Majesty, Peer of the Realm, Grand Cross of the Military Order of Notre Dame de la Conception de Villa-Viçosa, Commander of the Order of St.-Jacques de l'Epée of Scientific, Artistic and Literary Merit, Grand Cross of the Order of Military Merit in Spain, and Grand Bibliotécaire;

His Majesty the Emperor of China, His Highness Ch'ing, Prince of the First Rank, President of the Ministry for Foreign Affairs, Envoy Extraordinary and Minister Plenipotentiary, etc., etc.;

Who, having exchanged their full powers, which they have found in good and due form, have come to an agreement upon the following articles:

ARTICLE I.-The Treaty of friendship and commerce between Portugal and China, dated December 1, 1887,† continues to be in force with the alterations and additions resulting from the present Treaty.

ARTICLE II.-Portugal accepts the increase of the import tariffs stipulated by Article VI of the Peking Protocol of September 7, 1901; ‡ and from the time of the ratification of the present Treaty, and so long as the Treaty of friendship and commerce between Portugal and China, now in force, shall not have been revised, Portugal will enjoy the treatment of the most favored nation, and in no case will there be required from Portuguese subjects duties more or less high than those which may be required from the subjects of any nation what

soever.

This article annuls Article XII of the Treaty of 1887.

ARTICLE III-In order to make effectitve the cooperation of Portugal for the control and the levying of duties upon opium imported into Macao and exported from Macao to Chinese ports, there will be, in a location chosen by agreement between the Government of the Colony of Macao and the Administration of the Chinese Imperial Maritime Customs, a branch office of those Customs.

Translation from the French text as printed in Customs, Vol. II, p. 303. See Note to this document, post, p. 371.

+ See Hertslet, p. 423.

No. 1901/3, ante.