Products being exported, originating in Macao, as also those being imported, of foreign origin or destined for the sustenance of Macao and of its inhabitants, will be exempt from duty. Any product of foreign origin, exempted from duty upon importation, will pay duty in case it leaves Macao in order to enter China by land or by sea.

ARTICLE VI.-Opium will invariably pay duty and likin, whether upon entry or upon being taken out from the warehouse, and a certificate of payment will be affixed to each ball of opium, whether or not it is destined for despatch into the interior; but the duties and the likin levied upon the quantities of opium fixed annually for local consumption will be repaid monthly by means of a drawback certificate.

ARTICLE VII.—Boats belonging to the office of the Captain of the Port of Macao will be placed at the disposal of the Customs House for the service of meeting and visiting boats or junks upon arrival, but it will be optional for the Customs House to make use of its own boats in order to meet the needs of the service.

ARTICLE VIII.-The service of Maritime Police will be governed in accordance with an understanding between the Imperial Customs and the Government of the Colony. A portion of the cost of this service will be at the expense of the Customs House, and the amount that it is to pay is to be determined annually. For the purposes of control of the Maritime Service, an officer of the Portuguese Navy, delegated by the Captain of the Port, will be attached to the staff of the Imperial Customs House.

ARTICLE IX. The repressive measures to be adopted against smuggling in the waters and on the territory of Macao will be taken by the Government of Macao in accord with the Commissioner of Customs, and in the neighboring waters and Chinese territory, by the Customs House in accord with the Government of Macao, in order that these measures may, on the one hand, be effective at all points where co-operation is necessary, and that, on the other hand, they may in no way infringe upon the sovereign rights of one or the other party.

ARTICLE X.-So soon as the Imperial Customs House is established in Macao, the Customs stations of Ma-liu-chou and Ch'ien-shan will be closed; but the posts established at different points on Chinese waters and territory for the prevention of contraband will be maintained so long as China deems necessary for the protection of its revenue.

ARTICLE XI. The present Convention will remain in force as long as the Treaty of 1887: the denunciation of the Treaty would carry with it that of this Convention. Regulations for the procedure to be followed in Customs matters in Macao will be drawn up by agreement between the Government of the Colony and the Commissioner of Customs. Those regulations will be experimental and provisional, and may, if necessary, be modified in conformity with the circumstances and with a view to facility in operation.

In faith of which, the present agreement, drawn up in Portuguese, Chinese and French, has been signed in duplicate at Peking, the twenty-seventh day of January, 1903.

(Sgd.)
(Sgd.)

ROBERT HART.

GABRIEL DE ALMEIDA SANTOS.

NUMBER 1903/2.

GREAT BRITAIN (British and Chinese Corporation, Ltd.) AND CHINA. Agreement for a loan for the construction of a railway from Shanghai to Nanking.*-July 9, 1903.

This agreement is made the 15th day of the Intercalary 5th month of the 29th year of Kwang-Hsü, corresponding to the 9th day of July 1903, at Shanghai, and the Contracting Parties are:

The Director-General of the Imperial Railway Administration Sheng KungPao (to be called hereafter Director-General), acting under authority of an Imperial Decree, of the one part, and Messrs. Jardine, Matheson & Company, and the Hongkong and Shanghai Banking Corporation, representing as Joint Agents the British and Chinese Corporation Limited (hereinafter called the Corporation), of the other part.

Whereas, on the twenty-third day of the Intercalary third month of the twenty-fourth year of Kwang-Hsü, being the thirteenth day of May 1898, a preliminary Agreement † was signed at Shanghai between the Director-General of the Chinese Imperial Railway Administration, Sheng, acting under the instructions from the Tsungli Yamen, and the British firm of Jardine, Matheson & Company, for themselves and on behalf of the Hongkong and Shanghai Banking Corporation, representing as Joints Agents a British Syndicate, and

Whereas, on the 12th day of December 1902, an Imperial Decree was issued in the following terms: "In view of the important considerations connected with construction of railways in various parts a decree has already been issued apportioning the responsibility for the duties connected therewith. Hereafter the accounts of receipts and disbursements are to be prepared by Sheng Hsuan Huai, and communicated by him for the examination of the High Authorities of the Provinces through which the railways pass, and subsequently for submission in a joint memorial to the Throne. When a line of railway has been surveyed, before the work may be begun, plans and specifications must be communicated to the High Authorities above-mentioned, who will depute an official to ascertain that there are no objections. Should Sheng Hsuan Huai enter into an agreement with a foreign syndicate he must before signing such agreement obtain the assent of the High Provincial Authorities, and a copy of such agreement must be submitted to the Throne in a joint memorial" and

Whereas, on further consideration it has been found necessary to make certain alteration in the aforesaid preliminary agreement, now therefore it is agreed that this final Agreement shall be substituted for the preliminary agreement above referred to.

ARTICLE 1.—The Corporation agrees to issue on behalf of the Railway Administration, a sterling loan (hereinafter referred to as the loan) for an amount *Text as printed in Wang, p. 221. Printed also in Rockhill, p. 286. Note 1 to this document, post, p. 402.

not exceeding £3,250,000 sterling on the terms and conditions hereinafter contained. Imperial Chinese Government bonds are to be issued for the entire sum, similar to the bonds of the Imperial Railways of North China, with the Railway as first mortgage security therefor. The loan shall be issued in two or more parts, and each series is to be in such amount as the Engineer-in-Chief may determine under direction of the Director-General and the Corporation, in accordance with the extent of the work to be undertaken, so as to prevent the Chinese Government from suffering undue loss of Interest. The price agreed upon for the loan is 90 per cent. of the nominal value, and any loss or profit in selling these bonds to the public shall be borne by or go to the Corporation. The interest on the bonds shall be at the rate of 5 per cent. per annum on their nominal value, and be payable half-yearly.

The duration of the loan is fixed at fifty years, commencing from the date of ratification of this Agreement, but no interest will be paid on any bonds which may be redeemed or cancelled under the terms hereinafter mentioned after the redemption or cancellation thereof.

On the face of each of these bonds shall be expressed the value thereof in the sum of £100, or in such different amounts as the Chinese Minister in London in consultation with the Corporation may sanction.

If any of the bonds or net profit certificates hereinafter mentioned are lost or destroyed a re-issue of any thereof is to be made in the amounts respectively called for by such lost or destroyed bonds or certificates but proper proof of the loss or destruction must be given in the usual form to the Corporation and the Chinese Minister in London for examination and record, and the requisite guarantee is to be obtained by the Corporation from the respective claimants concerned.

ARTICLE 2.-The proceeds of the loan are to be used in the construction and equipment of the railway, and in paying interest on the loan during the course of construction.

The Corporation shall build and equip as economically as possible in accordance with the best modern system, the line from Shanghai to Nanking, it being hereby agreed that the Chinese Administration shall secure the necessary land for a double line of railway for the whole distance, as well as other facilities for the purposes of the construction and working of the line.

When the line is completed if there is a surplus from the sale of bonds the said surplus shall be at the disposal of the Chinese Government for redeeming the bonds, or to be placed through the Director-General in a bank on deposit for the purpose of paying interest on the loan or for developing business beneficial to the Shanghai-Nanking Railway, all to be arranged at the proper time between the Director-General and the Corporation. Should Chinese themselves build branch lines to act as feeders to this railway, it is understood that the system of construction and equipment thereof shall be adopted by such branch lines in order to facilitate through connection.

In all matters relating to the construction and administration of the Railway by the officials of the British and Chinese Corporation it is expressly agreed that particular heed shall be paid to the opinions, habits, and ideas of the Chinese

people and that when practicable Chinese shall be employed as far as possible by the Board of Commissioners in positions of trust and responsibility in connection with the railway.

In regard to the earthwork or such other work as Chinese are competent to perform, contracts shall be entered into for such work with Chinese under the sanction of the Director-General or his deputy, said work itself to be in accordance with plans and specifications of the Engineer-in-Chief and under his supervision.

In the further and final survey, detailed plans and estimates of cost, whether of the respective sections of the main line or of any extensions, branches, or alterations of the same, are to be submitted to the Board of Commissioners for the approval of the Director-General.

ARTICLE 3.-The loan shall be secured by mortgage now entered into in equity, and shall as soon as possible hereafter be secured by a specific and legal first mortgage in favor of the Corporation upon the railway not completed between Woosung and Shanghai, and also on all lands, materials, rolling-stock, buildings, property, and premises of every description purchased or to be purchased by the railways herein referred to, and on the last-mentioned railways themselves as and when constructed and on the revenue of all descriptions derivable therefrom.

The provisions of this article in respect of the mortgage are to be construed and treated as of the same purport and effect as a mortgage customarily executed and delivered in England to a trustee for the purpose of securing loans and bond issues upon railway properties.

ARTICLE 4.-According to Article 1 of this Agreement it is provided that the loan is to be paid in instalments from time to time as the work proceeds. It is hereby agreed that within eight months after this Agreement is officially signed and ratified the Corporation shall pay the first instalment to meet the requirements for the work, whether the proceeds come from the sale or hypothecation of the bonds or from advances made, provided the appropriate series of bonds for the required instalment of such loan shall have been executed and delivered. If after the expiration of twelve months from the date of the ratification hereof the work of construction shall not have been begun on the main line, this Agreement is to become null and void.

Of the proceeds realised from the sale of the bonds, after deducting so much of them as may be required to be kept in England for the purchase of materials and payments of contracts there, such amounts as may be estimated and certified to by the Engineer-in-Chief to the Board of Commissioners hereafter mentioned as being actually required for the construction of any particular section of the main line shall be ordered by the Board of Commissioners after consideration to be transferred to Shanghai to be kept in the Hongkong and Shanghai Bank, or such bank or banks as may be mutually agreed upon, and placed to the credit of the construction account of the Railway Administration for the exclusive purpose of building such section or sections of the railway herein provided for under the supervision of the Board of Commissioners.

On such occasion of a remittance being made to China the amount realised

in sycee will be reported to the Director-General, and any portion which may not be required shall be placed at interest. Similarly the balance in England shall be placed at interest.

The accounts of the money spent from time to time in England, and of the money transferred to the credit of the construction and other accounts for use in China, are to be submitted quarterly to the Board of Commissioners for examination and for report to the Director-General for the information of the Wai-Wu-Pu, and for his further report to the Board of Revenue and the Bureau of Mines for record therein, after such accounts have been approved and signed by him.

ARTICLE 5. The dates of the bonds mentioned in Article 1, and of the certificates mentioned in Article 12 of this Agreement shall be of even date with this Agreement. Interest shall begin to run upon the bonds only from the date of their respective sales and deliveries to the public, and due adjustment of such interest will then be made with respective purchasers for any fractional period of time thereafter covered by the coupon next maturing. For the purpose of such adjustment the then correct interest may be reckoned from the nearest first or fifteenth day of the month in which the sale and delivery occur as the case may be.

Coupons which have theretofore matured are to be cancelled and delivered to the Chinese Minister in London for transmission to the Railway Administration.

As to the form of bond, it is to be agreed upon by the Director-General or by the Chinese Minister in London and the British and Chinese Corporation at the same time as this Agreement is signed, but if hereafter the money markets in London or other countries require the modification of the form of the bond, except in any thing that affects the amount of the loan, the rate of interest, the period of the loan, and the liability of the Chinese Government, which are not to be touched at all, such slight modifications may be made to meet the views of the money markets by the Corporation in consultation with the Chinese Minister in London.

Any modifications are to be reported at once by the Corporation to the Director-General for the approval of the Wai-Wu-Pu.

The bonds and the net profit certificates referred to in Article 12 are to be engraved entirely in the English language, and shall bear the fac-simile of the signature of the Director-General and of his seal of office, in order to dispense with the necessity of signing them all in person. But the Chinese Minister in London is to sign each of the bonds and certificates and put his seal thereon as required, as a proof that the issue and sale of these bonds as well as the certificates are duly authorized and binding upon the Chinese Government.

Such bonds or net profit certificates are to be numbered consecutively, and as many bonds or certificates as may be needed are to be properly engraved under the supervision of the Corporation.

The loan bonds herein referred to, as soon as they are engraved and signed and sealed by the Chinese Minister in London as hereinbefore provided, are to be countersigned by the Corporation.