but it shall be refunded with the proceeds of the first sale of 12,500,000 francs, which must be issued within nine months from the signing of the present contract; a portion of the proceeds of this sale will be used to refund the advance first made.

ARTICLE XXIII.-Should the Compagnie Générale de Chemins de Fer et de Tramways en Chine finish satisfactorily the work for the Railway from Kaifengfu to Honanfu, complying strictly with all the provisions of the present Contract, and should the Chinese Government decide to extend the Railway from Honanfu to Singanfu, the Director General of the Imperial Chinese Railway Company agrees to come to an understanding preferably with and to grant an option for the Loan necessary for said undertaking to the Compagnie Générale de Chemins de Fer et de Tramways en Chine, in conformity with the provisions and conditions of the present Contract.

It is clearly understood that if the Chinese Government should be able to raise the capital necessary for the construction of the extension, either from its own resources, or from funds gathered by means of shares subscribed by its own nationals, the Compagnie Générale de Chemins de Fer et de Tramways en Chine would not be entitled to avail itself of this Article.

ARTICLE XXIV.—The present contract shall only be binding on the Compagnie Générale de Chemins de Fer et de Tramways en Chine if it is assumed that, exclusive of what may be furnished and produced in China, and bought at the same prices as the European product delivered in China, the total amount of materials and supplies necessary for the building and operating of the railway from Kaifengfu to Honanfu will be asked of and ordered from the Compagnie Générale de Chemins de Fer et de Tramways en Chine, which will fill these orders under the best possible terms.

The carrying out of this provision of this contract by the Imperial Chinese Railway Company will be proven by the orders for materials for each of the sections of line undertaken.

Orders from the Compagnie Générale de Chemins de Fer et de Tramways en Chine will be free from all duties or from likin on importation or in transit across Chinese territory.

If proof of the granting of this franchise is not forthcoming before the end of the month following the date on which the Belgian Government should inform the Compagnie Générale de Chemins de Fer et de Tramways en Chine that it has received notification concerning Article XXVIII, said Company reserves the right not to consider itself bound.

It reserves the same right if extraordinary events should take place, such as a war, or if there were absolute impossibility to secure subscribers for the bonds.

Should on its side the Compagnie Générale de Chemins de Fer et de Tramways en Chine not fulfil within the given delays the obligations it has assumed by the present contract, it shall become annulled. The Imperial Chinese Railway Company would be at liberty to enter into contract with whomsoever it chose, and to give up the services of the chief engineer.

It is expressly agreed that the works and mines under the control of H. E.

Sheng Kung-Pao shall have a preferential right for all orders necessary for the building and operating of the railway which is the object of the present contract. The word preference applies to equality of specifications and prices including transportation, as if the orders had to be filled abroad and delivered in China.

All orders made in China shall be free of duties and of likin on Chinese territory.

ARTICLE XXV.-In case of disagreement between the Compagnie Générale de Chemins de Fer et de Tramways en Chine or its delegates and the Imperial Chinese Government or the Imperial Chinese Railway Company, such conflicts or disagreements shall be settled by the decision of a member of the Ministry of Foreign Affairs and the Minister of Belgium in China. In case of non-agreement, the third arbitrator shall be the Dean of the Diplomatic Body at Peking. ARTICLE XXVI.-Should the Minister of Belgium request the Chinese Minister of Foreign Affairs, the latter shall be bound to give cognizance of the title (notifier le titre) to the Minister of the foreign country mentioned to him as subscribing to the issue of bonds.

ARTICLE XXVII.-The present contract is drawn up in triplicate, one copy for the Chinese Government, one for the Imperial Chinese Railway Company and the third for the Compagnie Générale de Chemins de Fer et de Tramways en Chine.

In case of doubt or disagreement, the French text alone shall be authoritative in interpreting the present contract.

The present contract shall be submitted through the proper channel for the Imperial Sanction, and when that shall have been obtained, the Minister of Foreign Affairs shall notify, by official despatch, the Representative of Belgium at Peking, and in case of necessity, the Representative at Peking of the foreign country to whom the title shall be notified.

ARTICLE XXVIII.-The Compagnie Générale de Chemins de Fer et de Tramways en Chine has been organized at Brussels the 26th March, 1900, under Belgian law (régime belge) and with Belgian capital.

The Imperial Chinese Railway Company only recognizes for the purposes of the present contract the above mentioned contracting Belgian Company, which shall never have the right to transfer the present contract to other nations nor to persons of another nationality than Belgian.

ARTICLE XXIX.-The present contract includes the right to build little branch lines from the line from Kaifengfu to Honanfu for the purpose of securing traffic and establishing useful relations. These branch lines shall only be built after agreement with the Director General and the Governor of Honan and in accordance with plans approved by them.

Done at Shanghai, November 12, 1903 (24th day of 9th moon of 29th year of Kuang Hsü).

(II)-OPERATING CONTRACT.

Between the undersigned:

(1) The Imperial Chinese Railway Company, represented by His Excellency Sheng Kung Pao, Director General, and

(2) The Compagnie Générale de Chemins de Fer et de Tramways en Chine, represented by Mr. A. Rouffart, its delegated Administrator,

It has been agreed as follows:

ARTICLE I.—The Imperial Chinese Railway Company, duly authorized by the Imperial Chinese Government, entrusts the Compagnie Générale de Chemins de Fer et de Tramways en Chine, which will appoint its delegates for the purpose, with the directing, managing and operating of the line from Kaifengfu to Honanfu, for which the Imperial Chinese Railway Company holds the concession.

ARTICLE II.—The Compagnie Générale de Chemins de Fer et de Tramways en Chine will undertake the operation of the line upon completion of the several sections, after their definitive acceptance by the Imperial Chinese Railway Administration; 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 Compagnie Générale de Chemins de Fer et de Tramways en Chine or the delegates it may have appointed in accordance with the provisions of Article I will organize the service, will have the right to engage the staff-over which it will have an absolute right of discharge or dismissal,-will fix their salaries according to a tabulated plan of organization approved in advance by the Director General of the Imperial Chinese Railway Company, will order whatever is necessary for the operation or upkeep 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 management to the Chinese Railway Company. The foregoing steps to be taken in respect to the operation of the line will be submitted in advance to the judgment of the Director General of the Imperial Chinese Railways, who will have the most extensive right of control over the revenues and expenditures, and who will for that purpose appoint delegates, especially an operating manager, a cashier, a chief accountant and a chief interpreter to represent the Imperial Chinese Railway Company with the European engineers, in order to exercise effectively this right of control. The station-masters will be appointed by agreement between the operating manager and the Chinese Director.

The salaries of these delegates will be paid out of operating expenses, and the Chinese Director will sign jointly with the Engineer-in-Chief all documents of account without exception.

If any employee engaged in the operation by the Compagnie Générale de Chemins de Fer et de Tramways en Chine, whatever his nationality, is found guilty of bad conduct, insubordination, ill-treatment of the Chinese, or disrespect towards the Chinese authorities, the Chinese Railway Company need only give

notice of it to the Compagnie Générale de Chemins de Fer et de Tramways en Chine in order that it may immediately discharge the guilty person.

The Chinese staff as deemed necessary for operating will be chosen and appointed by the Chinese Director, who will offer them for approval by the Engineer-in-Chief and place them under his orders.

The acquisition of all new material, and new work of improvement or extension 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 operating account. The orders required for the repair and upkeep of the line will so far as possible be given to the factories and mines under the control of H. E. Sheng Kung Pao, which will have for such orders a right of preference over European factories and mines upon the same prices and terms as though the orders had been given in Europe and delivered in China.

ARTICLE III.—In case of war with any nation whatsoever, 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 Chinese Railways. It will moreover be forbidden to transport anything which might be of a character to injure the Chinese Government. In case the Chinese Government or the local authorities should need trains for important purposes, the Engineer-in-Chief would arrange for such trains in cooperation with the Chinese Director delegated by the Director General of the Imperial Chinese Railway Company. Free tickets may be given only by agreement between the Engineer-in-Chief and the Chinese Director.

ARTICLE IV. From the net profits of operation remaining available after the payment of all operating expenses, the Compagnie Générale de Chemins de Fer et de Tramways en Chine will retain such amounts as are necessary to assure each half-year, at least three months before due-date, the service of the loan contracted by the Chinese Government for the enterprise.

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 Compagnie Générale de Chemins de Fer et de Tramways en Chine or into the hands of the Bank that the latter may have designated, which must turn over a receipt to the Chinese Director, who will notify the Director General of the amounts of these payments.

The bank will make the most favorable conversion into gold of the amounts paid over to it, to be used for the service of the loan; the amount in gold so converted will be communicated to the Director General by the Chinese Director.

Whenever the service of the loan may have been assured by means of the sums thus paid over, 10% of the surplus will be set aside, which will be devoted to the establishment of a reserve fund to make repairs or to rebuild as required in order to assure operation. Such balance as then remains available out of the operating revenues will then be paid over to the Chinese Railway Company. Whenever the loan to which the present Contract relates shall have been repaid

in full according to the conditions stipulated, the Compagnie Générale de Chemins de Fer et de Tramways en Chine or its delegates must hand over the entire line, with all its materials and appurtenances, in good condition and in regular operation, to the Imperial Chinese Railway Company, which will operate it, itself.

ARTICLE V.-The term of the present Operating Contract is fixed at thirty years, beginning with the date of the signature of the present Contract. This term, however, would be prolonged as of course (i.e., de plein droit) in the event that the loans should not at that time have been completely amortized.

That prolongation would continue so long as such complete amortization had not been effected. The present Operating Contract would be cancelled from the date of the full repayment of the loan, even before the due period.

ARTICLE VI.-During the whole period of the operation of the line by the Belgian Company, the Imperial Chinese Railway Company grants to it a participation of 20% in the net profits of the railway from Kaifengfu to Honanfu (after deducting the costs of operation, the amounts necessary for the service of interest and amortization of the loan, and the reserve funds) as determined by mutual agreement after each accounting period.

If the Chinese Posts desire to dispatch letters by this line, the Company must prepare a car for the purpose, and all the stations along the line must have offices for the postal service, arranged in conformity with the regulations of the Chinese Posts. The nation to which the Compagnie Générale de Chemins de Fer et de Tramways en Chine belongs may not establish along the line any postal service of its own.

ARTICLE VII.-In case of conflict or difference between the Chinese Government or the Imperial Chinese Railway Company and the Compagnie Générale de Chemins de Fer et de Tramways en Chine, these conflicts or differences will be adjusted as provided in Article XXV of the Loan Contract.

ARTICLE VIII.—If the operating revenues should not be sufficient to cover the costs, the Chinese Railway Company would have to furnish the funds necessary to insure the regular operating service under normal conditions. These supplementary funds must be considered as advances, and so soon as the receipts show an available balance, after the payment of all costs, they should be at once repaid.

ARTICLE IX. The materials and all supplies that the Compagnie Générale de Chemins de Fer et de Tramways en Chine may need for the operation and for the upkeep and repair of the line will be exempted from all customs and likin duties.

ARTICLE X.-The present Contract is drawn up in triplicate, one copy for the Chinese Government, one for the Chinese Railway Company, and the third for the Compagnie Générale de Chemins de Fer et de Tramways en Chine. In case of doubt or difference, the French text alone will be authoritative for its interpretation.

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 must give notice thereof by official dispatch to the representative