of the net receipts authorises the Pekin Syndicate to convert the amount into gold which shall be done on the most favorable terms in the interest of the Chinese Government and the Imperial Chinese Railway Administration in order to assure the service of the loan at the next half-yearly period of payment. The remittances to the head office of the Pekin Syndicate in London shall continue until the sum necessary for the whole service of the loan at the next half-yearly payment has been realised in gold and so that the service of the loan is assured three months at least before the half-yearly payment falls due.

The bank in which such sums are deposited will allow the best interest obtainable for the benefit of the Imperial Chinese Railway Administration. The account in which said sums stand will be debited twenty days in advance with all the payments falling due at any half-yearly period as provided for in this Contract whether for interest repayment of capital cost of transport or commission.

9. In order to assure more fully the guarantee now given for the loan, the Imperial Chinese Railway Administration creates in favor of the bonds a first mortgage over the said section of railway line its permanent way rolling-stock and earnings. This special hypothecation is made to and accepted by the Pekin Syndicate for the benefit of the bondholders.

In case the Imperial Chinese Railway Administration shall fail to carry out the engagements entered into by this Contract the Pekin Syndicate can exercise in respect to the said railway and property all the rights and powers which they are entitled to exercise resulting from this special hypothecation.

10. The foregoing stipulations do not militate against the responsibility of the Chinese Government in regard to this loan as specified in Article 7. The Chinese Government will devise means to provide the amount in gold necessary to supply the deficiency in case the sums accruing from the net earnings of the said section of railway and paid over by the Chinese Railway Administration are insufficient, after conversion into gold, to provide at least three months ahead for the payment falling due at the next half-yearly period.

In such case the Chinese Government will on demand place at the disposal of the Pekin Syndicate fourteen days in advance of the due date, either in gold or value in some other form sufficient to produce in gold, the sum which the Syndicate may have notified as being necessary to meet the service of the loan.

11. From the monies thus received from the Imperial Chinese Railway Administration or from the monies paid over by the Chinese Government the Pekin Syndicate shall duly set aside beforehand the sums necessary for the next service of the loan on the basis of the requirements of the last preceding half

year.

12. The Chinese Government will pay to the Pekin Syndicate or to the bank charged with the service of the loan a commission of one-fourth of 1 per cent. on the amount of interest coupons paid that is £25 on each £10,000 and the like commission on all the bonds drawn for payment or repaid in anticipation of the due date. The amount of this commission will be taken from surplus earnings of the railway if there are any, and in case these are insufficient it will then be paid by the Chinese Government.

13.—The Chinese Government binds itself to respect and cause to be respected the privileges attaching to the bonds as stipulated for in the present convention and to maintain the bonds themselves the interest coupons and operations incident to the service of the loan free from every tax and impost of whatsoever nature.

14.-Coupons not presented for payment within five years from the date when they fall due will be forfeited for the benefit of the Chinese Government. In the case of drawn bonds the term within which payment may be claimed is thirty years. In the case of a deceased bondholder the right will pass to his heirs executors etc. in conformity with the law of his own nationality. Payment of the coupons and repayment of bonds will be made whether in time of war or peace and irrespective of whether the holder belongs to a hostile or friendly State.

If bonds are lost stolen or destroyed the Chinese Government upon satisfactory proof of the facts of the loss and the title of the claimant will authorise the Pekin Syndicate to issue fresh bonds to replace those lost, at the expense of the Syndicate.

15. The Chinese Government through its Representative in London will take the necessary steps and furnish the necessary documents so as to enable the bonds to be officially quoted on the London Stock Exchange.

16. The price of all land taken up for the railway having been included in the loan, the Syndicate will in the first place hand over the title-deeds to the Imperial Chinese Railway Administration so that a list may be made which after being stamped by the Magistrates of the several districts concerned, will be retained for record. The Railway Administration will then return the deeds to the Syndicate for custody, having first impressed on each a stamp indicating that they are not to be sold pledged or mortgaged. When the term has expired or when the loan is fully repaid, the Syndicate will thereupon hand over to the Railway Administration all the original title-deeds to be held by them as owners of the property. During the continuance of the term the Syndicate shall not assign the deeds to others whether by way of sale, mortgage or pledge.

17. This Agreement and the rights under it being made with the Pekin Syndicate which is of British nationality, the said Syndicate besides conforming as hereby required, with the several articles of the Agreement shall not either openly or secretly alienate the said rights to persons of another nationality and shall not substitute persons of another nationality in the management of the railway affairs. A breach of this stipulation will entitle the Imperial Chinese Railway Administration to take the management out of the hands of the Syndicate and entrust it to another company, and in that case the Syndicate shall have no claim for compensation.

The foregoing places no restriction on the holding of shares in the Pekin Syndicate by persons of another nationality nor on the holding of bonds of this loan, both of which may be freely bought and sold on the market at the convenience of the holders.

18. In the accounts of this section there has been included an item for preliminary survey expenses, as also the cost of partial surveys of the second

section which have already been made by the Syndicate, the result of which will be submitted to the Director-General.

19. All plant and materials necessary for the repair and working of the line will be purchased by the Syndicate as agents, but in placing such orders the Syndicate will do their best to get the most favorable terms. A list of articles required shall be submitted to the Director-General, for approval, before the order is given.

It is understood that articles which China herself can manufacture, if quality and price are the same are not to be ordered from abroad. The workshops and mines controlled by the Director-General Sheng ought more especially to have the preference in supply of such articles provided that in quality and price the articles are equivalent to what can be imported from abroad. By price is meant the cost in the foreign country plus freight and insurance. All materials imported from abroad shall be exempt from customs duty and from likin in transit to the interior.

20. In case of differences of opinion arising between the Pekin Syndicate and the Chinese Government or the Imperial Chinese Railway Administration the matter in dispute shall be discussed and settled between a member of the Wai Wu Pu and the British Minister. If these cannot agree the Wai Wu Pu and the British Minister will appoint an Arbitrator whose decision will be final.

21. This Agreement is executed in duplicate, one copy to be kept by the Imperial Chinese Railway Administration and the other by the Pekin Syndicate. In case of doubt or ambiguity of meaning between the two texts the English version shall be deemed the standard. This contract shall be submitted to the Throne by the proper authority who will request ratification. After ratification the Wai Wu Pu will officially communicate the fact to the British Minister at Peking for record and so that the Syndicate may conform to the articles hereby agreed upon.

All the above must be done within one month from date of signature.
Signed and sealed at Peking the 3rd July 1905.

Working agreement between H. E. Sheng Director-General of Railways being thereto specially authorized by the Chinese Government and G. Jamieson, C. M. G., Agent-General of the Pekin Syndicate Limited.

1.-The Imperial Chinese Railway Administration under the authority of the Imperial Government authorises the Pekin Syndicate, which will appoint a General Manager for the purpose, to manage, administer, and work the TaokowChinghua section of railway for profit on behalf of the said Railway Administration. Notice of the appointment of the General Manager shall be communicated beforehand to the Director-General for his information, and confirmation.

2. As soon as this section of the line is completed the Pekin Syndicate will report to the Director-General, and after being definitely taken over by

him the Pekin Syndicate will take charge of it for working. The section is to be completely provided beforehand with all the rolling-stock necessary for working as also with a supply of tools furniture and funds for working expenses. The Pekin Syndicate or its delegate in conformity with the stipulation in Article 1 will organize the service. It will have authority to engage or dismiss officials and servants, and as to their salaries, a scale thereof will be drawn up beforehand for submission to the Director-General, and subsequent alterations will also be submitted for his approval. The Syndicate shall also purchase all articles necessary for the maintenance and repair of the line, shall fix rates for goods and passengers in accordance with the railway regulations on other lines, shall receive all the earnings and pay all the working expenses and expenses of the Imperial Chinese Railway Administration relative to this line of railway. All the above working details must be submitted beforehand by the Pekin Syndicate or its delegate to the Director-General of Railways and settled in consultation.

The General Administration shall have the fullest power to examine the details of income and expenditure and to appoint a Representative a Cashier Accountant and an Interpreter who will be associated with the European staff in order to exercise the above-mentioned power of examination. The salaries of the Representative and his associates above-mentioned will be paid from the office of the Tsechow-Taokow Railway.

The Representative shall countersign all vouchers for payment. Accounts will be rendered monthly to the General Administration in English and Chinese one copy each and signed by the respective English and Chinese officials.

The General Administration reserves the right to cause the dismissal of any employee whatever his nationality including the General Manager who does not perform his work satisfactorily or is guilty of misconduct insubordination or disrespect towards the Chinese authorities, and this should be mentioned in the contracts at the time of engagement of the employee.||

All Chinese Employees whether for repairs of line or otherwise will be selected by the Representative of the Director-General who will place them under the executive orders of the General Manager. No Chinese officials or servants can be engaged without the sanction of the Director-General. The expenses of the Shanghai Imperial Railway Administration in respect to this line shall be paid in the same way as for the Luhan Railway. After this section is finished and the working has begun, if additional rolling-stock or plant is required or if improvement or extensions of the line or stations become necessary, the funds for the same shall be provided by the office of the Tsechow-Taokow Railway. As regards orders for the supply of materials necessary for maintaining and repairing the line means should be devised to place the same at Chinese workshops. It is understood that the mines and workshops controlled by H. E. Sheng shall have the preference on the conditions and at the price at which the articles could be purchased abroad. By price is meant laying down price in China.

3. In the event of military operations whether due to foreign war or internal disturbance the railway will give the preference to Chinese GovernSee Note 2 to this document, post, p. 516.