suit the progress of construction of the Railway by orders on the Hongkong and Shanghai Banking Corporation and the Deutsch-Asiatische Bank respectively, signed by the Managing Director of the Railway, or, in his absence, by his duly authorized representative, and accompanied by his certificates stating the nature and cost of the work to be paid for.

Such amounts as may be required in China may at any time be transferred by the Managing Director, at his discretion, to Shanghai, the transfers being effected through the Hongkong and Shanghai Banking Corporation and the Deutsch-Asiatische Bank respectively, and the transferred funds shall remain on deposit with those banks until required for railway purposes.

The accounts of the railway will be kept in Chinese and English in accordance with accepted modern methods, and will be supported by all necessary vouchers. During the period of construction the said accounts and vouchers will be open at any time to the inspection of an Auditor, appointed and paid by the Syndicate, whose duties will be confined to certifying to the Syndicate to the due expenditure of the loan funds in accordance with the provisions of Article 3 of this agreement, and to certifying to a monthly statement of the foreign materials purchased by the railway administration under the provisions of Article 18 hereinafter. He will arrange with the Railway Administration that his inspections shall take place on such dates and at such intervals as will enable him to efficiently carry out his duties as herein provided. The Railway Administration will publish annually upon the close of its financial year, a report, in the Chinese and English languages, showing the working accounts and traffic receipts of the Railway, which report shall be procurable by the public on application.

ARTICLE XV.-If during the time of construction the net proceeds of the present loan with accrued interest should, after deduction of the sums necessary for the service of interest on the loan, not be sufficient to complete the construction and equipment of the railway line, the amount of deficiency shall be provided, in the first place, from such Chinese funds as may be available so as to permit of the uninterrupted continuance of the work of construction, any balance then uncovered being supplemented by a further foreign loan for the amount required, to be issued by the Syndicate.† The interest and other conditions of such supplementary loan will be the same as in the present Agreement, and the price will be determined as in the case of the second and subsequent issues of the present loan. If after the completion of the line there should be a balance at credit of the railway account, such unused balance will be transferred to the credit of the interest reserve fund hereinafter mentioned in Article 21 as a provision for payments for which the Imperial Chinese Government is responsible under this Agreement. ARTICLE XVI.-If, before the publication of the prospectus for the issue of the loan, any political or financial crises should take place by which the market and the prices of existing Chinese Government stocks are so affected as to render, in the opinion of the Syndicate, the successful issue of the loan impossible on the terms herein named, the Syndicate shall be granted further extension of time, but not beyond 18 months from the date of this Agreement, for the performance of their contract. If within this time limit the first series of the loan shall not + See the supplementary loan agreement of September 28, 1910 (No. 1910/4, post).

have been issued, then this contract shall become null and void, and any advances made by the Syndicate under the provisions of Article 3 shall be repaid by the Chinese Government with accrued interest, but without any other compensation or remuneration whatsoever.

ARTICLE XVII.-The construction and control of the railway will be entirely vested in the Imperial Chinese Government. For the work of construction of the Northern and Southern sections respectively the Imperial Chinese Government will select and appoint fully qualified German and British Chief Engineers, acceptable to the Syndicate. In the event of the Syndicate objecting to any proposed appointment, the cause of such objection shall be definitely stated. These two Chief Engineeers shall be under the orders of the Managing Director, or, in his absence, his duly authorized representative, and will carry out all the wishes of the Railway administration with regard to the plan and construction of the line. In their general conduct they shall pay all due respect to the Director General and the Managing Director. The terms of their respective agreements will be arranged by the Director General at his sole authority.

Whenever appointments are to be made or functions are to be defined of the technical employés on the railway staff as well as in the case of their dismissal, the Managing Director or, in his absence, his duly appointed representative, will act in consultation with the Chief Engineer of the section concerned and, in the case of disagreement, the matter will be referred to the Director General whose decision shall be final.

After completion of construction the Imperial Chinese Government will administer both sections as one undivided Government Railway and will appoint an Engineer-in-Chief,-who during the period of the loan shall be a European,— without reference to the Syndicate.

ARTICLE XVIII.-For the Northern and Southern sections of the Railway respectively the Deutsch-Asiatische Bank and the Chinese Central Railways Limited will act as Agents of the Railway Administration during construction for the purchase of all materials, plant and goods required to be imported from abroad. For all important purchases of such materials, tenders shall be called for by the Managing Director; in the case of all tenders, indents and orders for the importation of goods and materials from abroad, the said Agents shall purchase the materials required on the terms most advantageous to the Railway, and shall charge the original net cost of the same plus a commission of five per cent. It is understood that no orders for materials shall be executed or any expenditure incurred without due authorization by the Managing Director. In return for payment of commission as above stated the Deutsch-Asiatische Bank and the Chinese Central Railways Limited as Agents within their respective sections, shall be prepared to superintend the purchase of all foreign materials required for the construction and equipment of the Railway, which shall be purchased in the open market at the lowest rate obtainable, it being understood that all such materials shall be of good and satisfactory quality, and that the Railway Administration shall have the right to reject on arrival in China materials which do not come up to specifications. At equal rates and qualities goods of German and British manufacture shall be given preference over other goods of foreign

origin for the Northern and Southern sections respectively. The Railway Administration reserves the right, while paying the above stipulated commission to the said Agents in respect of all purchases of foreign materials, to avail itself of the services of other agents in China or abroad should it see fit to do so. Original invoices and inspector's certificates are to be submitted to the Managing Director; all return commissions and rebates of every description shall be credited to the Railway; and all purchases made by the Agents on behalf of the Railway shall be supported by manufacturer's original invoices and inspector's certificates.

No commission shall be paid to the Agents except as above provided; but it is understood that the Railway Administration shall provide out of the Railway funds for the remuneration of consulting engineeers whenever their services are engaged.

With a view to the encouragement of Chinese industries, preference will be given, at equal prices and qualities, over British, German or other foreign goods, to Chinese materials and goods manufactured in China. No commission will be paid on purchases of such materials and goods.

It is understood and agreed that after the construction of the line is completed, the Deutsch-Asiatische Bank and the Chinese Central Railways Limited, within their respective sections, will be given the preference for such agency business during the currency of the loan for the supply of foreign materials as the Railway Administration may require, on terms to be hereafter mutually agreed upon.

ARTICLE XIX.-Branch lines in connection with the Railway line mentioned in this agreement that may appear profitable or necessary later on shall be built by the Imperial Chinese Government with funds at their disposal from Chinese sources, and if foreign capital is required preference will be given to the Syndicate.

ARTICLE XX.-By the preliminary agreement under Imperial sanction a participation of 20 per cent. of the net profits of the Railway had been promised to the Syndicate in 'remuneration for their general responsibility and services. In commutation of this participation in net profits the Syndicate is granted the right to retain £200,000 out of the first issue of this loan, in instalments and on dates based on, and in proportion to, the terms of subscription to the loan as stated in the prospectus. No further payment in respect of commutation of profits will be allowed on any subsequent series of the loan, or on any supplementary loan.

ARTICLE XXI.-After payment of interest and repayment of principal of the loan for any current year, the Railway Administration will deposit with the Deutsch-Asiatische Bank and the Hongkong and Shanghai Banking Corporation in Shanghai or Tientsin any surplus of the net revenue of the railway line for that year up to the amount required to pay the following year's instalments of interest on the loan; the rate of interest on the deposit being arranged with the Banks from time to time with due regard to the conditions of the market.

ARTICLE XXII.-The Deutsch-Asiatische Bank and the Chinese Central Railways Limited may, subject to all their obligations under this agreement, transfer or delegate all or any of their rights, powers and discretions thereunder to any German or British Company, Directors, or Agents with power of further

transfer, and sub-delegation; such transfer, sub-transfer, delegation or subdelegation to be subject to the approval of the Director General.

ARTICLE XXIII.—This Agreement is signed under authority of an Imperial Edict dated this 10th day of the 12th Moon of the 33rd year of Kuang Hsu, corresponding to the 13th day of January, 1908, Western Calendar, which has been officially communicated to the ministers of Great Britain and Germany in Peking by the Wai-wu Pu.

ARTICLE XXIV.-Five sets of this Agreement are executed in English and Chinese, three sets to be retained by the Imperial Chinese Government and two by the Syndicate.

In the event of any doubt arising regarding the interpretation of the Contract the English text shall rule.

Signed at Peking by the contracting parties this 10th day of the 12th Moon of the 33rd year of Kuang Hsu, corresponding to the 13th day of January, 1908, Western Calendar.

[Seal of Waiwupu.]

LIANG TUNYEN.

H. CORDES,

For Deutsch-Asiatische Bank.

J. O. P. BLAND,

For Chinese Central Railways Limited,
Their Representative.

TIENTSIN-PUKOU RAILWAY LOAN. £5,000,000 AT 5%, 30 YEARS.

Schedule of payments of interest and repayments of principal.

NOTE.-Pending the issue of the final series of this loan in terms of Article 13 of the agreement, the half-yearly interest on the series actually issued shall be calculated pro rata in respect to the amounts of such series on the basis of the present schedule for the total amount of £5,000,000, but it shall be so arranged that the dates of payment of the second and any subsequent series shall coincide with those of the first series, in such way that, when all the series have been issued, the half-yearly service of principal and interest of the loan may be brought into line in respect to dates of payment.