of any person or persons undertaking to underwrite for the whole amount of the Loan, then there will be no necessity for soliciting subscriptions from the public.

9. Any one desiring to sell the Bonds on behalf of the Board must first register his name at the Agent's office.

10. On the closing of the applications, if the sum applied for just cover or be under that required, then the full number of Bonds shall be allotted to those who applied for that number. This rule excludes the underwriters. 11. But if the number of Bonds applied for be over that required to be raised, then the Bonds will be allotted proportionately to those who applied for them. The allotment, which depends upon the total number of Bonds applied for, can only be settled after the time of closing. This rule excludes the underwriters.

12. Interest on payments made after the date of issuing, but before the date of closing, shall commence from the day following that on which such payments are made.

13. Payments are to be accepted in dollars of currency, and if it is paid with silver in taels, the taels must be reduced into dollars according to the local rate of exchange on that date.

14. The Loan fund shall be deposited at the Chiao-tung Bank, and an account of it kept for report to the Committee in charge who will draw on the funds from time to time to meet expenditures, the balance to be treated under the Bank regulations governing ordinary Cash deposits.

15. The Interest of the Loan will be payable in two periods each year, i.e., on the first day of the third and the ninth moon and may be drawn any time after it becomes due, but if not drawn within three months after it is due, it will be carried forward to the next period. The first payment of the interest (depending upon the different dates when Loan funds are paid), shall be reckoned by the number of days.

16. When Interest becomes due, Bondholders may receive or draw money in dollars from the Agents.

17. All payments of Interest will be paid with dollars of currency. 18. In the payment of Interest, Coupons are the only proof required. When Bondholders receive or draw their Interest and Extra Dividend they must bring the Coupons and show them to the Agents. After being examined and paid, the Coupons shall be stamped and returned to their owners. 19.—The amount of Extra Dividend for each Bond will be paid once a year on the first day of the 9th moon together with the Interest payable on that date. The Extra Dividend for the 1st year will commence from the 1st January, 1909 (Western Calendar), and distributed the following year on the 1st day of the 9th moon (Chinese Calendar).

20. The period of the Loan is for 12 years. Commencing from the date when the Loan begins down to the end of the 7th year, interest only is to be paid but not the Loan Capital. The Loan Capital will be repaid from the 8th year down to the end of the 12th year. The total number of Bonds. to be redeemed each year will be advertised 6 months in advance.

21. Two months previous to the date of annual repayment of Loan Capital, the drawing of the Bond numbers will take place. 100,000 tickets consecutively numbered will be put together into the same receiver and separately drawn according to the amount of repayment required for that year. For instance if $1,000,000 (One Million Dollars) are to be repaid, 10,000 (Ten Thousand) tickets must be drawn out. The Bonds will, when drawn, be paid off.

22. The drawn numbers will be published next day in the newspapers and in due time the Bondholders, on surrendering their Bonds to their respective agents, will be paid in dollars.

23.-Bondholders, on their Bond numbers being drawn, must take all their Bonds and interest Coupons when going to their respective agents for money, in order that these may be cancelled after the money is paid and sent to the Committee in charge for inspection.

24.—If after three years from the due date of payment, owners of drawn Bonds fail to present their Bonds to the Agent for payment, the said Bonds will be declared nil and void.

25. Agents who, on behalf of the Board, sell the Bonds at or exceeding a value of $10,000 (Ten Thousand Dollars) will be given a discount of 12%, at or above $100,000 (One Hundred Thousand Dollars) 1%, at or above $1,000,000 (One Million Dollars) 12%, and at or above $3,000,000 (Three Million Dollars) 2%.

26.-Agents undertaking to contract for the loan for a sum of $10,000 (Ten Thousand Dollars) or over will be given a discount of 1%, at or above $100,000 (One Hundred Thousand Dollars) 12%, at or above $500,000 (Five Hundred Thousand Dollars) 2%, at or above $1,000,000 (One Million Dollars) 22%.

27. Those who sell Bonds to the total value of $125,000 (One Hundred and Twenty Five Thousand Dollars) will, besides their discount, be given rewards for services rendered (by memorial), and special rewards will be given (by memorial) to those who sell Bonds to the total value of $500,000 (Five Hundred Thousand Dollars).

28. The Loan Bonds are to be purchased by the free will of the people and must not be given to the local officials to force the rich gentry to buy against their will.

Note.

In connection with this loan see also the Peking-Hankow Railway loan agreement of June 26, 1898 (No. 1898/13, ante); and the loan agreement between the Board of Communications and the Hongkong & Shanghai Bank and the Banque de l'Indo-Chine, October 8, 1908 (No. 1908/12, ante).

It is understood that by an agreement with the Chiao-tung Bank (ie., the Bank of Communications) under date of August 1, 1910-no text of which is available-Messrs. Dunn, Fischer & Company, of London, purchased bonds of this redemption loan to the nominal value of $5,000,000: these bonds were thereafter floated by the company, jointly with the London City and Midland Bank, as indicated by the following extracts from their prospectus of September 24, 1910:

"The List will open on Monday, the 26th day of September, 1910, and close on or before Wednesday, the 28th day of September, 1910.

IMPERIAL CHINESE GOVERNMENT 7 PER CENT. PEKING-HANKOW RAILWAY REDEMPTION LOAN.

(ISSUED BY THE BOARD OF POSTS AND COMMUNICATIONS.)

"Entitled in addition to the fixed interest of 7 per cent. to a participation in the profits resulting from the operation of the Railway, as mentioned herein.

66

The total amount of the first issue of the Loan is $10,000,000 (Peking Currency), but in respect of the $5,000,000 of Bonds (equal to £450,000 as above), the Board of Posts and Communications of the Imperial Chinese Government has undertaken to guarantee the_payment of Capital and Interest in sterling. This undertaking will be endorsed on every Bond. The Bonds are to Bearer in denominations of $100 (Peking Currency) each, the equivalent being fixed at £9 (sterling). They are redeemable at par by annual drawings during the period commencing in 1916 and ending in 1920. The number of Bonds to be redeemed each year will be advertised six months in advance. The Principal and Interest of the Bonds are payable free from all Chinese Taxes and Imposts, present or future.

The Coupons are payable at the Chiao-tung Bank in Peking, half-yearly, on the 1st day of the 3rd and 9th Moon of the Chinese Calendar. The extra dividend (if any) resulting from the profits of operation of the railway will be paid on the 1st day of the 9th Moon of each year.

"THE LONDON CITY & MIDLAND BANK, LIMITED,

AND

Messrs. DUNN, FISCHER & COMPANY

are prepared to receive applications for the purchase of the above-mentioned Bond Certificates of £99 each issued by the London City & Midland Executor and Trustee Company, Ltd., representing £450,000 (Sterling) 7 per cent. Imperial Chinese Government Bonds

AT THE PRICE OF £108 PER CENT.

(Being £106 18s. 5d. for every Bond Certificate of £99), payable as follows:

£10 0 0 on Application.

"The following is a copy of a letter, addressed to Messrs. Dunn, Fischer, and Co., from His Excellency the Minister for China in London:

"Chinese Legation, London,

August 31st, 1910.

"Messrs. DUNN, FISCHER & CO.,

41, Threadneedle Street, London, E.C.

"Gentlemen,

"IMPERIAL CHINESE GOVERNMENT 7 PER CENT. PEKING-HANKOW RAILWAY REDEMPTION LOAN.

"In reply to your letters of the 26th, 27th, and 29th instant, I have to acquaint you that I have received a telegram from the Board of Posts and Communications in Peking instructing me to hand to you:

"I. Copy of the Agreement entered into by you with Lee Fong, the appointed Agent of the Chiao-tung Bank, for the sale to you of 50,000 Bonds of $100 each (Peking Currency), equivalent to £9 each, being part of the above-mentioned loan.

2. Power of Attorney by the Board of Posts and Communications authorizing

the said Lee Fong to enter into the above-mentioned Agreement.

44

3. Copy of the Imperial Edict sanctioning the issue of the Loan, and translation of the same.

"4. Copy of the Prospectus of issue, and translation of the same.

"I further beg to inform you that the Board of Posts and Communications of the Imperial Chinese Government has undertaken to guarantee the repayment of the Capi

tal of the aforementioned 50,000 Bonds of $100 each (Peking Currency) in sterling at the rate of nine pounds (£9) for every Bond and also to guarantee the payment of Interest thereon at the fixed value of Six Shillings and Three and Six-Tenths Pence (6. 3 6-10d.) for every Coupon, payable half-yearly, free from all Chinese Taxes and Ìmposts, present or future.

"I am, Gentlemen, Yours faithfully,
" (Signed)

LI-CHING-FONG.

"The following is an extract from the Prospectus issued by the Board of Posts and Communications of the Imperial Chinese Government in respect of these Bonds and relating to the participation in the profits of the operation of the railway to which the Bondholders are entitled, viz.:

"In the event of the Chinese Government deriving a profit from the earnings of the Peking-Hankow Railway, the Bond-holders, besides the yearly interest on the loan, will also participate in this profit to be called extra dividend."

"The Capital of the line amounts to 58,000,000 Taels. [Approximately equivalent of £7,400,000 sterling.] If in any year the Government Share of the profit should amount to 4,000,000 Taels, the Board will then reserve one-quarter of this sum, i.e., 1,000,000 Taels, for distribution as extra dividend, which will be divided proprotionately according to the whole Capital of 58,000,000 Taels. The Board will memorialize the Throne and publish annually the amount of profit, one-quarter of which will be made available for extra dividends. This privilege of participating in the extra dividends does not, however, confer upon Bondholders, the right to interfere with or examine the accounts."

"The Peking-Hankow Railway has a total length of approximately 760 miles. "The gross earnings and the Government's share of the net profits of the Railway are officially reported by the Chiao-tung Bank of Peking as follows:

1908 1909

Gross Earnings.
$11,034,610 = £965,528
$11,114,614 = £972,528

Government's Share of
the Net Profits.
$3,063,723 £268,075
$3,645,797 £319,007

=

In respect of the year 1910, the Bonds will only entitle the Holder to a pro rata share of the profits (if any) of the Railway representing the period from the date of payment for the Bonds to the 31st December, 1910. Such pro rata share (if any) will be paid on the 1st day of the Ninth Moon, 1911 (22nd October, 1911), together with the fixed interest then due."

The Yokohama Specie Bank also purchased these bonds to the nominal value of $2,500,000, by an agreement with the Bank of Communications, dated August 15, 1910, of which the following is a summary:

Agreement for Purchase of Bonds of Peking-Hankow Redemption Loan by
Yokohama Specie Bank, August 15, 1910.

"1.-The Yokohama Specie Bank to purchase 25,000 bonds, each of the nominal value of 100 current silver dollars, at the agreed equivalent of 88 yen: repayment of principal and payment of interest to be reckoned in yen.

2.-Bonds to bear 7% interest, payable semi-annually to the Shanghai Branch of the Yokohama Specie Bank.

"3.-Interest coupons to be met by the Shanghai Branch of the Bank of Communications on the 1st of the 3rd and 9th moons, Chinese calendar, each year.

4.-Interest for the first period payable upon receipt of principal; thereafter, Y. 3.08 to be paid as interest, each half year, upon each bond.

"5.-The Edict of October 8th, 1908, having provided a term of 12 years, with interest payable semi-annually, the first of the 24 interest dates is to be taken as October 8th, 1908 amortization to begin with the 15th period. Three interest periods having elapsed, the amortization of principal will begin from the 15th period but will be decreased to allow for the interest periods already elapsed.

"6.-Delivery of the 25,000 bonds by the Bank of Communications, and payment of Y. 2,200.000 therefor by the Yokohama Specie Bank, to be effected in Shanghai by the two parties, in five equal weekly instalments, beginning September 5th, 1910.

7.-Payments of principal and of interest, and repayments of principal, all to be made at the rate of exchange for the day for yen as posted at the Shanghai Branch of the Yokohama Specie Bank-or, in case of difference, at the rate posted by the other banks.

"8.-Issue price 971⁄2, discount to be reckoned after the paying in of the entire proceeds of the bonds.

"9.-Amortization to begin February 3rd, 1916, and to be completed February 7th, 1921, 5000 of the bonds purchased by the Yokohama Specie Bank being drawn by lot and redeemed each year during that period.

"10.-From the date of payment for the bonds, profits of the Peking-Hankow Railway to be set aside as security for them.

"11.-The Board of Posts and Communications to confirm officially the provisions of the Agreement in regard to the payments of interest and amortization. The Agreement to be formally cancelled after redemption of the bonds.

"12.-These Bonds to be subject to the original Regulations concerning the Domestic Loan Bonds, in addition to the terms of this Agreement."

Other bonds of this redemption loan were subsequently used as the security for a loan of £150,000 from The City Safe Deposit and Agency Company, Limited, of London, under the following agreement of December 11, 1912

Agreement for Loan upon Bonds of Peking-Hankow Redemption Loan by City Safe Deposit and Agency Company, December 11, 1912.

"THIS AGREEMENT made the eleventh day of December, one thousand nine hundred and twelve, BETWEEN The Chinese Republic acting by His Excellency Lew Yuk Lin its officially accredited representative in London and duly authorised to enter into this Agreement on its behalf (hereinafter called the Republic') of the one part and The City Safe Deposit and Agency Company, Limited, a company incorporated under the Companies Acts 1862 to 1890 whose registered office is situated at No. 13 Throgmorton Avenue in the City of London, England (hereinafter called 'the Company') of the other part WHEREAS it has been arranged that the Company shall purchase from the Republic Treasury Bills of the Republic for the amount of one hundred and fifty thousand pounds AND WHEREAS it is one of the terms of the said arrangement that the said bills shall be secured as hereinafter provided NOW IT IS AGREED as follows:"1. THE Republic shall sell and the Company shall purchase at par one hundred and fifty Treasury Bills of the Republic each for the sum of one thousand pounds payable at the Head Office for the time being in London, England (now No. 38 Bishopsgate in the said City of London) of the Chartered Bank of India, Australia and China (hereinafter called the Bank'). The said Bills shall be a direct obligation of the Republic and shall be signed by the said representative in London and the Republic shall give to the said representative due instructions and authority so to do.

"2. THE Republic shall pay to the Company as the consideration to the Company for entering into this Agreement the sum of Three thousand seven hundred and fifty pounds to be paid to the Company on the execution hereof.

"3. FORTHWITH after delivery to the Company in London of the said Bills signed as provided in Clause 1 hereof and of evidence to the satisfaction of the Company that the bonds mentioned in Clause 4 hereof have been deposited as thereby provided and after the execution by the representative of the Republic to the satisfaction of the Company of this Agreement, the sum of One Hundred and fifty_thousand pounds shall be paid by the Company to the Republic in London, but the Company shall be entitled to deduct thereout the said sum of three thousand seven hundred and fifty pounds and a sum of ten thousand five hundred pounds being seven per cent discount on one hundred and fifty thousand pounds paying to the Republic the balance of one hundred and thirty-five thousand seven hundred and fifty pounds.

"4. THE payment of the said Bills to the holders for the time being thereof shall be secured by the deposit with the bank in the name and to the order of the Company as trustees of bonds of the Chinese Government Seven per cent Peking-Hankow Railway Redemption Loan of the value at par of two million one hundred and sixty thousand Peking dollars hereinafter called the said Bonds.'

"5. EACH of the said Bonds shall be signed and sealed by the Board of Posts and Communications of the Republic and shall bear a statement certified by the signature and seal of the Board to the effect that the value of one hundred dollars is nine Pounds English sterling and that the said Bonds are payable in Peking in English sterling at that rate of exchange both as to principal and interest.

"6. THE Bonds shall be deposited in the first instance at the Branch office of the Bank in Peking and/or Tientsin in the name and to the order of the Company.

"7. THE Bonds when so deposited shall be held in trust to secure the payment to the holders for the time being and from time to time of the Bills aforesaid of the principal moneys and interest payable in respect of the said Bills.

"8. THE principal moneys received by the Bank in respect of the said Bonds whether upon the redemption of any of the said Bonds according to their tenor or otherwise as well as any interest from time to time received by the Bank in respect of the said Bonds, shall be held by the Bank in the name and to the order of the Company and together with all moneys arising under the last preceding clause hereof shall be applicable by the Company in or towards paying off all of the said Bills pari passu and the surplus (if any) shall be paid to the Republic.

"9. THE Republic hereby grant to the Company an option of purchasing from the Republic the said Bonds at the price of ninety-seven dollars for every Bond of one hundred dollars, and at a proportionate price in respect of Bonds for amounts greater or less than one hundred dollars, which option may be exercised at any time and from time to time by notice in writing to the Representative of the Republic in London specify