funds required for the service of interest and for commission on this service during the time of construction, the Banks will hold the net proceeds with accrued interest to the order of the Director General, who, in ordering payments of any sums exceeding twenty thousand pounds (£20,000) shall give notice to the Banks ten (10) days before the day on which they are required. Requisitions on the loan funds will be drawn in amounts to 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 authorised 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 efficiently to 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 15.-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 present loan. If after the completion of the line there should be a balance at credit of the Railway Supplementary Loan Account such unused balance will be transferred to the credit of the interest reserve fund hereinafter mentioned in Article 20 as a provision for payments for which the Imperial Chinese Government is responsible under this Agreement.

ARTICLE 16.—If, before the publication of the prospectus for the issue of the loan, any political or financial crisis 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 nine (9) 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 have been issued then this contract shall become null and void.

ARTICLE 17.-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 selection and appointment by the Imperial Chinese Government of fully qualified German and British Chief Engineers, acceptable to the Syndicate, which have already been made, will be continued as heretofore. In the event of the Syndicate objecting to any proposed appointment, the cause of such objection shall be definitely stated. These two Chief Engineers shall be under the orders of the Managing Director, or, in his absence, his duly authorised 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 on his sole authority.

Whenever appointments are to be made or functions are to be defined of the technical employes 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 18-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 (5) per cent. It is understood that no orders for materials shall be executed or any expenditure incurred without due authorisation 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 Administation 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 Inspectors' 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 manufacturers' original invoices and inspectors' 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 Railway funds for the remuneration of consulting engineers 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 19.-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 20-After payment of interest and repayment of principal of the loan for any current year, the Railway Administration will deposit with the Deutsch Asiatiche 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 21.-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 powers of further transfer, and sub-delegation; such transfer, sub-transfer, delegation or sub-delegation to be subject to the approval of the Director General.

ARTICLE 22.-This agreement is signed under authority of an Imperial Edict dated the nineteenth day of the eighth month in the second year of Hsuan Tung, corresponding to the twenty second day of September, 1910, Western Calendar, which has been officially communicated to the Ministers of Great Britain and Germany in Peking by the Waiwupu.

ARTICLE 23.-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 twenty fifth day of the eighth month of the second year of Hsuan Tung, corresponding to the twenty eighth day of September one thousand nine hundred and ten, Western Calendar. For the Deutsch Asiatische Bank,

Year

H. CORDES.

Director General, Tientsin-Pukow Railway,

HSU SHIH CHANG.

For the Chinese Central Railways Limited,

S. F. MAYERS.

Assistant Director General, Tientsin-Pukow Railway.
SHEN YUN PEI.

[Seal of DIRECTOR GENERAL, TIENTSIN-PUKOW RAILWAY.]

TIENTSIN-PUKOW RAILWAY SUPPLEMENTARY LOAN.
£4,800,000 AT 5%: 30 YEARS.

Schedule of Payments of Interest and Repayments of Principal.

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 £4,800,000, 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 service of principal and interest of the loan may be brought into line in respect to dates of payment.