be applied to the various expenditures incident to the operation of the said program.

(c) A statement specifying the nature of the proposed enterprises in Manchuria and showing in what amounts the allotted portion of the proceeds of this loan is to be applied thereto.

2. The program and the two statements above referred to shall be handed to the banks on the date of the signature of this agreement. The banks shall be given a period not exceeding six months from the said date for the consideration and planning of all matters involved and they shall issue this loan to the public as soon as possible after they shall have notified the Board of Finance that they will make the said program and statements the basis for the issue of bonds hereunder.

3. The price of the bonds to the Imperial Chinese Government shall be ninety-five per cent (95%) of their nominal value. Subscriptions will be invited by the banks in China, the United States and Europe on equal conditions, preference being given to the application of the Imperial Chinese Government provided such application be made to the banks not less than four days before the issue of the prospectus to the public. Seven days' notice of the issue of the prospectus will be given by the banks to the Board of Finance.

4. In the event of the Imperial Chinese Government requiring funds immediately for the commencement of any of the undertakings contemplated for Manchuria the banks agree upon the execution of this agreement and so soon as they shall have been furnished with a statement satisfactory to themselves of the nature of such undertaking or undertakings and the amounts to be applied thereto, to hold in America and Europe at the disposal of the Imperial Chinese Government the sum of one million pounds sterling (£1,000,000), and to advance the same, or such portion thereof as may be required, against the order of the Board of Finance.

5. The banks further engage that so soon as they shall have handed to the Board of Finance the notification referred to in section 2 of this article, and prior to the issue of this loan to the public, to hold in America and Europe at the disposal of the Imperial Chinese Government a further sum of one million pounds sterling (£1,000,000), which amount, or such portion thereof as may be required, may be withdrawn for preliminary expenses in connection with currency reform by orders of the Board of Finance as provided by section 5 of Article IX hereunder.

6. The above advances to the aggregate of two million pounds sterling (£2,000,000), or such portion or portions thereof as may, from time to time, have been availed of by the Imperial Chinese Government, shall bear interest at the rate of six per cent (6%) per annum from the date on which such several sums may have been withdrawn by the Board of Finance from the banks, and these advances shall be repaid to the banks, with accrued interest from the first proceeds of this loan when issued, or in any case within eighteen months from the signature of this agreement unless otherwise mutually arranged between the Board of Finance and the banks.

ARTICLE IX.-The net proceeds of the loan shall be placed to the credit of

accounts to be designated respectively as "The Chinese Government Currency Reform Account" and "The Chinese Government Manchurian Development Account" with the American group in New York or such bank or banks in China as from time to time shall be designated by the American group, the International Banking Corporation being now so designated; and with the Hongkong & Shanghai Banking Corporation, the Deutsch-Asiatische Bank and the Banque de l'Indo-Chine, in China, London, Berlin or Paris, as the case may be Payments of the loan proceeds into the credit of these accounts shall be made in the proportions fixed respectively by the statement of expenditures for currency reform and the statement of Manchurian expenditures provided for in Article VIII, section 1, above, in instalments and on dates conforming to the conditions allowed to the subscribers to the loan, and the sums so credited shall be held by the banks above named subject to the order of the Board of Finance.

2. Transfers of loan funds to China in amounts conforming to the Imperial Chinese Government's requirements as specified in the statements of currency reform and Manchurian expenditures respectively, but not exceeding a maximum of three hundred thousand pounds sterling (£300,000) transferred in any one week, will be made through the Shanghai branches of the several banks named in section 1 of this article by the Board of Finance:-and if such transfer be made through more than one of the several banks exchange therefor shall be settled with the transferring banks on the same day. Funds so transferred shall be held by the transferring banks in Shanghai until required to be withdrawn for the purposes specified in the statements of currency reform and Manchurian expenditures, respectively.

3. The banks agree to pay interest upon the funds held by them in America and Europe at the rate of 3 per cent per annum and upon the funds temporarily held by them in China at the banks' rates in Shanghai for current

accounts.

4. The Board of Finance shall, in accordance with the Imperial Chinese Government's requirements, as specified in the statements of currency reform and Manchurian expenditures, respectively, make transfers from the loan funds. held by the banks in China, to the credit of a "currency reform account" and/or "Manchurian development account" with the Shanghai and/or Peking branches of such Chinese bank or banks as the Board of Finance may, from time to time, designate to be its agent or agents for financing the operations contemplated under this agreement.

5. Orders on the banks for such transfers of loan funds held by the banks in China to the Shanghai and/or Peking branches of the designated Chinese bank or banks, shall be signed by the Board of Finance and shall be handed to the banks in Shanghai or Peking three days before the transfers are to be made. Such orders shall be of a form to be stipulated in the statement of expenditures for currency reform and/or the statement of Manchurian expenditures referred to in Article VIII, section 1 above, and shall specify to what item or items of such expenditures the transferred funds are to be applied. Such orders being found correct the banks shall not be entitled to delay the transfer desired and the sum requisitioned shall be immediately transferred to the credit of the "Currency

reform account and/or the Manchurian development account" with the designated Chinese bank or banks.

6. In case the Board of Finance should desire to withdraw or transfer funds held by the banks in America or Europe to make gold payments abroad for expenditures contemplated under the statement of expenditures for currency reform and/or the statement of Manchurian expenditures, orders of the form specified in section 5 above shall be handed to the bank or banks concerned in Shanghai or Peking five days before such payments or transfers are to be made and the orders being found correct the bank or banks concerned shall at the expense of the Board of Finance, by telegraph advise the bank or banks concerned in America or Europe, as the case may be, to make the payments or transfers thus requisitioned.

7. Transfers of loan funds from the banks in America and Europe to China, and transfers from the banks in China to the designated Chinese bank or banks shall be made as nearly as possible in equal amounts. In the event of equal transfers being found to be impracticable, however, a mutually satisfactory procedure for making the transfers above referred to shall be aranged by the Board of Finance with the banks.

ARTICLE X.-The Imperial Chinese Government may at its discretion, instruct the banks to make on its behalf payments in gold abroad from the proceeds of this loan held by them in America and Europe, up to an amount not exceeding two million five hundred thousand pounds sterling (£2,500,000) to meet its obligations due under the terms of the protocol of September 7, 1901.† These disbursements in gold abroad shall be made upon the payment in Shanghai to the credit of the "Chinese Government currency reform account" and/or the "Chinese Government Manchurian development account" with the bank or banks concerned, of funds in Shanghai sycee equivalent, at the average indemnity rate of exchange of the preceding month, to the amounts in gold so released. Funds so credited shall be held by the bank or banks concerned in Shanghai until withdrawn for the purposes specified in the statements of currency reform and Manchurian expenditures respectively, as provided in sections 4 and 5 of Article IX above.

ARTICLE XI.-Desiring to assure the banks, in the interests of the bondholders, that the loan funds are being expended for the purposes contemplated under this agreement, the Board of Finance engages, until such time as the proceeds of the loan shall have been expended in accordance with the statements of currency reform and Manchurian expenditures, to hand to the banks not later than thirty days after the expiration of each quarterly period Chinese calendar:

(a) A quarterly report in Chinese and English showing the disbursements incident to the inauguration and operation of the Imperial Chinese Government's program of currency reform.

(b) A quarterly report in Chinese and English showing the disbursements for the promotion and extension of Manchurian industry.

Such quarterly reports shall be of a form to be specified in the statements of currency reform and Manchurian expenditures.

In addition to such quarterly reports the Board of Finance will also hand to No. 1901/3, ante.

the banks a copy of the annual report which is to be published for the information of the Imperial National Assembly or the Imperial Chinese Parliament.

ARTICLE XII.—The rate of interest for the loan shall be five per cent (5%) per annum on the nominal principal and shall be paid to the bondholders halfyearly as calculated from the date on which the loan is issued to the public and according to the amounts specified in the schedule attached to this agreement.

2. The term of this loan and of the bonds evidencing the same shall be fortyfive years. Repayment of principal shall commence with the eleventh year after the date of the loan and shall be made by yearly amortization in half-yearly payments according to the amounts specified in the schedule attached to this agreement.

3. The Board of Finance shall, twelve days before their due dates, hand to the bank or banks designated from time to time by the American group, the International Banking Corporation being now so designated, and to the Hongkong & Shanghai Banking Corporation, the Deutsch-Asiatische Bank and the Banque de l'Indo-Chine in Shanghai, in equal shares, funds in Shanghai sycee and/or coin of the national currency (so soon as the said currency shall have been effectively established) sufficient to meet each such half-yearly payment of principal and/or interest in gold, in America or Europe.

4. The rate of exchange for such transactions shall be settled simultaneously with the banks aforementioned by the Board of Finance either on the day on which such payments in Shanghai sycee and/or coin of the national currency are to be made or, at the option of the Board of Finance, on any date or dates within six months previous to any due date for the payment of interest or the repayment of principal.

5. Payments may be made in gold twelve days before their due dates to the banks in the United States of America or Europe if the Imperial Chinese Government should happen to have gold funds bona fide at its disposal in the United States of America or in Europe, not remitted from China for the purpose, and desire so to use them.

6. In reimbursement of expenses connected with the payment of interest and the repayment of principal of this loan the banks shall receive a commission of one-fourth of one per cent on the annual loan service.

ARTICLE XIII.-If at any time after the lapse of fifteen years from the date of the loan the Government should desire to redeem the whole outstanding amount of the loan or any part of it not yet due for repayment in accordance with the schedule of repayments hereto attached, it may do so up to the end of the twentyfifth year by payment of a premium of 21⁄2 per cent on the face value of the bonds (that is to say, by the payment of £102 10s for each £100 bond) and after the lapse of twenty-five years without premium, but in each and every case of such extra redemption the Government will give six months' previous notice in writing to the banks and such redemption shall be effected by additional drawings of bonds to take place on the date of an ordinary drawing as provided in the prospectus of the loan.

ARTICLE XIV.-In the event of any bond or bonds issued for this loan being lost, stolen or destroyed, the group and/or bank or banks concerned may notify the

Board of Finance and the Imperial Chinese ministers in Washington, London, Berlin or Paris, as the case may be, who shall authorize the group and/or bank or banks concerned to insert an advertisement in the public newspapers stating that payment of such bond or bonds has been stopped; and to take such other steps as may appear advisable or necessary according to the laws or customs of the country concerned. Should any bond or bonds be destroyed, or should such lost or stolen bond or bonds not be recovered after a lapse of time to be fixed by the banks the Imperial Chinese ministers in Washington, London, Berlin or Paris, as the case may be, shall seal and execute a duplicate bond or duplicate bonds for a like amount and deliver the same to the group and/or bank or banks representing the owner or owners of such lost, stolen or destroyed bond or bonds, which group and/or bank or banks shall pay all expenses in connection with such delivery and execution of such duplicate bond or bonds for the account of the owner or owners of such bond or bonds.

ARTICLE XV.-All bonds and coupons and payments made and received in connection with the service of this loan shall be exempt from all Chinese taxes and imposts of any and every description during the currency of this loan.

ARTICLE XVI.-If the Imperial Chinese Government should desire to obtain from other than Chinese sources, funds in addition to the proceeds derived from this loan, to continue or complete the operations contemplated under this agreement, the Imperial Chinese Government shall first invite the banks to undertake a loan to provide the funds required, but should the Imperial Chinese Government fail to agree with the banks as to the terms of such supplementary loan then other financial groups may be invited to undertake the same; and should the Imperial Chinese Government decide to invite foreign capitalists to participate with Chinese interests in Manchurian business contemplated under this loan, or to be undertaken in connection therewith, the banks shall first be invited to so participate.

ARTICLE XVII.-If, before the publication of the prospectus for the issue of this loan any political or financial crisis should occur affecting the American, British, German and/or French markets and the prices of Chinese Government securities in such manner or to such a degree as in the opinion of the banks will render impossible the successful flotation and issue of this loan on the terms herein named, the banks shall be granted a period of six months from the date on which they shall have handed to the Board of Finance the notification referred to in section 2, Article VIII above, within which to issue the loan to the public. If, at the expiration of this period the markets are still unfavorable then the banks shall be entitled to ask the Imperial Chinese Government for a reasonable extension of time within which to carry out this contract. If the Imperial Chinese Government should refuse to grant the extension of time requested this contract shall become null and void, subject always to the repayment of advances as provided in section 6, Article VIII above, and the Imperial Chinese Government shall be liable for no other claims whatsoever.

ARTICLE XVIII.-The American group, the Hongkong & Shanghai Banking Corporation, the Deutsch-Asiatische Bank and the Banque de l'Indo-Chine shall take the loan in equal shares and without responsibility for each other.