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.

The most favorable shipping and insurance rates are to be secured and statements thereof together with original invoices and Inspectors' certificates are to be submitted to the Director General and the Managing Director concerned: all return commissions and rebates of every description shall be credited to the railways, and all purchases made by the Agents on behalf of the railways 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, French, German, American or other foreign goods to Chinese materials and goods manufactured in China, such cases being left to the decision, in consultation with the Engineers-in-Chief, of an Inspector appointed by the Ministry of Posts and Communications. No commission will be paid on purchases of such Chinese materials and goods.

It is understood and agreed that, after the construction of the lines is completed, the British & Chinese Corporation, Limited, and the Deutsch-Asiatische Bank will be given the preference for Agency business for the respective lines, during the currency of the Loan, for the supply of foreign materials which the Railway Administration may require, on terms to be hereafter mutually agreed

upon.

ARTICLE XIX.-Should the Imperial Chinese Government itself hereafter consider it desirable to construct extensions in connection with the railway lines named in Article II of this agreement in order that the interests of the country may be better served, such extensions shall be built by the Imperial Chinese Government with funds at its disposal from Chinese sources, but if foreign capital is required, and the terms offered by the Banks are as favorable as those offered by others preference will be given to the Banks.

ARTICLE XX.-After payment of interest and repayment of principal of this Loan for any current year, the Railway Administration will deposit with the Banks in Shanghai or Hankow any surplus of the net revenue of the railway lines 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 XXI.-All expenses in connection with the flotation and issue of this Loan, such as underwriting, commission and brokerage, telegraph charges, advertising, postage, engraving and printing of Prospectus and bonds, stamp and legal fees, shall be borne by the Banks.

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

ARTICLE XXIII.-The Deutsch-Asiatische Bank, the Hongkong & Shanghai Banking Corporation, the Banque de l'Indo-Chine and the American Group may,

subject to all their obligations under this Agreement, transfer or delegate all or any of their rights, powers, and discretions hereunder to any German, British, French or American Company, Directors or Agents, with power of further transfer and sub-delegation; such transfer, subtransfer, delegation or sub-delegation to be subject to the approval of the Ministry of Posts and Communications.

ARTICLE XXIV.-This Agreement is signed under the authority of an Imperial Edict dated the twenty-second day of the fourth month of the third year of the Emperor Hsuan T'ung, corresponding to the twentieth day of May, 1911, Western Calendar, which will be officially communicated to the Ministers of Great Britain, France, Germany and the United States of America in Peking by the Wai Wu Pu.

ARTICLE XXV.-Eight sets of this Agreement are executed in English and Chinese, four sets to be retained by the Imperial Chinese Government and four sets by the Banks. 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 second day of the fourth month of the third year of the Emperor Hsuan T'ung, corresponding to the twentieth day of May, One thousand nine hundred and eleven, Western Calendar.

THE MINISTER OF POSTS AND COMMUNICATIONS

SHENG HSUAN-HUAI

[Seal of
MINISTRY

of
POSTS AND
COMMUNICATIONS.]

For the DEUTSCH-ASIATISCHE BANK,

H. CORDES.

For the HONGKONG & SHANGHAI BANKING CORPORATION

E. G. HILLIER,

Agent.

For the BANQUE DE L'INDO-CHINE,

R. SAINT PIERRE.

CASENAVE.

For J. P. Morgan & Company,

Kuhn, Loeb & Company,
The First National Bank,
The National City Bank,
of New York

constituting

"THE AMERICAN GROUP"

WILLARD STRAIGHT,

Representative.

SCHEDULE OF INTEREST AND AMORTIZATION OF THE IMPERIAL CHINESE
GOVERNMENT 5% HUKUANG RAILWAYS SINKING FUND GOLD

LOAN OF 1911 FOR £6,000,000.
COEFFICIENT 6,505,144 PER CENT.

TOTAL ANNUAL PAYMENT OF INTEREST AND AMORTIZATION £390,308.12.10.

Note 1.

An agreement for a loan for the construction of these railways was originally concluded between the Chinese Government and the British, French and German banks, on June 6, 1909, in the following terms:

Agreement with British, French and German Banks for Hukuang Railways,

June 6, 1909.

"This Agreement is made at Peking on the 19th day of the 4th moon in the first year of the Emperor Hsuan-T'ung, corresponding to the 6th of June, one thousand nine hundred and nine, western calendar, and the contracting parties are:

"His Excellency the Grand Secretary Chang Chih-tung, director-general of the CantonHankow Railway and of the Hupeh section of the Szechuen-Hankow Railway, duly authorized by imperial decree to act on behalf of the Imperial Government of China, of the one part, and

(a) The Deutsch-Asiatische Bank, Shanghai, and

(b) The Hongkong and Shanghai Banking Corporation associated with the Banque de l'Indo-Chine, hereafter called the Banks, of the other part.

"ARTICLE 1.-The Imperial Government of China authorizes the Banks to issue a 5 per cent gold loan for an amount of five million five hundred thousand pounds sterling (£5,500,000). The loan shall be of the date on which the bonds are issued to the public, and shall be called 'The Imperial Chinese Government Five Per Cent Hukuang Railway Loan of 1909.'

"ARTICLE 2.-This loan is designed to provide capital (1) for the redemption at a premium of 21⁄2 per cent, with accrued interest, of certain unredeemed gold bonds of the total par value of two million two hundred and twenty-two thousand dollars United States currency, issued by the American-China Development Company on behalf of the Imperial Chinese Government, and

(2) For the construction of a Government railway, main line from Wuchang, the capital of the Hupeh Province, through Yo-chou and Chang-sha, the capital of the Hunan Province, to a point in the prefecture of Ch'en-chou, on the southern boundary of Hunan, connecting with the Kuang-tung section of the Canton-Hankow Railway line, the total length of this line, hereinafter known as 'The Hupeh-Hunan section of the CantonHankow Railway line,' being 1,800 Chinese li, or 900 kilometers, and of

"A Government railway main line from Ichang, in the Province of Hupeh, through Ching-men-chou and Hsiang-yang, to a point at or near Kuang-Hsui, connecting it with the Peking-Hankow, and a branch line from Ching-men-chou, on the aforesaid main line, through Shasi to Han-yang, the combined length of these two lines, hereinafter known as The Hupeh section of the Szechuen-Hankow Railway line,' being about 1,600 Chinese li, or 800 kilometers.

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The survey line shall be open to revision by the director-general of the railways. The Chinese Imperial Government undertakes to call in, after having received from the Banks application in writing to do so, the aforesaid gold bonds and the Banks will apply the amount necessary for the said redemption out of the proceeds of the loan, and will deliver the redeemed bonds to the Chinese Government, after having made the bonds valueless. The Chinese Imperial Government will, after receipt of the redeemed bonds, cancel the inscription of the pledge of the Canton-Hankow Railway line in their archives and will advise the Banks in writing after having done this.

"It is understood that the allotment of the aforesaid total nominal capital of £5.500,000 will be in the proportion of £2,500,000 to the Hupeh-Hunan section of the Canton-Hankow Railway line, and £2,500,000 to the Hupeh section of the Szechuen-Hankow Railway line, and that any surplus of the nominal amount of the £500,000 hereby allotted for the redemption of the gold bonds, issued by the American-China Development Company aforesaid which may remain after complete redemption of those bonds shall be added to the amount allotted to the Hupeh section of the Canton-Hankow Railway line.

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ARTICLE 3-After deduction of the amount required for the redemption of the gold bonds referred to in Article 2 of this agreement, the balance of the loan proceeds shall be solely devoted to the construction of the aforesaid railway lines, including the purchase of lands, rolling stock, and other equipment, and to the working of the line, and to the payment of interest on the loan during the period of construction, which is estimated at four years from the actual beginning of the work. The commencement of the work shall not be delayed beyond six months after this agreement has been signed, within which period the Banks shall notify the director-general that the sum of five hundred and ten thousand pounds sterling (£510,000) has been placed at his disposal in case funds should be required for survey or construction purposes, or for the ordering of material, the said sum to be held in Europe or remitted to China as he may direct, as a first installment on account of the proceeds of the loan. This amount of £510,000, or whatever portion thereof is actually advanced, together with interest thereon, not exceeding a charge of 6 per cent per annum, shall be deducted from the first proceeds of the sale of the bonds.