such extension of time for the performance of its contract with the administrator general as the circumstances demand, any advances or installments of proceeds already made to the Railway Administration being in that case treated as regards payment of interest, repayment of principal, security, and Imperial Chinese Government guaranty in terms of this present agreement and as forming part of the principal amount of this loan. Similar extension of time for the issue of this loan and payment of its proceeds shall also be granted in the event of the Deutsch-Asiatische Bank, Berlin, objecting to its issue before the month of April next, in accordance with the terms of clause 9, of the agreement for the Chinese Imperial Government 4 per cent sterling loan of 1898.

18. Immediately after the signature of this agreement, and before the issue of the prospectus of the loan to the public, the administrator general will memorialize the Throne and obtain an imperial edict confirming and sanctioning the provisions of this agreement, the imperial edict so received being then communicated officially and without delay by the Tsung Li Yamen to the British Minister in Peking.

19. The corporation may, subject to all its obligations, transfer or delegate all or any of its rights and discretions to any British company, directors, or agents, in consultation with the administrator general, with or without power of further transfer and subdelegation.

20. This agreement is executed in quadruplicate in English and Chinese, one copy to be retained by the administrator general, one by the Tsung Li Yamen, one by the British Minister in Peking, and one by the corporation. Should any doubt arise as to the interpretation of the contract, the English text shall be accepted as standard. Signed at Peking by the contracting parties this 25th day of the eighth month of the twenty-fourth year of the Emperor Kuang Hsu, being the 10th day of October, 1898, Western Calendar.

Appendix 5. CANTON-KOWLOON RAILWAY.

AGREEMENT BETWEEN THE WAIWUPU (BOARD OF FOREIGN AFFAIRS OF THE CHINESE GOVERNMENT) AND THE BRITISH & CHINESE CORPORATION (LTD.) FOR THE ISSUE AND REGULATION OF A LOAN FOR THE CONSTRUCTION OF A RAILWAY FROM THE CITY OF CANTON TO THE BOUNDARY OF THE KOWLOON LEASED TERRITORY UNDER BRITISH CONTROL (HEREINAFTER CALLED THE RAILWAY),

This agreement is made at Peking on the twenty-third day of the first month of the thirty-third year of Kuang Hsu, corresponding to the seventh day of March, 1907, and the contracting parties are:

The Waiwupu, acting under the authority of an imperial decree, of the one part, and the British & Chinese Corporation (Ltd.) (hereinafter called the corporation) of the other part.

Whereas, a preliminary agreement was made on March 28, 1899, between His Excellency Sheng, Director General of the Imperial Chinese Railway Administration acting under the authority of the Tsung Li Yamen, of the one part, and the British firm of Jardine, Matheson & Co., for themselves and on behalf of the Hongkong & Shanghai Banking Corporation, representing as joint agents the corporation, of the other part, and it was part of the objects thereof that the terms of another preliminary agreement signed by the same contracting parties on May 13, 1898, should be thereby adopted as a preliminary agreement for the construction and working of a railway from the city of Canton to the boundary of the Kowloon leased territory under British control, subject, however, as far as might be practicable, to the terms and conditions thereafter agreed to in the final contract for the Shanghai-Nanking Railway when signed and ratified.

Now it is hereby agreed by and between the parties hereto as follows:

ARTICLE 1. The corporation agrees to issue, on behalf of the Imperial Chinese Government, a sterling loan (hereinafter referred to as "the loan") for the amount of £1,500,000 on the terms and conditions hereinafter contained. Imperial Chinese Government bonds are to be issued for the entire amount, similar to the bonds of the Shanghai-Nanking Railway, with the railway as first mortgage security therefor. The loan shall be in one issue, and the price agreed upon is 94 per cent of the nominal value, subject to the other provisions of this article as hereinafter stated. The interest on the bonds shall be at the rate of 5 per cent per annum on their nominal value, payable half-yearly, on the first day of June and the first day of December, and shall be calculated from the date of their sale to the public.

The loan shall be issued to the public as soon as possible after signing this agreement but if at the date of signature thereof, owing to an unfavourable state of the market rendering the issue of the loan and the payment of its proceeds to the Viceroy of Canton impossible on the terms above named, then in such case the corporation shall thereafter, at such time as the Chinese Government may decide within a period not exceeding eight months, issue the loan and pay the proceeds thereof to the Viceroy, deducting and retaining six points from the rate at which the loan is actually issued to the public, whatever that rate may be (that is, if the issue price be 101 the Viceroy will receive 95, and so on).

Subject to the provisions of article 16, the duration of the loan is fixed at 30 years commencing from the date of the signature of this agreement, but no interest shall be paid on any bonds which may be redeemed or cancelled under the terms hereinafter mentioned after the redemption or cancellation thereof.

On the face of each of these bonds shall be expressed the value thereof in the sum of £100, or in such different amounts as the Chinese Minister in London in consultation with the corporation may sanction.

It is understood that the Chinese Government may hereafter, in its discretion, appoint a director general of the railway upon whom, in such case, will devolve all the powers, functions, and responsibility herein attributed to the Viceroy of Canton (hereinafter called the Viceroy).

ART. 2. The proceeds of the loan are to be used in the construction and equipment of the railway, and in paying interest on the loan during the course of construction.

The railway, being the first mortgage security for the loan, shall be built and equipped under the direction of the Viceroy, in accordance with the provisions of article 6 hereinafter, and shall be built as economically as possible in accordance with the best modern system.

It is understood that the Viceroy will secure all the necessary land for the railway, and will give the necessary instructions to expedite and facilitate the work of construction. The railway will be built in the first instance as a single line, but provision will be made, with the approval of the Viceroy, and wherever necessary to meet traffic requirements, for the eventual construction of a double line.

If, during the time of construction, the proceeds of the loan, together with the accrued interest thereon, payable by the corporation, should, after the deduction of the sums necessary for the payments of interest on the loan, be insufficient to complete the construction of the railway, the amount of the deficiency shall either be provided from the Chinese Government's own resources or by a supplementary loan to be hereafter issued by the corporation, the interest and other conditions of which supplementary loan shall be arranged when the time arrives, having due regard to the conditions of the money market.

When the railway is complete, if there is a surplus from the sale of bonds, the said surplus shall be at the disposal of the Chinese Government either to redeem the bonds in accordance with the terms of this agreement as hereinafter stated, or to be placed on deposit with the Hongkong & Shanghai Banking Corporation for the purpose of paying interest on the loan, or for other purposes beneficial to the railway, in regard to which the Viceroy will communicate in due course with the corporation.

In all matters relating to the construction of the railway it is expressly agreed that particular heed shall be paid to the opinions and habits of the Chinese people, and that, when practicable, Chinese shall be employed in positions of trust and responsibility in connection with the railway.

In regard to earthwork, or such other work as Chinese are competent to perform, contracts shall be entered into for such work with Chinese, under the sanction of the head office, and the work itself shall be carried out in accordance with plans and specifications of the engineer in chief and under his supervision.

Detailed plans and estimates of cost, whether of the respective sections of the railway, or of any alterations of the same, are to be submitted for the approval of the Viceroy, by the engineer in chief through the managing director.

ART. 3. The loan shall be secured by mortgage declared to be now entered into in equity by virtue of this agreement, and shall, as soon as possible hereafter, be secured by a specific and legal first mortgage in favour of the corporation upon all lands, materials, rolling stock, buildings, property, and premises of every description purchased or to be purchased for the railway, and on the railway itself, as and when constructed, and on the revenue of all descriptions derivable therefrom.

The provisions of this article in respect of the mortgage are to be construed and treated as equivalent in purport and effect to a mortgage customarily executed and delivered in England to a trustee for the purpose of securing loans and bond issues upon railway properties in foreign countries.

ART. 4. It is hereby agreed that in six months after this agreement is signed, the corporation shall provide the amount necessary to proceed with the detailed survey of the railway, and for preliminary construction work if necessary, whether this amount comes from the sale or hypothecation of the bonds, or from advances made, provided that bonds for the required amount shall have been executed and delivered to the corporation. If, after expiration of eight months from the date of the ratification hereof, the work of construction shall not have been begun on the railway, this agreement is to become null and void, but if failure to commence construction be due to any cause of force majeure, a reasonable extension of this time limit shall be arranged between the Viceroy and the corporation.

Of the proceeds realized from the sale of the bonds, after deducting so much of them as may be required to be kept in England for the purchase of materials and the payments of contracts there, or for repayment of advance, such amounts as may be estimated and certified to by the engineer in chief to the Viceroy through the managing director, as being actually required for the construction of any particular section of the railway, may be ordered by the Viceroy, after consideration, to be transferred to Hongkong to be kept in the Hongkong & Shanghai Bank, and placed to the credit of the construction account of the railway for the exclusive purpose of constructing the railway in the manner herein provided for under the supervision of the head office and the Viceroy.

On each occasion of a remittance being made to China, the amount realized in sycee will be reported to the Viceroy, and any portion which may not be required shall be placed at interest. Similarly, the balance in England shall be placed at interest, to be allowed at the usual rate.

The accounts of the money spent from time to time in England, and of the money transferred to the credit of the construction and other accounts for use in China, are to be submitted quarterly to the head office for report to the Viceroy for the information of the Waiwupu, and for his further report to the Board of Revenue, and the Board of Communications, for record therein, after such accounts have been approved and signed by him.

ART. 5. As to the form of the bond, it is to be agreed upon by the Viceroy or by the Chinese Minister in London and the corporation, as soon as possible after the signature of this agreement, but if, hereafter, the money markets in London or other countries require any modification of the form of the bond, except in anything that affects the amount of the loan and the liability of the Chinese Government, which are not to be touched at all, such slight modifications may be made to meet the views of the money markets by the corporation in consultation with the Chinese Minister in London.

Any modifications are to be reported at once by the corporation to the Viceroy for the approval of the Waiwupu.

The bonds are to be engraved entirely in the English language, and shall bear the facsimile of the signature of the Viceroy and of his seal of office, in order to dispense with the necessity of signing them all in person, but the Chinese Minister in London shall, previous to the issue of any bonds, put his seal upon each bond with a facsimile of his signature, as a proof that the issue and sale of the bonds are duly authorized and binding upon the Chinese Government.

Such bonds are to be numbered consecutively, and as many bonds as may be needed are to be properly engraved under the supervision of the corporation, and after they are sealed by the Chinese Minister in London, as hereintofore provided, are to be countersigned by the corporation.

All expenses for the engraving, safe deposit, and sale of the bonds are to be borne by the corporation.

ART. 6. When the work of construction is ready to begin, the Viceroy will establish a head office at Canton for the construction and management of the railway. This office will be under the direction of a Chinese managing director (appointed by the Viceroy) with whom will be associated a British engineer in chief, and a British chief accountant. These British employees shall be proposed and certified as competent for their posts, by the corporation, and shall be approved by the Viceroy; if their services should prove unsatisfactory to the Viceroy, he shall request the corporation to dispense with their services and to nominate their successors, and, in the event of the corporation desiring to remove them for good cause, it shall do so in consultation with the Viceroy. It is understood that the duties performed by these employees are intended to promote the mutual interests of the Chinese Government and the bondholders, respectively. and it is therefore agreed that all cases of difference arising therefrom shall be referred for amicable adjustment between the Viceroy and the representative of the corporation. The salaries and other terms of agreement of the engineer in chief and the chief accountant shall be proposed by the corporation, for approval by the Viceroy; and the amount of their salaries, etc., shall be paid out of the general accounts of the railway.

For all important technical appointments on the railway staff, Europeans of experience and ability shall be engaged, and wherever competent Chinese are available, they shall also be employed. All such appointments shall be made, and their functions defined, by the managing director and the engineer in chief in consultation, and shall be submitted for the Viceroy's approval; similar procedure shall be followed in the case of Europeans employed in the chief accountant's department. In the event of the misconduct or the incompetency of European employees, their services may be dispensed with by the managing director, after consultation with the engineer in chief, and subject to the sanction of the Viceroy. The form of agreements made with European employees shall conform to the usual practice.

The accounts of the receipts and the disbursements of the railway's construction and operation, shall be kept in Chinese and English in the Department of the chief accountant, whose duty it shall be to organize and supervise the same, and to report thereon for the information of the Viceroy through the managing director, and of the corporation. All receipts, and payments, shall be certified by the chief accountant and authorized by the managing director.

For the general technical staff of the railway the necessary arrangements shall be made by the managing director in consultation with the engineer in chief, and reported to the Viceroy in due course.

The duties of the engineer in chief shall consist in the efficient and economical construction and maintenance of the railway, and the general supervision thereof in consultation with the managing director. He shall always give courteous consideration to the wishes and instructions of the Viceroy, whether conveyed directly

or through the managing director, and shall always comply therewith, having at the same time due regard to the efficient construction and maintenance of the railway. A school for the education of Chinese in railway matters shall be established by the managing director, subject to the approval of the Viceroy.

ART. 7. Under the provisions of article 3 of this agreement the properties covered by the first mortgage security hereby created include the railway, its property and equipment, and the mortgage is to be executed by a deed in the form contemplated by the said article. But subject to the guaranty and mortgage thus given by the Chinese Government, it is hereby declared that this railway is in fact a Chinese property.

All land that may be required along the whole course of the railway within survey limits, and for the necessary sidings, stations, repairing shops and car sheds, to be provided for in accordance with the detailed plans now made, or hereafter to be made by the engineer in chief, and approved by the Viceroy, shall be acquired by the Viceroy at the actual cost of the land, and shall be paid for out of the proceeds of the loan.

The title deeds of the land for the railway and all other lands shall be free from all encumbrances and entanglements and shall, from time to time, as soon as secured, be registered in the name of the railway.

Notices of all purchases of lands for the railway within the survey limit (together with corresponding title deeds) are to be transmitted by the railway head office under the direction of the Viceroy to the local agent of the corporation for record and preservation in its office in Hongkong, and for the purpose of establishing the first mortgage security until the time when the same are to be returned to the Viceroy, as hereinafter in this article provided.

All lands, the title deeds of which are lodged with the corporation as part of the first mortgage security of the loan, shall not be disposed of in any way by hire, lease, or sale, to any party, for any purpose whatsoever, without the written consent of the Viceroy, except only in the event of the Imperial Chinese Government failing to pay the interest or principal of the bonds, and then in accordance with the powers in the deed of mortgage.

The lands thus bought shall be free from all encumbrances, liabilities, and entanglements, and shall be conveyed by full and sufficient deeds of assignment according to Chinese law, all of which are to be kept and recorded in the Hongkong office of the corporation, and are to be held by it as a first mortgage security for the bonds under the provisions of this agreement, until such time as principal and interest of the bonds, together with all indebtedness, shall have been paid off, when the same shall then be returned to the Viceroy, except only in the case of the Imperial Chinese Government's failure to pay the interest or principal of the bonds and consequent realization under the powers of the mortgage security.

For the proper protection of the first mortgage security the Chinese Government undertakes that until the bonds shall have been redeemed, no part of the lands comprised in the mortgage security or the railway with its appurtenances shall be transferred or given to another party, or shall be injured, and that the rights of the first mortgage shall not be in any way impaired, unless with the consent in writing of the corporation, which shall only be given if in the opinion of the corporation the interests of the bondholders will not be affected.

And further, that until the interest and principal of the loan and all the indebtedness shall have been paid off, or unless with the express consent in writing of the corporation, the Chinese Government or the Viceroy shall not again mortgage the above properties to another party whether Chinese or foreign.

During the period of this agreement no special taxes shall be levied by the Chinese Government on the railway, its appurtenances, or earnings; but all taxes at present payable, such as land tax, as well as any taxes which the Chinese Government may hereafter institute, such as stamp duty, etc., and which may be applicable generally to all commercial transactions in China, shall also apply in the case of the railway and its operations.

ART. 8. It is agreed that if the half-yearly interest on the bonds is not paid on any due date thereof, or if the principal of the loan be not paid in accordance with the amortization schedule hereto attached, the whole railway with all its appurtenances herein mortgaged to the corporation for the bondholders, shall be handed over to the corporation to be dealt with by it according to law in such manner as will insure the proper protection of the interests of the bondholders, provided, however, that if the failure to make payment at any one date be due to causes beyond the control of the Chinese Government, and if the Viceroy request the corporation to postpone the taking over of the railway for a reasonable period of grace, the question shall be amicably discussed and decided between the Viceroy and the representative of the corporation. When the whole loan and the interest due thereon and all