country, the treaty regulations, and rules of the Republic of China recognized as applicable to foreign residents in China. Should any of the above foreign staff misbehave or not submit to restraint or show disrespect for the Chinese local authorities or illtreat the country people, they shall, on notice being brought to the contractors, be forthwith impartially dealt with according to the circumstances of the case.

Should any complaint be made at any time by the managing director against any of the staff of the contractors, Chinese or foreign, about his or their improper actions or bad character and manners, the matter shall be at once investigated so that justice may be equitably and impartially administered. Should the complaint or charge be proven the objectionable person or persons shall be removed on the spot.

Chinese technical assistants employed in the construction shall be given every facility by the contractors to acquire a knowledge of railway construction in all its departments, and the engineering staff shall be instructed to help them as far as possible by affording all information relating to the construction.

ART. XX. All the land required for the railway and for all the purposes of construction (including ballast and borrow pits), whether permanent or temporary, with all right-of-way facilities and access to the same, shall be placed at the service of the contractors in due and proper time, as far as possible, enabling all the works of construction to proceed without delay or hindrance, and when requisitioned by the

contractors.

ART. XXI. The price to be paid by the Government to the contractors for the construction and equipment and maintenance during construction of the railway shall be an amount equal to the actual out-of-pocket cost thereof to the contractors together with a further sum equal to 5 per cent on the original net cost of all materials, plant, and goods required to be imported from abroad. The actual cost shall include all plant, tools, wages for superintendents, staff, management, and labor, and all expenses, if any, which may be actually incurred by the contractors, providing passages out and home for staff, skilled artisans, and other workmen specially sent from Europe or elsewhere, and any expense actually incurred by the staff for traveling specially and exclusively on the work of this contract, and the actual cost of all plant, materials, stores, and tools purchased, according to the cost price of same delivered at the works, and also all moneys paid for hire of plant and expenses actually incurred by the contractors in connection with any commissariat arrangements which may be made for the supply of food and other things for the convenience of the staff employed by the contractors on the works, including the medical staff, medicines, and the necessary equipment for same.

Provided, that no contract, subcontract, engagement of workmen, or other obligation of any kind by which such out-of-pocket expenses might be in any way affected shall be entered into or made by the contractors without the previous consent of the managing director and consulting engineers, and if any out-of-pocket expenses shall be incurred by the contractors under any contract, subcontract, arrangement, or obligation entered into or made without such previous consent of the managing director and the consulting engineers, such out-of-pocket expenses shall, if the managing director and the consulting engineers think fit, be wholly or to such extent as the managing director and consulting engineers think fit disallowed in the contractor's accounts, but this shall not apply to the staff employed by the contractors and the salaries paid to them, which shall be at the discretion of the contractors. Provided, that the salaries and allowances of the European engineers and European clerical staff other than the contractors' agent and the principal engineer under him shall be similar to such as are paid to Europeans in other works of the same nature in China. The term "equipment" shall be held to include in its meaning all requirements necessary for the operation of the railway, and shall therefore include rolling stock and locomotives sufficient for operation. It is clearly understood that the term "equipment" does not include any purchase made for the railway after it has been completely constructed and equipped and handed over ready for operation. It is further clearly understood that the cost of land purchased for the railway and salaries of the managing director, chief accountants, consulting engineers, and the cost of their offices and staff shall not be included in the meaning of the term "construction and equipment.' ART. XXII. The Government shall at all times keep the contractors in funds to meet expenditure on this contract. For the purpose of ascertaining the amounts to be paid by the Government to the contractors from time to time the contractors shall, not less than seven days before the end of each month, furnish to the engineer in chief during construction an account showing the estimated amount to be expended on the works during the then ensuing month, and the Government shall on the first day of each month authorize payment to a bank to be nominated by the contractors to the credit of the contractors the amount of such estimate together with any balance then due to the contractors in respect of previous expenditure or, as the case may be, after deducting any balance then in the hands of the contractors and then not expended.

38

ART. XXIII. The contractors shall have the full and free use of all the railway and works under construction and the equipment as well as all the land, including borrow pits, quarries, ballast pits, brick field, etc., required for the purpose of the railway sidings, stations, buildings, workshops, water supplies, etc., during the period of construction and shall hand over the same on completion of the railway.

The managing director and engineer in chief during construction and their deputies shall at all times have access to the works for purposes of inspection, and they shall be afforded full information regarding the construction and works, and they shall also at all times have access and the right to make copies of the records, accounts, subcontracts, and vouchers kept in the various departments established by the

contractors.

ART. XXIV. After the completion of the survey the Government may arrange with the contractors, if the Government so thinks fit, for the payment to the contractors of a bonus or bonuses conditional on the construction and equipment of any section or sections of the railway being completed within a fixed sum and time to be determined by the Government, but this arrangement shall not entail any obligation on the contractors to complete such section or sections within a fixed sum or time or any penalty on the contractors should they fail to complete such section or sections within a fixed sum or time.

ART. XXV. The Government shall prevent any interference with or hindrance or molestation to the contractors and shall take such precautions as may be necessary for the safety of the contractors' men and property.

ART. XXVI. The property of the contractors' staff and all matters and persons in connection with the works shall be protected by the Government, which shall see that the place is at peace without any organized hindrance. In case of any difficulty as to labor affecting the works, the Government shall use its best endeavor, in cooperation with the contractors, in equitably adjusting the same and shall do all in its power to assist the contractors in getting labor when required.

ART. XXVII. The managing director, the engineer in chief during construction, and the contractors' agent shall, from time to time, meet and confer upon any necessary matter in connection with the execution of the work and, acting harmoniously together in the interest of their respective principals, shall determine a mode of operation and line of action to their mutual satisfaction, but in case of and as often as any difference or dispute concerning or relating to the railway or the equipment or to anything appertaining to the carrying out of the construction (except where otherwise provided for herein) shall arise the subject of such difference or dispute shall be at once referred to the Government by the complaining party and the Government shall promptly and equitably adjudicate upon the same. But should either party feel aggrieved or be not satisfied by the adjudication, then the matter in question shall be at once referred to two independent arbitrators appointed by the parties, who shall act in accordance with the arbitration laws in force in England and who shall investigate and decide the matter or matters equitably. Should they fail to arrive at a unanimous decision they shall then refer the matter or matters in question at once to the decision of an umpire to be chosen and appointed by the above-mentioned arbitrators, whose decision shall be final and binding upon both parties hereto.

ART. XXVIII. The contractors shall make available the temporary track while under construction for public traffic as far as possible consistent with the requirements of construction, and traffic carried over the same shall be in accordance with a schedule of rates and terms to be settled by the managing director. After all expenses whatsoever which the chief accountant may allocate in connection with this traffic have been paid out of the receipts therefor the contractors shall receive one-third of the remainder.

ART. XXIX. The contractors shall hand over to the Government each section of the railway when it is, in the opinion of the managing director and engineer in chief during construction, completed for operation subject to the provisions of this agreement appertaining thereto. On completion of the survey the sections shall be defined.

ART. XXX. The railway may maintain a force of Chinese police and Chinese officers under the orders of the managing director, their wages and maintenance to be wholly defrayed as part of the cost of the construction and maintenance of the railway. In the event of the railway requiring further protection by the military forces of the Government, the same shall be duly applied for by the head office and promptly afforded, it being understood that such military forces shall be maintained at the expense of the Government.

ART. XXXI. All materials of any kind that are required for the construction and working of the railway, whether imported from abroad or from the Provinces to the scene of work, shall be exempt from likin or other duties so long as such exemption remains in force in respect of other Chinese present and future railways. The bonds of the loan, together with their coupons and the income of the railway, shall be free from imposts of any kind by the Government of the Republic of China.

ART. XXXII. With a view to encouraging Chinese industries, rails manufactured at the Hanyang Steel & Iron Works, native cement, and other goods manufacture: and produced in China are to have a preference at equal price and quality. At equal rates and qualities, goods of British manufacture shall be given preference over other goods of foreign origin.

ART. XXXIII. The contractors may, with the approval of the Government and subject to all their obligations, transfer or delegate all or any of their rights, powers, and discretions to their successors or assigns, provided they are of British nationality. ART. XXXIV. On the signing of this agreement the Government of the Republic of China shall officially notify the British Minister at Peking of the fact.

ART. XXXV. This agreement is executed in quadruplicate in English and Chinese, two copies to be retained by the Government, one to be forwarded to the British Minister at Peking, and one to be retained by the contractors. Should any doubt arise as to the interpretation of the agreement, the English text shall be accepted as the standard.

Signed at Peking by the contracting parties on this 25th day of the seventh month of the third year of the Republic of China, being the 25th day of July, nineteen hundred and fourteen.

SUPPLEMENTARY AGREEMENT PROVIDING FOR CANCELLATION.

Supplementary agreement providing for the cancellation of an agreement made on the 18th day of December, 1913, between the Chiao Tung Pu, duly authorized by the Government of the Republic of China, on the one part, and Messrs. Pauling & Co. (Ltd.), of 26 Victoria Street, London, S. W., of the other part, and for due compensation therefor to Messrs. Pauling & Co. (Ltd.).

This agreement is made at Peking on the 25th day of the seventh month of the third year of the Republic of China, being the 25th day of July, 1914, and the contracting parties are the Chiao Tung Pu, duly authorized by the Government of the Republic of China (hereinafter referred to as the Government), of the one part, and Messrs. Pauling & Co. (Ltd.), of 26 Victoria Street, London, S. W. (hereinafter termed the contractors), of the other part.

Whereas an agreement was made on the 18th December, 1913, between the Government and the contractors (hereinafter termed the preliminary agreement) for the financing and construction of a railway from a point on the Yangtze River opposite Shasi via Changteh, Yuanchow, and Kweiyang to Shingyi in the Province of Kweichow, with a branch line connecting Changteh with Changsha (hereinafter called the railway).

And whereas an agreement has been entered into this day between the Government and the contractors (hereinafter termed the detailed agreement) providing for the financing and construction of the railway.

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

ART. I. The preliminary agreement is hereby cancelled, and the contractors shall receive as compensation for the cancellation thereof a sum (hereinafter termed the compensation) equal to 7 per cent on the actual cost of the construction and equipment and maintenance during construction of the railway less the 5 per cent commission on materials purchased abroad provided for in article XXI of the detailed agreement. Such actual cost shall include all plant, tools, wages for superintendence, staff, management, and labor and all expenses, if any, which may be actually incurred by the contractors providing passages out and home for staff skilled artisans and other workmen specially sent from Europe or elsewhere and any expenses actually incurred by the staff for traveling specially and exclusively on the work arranged for in the detailed agreement and the actual cost of all plant, materials, stores, and tools purchased, according to the cost price of the same delivered at the works, and also all moneys paid for hire of plant and expenses actually incurred by the contractors in connection with any commissariat arrangements which may be made for the supply of food and other things for the convenience of the staff employed by the contractors on the works, including the medical staff, medicines, and the necessary equipment for same.

The term "equipment" shall be held to include in its meaning all requirements necessary for the operation of the railway and shall therefore include rolling stock

and locomotives sufficient for operation. It is clearly understood that the term "equipment" does not include any purchases made for railway after it has been completely constructed and equipped and handed over ready for operation. It is further clearly understood that the cost of land purchased for the railway, the salaries of the director general, chief accountants, and consulting engineers, and the cost of their offices and staff shall not be included in the meaning of the term "construction and equipment."

ART. II. Five-sevenths of the compensation of the 7 per cent provided for and defined in Article I of this agreement shall be paid to the contractors by the Government immediately on the presentation of each certificate of expenditure signed by the managing director, the engineer in chief during construction, and the chief accountant, and the balance (equal to two-sevenths of the said sum) on completion and handing over of each section of the railway to which the certificate may apply. ART. III. The Government hereby unconditionally undertakes to pay the contractors the compensation as defined in Article I of this agreement and in the manner defined in Article II of this agreement.

ART. IV. If both parties to this agreement agree that the section of the railway from Kweiyang to Shingyifu is impracticable, the Government of the Republic of China undertakes to substitute an equal mileage elsewhere on the same terms and conditions as those set forth in the detailed agreement and in this agreement.

ART. V. On the signing of this agreement the Government shall officially notify the British Minister at Peking of the fact.

ART. VI. This agreement is executed in quadruplicate in English and Chinese, two copies to be retained by the Government, one to be forwarded to the British Minister at Peking, and one to be retained by the contractors. Should any doubt arise as to the interpretation of this agreement, the English text shall be accepted as the standard.

Signed at Peking by the contracting parties on this 25th day of the seventh month of the third year of the Republic of China, being the 25th day of July, nineteen hundred and fourteen.

Appendix 8.-HUKUANG RAILWAYS.

FINAL AGREEMENT.

This agreement is made at Peking on the twenty-second day of the fourth month of the third year of the Emperor Hsuan Tung, corresponding to the twentieth day of May, one thousand nine hundred and eleven, Western Calendar, and the contracting parties are:

His Excellency the Kung-Pao Sheng Hsuan-Huai, Minister of Posts and Communications, duly authorized by imperial decree to act on behalf of the Imperial Government of China, of the one part, and the Deutsch-Asiatische Bank, the Hongkong & Shanghai Banking Corporation, the Banque de l'Indo-Chine, and Messrs. J. P. Morgan & Co., Messrs. Kuhn, Loeb & Co., the First National Bank, and the National City Bank, all of New York, constituting the American Group, hereinafter called the "banks," of the other part, witnesseth as follows:

ARTICLE I. The Imperial Government of China authorizes the banks to issue a 5 per cent gold loan for an amount of £6,000,000 sterling. The loan shall be of the date on which the bonds are issued to the public, and shall be called "The Imperial Chinese Government 5 Per Cent Hukuang Railways Sinking Fund Gold Loan of 1911." ART. II. This loan is designed to provide capital, first—

For the redemption at a premium of 23 per cent, with accrued interest, of certain unredeemed gold bonds of the total par value of two million two hundred and twentytwo thousand dollars United States currency (G $2,222,000) issued by the American China Development Co. on behalf of the Imperial Chinese Government, and secondly— For the construction of a Government railway main line from Wuchang, the capital of the Hupeh Province, through Yochow and Changsha, the capital of the Hunan Province, to a point in the district of Yichanghsien in the prefecture of Chenchow on the southern boundary of Hunan, connecting with the Kwangtung section of the Canton-Hankow Railway line, the total length of this line, hereinafter known as "The Hupeh-Hunan Section of the Canton-Hankow Railway line," being an estimated distance of 1,800 Chinese li, or 900 kilometers, and of

A.Government railway main line from a point at or near Kwangshui in the Province of Hupeh, connecting with the Peking-Hankow Railway line and passing through Hsiangyang, and Chingmenchow to Ichang, an estimated distance of 1,200 Chinese li, or 600 kilometers, and from Ichang to Kweichowfu in the Province of Szechwan, an estimated distance of 600 Chinese li, or 300 kilometers-this latter section of the main line having been added in substitution for the branch line from Chingmenchow to Hanyang originally agreed upon-the total length of this main line, hereinafter known as "The Hupeh Section of the Szechwan-Hankow Railway line," being about 1,800 Chinese li, or 900 kilometers.

The survey lines shall be open to revision by the Ministry of Posts and Communications.

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 CantonHankow Railway line in their archives, and will advise the banks in writing after having done this.

It is understood that any surplus of the nominal amount of £500,000 sterling hereby allotted for the redemption of the gold bonds issued by the American China Development Co., aforesaid, which may remain after complete redemption of those bonds, shall be allotted to the above-named railway lines.

ART. III. After deduction of the amount required for the redemption of the gold bonds referred to in Article II 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 land, rolling stock, and other equipment, and to the working of the lines, and to payment of interest on the loan during the period of construction,