the reserve capital shall be divided among the shareholders. In the event of the redemption of the railway by the Chinese Government, the reserve capital becomes the property of the shareholders.

Net Revenue.

15. The net revenue of the company shall be the remainder of the gross receipts after deduction of working expenses. Under these expenses are classed :—

(a) General outlays, including assignments towards pension and relief funds, if such be established on the line.

(b) Maintenance of the staff of the board of management, and of all the services; as also the maintenance of employés and labourers not on the permanent list.

(c) Outlays for materials and articles used for the railway, as also expenditure in the shape of remuneration for using buildings, rolling-stock, and other various requisites for the purposes of the railway.

(d) Outlays for the maintenance, repair, and renewal of the permanent way, works of construction, buildings, rolling-stock, and other appurtenances of the railway.

(e) Expenditure connected with the adoption of the measures and instructions of the board of management for insuring the safety and regularity of the railway service.

(f) Expenditure for the improvement and development of the railway, as also for creating and developing its resources.

Additional Payments by the Russian Government under the Guarantee, and the Order of Settlement of Accounts between the Company and the Russian Government in respect of these additional Payments.

16. Should the gross receipts of the railway prove insufficient for defraying the working expenses and for meeting the yearly payments due on the bonds, the company will receive the deficient sum from the Russian Government, through the Russian Minister of Finances. The payments referred to will be made to the company as advances, at a rate of interest of 6 per cent. per annum. Sums paid in excess to the company in consequence of its demands and on account of the guarantee will be deducted from succeeding money payments.

On the presentation to the general meeting of shareholders of the annual report of the working of the railway for a given year, company shall at the same time submit to the general meeting, for confirmation, a detailed statement of the sums owing by

the

the company to the Russian Government, with the interest that has accrued thereon. On the confirmation of this statement by the general meeting, the board of management shall deliver to the Russian Government an acknowledgment of the company's debt, to the full determined amount of the same, and this acknowledgment, until its substitution by another, shall bear annually interest at the rate of 6 per cent.

The acknowledgment above mentioned, given by the board of management to the Russian Government, shall not be subject to bill or deed stamp tax.

Subjects of minor importance are dealt with in the following sections:

17. Distribution of net profits of the railway.

18. Functions of board of management, the seal of which will be at Peking and St. Petersburg.

19. Constitution of the board, which is to consist of nine members, elected by the shareholders. The chairman is to be appointed by the Chinese Government. The vice-chairman is to be chosen by the members of the board from among themselves. 20. Order of transaction of the business of the board.

21. General meetings of shareholders, and the subjects that shall come under their notice.

22. Order of convening general meetings.

23. Conditions under which general meetings shall be recognised as legally held.

24. Participation of shareholders in proceedings of general meetings.

25. Local management of works of construction.

26. Local management of railway when in working order.

27. Questions to be submitted for confirmation by Russian Minister of Finances.

28. Committee of audit.

Gratuitous Entrance into Possession of Railway by Chinese

Government.

29. In accordance with the agreement concluded with the Chinese Government, the latter, after the expiration of eighty years of possession of the railway by the company, enters into possession of it and its appurtenances.

The reserve and other funds belonging to the company shall be employed in paying the money due to the Russian Government under the guarantee (§ 16), and in satisfaction of other debts of the company, and the remainder shall be distributed among the shareholders.

Any money that may remain owing by the company to the Russian Government at the expiration of eighty years in respect of the guarantee shall be written off. The Russo-Chinese Bank will incur no responsibility in respect of the same.

Right of the Chinese Government to acquire the Railway on the expiration of Thirty-Six Years.

30. In accordance with the agreement concluded with the Chinese Government, on the expiration of thirty-six years from the time of completion of the whole line and its opening for traffic, the Chinese Government has the right of acquiring the line, on refunding to the company in full all the outlays made on it, and on payment for everything done for the requirements of the railway, such payments to be made with accrued interest.

It follows as a matter of course that the portion of the share capital which has been amortised by drawing, and the part of the debt owing to the Russian Government under the guarantee, and repaid out of the net profits (§ 17) will not constitute part of the purchase-money.

In no case can the Chinese Government enter into possession of the railway before it has lodged in the Russian State Bank the necessary purchase-money.

The purchase-money lodged by the Chinese Government shall be employed in paying the debt of the company under its bonds, and all sums, with interest, owing to the Russian Government, the remainder of the money being then at the disposal of the shareholders.

PRÉCIS OF THE GERMAN AGREEMENT WITH CHINA

WITH REGARD TO KIAO-CHAU.

Signed 10th January, 1898.

(From the Chinese Text.)
PREAMBLE.

THE preamble states that the Ts'ao chow missionary case has been settled, and that China, being willing to make a return for the aid previously given her by Germany, the following Agreement has been made, in the hope of further cementing the friendship of the two countries, and fostering commercial relations :—

Section I.

(1) The Emperor of China, desiring to strengthen the friendship of the two countries, and to increase their military power, agrees that within 100 Chinese li (about 30 miles) of Kiao-chau Bay, German troops shall have full liberty of movement, but the sovereign rights of China remain. If China desires to take any administrative measures she must first come to an arrangement with Germany. There is to be no obstruction by China of German improvements of waterways, &c., and the stationing of troops, &c., by China within the territory named requires a previous agreement with Germany.

(2) As the Emperor of Germany desires that Germany, "like other Powers," should have a coaling and docking depot on the Chinese coast, the Emperor of China has already agreed to lease to Germany the territory north and south of Kiao-chau Bay for a term, in the first instance, of ninety-nine years. Germany may erect forts, etc., for the protection of the place.

(3) The administration of the leased territory during the term of the lease is left entirely to Germany.

The boundaries are then described. (These are difficult to follow in the Chinese text, the names of places being different from those on foreign maps. The area has, however, been officially made known at Berlin.)

The exact boundaries are to be settled after joint survey. Chinese men-of-war and merchant vessels and vessels belonging to nations in amity with Germany will receive from her equally friendly treatment at Kiao-chau. The waters of the bay being placed entirely under German control, Germany may at any time make regulations for the vessels of other nations, and such regulations must be equally observed by Chinese vessels. There will be no other difficulties made.

(4) Germany to buoy the approaches. Dues to meet the cost of harbour improvements will be payable by the vessels of all nations including China. But Chinese vessels will be liable to no other dues.

(5) If before the term of this lease expires Germany desires to restore Kiao-chau Bay to China, the latter will repay the expenses incurred there, and will grant a more suitable place to Germany. The latter agrees never to lease to another Power the territory leased to her by China.

Chinese within the leased territory may remain, provided they show themselves law-abiding, and will receive German protection. Land required by Germany is to be bought from the proprietor. Offenders against Chinese law escaping into the territory leased to Germany are to be given up to the Chinese officials on written application, but the latter are not to effect arrests in that territory themselves.

As to the Customs stations, of which some are stated to exist beyond the 100 li radius, it is provided that arrangements and regulations are to be subsequently drawn up.

(There seems to be a hiatus in the Chinese text which runs, after referring to the existing stations outside the 100 li radius: "But within the 100 li radius it has been agreed. . . ." and there breaks off. Probably, "that no Chinese Customs stations shall be permitted," is left out.)

Section II.

(1) China agrees to permit Germany to construct two railway lines in the Province of Shantung: one from Kiao-chau, past Wei Hsien, Ching Chan, Poshan, Tzu-ch'uan, and Tsou-p'ing to Chi-nan, and the Shantung frontier; the other from Kiao-chau to I chou, and thence past Lai-wu Hsien to Chi-nan Fu. The railway from Chi-nan Fu to the frontier of Shantung is not to begin until the line to Chi-nau Fu has been built, in order that arrangements may be made for a junction with the main line constructed by China. The route of the line is to be left for future arrangement.

(2) For the construction of the above-mentioned lines a German-Chinese company is to be formed (the Deutsche