expenses. The Pekin Syndicate or its delegate, in conformity with the stipulation in Article 1, will organise the service. It will have authority to engage or dismiss officials and servants, and as to their salaries a scale thereof will be drawn up beforehand for submission to the Director-General, and subsequent alterations will also be submitted for his approval. The Syndicate shall also purchase all articles necessary for the maintenance and repair of the line, shall fix rates for goods and passengers in accordance with the railway regulations on other lines, shall receive all the earnings and pay all the working expenses and the expenses of the Imperial Chinese Railway Administration relative to this railway. All the above working details must be submitted beforehand by the Pekin Syndicate or its delegate to the Director-General of Railways, and settled in consultation.

The General Administration shall have the fullest power to examine the details of income and expenditure, and to appoint a Representative, a Cashier, Accountant, and an Interpreter, who will be associated with the European staff, in order to exercise the above-mentioned power of examination. The salaries of the Representative and his associates above-mentioned will be paid from the office of the Tsechow-Taokow Railway.

The Representative shall countersign all vouchers for payment. Accounts will be rendered monthly to the General Administration in English and Chinese, one copy each, and signed by the respective English and Chinese officials.

The General Administration reserves the right to cause the dismissal of any employee, whatever his nationality, including the General Manager, who does not perform his work satisfactorily or is guilty of misconduct, insubordination, or disrespect towards the Chinese authorities, and this should be mentioned in the contracts at the time of engagement of the employee.

All Chinese Employees, whether for repairs of line or otherwise, will be selected by the Representative of the Director-General, who will place them under the executive orders of the General Manager. No Chinese officials or servants can be engaged without the sanction of the Director-General. The expenses of the Shanghai Imperial Railway Administration in respect to this line shall be paid in the same way as for the Luhan Railway. After this section is finished and the working has begun, if additional rolling-stock or plant is required, or if improvement or extensions of the line or stations become necessary, the funds for the same shall be provided by the office of the Tsechow Railway. As regards contracts for the supply of materials necessary for maintaining and repairing the line, means should be devised to place the same at Chinese workshops. It is understood that the mines and workshops controlled by H.E. Sheng shall have the preference on the conditions and at the price at which the articles could be purchased abroad. By price is meant laying down cost in China.

3. In the event of military operations, whether due to foreign war or internal disturbances, the railway will give the preference to Chinese Government troops, stores, or munitions of war over private merchandise in conveyance over the line.

Rates to be charged in such cases shall be one-half of the ordinary rates,

and in such matters the railway will carry out any special instructions given by the Director-General. Articles tending to the injury of the Chinese Government are not to be carried on the line.

In case of famine, stores for relief will be carried at half rates.

Special arrangements will be made in consultation with the Representatives of the Director-General for conveyance of local authorities or members of the Imperial Government travelling on important business over the line. Free passes over the railway shall be countersigned by the Representative of the Director-General.

4. From the net earnings of the line after paying all working expenses the Pekin Syndicate shall retain such sums as are necessary to meet the service of the loan at least three months in advance of the next half-yearly payment. This procedure will be followed until the whole loan is finally redeemed. The sums retained will be paid over monthly to the Pekin Syndicate, or to the bank appointed for that purpose by the Syndicate. The latter will convert the sums so received into gold at the best rate obtainable, in order to be used for the service of the loan. Information as to this will be given from time to time to the Director-General.

When by means of monies thus paid over the service of the loan is assured the Syndicate will set apart 10 per cent. of the surplus, which will be devoted to building up a reserve fund in order to meet the cost of ordinary or extraordinary repairs with a view to assure the working of the line. The surplus of net earnings still remaining will be paid over to the Imperial Chinese Railway Administration. When the loan is all repaid, in accordance with the next following article, the Syndicate or its Representative will hand over to the Representative of the Director-General all the line, fixtures, rolling-stock, and appurtenances, the whole in good working condition.

5. The duration of the present contract is fixed at thirty years from date of signature. If, however, on the expiry of that date the loan is not fully paid off the term of the contract will be necessarily extended, and it will continue until the whole loan is finally redeemed. But if the loan is finally redeemed before the due date the present working contract shall become null and void from the date of such redemption.

6. The Pekin Syndicate, during the term of this contract for the working of the line, shall be entitled to receive from the Imperial Chinese Railway Administration, on making up the yearly accounts, 20 per cent. of the surplus profits of each year. By surplus profits is meant what is left over after providing for payment of interest and redemption of capital.

7. In case of dispute the matter is to be settled as provided for in Article 20 of the principal contract.

8. If the earnings are insufficient to meet working expenses the Imperial Chinese Railway Administration will provide funds so as to enable the regular working of the line to be kept up. The funds thus supplied will be considered as a temporary advance merely, and to the paid as soon as the income exceeds expenditure.

9. All materials and supplies which the Syndicate may require for the working, maintenance and repair of the line shall, if imported from abroad, be exempt from Customs duty and likin.

10. The present contract is drawn up in two copies, one for the Imperial Chinese Railway Administration and the other for the Syndicate.

In case of doubt or difference in interpretation of the contract the English version shall be deemed the standard.

This Contract shall be submitted to the Throne for ratification by the proper authorities, and when the Imperial sanction has been obtained it will be communicated by the Wai Wu Pu in an official despatch to the British Minister. Signed and sealed at Peking the 3rd July 1905.

Signature and Seal of

SHENG HSUAN-HUAI,

Director-General of Railways.

(Signed) G. JAMIESON, Agent-General,

Pekin Syndicate Ltd.

APPENDIX D.

FINAL AGREEMENT BETWEEN SHENG KUNG-PAO, DIRECTOR-GENERAL OF THE IMPERIAL CHINESE RAILWAY ADMINISTRATION, AND THE BRITISH AND CHINESE CORPORATION LIMITED, FOR THE ACQUISITION OF A Loan for THE CONSTRUCTION OF A RAILWAY FROM SHANGHAI TO NANKING :

THIS Agreement is made the 15th day of the Intercalary month of the 29th year of Kwang-Hsu, corresponding to the 9th day of July 1903, at Shanghai, and the Contracting Parties are:

The Director-General of the Imperial Railway Administration, Sheng Kung-Pao (to be called hereafter Director-General), acting under authority of an Imperial Decree, of the one part, and Messrs. Jardine, Matheson & Company, and the Hong Kong and Shanghai Banking Corporation, representing as Joint Agents the British and Chinese Corporation Limited (hereinafter called the Corporation), of the other part.

Whereas, on the twenty-third day of the Intercalary third month of the twenty-fourth year of Kwang-Hsu, being the thirteenth day of May 1898, a preliminary Agreement was signed at Shanghai between the Director-General of the Chinese Imperial Railway Administration, Sheng, acting under instructions from the Tsungli Yamen, and the British firm of Jardine, Matheson & Company, for themselves and on behalf of the Hong Kong and Shanghai Banking Corporation, representing as Joint Agents a British Syndicate, and

Whereas, on the 12th day of December 1902, an Imperial Decree was issued in the following terms:-"In view of the important considerations connected with the construction of railways in various parts a Decree has already been issued apportioning the responsibility for the duties connected therewith. Hereafter the accounts of receipts and disbursements are to be prepared by Sheng Hsuan Huai, and communicated by him for the examination of the High Authorities of the provinces through which the railways pass, and subsequently for submission in a joint memorial to the Throne. When a line of railway has been surveyed, before the work may be begun, plans and specifications must be communicated to the High Authorities above-mentioned, who will depute an official to ascertain that there are no objections. Should Sheng Hsuan Huai enter into any agreement with a foreign Syndicate he must before signing such Agreement obtain the assent of the High Provincial Authorities, and a copy of such Agreement must be submitted to the Throne in a joint memorial," and

Whereas, on further consideration it has been found necessary to make certain alterations in the aforesaid preliminary Agreement, now therefore it is

agreed that this final Agreement shall be substituted for the preliminary Agreement above referred to.

Article 1.-The Corporation agrees to issue on behalf of the Railway Administration, a sterling loan (hereinafter referred to as the loan) for an amount not exceeding £3,250,000 sterling, on the terms and conditions hereinafter contained. Imperial Chinese Government bonds are to be issued for the entire sum, similar to the bonds of the Imperial Railways of North China, with the Railway as first mortgage security therefor. The loan shall be issued in two or more parts, and each series is to be in such amount as the Engineer-in-Chief may determine under direction of the Director-General and the Corporation, in accordance with the extent of the work to be undertaken, so as to prevent the Chinese Government from suffering undue loss of interest. The price agreed upon for the loan is 90 per cent. of the nominal value, and any loss or profit in selling these bonds to the public shall be borne by or go to the Corporation. The interest on the bonds shall be at the rate of 5 per cent. per annum on their nominal value, and be payable half-yearly.

The duration of the loan is fixed at fifty years, commencing from the date of the ratification of this Agreement, but no interest will 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.

If any of the bonds or net profit certificates hereinafter mentioned are lost or destroyed a reissue of any thereof is to be made in the amounts respectively called for by such lost or destroyed bonds or certificates, but proper proof of the loss or destruction must be given in the usual form to the Corporation and the Chinese Minister in London for examination and record, and the requisite guarantee is to be obtained by the Corporation from the respective claimants concerned.

Article 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 Corporation shall build and equip as economically as possible in accordance with the best modern system, the line from Shanghai to Nanking, it being hereby agreed that the Chinese Administration shall secure the necessary land for a double line of railway for the whole distance, as well as other facilities for the purposes of the construction and working of the line.

When the line is completed, if there is a surplus from the sale of bonds, the said surplus shall be at the disposal of the Chinese Government for redeeming the bonds, or to be placed through the Director-General in a bank on deposit for the purpose of paying interest on the loan or for developing business beneficial to the Shanghai-Nanking Railway, all to be arranged at the proper time between the Director-General and the Corporation. Should Chinese themselves build branch lines to act as feeders to this railway, it is understood that the system of construction and equipment thereof shall be adopted by such branch lines in order to facilitate through connection.

In all matters relating to the construction and administration of the