exchange at any date or dates within six (6) months previous to any due date for the repayment of interest and principal.

The Chinese Government unconditionally undertakes, and hereby promises, to pay the principal of the loan and the interest on the loan on the due dates fixed therefor. If, at any time, the earnings of the Railway, together with funds available from the proceeds of the loan, are not sufficient to meet the interest on the bonds and the repayment of capital in accordance with the amortisation schedule hereto attached, the Viceroy shall devise means for supplying the deficiency; and should his inability to do so appear probable, he shall memorialise the Government to take measures to make up the deficiency from other sources, and thus be ready to pay off the indebtedness, so that the required amount may be placed in each case at least fourteen days previous to the due dates of such payments in the hands of the Hongkong and Shanghai Banking Corporation.

Article 15.-The Corporation may, subject to all its obligations, transfer or delegate all or any of its rights, powers, and discretions to its successors or assigns, but the Corporation, which is a Corporation formed under English law, shall not transfer its rights under this Agreement to any other nation, or people of any other nationality, except British or Chinese. Similarly, the Chinese Government's rights and authority under this Agreement shall not be transferred to persons of other nationality.

It is further understood that the Chinese Government will not build another line competing with this Railway to its detriment.

Article 16.-The term of the loan, as stated in Article 1, shall be thirty (30) years. Repayment of principal shall commence after the expiry of 12 years from the date of the loan and shall be completed in 17 years by yearly payments to the Hongkong and Shanghai Banking Corporation as Agents for the service of the loan, acting for the Corporation under the terms of this Agreement, in accordance with the amortisation schedule hereto attached.

If at any time after the expiry of 12 years from the date of the loan, the Imperial Chinese Government should wish to redeem the outstanding amount of the loan, or any portion of it, not yet due under the provisions of the amortisation schedule hereto attached, not less than six months' notice shall be given in writing by the Viceroy to the Representative of the Corporation, declaring the number of additional bonds so required to be redeemed, whereupon the Representative of the Corporation shall immediately proceed to make such arrangements as may be necessary and usual for the redemption of the number of bonds specified, which, when duly redeemed after payment by the Imperial Chinese Government of the proper amount due thereon, shall be cancelled and delivered to the Viceroy.

All bonds thus redeemed, in excess of the amount specified in the amortisation schedule hereto attached, before the expiry of 25 years from the date of the loan, shall be paid for with a premium of 23 per cent. over their face value (i.e. £102, 10s. will be required to pay for £100), but, after 25 years, bonds may be redeemed over and above the amounts specified in the schedule without premium, upon notice being given in the manner above specified.

As soon as the loan has been completely redeemed, this Agreement shall become null and void and the mortgage shall be cancelled.

Article 17.-If, during construction, any proceeds of the sale of the bonds are lying unused and bearing interest on their deposit whilst the construction of the Railway is going on, such interest is to be credited to the general account of the Railway in order that the Railway may enjoy the full advantage thereof.

It is also agreed that, if the Corporation shall think it expedient before the sale of any of the bonds to advance any money for the work, such advances, together with the interest thereon, not exceeding a charge of 6 per cent. per annum, shall be deducted from the proceeds of the sale of the bonds.

Article 18.-The junction of the sections of the Railway from Canton to the boundary of the Kowloon leased territory under British control, and from the said boundary to the port of Kowloon respectively, and the subsequent joint working of the two sections, shall be arranged by agreement between the Viceroy of Canton and the Governor of Hongkong.

Article 19.-This Agreement is signed under the authority of an Imperial Edict dated which has been officially communicated to the British Minister in Peking by the Wai-wu-pu.

Article 20.—This Agreement is executed in quintuplicate in English and Chinese, one copy to be retained by the Viceroy, one by the Wai-wu-pu, one by the Board of Communications, one by the British Minister, and one by the Corporation; and 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, this 23rd day of the first month of the 33rd year of the Emperor Kwang Hsu, being the 7th day of March 1907.

Seal of Wai-wu-pu.

Signature of TANG SHAO-YI.

Witnessed by Canton Viceroy's Delegates, TAO-TAIS KUNG and Hu.

For the British and Chinese Corporation, J. O. P. BLAND.

Representative in China.

Witnessed by

Messrs. JARDINE, MATHESON & Co., and

Joint Agents,

H. S. GARDNER, Agent, H. & Sh. Bkg. B. & C. Corporation.
Corporation.

[TABLE

CANTON-KOWLOON RAILWAY LOAN, £1,500,000, AT FIVE PER CENT., THIRTY YEARS.

APPENDIX G.

COPIES OF THE DESPATCH FROM HER MAJESTY'S MINISTER AT PEKING, FORWARDING COPIES OF THE NOTES EXCHANGED WITH THE CHINESE GOVERN MENT, RESPECTING THE NON-ALIENATION OF THE YANG-TSZE REGION.

INCLOSURE I.

Sir C. MACDONALD to the TSUNG-LI YAMEN.

MM. les MINISTRES,

PEKING, February 9, 1898.

Your Highnesses and your Excellencies have more than once intimated to me that the Chinese Government were aware of the great importance that has always been attached by Great Britain to the retention in Chinese possession of the Yang-tsze region, now entirely hers, as providing security for the free course and development of trade.

I shall be glad to be in a position to communicate to Her Majesty's Government a definite assurance that China will never alienate any territory in the provinces adjoining the Yang-tsze to any other power, whether under lease, mortgage, or any other designation. Such an assurance is in full harmony with the observations made to me by your Highnesses and your Excellencies.

(Translation)

I avail, etc.,

(Signed) CLAUDE M. MACDOnald.
II.

The TSUNG-LI YAMEN to Sir C. MACDONALD.

KUANG HSU, 24th year, 1st moon, 21st day. (February 11, 1898.)

The Yamen have the honour to acknowledge the receipt of the British Minister's despatch of the 9th February, stating that the Yamen had more than once intimated to him that the Chinese Government were aware of the great importance that has always been attached by Great Britain to the retention in Chinese possession of the Yang-tsze region, now entirely hers, as providing security for the free course and development of trade. The British Minister would be glad to be in a position to communicate to Her Majesty's Government a definite assurance that China would never alienate (any territory) in the provinces adjoining the Yang-tsze to any other power, whether under lease, mortgage, or any other designation.

The Yamen have to observe that the Yang-tsze region is of the greatest importance as concerning the whole position (or interests) of China, and it is out of the question that territory (in it) should be mortgaged, leased, or ceded to another power. Since Her Britannic Majesty's Government has expressed its interest (or anxiety), it is the duty of the Yamen to address this note to the British Minister for communication to his Government.

They avail themselves, etc.

INDEX

American China Development Company, | Chinese Eastern Railway, the, agreement