bonds or any of the American Debentures, the Director General shall, not less than four months previous to the proposed redemption, notify in writing the Agent of the American Company resident in Shanghai, declaring the number of the bonds or the number of American Debentures so required to be redeemed and cancelled.

The Agent of the American Company shall, immediately on the receipt of such notice in writing, proceed to make arrangements for the desired redemption by drawing lots and taking other proper steps in the way customary in New York of the number of bonds or of American debentures in such quantity as may be required. And as soon as the Railway Administration under instructions from the Chinese Government, shall remit the proper amount, according to the redemption price of the bonds or the redemption price of the American Debentures, together with the interest due on the bonds or the net profits due on such Debentures, a notice of such redemption shall be published in two of the most prominent newspapers in New York and in such other financial centres as may be agreed upon with the Chinese Minister in Washington for four weeks. At the expiration of the four weeks and on the day fixed for the redemption, the American Company shall cause the usual lots to be drawn for the redemption of the bonds or of such debentures and shall pay over the respective prices of the same to their respective holders and shall thus redeem the bonds or debentures and cancel them, and thereupon the same are to be delivered to the Director General or to the Chinese Minister in Washington for return to the Director General.

All the first mortgage bonds and the American Debentures shall express that they are redeemable at any time on the conditions mentioned in the preceding paragraph and shall state that the payment of any interest for the bonds and participation of any of the net profits by the American Debentures so drawn by lot, shall entirely cease from the date mentioned by the published notice of the American Company. The amount required for the redemption shall, however, have to be got ready and be placed in the hands of the American Company before such redemption is carried out.

The first mortgage bonds, if redeemed within twenty-five years from the date they were originally issued, shall be paid for with a premium of two and one-half per cent. over their face value (. e., 1024 Dollars will be required to pay for 100 Dollars gold), but after the twenty-five years from the date of issue to the expiry of the term of the loan the bonds so redeemed shall be paid for without any premium whatever. If any interest is still due on any of the bonds at the time of redemption, such interest shall have thereupon to be paid in full. As to the American debentures, if they are redeemed within the term of their duration, they are to be paid for according to their face value, and if such debentures run to the end of their term, they become null

and void and no price need be paid on them nor need they be redeemed, but any net profits still due on them shall have to be fully paid up according to their amounts before the same are cancelled.

ARTICLE 22: If any proceeds of the sale of the Bonds are lying unused and bearing interest on their deposit while the construction of the railway is going on, such interest is to go to the general account of the Chinese Railway Administration in order that the Railway Administration may enjoy the full advantage thereof.

It is also agreed that if the American Company shall find it necessary, before the sale of any of the bonds, to advance any money for the work, the expense of effecting such advance, together with the interest thereon, not exceeding a charge of six per cent. per annum, shall be deducted from the interest derived from the above-mentioned unused proceeds of the sale of the bonds or otherwise to be provided for in the construction accounts. It is further agreed that the proceeds of the first sale of the bonds immediately following any such advance shall be used to pay off the said advance so as to save the cost of the aforesaid charge.

ARTICLE 23: If any of the bonds still remain unredeemed when the fifty years of the term of the loan are about to expire, the Director General will, within two years preceding the expiry of the said term, negotiate, by writing, with the American Company for an extension of the term of the loan and if six months shall have expired after such negotiation in writing and no definite arrangement shall have been come to, the Chinese Government shall be at liberty to take steps to devise means for elsewhere procuring funds to pay off the loan and to redeem the bonds and cancel the mortgage.

ARTICLE 24: It is hereby agreed that as concerns all matters in these agreements, whatever provisions are contained in the Main Agreement and are not mentioned in this Supplemental Agreement are to prevail.

ARTICLE 25: Although the Ping Hsiang branch was not originally included in the Main Agreement, yet seeing that Coal Mining operations have recently been begun thereon by the Chinese and that the prompt construction of this section (in order to reach the point of nearest water transportation, at Lukow), is now deemed by the Chinese to be of urgent necessity, and seeing also that such branch was included in the plans and estimates of the American Company's Chief Engineer for construction (subject to the approval of the Director General) in connection with the Main Line and that provisions to this end have been included in this Supplemental Agreement (In article 1, 2 and elsewhere), and also that Captain Rich, the Engineer of the Railway Administration has already begun work on the line at or near Ping Hsiang with funds supplied by the Director General, it is now agreed that:

If the American Company, on or before the first day of September, 1900, fails to begin work on this branch from the funds to be provided from the loan or otherwise, or does not take the line over at the actual cost thereof as may then have been incurred in the construction of the same under the supervision of Captain Rich, the said branch line (from Ping Hsiang to Lukow), may be withdrawn from the operation of this Supplemental Agreement and the Director General thereupon be free to adopt other measures for its construction. In such case the various references to such branch line in this Supplemental Agreement are to be considered as cancelled. But until the said date of September 1st, 1900, the American Company is free to so commence work on this branch, or to take over the same at the cost of such work as Captain Rich may then have done thereon.

ARTICLE 26: This Supplemental Agreement is written in the Chinese and English languages in five originals, viz.: One for the Tsungli Yamen, one for the Government Bureau of Railway and Mines, one for the Chinese Legation in Washington, and one for each of the contracting parties.

If there are doubts as to the meaning of the text, the English version is to be taken as the true one.

Dated the 26th year of Kwang Su, seventeenth day of the 6th month corresponding to the thirteenth day of July, 1900, at

The Chinese Minister at Washington duly designated hereto by the Director General of the Chinese Railway Administration, has hereunto set his hand and the Seal of his Office, subject to the sanction and ratification of the Imperial Chinese Government.

And the American Company hereby signs its Corporate name and affixes its Corporate Seal by the hands of its duly authorized Officers, the day and year above written.

AMERICAN CHINA DEVELOPMENT COMPANY,
By JOHN FRENCH, President.

[L. S.] Attest:

HENRY H. GRAFF, Secretary.

WU TING-FANG. [SEAL.]

Approved.

F. W. WHITRIDGE.

NOTES EXCHANGED BY THE CHINESE MINISTER IN WASHINGTON AND THE SECRETARY OF STATE OF THE UNITED STATES ON THE STATUS OF THE AMERICAN CHINA DEVELOPMENT COMPANY IN ITS RELATION TO THE CANTON-HANKOW RAILWAY.

No. 1.

No. 33.]

CHINESE LEGATION, Washington, May 10, 1904.

SIR: I have the honor to inform you that, in view of the present condition of the American China Development Company, the control of which has passed into other than American hands as stated in the enclosure to my informal note of the 29th of January last, I am instructed by my Government to inquire,-(1) If the American China Development Company is considered by the United States Government to be a bona fide American Company; (2) If the United States Government will maintain the sole right to deal with all diplomatic matters affecting the interests of this Company; (3) If the United States Government will take steps to make public its position concerning the Canton-Hankow Railway and its intention to protect the Railway's interests.

Accept, Sir, the renewed assurances of my highest consideration. CHENTUNG LIANG CHENG.

Honorable JOHN HAY,

No. 41.]

Secretary of State.

No. 2.

DEPARTMENT OF STATE,

Washington, May 11, 1904.

SIR: I have the honor to acknowledge the receipt of your note of the 10th of May, in which you inform me you are instructed by your Government to inquire:

1. If the American China Development Company is considered by the United States Government to be a bona fide American Company; 2. If the United States Government will maintain the sole right to deal with all diplomatic matters affecting the interests of this Company; 3. If the United States Government will take steps to make public its position concerning the Canton Hankow Railway and its intention to protect the Railway's interests.

To which I have the honor of replying as follows:

1. The United States Government considers the American China Development Company to be in good faith an American Company.

2. The United States considers that, as the Company is at present organized and conducted, this Government alone has the right to deal with diplomatic questions affecting the interests of the Company.

3. The United States will make public its position concerning the Canton-Hankow Railway, and its intention to interpose its good offices on all proper occasions in the interests of that railway.

Your Excellency will understand that this Government reserves its right to cease its recognition and its assistance of the above mentioned Company in case of any change in its organization or conduct which may seem to justify such action on the part of this Government. Accept, Sir, the renewed assurance of my high consideration. JOHN HAY.

Sir CHENTUNG LIANG-CHENG, K. C. M. G.,

etc., etc., etc.