ARTICLE XVII.

Of the whole amount of the present loan, amounting to a nominal capital of 40,000,000 francs, the Russo-Chinese Bank buys outright 22,000,000 francs of nominal capital, or 44,000 bonds of 500 francs, delivery to date from payment to the Agency of the Russo-Chinese Bank at Paris, at the price of 90%, that is to say for the total sum of 19,800,000 francs.

ARTICLE XVIII.

(Substantially the same as Art. XVIII, in No. 58).

ARTICLE XIX.

(Same as Art. XIX. in No. 58, with omission of first five and the last paragraphs. Last paragraph reads: "It (the Russo-Chinese Bank) will endeavor to finish the work on the line within a term of three years."

ARTICLE XX.

(Substantially the same as Art. XX in No. 58).

ARTICLE XXI.

The Chinese Government gives the Russo-Chinese Bank an option to December 31, 1905, to purchase the balance of the loan, or 18,000,000 francs, and at the price of 90% of par value.

Said option may be availed of at one or several times, regardless of the amortizations made. Delivery of the bonds taken on the options will be made at the Russo-Chinese Bank in Paris, which will only surrender them under the conditions and terms provided for in the above Article XX.

ARTICLE XXII.

If the Russo-Chinese Bank should avail itself of the right given it to purchase all or a portion of the securities for which it has an option granted it, it shall come to an agreement in each case with the Imperial Chinese Railway Company to determine the sections (of line) to be built with the new funds.

ARTICLE XXIII.

Studies for the line, dating from the signing of the present contract, are at the expense of the Imperial Chinese Railway Company. The whole line shall be divided into two principal sections: The first from Cheng-ting Fu to P'ing-t'ing on the left bank of the Wei-shui River, to the north of P'ing-t'ing Chou, and the second from that point to Tai-yuan Fu.

It is hereafter to be understood that the section to be built with the funds derived from the first option, will be that from Cheng-ting Fu to P'ing-t'ing and that studies for it will begin the first year.

Within two months from the date of ratification of the present contract, the Russo-Chinese Bank will place at the disposal of the DirectorGeneral of the Imperial Chinese Railway Company a sum of 1,000,000 francs as an advance on the proceeds of the loan.

This sum, it is understood, can only be applied to studies and construction work on the Shansi railway. The rate of interest on this advance is fixed at 6% annually, regardless of the price of issue.

The first option must be taken up within eleven months from the date of signing the present contract; the proceeds of said option shall be applied in the first place to refunding the above mentioned advance.

ARTICLE XXIV.

The Russo-Chinese Bank reserves the right to make one or more issues, by public subscription or otherwise, of the whole or a part of the bonds bought outright, or forming a part of the option; the expense of such issues to be borne, of course, by the Russo-Chinese Bank.

ARTICLE XXV.

(Substantially the same as Art. XXIV in No. 58.)

ARTICLE XXVI.

(Same as Art. XXV in No. 58 except that cases of disagreement between the parties to the contract are to be settled by the Russian Minister at Peking and a member of the Chinese Foreign Office or by a judge of their choice.)

ARTICLE XXVII.

(Same as first phrase of first paragraph of Art. XXVI in No. 58.)

ARTICLE XXVIII.

(Same as Art. XXVI in No. 58, exclusive of first phrase.)

No. 42.

GREAT BRITAIN.

PRELIMINARY AGREEMENT BETWEEN THE HONG KONG AND SHANGHAI BANK AND DIRECTOR-GENERAL HU FOR A LOAN TO THE PEKING-NEWCHWANG RAILWAY, a

JUNE 7, 1898.

This is a preliminary Agreement made between His Excellency Hu, Governor of Peking and Administrator-General of the Imperial Railways of North China within and without the Great Wall, hereinafter called the Administrator-General, of the one part; and the Hong Kong and Shanghae Banking Corporation representing a British Syndicate hereinafter called the Syndicate, of the other part.

1. The Syndicate is hereby authorized by the AdministratorGeneral to make arrangements to float and issue, on behalf of the Railway administration on the best terms obtainable on the market, a sterling loan for the equivalent of about (16,000,000 taels), for the construction of a railway-line from Chung-hou-sou to Hsin ming-ting, and a branch line to Ying-tzu, and for the redemption of existing loans to the Tien-tsin-Shan-hai-kuan and Tien-tsin-Lu-kou-chiao lines.

2. The security for the loan shall be the permanent way, rollingstock, and entire property, together with the freight and earnings of the existing lines between Peking, Tien-tsin, Tang-ku, and Chunghou-sou, and also of the proposed new lines when constructed, in addition to the rights of mining coal and iron, which will be retained by the Railway administration on each side of the proposed new lines, for a distance to be determined. In the event of default or arrears in payment of interest or repayments of principal, the said railway lines and mines shall be handed over to representatives deputed by the Syndicate, to manage them on their behalf, until principal and interest of the loan are redeemed in full, when the management will revert to the Railway Administration.

It will, however, be provided that if such arrears are for a small sum, and it appears desirable to the Syndicate to extend the due date of their payment for a term not exceeding three months, it shall be open to the Syndicate to do so.

In the event of any special circumstances arising necessitating the introduction of important changes by the management aforesaid, these

a British Parliamentary Blue Book, China, No. 2 (1899), p. 4.

changes shall be effected in consultation with the AdministratorGeneral, and in the best interests of the railway. In the case of war or famine, troops and grain will be transported over the lines on terms to be arranged hereafter.

No further loan, charge, or mortgage shall be charged on the security named above until this loan is redeemed.

3. During the currency of their loan, the principal members of the railway staff shall be capable and experienced Europeans who shall be, as at present, appointed by the Administrator-General of the Railway, and may be, in the event of their misconduct or incompetency, dismissed, after consultation with the Chief Engineer. If there are Chinese with sufficient engineering or traffic experience, they may be appointed as well as Europeans. Should it be necessary to appoint a new Chief Engineer, such appointment shall be made in consultation with the Syndicate.

In addition to above, a capable and experienced European railway accountant shall be appointed to inspect all the accounts of the railways.

All receipts and earnings of the lines herein specified shall be paid into the credit of the Railway Administration with the Hong Kong and Shanghae Banking Corporation, Tien-tsin, together with 50,000 taels annually payable under the Board of Revenue's arrangement, approved by the Throne, by each of the Provinces of Shansi, Shensi, Honan, and Anhui for railway purposes for ten years.

All expenses of repairing and maintaining lines will be paid from this account, the remainder of which shall then be charged with the service of this loan.

4. The rate of interest, price, term of years, and other particulars shall be left to the Syndicate to arrange on the best terms possible on the market when the moment appears favourable for floating the loan. Instalments of proceeds will be arranged as far as possible to suit the progress of construction and the requirements of the AdministratorGeneral, interest being calculated from the date of such payments. The Loan will be redeemable by annual drawings to be scheduled in the final Agreement. Besides the drawings so scheduled, the Administrator-General may from time to time, on giving due notification to the Syndicate, call for extra drawings to be held, bonds so drawn being redeemed by the Railway Administration at 20 per cent. premium on their par value.

5. If it should be found that the Loan cannot be floated without the introduction of some special attraction, the Administrator-General small memorialize the Throne, recommending that a Concession of mining rights be granted to the Syndicate at a point or points on the lines, and on terms to be arranged with the Syndicate on the basis of the mining Regulations newly established by the Tsung-li Yamên.

The requests of the Syndicate will be confined to mines within a distance of 5 li of the railway.

6. The date of issue of this loan shall be left to the discretion of the Syndicate, to be fixed in accordance with the state of the market, but should it be found impossible to issue it before the 1st day of October next, the Syndicate will arrange to advance to the AdministratorGeneral on or about that date, an instalment of about 2,000,000 taels on account of, and repayable out of the proceeds of the loan when floated. The terms of this advance shall be left to the arrangement of the Syndicate on the best terms obtainable, interest not to exceed the rate of 5 per cent. per annum, and the Syndicate shall be authorized to issue temporary bonds for the amount if required.

7. For the satisfaction of the investing public who are unacquainted with China, a satisfactory report will be required from District Engineer, Mr. J. Ginnell, as to the condition and earning power of the old lines, and as to the route, prospects, and mineral wealth of the new lines to be constructed, and Mr. Ginnell shall be instructed by the Administrator-General to proceed to London as soon as possible after the signing of this preliminary Agreement, to confer with the Syndicate on these matters.

8. The terms of this preliminary Agreement will, immediately after signature, be submitted by the Administrator-General to the Throne for sanction by Imperial Edict, which shall be officially communicated by the Tsung-li Yamên to the British Minister in Peking.

9. Three months from the date of signature of this preliminary Agreement shall be allowed to the Syndicate to accept or decline its terms. Upon their confirmation by the Syndicate, this preliminary Agreement shall be replaced by a definitive Agreement, providing for all details."

Signed at Peking, this 7th day of June, 1898, being the 19th day of the 4th moon of the 24th year of the Emperor Kuang Hsü.

(Seal of Administrator-General of Railways within and without the Shan-hai-kuan boundary.) For the Hong Kong and Shanghae Banking Corporation,

(Signed)

E. G. HILLIER, Agent.

a The definitive Agreement bearing date October 10, 1898, is given below, pp. 332-337.