21. After completion of the survey and due inquiry as to the prevailing provincial li-kin and customs dues, the Imperial Directors will arrange with the Deutsch-Asiatische Bank and the British and Chinese Corporation (Limited), regulations for the payment of li-kin and duty upon merchandize and live-stock in transit over the railway lines.

22. All materials necessary for the construction and working of the lines obtained either from foreign countries or from other provinces of China and the revenues derived from the railway shall be exempt from duty or taxation of all kinds, and the Imperial Government of China will instruct the customs and li-kin authorities accordingly.

All material, plant and goods, shall be ordered from the DeutschAsiatische Bank and the British and Chinese Corporation (Limited), on conditions to be arranged in the Final Agreement.

The plans, estimates and requisitions for materials shall be submitted to the Board of Commissioners by the Chief Engineer for reference at their discretion to the Imperial Directors, and the same shall be furnished by the Deutsch-Asiatische Bank and the British and Chinese Corporation on the best possible terms.

Due consideration will be extended to materials from the Hanyang Iron Works, if available when required and of a quality satisfactory to the Chief Engineers of the Syndicate.

23. The Deutsch-Asiatische Bank and the British and Chinese Corporation (Limited), shall during the working of the lines maintain the railways, buildings, works, rolling stock and dependencies in good order and condition.

24. Branch lines or extensions in connection with the Tien-tsinChinkiang Railway lines that may appear profitable or necessary later on shall be the subject of negotiations between the Imperial Directors and the Syndicate.

25. The tariff to be introduced by the European Manager shall be approved by the Boards of Commissioners who will take into consideration the tariffs of other existing railway lines in China, while keeping in view the necessity for attracting traffic. The European Manager may also be instructed so enter into arrangements for tariffs on through traffic over connecting lines. In case of war, foreign or internal, the railway lines shall be reserved in the first instance for the transport of Chinese troops, commissariat and munitions of war under the order of Imperial Directors and at half the ordinary tariff rates, and the railways shall not engage in any service injurious to China. In case of famine, grain will also be transported over the lines at half the ordinary tariff rate under orders of the Imperial Directors.

26. All payments made and received in connection with the railway lines will be subject to the control of the Boards of Commissioners, and after the line is working estimates of receipts and expenditure shall be similarly submitted to the Boards. Regular accounts shall be

furnished through the Imperial Directors to the Railway and Mining Bureau of the Tsung-li Yamên and the Board of Revenue, Peking. All payments made must be represented by Chinese or foreign vouchers, as the case may be.

27. The profits from working completed sections of the railways during the time of construction shall be credited to railway construction account.

28. Should any traffic business be apparent later on as likely to benefit the Imperial Government of China and increase the earning power of the railway lines, the Deutsch-Asiatische Bank and the British and Chinese Corporation (Limited) shall represent the same to the Imperial Directors, and request them to obtain the necessary authority to arrange the business.

29. The Deutsch-Asiatische Bank and the British and Chinese Corporation (Limited) shall work the lines on behalf of the Imperial Government of China until the present loan is redeemed. As soon as the loan has been completely redeemed, this Agreement shall become null and void, and the railway lines and property named in this Agreement shall be handed over to the absolute disposal of the Chinese Government.

30. The annual net revenue is understood to be that resulting from the gross receipts of the passengers and goods traffic and the income. from other sources, after deducting all working expenses, including maintenance of the permanent way, repairs and renovation of machinery and rolling stock, and all expenses of administration, besides deducting an amount to be determined by the Deutsch-Asiatische Bank and the British and Chinese Corporation (Limited) as sufficient for accumulating a reserve fund for extraordinary improvements or repairs. Of the surplus of the joint net annual revenue of the northern and southern railway lines, after payment of interest and repayment of principal of the loan, first, a participation of 20 per cent. will be granted to the Syndicate in remuneration for their management of the construction and the working of the railway lines; secondly, an amount equal to 10 per cent. of the gross earnings will be transferred to a loan service reserve fund, deposited with the two Banks, and the remainder will be at the disposal of the Imperial Government of China. An account of the said loan service reserve fund will be rendered yearly to the Railway and Mining Bureau of the Tsung-li Yamên and to the Board of Revenue, and the fund will be drawn upon only in the case of the revenue of the railway lines being insufficient to meet the service of interest and principal of the loan. On redemption of the loan being completed, the balance of this fund will revert to the Chinese Government.

31. The powers and authority given and delegated to the Imperial Directors by the Imperial Government of China shall, in the case of

their promotion or removal, be transferred to their successors, and the Deutsch-Asiatische Bank, the Hong Kong and Shanghae Banking Corporation, Messrs. Jardine, Matheson, and Co., and the British and Chinese Corporation (Limited) may, subject to all their obligations, transfer or delegate all or any of their rights, powers, and discretions to any German or English Company, Directors, or agents with or without power of further transfer and sub-delegation.

32. Differences arising between the Imperial Directors and the Syndicate will be taken up and decided with equity and justice by the Tsung-li Yamên on the one side, and the Minister for Germany and the Minister for Great Britain in China on the other side.

33. As soon as possible after the signature of this Agreement the Engineers of the Syndicate will be authorized by the Imperial Chinese Government to survey and report upon the proposed railway lines, when, subject to such report being satisfactory to the Syndicate, this Preliminary Agreement will be ratified by the Syndicate and replaced by a Final Agreement containing all necessary details. Modifications in the conditions of this Preliminary Agreement may be made subject to the consent of both parties.

34. The provisions of this Preliminary Agreement shall, immediately after signature, be ratified by an Imperial Edict," which shall be communicated by the Tsung-li Yamên to the Ministers for Germany and Great Britain in Peking.

35. Five sets of this Agreement are executed in English and Chinese, one set to be retained by the Tsung-li Yamên, one by the Railway and Mining Bureau, and one by each Contracting Party.

In the event of any doubt arising regarding the interpretation of the Contract, the English text shall rule.

a Ratification was granted on the 24th of May, 1899. British Parliamentary Blue Book, China, No. 1 (1900), p. 190.

No. 52.

GERMANY.

CONCESSION GRANTED THE SCHANTUNG-EISENBAHN-GESELLSCHAFT FOR THE CONSTRUCTION AND OPERATION OF A RAILWAY FROM TSIN-TAO TO TSINAN FU.

[Translation.]

JUNE 1ST, 1899.

In response to a request made by the Deutsch-Asiatischen Bank (German-Asiatic Bank), representing the Syndicate, formed for the establishment of a German-Chinese Company with the title of "Schantung-Eisenbahn-Gesellschaft" (Shantung Railway Company), the Imperial Government agrees to grant to said company a conces sion for the construction and operation of a railway in the Chinese Province of Shantung, from Tsin-tao via Weihsien to Tsinan Fu with a branch line, starting from a point on the main line, to Poshan, according to the provisions of the German-Chinese Treaty of March 6, 1898, and under the following conditions:

$ 1.

The construction and maintenance of the railway shall be proceeded with by a German-Chinese Company, to be organized by the Syndicate upon the basis of the contract hereto attached.

This company will have its domicile at first in Berlin but will nevertheless remove the same to Tsin-tao within six months from the date of the granting of the concession.

$ 2.

The capital for the construction and operation of the railway is fixed at 54 Million Marks.

Care is to be taken that Germans as well as Chinese may participate in the public subscription to the stock of the Company. More especially, shall subscriptions be opened in the suitable commercial centers of East Asia, and the amounts there subscribed shall receive proper consideration.

$ 3.

The management of the railway shall be domiciled at Tsin-tao. The election of the President of the Board of Directors as well as the Chief Operating Official must be approved by the Imperial Government.

§ 4.

The following regulations govern the construction of the railway:

I.

In the building of the railway lines the special preparatory work shall determine the best possible connection with the most important coal fields, more especially with those of Weihsien and Tzechuan as well as the chief cities and towns between Tsintao and Tsinanfu, which, on account of their population or other significance, must be considered. in their relation to railway traffic.

In the construction of the railway station at Tsinan Fu consideration is to be given to the connection with the Hoang ho and the continuation of the railway on the one side to the southern boundary of the Province of Shantung in the direction of Kua-chou (Chinkiang), on the other side following the North Boundary of the same Province in the direction of Tientsin and Cheng-ting.

The Company must obtain from the Imperial Governor permission to carry out the railway line, in accordance herewith, in the territory of Kiau-chou, outside this territory the permission of the Imperial Minister in Peking is to be obtained.

The lines may be built for single track; however sufficient land for the construction of a double track must be provided.

The gauge shall measure 1,435 meter.

II.

German material shall be used, as far as possible, in the construction of the railways.

III.

The completion and opening of the main line from Tsin-tao to Tsinan Fu, and of the branch line to Poshan must follow within a period of 5 years, dating from the grant of the concession, and that of the railway section from Tsin-tao to Wei-hsien within a period of 3 years. Should the company be prevented from the fulfillment of these obligations by force major, the fixed periods shall be respectively extended.

§ 5.

The following stipulations shall obtain for the operation of the railways:

I.

The Governor of Kiau-chou is to be notified of the proposed opening of the railway on any one section at least three days in advance of the time set.