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The American group and its associates (such associates to be admitted to participa- tion with the full consent of and to the extent-not more than 40 per cent. of the whole-to be determined by the Chinese Government), hereinafter called the bank, and Pauling and Co., hereinafter called the contractors, of the other part.
Now it is hereby mutually agreed by and between the parties hereto as follows
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1. The administration engages to borrow from the bank the sum necessary to construct the railway from Chinchou to Aiguu. The rate of interest for this loan shall not exceed 5 per cent. per annum, and the terms of issue, which shall be the most favourable obtainable, and the other details of procedure shall be arranged in a mutually satisfactory manner.
The payment of interest and amortisation of this loan shall be guaranteed by the Imperial Chinese Government, and the security therefor shall be the railway line.
Interest payments and amortisation shall be met by the receipts of the railway or the proceeds of the loan, and if these be insufficient, by such Manchurian revenues as may hereafter be selected by the administration and the bank in a manner to be mutually satisfactory.
The first bond issue shall be for the amount necessary for the construction and equipment of the railway between Chinchou and Tsitsihar. The second shall be for the construction and equipment of the railway between Tsitsihar and Aigun.
An equitable arrangement shall be made for the redemption of the bond issues by the Board of Communications prior to the expiration of their terms.
2. The administration agrees to contract with the contractors for the construction and equipment of this road. The contractors engage to build and equip the line, using the best possible materials on the cheapest possible terms. The detailed terms and conditions, &c., shall be arranged hereafter in a manner that shall be mutually satis- factory.
3. On equal terms Chinese materials shall be given the preference. If, however, Chinese materials are not available, recourse shall be had to other markets.
The administration shall be liable to the contractors only for the contract price of the railway, and it is clearly understood that no commission shall be paid on the purchase of materials.
4. During the construction of this railway the appointment of the chief engineer shall be vested in Pauling and Co., but this appointment must be approved by the president of the railway company, to be designated by the Imperial Chinese Govern- ment. The chief engineer shall be under the control of the Board of Communications and the railway company,
5. As the work of construction is completed section by section, the railway shall be operated during the currency of the loan by a company which shall be under the control of the Board of Communications. If, after the payment of interest and amortisation charges and operating expenses, there be a surplus, the railway company shall receive 10 per cent. thereof.
6. The company shall be composed of Chinese, Americans, and British, as may be hereinafter arranged, the Chinese to have a majority interest in the control, but under no circumstances shall persons of any other nationality than those herein mentioned have any voice in the management or control of the company without the full permission of the Imperial Chinese Government.
The company shall have as its president a high official appointed by the Imperial Chinese Government. The other details of organisation shall be subsequently arranged in a mutually satisfactory manner.
7. This railway company is to be organised by Chinese, American, and British interests. It is recognised, however, that this line is constructed in Chinese territory for commercial purposes, and in case of war may be used only for the transportation of Chinese troops and munitions of war.
8. This preliminary agreement Manchuria and the Governor of Fengtien with the bank and contractors, subject to approval by Imperial edict, without which it shall be null and void.
signed by their Excellencies the Viceroy of
9. In case certain portions of this agreement are characterised as unacceptable by the Imperial edict, or in case the administration finds on further consideration that there are certain unsatisfactory provisions therein, these clauses to which exception has been taken shall be revised in the detailed agreements in a manner which shall be satisfactory to all parties.
10. This agreement is executed in triplicate in English and Chinese, one set to be retained by their Excellencies the Viceroy of Manchuria and the Governor of Fengtien,
one set by the American group, and one set by Pauling and Co. In case there be any misunderstanding arising from a difference between the English and Chinese texts, the matter shall be settled by a mutually satisfactory arrangement.
Signed at Mukden by the contracting parties this nineteenth day of the eighth moon of the first year of the Emperor Hsuan Tung, being the second day of October of the year one thousand nine hundred and nine of the western calendar.
The Viceroy of Manchuria and the Governor of Fengtien.
For J. P. Morgan and Co.,
Kuhn, Loeb, and Co.,
The First National Bank,
The National City Bank, of New York
(constituting the American Group).
For Pauling and Co.,
1
Agent.
*
Agent.