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the first instance Chinese goverment will take the
necessary steps to invest monies in hand and due for
payment shortly (with the exception of amount required
for the purposes specified in paragraph 3 below) in re-
habilitation of said railways preference being given
to those lines in which there is a British financial
interest. All orders for railway materials required
and purchases out of these funds including bridges
locomotives rolling-stock rails and other railway equip-
ment will be placed in Great Britain. Funds thus in-
vested will be regarded as a loan to railways in question
service of which will be available as to repayment of
capital and interest after prior charges on railway
revenues concerned have been met as an endowment fund
for educational purposes. If funds permit the urgently
necessary work in connection with conservancy of Hopei
rivers will similarly be financed out of monies in
question under the same conditions as railway work.
3. It is the further intention of Chinese govern-
ment in order to make an immediate start on Anglo-
Chinese educational work of the kind contemplated in
the report to transfer out of accumulated funds now
on deposit the sum of £250,000 to Hongkong University and a sum of £200,000 to Universities of Chine committee
in Londo11.
4. With regard to future instalments of indemnity funds these will also be partly applied to immediate educational purposes as recommended in report besides being invested in railway rehabilitation and construc-
tion and river conservancy work in manner and under
conditions..