(2).
100
that the most advantageous plan consists in the invest-
ment of two-thirds of the said indemnity funds in
building railways in China with the proceeds accruing
therefrom to be applied to educational purposes, while
the remaining one-third will be partly invested in other
productive undertakings, the returns from which will be
devoted to the support of education, and partly used
for education by direct expenditure. For control and
administration of indemnity funds remitted, the Chinese
government will duly appoint a Board of Trustees which
will include a certain number of British members.
In view of the urgent necessity in connexion with
the reconstruction and development of China, of the
reconditioning of the existing Chinese government
railways in the first instance, the Chinese government
will take necessary steps to invest the monies in hand,
and due for payment shortly, in rehabilitation of the
said railways, especially those lines in which there
is a British financial interest, to which attention will
first be given. With regard to the purchase of railway
materials and equipment to be made out of the funds,
the terms of existing contracts will be taken into
consideration. Subject to the terms of such contracts,
all orders for railway materials required and purchased
abroad out of these funds including bridges, locomotives,
rolling stock, rails and other railway equipment will
be placed in Great Britain.
The funds thus invested
will be regarded as a loan to the railways in question,
the service of which will be available, as to repayment
of capital and interest, as an endowment for educational
purposes.