2
Shanghai and placed to the credit of the Railway Administration for the exclusive purpose of building the railway.
(5) The Director-General to appoint a Board of five Commissioners, with head office at Shanghai, for super- vising the construction and operation of the railway two Chinese, an engineer-in-chief, and two British members selected and appointed by the Corporation. Their salaries to be fixed by the Director-General and the Corporation and paid from the general accounts of the railway. Foreigners of ability and experience to be employed in the important offices of the railway.
(6) Subject to the guarantee and mortgage given by the Chinese Government,
the line
property.
is declared a Chinese
(7) Land for the railway to be acquired by the railway administration. When the purchase of land is completed, additional bonds to an amount not exceeding £250,000 to be issued to repay the sums so spent. These
bonds to have the same security and treatment as the loan issue, but to bear interest at 6 per cent. and to be redeemable at par on six months' notice.
(8) As remuneration for superintendence and services the Corporation to re- ceive 5 per cent. on the entire cost of all materials purchased for the railway, but no other commission : trade discounts to go to the con- struction account.
(9) After deduction of working and other expenses (including cost of main- tenance and repairs, and renovating or replenishing engines and rolling stock) the Corporation to receive 20
per cent. of the net profits, to be represented by certificates to an amount equal to one-fifth of the cost of the line. These certificates to carry no interest, to have a term of 50 years and a face value of £100. The Chinese Administration to have the right to redeem them at any time at their face value ; after 50 years the certificates to be null and void.
(10) The Chinese Railway Administration to be entitled to issue and receive similar net profit certificates to an amount equal to the remaining four- fifths of the loan; but their net
Eastern
No. 88,
P. 7.
3
profits to be retained by the railway administration to accumulate a fund for redeeming bonds, &c.
(11) The bonds and their coupons, the net profit certificates, and the income of the railway, to be free from imposts of any kind by the Chinese Govern-
ment.
(12) The Corporation not to transfer its rights under this Agreement, or the management of the Railway, to other nations or people of any nationality except British or Chinese: similarly the Railway Administration not to transfer any of its rights to persons of other nationality.
(13) Line to be begun within one year, and completed within five years, frɔm date of ratification.
(14) Bonds redeemed in less than 25 years to receive a premium of 2 per cent.; after 25 years to be redeemable at face value.
Under this agreement part of the loan-viz, £2,250,000 was issued last July at a fixed price of £97 108. The Corporation ceded to the Bond-holders their right to the 20 per cent. of profits-splitting each Net Profit Certificate into five Sub-Certificates and attaching one of these to each bond. The bonds are now quoted at 14 discount.
3. Up to the present nothing has been done by the Corporation to replace the Preliminary Agreement of 28th March, 1899, by a Final Contract for the Canton-Kowloon Railway. The matter is regarded in Hong Kong as one of great and pressing importance; not only is it felt that the railway if extended to the British coast opposite Hong Kong would increase the prosperity of the Colony, but it is thought that so long as such a line is not actually made, there is always the fear that foreign rivals may get a concession for constructing a line from Canton to a port on the Chinese seaboard and thereby jeopardise the commercial position of Hong Kong. The Acting-Governor in his despatch of 15th January, 1904, proposed that the Colony should guarantee 3 per cent. on the subscribed capital for five years; and suggested that if this was not sufficient assistance, either (a) the Imperial Government should give a guarantee for a further five years, or (b) a Colonial guarantee for 10 years, backed by the Imperial Government, might be given. Apparently he contemplated that the whole line should be built, worked, and owned under the terms of the Corporation's agreement with the Chinese Government, with a right of eventual purchase by the Colonial Government of the portion in British territory.
19789
A3
PUBLIC RECORD OFFICE
Reference :-
TLC.O. 882
سلسل.
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