CO882-(6-8) — Page 67

PUBLIC RECORD OFFICE

Reference:

TILICO. 882

6PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH—NOT TO

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Detailed plans and estimates of cost, whether of the respective sections of the railway or of any alterations of the same, are to be submitted for the approval of the Viceroy by the Engineer-in-Chief.

ARTICLE 3.

The loan shall be secured by mortgage declared to be now entered into in equity by virtue of this agreement, and shall, as soon as possible hereafter, be secured by a specific and legal first mortgage in favour of the Corporation upon all lands, materials, rolling stock, buildings, property, and premises of every description pur- chased, or to be purchased, for the railway, and on the railway itself as and when constructed, and on the revenue of all descriptions derivable therefrom.

The provisions of this Article in respect of the mortgage are to be construed and treated as equivalent in purport and effect to a mortgage customarily executed and delivered in England to a trustee for the purpose of securing loans and bond issues upon railway properties in foreign countries.

ARTICLE 4.

It is hereby agreed that in six months, after this agreement is officially ratified, the Corporation shall provide the amount necessary to proceed with the detailed survey of the railway, whether this amount comes from the sale or hypothecation of the bonds, or from advances made, provided that bonds for the required amount shall have been executed and delivered to the Corporation. If, after expiration of eight months, from the date of the ratification hereof, the work of construction shall not have been begun on the railway, this agreement is to become null and void, but if failure to commence construction be due to any cause beyond the power of the Corporation to prevent, a reasonable extension of this time shall be arranged between the Viceroy and the Corporation.

Of the proceeds realised from the sale of the bonds after deduction so much of them as may be required to be kept in England for the purchase of materials and the payments of contracts there, such amounts as may be estimated and certified to by the Engineer-in-Chief to the Viceroy hereafter mentioned as being actually required for the construction of any particular section of the railway, may be ordered by the Viceroy, after consideration, to be transferred to Hong Kong to be kept in the Hong Kong and Shanghai Bank, and placed to the credit of the construction account of the railway for the exclusive purpose of constructing the railway in the manner herein provided for under the supervision of the Head Office and the Viceroy.

On each occasion of remittance being made to China the amount realised in sycee will be reported to the Viceroy, and any portion which may not be required shall be placed at interest. Similarly the balance in England shall be placed at interest, to be allowed at the usual rate.

The accounts of the money spent from time to time in Engand, and of the money transferred to the credit of the construction and other accounts for use in China are to be submitted quarterly to the Head Office for report to the Viceroy for the information of the Wai Wu Pu, and for his further report to the Board of Revenue and the Bureau of Mines for record therein, after such accounts have been approved, and signed by him.

ARTICLE 5.

As to the form of the Bond, it is to be agreed upon by the Viceroy or by the Chinese Minister in London and the Corporation at the same time as this agreement is signed, but if hereafter the money markets in London or other countries require any modification of the form of the bond, except in anything that affects the amount of the loan and the liability of the Chinese Government which are not to be touched at all, such slight modifications may be made to meet the views of the money markets by the Corporation in consultation with the Chinese Minister in London."

Any modifications are to be reported at once by the Corporation to the Viceroy for the approval of the Wai Wu Pù.

The bonds are to be engraved entirely in the English language, and shall bear the facsimile of the Viceroy, and of his seal of office, in order to dispense with the necessity of signing them all in person, but the Chinese Minister in London shall previous to the issue of any bonds put his seal upon cach bond with a facsimile of

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his signature as a proof that the issue and sale of the bonds are duly authorised and binding upon the Chinese Government.

Such bonds are to be numbered consecutively, and as many bonds as may be needed are to be properly engraved under the supervision of the Corporation, and after they are sealed by the Chinese Minister in London as hereintofore provided are to be countersigned by the Corporation.

All expenses for the engraving, safe deposit, and sale of the bonds are to be borne by the Corporation.

ARTICLE 6.

When the work of construction is ready to begin, the Viceroy will establish a Head Office at

for the construction and management of the railway. This office will be under the direction of a Chinese Managing Director (appointed by the Viceroy) with whom will be associated a British Engineer-in-Chief and a British Chief Accountant. These British employees shall be proposed and certified as compe- tent for their posts, by the Corporation, and shall be approved by the Viceroy; in the event of their services proving unsatisfactory, they shall be removable by the Corporation, in consultation with the Viceroy, upon complaint being made by either one or the other parties to this agreement. It is understood that the duties per- formed by these employees are intended to promote the mutual interests of the Chinese Government and the bondholders respectively, and it is, therefore, agreed that all cases of difference arising therefrom shall be referred for amicable adjustment between the Viceroy and the representative of the Corporation. The salaries and other terms of agreement of the Engineer-in-Chief and the Chief Accountant shall be proposed by the Corporation, for approval by the Viceroy and the amount of their salaries, &c., shall be paid out of the general accounts of the railway.

For all important technical appointments on the railway staff Europeans of experience and ability shall be engaged, and wherever competent Chinese are avail- able they shall also be employed. All such appointments shall be made, and their functions defined by the Managing Director and the Engineer-in-Chief in consulta- tion, and shall be submitted for the Viceroy's approval; similar procedure shall be followed in the case of Europeans employed in the Chief Accountant's Department. In the event of the misconduct or the incompetency of such employees, their services may be dispensed with by the Managing Director, after consultation with the Engineer-in-Chief, and subject to the sanction of the Viceroy. The form of agree- ments made with European employés shall conform to the usual practice.

The accounts of the receipts and disbursements of the railway's construction and operation shall be kept in Chinese and English in the Department of the Chief Accountant, whose duty it shall be to organise and supervise the same, and to report thereon for the information of the Corporation. A copy of this report shall be sent to the Viceroy by the Managing Director.

For the general subordinate technical staff of the railway the necessary arrange- ments shall be made by the Managing Director in consultation with the Engineer- in-Chief, and reported to the Viceroy in due course.

The duties of the Engineer-in-Chief shall consist in the efficient and economical construction and maintenance of the railway, and the general supervision thereof in consultation with the Managing Director. He shall always give courteous con- sideration to the wishes and instructions of the Viceroy, whether conveyed directly or through the Managing Director, and shall always comply therewith having, at the same time, due regard to the efficient construction and maintenance of the railway.

A school for the education of Chinese in railway matters shall be established by the Managing Director subject to the approval of the Viceroy.

ARTICLE 7.

Under the provisions of Article 3 of this agreement, the properties covered by the first mortgage security hereby created include the railway, its property, and equipment, and the mortgage is to be executed by a deed in the form contemplated by the said article. But subject to the guarantee and mortgage thus given by the Chinese Government, it is hereby declared that this railway is, in fact, a Chinese property.

All land that may be required along the whole course of the railway within

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