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information of the High Provincial Authorities on the state of the railway accounts, the progress of the work, and the management of the railways. To this end they will be granted every facility by the Roards of Commissioners, who will always give them access to the records of the head offices at Tien-tsin and Shanghae respectively. But these officials shall not in any way interfere with the Boards in the performance of their duties. The salaries of these officers shall be the same as that of each of the Chinese members of the Boards, and be paid out of the railway account.
The fauctions of the Engineers-in-Chief, who will at all times give courteous consideration to the wishes of the High Provincial Authorities and the Director-General, shall be limited to the construction and operations of the lines, and the management of affairs connected with the railways. No foreigners employed by the railways shall be allowed to treat Chinese officials with disrespect, or interfere in local affairs, or usurp the authority of local officials, and should any such be guilty of riotous conduct or of wounding and maiming Chinese, the same shall be dismissed on complaint being made by the Director-General.
As the progress of construction reaches any particular province the appointment under the Imperial sanction of a Chinese official of high rank shall be made in such province by the Director-General for facilitating the settlement of any local matter with the Provincial Government concerned.
For the service of the railways any Chinese of official rank and competent for the work may be recommended by the Boards of Commissioners to the Director-General for employment under the formality of a letter of appointraent.
For the important offices of the railways foreigners of ability and experience shall be employed. In the engineering and traffic departments competent Chinese may also be employed, and all employees, whether Chinese or foreigners, if incompetent in their work or unsatisfactory in their behaviour, may be dismissed at any time by the Boards of Commissioners, and the dismissal shall be reported by the Board concerned to the Director-General. The Chinese and European members of the Boards when ill or absent may be represented at the Boards by available substitutes. In the case of the Chinese members the substitutes must be approved by the Director-General, and in case of the European members by the Deutsch-Asiatische Bank or the Chinese Central Railways (Limited).
When deemed necessary a school for the education of Chinese in the construction and working of railways shall be undertaken by the Boards of Commissioners, subject to report to and approval by the Director-General.
The accounts of the receipts and disbursements of the railways are to be kept by a chief accountant whose records and books are at all times open to the inspection and examination of the Boards of Commissioners. All the accounts of the railway construction and operation are to be kept in northern section in German and Chinese languages, and of the southern section in currency, and as regards the English and Chinese languages, with the combined signature of a Chinese and European official for each section. The staff of the Chief Accountant's Depart- ment shall be composed of Chinese and foreigners who must be satisfactory and reliable men.
18. The general plans, estimates and surveys of the railway line must be submitted for approbation to the Board of Commissioners. The Chief Engineer, accompanied by a Chinese Deputy, shall indicate the land which it is necessary to purchase, and which must be sufficient for the construction of a permanent way with double lines and dependencies, and the managers shall thereupon effect such purchases at a price to be based on a scale to be arranged after survey.
In the event of the route proposed by the Chief Engineer passing through towns, villages, graveyards or other points where much obstruction is encountered, the Chief Engineer will, together with the Board of Commissioners, consider means of diverting the proposed railway route in order to avoid difficulties.
19. The Imperial Directors will endeavour to arrange with the Chinese Imperial Government for the payment of li-kin and duty upon merchandize and live-stock in transit over the railway lines, and these regulations shall not be less favourable than any arrangements made for the same purpose with other most-favoured railways in China built with capital borrowed from foreign countries.
20. All materials necessary for the construction and working of the lines obtained either from foreign countries or from other provinces of China, and the revenue derived from the railway as well as the railway landed property shall in virtue of its being a Government railway be exempt from duty or taxation of all kinds, and the Imperial Government of China will instruct the Customs and li-kin and local authorities
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accordingly. This exemption to continue until such time as the Imperial Government imposes duties and taxes on other lines of railways.
The plans, estimates, and requisitions for materials shall be submitted to the Boards of Commissioners by the Chief Engineers for reference at their discretion to the Imperial Directors. All materials, plant and goods shall be ordered for the northern section from the Deutsch-Asiatische Bank, and for the southern section from the Chinese Central Railways (Limited), who shall buy the goods on the best possible terms for account of the Chinese Government, and charge the original cost plus a commission of 5 per cent. Tenders shall be invited by the Deutsch-Asiatische Bank and the Chinese Central Railways (Limited) wherever feasible, and any return, commis- sion, and rebate of whatever nature received by them shall be in favour of the Chinese Government. All purchases made by the bank and the Chinese Central Railways (Limited) shall be supported by the manufacturers' original invoices.
Due consideration will be extended to materials from Chinese works, if available, when required, and of a quality sati-factory to the chief engineer.
21. The Boards of Commissioners shall during the working of the lines and in using the funds mentioned in clause 28 maintain the railways, buildings, works, rolling-stock, and dependencies in good order and condition.
22. Branch lines or extensions in connection with the railway lines mentioned in this Agreement, that may appear profitable or necessary later on shall be the subject of negotiations between the Imperial Directors and the Syndicate.
23. The tariff of traffic charges shall be decided by the Boards of Commissioners, who will take into consideration the tariffs of other existing railway lines in China while keeping in view the necessity for attracting traffic. The Board of Commissioners may enter into In case of war, arrangements for tariffs on through traffe over connecting lines.
foreign or internal, the railway lines shall be reserved, in the first instance, for the transport of Chinese troops, commissariat, and munitions of war, under the order of the Imperial Directors, aud at half the ordinary tariff rates, and the railways shall not engage in any service injurious to China. In case of famine or great need, grain will also be transported over the line at half the ordinary tariff rate, under orders of the Imperial Directors. Government and Court supplies shall be dealt with by the Boards of Commissioners in the same way as they are treated on other lines,
21. All payments made and received in connection with the railway lines will be subject to the control of the Boards of Commissioners, and, after the line is working, all semi-annual estimates of receipts and expenditure shall be prepared by the Boards. Regular annual Chinese accounts shall be furnished through the Imperial Directors to the Wai-wu Pu and the Board of Revenue at Peking, and all payments made must be supported by Chinese or foreign vouchers, as the case may be.
25. All receipts of whatsoever nature derived during the time of construction from working completed or incompleted sections of the railways shall be credited to railway
-revenue account.
26. Should any traffic business be apparent later on as likely to benefit the Imperial Government of China and increase the earning power of the railway lines, the Boards of Commissioners shall represent the same to the Imperial Directors, and request them to obtain the necessary authority to arrange the business.
27. The Boards of Commissioners shall work the lines on behalf of the Imperial Government of China, until the present loan is redeemed. As soon as the loan has been completely redeemed, this Agreement shall become null and void, and the railway lines and property named in this Agreement together with all reserve funds, and the amount of working capital shall be handed over to the absolute disposal of the Chinese Govern- ment.
28. The annual net revenue is understood to be that resulting from the gross receipts of the passengers and goods traffic and the income from other sources, after deducting all working expenses, including maintenance of the permanent way, repairs, renovation and increase of machinery and rolling-stock, and all expenses of administra- tion, besides deducting an amount to be determined by the Deutsch-Asiatische Bank and the Chinese Central Railways (Limited), as sufficient for accumulating a reserve fund for extraordinary improvements or repairs.
As repairs and renovations are not to be understood such of the permanent way, bridges, rolling-stock, machinery, and dependencies, which should be occasioned by vis major, for instance, by earthquake, extraordinary flood, or other exceptional manifestation of natural forces, war, or riots.
The expenses caused in such cases are to be covered either by the Imperial Government or by supplementary loans, as described in Article 14.
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