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issued by the Syndicate Banks, the interest and other conditions of which are to be the same as in the present Agreement, but the price must be arranged when the time arrives according to the condition of the market. If after the completion of the lines there should be a balance at credit of the railway account the Syndicate Banks shall transfer such unused balance to the credit of the loan service reserve fund hereinafter mentioned as a provision for payments to which the Government is bound by clause 8 of this Agreement.
16. If before the publication of the prospectus for the issue of the loan any political or financial crisis should take place in the countries of the contracting parties by which the markets and the prices of existing Chinese Government stocks are so affected as to render the successful issue of the loan impossible on the terms herein named, the Syndicate Banks shall be granted further extension of time, but not beyond eighteen months from the date of this Agreement, for the performance of their contract, or shall have the right to withdraw from the present contract with the Chinese Imperial Govern- ment, which shall in that case become null and void.
17. The railway lines shall be constructed, equipped, and worked under conditions as follows: A Board of Commissioners shall be appointed to manage the construction, equipment, and working of the line in accordance with regulations to be arranged between the Imperial Directors and the Syndicate Banks.
18. An office shall be provided for the Imperial Directorate in Tien-tsin, and for each Board of Commissioners at Tien-tsin and Clinkiang, and the Imperial Directors may depute a representative to act on their behalf.
Each Board of Commissioners appointed to manage the construction and admini- stration shall consist of three members, namely, two Chinese Managers (one of whom will be the President of the Board and Chief Manager) appointed by the Imperial Directors and one European member, viz., a representative of the Syndicate Banks. The Traffic Manager and the Chief Engineer of the railway will be invited to sit on the Board when- ever their opinion on technical question (se) is required. The last two named to be appointed by the Director-General, due weight of course being given to the recom mendation of the Syndicate Banks.
The foreign and Chinese railway staff shall be appointed by the Board of Commissioners, who will report the appointment to the Imperial Directors. In the event of an important appointment the two Chinese members of the Board may first consult the Imperial Directors. The principal members of the railway staff shall be capable and experienced Europeans, but Chinese with sufficient experience in engineering or traffic may also be appointed. The members of the foreign staff should have a knowledge of English, as it is better known than any other foreign language in China.
Foreign and Chinese members of the railway staff shall, in the event of incapacity or misconduct, be dismissed by the Board of Commissioners, who will inform the Imperial Directors of the same.
In the event of a serious difference of opinion between the Chinese and the foreign members of the Board on question of railways, such question to be referred to the Imperial Directors, whose decision will be final.
The salaries of the three members of the Board of Commissioners shall be arranged by the Syndicate Bauks together with the Imperial Directors. The salaries of the foreign and Chinese staff shall be fixed and paid by the Railway Administration.
An annual sum, to be hereafter agreed upon, to be set apart for the use of the Imperial Directorate.
19. The general plans, estimates, and surveys of the railway line must be submitted for approbation to the Board of Commissioners.
In the
The Chief Engineer, accompanied by a Chinese deputy, shall indicate the land to be acquired for the purposes of the railway, and the Head Office shall thereupon effect such purchases at a price to be based on a scale to be arranged after survey. 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.
20. The Imperial Directors will endeavour to arrange with the Chinese Govern- ment regulations 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.
21. 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
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from the railway, as well as the rauway's 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, li-kin, and local authorities accordingly. This exemption to continue until such time as the Imperial Government imposes duties and taxes on their lines of railway. Tenders shall be invited in China by the Board of Commissioners for the execution of all important indents for materials, plant, and goods, and the plans, estimates, and requisitions for such materials shall be submitted to the Board of Commissioners by the Chief Engineer for reference, at their discretion, to the Imperial Directors. Indents not dealt with in China shall be placed in the hands of the Syndicate Banks for execution in London or Berlin as may be required. The banks shall buy the goods on the best possible terms for account of the Chinese Government and charge the original cost plus a commission of 50 per cent., but all return commissions and rebates of whatever nature shall be in favour of the railway, and all purchase made by the Syndicate Banks on behalf of the railway shall be supported by manufacturers' original invoices.
Due consideration will be extended to materials from the Hanyang Iron Works, if Also available when required, and a quality satisfactory to the Chief Engineer. consideration will be given to such Government workshops as those at Tongshan and Shanhaikwan for the construction of rolling-stock, bridge material, and the supply of other railway necessaries.
22. The Board of Commissioners shall, &c. (Same as Preliminary Agreement of 1899.)
23. Branch lines and extensions in connection with the railway lines mentioned in this Agreement that may appear profitable or uecessary later on shall be built by the Imperial Government with such funds as they may then raise.
24. The tariff of traffic charges shall be decided by the Board of Commissioners. The Board will take into consideration the tariff of other existing lines in China, while keeping in view the necessity for attacting traffic.
The Board of Commissioners may enter into arrangements for tariffs on through traffic over connecting lines. In case of war-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 and 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 Board of Commissioners in the same way as they are treated on other lines.
25. All payments made and received in connection with the railway lines will be subject to the control of the Board of Commissioners; and after the line is working, all semi-annual estimates of receipts and expenditure shall be prepared by the Board. Regular annual Chinese accounts shall be furnished through the Imperial Directors to the Wai-wu Pu and the Board of Revenue, Peking. All payments made must be supported by Chinese or foreign vouchers, as the case may be.
26. All receipts of whatsoever nature derived during the time of construction from working, completed, or uncompleted sections of the railways shall be credited to railway
revenue account.
27. Literally taken from Article 28 of the Preliminary Agreement of 1899; only instead of the "two banks" they put "the Board of Commissioners."
28. Literally taken from Article 29 of the Preliminary Agreement of 1899, except that the Board of Commissioners" is substituted for the two banks."
29. 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 and renovation, and increase of machinery and rolling-stock, and all expenses of administration, besides deducting an amount to be determined by the Board of Commis- sioners as sufficient for accumulating a reserve fund for extraordinary improvements or repairs. Of the surplus of the net annual revenue of the railway lines, after payment of interest and repayment of principal of the loan: first, a participation of 10 per cent. will be granted to the Syndicate Banks in remuneration for their general services; secondly, an amount equal to 20 per cent. of the said surplus earnings will be transferred to a loan service reserve fund deposited with the Syndicate Banks, and bearing interest at the market rate or better, and the remainder will be at the disposal of the Imperial Government of China. The deposit of this 20 per cent. surplus earnings shall, however, be discontinued when the accumulated loan service reserve fund shall have reached
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