CO129-344 - Public Offices & Foreign Office - 1907 — Page 367

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III.

With the exception of the duration of the loans, all other conditions respecting the loans specified in Articles I and II shall follow the Loan Agreements of the Imperial Railway of North China, the main provisions being enumerated below; (while) as regards the rules and conditions under which the railways are to operate, the present system of the administration of the Imperial Railways of North China shall be followed--

(a.) The duration of the loans-

(1.) In respect to the Hsin Min-fu-Mukden Railway east of the Liao River, shall be for eighteen years; and

(2.) In respect to the Kirin-Ch'ang-ch'un Railway, twenty-five years; before the expiry of which periods the respective loans shall not be fully redeemed.

(b.) The loan for the Hsin Min-fu-Mukden Railway east of the Liao River, raised from the South Manchurian Railway Company, shall be secured by the property and revenue of that section of the line.

The share capital raised by the Kirin Chang-ch'un Railway Administration from merchants, together with the funds borrowed from the South Manchurian Railway Company, shall both be secured by the property and revenue of that railway.

Before these loans are redeemed the Chinese Government shall not make use of the property and revenues of these railways as security for any other loans.

Throughout the period of these loans the Chinese Government shall maintain in satisfactory working order the buildings, workshops, rolling-stock, land, and all manner of property of the railway east of the Liao River and of the Kirin-Ch'ang-ch'un line, and shall add as may be necessary from time to time to the rolling-stock so as to render it sufficient for the demands of traffic.

If in the future branch lines are added to the Kirin-Chang-ch'un Railway, or if it is extended, the Chinese Government shall undertake such work itself, and should the funds at its disposal be insufficient it will borrow from the (South Manchurian Railway) Company. With the exception of the above-mentioned lines, if the Chinese Govern- ment raises funds itself for the construction of other lines, such undertakings shall be independent of the South Manchurian Railway Company.

(c.) The Chinese Government guarantees both the capital and interest of these loans, and, in case of default, the Company shall notify the Chinese Government, which will pay over to the Company the amount due. Should the Chinese Government be unable to meet the Company's demand for payment of interest or amortization, after due notice, the railway in question shall be handed over temporarily to the management of the Company until payments have been liquidated, when the line will be restored to the Chinese Administration. If the amount in default is inconsiderable, an extension of the date shall be made, but in no case shall such extension exceed three months.

(d.) During the duration of these loans the Engineer-in-chief shall be a Japanese, and in the railway staff, if there are not enough Chinese suitable for employment, Japanese may also be used. When the necessity arises of changing the Engineer-in- chief, the new appointment shall not be made until the Company has been consulted; and in the additional appointment [sic] of a Japanese accountant, a capable employé shall be engaged, who shall have full responsibility in the arrangement and control of all the railway's accounts, (though) his superintendence of the receipts and disburse- ments shall be conducted in consultation with the Managing Director of the line.

(e) These railways will be Chinese Government railways, and in ease of military operations or famine relief the Government shall enjoy free carriage of troops or grain.

(f) All the revenues of these lines shall be deposited in Japanese banks, the particulars regarding such deposits being left for negotiation till the Loan Agreements are drawn up.

IV.

The Chinese Government, after purchasing the existing railway from Hsin Min-fu to Mukden, shall take immediate steps to arrange with the South Manchurian Company the Loan Agreement in respect to the railway east of the Liao River; and they shall

also appoint a Chinese engineer to join with a Japanese engineer in surveying the Kirin-Ch'ang-ch'un line in order that estimates of cost may be drawn up, upon completion of which, they shall conclude a Loan Agreement with the Company within six months.

V.

The Hsin Min-fu-Mukden Railway and the Kirin-Ch'ang-ch'un Railway to be now undertaken by China shall both be connected with the South Manchurian Railway. The conditions under which this will be effected will be arranged between special Delegates appointed by the Administration of the Imperial Railways of North China and the South Manchurian Railway Company to consult together for this purpose.

VI.

The actual price of the loans specified in Articles I and II shall be determined by the most recent price obtained by China in loans with other countries.

VII.

One month after the purchase money for the Hsin Min-fu-Mukden Railway has been paid over, the Chinese Railway Administration will appoint employés to assume control.

Meiji, 40th year, 4th month, 15th day.

Kuang Hsü, 33rd

year, 3rd month, 3rd day (April 15, 1907).

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