CO129-384 - Public Offices - 1911 — Page 130

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as the case may be, shall seal and execute a duplicate bond or duplicate bonds for a like amount and hand the same to the group and [or] bank or banks representing the owner or owners of such lost, stolen, or destroyed hond or bonds, which group and [or] bank or banks shall pay all expenses in connection with such delivery and execution owners of such bond of such bond or bonds for the account of the owner or or bonds.

Art. 11. All bonds and coupors and payments made and received in connection with the service of this loan shall be exempt from all Chinese taxes and imposts during the currency of this loan.

Art. 12. All details necessary for the prospectus and connected with the payment of the interest and repayment of the principal of this loan, not herein explicitly provided for, shall be left to the arrangement of the banks in consultation with the Chinese Ministers in Berlin, London, Paris, and Washington. The banks are hereby soon as possible after the authorised to issue the prospectus of the loan as signing of this agreement; and the Imperial Government will instruct the Chinese Ministers in Berlin, London, Paris, and Washington to co-operate with the banks in any matters requiring conjoint action, and to sign the prospectus of the loan.

Art. 13. This loan of 6,000,0001, shall be issued to the public in one amount as soon as possible after the signature of this agreement, and not later than twelve months from the date thereof. The price of the bonds to the Imperial Chinese Subscriptions will be Government shall be 95 per cent. of their nominal value. invited by the banks in Europe, in the United States of America, and in China from Chinese, Europeans, and Americans on equal conditions, preference being given to the application of the Chinese Government, provided such application be made not less than four days before the issue of the prospectus to the public. Seven days' notice of the issue of the prospectus will be given by the banks to the Imperial Chinese Government.

Art. 14. The proceeds of the loan shall be placed to the credit of a "Hukuang Government Railways account" with the Deutsch-Asiatische Bank, the Hong Kong and Shanghai Banking Corporation, and the Banque de l'Indo-Chine in China, Berlin, London, or Paris, as the case may be, and with the American group in New York, or such banks in China as from time to time shall be designated by the American group, the International Banking Corporation being now so designated. Payments of the loan proceeds into the credit of this account shall be made in instalments and on dates conforming to the conditions allowed to the subscribers to the loan.

Interest at the rate of 3 per cent, per annum shall be granted on the credit balance of the portion of this account kept in Berlin, London, Paris, or New York, and interest on the credit portion kept in China by the above banks will be allowed at the banks' rate for current accounts to be arranged.

Subject to the payments and deductions to be made from the loan proceeds in terms of articles 2 and 3 of this agreement, the banks will hold the net balance with accrued interest to the order of the Ministry of Posts and Com- munications.

Transfers of the loan funds to China in amounts not exceeding 200,000% transferred in any one week will be made by the Ministry of Posts and Com- munications at its discretion, the transfers being effected through the Deutsch- Asiatische Bank, the Hong Kong and Shanghai Banking Corporation, the Banque de l'Indo-Chine, and [or] the bank or banks to be designated by the American group, the International Banking Corporation being now so designated.

Transfers of the loan funds to China from the banks in Europe and America and transfers from the banks in China to the Chinese banks which are hereinafter designated shall be made as nearly as possible in equal amounts from each of the banks, the rate of exchange for each transfer from Europe and America being settled simultaneously with the transferring banks, either on the day on which such transfer is to be made, or at the option of the Ministry of Posts and Communications, on any date or dates within six months previous to the day on which the transfer is to be made. In the event of equal transfers being found to be impracticable, a mutually satisfactory procedure for making the transfers above referred to shall be arranged between the Ministry of Posts and Communications and the banks.

The transferred funds, to the extent of one-half of the net balance of the loan proceeds above referred to, may, at the discretion of the Ministry of Posts and Communications, be deposited in a Hukuang Government Railways account with the Bank of Communications (Chiao-tung Bank) and [or] with the Ta-ching Government Bank, which banks have been designated by the Ministry of Posts and Communications

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as its agents for this purpose, and the Imperial Chinese Government hereby declares itself responsible for all the funds of this loan deposited with the said Chinese banks,

The Ministry of Posts and Communications shall from time to time make transfers from the loan funds held in China by the banks and by the designated Chinese banks to the credit of a construction account for the Hupei section of the Szechuan-Hankow Railway line with the Deutsch-Asiatische Bank and of a construction account for the Hupei-Hunan section of the Canton-Hankow Railway line with the Hong Kong and Shanghai Banking Corporation, in amounts sufficient to cover one mouth's construction estimates in advance, so as to ensure the uninterrupted continuance of construction. The Ministry of Posts and Communications shall hand to the banks, for the information of the auditors (hereinafter referred to), quarterly statements of the loan funds held on deposit by the aforesaid designated Chinese banks, and these funds shall not be withdrawn from the said banks except for the purpose of transfer to the construction accounts above named. Funds shall be drawn from these construction accounts in sycee by the managing director as hereinafter provided, and it will rest with the managing director under the instructions of the Ministry of Posts and Communications to make all necessary arrangements for the distribution of such funds through Chinese banks or otherwise to the points where they are required.

Requisitions upon these construction accounts will be drawn in amounts to suit the progress of construction of the railway lines by orders upon the Deutsch-Asiatische Bank or the Hong Kong and Shanghai Banking Corporation signed by the managing director of the line concerned or, in his absence, by his duly authorised representative, who shall, moreover, two days previous to the presentation of such order, issue in duplicate a certificate stating clearly the object for which the funds are to be drawn, handing one copy to the auditor concerned (hereinafter referred to) and one copy to the bank concerned. If the auditor should find that there are irregularities in the payments to be made, he may in the first place ask the managing director for specific explanations, and if the managing director is unable to furnish definite explanations, the auditor may refer the matter to the Ministry of Posts and Communications for its instructions.

The accounts of the railways shall be kept in Chinese and English in accordance with accepted modern methods, and will be supported by all necessary vouchers. During the period of construction the said accounts and vouchers will be open at any time to the inspection of two auditors for the Hupei-Ilunan section of the Canton- Hankow Railway line and the Hupei section of the Szechuan-Hankow Railway line respectively, appointed and paid by the banks, whose duty it will be to satisfy the banks as to the due expenditure of the loan funds in accordance with the provisions of article 3 of this agreement, and to certify to monthly statements of the foreign materials purchased by the railway administration under the provisions of article 18 hereinafter. The railway administration will publish annually upon the close of its financial year a report in the Chinese and English languages, showing the working accounts and traffic receipts of the railways, which reports shall be procurable by the public on application.

Art. 15. If after the deduction of the amount required for the redemption of the gold bonds referred to in article 2 of this agreement, and of the sums necessary for the service of interest on the loan during the time of construction, the balance of the loan proceeds, with accrued interest, should not be sufficient to complete the construc- tion and equipment of the railway lines named in article 2 of this agreement, the amount of deficiency shall be provided, in the first place, from such Chinese funds as may be available so as to permit of the uninterrupted continuance of the work of construction, and any balance then uncovered shall be supplemented by the issue by the banks, under the terms of the present agreement, of a second series of the present loan, for an amount not exceeding 4,000,000. This second series shall be secured pari passu as an equal charge in every respect on the internal revenues specified in article 9 of this agreement, and the time of its issue shall be left to the discretion of the banks. Should foreign capital still be required for the completion of the railway lines aforesaid it shall be provided by a further loan to be issued by the banks on terms to be arranged. If after the completion of the lines there should be a balance at the credit of the railways account, such unused balance will be transferred to the credit of the interest reserve fund, hereinafter mentioned in article 20, as a provision for payments for which the Imperial Chinese Government is responsible under this agreement, or will be devoted, if necessary, to the improvement of these railways or otherwise to their advantage.

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