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Art. 16. If before the publication of the prospectus for the issue of the loan any political or financial crisis should take place by which the markets and the prices of existing Chinese Government stocks are so affected as to render, in the opinion of the banks, the successful issue of this loan impossible on the terms herein named, the banks shall be granted a reasonable extension of time for the performance of their contract. If within this time limit, to be arranged, the loan shall not have been issued, then this contract shall become null and void, and any advances made by the banks under the provisions of article 3 of this agreement shall be repaid by the Chinese Government with accrued interest, but without any other compensation or remuneration whatsoever.
Art. 17. The construction and control of the railway lines shall be entirely and For the work of exclusively vested in the Imperial Chinese Government. construction the Imperial Chinese Government will select for appointment a fully qualified British engineer-in-chief for the Hupei-Hunan section of the Canton- Ilankow Railway line from Wuchang to Yichang-hsien, and a fully-qualified German engineer-in chief for the Kuangshui-Ichang section of the Szechuan-Hankow Railway line, with a fully qualified American engineer-in-chief for the section of that line from Ichang to Kueichou-fu, at the same time informing the banks of the selection made. If the banks have objections to offer against the engineers-in-chief thus selected for appointment, they shall, in stating their objections, give definite reasons therefor. The said engineers-in-chief shall be under the orders of the director-general and the managing directors of the respective lines or, in their absence, of their duly authorised representatives, and will carry out all the wishes of the Ministry of Posts and In their Communications with regard to the plan and construction of the lines. general conduct they shall pay all due respect to the Ministry of Posts and Com- munications, the director general, and the managing directors. The terms of their respective agreements will be arranged by the Ministry of Posts and Communi-
cations.
Whenever appointments are to be made or functions defined of the technical members of the railway staff, as well as in the case of their dismissal, the director- general, the managing director, or, in his absence, his duly authorised representative will act in consultation with the engineer-in-chief concerned, and in the case of disagreement the matter will be referred to the Ministry of Posts and Communications, whose decision shall be final.
After completion of construction, and during the currency of this loan, the Imperial Chinese Government will continue to employ Europeans and [or] Americans as engineers-in-chief of the said railway lines, these appointments being made without reference to the banks.
Art. 18. For the Ilupei-Hunan section of the Canton-Hankow Railway line and the Hupei section of the Szechuan-Hankow Railway line respectively (a) the British and Chinese Corporation (Limited) and (6) the Deutsch-Asiatische Bank will act as agents of the railway administration during construction for the purchase of all materials, plant, and goods required to be imported from abroad. From this category rails and their accessories are excepted, for the purchase of which the Ministry of Posts and Communications has memorialised the Throne recommending that they should he manufactured and supplied by the Hanyang Ironworks. Their price will be settled by the Ministry of Posts and Communications with the Hanyang Ironworks, after comparison with the current quotations for rails purchased by other lines from Europe or America. No delay will be allowed, and it is understood that if the Hanyang Iron- works are unable to supply the requirements of the lines in question in such manner as to ensure uninterrupted construction the purchasing agents will be instructed to procure from abroad the additional supplies required. For all important purchases of materials tenders shall be called for by the director-general or the managing director concerned; in the case of all tenders, indents, and orders for the importation of goods and materials from abroad, the said agents shall purchase the materials required on the terms most advantageous to the railways, and shall charge the original net cost of the same, plus a commission of 5 per cent. It is understood that no orders for materials shall be executed or any expenditure incurred without due authorisation by the managing director concerned.
In return for payment of commission as above stated, the British and Chinese Corporation (Limited), and the Deutsch-Asiatische Bank as agents for the respective railway lines, shall be prepared to superintend the purchase of all foreign materials required for their construction and equipment, which shall be purchased in the open market at the lowest rate obtainable, it being understood that all such materials shall
be of good and satisfactory quality, and that the aforesaid agents will avail them- selves of the services of engineering experts to be selected by the Ministry of Posts and Communications for the inspection of such materials. The fees of these inspectors shall be borne in equal shares by the Ministry of Posts and Communications and the purchasing agents. At equal rates and qualities goods of British, French, German, and American manufacture shall be given impartial preference over other goods of foreign origin. The railway administration of the Ministry of Posts and Communi- cations reserves the right, while paying the above stipulated commission to the said agents in respect of all purchases of foreign materials, to avail itself of the services of other agents in China, or abroad, should it see fit to do so.
The most favourable shipping and insurance rates are to be secured, and statements thereof, together with original invoices and inspectors' certificates, are to be submitted to the director-general and the managing director concerned; all return commissions and rebates of every description shall be credited to the railways, and all purchases made by the agents on behalf of the railways shall be supported by manufacturers' original invoices and inspectors' certificates. No commission shall be paid to the agents except as above provided; but it is understood that the railway administration shall provide out of railway funds for the remuneration of consulting engineers whenever their services are engaged.
With a view to the encouragement of Chinese industries, preference will be given, at equal prices and qualities, over British, French, German, American, or other foreign goods to Chinese materials and goods manufactured in China, such cases being left to the decision, in consultation with the engineers-in-chief, of an inspector appointed by the Ministry of Posts and Communications. No commission will be paid on purchases of such Chinese materials and goods.
It is understood and agreed that, after the construction of the lines is completed, the British and Chinese Corporation (Limited) and the Deutsch-Asiatische Bank will be given the preference for agency business for the respective lines, during the currency of the loan, for the supply of foreign materials which the railway adminis- tration may require, on terms to be hereafter mutually agreed upon.
Art. 19. Should the Imperial Chinese Government itself hereafter consider it desirable to construct extensions in connection with the railway lines named in article 2 of this agreement in order that the interests of the country may be better served, such extensions shall be built by the Imperial Chinese Government with funds at its disposal from Chinese sources, but if foreign capital is required, and the terms offered by the banks are as favourable as those offered by others, preference will be given to the banks.
Art. 20. After payment of interest and repayment of principal of this loan for any current year, the railway administration will deposit with the banks in Shanghai or Hankow any surplus of the net revenue of the railway lines for that year up to the amount required to pay the following year's instalments of interest on the loan, the rate of interest on the deposit being arranged with the banks from time to time with due regard to the conditions of the market.
Art. 21. All expenses in connection with the flotation and issue of this loan, such as underwriting, commission and brokerage, tolegraph charges, advertising, postage, engraving and printing of prospectus and bonds, stamp and legal fees, shall be borne by the banks.
Art. 22. The Deutsch-Asiatische Bank, the Hong Kong and Shanghai Banking Corporation, the Banque de l'Indo-Chine, and the American group shall take the loan in equal shares and without responsibility for each other.
Art. 23. The Deutsch-Asiatische Bank, the Hong Kong and Shanghai Banking Corporation, the Banque de l'Indo-Chine, and the American group may, subject to all their obligations under this agreement, transfer or delegate all or any of their rights, powers, and discretions hereunder to any German, British, French, or American company, directors, or agents, with power of further transfer and sub-delegation; such transfer, sub-transfer, delegation, or sub-delegation to be subject to the approval of the Ministry of Posts and Communications.
Art. 24. This agreement is signed under the authority of an Imperial edict dated the 22nd day of the 4th month of the 3rd year of the Emperor Hsuan Tung, corre- sponding to the 20th day of May, 1911, Western calendar, which will be officially communicated to the Ministers of Great Britain, France, Germany, and the United States of America in Peking by the Wai-wu Pu.
Art. 25. Eight sets of this agreement are executed in English and Chinese, four sets to be retained by the Imperial Chinese Government and four sets by the banks,
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