2. With the exception of industrial loans, the amount of a
loan should not exceed $3,000,000 (Mex.).
3. The proceeds of the loans should be used only for mili-
tary expenses, returning overdue loans or paying other un-
avoidable expenses. The ordinary administrative expenses

1 Far Eastern Review, Nov., 1913, p. 211.
124 RAILWAY PROBLEMS IN CHINA [352

should be defrayed by the revenues of the province, and no
loan should be used for administrative purposes.
4. Before concluding a loan, the province should first report
to the Ministry of Finance the source from which the repay-
ment of the loan is to be made.
5. No revenue which is included in the class of national tax
should be used as security for loans by the provinces.
6. Before signing a loan agreement, the draft of the agree-
ment should be approved by the Ministry of Finance.
7. A comprehensive and detailed statement of the expendi-
ture of every loan should be submitted to the ^Ministry of
Finance.
Also, in view of the troubles involved in the foreign loans
raised by the private entrepreneurs, such as in the cases of
the Kiangsu Railway Company,^ the Hanyihping - and other
loans, the Government has drawn up a new set of regula-
tions governing the conditions under which merchants may
contract foreign loans. The regulations ^ issued in March,
1914, are as follows :

1. Any merchant who borrows foreign loans to undertake
business, no matter whether the loan is a new one or has been
discussed in the past, should first make a report to the Min-
istry to whose control his occupation is subject.
