As mentioned earlier in this chapter, at about the same time that the C.N.A.C. was formed, other negotiations were going on which resulted in the formation of a second company, with the Luft Hansa of Germany as a partner of the Chinese Government. As early as 1928, when the whole country was in course of being brought under control of the National Government-the Luft Hansa, at that time already one of the largest aviation enterprises in Europe, had despatched a representative to China in the person of Herr Wilhelm Schmidt, operation in establishing a direct air-mail and passenger service between China and Germany. The connecting of Europe and the Far East by an air line which has the advantage of being considerably shorter than all other existing routes, is undoubtedly one of tile great air projects of the futurt.

Behind this proposal was a strong belief in German aviation circles that sooner or later Shanghai or Nanking would become the central air-port of Asia, where all Far Eastern lines would converge. Since 1925 they had been studying the project very seriously, envisaging alternative routes vid Siberia and across Central Asia, while much reconnoitring from China was done also during recent years in the direction of Sinkiang. Herr Schmidt's plans for the formation of a joint Sino-German company to operate a line between Berlin and either Nanking or Shanghai were presented to the National Government in the fall of 1928, 6ut largely because of political difficulties then prevailing, formal negotiations were repeatedly postponed. No dccision was come to until after the lapse of a year and a half, when the signatures of the Ministry and the Luft Hansa representative were formally put to an agreement on February 21, 1930, the Eurasia Aviation Corporation being established in February the following year. The tenor oŁ this agreement is as follows:-(1) The Corporation, though a semi-foreign concern, shall he formed in strict conformity with Chinese law and shall be under Chinese jurisdiction; (2) The Chinese Government shall subscribe and own two-thirds cf the total capital of the Corporation; (3) Two:thirds of the Board of Directors and the supervisory staff, including the Chairman of the Board of Directors and the General Manager shall be of Chinese nationality; (4) The books and accounts of the Corporation shall be kept in Chinese, and all its funds, negotiable instruments and other securities shall be deposited in bona fide Chinese banks; (5) The Corporation shall be given the exclusive right of operating an air-mail service between China and Berlin by way of the U.S.S.R.; (6) In case of differences arising as to the inter- pretation of the contents of the agreement, the Chinese text shall prevai.

As the Eurasia Aviation Corporation has for its original and main purpose the opening of a direct service between China and BerlLn, the arms and objects of this Corporation and the C.N.KC. are complementary rather than competitive. In accordance with the mail contract, the Eurasia Corporation may operate arong any one of three specified routes-this wide choice being allowed for the sake of giving greater flexibility to this agreement and more freedom to the Luft Hansa. The said routes are (1) the Shanghai-Manchuli route, sin Nanking, Tientsin and Peiping; (2) a variation of the first, but proceeding, after Nanking, Tientsin and Peiping, sin Pailingrniao and Urga in Outer Mongolia; (3) the Kansu-Sinkiang route to the North- West, ria Nanking, Chengchow, Sian, Lanchow, Hami, Tihwa (Ururntchi) and Tchukuckak. All the proposed airways would have to pass over Asiatic Soviet Russia to Berlin, but from different directions.

Furthermore, it was also provided in the contract that, pendmg satisfactory negotiations with other countries concerned for aeriat passage over their horders, Eurasia should be permitted to operate domestic air services in China for the carriage 0f passengers and mail. It was fortunate for the company that this clause existed, as otherwise it would not have been able to maintain itself, since political and other obstacles are still preventing the attainment of its main objective even up to the present day, and direct att connection between the two great nations on the Asiatic and European continents will not be achieved for some considerable time to com~t least, any route involving passage over U.S.S.R. terntoty.