in fact, had developed into a race to the Russo-Chinese eastern frontier. If the Chinese could succeed in building their projected line through Manchuria before some opportunity presented itself to the Russians for obtaining a concession, the probability of the latter securing the railway rights in the three eastern provinces at which they aimed would be considerably diminished.

Li Hung Chang was not slow to realise this. Indeed, he had doubtless long since calculated all the possibilities of the situation, and if his real intentions could be known it would not improbably prove that he designed his survey in 1890 as a test of Russian intentions. At that time he was much alive to the real antagonism that existed, and must in the nature of things continue to exist, between Chinese and Russian interests in the north-east of Asia. The circumstances out of which arose the apparent harmonisation of interests in 1896 had not then occurred; and so, noting the activity in St. Petersburg, he laid his plans accordingly.

In the earlier part of this chapter the circumstances of the extension from Kuyeh to Shanhaikwan have been recorded. Before it was completed, which it will be remembered was in the year 1893, Li Hung Chang, notwithstanding Russian influence in Peking, had obtained the Imperial sanction to continue the line beyond the Great Wall, and construction was commenced in the direction of Chinchow in the spring of that year, further orders for stock and materials being placed in Europe. To facilitate construction it was decided to land materials at Tienchaochang, an inferior harbour half way between Shanhaikwan and Yingkow and some three miles from Kaochiao, the nearest inland point touched by the railway, between which and Tienchacchang a temporary line was constructed.

All materials were therefore shipped to Port Arthur, and the transhipment of the greater part was made by junks in 1894. Six thousand tons of rails, however, were still in Port Arthur when the Chino-Japanese War broke out, and they were ultimately taken away by the Japanese when the fortress fell. But beyond this, and a certain amount of depreciation of the stores owing to exposure, and expenses connected with the staff, the Railway Administration did not suffer by the war, as the material already landed at Tienchaochang lay there uninterfered with by the belligerents.

At the time of the outbreak of the war the extension had been

carried to Chunghouso, some forty miles beyond Shanhaikwan, but had not been opened to public traffic. In the spring of 1895 the war came to an end: the circumstances of its conclusion in relation to the railway development of Manchuria are worthy of serious study.

Japan, victorious at every point, had China at her feet. In March an armistice was agreed for the purpose of discussing terms of peace. Plenipotentiaries were appointed on either side. Count Ito was selected to represent Japan; China entrusted the negotiations to Li Hung Chang. The place of their meeting was Shimonoseki, on the Straits of Shimonoseki between Hondo and Kiushiu, the two larger islands of Old Japan.

The terms demanded by Japan were, in brief, the independence. of Corea, the cession of the Island of Formosa and of the Liaotung Peninsula, and the payment of an indemnity. The demands were in accordance with anticipation, and after a good deal of discussion they were embodied in the Treaty, which was signed on the 17th of April. The terms of the Treaty did not tend to restore Li's waning popularity, though he certainly had had no option in the matter, and was besides more fully aware perhaps than his critics of the probable effect of the terms that had been arranged. It is rather more than hinted by Mr. Michie that before leaving for Japan a secret understanding had been arrived at between Li and the Russians, who saw in the humiliation of China an opportunity to augment their prestige in Peking. The suggestion is that Li was given to understand that Russia would protest against any cession of territory on the mainland, and veto any terms that he might be compelled to accept involving such a proceeding. In return Russia was to receive trading and other facilities in China. The fact that Li directed most of his efforts to saving Formosa perhaps lends some support to the idea, though, as must be admitted, it would not be incompatible with the absence of any understanding such as that indicated. He would, of course, have preferred to avoid the necessity of signing away Liactung, but with his knowledge of Russian aims and ambitions he must have felt that Liaotung would in all probability be saved by Russian interference. At the worst, he doubtless saw that in effect he was only substituting Japanese for Russian ascendancy in Manchuria,—from the Chinese standpoint merely one evil for another.

Whether or not such an understanding as has been outlined

existed when Li went to Japan there can be no doubt that a bargain was subsequently effected, with the result that on the publication of the Treaty a protest came from Russia, supported by France and Germany, against the cession of any territory on the mainland, and Japan was deprived of the chief fruits of her victory in return for an increased payment of indemnity.

By this means the aims of Russia were materially advanced, while the chance of continued Chinese ascendancy in Manchuria underwent a marked decline.

On the conclusion of his diplomatic labours in connection with the settlement with Japan, Li Hung Chang returned to his railway scheme, and, taking advantage of the alarm prevailing in Peking consequent on the result of the war, he revived the question of the extension toward the capital. In one particular the scheme was revised. Previously the objective had been Tungchow, but to avoid all chance of interference with the boat traffic, Lukouchiao was selected as the terminal. This time Li's efforts were successful. The Fifth Prince was dead. There was at the moment no reactionary party who dared uplift its voice against any scheme that might tend in any way to the strengthening of the Empire. There was a nascent sense of the necessity of improving China's methods which induced a reforming tendency. So the Empress Dowager, this time without fear of criticism, was able to renew the Imperial sanction to the line which had been given and subsequently withdrawn in the winter of 1888.

The work of construction was commenced in the autumn of 1895, some difficulty being experienced in regard to the financial side of the matter. Hu Yen Mei, Governor of Peking and Director General of the Imperial Railway Administration, had proposed to raise a loan for £400,000 through the Hongkong and Shanghai Banking Corporation,1 and in the previous July had virtually concluded an agreement in that connection with the Bank's Agent in Tientsin. For some reason, however, the matter fell through, and the construction of the line consequently proceeded without the loan, while to provide the necessary funds the Administration were allowed to overdraw their current banking account with the Hongkong Bank in Tientsin. Thus was laid the foundation

1 It should be mentioned to prevent confusion that in the following pages this institution is alternatively and more shortly referred to as the "Hongkong Bank," or the "Hongkong and Shanghai Bank."

for the £2,300,000 gold loan of 1899, to which reference will be made later.

While the line, which was a double track, was under construction, arrangements were made with the China Railway Company for their section from Kuyeh to Tientsin to be taken over by the Imperial Administration. It was desirable that the private company should be absorbed in the Imperial undertaking, and the shareholders were therefore offered Government bonds bearing interest at the rate of 5 per cent. in return for their scrip.

This conversion took place in the early part of 1894. It is 1894 characteristic of the methods that sometimes prevail in China that the last of the scrip was called in and bonds issued therefor in the autumn of 1904.

Towards the end of the year 1894 the railway reached Fengtai, and was subsequently continued to Machiapu, some little distance outside the walls of Peking.

It is a little surprising that this proceeding was allowed to pass unchallenged, for it was wholly unauthorised. The Imperial sanction had, in the first place, approved Lukouchiao as the terminus, but subsequently, on the authority of the Engineer-in-chief, Fengtai, about five miles in an easterly direction, and somewhat nearer the capital, was selected. The explanation of the change lay primarily in the fact that Peking was from the outset kept in mind as the objective of the railway, if not for the moment, at anyrate in years to come, when prejudice should be less strong. It was therefore desirable to follow as nearly as possible the true line of route between Tientsin and Peking, which lay through the Imperial hunting park. This was the line of country taken by the original survey, but instructions were given for the park to be avoided, and so the line was carried to the west through Huangtsun and Fengtai, barely skirting the Imperial domain. Lukouchiao was left still farther to the west, and connected with a branch, thus fulfilling the letter of the Imperial commands.

From Fengtai, which was unsatisfactory as a terminus, both from the point of view of the traveller and of the railway, the line, as has been observed, was pushed on in the direction of the capital as far as the village of Machiapu, which was subsequently put in communication with the city by a small electric tramway.

In acting in this way the Engineer-in-chief showed that he had profited by his twenty years' intercourse with the Chinese, and

learned to estimate the strength of rival forces. Had he raised the question of the extension to Machiapu, it may be taken for granted that it would never have been authorised. As an accomplished fact it was accepted by the Chinese without question, for the simple reason that the party which would have favoured it, though not sufficiently strong to have initiated it in the face of superstitious and other objections that would have been raised, was nevertheless sufficiently influential to ensure its retention in the face of any attack that might be levelled against it.

To return now "East of the Barrier," as the Chinese picturesquely call the country east of the Great Wall, in that region the section between Shanhaikwan and Chunghouso, which had been practically completed prior to the outbreak of war, had now been put into working order and opened for public traffic. But its continuation was destined to be delayed for some time longer. China's dilatoriness has been explained on financial grounds. This is partly true. It was, however, no doubt owing in large measure also to the fact that her obligations to Russia had resulted in a large increase of Russian influence in Peking, which continued to exert itself to gain time in the north. A further factor in the situation was that Russia had secured the friendship of Li Hung Chang.

The present writer has no desire to add himself to the list of those who have sought to expound the mysteries of that momentous conversion. Taken in conjunction with the Chinese obligations to Russia, arising from the circumstances of the conclusion of the Chino-Japanese War, its more obvious features alone seem sufficiently to explain the events that subsequently occurred.

In 1895 the present Czar was crowned at Moscow. It was thought an opportunity for paying China a little compliment, and a royal prince was invited to represent the Emperor. Chinese royal princes, however, are not—or at that time at anyrate were not-in the habit of passing beyond the borders of the Empire. There was no precedent for a visit to a foreign Court. Perhaps the statesmen of Russia realised this. At anyrate no objection was made to the substitution of Li Hung Chang for a royal personage, and in due course His Excellency set out on his celebrated cour round the world.

Arrived at Moscow, he was received with princely circumstance. Greater splendour could scarcely have attended the visit of a scion of a Royal House. And amongst the Czar's exalted guests