before declined a similar proposal, saying it preferred to continue singly in China's financial field, but it reconsidered this decision and adopted the view that the cooperation of the powers was essential to the success of loans, and of currency reform. It invited the European groups to a meeting in Paris, where, November 10, 1910, the previous overtures from the groups for a quadrilateral agreement for equal participation in future loans was signed. The present or currency loan was specially excepted from the body of the agreement, but in the minutes of the meeting the American group agreed to European participation, conditional upon China's consent, and stipulations were imposed, leaving the conduct of all negotiations for the loan to the tact and endeavor of the American group. This compact held out to the European groups the possibility of their participation in a loan which China had granted solely to America. It defined the essentially different positions of the American Government and the American bankers. Bankers can unite, and the American and European groups, in order to forestall Chinese financial tactics, of which they had had previous experience, quickly did so before the negotiations began. Governments find such a course impossible in the same degree in China, where they have always been played by her, one against another. The government at Washington, obliged to act alone, confined its activity to an effort to secure the appointment of an American adviser. Its course was based on considerations of equality for all, including China herself. It hoped that international capital would find its way into the loan and it deferred to the view that currency reform in China to be successful must have the co-operation of the powers. But comprehending the inevitable increase of foreign financial influence in China, fully appreciated by China also, it desired an American adviser, independent of foreign financial influence. It would have been glad to have had some adviser statesman like Jeremiah W. Jenks, its former currency commissioner. Had the advisership come to America independent of the loan the government might have been able to have consummated its desires. But as the European groups were now involved the government agreed that no adviser would be chosen without consultation

with the American group, which had the interests of the European groups in trust.

The action of the American group undermined the government's position. The European groups saw that equality in the loan implied joint advisership, but having received, as it were, a gift horse, they could not at the moment look it in the mouth. They could not then contest with America her reservation of an exclusive adviser.

The task of the American Government was to secure from China, without international interference, the American advisership as China had desired. The task of the American group was to persuade China to admit the European groups to the loan, thereby preventing competition on the loan terms.

The scene of action had been transferred to Peking. China, to the western world, is the battle-ground of nations, where the strong, aggressive, and needy struggle for trade and territory. It has been the bitterest international gridiron in Asia since the days of Seoul under the Japanese and Russians, and its comparative peace and political order is only due to the operation of the principles of the open door doctrine. It is the phenomenon of the era just beginning that capital has at last invested this battle-ground to resolve, maybe, by industrial development the problems that diplomacy has so far failed to solve, and that American capital in its first start abroad has selected this field.

When she obtained the preliminary agreement for her loan and foreign capital had again turned to Peking, China, under apprehension of further failures in finance, desired prompt action and called upon America to proceed with the loan, stating she was ready to telegraph her views as to terms.

It

The government at Washington in its first retort took the view that the next step was not the conclusion of details, but the confirmation in writing by China of her request for the American adviser. stated that in consideration of China's desire for conclusion the American financiers were sending a special representative (Mr. Straight), authorized to take up all financial questions; but as to other matters they could be concluded immediately through diplomatic channels, and the State Department asked China, straight out, to name the adviser.

China hesitated.

She had never had an active adviser. She had nullified the influence of those advisers she had employed for various services in the past. It was seen that there was a division of views between her and America, and in America it was suspected that China had not intended a directing adviser, and not at all such an adviser as America had just provided for Persia, for example.

But something had happened in Peking. About November 15 France informally told China that in regard to the proposed loan, France maintained the right of participation, and joint advisership in case advisers were appointed. Japan and Russia came forward and while they did not impose direct opposition to the loan in Manchuria, yet affirmed right of equality and required of China an explanation of the objects of the loan with respect to Manchuria, acts strictly in accord with diplomatic practice in Peking, but totally disconcerting to China's intentions. In fact, they prevented her confirming her request to America for an adviser.

Although the European groups had a right to expect participation in the loan, America stuck to her understanding with China. No time was lost and it is to the credit of the official alertness of France, Russia, and Japan that they acted in Peking before China had time to name an adviser, if she so intended. Before November 29 Minister Calhoun had twice urged China to confirm in writing her oral request for an American adviser, and his government was prepared to instruct him to urge yet more strongly.

Mr. Straight, agent of the American group, now arrived in Peking. As the European groups expected participation in the loan their representatives there immediately placed themselves in communication with him, while their legations behind them watched the efforts of the American Government, through its legation, to introduce an adviser into the councils of China, something that had been tried by other governments many times before. In .opening the loan terms negotiations the American group brought forward the proposal for European participation.

China had not intended this. China had asked America for a currency loan and for an American adviser to carry out

its objects. She instantly perceived that there was a difference of position between the American Government and the American group, and the arrival of the group agent, completing the circle of the allied groups, gave her an excuse for deferring action on the advisership, pending their deliberations and the outcome of their difference with the American Government. China had not been promptly required to confirm in writing her request for an American adviser, and now that complications had arisen she evaded it.

It is always necessary for China, ground as she is between the millstones of the powers, to act slowly. She awaited the outcome of America's insistence, and the demonstrations of Russia and Japan on one hand, and the European groups and governments on the other. The representatives of the European groups sought to come into the negotiations, thinking complications might give them an opportunity to take the loan away from the Americans. But the American minister, and the agent of the American group, on instructions, refused to recognize them, pending further knowledge of China's intentions, which were the main consideration. China parleyed. The Washington Government, unable to proceed against her indisposition without creating another situation, sat down to take counsel.

Two months had elapsed, China would not confirm her request for nor appoint an adviser, and the government in Washington did not know whether she desired American pressure exerted against her, so that she might have an excuse for concluding her obligations to America, or whether she was sincerely afraid of the powers. An effort was made to find out, and in the end it was seen that the currency loan was involved in complications such as had affected the previous measures of the government's "plan of State" namely, the Hukuang loan, the Kinchou-Aigun railway project, and the neutralization proposal.

China could not be blamed for resisting, in view of the intimidation inherent in the representations of France, Russia, and Japan, who constituted a majority of the political combination of European and Asian powers called the Manchurian allies, nor for making use of them. When the American bankers promised participation

to the European groups conditional upon China's consent without opposition of the Washington Government, China apprehended that she was about to fall into the trap she had planned to avoid. International control of her finances had come. She was safeguarded, through American participation, by the principles of equal opportunity and Chinese integrity, and by American Government supervision of American finance in China, yet her understanding with America was threatened with failure.

Her methods that had caused the bankers to combine, but which cannot accomplish an alliance of so many powers, China now repeated in her dealings with the American Government, seeming to justify the course which the bankers had taken. China could not play the bankers against each other, and to further boost her visible credit she played the American Legation in Peking against the American group there. Mr. Calhoun urged that the advisership be settled so the terms of the loan could be arranged. Mr. Straight urged the internationalization of the loan so as to insure success of currency reform, to give China's securities a wider market, to say nothing of protection for the American bankers. To Minister Calhoun China's objection was that Mr. Straight proposed admission of other powers; to Mr. Straight that Minister Calhoun urged American sole advisership. America's diplomatic position was defective. This had its effect in Washington. November 28, 1910, when the final negotiations with China began in Peking, the governments of Great Britain, France, and Germany had in a night become tentative participants. Although the European groups had agreed not to interfere, the Washington Government could not refuse their governments, and the preliminary agreement with China had to be shown to the British and German ambassadors in Washington and then to the French, completing the admission of America's three capitalistic colleagues to the field of negotiations. America, however, could urge restraint upon them, and the State Department found it necessary to send a note to these three powers, assuring them of participation in the loan, including the right of signature, and deprecating the complication of the negotiations by the participation at this time of other

governments as likely to defeat the loan itself, which was the main object aimed at. European interests were directed to breaking down the preference China had given to America. Their financiers proposed a board of advisers. This opposed the positions both of the American Government and of China. It is hard to imagine diplomatic topsy-turviness more bewildering than this, but it was just at this time that all other forces capable of interference concentrated in Peking like rooks. Aside from the four allied capitalistic powers on one hand, there was another and greater power in China: the four Manchurian allies, swayed by the political questions of Manchuria and the Chinese border. There was the possibility that the apprehensions of two of the Manchurian allies, Russia and Japan, as to the application of loan moneys in a Chinese-American project in Manchuria, would inspire in Great Britain and France a disinclination to participate in the Manchurian section of the loan. But other influences arrayed themselves against China, America, and her capitalistic allies. These were the separate and peculiar interests of Japan, Russia, and of the Chinese reform and revolutionary agitators, having at the time a centre in the Chinese National Assembly, China's embryo parliament. The new provincial assemblies, and the National Assembly agitated against foreign loans. The Japanese press commenced a political agitation. What was really a simple international loan negotiation for mutual benefit had, therefore, within a month, become a political problem.

Certain fundamental facts of capital and finance, as well as statesmanship, determined its solution. Great Britain, for the good of the currency reform cause, in which she was deeply interested, exerted her influence upon Japan her ally, and then upon her financial ally, France, thus at the same time reaching Russia, the ally of France, expressing the hope that those powers would not obstruct a measure for progress. Russia and Japan, now the leaders of the Manchurian allies, had once before on account of their financial weaknesses dropped out of loan enterprise, namely, respecting the Hukuang loan, leaving the care of their interests and rights to their allies, France and Great Britain. They therefore repeated this invention and contented them

selves with China's assurances that in respect to future loans they would receive the same consideration as other powers in case they wished to participate, and left the way unobstructed for their allies, together with Germany, to come into the currency loan. The American Minister, Mr. Calhoun, and the Legation Secretary of Chinese, Dr. Tenney, with admirable discretion assisted in bringing China's statesmen to accept this programme, greatly accelerating the work of the American group carried on by Mr. Straight, upon whom the weight of the negotiations fell.

Duke Tsai Tseh visited the National Assembly and explained the beneficial nature of the loan and quieted the misguided patriots from among the people.

Although Japan was accused of fomenting in China native opposition to American and European capital in order to minimize and obstruct the extension of American and other Western influence; and although Russia's interests have been said to lie in the same direction, these two powers remained neutral during the contentions. When China agreed to European participation, and this desired object was guaranteed, President Taft relinquished his expectation of an exclusive and independent American adviser, and the four powers, together with China, with remarkable and perhaps unexampled international co-ordination in Eastern Asia, reached an agreement.

As an American loan the adviser could only have been an American, but when the loan became international the advisership was a question of equal opportunity. China cordially accepted the views of the groups and governments, even to the advisership, which was to be neutral, and to complete the harmony of the powers China became satisfied that America should accompany the loan with an adviser of whatever nationality she deemed expedient. The groups jointly nominated an adviser from a country not concerned in the loan and his appointment was left to the President by reason of right of agreement with China. March 18, 1911, they met in Brussels to consider the details of China's currency scheme and of the loan agreement, and April 15, as already stated, the final agree

ment for the currency loan was signed in Peking by all concerned, thus according with the pledges given by the Washington Government to the three European powers in November, 1910.

By American diplomacy, in bringing about currency reform through the currency loan, a new force was created in China from the four capitalistic powers of the world that may be called The Capitalistic Allies. The acceptance by the hitherto intractable and unapproachable masters of the Celestial Empire of the most important reform required by present times and conditions is a tribute to the open door doctrine and is the first response from China of the effect of America's great doctrine upon her political life. America, by awakening and introducing currency reform and insuring the beginning of trade, financial, and industrial regeneration in China, becomes a financial ally of China, a member of the foreign financial council of China, and has in fact united the capitalistic powers and defeated the movement toward consolidated “financial spheres." It is likely that by the co-operation of the government and American financiers American political errors of the decade in Eastern Asia have been as nearly redeemed by this event as they could be. The object attained by the currency loan respecting Manchuria, to which four-ninths of the whole loan are applied, is approximately the same as aimed at in the neutralization proposal.

The signing of the currency loan is the result of President Taft's and Secretary Knox's plan of state for Eastern Asia. It is an achievement not less in importance perhaps than the securing of the pledges of the powers to the doctrine of the open door in 1899-1900. It may be said that not since the delegation by China of the American Minister, Anson Burlingame, as her special envoy to the West has China trusted or relied upon any foreign agencies as in this event of trusting the bringing about of her currency reform to American leadership. In American relations with China a wide gap since William H. Seward and Anson Burlingame has been thus bridged by President Taft and Secretary Knox.

NCE on a November morning, Mr. Michael Weems, the diminutive and shrivelled foreman of ship fitters at the Sierra Navy Yard, pulled his large, red, tobacco-stained moustache impatiently and let an aimless stream of profanity bubble up from his heart-or his lungs, whichever is the seat of a man's feelings-to his lips and bubble over until the air of his office became the color that profanity does color air, whatever that color is.

"I should think," started to say his bespectacled timekeeper, who had nine children at home, and who earnestly desired to have his pay raised-for altruistic reasons. "Gawd, if ye only could think!" blazed Mr. Weems, rising and eying his subordinate so fiercely that that trusted and valuable government servant withered and the shadow of him backed out of the office, for he had divined that Mr. Weems was not in a receptive mood for thought touching the insufficient emoluments of government clerks.

"I s'pose I'll be fired, all right," soliloquized Mr. Weems thoughtfully when he was alone. "I suppose the 'Con' has to do it. I'd do it mesilf if I was wearin' his boots-but fwhat's the difrince? I'll go to Yakima and slave out the rist of me loife raisin' apples and be happy and f'rgit the iron workers entirely-'tis a haard lot they are, anyhow——

Mr. Weems was interrupted.

"Hello, Mike," crisped a staccato voiceand there entered that prosperous, if not elegant, gentleman, Mr. Emannalson Knott. Mr. Knott was twenty years younger than Mr. Weems, and forty times richer. He had a private car and a yacht, yet he nevertheless took a perverse pride in remembering that in his less prosperous days he had been a "rivet boy" in a "Frisco" repair shop, where Michael Weems was a journeyman fitter.

Mr. Weems said vociferously that he was glad to see Mr. Knott, then he patted him on the shoulder, poked him in the stomach, and cursed him in fond and fluent periods.

"Divil take us, but ye look foine, Em,— av course, ye feel foine-good; 'tis a shame we're not out av the Yard so we could get our noses over a glass of hot-no, av course ye don't drink-not me nayther; nobody does."

Mr. Knott examined Mr. Weems's countenance.

"Mike, you look seedy; has that boy of yours at last got in jail?"

"He has not-he's a fine bhoy; there's nawthin' the matter with him." "Old lady sick?”

"Not that ye'd notice-she was scoldin' me only last night f'r-no matter fwhat— she'll live a cintury yet.”

"M-m-m," grunts Mr. Knott, making a sound like Richard Mansfield in a death

scene.

Silence for three minutes. Mr. Knott lights a cigar.

"I know smokin' violates Navy Yard rules," says he, "and if a marine discovers me, you can be found kicking me out of your office. I light this cigar only because 'tis my custom to smoke when my friends are in trouble-here's toward you," and he expansively threw his head back, blew toward the ceiling and sighed.

"'S far's trouble's concerned, I have it— ye're damn right. I have it, though 'tis not in me family it lies."

"Then where is it?"

"Not in yer shiny eye, annyhow-ye see 'tis this way. A fortnight ago that damn big cruiser Penobscot comes into this ya-ard. with her bows smashed up by ice, land, rocks, brick hotels, and such other obstycles as they've encountered in Bering Seafwhat she was doin' up there don't ask me, 'twas niver I that sint her there."

"M-m-m," grunts Mr. Knott again, blowing smoke, "and what of that?"