In 1894-5 war broke out between China and Japan on account of Korea. My sympathies were enlisted on the side of China, not because I am a Chinese, but because China had the right on her side, and Japan was simply trumping up a pretext to go to war with China, in order to show her military and naval prowess. Before the close of the war, it was impossible for me to be indifferent to the situation—I could not repress my love for China. I wrote to my former legation interpreter and secretary, two letters setting forth a plan by which China might prosecute the war for an indefinite time.

My first plan was to go over to London to negotiate a loan of $15,000,000, with which sum to purchase three or four ready built iron-clads, to raise a foreign force of 5,000 men to attack Japan in the rear from the Pacific coast—thus creating a diversion to draw the Japanese forces from Korea and give the Chinese government a breathing spell to recruit a fresh army and a new navy to cope with Japan. While this plan was being carried out, the government was to empower a commission to mortgage the Island of Formosa to some Western power for the sum of $400,000,000 for the purpose of organizing a national army and navy to carry on the war. These plans were embodied in two letters to Tsai Sik Yung, at that time secretary to Chang Tsze Tung, viceroy of Hunan and Hupeh. They were translated into Chinese for the Viceroy. That was in the winter of 1894. To my great surprise, Viceroy Chang approved of my first plan. I was authorized by cable to go over to London to negotiate the loan of $15,000,000. The Chinese minister in London, a Li Hung Chang man, was advised of my mission, which in itself was a sufficient credential for me to present myself to the minister. In less than a month after my arrival in London, I succeeded in negotiating the loan; but in order to furnish collaterals for it, I had to get the Chinese minister in London to cable the government for the hypothecation of the customs’ revenue. I was told that Sir Robert Hart, inspector-general of customs, and Viceroy Li Hung Chang refused to have the customs’ revenue hypothecated, on the ground that this revenue was hardly enough to cover as collateral the loan to meet the heavy indemnity demanded by Japan. The fact was: Viceroy Li Hung Chang and Chang Chi Tung were at loggerheads and opposed to each other in the conduct of the war. The latter was opposed to peace being negotiated by Li Hung Chang; but the former had the Dowager Empress on his side and was strenuous in his efforts for peace.

Hence Sir Robert Hart had to side with the Court party, and ignored Chang Chi Tung’s request for the loan of $15,000,000; on that account the loan fell through, and came near involving me in a suit with the London Banking Syndicate.

I returned to New York and cabled for further instructions from Chang Chi Tung as to what my next step would be. In reply he cabled for me to come to China at once.

After thirteen years of absence from China, I thought that my connections with the Chinese government had been severed for good when I left there in 1883. But it did not appear to be so; another call to return awaited me, this time from a man whom I had never seen, of whose character, disposition and views I was altogether ignorant, except from what I knew from hearsay. But he seemed to know all about me, and in his memorial to the government inviting me to return, he could not have spoken of me in higher terms than he did. So I girded myself to go back once more to see what there was in store for me. By this recall, I became Chang Chi Tung’s man as opposed to Li Hung Chang.

Before leaving for China this time, I took special pains to see my two sons well provided for in their education. Dr. E. W. Kellogg, my oldest brother-in-law, was appointed their guardian. Morrison Brown Yung, the older son, had just succeeded in entering Yale, Sheffield Scientific, and was able to look out for himself. Bartlett G. Yung, the younger one, was still in the Hartford High School preparing for college. I was anxious to secure a good home for him before leaving the country, as I did not wish to leave him to shift for himself at his critical age. The subject was mentioned to my friends, Mr. and Mrs. Twichell. They at once came forward and proposed to take Bartlett into their family as one of its members, till he was ready to enter college. This is only a single instance illustrative of the large-hearted and broad spirit which has endeared them to their people both in the Asylum Hill church and outside of it. I was deeply affected by this act of self-denial and magnanimity in my behalf as well as in the behalf of my son Bartlett, whom I felt perfectly assured was in first-class hands, adopted as a member of one of the best families in New England. Knowing that my sons would be well cared for, and leaving the development of their characters to an all-wise and ever-ruling Providence, as well as to their innate qualities, I embarked for China, this time without any definite and specific object in view beyond looking out for what opening there might be for me to serve her.

On my arrival in Shanghai, in the early part of the summer of 1895, I had to go to the expense of furnishing myself with a complete outfit of all my official dresses, which cost me quite a sum. Viceroy Chang Chi Tung, a short time previous to my arrival, had been transferred from the viceroyalty of the two Hoos to the viceroyalty of the two Kiangs temporarily. Instead of going up to Wu Chang, the capital of Hupeh, I went up to Nanking, where he was quartered.

In Viceroy Chang Chi Tung, I did not find that magnetic attraction which at once drew me towards Tsang Kwoh Fan when I first met him at Ngan Khing in 1863. There was a cold, supercilious air enveloping him, which at once put me on my guard. After stating in a summary way how the loan of $15,000,000 fell through, he did not state why the Peking government had declined to endorse his action in authorizing the loan, though I knew at the time that Sir Robert Hart, the inspector-general of the Chinese customs, put forward as an excuse that the custom dues were hardly enough to serve as collateral for the big loan that was about to be negotiated to satisfy the war indemnity demanded by the Japanese government. This was the diplomatic way of coating over a bitter pill for Chang Chi Tung to swallow, when the Peking government, through the influence of Li Hung Chang, was induced to ignore the loan. Chang and Li were not at the time on cordial terms, each having a divergent policy to follow in regard to the conduct of the war.

Dropping the subject of the loan as a dead issue, our next topic of conversation was the political state of the country in view of the humiliating defeat China had suffered through the incompetence and corruption of Li Hung Chang, whose defeat both on land and sea had stripped him of all official rank and title and came near costing him his life. I said that China, in order to recover her prestige and become a strong and powerful nation, would have to adopt a new policy. She would have to go to work and engage at least four foreigners to act as advisers in the Department for Foreign Affairs, in the Military and Naval Departments and in the Treasury Department. They might be engaged for a period of ten years, at the end of which time they might be re-engaged for another term. They would have to be men of practical experience, of unquestioned ability and character. While these men were thus engaged to give their best advice in their respective departments, it should be taken up and acted upon, and young and able Chinese students should be selected to work under them. In that way, the government would have been rebuilt upon Western methods, and on principles and ideas that look to the reformation of the administrative government of China.

Such was the sum and substance of my talk in the first and only interview with which Chang Chi Tung favored me. During the whole of it, he did not express his opinion at all on any of the topics touched upon. He was as reticent and absorbent as a dry sponge. The interview differed from that accorded me by Tsang Kwoh Fan in 1863, in that Tsang had already made up his mind what he wanted to do for China, and I was pointed out to him to execute it. But in the case of Chang Chi Tung, he had no plan formed for China at the time, and what I presented to him in the interview was entirely new and somewhat radical; but the close of the Japan War justified me in bringing forward such views, as it was on account of that war that I had been recalled. If he had been as broad a statesman as his predecessor, Tsang Kwoh Fan, he could have said something to encourage me to entertain even a glimpse of hope that he was going to do something to reform the political condition of the government of the country at the close of the war. Nothing, however, was said, or even hinted at. In fact, I had no other interview with him after the first one. Before he left Nanking for Wu Chang, he gave me the appointment of Secretary of Foreign Affairs for Kiang Nan.

On the arrival of Liu Kwan Yih, the permanent viceroy of the two Kiang provinces, Chang Chi Tung did not ask me to go up to Wu Chang with him. This I took to be a pretty broad hint that he did not need my services any longer, that I was not the man to suit his purposes; and as I had no axe to grind, I did not make any attempt to run after my grind-stone. On the contrary, after three months’ stay in Nanking under Viceroy Liu Kwan Yih, out of regard for official etiquette, I resigned the secretaryship, which was practically a sinecure—paying about $150 a month. Such was my brief official experience with Viceroys Chang Chi Tung and Liu Kwan Yih.

I severed my official connection with the provincial government of Kiang Nan in 1896, and took up my headquarters in Shanghai—untrammeled and free to do as I pleased and go where I liked. It was then that I conceived the plan of inducing the central government to establish in Peking a government national bank. For this object I set to work translating into Chinese the National Banking Act and other laws relating to national banks from the Revised Statutes of the United States with Amendments and additional Acts of 1875. In prosecuting this work, I had the aid of a Chinese writer, likewise the co-operation of the late Wong Kai Keh, one of the Chinese students who was afterwards the assistant Chinese commissioner in the St. Louis Exposition, who gave me valuable help. With the translation, I went up to Peking with my Chinese writer, and, at the invitation of my old friend, Chang Yen Hwan, who had been Chinese Minister in Washington from 1884 to 1888, I took up my quarters in his residence and remained there several months. Chang Yen Hwan at that time held two offices: one as a senior member of the Tsung Li Yamun (Office for Foreign Affairs); the other, as the first secretary in the Treasury Department of which Ung Tung Hwo, tutor to the late Emperor Kwang Su, was the president. Chang Yen Hwan was greatly interested in the National Banking scheme. He examined the translation critically and suggested that I should leave out those articles that were inapplicable to the conditions of China, and retain only such as were important and practicable. After the translation and selection were completed, he showed it to Ung Tung Hwo, president of the Treasury. They were both highly pleased with it, and had all the Treasury officials look it over carefully and pass their judgment upon it. In a few weeks’ time, the leading officials of the Treasury Department called upon me to congratulate me upon my work, and said it ought to be made a subject of a memorial to the government to have the banking scheme adopted and carried out. Chang Yen Hwan came forward to champion it, backed by Ung Tung Hwo, the president.

To have a basis upon which to start the National Bank of China, it was necessary to have the government advance the sum of Tls. 10,000,000; of this sum, upwards of Tls. 2,000,000 were to be spent on machinery for printing government bonds and bank-notes of different denominations and machinery for a mint; Tls. 2,000,000 for the purchase of land and buildings; and Tls. 6,000,000 were to be held in reserve in the Treasury for the purchase of gold, silver and copper for minting coins of different denominations for general circulation. This Tls. 10,000,000 was to be taken as the initiatory sum to start the National Bank with, and was to be increased every year in proportion to the increase of the commerce of the Empire.

We had made such progress in our project as to warrant our appointing a committee to go around to select a site for the Bank, while I was appointed to come to the United States to consult with the Treasury Department on the plan and scope of the enterprise and to learn the best course to take in carrying out the plan of the National Bank. The Treasury Department, through its president, Ung Tung Hwo, was on the point of memorializing for an imperial decree to sanction setting aside the sum of Tls. 10,000,000 for the purpose indicated, when, to the astonishment of Chang Yen Hwan and other promoters of the enterprise, Ung Tung Hwo, the president, received a telegraphic message from Shing Sun Whei, head of the Chinese Telegraphic Co., and manager of the Shanghai, China Steamship Navigation Co., asking Ung to suspend his action for a couple of weeks, till his arrival in Peking, Ung and Shing being intimate friends, besides being compatriots, Ung acceded to Shing’s request. Shing Taotai, as he was called, was well-known to be a multimillionaire, and no great enterprise or concession of any kind could pass through without his finger in the pie. So in this banking scheme, he was bound to have his say. He had emissaries all over Peking who kept him well posted about everything going on in the capital as well as outside of it. He had access to the most powerful and influential princes in Peking, his system of graft reaching even the Dowager Empress through her favorite eunuch, the notorious Li Ling Ying. So Shing was a well-known character in Chinese politics. It was through his system of graft that the banking enterprise was defeated. It was reported that he came up to Peking with Tls. 300,000 as presents to two or three princes and other high and influential dignitaries, and got away with the Tls. 10,000,000 of appropriation by setting up a bank to manipulate his own projects.

The defeat of the National Banking project owed its origin to the thoroughly corrupt condition of the administrative system of China. From the Dowager Empress down to the lowest and most petty underling in the Empire, the whole political fabric was honey-combed with what Americans characterize as graft—a species of political barnacles, if I may be allowed to call it that, which, when once allowed to fasten their hold upon the bottom of the ship of State were sure to work havoc and ruination; in other words, with money one could get anything done in China. Everything was for barter; the highest bid got the prize. The two wars—the one with Japan in 1894-5 and the other, the Japan and Russian War in 1904-5—have in some measure purified the Eastern atmosphere, and the Chinese have finally awakened to their senses and have come to some sane consciousness of their actual condition.

After the defeat of the national banking project at the hands of Shing Taotai, I went right to work to secure a railroad concession from the government. The railroad I had in mind was one between the two ports of Tientsin and Chinkiang; one in the north, the other in the south near the mouth of the Yangtze River. The distance between these ports in a bee line is about five hundred miles; by a circuitous route going around the province of Shan Tung and crossing the Yellow River into the province of Hunan through Anwhui, the distance would be about seven hundred miles. The German government objected to having this railroad cross Shan Tung province, as they claimed they had the monopoly of building railroads throughout the province, and would not allow another party to build a railroad across Shan Tung. This was a preposterous and absurd pretension and could not be supported either by the international laws or the sovereign laws of China. At that time, China was too feeble and weak to take up the question and assert her own sovereign rights in the matter, nor had she the men in the Foreign Office to show up the absurdity of the pretension. So, to avoid any international complications, the concession was issued to me with the distinct understanding that the road was to be built by the circuitous route above described. The road was to be built with Chinese, not with foreign capital. I was given six months’ time to secure capital. At the end of six months, if I failed to show capital, I was to surrender the concession. I knew very well that it would be impossible to get Chinese capitalists to build any railroad at that time. I tried hard to get around the sticking point by getting foreign syndicates to take over the concession, but all my attempts proved abortive, and I was compelled to give up my railroad scheme also. This ended my last effort to help China.

I did not dream that in the midst of my work, Khang Yu Wei and his disciple, Leang Kai Chiu, whom I met often in Peking during the previous year, were engaged in the great work of reform which was soon to culminate in the momentous coup d’État of 1898.