events, now regarded as of the highest importance, shall have been quite forgotten.

The idea of a great union of civilized nations for mutual defense is rapidly developing in the minds of thoughtful people. We may perhaps say that its first impetus was given at the international conference at The Hague, but more recent events have tended to the crystallization of public opinion upon this subject, in unmistakable shape.

China's reactionary defiance of the civilized world has set the people to thinking, and as a result we are about to witness the subjugation of barbarianism by the combined forces of civilization. It is of course earnestly to be hoped that this may be accomplished with little bloodshed, but that it must be accomplished, even at high cost of life and treasure, is apparent from a glance at the following summary of the population of the countries now interested in common cause :

as against, say, 400,000,000 Chinese. The time has evidently come for the step to be taken. The Yellow Peril is a very real one, when we reflect that year after year since the ChinoJapanese War the armies of China have undergone thorough regulation and drill in the use of the most modern arms and appliances of warfare.

Although an invasion by these Mongolian hordes, similar to the descent of the Goths and Vandals upon the Roman Empire, is not to be considered probable, still it must be granted that such a vast nation under one strong central government is a menace to the peace and prosperity of the rest of the world.

To my mind, the best solution seems to lie in the decentralization of the Chinese government, the division into princi

palities, autonomous in the government of internal affairs, but under the tutelage of the great powers now having territorial interests there. But the United States should insist that perfect good faith be kept in the pledges of an "open door" policy agreed upon by all the interested nations. A successful termination of this present serious trouble will, it is to be hoped, form a lasting bond of friendship between all the great powers, and bring appreciably nearer the fruition of the Czar's great humanitarian proposals.

The subject of an alliance of the English-speaking people has been very extensively discussed during the past few years by some of the ablest writers and thinkers of the day, and some have gone so far in accordance with the foregoing suggestions as to advocate an alliance of all civilized nations. Among these may be mentioned Captain Alfred T. Mahan, formerly of the United States Navy, who is, perhaps, one of the greatest marine tacticians in the world, and a man capable of taking the widest range of vision of all that relates to the sea, both from a military and a commercial point of view. His ideas, therefore, on the possibilities of an Anglo-American reunion are worthy of the most careful consideration, and will furnish an excellent guide to any one pursuing the study of the influence of that reunion on the financial affairs and prosperity of the proposed reunionists, and especially on those of the United States.

Among others who have recently made most valuable contributions to this department of literature may be mentioned Captain Lord Charles Beresford, of the Royal Navy of Great Britain; also Sir George Clarke, Mr. Arthur Silva White, and Mr. Andrew Carnegie.

Captain Mahan dwells at length on the necessity of America taking a deeper interest in the sea, which he regards of far greater importance than the land. He thinks that the time is past forever when any single nation can control the domain of the boundless deep, but suggests that an Anglo-American alliance could do so to the great interest of both parties, and to the union and the benefit of humanity at large. His great apprehension of the future seems to be a possible inundation

by countless hosts of outside barbarians, while he does not forget the inside ones in the shape of anarchists and socialists. He believes in the firm maintenance of the military system for accomplishing the highest objects of civilization. In the prospect of a possible barbarian invasion, Captain Mahan thinks that the United States will be obliged to play a prominent part in the defense, and, to quote his own words, "to cast aside the policy of isolation which befitted her infancy, and to recognize that, whereas to avoid European entanglement was once essential to the development of her individuality, now to take her share of the travail of Europe is but to assume an inevitable task, an appointed lot in the work of upholding the common interests of civilization." He predicts that against this possible invasion the only barrier will be the warlike spirit of the representatives of civilization, and adds with patriotic fervor, backed by good argument, "Whate'er betide, sea power will play in those days the leading part which it has in all history, and the United States by her geographical position must be one of the frontiers from which, as from a base of operations, the sea power of the civilized world will energize." In urging the just recognition of the superiority of the sea to the land, this able author says, "Control of the sea by maritime commerce and naval supremacy means predominant influence in the world, because, however great the wealth of the land, nothing facilitates the necessary exchanges as does the sea.”

If Captain Mahan and other great thinkers and tacticians who hold the same or similar opinions are correct, then our navy cannot be enlarged too soon nor too extensively.

It may be asked, How will this accord with the peace theory and the holding forth of the olive branch to the nations? It will be perfectly consistent with that, as all preparations for defense, and defense only, are. Savages and barbarians bent on plunder do not understand anything about the significance of the olive branch until they are first made to feel the power behind it. Then they become docile. It may require such a display of strength as Captain Mahan supposes, to reduce these nations outside of civilization to a state of mind in which they

will feel disposed to reason, so far as they are capable of reasoning. But in order to accomplish this great purpose, the necessity for which may still be far distant, a pacific alliance among all civilized nations, irrespective of language, will be an indispensable preliminary. Such preparation would certainly be the best guaranty for universal peace and prosperity, thus enabling the human race to apply its best energies to its own development instead of to its degradation and destruction.

CHAPTER XXXIII.

THE BARING FAILURE.

The true story of the cause of that astounding collapse told for the first time. The great Baring boom, and what the scaling down of the interest on British consols had to do with it.-The Duke of Marlbor

ough's hand in it. Sensational acts of the hypnotic gentleman who captivated the Argentine beauty, and through her captured all the Barings' business in the South American republic. - Magnificent executive ability displayed by Mr. Lidderdale in the rehabilitation of the firm. — Amazing gratitude of the benevolent friend who assisted Lord Revelstoke with five million dollars. The future money center of the world.

TH

“HERE have been many versions of the Baring failure and its causes, but the true story of the latter is here told for the first time.

The means to obtain the money which caused the big Baring boom, first in the securities of Guinness's XX. and afterward in the properties, real and imaginary, of Argentina, originated in the act of Parliament, a few years ago, which scaled down the interest on the British consols from 3 to 23 per cent., and that act of Parliament originated in a casual conversation between the Duke of Marlborough and myself.

When the Duke, who married Mrs. Lily Price Hamersley, now Lady Charles Beresford, was in New York, he and I became quite well acquainted, and had frequent conversations on financial questions and other subjects, in all of which I found him an exceedingly brilliant talker, thoroughly informed on all subjects that came up.

One evening the conversation was diverted to a comparison of the market value of our government bonds with that of the British 3 per cents., or "consols" as they are called. These securities had been called "consols" by way of abbreviation