When afterwards it was found that the French settlement did not imply any special privileges to French citizens to the detriment of other residents, the British protest was withdrawn, and an increase which had long been desired was also granted in May by the Viceroy of Nanking to the area of the International Settlement at Shanghai.

The Tsung-li-Yamên on February 3 consented to the opening of Nanning-fu on the Yu-kiang River as a new treaty port. Hu-Yu-Fin, chief director of the Northern Railways was accused of maladministration (Jan. 26) and superseded by Chang-Yi, a great speculator, and one of the richest men in North China. Sir Claude Macdonald, the British Ambassador, refused to recognise this appointment until the charges made against Hu-Yu-Fin were investigated. A commission of inquiry was appointed, and in consequence of their report an imperial edict was promulgated (March 7) discharging the prisoner. Nevertheless Chang-Yi was finally recognised. No salary attached to the appointment, and Chang-Yi expected profits from the handling of the earnings of the line and by compelling the use of inferior coal from his own coal mines. Despite British opposition increasing favour was shown to Chang-Yi, and he received an honourable court appointment in June.

The prospectus of the Chinese Imperial Railway five per cent. gold loan for 2,300,000l. was issued in February. The loan was to be secured in part by the earnings of an extension line to the port of Niu-Chwang. The Russian Minister, M. de Giers, protested, alleging that the clause providing that the chief engineer should be British conflicted with the conditions of the Russo-Chinese agreement given to M. Pavloff in August preceding. The Tsung-li-Yamên replied that it did not conflict, and asked whether, if they gave way, Great Britain would reckon with Russia, or hold China alone responsible. The Russian Minister renewed his protest, objecting to the chief engineer being British, and that the loan should be secured on the earnings of the new line. England renewed her emphatic declaration that the contract could not be altered. Finally, in April, Russia withdrew her opposition to the loan, although still protesting.

The petition of Liu-Kun-Yi, Viceroy of Nanking, addressed to the Throne, and asking to be relieved from the duties of his office on account of his age and failing health, was refused. He had previously recommended in another memorial the proper training of military officers and the use of modern weapons and forms of drill. For this presumption he was severely censured by an imperial edict issued in January.

The Italian Minister on February 28 presented demands to the Tsung-li-Yamên for the lease of Sammun Bay on the coast of Che-kiang as a coaling station and naval base, including the concession of three islands off the coast, with the right to

construct a railway from Sammun Bay to Poyang Lake within a sphere of influence comprising the southern two thirds of Che-kiang province. The demand was supported by a note from the British Minister, but it was rejected with contempt by the Tsung-li-Yamên. To enforce the demand some Italian marines were landed at Sammun Bay. Through misunderstanding, Sgr. Martino, the Italian Minister, sent an ultimatum with the sanction of his Government, allowing only four days for a reply. Italy not intending to resort to force disavowed this ultimatum, and recalled Sgr. Martino. Pending the appointment of his successor, Italy was represented by the British Ambassador at Pekin. Negotiations were continued between Italy and China after the appointment of Sgr. Salvago Raggi as the Italian Minister at Pekin. In May the Italian demand was confined to the lease of a coaling station merely. In August mining rights in North Che-kiang and a chair of Italian at Pekin University were demanded, but the Tsung-li-Yamên, while willing to grant the mining rights, stubbornly refused to concede any other demands.

Sir Claude Macdonald obtained leave of absence in March. for a visit to England, and Mr. Bax Ironside, Secretary of Legation, became British Chargé d'Affairs, ad interim.

At the end of April Great Britain and Russia concluded an agreement with regard to their respective railway interests in China that had been discussed for many months.

1. Great Britain engaged not to seek on her own account or for others railway concessions north of the great wall of China, and not to obstruct Russian applications for concessions in that region.

2. Russia made a like agreement respecting the basin of the Yang-tsze, relative to British claims and concessions.

3. The contracting parties agreed to inform China of the arrangement, since they had no desire in any way to infringe the sovereign rights of China or existing treaties.

An agreement was appended as to the Shanghai-Kuan and Niu-Chwang Railway which declared that the railway must remain a Chinese line under control of the Chinese Government, and that the Chinese Government might appoint both an English engineer to supervise the construction of the line and a European accountant to look after the expenditures appropriated.

In March the Belgian Minister applied to the Tsung-liYamên for a concession at Hankow for land on which to build the terminus of the Luhan Railway. This had the support of the British Minister, although Belgium had played an unfriendly part in railway negotiations. China was disposed to grant the land to Belgian employees, but declined to yield the valuable river frontage which was asked for. China, however, agreed in December to allow M. Rouffart, a Belgian engineer, to construct a railway connecting the Luhan Line with Honan

fu, with right of future extension to Sin-gan-fu, the capital of Shensi province, but Sir Claude Macdonald protested on the ground that this concession had already been applied for by the Pekin syndicate.

Inundations of the Yellow River created much distress in Shantung province, reducing 2,000,000 of people to starvation. Li-Hung-Chang returned to Pekin from his inspection, and reported that it would cost 4,000,000l. sterling to construct the barriers to prevent these floods. By imperial decree 400,000 taels were provided for works on the Yellow River and 600,000 taels for erecting dykes, and 2,000,000 taels were to be devoted to deepening the mouth of the river.

On account of the threatening attitude of the people in this province towards foreigners the German war-ships landed men in April to put down disturbances.

The Anglo-German loan contract for the Tien-tsin and Ching-kiang Railway was signed on May 18. The line, 613 miles long, would be a Chinese Government railway, to be completed within five years; the loan having a period of redemption of fifty years with security from a Government guarantee and from the railway itself. The amount of the loan was 7,400,000l. with interest at 5 per cent. The German section of the road from Tien-tsin to the southern border of Shantung was to be under German and Chinese management, and the English section to Ching-kiang under joint English and Chinese control. An imperial edict in May sanctioned the construction of this important railway.

Shantu in Samsah Bay was conceded as a treaty port in May, and Yo-chau-fu at the entrance of Tung-ting Lake on November 13, being the first port to be opened in the province of Hu-nan. The Chinese authorities declined in November to grant the application made by a British syndicate for a concession to remove existing obstructions from the Yang-tsze with a view to improving the navigation of the river. The reason assigned for the refusal was that the obstructions constitute a valuable defence against foreign invasion.

An imperial order of the Russian Government was issued in August directing that Ta-lien-wan would be a free port when the Siberian railway was finished.

Russia made claim on May 7 for a concession to construct a separate railway connecting Port Arthur with Pekin. This was refused on the ground that no more concessions could be granted till the lines already allowed were completed. M. de Giers informed the Tsung-li-Yamên that the Russian Government insisted that the right to construct this railway must be granted. The Chinese were, however, determined to resist this demand, and they were so advised by the British Government.

A dispute with regard to the possession of some land at Hankow purchased in 1863 by Jardine, Matheson & Co., an

English firm, and afterwards included in concessions to Russia, was by M. de Giers and Mr. Bax Ironside arranged to be submitted to arbitration.

The Franco-Chinese agreement for the construction of the Lung-chau and Nanning-fu Railway was signed on September 15, the Chinese Government to provide 3,100,000 taels of the capital. The work was to be completed within three years, and only French engineers and French materials were to be employed. The French claimed to have obtained mining concessions in six districts of Szu-chuan province, but these appeared to conflict with the contract made with Mr. W. Pritchard Morgan and an American syndicate in February. The French demanded 1,200,000 taels and mining rights around Chung-King as indemnity for outrages on French missionaries in Szu-chuan. The Dowager-Empress in September sent for Mr. Pritchard Morgan to go at once to China and begin mining and commercial work in Szu-chuan.

The aged and much-abused Li-Hung-Chang had a good year, if report be true, for in November he was appointed by imperial decree Minister of Commerce, and in December became Viceroy of the province of Kwang-tung. For some time he was engaged in drawing up a report as to the best means of improving Chinese commerce, especially in the tea and silk trades.

The Empress-Dowager issued on November 21 to the Viceroys and Governors of the Yang-tsze and maritime provinces a circular despatch and a secret edict, appealing to them to resist by force of arms all further aggressions of foreign Powers.

Especially the attempt of the Italians to obtain the cession of Sammun Bay and the aggressions of the French in Kwanchau-wan aroused the indignation of the Empress, who exhorted the people to act en masse and "preserve their ancestral homes and graves from the ruthless hands of the invader."

III. HONG-KONG.

Lord Charles Beresford returned from Canton on January 3, and delivered an address to the Hong-Kong Chamber of Commerce on the reforms necessary in the system of Chinese administration; and on January 22 at a meeting of the leading Chinese merchants resolutions were passed in sympathy with Lord Beresford's views.

The Hong-Kong authorities early in April were urging the Chinese Government to give up the territory recently leased at Kau-lung, and notice was given to the Chinese Maritime Customs to cease collecting on April 17 within the boundaries of the Kau- lung extension. Some superstitious Chinese villagers posted inflammatory placards and burned a police shed at Tai-po-fu on the ground that it interfered with the fungshui of the village. The Governor, Sir H. Blake, induced the Viceroy of Canton to send troops to protect build

ings and property, but a mob assaulted the British officials and the Chinese soldiers acting as guard and compelled them to retire. British troops were then landed at Mirs Bay from a torpedo-boat destroyer, and for a few days some fighting was kept up by a horde of Chinese rebels. On May 17 a British force took possession of Kau-lung city, the town of Sam-chun in the extension territory was occupied without resistance, and in all the towns the rebels were subdued. The British Government granted the request of the Chinese for six months' extension of time to make needful arrangements for the removal of the Maritime Customs stations.

The

The commercial condition of the colony was highly satisfactory. British trade met with serious hindrance, however, through the increase of piracy on the West River. revenue of Hong-Kong in 1898 was $2,918,159, with an expenditure of $2,841,805, and the population at the end of 1898 was estimated at 254,400.

IV. KOREA.

The entire Korean Cabinet was dismissed on March 22, and two of the members were banished because of changes made by the Cabinet in provincial offices.

The Japanese were gaining in influence by encouraging attempts at reform, while Russian policy was to check reform.

Concessions of three whaling stations, each fifteen miles long, were applied for by the Russian Count Kaiserlingk on behalf of the East Russian Fishery Company. The Government agreed to allow the company three sites of 700 feet by 350 feet for whaling purposes only, on a lease of twelve years, under the supervision of the Korean Maritime Customs, and the Japanese were promised similar concessions. Russian attempts to gain political advantages under any guise were being checked by Japanese vigilance. Yet Russia denied that she was desirous of establishing a Russian Protectorate over the country, and asserted that Japan had nothing to fear from Russia.

Japan took over the Seoul and Chemulpho Railway in January with the consent of Korea. The total foreign trade last year of Korea amounted to 2,495,9551. Export of gold dust amounted to 240,0471., the other exports 906,7371., and the imports 1,194,8437. Half the value of the import trade was represented by cotton goods.

V. JAPAN

Negotiations for a treaty of alliance with China were attempted by Prince Cheng, and Chinese envoys arrived in Japan in July, it was said with that object in view. The Russian Minister in Pekin addressed a note to the Tsung-liYamên, warning them that the conclusion of such an alliance