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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