Beiyang Dream

July 20, 1891, evening. Beijing, Dongjiaomin Lane, inside the Chinese-style mansion of Sir Robert Hart, Inspector General of Customs. Hart sat in his study, a report spread out before him.

His study was illuminated by a high-tech lighting system—a rarity in Beijing—electric light bulbs that shone brightly, illuminating the words on the paper clearly. This was incredibly powerful; in the entire city of Beijing, no more than five places could use it: the Summer Palace, the Forbidden City, Prince Chun's Mansion, and Prince Qing's Mansion. Hart sometimes felt he was being extravagant, but then he thought, "The electricity bill comes from the customs administration's funds, not my own pocket." Why not take advantage of the Qing Dynasty's resources?

The report was delivered by Detring, the Tianjin Customs Commissioner; it was a thick stack of documents, with the cover reading "Nanyang Bank and Luanzhou Coal and Iron Joint Venture." Hart picked up his coffee cup, took a sip, and frowned slightly.

The two things mentioned in the report made him feel very uncomfortable.

First, Li Hongzhang's Beiyang Group has recently become very close to a bank called "Nanyang Bank." This bank has only been open for a short time, but its capital is frighteningly large!

The financial backers behind it were a group of wealthy Chinese in Southeast Asia, who held large positions in commodities such as rubber, tin ore, coconut oil, and sugar. Detring estimated in her report that the capital held by this group might be far greater than that of British conglomerates like HSBC and Jardine Matheson! If they were merely making money in Southeast Asia, Hart wouldn't have cared. But now they had colluded with the Beiyang government, investing in its industries and providing substantial financing for its large-scale military procurement, defense industry, and railway projects.

Hart cursed inwardly: These Southeast Asian Chinese, instead of investing their money in the British Empire, they come to serve the Qing Dynasty? Their heads must have been slammed in a door! They have British government bonds to give money to Li Hongzhang, what else is that but water in the brain?

The second thing was the Luanzhou Coal and Iron Joint Venture, which had a total investment of ten million taels of silver.

Ten million taels! That's almost two million pounds. In Britain, that's no small sum.

Detring's report was detailed: the Nanyang Consortium had completed the first phase of capital increase for the Luanzhou project, investing 2.5 million taels of silver to acquire a 50% stake, and also planned to have the Nanyang Bank provide a credit line of 5 million taels for the Luanzhou project. The scale of investment in the Luanzhou plant far exceeded that of the Hanyang Ironworks, which received full support from the Qing Dynasty.

When Hart saw this, his brows furrowed even more.

He continued reading. Detring's report stated that Luanzhou possessed abundant coal and iron resources, was geographically close, and had convenient transportation with existing canals and railways. It was also near the sea, making it easy to import equipment. As long as the project didn't make any major mistakes in investment and operation, it should be able to start production quickly. Furthermore, Sheng Xuanhuai, the general manager of the Luanzhou plant, and his associates Tang Tingshu and Zhang Zhensheng, were all experienced industrialists, far superior to Zhang Zhidong, an inexperienced bureaucrat! Hoping they would make major mistakes in management was wishful thinking.

Detring also included a cost assessment: the cost of pig iron from the Luanzhou plant is likely as low as 12 to 16 taels per ton, which is more than 60% lower than the landed price of imported pig iron.

Therefore, this is a project with good profit prospects!

Good profitability means that it can grow on its own and is more likely to attract business capital.

At the end of her report, Detring noted that the Qing Dynasty imported approximately 130,000 tons of steel in the sixteenth year of the Guangxu Emperor's reign. If the Luanzhou Steel Plant performs well, this figure could potentially drop to zero within ten years.

Heard put down the report, picked up his coffee cup, and took another sip.

He muttered to himself:

"In today's world, there isn't a single country whose customs, capable of producing 130,000 tons of steel, is controlled by foreigners." He paused, then added:

"And there isn't a single country that can produce 130,000 tons of steel that can accept agreed tariffs, unilateral most-favored-nation status, and extraterritoriality..." He put down his coffee cup, his eyes fixed on the "130,000 tons" on the report.

He began to calculate in his mind: 130,000 tons. If the Qing Dynasty could produce all 130,000 tons of steel itself, would it still need to borrow money from foreign countries? Would it still need to use customs revenue as collateral? Would it still need him, Hart, to sit in this position?

Definitely not needed.

They could easily impose a 49.5% tariff, just like the United States!

By then, he, Herd, will be a superfluous person...

Just then, the secretary's voice came from outside the door:

"Sir, Sir Walter has arrived."

Herd looked up: "Quickly, please come in."

No sooner had he finished speaking than the British Minister to Beijing, Walter, hurried in. He was wearing a dark suit, his forehead was covered in sweat, and he was wiping himself with a handkerchief as he entered. He looked as if he had just stepped out of a steamer.

Heard rose to greet John: "John, what brings you here?"

Without any pleasantries, Wall took off his suit jacket, hung it on the hanger, and plopped down on the sofa, wiping his sweat with a handkerchief. Hurd turned and poured him a glass of chilled whiskey, handing it to him.

Hua Ershen took it, drank a large gulp, caught his breath, and then spoke:

"Robert...we've run into a little trouble in Yuanshan."

Hart also picked up his glass and took a sip: "A little trouble? You mean the Russians?"

"No," Walter shook his head. "Russia is very powerful, so it's a big problem."

Herd paused for a moment: "Then the little trouble is..."

Hua Er looked at him and said, word by word:

"It's a bastard named Chang Desheng."

Hearing the name, Hart's brow twitched slightly. He put down his wine glass and thought for a moment:

"Chang Desheng... I think I've seen this name in Detring's report before."

He walked to his desk, flipped through the stack of documents, pulled out a page, and glanced at it:

"He was involved in the Nanyang Bank in Tianjin and the coal-iron joint venture project in Luanzhou. The co-director of the Nanyang Bank was his wife's brother."

He looked up at Wall:

"By the way, what did he do in Yuanshan?"

Walter took a sip of whiskey, put down his glass, and looked at Herd:

"He... asked us, or rather, he asked you for money."

Heard was stunned for a moment: "To me?"

Hua Ershen nodded: "He hopes you can withdraw seventy or eighty thousand taels of silver from a less well-known account of the Inspector General of Customs to fund his military campaign against the Russians in Wonsan."

Herd's face immediately darkened: "What?"

Having been in charge of the Qing Dynasty's customs service for so many years, he certainly had a large sum of "hidden money" at his disposal. A man like Hart was undoubtedly capable, but incorruptible was impossible. Absolute power corrupts absolutely! Hart's power in the customs service was immense, rarely subject to oversight, and was practically "absolute."

The share of fines and confiscations from customs offices across the country meant tens of thousands of taels of silver would end up in his pocket every year. From HSBC, he received commissions on every large remittance; they were all fellow British, so how could he refuse money offered to him? If he refused, how could Sir John Wallsham accept it? If no one refused, how could progress be made? And when he handled the procurement of military supplies for the Beiyang and Nanyang warlords overseas, the kickbacks he earned as a middleman were also perfectly legitimate… As for various forms of falsification and extravagant accounting, he was no stranger to them. Over the years, the accumulated amount had long since reached millions of taels!

Some of the money went into his own pocket, while some was deposited in a secret HSBC account that was nominally under the control of customs, but in reality, only he could access it.

But Hurd certainly couldn't admit to the existence of these funds. If he did, he would give others ammunition to criticize him, and all the "clean and efficient" image he had painstakingly built up over the decades would be ruined.

Seeing that Herd remained silent, Hua Ershen knew he was reluctant to part with the money, so he whispered a suggestion: "If you don't touch this money... perhaps you could try to find a way to cover the additional miscellaneous charges on the customs duties..."

"That's absolutely impossible!" Hurd said firmly. "The agreed-upon tariffs are fixed by the treaty...no one can change them!"

As he spoke, Herd was thinking to himself: Is it really impossible to move? What if the Luanzhou Ironworks can produce 130,000 tons of steel every year? At that time, forget about additional miscellaneous charges, they'll just change the tariff rate directly!

Hua Er sighed: "I know we can't do anything about it. But the problem now is... he has Yuanshan in his hands. The Russian fleet is right outside the sea. If he really withdraws and Yuanshan is lost, neither of us will be able to explain ourselves back at Whitehall."

He paused, looking into Hurd's eyes:

"Robert, I only have five thousand pounds in cash. The remaining seventy-five thousand taels... you have to help me figure out a way."

Now Hurd has to pay up, and even Sir Walter has taken the lead!

If he doesn't respond, then it's simply not right.

If Wall fails to fulfill his mission of defending against Russia, and Whitehall holds him accountable, they will definitely drag him, Hurd, down with him. At that point, not only will his slush fund be gone, but his job will be ruined.

Hart picked up his glass and took another big gulp.

"This money cannot be paid by the Inspector General of Customs."

Hua Ershen's eyes lit up: "Then who should go?"

Heard didn't answer directly. He picked up his glass, took another sip, and slowly said:

"I can have the Korean customs levy an additional fee. It will be called the 'Port Security and Waterway Maintenance Supplementary Tax,' and it will be collected from Japanese and Qing Dynasty merchants. Japan and Qing Dynasty have almost divided up Korea's foreign trade. As long as they don't protest, we British will turn a blind eye. It won't be a problem for the Korean customs to collect an extra 30,000 to 50,000 taels of silver every year."

He paused, looking at Wall:

"Once this money is collected, it will be directly disbursed to Chang Desheng by the North Korean Customs and Tax Service as a subsidy for the defense of Wonsan."

After listening, Hua Ershen pondered for a moment and nodded: "This is a good idea! Japan and Qing will definitely not protest. Preventing Wonsan from falling into Russian hands is the most important thing for Japan! Qing is even less likely to protest. And the Korean customs commissioner is jointly controlled by the Qing's Inspector General of Customs and Yuan Shikai. By having the Korean customs pay Chang Desheng, it's as if you've seized a portion of his funding."

A cold smile curled at the corner of Hurd's lips: "That's right. Let him know who his money came from."

Hua Ershen was silent for a few seconds, then added, "However... the principles of agreed-upon tariffs have begun to loosen!"

Hart picked up his glass, took a big gulp, and said nothing.

He knew that Ward was right; the agreed-upon tariffs had been swayed by this lowly fourth-rank official of the Qing Dynasty!

Even though it's just a tiny bit of loosening, it's still loosening!

This Chang Desheng not only knows how to make money, but he also knows how to acquire artillery and territory. And he even dares to circumvent agreed-upon tariffs…

Once the time is right, we must strike him hard!

Meanwhile, in Tokyo, in the Cabinet meeting room.

The atmosphere in the meeting room wasn't very good.

The elderly Foreign Minister, Moben Wu, slammed his hand on the table, making the teacup jump.

"This Chang Desheng... he's far too cunning! He actually managed to circumvent the Tianjin Convention by obtaining a fake official note... and even dared to demand money and cannons from the Empire... he deserves to die!"

He was so angry his beard was trembling. As a foreign minister who came from a background of serving the Shogunate, he had always looked down on the so-called "Qing Dynasty experts" in the government monopolized by the Satsuma and Choshu clans. And now, a fourth-rank official from Qing China had actually managed to outmaneuver the Japanese Empire's envoy to Korea and trick that fool Oishi into signing two fatal diplomatic notes.

He couldn't swallow this insult. It was like swallowing a mouthful of wasabi, stuck in his throat, unable to go up or down.

Takashima Rakunosuke, the Army Minister from the Satsuma Domain, glanced at him, coughed, and slowly began to speak:

"Mr. Model, now is not the time to lose your temper. We still need this man. As long as he can hold off the Lucia for us and prevent us from going to war with them, we can give him these benefits for now... let him have a taste of the good life. There will be plenty of opportunities to deal with him in the future." He said this in a very calm tone, as if Chang Desheng was already firmly in his grasp. His tone was like talking about a grasshopper in autumn, who wouldn't be able to jump for much longer.

In fact, the General Staff had already reported to him about Chang Desheng, who was a potential threat that needed to be eliminated! Moreover, the Genyosha had already organized two assassination attempts against Chang Desheng, both of which failed... However, he still believed in the capabilities of the General Staff and the Genyosha, and that they would be able to get rid of this person sooner or later.

Kabayama Sukenori, the Minister of the Navy who also came from the Satsuma Domain, said through gritted teeth:

"It seems that the Qing Dynasty's successful purchase of the 'Changyuan' warship was also facilitated by this person during his time in Germany..."

As Minister of the Navy, he harbored a deep resentment towards the warship "Changyuan." Without the "Changyuan," the navy would have had a very high chance of defeating the Beiyang Fleet by Meiji 27 (1888).

Now that the Navy has acquired the "Changyuan" ship, it has to spend a huge sum of money to purchase a "Centurion" class ship. Although victory is still assured, the extra cost of so many pounds has had a significant impact on the Navy's long-term development plans, which is ultimately unpleasant.

Prime Minister Masayoshi Matsukata frowned and interrupted them:

"Now is not the time to dwell on these issues. The primary concern now is managing relations with Russia and ensuring that Yuanshan is not occupied by Russia." He glanced at Moben Wusun: "The 100,000 taels promised by Minister Oishi... from which account will it come?"

Takashima Rakunosuke casually added, "The military can find a way... they can allocate a portion from the 'special funds.' The rest can be covered by the Okura Group."

Mobenwu snorted: "The military's secret accounts are more lavish than those of the Ministry of Foreign Affairs."

However, he did not object, because he also knew that Yuanshan really could not be lost.

But he was still not entirely satisfied, so he sighed and said again:

"Unfortunately, Li Hongzhang was unwilling to deploy the Zhen and Ding warships of the Beiyang Fleet."

If those two ironclad warships could reach Yuanshan, the Russians wouldn't dare to act rashly. Japan wouldn't be at the mercy of a mere fourth-rank Qing official. Just then, a voice suddenly rang out:

"Perhaps, the Empire can use the Sino-Japanese alliance and joint defense against Russia as a condition to request the Zhenyuan and Dingyuan warships."

All eyes turned to the person who had spoken.

It was Minister of Agriculture and Commerce, Mutsu Munemitsu.